version_id
stringlengths 36
36
| type
stringclasses 1
value | jurisdiction
stringclasses 1
value | source
stringclasses 1
value | mime
stringclasses 2
values | date
stringlengths 19
19
⌀ | citation
stringlengths 21
1.02k
| url
stringlengths 61
64
| when_scraped
stringlengths 32
32
| text
stringlengths 46.2k
2.63M
| word_count
int64 8.19k
415k
|
|---|---|---|---|---|---|---|---|---|---|---|
nsw_caselaw:190c4b97824952b1bf96c523 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-19 00:00:00 | In the matter of Heartland Group Pty Limited and others [2024] NSWSC 875 | https://www.caselaw.nsw.gov.au/decision/190c4b97824952b1bf96c523 | 2024-07-26T22:25:56.556246+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Heartland Group Pty Limited and others [2024] NSWSC 875
Hearing dates: 4-5 July 2024
Date of orders: 19 July 2024
Decision date: 19 July 2024
Jurisdiction: Equity - Corporations List
Before: Black J
Decision: Parties to bring in short minutes of order to give effect to this judgment, including as to costs, within five business days and, if there is no agreement between them, their respective draft orders and submissions as to the differences between them.
Catchwords: CORPORATIONS – Directors and officers – Appointment, removal and retirement of directors – Whether director was validly appointed – Where director purported to exercise casting vote of board chairperson to effect appointment of another director.
CORPORATIONS – Whether share held by subsidiary in holding company could be voted – Application of exception for shares held in trust.
CORPORATIONS – Whether relief should be granted under s 1322 of the Corporations Act 2001 (Cth) to validate members’ resolutions – Where member excluded from voting on resolution purportedly passed by written resolution executed by majority shareholder.
Legislation Cited: - Corporations Act 2001 (Cth), ss 249S, 259C-259D, 1322
- Evidence Act 1995 (NSW), s 136
Cases Cited: - Armagas Ltd v Mundogas SA [1985] 1 Ll R 1
- Australian Hydocarbons NL v Green (1985) 10 ACLR 72
- Australian Karting Association Ltd v Karting (NSW) Inc [2021] NSWSC 1075
- Camenzuli v Hawke [2022] NSWSC 168
- Clark v Workman [1920] 1 IR 107
- Commissioner of State Revenue v Serana Pty Ltd (2008) 36 WAR 251; [2008] WASCA 82
- Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd (2005) 194 FLR 322; (2005) 55 ACSR 185; [2005] NSWSC 1005
- Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301
- ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24
- Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11
- Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725
- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810
- Inland Revenue Commissioner (NZ) v Ward [1970] NZLR 1
- John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
- MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; [1999] HCA 51
- MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636; (1999) 25 ACSR 78; [1999] HCA 24
- New South Wales Rugby League Ltd v Australian Rugby Football League Ltd (1999) 30 ACSR 354; [1999] NSWCA 9
- No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd [2022] NSWSC 1345
- Primary Securities Ltd v Aurora Funds Management Ltd [2020] NSWCA 230
- Re Atlas Advisors Australia Pty Ltd (2022) 162 ACSR 509; [2022] NSWSC 705
- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789
- Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883
- Re iCandy Interactive Ltd (2018) 125 ACSR 369; [2018] FCA 533
- Re National Australia Bank Ltd (2020) 149 ACSR 323; [2020] NSWSC 1761
- Re Pacific Springs Pty Ltd (2020) 148 ACSR 454; [2020] NSWSC 1240
- Re Vestey’s Settlement [1951] Ch 209
- Singh v Singh; Flora t/as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386
- The Chinese Cultural Club Ltd (2004) (2004) 83 FLR 33; 49 ACSR 568; [2004] NSWSC 432
- Varma v Varma [2010] NSWSC 786
- Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963
- Watson v Foxman (1995) 49 NSWLR 315
- Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14
Category: Procedural rulings
Parties: Joanne Richards (First Plaintiff)
Bernice Hooker (Second Plaintiff)
Kieran Turner (First Defendant)
Bernley Corporation Pty Ltd (Second Defendant)
Heartland Group Pty Ltd (Third Defendant)
Boyded Industries Pty Ltd (Fourth Defendant)
HMG Parts Pty Ltd (Fifth Defendant)
Heartland Motors Pty Ltd (Sixth Defendant)
Heartland Blacktown Pty Ltd (Seventh Defendant)
Heartland Penrith Pty Ltd (Eighth Defendant)
Chicago Properties Pty Ltd (Ninth Defendant)
T S Management Pty Ltd (Tenth Defendant)
BGW Nominees Pty Ltd (Eleventh Defendant)
Rossfield Nominees (A.C.T.) Pty Ltd (Twelfth Defendant)
Australian Securities and Investments Commission (Thirteenth Defendant)
Anthony Turner (Fourteenth Defendant)
Representation: Counsel:
R A Dick SC/A Langshaw (Plaintiffs)
M Izzo SC/T Boyle (First Defendant)
Solicitors:
Speed & Stracey (Plaintiffs)
McCabes (First Defendant)
File Number(s): 2024/205160
Judgment
Nature of this hearing
1. By Amended Originating Process filed, by leave, at the hearing on 4 July 2024, the Plaintiffs, Ms Richards and Ms Hooker, seek a range of relief against Mr Kieran Turner (to whom I will refer as “KT”, to distinguish him from his brother, Mr Anthony Turner (“AT”)), against several corporate entities associated with the Heartland group of companies and against AT. Only the First Defendant, KT, has taken an active role for the Defendants in the proceedings. The defendant companies rightly did not seek actively to participate in the resolution of the dispute between their shareholders and directors and the Australian Securities & Investments Commission (“ASIC”) (which was joined as a party since orders were sought to rectify registers that it maintains) and AT each filed submitting appearances.
2. By way of background, Ms Richards and Ms Hooker and the late Ms Kathryn Turner (“Mrs Turner”) are the daughters of the late Mr Bernard Webb and the late Mrs Dulcie Webb (“Mrs Webb”). KT and AT are two of Mrs Turner’s children, grandchildren of Mr Webb and Mrs Webb, and nephews of Ms Richards and Ms Hooker. Mr Webb founded the Heartland group of companies, and it is common ground that companies within the Heartland group operate car dealerships which retail and service cars and car parts (Amended Points of Claim (“APC”) [3]; Points of Defence to APC (“POD”) [3]). The issued share capital of the holding company of the Heartland group, B.G. Webb Pty Ltd (“BG Webb”), is owned by Mr Webb’s and Mrs Webb’s descendants. Ms Richards and Ms Hooker hold the majority of the shares in BG Webb and KT, personally and through his ownership of the shares in Turnercorp Pty Ltd, owns or controls a minority of the issued shares in BG Webb (APC [4]-[5], POD [4]-[5]).
3. BG Webb in turn owns all the shares in the Second Defendant, Bernley Corporation Pty Ltd (“Bernley”) (APC [6], POD [6]). It is also common ground (APC [7]-[10], POD [7]-[10) that, since 28 June 2013, Bernley has owned 599 of the issued shares in the Third Defendant, Heartland Group Pty Ltd (“Heartland Group”). One share in Heartland Group is owned by its wholly owned subsidiary, the Fourth Defendant, Boyded Industries Pty Ltd (“Boyded”) as trustee of the Rossfield Group Trust (“Trust”).
4. On 7 June 2024, the Plaintiffs and KT gave undertakings, without admission or concession by any party, that they would proceed on a specified basis. By consent, the Court then ordered that several issues raised by the (now Amended) Originating Process be heard separately, and in advance of any cross-claim that may be filed by KT seeking relief for oppression, where the determination of those issues was likely to narrow the issues in dispute in an oppression claim. The matters which were the subject of that separate issue include whether AT, Mr Richards and Ms Hooker are directors of several companies and whether the Plaintiffs also be allowed relief, to the extent necessary, under s 1322(4)(a) of the Corporations Act 2001 (Cth) (“Act”) declaring that members’ resolutions of Heartland Group executed by Bernley on three occasions were not invalid because they were not passed at a general meeting of Heartland Group.
Affidavit evidence and cross-examination
5. I will first deal with the affidavit evidence and the cross-examination of KT and Ms Richards, and I will then address communications and correspondence between the parties relevant to the several issues in dispute in dealing with those issues below.
6. The Plaintiffs initially did not read evidence of either Ms Richards or Ms Hooker in chief and instead read several affidavits of their solicitor, Mr Scott. By his affidavit dated 3 June 2024, Mr Scott referred to the corporate structure of the Heartland group of companies and exhibited documents relating to those companies. Mr Scott there refers to the circumstances surrounding the purported appointment of AT as a director of various group companies on 6 December 2022, and I will address that matter in dealing with issue 3 below. Mr Scott’s evidence (Scott 3.6.2024 [27]) is that Ms Richards had there called for a vote to appoint the chair of the board meeting, which was held for the several companies together, and that KT responded that “he was the paid chair for each company, was approved by car manufacturers, and that if Ms Richards wanted to remove him as chair she would have had to have obtained the approval of those manufacturers”.
7. Mr Scott then refers to the steps which Ms Richards took to seek to remove AT as a director of several companies and appoint Ms Hooker as a director of those companies on 13 December 2022. His evidence is that Ms Richards, on 8 December 2022, served notices on Ms Hooker and KT convening board meetings of Bernley and Heartland Group to take place on 13 December 2022 to consider resolutions to remove AT as a director, and he refers to a response received from KT’s solicitors on 13 December 2022, to which I will refer in dealing with that issue below. Mr Scott also refers to his attendance at that board meeting as Ms Richards’ and Ms Hooker’s legal adviser and to Ms Richards’ and Ms Hooker’s attendance at the meeting and KT’s absence from that meeting. He also refers to circulating resolutions then executed by Bernley and Heartland Group which purported to remove AT as a director and appoint Ms Hooker as director of several companies, and I address the validity of those circulating resolutions. I will address those matters in determining issue 4 below.
8. Mr Scott’s evidence is that KT then convened board meetings on 30 May 2024 that sought to remove Ms Richards as a director of Boyded, by a resolution of the board of Heartland Group, Boyded’s holding company and of other companies. Ms Richards responded to that step by convening board meetings of Bernley and Heartland Group on 29 May 2024 to consider resolutions that they exercise their power as shareholders to affirm AT’s removal as a director and affirm Ms Hooker’s appointment as a director of several companies. I address that matter in dealing with issues 9-11 below. It is difficult to avoid the conclusion that, by this point, the corporate governance of the Heartland group of companies was in disarray.
9. By a second affidavit dated 5 June 2024, Mr Scott referred to documentary evidence relating to several transactions on 28 June 2013, which had the result that Bernley and Boyded became the two shareholders in Heartland Group, subject to an issue as to the potential application of ss 259C-259D of the Act, which I address in dealing with issue 4 below. Mr Scott also there referred to an unpaid distribution from the Trust payable to Heartland Group in the amount of $4,816,548, which I also address in dealing with that issue.
10. By a third affidavit dated 6 June 2024, Mr Scott addressed a board meeting of T S Management Pty Ltd (“TS Management”) called by KT on 6 June 2024 seeking to remove Ms Richards from the board of that company, and yet another board meeting of Bernley convened by Ms Richards to consider resolutions that Bernley reaffirm AT’s removal as a director of Heartland Group and the appointment of Ms Hooker as a director of Heartland Group, and a board meeting of Heartland Group to consider a resolution that it exercise its power as sole member of TS Management to remove AT as a director of that company. The parties paid little attention to this issue at the hearing, but I will address it briefly as issue 15 below.
11. KT relied on his affidavit dated 26 June 2024. He there referred to his education and to the fact that he started working with the Heartland group of companies in January 1995, immediately after he graduated high school, and he explained the business of the group and its relationship with several motor vehicle manufacturers in respect of its five motor vehicle dealerships and parts and logistics businesses that it conducts in Western Sydney. KT referred to the steps taken by Mr Webb to train him to succeed Mr Webb in the business; to his appointment as chief executive officer of the Heartland group of companies in 2009; and to the circumstances in which he was issued equity in BG Webb and appointed as a director of several companies within the Heartland group. He also refers to his responsibilities as chief executive officer of the group and to AT’s role as chief operating officer of the Heartland group of companies. His evidence (KT 26.6.2024 [34]) is that:
“The group of companies historically infrequently held board meetings or general meetings, although recently they have occurred more frequently. They are usually conducted to update the attendees on the business generally and family issues have sometimes been discussed in these meetings too.”
12. KT also further addressed the relationship between the Heartland group of companies and the motor vehicle manufacturers, and the manufacturers’ practice of reviewing the suitability of persons appointed to senior positions within motor dealers and changes to key personnel within a dealership. He also referred to communications with motor vehicle manufacturers in respect of proposals to appoint Ms Hooker as a director of the company, although it will not be necessary to address the merit of those proposals to determine the separate issues in this hearing.
13. KT also gives evidence of the circumstances in which he claims that, at a meeting in the first half of 2019, he was appointed chair of each company in the Heartland group, a factual matter which is in dispute in the proceedings. I will address his evidence as to that matter and the contemporaneous correspondence and communications in dealing with issue 3 below.
14. KT was examined at considerable length, although that may not have been the original intention of Mr Dick, with whom Mr Langshaw appears for the Plaintiffs. Mr Dick sought to put numerous emails and letters to KT, and then to put the ultimate propositions that KT and Ms Richards were not on good terms in the first half of 2019 and their communications were then largely directed to a contentious proposal by KT to sell his shares in BG Webb. That appeared to be directed to supporting a contention that it was unlikely that Ms Richards would have agreed in an informal board or other meeting in that period (“2019 Meeting”), also attended by several other family members, that KT would be the chair of the companies within the Heartland group so long as he held shares in BG Webb. That matter was relevant to the determination of issue 3 below. It was perhaps not surprising that KT, a plainly intelligent businessman, did not understand Mr Dick’s questions about those emails and letters to be directed to no more than the fact that they existed, and sought to address the merit of the positions taken by the parties in that correspondence even if he was not asked to do so. It seemed to me that he was not being uncooperative in that approach, although that approach substantially expanded the scope and length of the cross-examination.
15. It is not necessary to reach a finding as to KT’s credit to determine the separate issues that arise at this hearing. It is preferable that I do not do so where it is not necessary to do so, where his credit will likely be in issue in the wider oppression claim that he has foreshadowed, possibly subject to the outcome of this hearing. I will find below, without reaching any adverse credit finding in respect of KT, that I cannot reach a state of actual persuasion, and am unable to find on the balance of probabilities, that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence, notwithstanding the parties’ acceptance by conduct that KT was chair of the companies over an extended period.
16. Turning now to the Plaintiff’s evidence in reply, by a fourth affidavit dated 27 June 2024, apparently in response to KT’s affidavit dated 26 June 2024, Mr Scott referred to minutes of meetings of several companies where Ms Richards was recorded as having been chair of the meetings. Little turned upon that evidence, where it became apparent that all but one of those meetings had occurred while KT was on a lengthy sabbatical in France and it was not surprising that he had not chaired those meetings where he was attending them virtually from overseas. By a fifth affidavit dated 28 June 2024, Mr Scott referred to his communications with car manufacturers on behalf of Ms Richards and Ms Hooker since June 2022, apparently also in response to KT’s evidence.
17. I will address Ms Richards’ evidence in reply in addressing issue 3 below. It is notable that, although Ms Richards addressed narrow but important aspects of KT’s evidence, she did not address, in chief or in reply, other aspects of the proceedings. In particular, she did not address the circumstances leading to the numerous board resolutions and shareholder resolutions in 2022 and, notwithstanding that the Plaintiffs sought relief under s 1322 of the Act in respect of the potential invalidity of several transactions, she neither gave an account of those transactions which would allow the Court to form a view as to her honesty in respect of them, nor advance even a conclusory claim to honesty in respect of the transactions. Ms Hooker, who did not give evidence, also did not address those matters.
Issue 1 – 29 June 2022 members’ resolution of BG Webb
18. It is common ground that, as at 28 June 2022, each of Ms Richards and KT were the only directors of BG Webb and the other companies joined as Defendants (APC [16], POD [16]) and that, on or about 29 June 2022, Ms Hooker was appointed as a director of BG Webb, so that Ms Richards, Ms Hooker and KT have since been directors of BG Webb (APC [17]-[18], POD [17]-[18]). There was previously a dispute as to this issue; however, it is common ground that it has been resolved and that a declaration is not required.
Issue 2 – 26 September 2022 board resolution of BG Webb
19. It is also common ground that, on or about 26 September 2022, Ms Hooker was appointed as a director of Bernley so that each of Ms Richards, Ms Hooker and KT have been directors of Bernley (APC [19]-[20], POD [19]-[20]). There was previously a dispute as to this issue; the Plaintiffs seek a declaration as to this matter; and KT fairly accepts that such a declaration should be made.
Issue 3 – Purported 6 December 2019 board resolutions of Heartland Group, Boyded and Rossfield Nominees
20. The first issue that remains in dispute relates to the validity of resolutions passed at board meetings of Heartland Group, Boyded and Rossfield Nominees (A.C.T) Pty Ltd (“Rossfield Nominees”) held on 6 December 2022 (“6 December Resolutions”) (APC [21]-[27], POD [21]-[27]). The parties identify the factual and legal issues that arise in respect of this matter in their Joint Chronology and Summary of Issues. The Plaintiffs contend (Plaintiffs’ Submissions (“PS”) [29]-[30], Plaintiffs’ Further Submissions (“PFS”) [17]-[23]) that KT was not the chair of each of the companies and the purported resolutions were not passed and had no effect. KT responds that he was the chair of Heartland Group, Boyded and Rossfield Nominees and was able to cast a deciding vote (KT’s Submissions (“DS”), [9]-[17]).
21. On 2 December 2022, KT gave notice to Ms Richards convening board meetings of, inter alia, Heartland Group, Boyded and Rossfield Nominees to consider proposed board resolutions appointing AT as a director of each of those companies. Those proposed resolutions relied on powers contained in each of the constitutions of those companies conferring on the board power to appoint directors, in most cases for a limited term. In the case of Boyded, the resolution caused Heartland Group to exercise its power as the shareholder in Boyded to appoint a director to Boyded (Ex P1, CB 805).
22. At the board meetings of Heartland Group, Boyded and Rossfield Nominees held on 6 December 2022, Ms Richards initially called for a vote as to the chair, and KT contended that he was the chair of the relevant companies. KT voted in favour of the 6 December Resolutions; Ms Richards voted against those resolutions; and KT purportedly exercised a casting vote as chair in respect of those resolutions (Scott 3.6.24, [27]). The Plaintiffs plead that the 6 December Resolutions were of no effect and that KT and Ms Richards remained the only directors of those companies (APC [21]-[27]). It is common ground that those resolutions would have been effectively passed if KT could exercise a casting vote as chair of the relevant meetings and not otherwise.
23. KT responds (POD [25]) that that he was the chair of the relevant companies and particularises that contention as follows:
“During a conversation held between about February and June 2019, at the then home of KT's maternal grandmother (being a unit in … Bellevue Hill, NSW) [Ms Dulcie Webb] on his return from 18 months living in France, it was agreed between Dulcie Webb, Kathryn Turner, Joanne Richards and [KT] that [KT] would take on the role of, and be paid a salary to be, Chief Executive Officer and Chairman of each of the Heartland Motor Group of Companies for so long as he was a shareholder of [BG Webb] (i.e. the ultimate holding company of the Group).”
KT also relies on numerous occasions since 2010 and again in 2020 and 2021 when he acted as chair of the companies. He contends that he was entitled to exercise casting votes as chair of the companies on that basis.
24. In reply, the Plaintiffs deny the existence of the agreement on which KT relies and point to occasions on which Ms Richards acted as chair of board meetings, all but one of which occurred in the period when KT was absent in France and attended the meetings remotely, and the last of which took place between the date of the meeting alleged by KT and 1 July 2019, when he contends the resolution on which he relies took effect.
Factual background to issue 3
25. I now set out the factual background to this issue, and I should first identify the articles of association relevant to this dispute. Article 101 of Heartland Group’s articles of association (Ex P1, CB 340) relevantly provides that:
“The Directors may elect a Chairman and if desired a Deputy Chairman of their meetings and determine the period for which he or they are respectively to hold office and unless otherwise determined the Chairman and deputy Chairman shall be elected annually. If no Chairman is elected or if at any meeting the Chairman is not present within fifteen minutes of the time appointed for holding the same the Deputy Chairman shall be Chairman of such meeting. If no Chairman and no Deputy Chairman is elected or if at any meeting neither the Chairman or Deputy Chairman is present within fifteen minutes of the time appointed for holding the same the Directors present shall choose someone of their number to be Chairman of such meeting.”
26. Article 55 of Boyded’s articles of association (Ex P1, CB 379) relevantly provides that:
“The Directors may elect a Chairman of their meetings and determine the period for which he is to hold office but if no Chairman is elected or if at any meeting the Chairman is not present at the time appointed for holding the same the Directors present shall choose one of their number to be Chairman of the meeting.”
27. Article 87 of Rossfield Nominees’ articles of association (Ex P1, CB 769) in turn provides that:
“The Directors may elect a Chairman of their meetings and determine the period during which he is to hold office. Except as hereinafter mentioned a Chairman shall have one vote at such meeting. All meetings of the Board shall be presided over by the Chairman if present and in his absence at the time appointed for holding the same or if no Chairman has been elected the Directors present may choose one of their number as Acting Chairman to preside at the meeting.”
28. It is important to recognise that KT contends, as I have noted above, that the 2019 Meeting occurred between February and June 2019, and I now turn a review of surrounding events and correspondence in that period. It will be necessary to set out several communications between Ms Richards and KT, where Ms Richard’s evidence that she was then estranged from KT and that she would not have met with or spoken to him at the 2019 Meeting, and where the factual findings that I will reach turn upon both the content and tone of these communications. I will allow the parties an opportunity to make submissions as to whether these communications should be redacted when this judgment is published.
29. At the commencement of the period on which KT contends the 2019 Meeting occurred, on 4 February 2019, Ms Richards and KT exchanged messages as to the fact that Mrs Webb was then in hospital and as to the nature of her condition (Ex D2, 3-4). Obviously, the fact that Mrs Webb was then in hospital confines the dates on which the 2019 Meeting, which is said to have taken place in her presence and at her home, could have occurred and it is unfortunate that better evidence was not led as to the dates of her hospitalisation.
30. On 9 February 2019, KT and Ms Richards sent text messages, in apparently civil terms (Ex D2, 4-5):
[Ms Richards] “Got muttered voicemail from “
[KT] “Ahh the good old pocket dial at the park with kids amock”.
31. By February 2019, an issue had arisen as to KT’s then wish to sell his shares in BG Webb, either to other family members or to a third party. On 14 February 2019 (Ex D2, 5-6) Ms Richards and KT exchanged text messages, at about the same time as an email sent by Ms Richards to KT:
[KT]: “Hi Jo, [Mrs Webb] tells me she is feeling much better which is great to hear. I don’t feel it’s her turn but fingers and toes are always crossed. Any update on your possible acquisition?”
[Ms Richards]: “Mum is feeling much better but she has a long uncertain road ahead unfortunately. I have just sent you an email”.
32. On 14 February 2019 (Ex P11), Ms Richards emailed KT, copied to Ms Hooker, Mrs Turner and Mrs Webb, that:
“With regard to your offer for us to buy your interest in the Heartland Group, we have been thinking carefully about it, but have delayed because of mum’s illness. Now we have decided that we do not wish to buy out your interest, but we are comfortable with selling the whole business and land with it, providing it is for an attractive price, bearing in mind that it is not a particularly good time to be selling, may be after the election. We know that you would like to leave the business to pursue other interests, so we have no problem with Neal taking over as CEO while the sale process takes place. We are not sure if you would like to be involved in the sale, but if not we are happy to orchestrate it with some professional help of course.”
33. By a subsequent email on the same date to Ms Richards (Ex P11), copied to Ms Hooker, Mrs Turner and Mrs Webb, KT advised that he had previously been approached by a dealer to buy his interest and, where other shareholders did not wish to do so, he would progress his discussions with that dealer, and noted the possibility that purchasers could afford the cost of his interest to BG Webb, but not of the value of the whole of the company. KT then sent a text message to Ms Richards (Ex D2, 6) that:
“I replied to your email but [Mrs Webb’s] email address bounced.”
34. Ms Richards responded, on 19 February 2019:
“Thanks for your email. I mentioned that we would be comfortable for the sale of the whole business including land, but the sale of a small interest to someone we don’t know doesn’t appear to be in anyone’s interest or indeed the company’s interest. The Groups’ finances and assets are very sensitive and confidential and making them available would need to be done only with proper restrictions and the board’s consent. We think that can best be done with a whole business sale. As you know, trying to sell your interest at the same time as we investigate the larger sale will likely cause problems and conflict with what we suggest is best for the Group.
We seek your support for a sale process of the whole business and land.
Cheers Dulcie, Kate, Jo”
35. KT then responded, on 19 February 2019, indicating the difficulty with a sale of the whole group in the then market and observed, in a manner that suggested increasing impatience on his part:
“I need out and I am progressing that as we speak with an interested party.”
36. Communications concerning KT’s potential sale of his interest in BG Webb continued with emails dated 26 February 2019 from Ms Richards to KT and 26 February 2019 from KT to Ms Richards (Ex P10, CB 2867). By March 2019, a further issue had arisen as to whether additional directors should be appointed to BG Webb. By her email dated 27 February 2019 to KT (Ex P10, CB 2870), Ms Richards advised that:
“Your timing is very very short, but we really hope that we can sort this out, and we agree with your comment that it would be crazy, and not in the companies’ best interests, to let a non-family member into our boardroom which raises an issue that we should address, and that is I think the others (Bess, Kate and mum) should also be appointed to the various company boards as they have an interest in all of this and particularly decisions have to be made in dealings with you and the companies.”
Ms Richards there appears to express her own view as to the appointment of additional directors rather than a view attributed to Mrs Webb, Ms Hooker or KT’s mother, Mrs Turner, and she did not, on the face of that email, copy it to Mrs Webb, Ms Hooker or Mrs Turner. Ms Richards also there suggested that she would arrange for a solicitor to contact KT’s solicitor.
37. KT copied Mrs Webb, Ms Hooker or Mrs Turner in his response dated 28 February 2019 (Ex P10, CB 2869), and asked the question:
“Why would you want to add Director liabilities to more family members? Do [Mrs Turner, Ms Hooker and Mrs Webb] agree with this? [Mrs Webb] has always been against her nomination.”
I will return to this question below. KT there also expressed discontent with Ms Richards’ approach to his proposed sale of interest in BG Webb, and referred to the possible sale of that interest to a third party.
38. On 1 March 2019 (Ex D2, 6), KT sent a text to Ms Richards in respect of a price for the sale of his shares in BG Webb. Also on 1 March 2019, Mr Scott’s firm sent a letter to Ms Richards, Ms Hooker, Mrs Webb and Mrs Turner (Ex P8) comprising an engagement letter and disclosure and costs agreement, which described the relevant legal services as “advising generally regarding Heartland Motor Group”. That letter provided for acceptance in writing, but by Ms Richards only, or by continuing to instruct the firm. It is not clear, and not necessary to determine in this aspect of the proceedings, whether Mrs Webb and Mrs Turner had then retained Mr Scott to act for them and whether he was speaking for them in subsequent correspondence.
39. By email dated 6 March 2019 (Ex P12), Mr Scott advised Ms Richards, with copies to Ms Hooker and Mrs Turner but not Mrs Webb:
“When Peter first raised the potential for issues to arise with the Group there was uncertainty who would be the client(s) so we issued a costs agreement to him subject to substituting the clients in the future. It is appropriate for a new agreement to be issued.
Attached is our costs agreement terms and retainer letter. As you know the matter is very fluid as to what will happen including the potential for a buy-out of [KT’s] interest. At this time however the nature of the estimate referred to in the agreement is predicated upon uncertainty with ongoing debate between the parties. Obviously that may change.”
The attached costs agreement and retainer letter was addressed to Ms Richards, Ms Hooker, Mrs Webb and Mrs Turner but provided for signature only by Ms Richards; it allowed other parties to accept by conduct, but there is no evidence that they did so.
40. By email dated 7 March 2019 (Ex P6; Ex P10, CB 2871), Mr Scott advised KT’s solicitor with a copy to KT that:
“I understand my clients have previously notified your client that they considered it appropriate that each of the shareholders be appointed as directors in [BG Webb]. Our ASIC search indicates that the current directors are Joanne Richards, Kathryn Turner and [KT] meaning Dulcie Webb and Bernice Hooker are to be appointed as directors.”
That email referred to the receipt of consents to act as directors from Mrs Webb and Ms Hooker and attached copies of those consents and requested that KT execute a circulating resolution to make the relevant appointment.
41. In his cross-examination, KT expressed doubt as to whether Mr Scott was then acting for Mrs Webb and whether the position which he expressed was Mrs Webb’s position. I accept that KT had every reason to be concerned as to that matter, where it would be surprising if Mrs Webb, who was then in hospital with a very serious illness, then wished to be appointed as a director of the holding company of a substantial motor dealership, and assume the liabilities attached to that position, when she was plainly too ill to undertake a director’s duties. That proposition calls for further explanation, although I recognise that this issue may have caught the Plaintiffs and Mr Scott by surprise. It would not be appropriate for me to reach findings as to the extent of Mr Scott’s retainer, or the status of the position attributed to Mrs Webb, where it is not necessary to do so to resolve this aspect of the proceedings; the Plaintiffs and Mr Scott may not have led all the evidence that would be available to address those matters; and these matters may well be in issue in the balance of the proceedings.
42. By email dated 14 March 2019 (Ex P7), Mr Scott wrote to KT, with a copy to KT’s solicitors, in respect of then discussions concerning a possible sale of KT’s interest in BG Webb, observing that nothing has been agreed, nor committed to, including the structure and terms of any transaction. He advised that he not received a response from KT to emails requesting further information and observed that:
“You will appreciate that any transaction will require the approval of my clients. I assume that the fact that none of the details requested in my email dated 28 February 2019, concerning a proposed sale to a third party, have been provided means that such a sale is no longer being considered.”
Mr Scott also referred to a “proposed transaction” with BG Webb, although the content of that transaction is unclear, and followed up as to the circulating resolution attached to his earlier email.
43. The relations between the parties were tense by mid-March 2019. In an email sent on 18 March 2019 (Ex P10, CB 2874-2875), Mr Scott communicated the fact that his “clients” did not approve the transaction set out in a draft contract, which is not in evidence, because the price exceeded the value of KT’s shares in BG Webb. He also indicated that:
“My clients and their advisors continue to investigate options for the way forward. In this respect I note you continue to ignore my clients’ request that you sign the Circulating Resolution appointing the other shareholders as directors of [BG Webb]. As you know my clients represent over 80% of the voting entitlements of [BG Webb] and they again ask that you immediately sign the resolution without the need to call a meeting or meetings.
I am asked to request that all further communications concerning this matter be directed to me.”
44. Also on 18 March 2019, KT responded (Ex P10, CB 2874) to Mr Scott’s email set out above as follows:
“I will now focus on completing my sale with a third party, a position I preferred from the outset. I knew the family couldn’t and wouldn’t make a decision.
I will not be signing your proposed Circulating Resolution because I do not believe it is in the best interests of [Ms Hooker] or [Mrs Webb] or the Company. In fact [Mrs Webb] has said many times she doesn’t want to be a Director and risk “going to jail”. Furthermore, I do not understand why all of a sudden these 2 persons would like to expose their personal liabilities accordingly especially when they are very hands off and [Mrs Webb] is ill. If your sneaky intention is to out vote me selling my shares then I will sell my holding Family Trust which has already been dealt with by my team and I.
I will continue to speak to my Mum and [Mrs Webb] about any matters of the company when and how I feel like it.
[Ms Richards] is bullying the other family members, none of which are savvy or experienced business people, and steering this ship into an iceberg. I will not be here to watch.”
45. On 18 March 2019, KT also sent a text to Ms Richards, in somewhat hostile terms, as follows (Ex D2, 9):
“Hi Jo [Mr Scott] told me your [sic] not interested and that’s fine although foolish, but I would love a copy of your so called valuation that’s [sic] says my price is many times too high? I’m betting you don’t have this and I’m making this personal. I am exiting the business because of you and yet here you are trapping me in. Very strange, although not unusual … you will regret this.”
46. Communications as to these matters continued into 2 April 2019, when Mr Scott again confirmed that his clients did not wish to buy KT’s shares in BG Webb at the price which KT proposed (Ex P10, CB 2877).
47. By email dated 16 April 2019 (Ex P10, CB 2883), KT advised Mr Scott that, absent a circular resolution, presumably permitting the transaction, the proposed purchaser of his shares in BG Webb would “walk”. Mr Scott responded on 16 April 2019 (Ex P10, CB 2886) that his clients had “at all times acted reasonably and with everyone’s interests, including the company’s, foremost in their approach” and stated that:
“My clients do not wish to frustrate your exit from the Group but they are simply not in a position to provide you with the approval that you seek without the adequate information requested and the consideration of, and advice from, Their advisors with respect to that information. To ask them to do so is unreasonable, particularly in the timeframe that you suggest.”
48. KT responded on 19 April 2019 (Ex P10, CB 2886), in strong terms, that:
“As warned, my buyer has walked. It’s been an incredibly difficult process trying to separate from the family in business and I am not wasting another minute on it. Your intent is frustratingly clear and unwavering. You have destroyed a good idea and deal out of sheer stubbornness and stupidity. The process has proven to been [sic] full of back flips (4 on 4 months) and stonewalling and your recent refusal to sign my [circulating resolution] is the straw that broke the camels [sic] back. Ironically, your illegal and immoral entrapment of my minority equity is flattering.
I need to focus back on the business and protect my 10% equity from further los[s]es.”
49. In this context, KT’s evidence as to his appointment of chair of each entity in the Group (KT 26.6.24 [56]-[60]) is that:
“My appointment as Chair of each entity in the Heartland Motor Group was formalised during a family meeting held sometime between about January 2019 and June 2019 following my return from living in France ([2019 Meeting]).
The Appointment Meeting I refer to immediately above took place at the home of my grandmother (my mother’s mother) which was a unit in … Bellevue Hill, NSW.
The persons in attendance at the [2019 Meeting] were my grandmother (Dulcie Webb), my mother (Kathryn Turner), the first plaintiff, Joanne Richards and myself. No minutes were taken of the [2019 Meeting] as it was not a board or shareholder meeting. It was a meeting of family members with the material interest in the Group.
I recall the discussion at the [2019 Meeting] was in the following terms:
[KT]: I am back from sabbatical and need to decide whether the break was a halftime break or fulltime for me. If I leave then obviously I wouldn’t be CEO or chairman but if I stay I would need to be the fulltime CEO and chairman until I am no longer involved in and don’t hold shares in all the companies. I have compared the salaries of both positions and have them here for you. I propose this be accepted and we carry the business forward unless a[t] some stage in the future I choose to leave. Agreed?
[Ms Richards]: Yes.
[Mrs Webb]: Yes.
[Mrs Turner]: Yes.
[KT]: OK, great. I am happy to start this clean in the new financial year.
The consequence and effect of this discussion was that I take on the role of, and be paid a salary to be permanent Chairman of each of the Heartland Motor Group of Companies so long as I was a shareholder of [BG Webb] (ie the ultimate holding company of the Group).”
50. The last paragraph quoted above was admitted, by agreement of the parties, with a limiting order under s 136 of the Evidence Act 1995 (NSW) as evidence of KT’s understanding. I bear in mind that, as Mr Dick emphasises, KT here characterises this meeting as a “family meeting” and as a “meeting of family members with a material interest in the Group” rather than as a board or shareholder meeting, and I have taken that characterisation into account. However, the question of the effectiveness of the meeting, as a decision of the directors of the companies which binds those companies, is a question of law which does not depend on KT’s understanding of the meeting. I address that question below. I also recognise that KT’s evidence in cross-examination was that there has been a previous practice appointing the chief executive officer as chair of companies in the Group (T40).
51. By an affidavit in reply dated 3 July 2024, made the day before the hearing commenced and after KT had served his affidavit evidence in chief and also after he had served his written opening submissions, Ms Richards addressed one aspect of KT’s evidence. Ms Richards’ evidence was that she did not recall being present at a meeting with KT between January 2019 and June 2019 as described by him or at all; that, obviously, was a statement of lack of recollection, not a denial of such a meeting, although her evidence in cross-examination was not wholly consistent with that position. She then went on to say that she otherwise recalled the period, and by a process of deduction, concluded that the meeting did not occur because, during that time period, she had an “estranged relationship” with KT; correspondence had occurred in respect of his wish to sell his interest in the Group and leave the Group; and
“As a result, there was no occasion after [KT] returned from France in which all of my mother, my sister (Kathryn Turner); [KT] and I were all present during the first half of 2019.”
52. Ms Richards also referred to an occasion on which, when she visited her mother, KT telephoned her mother, Mrs Webb; Ms Richards answered the phone and did not say anything to KT; and she then passed the phone to Mrs Webb. Her evidence was also that Mrs Webb was in hospital for between 6 and 8 weeks in February and March 2019; that she was not present for visits of KT and his children to Mrs Webb or when KT was at Mrs Webb’s unit; and she relied on the lack of reference to the 2019 Meeting in her appointment diary as proof that it did not occur. Her evidence was also that KT had determined his own salary, rather than the family doing so informally or at a meeting of directors or members of companies in the Heartland Group.
53. Ms Richards was cross-examined, by reference to documents which were produced in response to a notice to produce that was issued on the first day of the hearing, where her affidavit had only been served the day before the hearing commenced. I did not understand that Mr Izzo, with whom Mr Boyle appears for KT, asked me to reach an adverse credit finding against Ms Richards, although he contended that her evidence did not establish that the 2019 Meeting did not occur. It is not necessary to reach, and I do not reach, an adverse credit finding in respect of Ms Richards, although I reach the following findings in respect of that evidence. First, Ms Richard’s evidence that she and KT did not speak is plainly qualified by her exchange of text messages with KT at the relevant time, to which I have referred above; at best, that evidence could be correct only if read literally as a denial of spoken communications that left open other forms of communication. Her suggestion that she had an “estranged” relationship with KT plainly did not have the result that there were no communications between her and KT, where there were a significant number of communications over that period by text and email, including in respect of the suggested sale of his interest in the Heartland group and the state of Mrs Webb’s health, and those communications were inconsistent with any suggestion that she was not then communicating with KT. Second, as Mr Izzo points out, communications between KT and Ms Richards must have taken place before 14 February 2019, because the communications concerning KT’s offer to other family members to acquire his shares could not have taken place unless that offer had first been communicated to Ms Richards and other family members. Third, her appointment diary was plainly no more than a note of preplanned engagements (such as pilates appointments and the like) and plainly not capable of supporting a negative inference that a meeting could not have occurred as it was not recorded in that diary, at least if family members found themselves at Mrs Webb’s home at the same time.
The parties’ submissions and determination as to issue 3
54. I should note that, in addressing this and subsequent issues below, I will largely refer to the parties’ written outlines of submissions and supplementary submissions, and only briefly to Mr Dick’s and Mr Izzo’s oral closing submissions. Those oral submissions were helpful in identifying the relevant evidence and matters as to which the parties considered were in issue and the basis on which they put their submissions, but did not substantially advance the parties’ analysis beyond that undertaken in their written outlines of submissions and supplementary submissions. That is not a criticism, since it reflects the comprehensive identification and analysis of those issues in the written submissions.
55. In their further outline of submissions, the Plaintiffs submit that:
“There is no evidence of any formal election by the directors of [KT] to a permanent or standing role as chairman. Rather, the highest the evidence rises is an alleged oral discussion between certain family members at which, [KT] says, he asserted that he would need to be the “full time CEO and Chairman” [KT 26.6.24, [59]]. … even taken at its highest, it does not establish that [KT] was elected chair by the board of directors of every company within the Group consistent with the requirements of each company’s constitution or articles of association. Moreover, the position [KT] asserts is inconsistent with subsequent events; Ms Richards has in fact been appointed as the chair of the board of BG Webb at various board meetings since 2022, and [KT] tellingly did not raise any of the matters on which he now relies at the time of her appointment (Ex P4, [CB 2648-2653].)
56. In oral submissions, Mr Dick also addressed the case law concerning informal meetings of directors, to which I will refer below, and the factual circumstances surrounding the alleged 2019 Meeting and KT’s account of what was said at that meeting. Mr Dick submits that, in the circumstances of the surrounding discussion of a potential sale of KT’s shares in BG Webb, it was unlikely that KT would have sought to convene a family meeting to talk about being chair of the companies, and also likely that other family members would readily have agreed to his holding that position so long as he held shares in BG Webb (T72-73). In oral submissions in reply, Mr Dick returned to the question whether the appointment of a chair could be made in an informal manner, having regard to the significance of that appointment (T120-121).
57. In his outline of submissions, KT responds:
“The authorities recognise that latitude is given to companies in being found to have made resolutions, notwithstanding that no formal meeting has occurred and no resolution has been documented ….
[KT]’s evidence is, in substance, that in 2019, at [the 2019 M]eeting attended by Ms Richards (who at the time was the only other director of Boyded, Heartland Group and Rossfield Nominees) and his mother [Mrs] Turner (who, with [KT] and Ms Richards, comprised the board of BG Webb), it was agreed that [KT] would serve as chairman of all the companies in the group so long as he remained involved and held shares … “.
The Plaintiffs also there refer to contemporaneous documentary evidence which they contend supports KT’s contention that he was the chairman of the companies, which I will address below.
58. Mr Izzo also points out that, by mid-June 2019, KT plainly understood he was chair of companies within the Heartland group and, on 27 June 2019, an internal email (Ex D1, CB 2555) referred to his wish to increase his “Chairman’s salary.” Mr Izzo also points to many subsequent occasions, prior to KT’s departure for a long “sabbatical” in France, where he chaired directors’ meetings of numerous companies within the Heartland group (Ex D1, CB 2564ff; I have assumed these documents were tendered). However, this matter would be explicable by a practice that accepted his taking the role of chair, consistent with the group’s prior practice of combining the role of chief executive and chair, even if the 2019 Meeting had not occurred and no express agreement had been reached that he occupy that role, still less that he do so for as long as he held shares in BG Webb. Mr Izzo also responds to the Plaintiffs’ submission that KT had not raised an issue with Ms Richards acting as chair in board meetings, pointing out that minutes of a meeting of BG Webb on 11 August 2022 (Ex P1, CB 1214; I have assumed this document was tendered) recorded that “[Ms Richards] nominated herself to be Chairperson of the meeting [and] KT stated he should be Chairperson to the meeting” and that a similar issue is recorded in minutes of a meeting of BG Webb on 30 November 2022 (Ex P4, CB 2653). The weight of these comments is reduced by the fact that Ms Richards plainly acted as chair of directors’ meetings while KT was on “sabbatical” and for at least one meeting after his return and that, by mid-2022, a potential dispute as to board control of the companies was likely emerging. KT reiterated that position at directors’ meetings of Bernley and Heartland Group on 29 May 2024, contending that he was “voted Chairperson in 2018 [sic] for the duration of while he is a shareholder” (Ex P9), but by then the dispute was well-advanced.
59. Mr Izzo also addressed the communications between KT and Ms Richards in the first half of 2019, when the 2019 Meeting is said to have occurred, in oral submissions and undertook a detailed review of the texts produced on notice to produce by Ms Richards, and the texts and email correspondence in respect of the proposed sale of KT’s shares in BG Webb (T95ff), which I have addressed above. Mr Izzo emphasised the evidence that KT had in fact acted as chair of board meetings, both before his sabbatical in France and, after his return, from July 2019 until disputes arose (T98). I have had regard to that evidence, although I recognise that it would be consistent with a practice that permitted him to do so, falling short of the board resolution for which he contended. Mr Izzo also submitted that the 2019 Meeting was sufficient to pass a board resolution, where the relevant directors were present at the meeting (T102). I address that proposition below, although it will only advance KT’s position if I could find, on the balance of probabilities, that the 2019 Meeting and the discussion, in substantially the terms for which KT contends, had occurred. The Defendants also provided a helpful written summary of the documents on which they relied in support of the contention that KT was chair of the relevant companies.
60. I have referred to KT’s and Ms Richards’ evidence in respect of the 2019 Meeting above. I recognise that their respective recollections and their evidence as to that meeting could well be distorted by their respective economic interests in KT retaining or Mr Richards (with Ms Hooker) obtaining control at board level of the Heartland Group. The other persons who are alleged to have attended that meeting have died and there is no contemporaneous recording that the meeting occurred or what was said at it.
61. I also have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424]-[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10].
62. In Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [87], in dealing with alleged oral representations, Slattery J observed that:
“The principal conduct of the defendants that [the plaintiff] alleges was misleading or deceptive was the speaking of words in the course of a series of conversations. Special considerations apply when assessing alleged misleading and deceptive conduct in such a context. It is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in proved circumstances: Watson v Foxman (1995) 49 NSWLR 315 at 318 per McLelland CJ in Eq. In assessing whether spoken words were misleading the Court may have to examine relatively subtle nuances flowing from the use of one word, a phrase or a grammatical construction rather than another or the presence or absence of some qualifying word, phrase or condition: Watson v Foxman (1995) 49 NSWLR 315 at 31. The fallibility of human memory and the overlaying of memory with perceptions of self interest leading to sub conscious reconstruction are all hazards of ordinary human experience to which a Court must be alert in assessing whether particular spoken words are misleading or deceptive: Watson v Foxman (1995) 49 NSWLR 315 at 319. Ultimately each element of the cause of action must be proved to the reasonable satisfaction of the Court which means that the Court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not obtained or established independently of the nature and consequences of the fact or facts to be proved”, including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.”
63. I also note the matters relevant to the assessment of spoken words in the context of a contractual dispute, which were identified by Hammerschlag J (as his Honour was then) in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 (“John Holland”) at [95]:
“Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.”
64. I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]-[29]:
“Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin):
“the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.” (emphasis added)
Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”
65. I have here drawn on my summary of the applicable principles in Re Atlas Advisors Australia Pty Ltd (2022) 162 ACSR 509; [2022] NSWSC 705 at [5] and No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd [2022] NSWSC 1345 at [53]ff.
66. As I noted above, I have not reached an adverse credit finding in respect of either KT or Ms Richards, although I have found that Ms Richards’ evidence that the 2019 Meeting could not have occurred because she was “estranged” from KT and because it was not recorded in her diary is not persuasive. The fact that I am not persuaded by Ms Richards’ evidence that the 2019 Meeting could not have occurred does not have the consequence that I should accept KT’s evidence of what was said at that meeting, where a wider range of possibilities is obviously available. I accept Mr Izzo’s submission that, if the conversation for which KT contends had occurred at the 2019 Meeting, it would likely have taken place prior to KT’s attempt to sell his interest in the group and the increasingly fraught discussions whether other shareholders would consent to that course. It is unlikely that such a meeting occurred after KT’s attempt to sell that interest had failed, where his account of what was said commences with his reference to his return from France but does not refer to the failed discussions as to the sale of his interest. I have pointed to the evidence, both before KT departed for France and after his return, that he regularly acted as chair of the companies within the Heartland group and to his employment agreement which was signed in a manner referring to that position, although it is not apparent that Ms Richards as a director or other shareholders had acquiesced in that document. I also recognise that Ms Richards acted as chair of several meetings while KT was in France.
67. I accept that it is possible that an agreement was reached to the effect set out in KT’s evidence, and I think it likely that Ms Richards as a director of companies within the Heartland group and its shareholders had previously accepted, as a matter of practice, that KT would act as the companies’ chair while he was also chief executive of the Heartland group, as his predecessors had done, and the parties proceeded on that basis until Ms Richards and Ms Hooker sought to take control of the companies’ boards in 2022. However, there was a very limited period in which that meeting could have occurred, before KT and Ms Richards became involved in contentious discussions as to the sale of his shares in BG Webb; Mrs Webb was in hospital and not at her home, where the meeting is said to have occurred, for a part of that period; it is doubtful that, once the share sale discussions had commenced, the meeting would have occurred without reference to them and so readily reached the result that KT sought; no contemporaneous documents refer to or record the 2019 Meeting or the resolution for which KT contends; and the other persons present at the suggested meeting have died. I am unable to reach a state of actual persuasion that, and I am unable to find on the balance of probabilities that, the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence, notwithstanding the parties’ acceptance by conduct that KT was chair of the companies over an extended period. KT did not contend that there was, for example, any form of estoppel or acquiescence arising from the conduct of the parties, which would prevent Ms Richards and Ms Hooker subsequently taking the course they have adopted since 2022.
68. Where I am unable to find on the balance of probabilities that the 2019 Meeting or the relevant conversation between KT and Ms Richards, in the presence of other family members, took place in the manner or substantially in the terms set out in KT’s evidence, the 6 December Resolutions that appointed AT as director of the companies, relying on KT’s casting vote, were invalid, irrespective of any question of law as to whether a chair could be appointed in an informal meeting. I will nonetheless address that question against the contingency of an appeal.
69. It is common ground that company directors, particularly of proprietary companies, may pass board resolutions, although a formal meeting has not occurred and the resolution was not formally documented. Mr Izzo points to MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636; (1999) 25 ACSR 78 at 92; [1999] HCA 24, where Powell JA observed, with reference to authority, that even a casual meeting of directors may constitute a board meeting, so long as that represents the will and intention of those meeting; it is not necessary, in order for a decision of a board of directors to operate in law, that it be recorded in a minute; and the intention of the directors of a company may be determined by reference to what they say or do. In Australian Karting Association Ltd v Karting (NSW) Inc [2021] NSWSC 1075 (“Australian Karting”) at [118], Adamson J similarly observed that:
“Latitude is given to companies in being found to have made resolutions notwithstanding that no formal meeting has taken place and no resolution has been documented: MYT Engineering Pty Ltd v Mulcon Pty Ltd (1997) 140 FLR 247 at 266 (Powell JA). The intention of the directors of a company may be determined by reference to what they say or do: H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 (H L Bolton (Engineering)) at 170-173 (Denning LJ, Hodson and Morris LJJ agreeing). In H L Bolton (Engineering), their Lordships found that the intention of a company to occupy a building was clear from its acts. Thus, the fact that there had been no board meeting or resolution did not mean that the company’s intention had not been sufficiently established. ...”
70. The Plaintiffs seek to qualify that position by reference to the decision in Clark v Workman [1920] 1 IR 107 which held that shareholders, in general meeting, cannot appoint the chair of directors’ meetings. KT does not contend to the contrary, and relies instead on the orthodox proposition that directors in a directors’ meeting, held informally, can do so. Mr Dick points to observations in that decision which emphasise the significance of the appointment of a chair, for the exercise of the casting vote, although it should be recognised that company directors make many significant decisions and the appointment of a chair is not necessarily the most significant of them. That decision was also referred to by the Court of Appeal in New South Wales Rugby League Ltd v Australian Rugby Football League Ltd (1999) 30 ACSR 354; [1999] NSWCA 9 at [79], but without reference to its reasoning process.
71. Had it been necessary to decide the question, I would have followed the well-established reasoning in Australian cases that accept that directors’ resolutions may be passed in an informal setting and would have applied that reasoning to a directors’ resolution that appoints a chair of company meetings, as it also applies in respect of directors’ resolutions dealing with other important matters. It seems to me undesirable to treat a single category of resolution, relating to the appointment of a chair, as excluded from that general approach; and it seems to me that to do so would undermine commercial certainty, where some or many Australian proprietary companies may have previously operated on the basis of the appointment of a chair undertaken in an informal way and previously accepted by all directors and all shareholders. It would be an extraordinary and unfortunate result if decisions made on the exercise of a casting vote on that basis were now to be called into question or companies put to the costs of seeking to validate them under s 1322 of the Act.
72. Where I have held that KT has not established that he was appointed as chair at the 2019 Meeting, then KT was not entitled to exercise a casting vote and AT was not effectively appointed a director of Heartland Group or of subsidiary companies by the 6 December Resolutions, in reliance on that casting vote. An issue as to the validity of subsequent resolutions purportedly passed at the Plaintiffs’ instigation to remove AT as director of the several companies therefore does not arise, although it will be necessary to determine the question of the validity of resolutions to appoint Ms Hooker as a director of those companies.
Issue 4 – 13 December 2022 board resolution of Bernley and members’ resolution of Heartland Group
73. The passage of the 6 December 2022 resolutions prompted a period of sustained, repetitive and unattractive manoeuvring by both the Plaintiffs and KT. The first step in that regard was that Ms Richards sought to hold a board meeting of Bernley to cause the execution of a circulating resolution by Bernley as a shareholder in Heartland Group to remove AT as a director of Heartland Group and appoint Ms Hooker as a director of that company.
74. It appears that KT was unable to attend the proposed board meetings and, by letter dated 13 December 2022 (Ex P1, CB 828), his solicitors wrote to Ms Richards’ and Ms Hooker’s solicitors and advised that KT met with the general managers of Heartland group on a monthly basis; that he was scheduled to do so that day when the proposed meetings had been called; and the short notice given meant that he could not cancel those meetings to allow him to attend the proposed board meetings. KT there indicated his opposition to the proposed resolutions and drew attention to a suggested breach of manufacturer agreements arising from the appointment of new directors to certain entities within the Heartland group, without the prior consent of certain manufacturers, and a suggested need for manufacturer consent to effect the removal of AT as a director of the companies. He also identified the potential risk to the Heartland group if the steps taken by Ms Richards and Ms Hooker amounted to a default under the agreements between the manufacturers and Heartland group, potentially enlivening termination rights under those agreements. There is other evidence of inquiries made by the motor vehicle manufacturers as to these matters and of Ms Richards’ somewhat dismissive responses to those inquiries (Ex P5, CB 2797, 2816, 2832, 2835, 2841). It is not necessary to determine whether KT’s concerns as to these matters were well-founded to determine the separate issues in this hearing.
75. On 13 December 2022, the board meeting of Bernley took place in KT’s absence, attended by Ms Richards and Ms Hooker (Ex P1, CB 830-831). The minutes of that meeting recognised that Boyded was a shareholder in Heartland Group but stated that it could not exercise any voting rights attached to that share. I find below that that view was incorrect. The board resolved that Bernley as sole shareholder of Heartland Group exercise its entitlement to vote on the members’ resolutions to remove AT as a director of Heartland Group and appoint Ms Hooker as a director of Heartland Group, and that the resolutions be passed as circulating resolutions pursuant to s 249A of the Act. Bernley (but not Boyded, the other shareholder in Heartland Group, subject to the dispute noted below) then executed a circulating members’ resolution of Heartland Group by which it removed AT as a director of Heartland Group and appointed Ms Hooker as a director of Heartland Group (Ex P1, CB 838). KT contends (POD [28]) that that circular resolution was not validly passed, because Boyded was also a member of Heartland Group and the resolution could not be passed by circular resolution executed only by Bernley.
76. The effect of this resolution depends on the status of the shareholdings in Heartland Group, which in turn depends on the effect of earlier transactions that took place on 28 June 2013 concerning Heartland Group. The Plaintiffs identify two possible analyses of those transactions. The evidence does not establish and it is not necessary to decide which analysis is applicable. The first is that, if the Heartland Group Acquisition (as defined) occurred prior to the Bernley Share Transfer (as defined), then the Bernley Share Transfer comprised a transfer of shares in Heartland Group to an entity which it controlled, Boyded, within the meaning of s 259C(1) of the Act; the Bernley Share Transfer was void; and Bernley has at all times since 28 June 2013 been the sole member of Heartland Group (APC [12]). KT responds (POD [12]), in respect of that analysis, and I accept for the reasons noted below, that Boyded is and at all material times was the trustee of the Trust; the Trust is a discretionary trust; neither Heartland Group nor any of the companies it then controlled have at any relevant time had a beneficial interest in the Trust; so the transfer of the share in Heartland Group to Boyded was not void by reason of s 259C of the Act.
77. The Plaintiffs alternatively contend (APC [13]) that, if the Bernley Share Transfer occurred prior to the Heartland Group Acquisition, Heartland Group obtained control (within the meaning of s 259E of the Act) of an entity that held shares in Heartland Group, Boyded, within the meaning of s 259D(1)(a) of the Act; by operation of s 259D(3) of the Act, no voting rights attached to the share held by Boyded in Heartland Group could be exercised whilst Heartland Group continued to control Boyded; and Bernley has at all times since 28 June 2013 been the sole member of Heartland Group entitled to vote on any members’ resolution. KT responds (POD [13]), in respect of that analysis, and I also accept for the same reasons, that the transfer of a share in Heartland Group was a transfer to Boyded as trustee of the Trust; neither Heartland Group nor any of the companies it then controlled had a beneficial interest in the Trust; and Boyded’s entitlement to vote its share in Heartland Group was not affected by s 259D(3) of the Act, by reason of s 259D(5)(b) of the Act.
78. It is common ground that Bernley was not the sole shareholder of the Heartland Group, nor the sole shareholder entitled to vote on the resolution, unless Boyded did not hold that share by reason of s 259C(1) of the Act or was not entitled to vote that share by reason of s 259D(3) of the Act. It is also common ground that neither of those provisions would apply, and Boyded would be entitled to vote that share, if either s 249C(1)(b) or s 259(d)(5)(b) apply, because Boyded holds its share in Heartland Group as trustee (as is the case) and neither Heartland Group nor any entity it controls has a beneficial interest in the Trust. There is no suggestion that any controlled entity of Heartland Group has such an interest and the only question is whether Heartland Group has such an interest.
79. In their opening written submissions, the Plaintiffs contend that the share held by Boyded in Heartland Group was either invalidly transferred to Boyded by reason of s 259C of the Act or could not be voted on resolutions by reason of s 259D of the Act, and recognise the disputed steps in that analysis as follows:
“the effect of those provisions was that, regardless of the order of those two transactions, the resulting position since 2013 was that Bernley was either:
a. the sole member of Heartland Group (relevantly, for the purposes of s 249B(1) of the Act), because Bernley’s transfer of one of its shares in Heartland Group to [Boyded] was void pursuant to s 259C(1) of the Act; or alternatively
b. the sole member of Heartland Group entitled to vote (relevantly, for the purposes of s 249A(2) of the Act), because on and from Heartland Group’s acquisition of control of [Boyded] through Rossfield Nominees, [Boyded] could not exercise any voting rotes attached to its share in Heartland Group by operation of s 259D(3) of the Act.
[KT’s] solicitors have asserted in correspondence that exceptions, specifically those in either ss 259C(1)(b) or 259D(5)(b) apply so as to render s 259D inapplicable, with the result that [Boyded] both validly received and can exercise its voting rights in respect of its one share in Heartland Group. One of those exceptions would apply if [Boyded] held its share in Heartland Group in its capacity as trustee of a trust in which Heartland Group has no beneficial interest. [Boyded] is the trustee of the Rossfield Group Trust (Trust), and it may hold its share in Heartland Group for the benefit of the Trust. Regardless, Heartland Group was prior to 2013, and remains, both a discretionary object of the Trust, and at least from 2010, has had fixed, unpaid beneficial entitlements held pursuant to the Trust. It follows that Heartland Group has a beneficial interest in the trust, and neither of those exceptions applies.”
80. First, the Plaintiffs contend that Heartland Group has an interest in the Trust because it is a discretionary object of the Trust. Mr Dick puts the key and contentious step in this analysis, in opening written submissions, as follows
“… the [P]laintiffs’ principal submission is that a sufficient “beneficial interest” in the Trust arises in respect of a discretionary object of the Trust for the purposes of ss 259C(1)(b) and 259D(5)(b) of the Act. A discretionary object of a discretionary trust has a beneficial interest “in the trust” (as distinct from, for example, a fixed beneficial in the trust property) insofar as it has a right to due administration of the trust, including to compel the trustee to act in good faith and give due consideration to the exercise of its discretionary powers, see, eg: Kennon v Spry (2008) 238 CLR 366 at [74], [125].”
81. Mr Dick also addressed the scope of ss 259C and 259D of the Act and the exceptions to those sections in oral submissions (T83ff) and, in reply, Mr Dick again emphasised the Plaintiffs’ construction of the exceptions to s 259C-259D of the Act, and the distinction that the Plaintiffs draw between a “beneficial interest in the Trust” and a “beneficial interest in Trust property”, and their reliance on the unpaid distribution to Heartland Group as establishing an interest in the Trust property in its part, which I address below (T123-124).
82. Mr Izzo responds, in opening written submissions, that ss 259C and 259D of the Act do not operate as the Plaintiffs contend in the circumstances of this case, and Boyded was entitled to vote as a member of Heartland Group and the purported resolution passed on 13 December 2022 was invalid by reason of Boyded’s exclusion from voting (DS [18]-[38]). Mr Izzo refers to cll 3 and 4 of the Trust Deed for the Trust (Ex P1, CB 403ff) which provide that the trustee has an absolute discretion as to how to apply the Trust property, as to both income and corpus, among the “General Beneficiaries”, which it is common ground include Heartland Group. Both parties rightly accept that the rights of a discretionary object in the position of Heartland Group are a right to due administration of the trust, and Mr Izzo submits that a person with an interest of that kind does not have a beneficial interest in the trust property: Commissioner of State Revenue v Serana Pty Ltd (2008) 36 WAR 251; [2008] WASCA 82 (“Serana”) at [53], [122]-[129], [135], [139].
83. Mr Izzo also rightly draws attention to the observation of Brereton J in Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301 at [41] that:
“a discretionary trust does not have beneficiaries in the traditional sense, whose interests together aggregate the beneficial ownership of the trust property. Instead there is a class of persons, usually described in wide terms, who are the objects of a trust power to appoint either income or corpus or both to selected members of the class. The members of the class are objects of a trust power, rather than beneficiaries in the strict sense. They do not have a proprietary legal or equitable interest in the trust fund… They have no beneficial interest in the trust property; they are not persons for whose benefit the trust property is held by the trustee; at the highest they are members of a class of persons for the benefit of some one or more of whom the trustee may in due course hold property if it so determines. At best, they are potential beneficiaries, not beneficiaries.”
84. Mr Izzo takes issue with Mr Dick’s submission distinguishing between the reference to “a beneficial interest in the trust” in ss 259C(1)(b) and 259D(5)(b) of the Act and a beneficial interest in the trust property. Mr Izzo submits that, obviously enough, the meaning of “beneficial interest in the trust” in these sections is a question of statutory construction. He submits, and I accept, that the phrase “beneficial interest”, when used in connection with a “trust”, directs inquiry to whether the company has a proprietary interest in the trust property, where the phrase “beneficial interest” is itself ordinarily used in connection with property, rather than to beneficiaries’ interests in a discretionary trust: MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494 at [34], Serana at [121], [135]; [1999] HCA 51. Mr Izzo also points to the difficulty that, if a potential beneficiary of a discretionary trust (in the sense of being among the class of persons for whose benefit the trustee may hold property if it so determines) has a “beneficial interest” for the purposes of ss 259C(1)(b) and 259D(5)(b), then the scope of persons caught by the provisions is unreasonably extended. He submits and I also accept that, at least so far as the object of the provisions includes maintenance of a company’s capital (Re National Australia Bank Ltd (2020) 149 ACSR 323; [2020] NSWSC 1761 at [25]), the construction for which the Plaintiffs contend would not advance that objective because a potential beneficiary has no right in any share which is the subject of the trust unless and until a power of appointment is exercised in its favour. Mr Izzo also put further matters in support of this view which I need not address. Mr Izzo also made detailed oral submission as to the operation of ss 259C-259D of the Act and the concept of “interest in the trust” in the exceptions to those sections (T107ff).
85. For the reasons put by Mr Izzo, I do not accept the Plaintiffs’ submissions as to this aspect of this issue. The language “interest in the trust” in s 259C(1)(b) and s 259D(5)(b) appears to me to be directed to an interest in assets of the trust and it can be given no other coherent meaning where a trust is not a legal entity, and the Heartland Group can have no “interest in the trust”, as a concept or collection of legal rights and obligations, as distinct from an interest in the assets of the trust. Specifically, I do not accept the Plaintiffs’ submission that the right of a discretionary object of a discretionary trust to due administration of the trust can properly be characterised as an “interest in the trust” for the purpose of these sections, with the result that persons who have little or no prospect of an ultimate exercise of discretion in their favour are treated as having an “interest in the trust”.
86. Alternatively, the Plaintiffs contend that Heartland Group has an interest in the Trust because, from 2010, it has had unpaid beneficial entitlements held pursuant to the Trust (Ex P2, CB 1268). Mr Dick here submits that:
“… Heartland Group also has (or, at least, had at 28 June 2013) a fixed beneficial entitlement to Trust property in the nature of unpaid present entitlements, such that it was not a ‘mere’ discretionary object, but had a direct beneficial interest in Trust property.
The Trust’s financial statements for the financial year ended 30 June 2017 record in its statement of financial position non-current liabilities described as “[t]rade and other payables” of just under $40 million. Note 7 to that entry provides further descriptions of that entry, and relevantly includes an entry for $4,816,548 described as:
“Heartland Group Pty Limited – unpaid Distributions pre 2010”
The inference to be drawn from that business record is that, at all times between at least 2010 and 30 June 2017, Heartland Group had a fixed beneficial entitlement to unpaid distributions declared in its favour out of the Trust totalling just over $4.8 million.”
87. The Defendants contend to the contrary. Mr Izzo submits that ss 259C(1)(b) and 259D(5)(b) refer to shares that are held by an entity as trustee; the “trust” the subject of those provisions is a trust of the “shares” in question; and the single share in Heartland Group that is held by Boyded has not been the subject of any appointment in favour of Heartland Group as contemplated by cl 4 of the Trust Deed, and remains part of the capital of the Trust (Ex P2 , CB 1267). I accept the factual basis of that submission.
88. Mr Izzo also points out, and I accept, that a distribution of income has apparently here been made to Heartland Group pursuant to cl 3 of the Trust Deed, and points out that cl 3(i) of the Trust Deed provides that:
“the Trustee may, in each Accounting Period, pay apply or set aside the whole or such part (if any) as it shall think fit of the net income of the Trust Fund of that Accounting Period to or for the benefit of or for all or such one or more exclusive of the others or other of the General Beneficiaries from time to time in such proportions and in such manner as the Trustee in its absolute discretion thinks fit…”
89. Mr Izzo also points out that cl 1(ix) of the Trust Deed defines “set aside”, in relation to a Beneficiary, as including “placing sums to the credit of such Beneficiary in the books of the Trust Fund”. Mr Izzo submits, and I accept, that the result of making a distribution of income under that clause is to give Heartland Group a vested interest in the sums distributed to it: Re Vestey’s Settlement [1951] Ch 209 at 217, 224; Inland Revenue Commissioner (NZ) v Ward [1970] NZLR 1 at 17, 30. Mr Izzo also refers to Fischer v Nemeske Pty Ltd (2016) 257 CLR 615; [2016] HCA 11 at [96], where Gageler J observed that:
“Once it is accepted — as it was in Re Baron Vestey’s Settlement; Lloyds Bank Ltd v O’Meara [1951] Ch 209; [1950] 2 All ER 891] and in Commissioner of Inland Revenue v Ward [[1970] NZLR 1] — that a trustee can “apply” trust property to the advancement of a specified beneficiary by resolving to allocate trust property unconditionally and irrevocably to the benefit of that beneficiary, it is difficult to see any reason in principle why such an unconditional and irrevocable allocation of trust property must take the form of an alteration of the beneficial ownership of one or more specific trust assets. The allocations in each of those cases were of specified proportions of a single monetary amount which stood to the credit of a bank account which the trustee held as trust property at the time of the resolution. The allocations were held to be sufficient to result in the specified beneficiaries to whom the allocations were made each obtaining an immediate absolute beneficial entitlement to the sums so allocated. It appears that the sums in question in the first case were soon afterwards paid into separate bank accounts, but that fact does not appear to have been treated as relevant to the holding. The sums in question in the second case were not paid into separate accounts for many years.” [emphasis added]
90. In Australian Karting at [108], to which Mr Izzo also referred, Adamson J similarly observed that:
“A distribution of trust property has the effect of removing the amount distributed from the corpus of trust property. If the distribution is paid to the beneficiary, the distribution is complete. If the distribution is made but not yet paid to the beneficiary, the amount of the unpaid distribution becomes the subject of a “bare” or “absolute” trust in favour of the beneficiary to which the distribution has been made. As the beneficiary’s entitlement in such a case is absolute (by reason of the distribution), the beneficiary can call for the distribution (under the principles of Saunders v Vautier (1841) 49 ER 282) or obtain judgment for the amount of the distribution in an action for money had and received …” [emphasis added]
91. Mr Izzo submits that, obviously enough, the distribution of income to Heartland Group is not the same thing as an appointment or distribution of the share, which remains undistributed, and this case is different to Fischer v Nemeske where what was distributed was the capital of the trust, comprising shares in a company.
92. Here, it seems to me that the distribution of the unpaid distributions declared by the Trust in favour of Heartland Group in the sum of $4.8m plainly give that company a beneficial interest in that amount, which is to the extent removed from the Trust property; but they do not give that company a beneficial interest in the Trust, or any other “interest in the trust” in the relevant sense. Again, to read the sections in that way would unreasonably expand their scope, and lead to arbitrary results where the applications of the sections to shareholdings in a company group would potentially alter with no more than the making of money distributions to discretionary beneficiaries of trusts. Companies and their shareholders would have no reason to anticipate such a result, and no legislative policy would be served by it. I also do not accept the Plaintiffs’ submission as to this alternative claim on this basis.
93. The Plaintiffs also put a submission in reply that the dispute as to the application of s 249C and s 249D of the Act, and whether Boyded was deprived of the right to vote at a meeting of Heartland Group was largely an “arid one”, because:
“There can be no doubt that, had a general meeting of Heartland Group been formally convened on the requisite 21 days’ notice, a members’ resolution in identical terms to that signed by [Bernley] would have been passed.”
94. I do not accept that submission. It is not an answer to the fact that minority shareholder(s) have been deprived of the right to vote that the controlling shareholder would have disregarded any matters they raised at a shareholders meeting and overridden their wishes in any event. That proposition also assumes that the Plaintiffs and those advising them would not have engaged genuinely in the process of consultation at a shareholders meeting and that their wishes were impervious to reasoned discussion. That proposition also should not be accepted here, where careful attention would likely need to be given to the impact of a change of control of the companies or any change in the identity of their directors on the relationship between the Heartland group of companies and the motor vehicle manufacturers, given the manufacturers’ proper commercial interest in the identity of the controllers of the Heartland group.
95. The Plaintiffs alternatively seek a declaration under s 1322(4)(a) of the Act that the circular resolution executed by Bernley was not invalid by reason of the failure to convene a meeting of the companies (APC [29]-[29A]) and, implicitly, by the fact that Boyded was not permitted to vote upon it. KT responds that no relief is available under s 1322 because the criteria under s 1322(6)(a) and (c) of the Act are not satisfied. In oral submissions, Mr Dick also addressed the potential application of s 1322 of the Act and the outcome of the shareholder meeting, had it been held and Boyded attended it (T86). Mr Izzo also addressed the Plaintiffs’ reliance on s 1322 of the Act in oral submissions (T111ff) and, in oral submissions in reply, Mr Dick also sought to distinguish the case law relating to ss 1317S-1318 of the Act, so far as it requires proof of honesty, and the position under s 1322 of the Act (T124-125).
96. The Court can only make an order under s 1322(4) if it is satisfied that the act, matter or thing, or the proceeding is essentially of a procedural nature; or the person or persons concerned in or party to the contravention or failure acted honestly; or that it is just and equitable that the order be made (s 1322(6)(a)(i)-(iii)). The conditions specified in s 1322(6)(a)(i)-(iii) are not cumulative, and only one of those conditions needs to be satisfied in order to allow an order to be made under s 1322(4): Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd (2005) 194 FLR 322; (2005) 55 ACSR 185; [2005] NSWSC 1005 (“Cordiant”); Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725 (“Gosford Christian School”) at [80]. The section should be given the wide application recognised by the High Court in Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14. French CJ there observed that that section should be construed widely to give effect to its policy and did not consider the section was limited to where there was disobedience of a prohibition or non-compliance with an obligation. Hayne, Crennan and Kiefel JJ similarly rejected the view that s 1322(4) was limited to validating actions that were able to be achieved under the Act or a company’s constitution or was not available for actions that could not otherwise be achieved. Gageler J observed that a contravention of the company’s constitution may occur if something happened differently to what the constitution required. However, the potential width of the application of the section does not exclude the relevance of injustice arising from the relevant event, to which I will refer below, in determining whether it should be applied in a particular case. Mr Izzo submits and I understand it to be common ground that the Plaintiffs bear the onus of establishing that the criteria specified in s 1322(6) of the Act are satisfied: Australian Hydocarbons NL v Green (1985) 10 ACLR 72 at 83.
97. Mr Izzo submits that s 1322(6)(a)(i) would only be satisfied if the contravention which occurred, which is not merely the use of a circulating resolution but the fact that Boyded was excluded from voting on the resolution, was “essentially of a procedural nature”. He points to Palmer J’s observation in Cordiant that a wrongful denial of a shareholder’s statutory right to vote at a meeting is a denial of a substantive right and is not of a procedural nature. I accept that submission.
98. Mr Izzo also points out that s 1322(6)(a)(ii) only applies if it is shown that the person or persons concerned in the contravention, here Ms Richards and Ms Hooker, “acted honestly”. The case law, in respect of the requirement for honesty in ss 1317S and 1318 of the Act, indicates that an applicant for relief under those sections must positively satisfy the Court that his or her conduct was honest. While I accept those sections are directed to a different situation, it still seems to me that it will at least be difficult for a person to establish honesty without leading his or her evidence of the facts which may support that finding. Mr Izzo also points out that the requirement for honesty requires that the relevant person has not only acted without deceit or conscious impropriety, and without intent to gain improper benefit or advantage, but also without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt at all has been made to carry out the duties and obligations imposed by the Act or the general law: Re iCandy Interactive Ltd (2018) 125 ACSR 369; [2018] FCA 533 at [56]; Re Pacific Springs Pty Ltd (2020) 148 ACSR 454; [2020] NSWSC 1240 (“Pacific Springs”) at [175] (reversed on appeal on other grounds). I am not persuaded that Ms Richards, who did not give evidence of her decision making in respect of this matter, or Ms Hooker, who did not give any evidence, have affirmatively established honesty in the relevant sense.
99. Mr Izzo points out that s 1322(6)(a)(iii) requires it to be shown that it is “just and equitable” that the order sought by the Plaintiffs be made. He points out that the authorities indicate that concept confers a discretion which is to be exercised judicially, that is, by reference only to such considerations affecting the transaction as, on an examination of the legislation, may be seen to be material to the decision to be made: The Chinese Cultural Club Ltd (2004) 83 FLR 33; (2004) 49 ACSR 568; [2004] NSWSC 432 at [19]; Pacific Springs at [176]-[177]. Mr Izzo identifies several relevant considerations, namely that Boyded was denied the opportunity to vote on a resolution on which it was entitled to vote; and the significance of the denial of that opportunity must be assessed in the context of the rights which the Act and the constitution gives to shareholders in the company, including Boyded’s rights under s 249S of the Act to attend and participate in any general meeting at which a resolution to remove or appoint directors was to be considered. Mr Izzo submits that the denial of those rights occurred in circumstances where, it may be inferred, the Plaintiffs must have been advised at least of a real risk that they ought to have held a general meeting to consider any resolution to remove or appoint directors. I do not draw that inference but do recognise that course was taken, more than once, in steps directed to the Plaintiffs’ obtaining control of the board, where both parties were manoeuvring for advantage, and there is no reason to think it reflected any naïve misunderstanding of the statutory requirements. I also do not accept the Plaintiffs’ submission, in effect, that the outcome of such a meeting would be a foregone conclusion, implicitly because a corporate representative or proxy holder for Bernley would not genuinely have engaged in any discussion on the merits at a shareholders meeting, for the reasons that I did not accept that submission in respect of the application of ss 259C-259D of the Act. That proposition, in any event, undermines rather than advances a claim to relief under s 1322 of the Act. For these reasons, I am not satisfied that it would be just and equitable to make an order under s 1322(6) of the Act here.
100. In order to obtain relief under s 1322 of the Act, the Plaintiffs must also establish that “no substantial injustice” has been or is likely to be caused to any person, under s 1322(6)(c) of the Act and a validating order cannot be made if it would cause substantial injustice: Primary Securities Ltd v Aurora Funds Management Ltd [2020] NSWCA 230 at [146]. Mr Izzo submits and I accept that this requirement directs attention to whether the order would be unjust in the sense of causing such prejudice overall as to be unfair or inequitable, taking into account the interests of those directly affected: Pacific Springs at [178]. Mr Izzo points to the possibilities that AT was a director of Boyded at the time of the passage of the three circular resolutions or that KT had a casting vote on the board of Boyded at the time of the passage of the three circular resolutions. I have not accepted either proposition. Nonetheless, it seems to me that there would be substantial injustice in exercising the Court’s power of validation so as to advance the denial of Boyded’s right to vote on this issue, whatever the result of that vote would ultimately have been.
101. For these reasons, Boyded was entitled to vote on the relevant resolutions and was deprived of the opportunity to do so. No issue arises as to the validity of any resolution to remove AT as a director, since the finding that I have reached above has the consequence that he was not properly appointed as a director by the exercise of KT’s casting vote. However, the appointment of Ms Hooker as a director of Heartland Group was invalid, and any subsequent resolution that depended on the exercise of her vote as a director of Heartland Group was also invalid.
Issue 5 – 13 December 2022 board resolution of Heartland Group and members’ resolution of Boyded
102. An issue also arises in respect of a board meeting of Heartland Group held and a members’ resolution of Boyded executed on the same day, 13 December 2022. The minutes of a meeting of directors of Heartland Group held on that day (Ex P1, CB 832) record that Ms Richards and Ms Hooker resolved that Heartland Group exercise its voting power to remove AT as a director of Boyded and appoint Ms Hooker as a director of Boyded and Ms Richards subsequently executed a circulating resolution to that effect in respect of Boyded (Ex P1, CB 836, 838).
103. It is common ground that the sole issue that arises as to the validity of this resolution is whether Ms Hooker had by this time been validly appointed, and AT removed, as a director of Heartland Group, such that the votes of Ms Hooker and Ms Richards authorising this resolution comprised a vote of the majority of the board of Heartland Group. The parties accept that this issue is determined by the resolution of issue 4 above. I have found above that Ms Hooker was not validly appointed as a director of Heartland Group; the resolution authorising Heartland Group to execute the circulating resolution of Boyded was therefore not validly passed; AT was not validly removed as a director of Boyded, although nothing turns on that where he was not previously validly appointed to that position; and Ms Hooker was not validly appointed as a director of Boyded.
Issues 6-8 – Expiry of AT’s term as director of several companies
104. The Plaintiffs also contend (APC [37]-[43]) that AT’s term of office as a director of several companies has expired, if he was validly appointed as director of those companies. The Defendants admit that matter in respect of several companies. A contest remains as to the position in respect of Heartland Group and Rossfield Nominees and specifically whether AT’s term as director of each of those companies expired on 31 December 2023, if he had validly been appointed as a director of those companies and had not previously been removed as a director. It is strictly not necessary to decide this issue, where I have held that AT was not validly appointed as a director of those companies by the exercise of a casting vote by KT. However, I will address the issue against the contingency of an appeal.
105. The parties have identified the factual and legal issues that arise in respect of this matter in their Joint Chronology and Summary of Issues. The Plaintiffs contend that, if AT was previously appointed as a director of Heartland Group and Rossfield Nominees, his term as a director of each of those companies expired on 31 December 2023, on the proper construction of the articles of association of each company (PS, [34], [35(c)]; PFS, [49]-[57]). KT responds (POD [42]-[43]; DS, [40]-[50]) that, although it was a requirement that an annual general meeting of those companies be each calendar year, the articles of association of each company provides that a director who is appointed by other directors of the company continues to hold office until the next following ordinary general meeting of the company; no ordinary general meeting of the companies has been held since 6 December 2022; and AT continues to hold office as a director of the companies on that basis.
106. Relevantly, art 53 of the articles of association of Heartland Group (Ex P1, CB 332-333) provides that:
“An Annual General Meeting of the Company shall be held in accordance with the provisions of the [Companies] Code. All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings …
107. Section 240 of the Companies (NSW) Code in turn provides for a general meeting, to be called the “annual general meeting”, to be held at least once in every calendar year. Article 54 in turn permits the directors to convene extraordinary general meetings. Article 83 (Ex P1, CB 337) provides that:
“The Directors shall have power at any time and from time to time to appoint any other person as a Director either to fill a casual vacancy or as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed. But any Director so appointed shall hold office only until the next following Ordinary General Meeting of the Company and shall then be eligible for re-election.”
The reference to an “Ordinary General Meeting” here is apparently a reference to an annual general meeting, where the articles otherwise distinguish between annual general meetings and extraordinary general meetings.
108. Article 80 of Rossfield Nominees’ articles of association similarly provides that:
“The Directors shall have power at any time and from time to time to appoint any other person as a Director either to fill a casual vacancy or as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with these Articles and any director so appointed shall subject to these articles hold office until the next annual general meeting of the Company.”
109. In their initial submissions, the Plaintiffs put that:
“… even if [AT] had been validly appointed as a director of Heartland Group, and was not removed by Bernley as its sole voting member on 13 December 2022, his term as director has in any event expired. The articles of association of Heartland Group provide that a director appointed by the board only until the next ordinary general meeting of Heartland Group. Whilst no annual (or ‘ordinary’) general meeting of Heartland Group has been held since 6 December 2022, the latest time at which such a subsequent general meeting should have been convened was 31 December 2023, such that if [AT] was validly appointed as a director, and remained a director by that time, his office in any event expired, see: see: Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883 [“Consolidated Nickel”]. …
[I]n respect of Rossfield Nominees, the term of a director appointed by the board expires at the next annual general meeting. Whilst no such annual general meeting has since occurred, the latest date after 6 December 2022 that such an annual general meeting could have occurred was 31 December 2023, such that Anthony’s term of office will also have expired at that time.”
110. In further submissions, Mr Dick elaborated on that submission:
“On the proper construction of those articles of each of Heartland Group and Rossfield Nominees, a director appointed by the board is to hold office until either the next annual general meeting is in fact held or, if no such meeting is held, the last date after their appointment at which an annual general meeting should have been held. That is an incident of the canon of construction that a document will not be construed such as to permit a party to take advantage of their own wrong, namely by permitting the directors to extend the term of their office by failing to convene an annual general meeting as required, see: [Consolidated Nickel] at 888; Camenzuli v Hawke [2022] NSWSC 168 [“Camenzuli”] at [65] ff.
It is common ground that no annual general meeting of either of Heartland Group or Rossfield Nominees was held in the calendar year 2023, or indeed at any time since 6 December 2022: POC, [42(c)], [43(c)]; POD, [42(d)]; [43(d)]. In those circumstances, [AT’s] term of office as a director of each of those companies (if validly appointed) expired on the last day after his appointment on which an annual general meeting should have been held, being 31 December 2023.”
111. Mr Izzo responds that:
“The Plaintiffs submit that on their proper construction these provisions have the effect that, where no annual general meeting is held, the director’s appointment expires on the last date after their appointment at which an annual general meeting should have been held (PFS [55]). That construction is not supported by the text of the provisions. What is significant about the language of both provisions is that they are concerned with and premised upon the occurrence of an event, namely the holding of a meeting. In terms, both provisions are silent as to any temporal limitation on office, in the sense that neither provision states that the lapsing of the time period for a meeting is the determiner of a director’s office.
… there is a serious question as to the correctness of the principle of law for which [Consolidated Nickel] is said to stand. The principle that a person cannot take advantage of their own wrong is, in truth, not a principle of construction at all. It is simply a principle that may preclude a person obtaining relief in particular instances. Further, a construction that holds that a person’s office as director is vacated after the company has failed to hold an annual general meeting, despite no other director having been appointed in that person’s stead, is capable of causing significant inconvenience if it would mean invalidation of corporate acts in circumstances where the directors may not have appreciated the defect. That is particularly so in a case such as Re Consolidated Nickel Mines Ltd, where all directors were required to retire and it would follow that there was no director validly in office for the relevant period.”
112. In oral submissions, Mr Dick reviewed the case law as to the question whether AT’s office was vacated on the failure to call an annual general meeting by 31 December 2023 (T91ff). His submissions rightly highlighted the difference in approach between Consolidated Nickel and cases which have followed it, including Singh v Singh; Flora t/as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386 (“Singh v Singh) and Gosford Christian School and the approach more recently adopted by Ward CJ in Eq in Camenzuli. In oral submissions (T116ff), Mr Izzo also addressed the relevant case law in respect of the expiry of AT’s term as a director of the companies, if he validly had been appointed, with particular focus on the decision of Ward CJ Eq in Camenzuli and, in oral submissions in reply, Mr Dick returned to the analysis of that decision (T126).
113. I now turn to the applicable case law. The decision in Consolidated Nickel concerned the application of art 101 of that company’s articles of association which provided that:
“At the ordinary meeting in 1906 all the directors, and at the ordinary meeting in every subsequent year one-third of the directors for the time being respectively, or if their number is not a multiple of three, then the number nearest to one-third, but not exceeding one-third, shall retire from office. A retiring director shall retain office until the dissolution of the meeting at which his successor is elected.”
114. Sargant LJ there observed (at 888) that:
“No ordinary meeting was held or called in 1906 or 1907, and the liquidator’s contention is that all the directors vacated office on December 31, 1906, which was the last day on which a meeting of the company for that year could have been held. That contention appears to me to be well founded.
A director on his appointment does not ordinarily step into an office which is perpetual unless terminated by some act, but into an office the holding of which is limited by the terms of the articles. The meaning of article 101 is that the holding of the office of the director was only to last until the end of 1906, or until the earlier date on which the ordinary meeting for that year was held. … The duty of the directors was to call a meeting in 1906 and 1907, and they cannot take advantage of their own default in that respect and say that they still remain director.”
115. This decision has stood for many years and has been followed by many Australian decisions. I do not accept Mr Izzo’s submission that the correctness of the principle for which it stands should be reconsidered by a judge at first instance, and there is no reason to think that it or the decisions that have applied it are plainly wrong. To the contrary, to the extent that they avoid creating an incentive for directors to fail to call general meetings, so as to extend their period in office, these decisions seem to me to promote good corporate governance.
116. In Gosford Christian School, Barrett J considered the construction of an article of association which provided that a director “shall retire from office at the conclusion of the annual general meeting which shall elect the directors for the ensuing year”. His Honour recognised (at [36]) that, on one view, an article that required a director’s retirement from office “at the conclusion of the annual general meeting” could mean that:
“there can be no retirement and hence no vacancy unless an annual general meeting takes place, since there can otherwise be no ‘conclusion’ of the annual general meeting and therefore no occasion for retirement and the creation of the resultant vacancy”.
However, his Honour held (at [37]) that such a construction was inconsistent with authority, including Consolidated Nickel.
117. In Singh v Singh, Barrett JA considered an article which provided that each member of the executive committee “shall hold office until the next annual general meeting when they shall retire”. His Honour observed (at [70]) that, where a provision “limit[s] tenure to the next annual general meeting and compel[s] retirement at that meeting”, then office holders are taken to have vacated office on the last day on which the annual general meeting could have been held and it made no difference that no meeting was held.
118. In Luen Fook Tong Incorporated v Lowe [2011] NSWSC 1004 (“Luen Fook Tong”), an association’s rules did not expressly provide for the retirement of committee members at a specified time but provided that each member “shall, subject to these rules, hold office until the conclusion of the annual general meeting following the date of the member’s election but is eligible for re-election”. Slattery J there expressed the view (at [66]-[67]) that, had it been necessary to consider the issue, he would have distinguished Singh v Singh on the basis that the rule did not require the members of the committee to retire, by contrast with the article in Consolidated Nickel.
119. The parties also refer to Camenzuli, where Ward CJ in Eq (as the President then was) undertook a detailed review of the relevant authorities. Her Honour there observed (at [67]) that:
“The plaintiff accepts that it is a well-settled principle of construction that may properly be taken into account in cases such as the present that the Court ought not to adopt a construction that allows one to take advantage of one’s own wrong … (which was relevant in Consolidated Nickel as the directors had there lodged a proof in the winding up of the company on the basis that they were still directors when that was so only due to their own default in not calling an ordinary meeting as required by the company’s articles).”
120. Her Honour also noted (at [69]) that questions of construction are questions of law, and referred to a submission that they ultimately turn on the meaning of the particular document in issue (formed within a particular context, between particular parties) and that judges ought to be wary of placing too great an emphasis on judicial precedent. She observed (at [70]-[71]) that she was not, in any traditional sense, bound by the earlier decisions; that they would be relevant to the extent that the wording of the relevant clause might be said to have some received meaning in particular contexts; and that she was assisted by “the manner in which the conclusion was reached as to the meaning of cognate provisions.” By contrast with Luen Fook Tong, her Honour noted (at [72]) that words such as “when they shall retire” did not seem to her to bear upon the question whether, where no such AGM is held, a clause operates so as automatically to vacate the office of office-bearers, and she did not find the obiter dicta in that decision to be of assistance.
121. Her Honour then observed (at [76]) that:
“Approaching the construction of the relevant clause by reference to its text and in the context of the NSW constitution as a whole, and having regard to the caution to be exercised in construing constitutions of this kind, I have concluded (with some hesitation) that the natural meaning of the words “until the next AGM” is premised on such an AGM occurring, such that if an AGM does not occur then the event on which the termination of office will happen has not arisen and the elected office-bearer continues in office until such time as an AGM is held. I have so concluded because I consider that the contrary construction requires an impermissible distortion of the text of the clause, and the substitution of the requirement that an event occur with the elapsing of the time within which that event was to occur, which is inconsistent with text of the constitution, and the “public element” that shapes the construction of instruments of this kind. The hesitation I have is that this is inconsistent with the interpretation that has been placed on cognate provisions in the line of authority following Consolidated Nickel. However, I consider that those decisions are explicable on the principle of construction that an approach not be adopted which would permit a person to rely on his or her own wrong and/or by reference to an inference that the use of words that have been interpreted in a particular context suggests that such a meaning was intended.”
122. Her Honour also there noted that the application of a principle that one could not take advantage of one’s own wrong had a limited application in that case, where the persons in office were not the same persons as those who were obliged to call the AGM. That cannot be said in this case, as to KT and AT, although I recognise that Ms Richards could also have sought to convene an AGM of Heartland Group and Rossfield Nominees when it was due to be held by 31 December 2023.
123. It seems to me that the facts of this case, involving the construction of a proprietary company’s articles of association, are relevantly indistinguishable from those considered in Gosford Christian School and Singh v Singh, and I would also give little weight to whether an article expressly required retirement at the end of a specified period, where reference to holding office for a period implies that office will cease at the end of that period. If it had been necessary to do so, I would have followed and applied Gosford Christian School and Singh v Singh here, and distinguished the decision in Camenzuli so far as it relied on the absence of reciprocity between those who had failed to call the annual general meeting as to who stood to benefit from the continuance of the directors in office. I would have held that AT had ceased to hold office as a director of Heartland Group and Rossfield Nominees on 31 December 2023 on that basis.
Issues 9 - 11 – 29 May 2024 members’ resolutions of Heartland Group, Boyded and other companies
124. On 23 May 2024, KT gave notice (Ex P1, CB 854ff) to each of Ms Richards and AT (but not Ms Hooker) purporting to convene board meetings on 30 May 2024 of several companies to consider proposed board resolutions of several companies to exercise their respective power to remove Ms Richards as director of their respective subsidiary company. I do not understand there to be any suggestion that Ms Richards was removed as a director of those companies and that matter is background to subsequent events.
125. On 24 May 2024, Ms Richards gave notice to KT and Ms Hooker (Ex P1, CB 864-867) convening two board meetings to occur on 29 May 2024, namely a board meeting of Bernley to consider proposed resolutions exercising its rights as sole voting member of Heartland Group to confirm AT’s removal as a director of Heartland Group (if ever appointed) and reaffirm Ms Hooker’s appointment as a director of Heartland Group; and a subsequent board meeting of Heartland Group to consider proposed resolutions as sole member of the applicable companies, inter alia, to reaffirm AT’s removal, and Ms Hooker’s appointment, as a director of Boyded. On 29 May 2024, Bernley executed a circulating members’ resolution of Heartland Group by which it confirmed both AT’s removal as a director of Heartland Group, if he was ever validly appointed and Ms Hooker’s appointment, if not already validly appointed, as a director of Heartland Group (APC [44], POD [44]; Ex P1, CB 898, 907-908).
126. It is now common ground that these issues raise the same issues as the 13 December 2023 members’ resolutions of Heartland Group and Boyded, and these resolutions were not validly passed for the same reasons as the 13 December 2023 resolutions were not validly passed. Because Bernley was not the sole member or sole voting member of Heartland Group as at 29 May 2024, the resolution purportedly passed by Bernley at that time, appointing Ms Hooker as a director was not validly passed. The Plaintiffs claim to validate those resolutions under s 1322 of the Act is not established for the same reasons its case to validate the 29 May resolutions is not established. Accordingly, Ms Hooker did not become a director of Heartland Group at that time. The resolution to remove AT as a director of Heartland Group was also invalid, but he was not a director at that time for reasons noted above.
127. Also on 29 May 2024, Heartland Group then executed a sole members’ resolution of Boyded, purportedly authorised by prior board resolution of Heartland Group, appointing Ms Hooker (if not already appointed) and removing AT (if validly appointed at the time) as a director of Boyded (APC [51], POD [51]; Ex P1, CB 899-900, 909ff). Because Ms Hooker was not then a director of Heartland Group, the resolution of Ms Hooker and Ms Richards authorising a members’ resolution of Boyded appointing Ms Hooker, purportedly passed at that time, was not valid. The resolution to remove AT as a director of Boyded was also invalid, but he was not a director at that time for reasons noted above.
128. Issue 11, as to members’ resolutions of other companies, is no longer in dispute.
Issues 12 - 13 – 30 May 2024 board resolutions
129. An issue also arises (APC [63]ff) in respect of a board meeting of Heartland Group held on 30 May 2024, attended by KH and AH, which passed a resolution removing Ms Richards as a director of the companies and consequential notifications to the Australian Securities & Investments Commission. The parties have isolated the factual and legal issues that arise in respect of this matter in their Joint Chronology and Summary of Issues. The Plaintiffs contend that, first, AT was not a director of Heartland Group at this time and, second, the purported board meeting was inquorate and a nullity; and KT contends the contrary. While the Plaintiffs rely on several matters for that proposition, I have found above that AT had not been validly appointed as a director Heartland Group; I would have found that his appointment had expired on 31 December 2023 if it were necessary to do so; and it follows that meeting was inquorate and invalid. KT rightly does not seek to validate the meeting under s 1322 of the Act if I reached that conclusion. The Plaintiffs’ alternative position relying on Ms Hooker’s appointment as a director of Heartland Group must fail, because Ms Hooker was not a director of Heartland Group at that time. Issue 13, as to members’ resolutions of other companies, is no longer in dispute.
Issue 14 – 5 June 2024 members’ resolution of Heartland Group
130. On or about 5 June 2024, Bernley again executed a circulating members’ resolution of Heartland Group by which it confirmed both AT’s removal as a director of Heartland Group, if he was validly appointed and remained a director, and Ms Hooker’s appointment as a director of Heartland Group. If Bernley was neither the sole member or the sole voting member of Heartland Group at the time of this resolution, the Plaintiffs alternatively seek a declaration under s 1322(4)(a) of the Act that this resolution was not invalid by reason of the failure to convene a general meeting of Heartland Group (APC [98]-[98A]). It is now common ground that this claim raises the same issues as the 13 December 2022 resolutions, and the Plaintiffs’ claim in respect of this resolution fails for the same reasons as their claim in respect of the earlier resolutions.
Issue 15 – 5 June 2024 members’ resolution relating to TS Management
131. An issue is also in dispute as to the validity of a members’ resolution on 5 June 2024 removing AT as a director of TS Management. On that date, Heartland Group executed yet another members’ resolution of TS Management, purportedly authorised by prior board resolution, removing AT as a director (if validly appointed) of TS Management. The validity of this resolution is challenged on the basis that Ms Hooker was not, at this time, a director of Heartland Group. This issue received little attention at the hearing and the parties accept that it depends upon the issues that I have determined above. It is strictly not necessary to address this issue where the findings that I have reached have the consequence that AT was not a director of TS Management at the relevant time. However, the resolution would also have failed because I have held above that Ms Hooker was not validly appointed as a director of Heartland Group at this time.
Orders and costs
132. I am inclined to think that there should be no order as to costs as to the separate issues and this hearing, where each party has had a measure of success and a substantial measure of failure. However, I will allow the parties an opportunity to make short submissions as to costs. I direct the parties to bring in short minutes of order to give effect to this judgment, including as to costs, within five business days and, if there is no agreement between them, their respective draft orders and submissions as to the differences between them, not exceeding 5 pages in Arial font in one and a half spacing.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2024 | 21,725 |
nsw_caselaw:190e7adc10be7583595bc544 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Haigh & Anor v Haddad & Anor [2024] NSWSC 904 | https://www.caselaw.nsw.gov.au/decision/190e7adc10be7583595bc544 | 2024-07-26T22:25:56.743246+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Haigh & Anor v Haddad & Anor [2024] NSWSC 904
Hearing dates: 19 – 20 July 2023
23 August 2023
Date of orders: 26 July 2024
Decision date: 26 July 2024
Jurisdiction: Common Law
Before: Weinstein J
Decision: With respect to the Notice of Motion brought by the defendants dated 20 July 2023:-
(1) The time for service of the Notice of Motion be abridged pursuant to r 1.12 of the UCPR;
(2) The first defendant be removed as a party to the proceedings pursuant to r 6.29(a) of the UCPR; and
(3) Each of the plaintiffs and the defendants is to bear their own costs of the motion.
With respect to the substantive proceedings:-
(1) Orders 2 and 4 made by Harrison AsJ on 21 October 2022 be set aside;
(2) Pursuant to r 13.4 of the UCPR, the proceedings are dismissed;
(3) The plaintiffs are to pay the defendants’ costs of these proceedings; and
(4) In the absence of an agreement as to the costs reserved by Harrison AsJ, the parties are to contact my Associate within 14 days of this judgment, so that the matter can be listed for argument.
Catchwords: CIVIL PROCEDURE — summary disposal — dismissal of proceedings — appeal from Associate Justice — No reasonable cause of action disclosed — reflective loss — whether reflective loss principle applies to indirect shareholders — abuse of process — where multiple prior proceedings brought on behalf of related party — proceedings dismissed
Legislation Cited: Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2)
Civil Liability Act 2002 (NSW)
Civil Procedure Act 2005 (NSW)
Crown Proceedings Act 1988 (NSW)
Environmental Planning and Assessment Act 1979 (NSW)
Fair Trading Act 1987 (NSW)
Limitation Act 1969 (NSW)
Supreme Court Act 1970 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Ballard v Multiplex (2008) 68 ACSR 208; [2008] NSWSC 1019
Ballard v Multiplex Ltd [2012] NSWSC 426
CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202; [2021] NSWCA 316
Central Coast Council v Norcross Pictorial Calendars Pty Ltd (2021) 391 ALR 157; [2021] NSWCA 75
City of Botany Bay Council v Jazabas Pty Limited [2001] NSWCA 94
D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12
Dey v Victorian Railways Commissioners (1948) 78 CLR 62
Do Carmo v Ford Excavations Pty Ltd (1981) 1 NSWLR 409
Emanuele v Hedley & Ors (1998) 179 FCR 290
Fleet v Royal Society for the Prevention of Cruelty to Animals (NSW) [2005] NSWSC 926
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69
Jazabas Pty Ltd v Haddad [2006] NSWSC 559
Jazabas Pty Ltd v Haddad [2007] NSWCA 291
Jazabas v Botany Council [2000] NSWSC 58
Johnson v Gore Wood & Co [2002] 2 AC 1
Jones v State of New South Wales [2020] NSWSC 830
Leerdam v Noori (2009) 227 FLR 210; [2009] NSWCA 90
Magill v Magill (2006) 226 CLR 551 at 562; [2006] HCA 51
Massalski v Owners SP 90255 [2023] NSWSC 23
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) (2021) 57 WAR 468; [2021] WASCA 105
Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471; [2007] NSWCA 377
Neilson v City of Swan (2006) 147 LGERA 136; [2006] WASCA 94
New South Wales v Mulcahy [2006] NSWCA 303
New South Wales v Spedding [2023] NSWCA 180
Northern Territory v Mengel (1995) 185 CLR 307; [1995] HCA 65
Pao v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2011] NSWSC 1216
Plaintiff M83A/2019 v Morrison (No 2) [2020] FCA 1198
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45
Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 325
Thomas v D’Arcy [2005] 1 Qd R 666; QCA 68
Three Rivers District Council v Governor and Company of the Bank of England [2003] 2 AC 1
Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28
Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69; [1974] HCA 25
UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45
Victoria International Container Terminal Ltd v Lunt (2021) 271 CLR 132; [2021] HCA 11
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; [1992] HCA 55
Wickstead v Browne (1992) 30 NSWLR 1
Three Rivers District Council v Governor and Company of the Bank of England [2003] 2 AC 1
Category: Procedural rulings
Parties: Stephen William Haigh (First Applicant)
Dimitrios Kikiras (Second Applicant)
Department of Planning NSW (First Respondent)
Sam Haddad (Second Respondent)
State of New South Wales (Third Respondent)
Representation: Counsel:
P King (First and Second Applicants)
V Thomas (First, Second and Third Respondents)
Solicitors:
Mihalatos & Associates Solicitors (First and Second Applicants)
Crown Solicitor’s Office (First, Second and Third Respondents)
File Number(s): 2020/308863
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Common Law
Citation: [2022] NSWSC 1434
Date of Decision: 21 October 2022
Before: Harrison AsJ
File Number(s): 2020/308863
JUDGMENT
1. This is an appeal and cross-appeal from a decision of Harrison AsJ striking out a Statement of Claim filed by the plaintiffs (“the SOC”) on 28 October 2020 pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) but permitting the second plaintiff to replead one aspect of the claim, being a claim for mental harm and psychiatric injury (“Order 2”). Costs of the application were reserved (“Order 4”). The proceedings before me were heard over three days, and were then the subject of an unsuccessful mediation in November 2023. I refer to the applicants in these proceedings as the plaintiffs, and the respondents as the defendants.
2. The facts underlying these proceedings have been the subject of two prior claims in the Supreme Court of NSW, first in 1998 (“the 1998 proceedings”) and then in 2005 (“the 2005 proceedings”). Although the plaintiffs were initially successful at trial in the 1998 proceedings (see Jazabas v Botany Council [2000] NSWSC 58 (“Jazabas v Botany Council”)), that decision was overturned by the Court of Appeal in City of Botany Bay Council v Jazabas Pty Limited [2001] NSWCA 94 (“City of Botany Bay v Jazabas”). The 2005 proceedings, commenced by Jazabas Pty Limited (Jazabas) and two related companies, were stayed when the plaintiffs in those proceedings failed to comply with an order for security for costs. The plaintiffs in these proceedings are natural persons, rather than the corporate entities who were the plaintiffs in the 1998 and 2005 proceedings.
3. Harrison AsJ found that the loss claimed by the plaintiffs in the current proceedings is the same loss claimed by Jazabas in the 1998 proceedings. Her Honour held that all the losses claimed in the current proceedings are reflective losses which the two plaintiffs cannot recover. She found that the only exception was a claim for damages for mental harm suffered by the second plaintiff (“the personal injury claim”). With respect to that claim, her Honour found that further pleadings and particulars were required and she permitted the second plaintiff to replead that part of the claim.
4. The plaintiffs’ Amended Notice of Motion filed on 9 December 2022 seeks the following relief:-
“1. Order to set aside or vary the orders and Judgment of Harrison AsJ of 21 October 2022 pursuant to s 118(3) of the Supreme Court Act 1970.
2. The appeal is from the whole of the decision.
3. Costs.”
5. The plaintiffs set out the grounds of their appeal pursuant to r 49.9(b) of the UCPR as follows:-
“4. The Associate Judge erred in failing to give appropriate weight to the significance of the factual case of the Plaintiffs as pleaded in the Statement of Claim.
5. The decision of the Associate Judge to strike out the proceedings without leave to replead was provoked by error such that the Court should intervene.
6. The Associate Judge erred in characterising the sum of the Statement of Claim as that it merely reflects the loss suffered by Jazabas Pty Ltd and should be struck out pursuant to UCPR 14.28(1)(a).
7. The Associate Judge erred in finding that the loss and damage claimed by the Plaintiffs amount to damages with regard to losses suffered by the company.
8. The Associate Judge erred in adopting as the test of strike out or dismissal whether the Defendants or persons in their position are unable to identify an explanation in the evidence served by the Plaintiffs as to why the Plaintiffs’ claims were not made in the earlier proceedings.
9. The Associate Judge erred in holding that the claims brought by the Plaintiffs in the proceedings in this Honourable Court should have been brought in proceedings in 2005 either in their own right even though not so claims and not then known to the Plaintiffs.
10. The Associate Judge erred in holding that if the present Plaintiffs had viable causes of action in their own right, they could and should have brought them in the 2005 proceedings initiated by persons not parties to those proceedings.
11. The Associate Judge in error and the Defendants misconstrued and/or erroneously represented the nature and effect of the Plaintiffs’ claims and the particulars.
12. The Associate Judge misconstrued and/or misapplied the principle in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at 223.
13. The Associate Judge erred in holding that the loss and damage claimed by the Plaintiffs were as shareholders in Jazabas Pty Ltd a company which last traded in 1999 and deregistered in 2002.
14. The Associate Judge erred in holding that the Plaintiffs’ proceedings are an abuse of process and/or that the claims of business interruption loss and damage amounted to an abuse of process.
15. The Associate Judge erred in holding the claim of the Plaintiffs relating to the chlorine plant is an abuse of process.
16. The Associate Judge erred in holding that the same causes of action pleaded in the current proceedings were pleaded against Mr Haddad and the State of NSW in the 2005 proceedings in circumstances where one of the Plaintiffs was not a party thereto, and they were unable to sue as the facts alleged were admittedly not known to the plaintiffs.
17. The Associate Judge erred in holding that the loss and damage found in favour of the company in the 1998 proceedings was the same loss and damage the Plaintiffs now claims.
18. The Associate Judge erred in characterising the loss and damage claimed as a ‘reflective loss’ not available to the Plaintiffs.
19. The Associate Judge erred in dismissing the proceedings with costs in response to the Notice of Motion save and except for one aspect of the Second Plaintiff’s claimed.
20. The Associate Judge erred in striking out the Second Plaintiff’s claim limiting any repleading of the Statement of Claim only so far as it relates to the psychological harm suffered by the Second Plaintiff.
Particulars under Part 49.9(c)
In place of the decision and orders of the Associate Judge of 21 October 2022 the Plaintiffs seek an order dismissing the Defendant’s Notice of Motion filed 28 May 2021 with costs and in the alternative an order varying the orders of 21 October 2022 by granting leave to the Plaintiffs to replead with costs.”
[sic]
6. The defendants filed a Notice of Motion on 3 February 2023 setting out the nature of their cross-appeal, the orders sought in lieu of her Honour’s decision and a Notice of Contention as follows:-
“Cross Appeal pursuant to rule 49.11
The appeal is from part of the decision of Harrison AsJ of 21 October 2022.
Grounds relied on in support of the cross appeal
1. The primary judge erred by failing to dismiss the proceedings under UCPR 13.4(1) on the ground that the whole of the proceedings represented an abuse of process, because:
a. the claims pleaded in the statement of claim should have been brought in earlier proceedings commenced by companies controlled by the plaintiffs in 1998 or alternatively in 2005;
b. the proceedings, having regard to the time that has elapsed since the circumstances giving rise to the claims, are such as to occasion unjustifiable oppression to the defendants; and
c. the continuation of the proceedings would bring the administration of justice into disrepute.
2. The primary judge erred by failing to dismiss the whole or alternatively part of the proceedings under UCPR 13.4(1) on the ground that no reasonable cause of action was disclosed by the Statement of Claim, because:
a. the causes of action alleged in the statement of claim are statute barred;
b. the statement of claim pleaded causes of action based on facts that engaged the principle of witness immunity; and
c. the statement of claim failed to plead essential elements of causes of action alleged against the defendants.
3. On the same grounds as set out in paragraphs 1 and 2(b) and (c), the primary judge erred by granting the second plaintiff leave to replead a claim for mental harm and psychiatric injury.
Orders sought in place of the decision
The defendants seek the following orders:
i. Orders 2 and 4 made by Harrison AsJ on 21 October 2022 are set aside.
ii. The proceedings are dismissed pursuant to Uniform Procedure Rules 2005 (NSW) r 13.4; and
iii. The plaintiffs pay the defendants’ costs of the proceedings.
Notice of contention pursuant to rule 49.13
The defendants contend that orders 1 and 2 made by Harrison AsJ, in their favour should be confirmed on following grounds:
4. Other than a potential claim by the second plaintiff as described in order 2:
a. The proceedings represented an abuse of process, for the reasons set out in ground 1 of the defendant’s cross appeal; and
b. no reasonable cause of action was disclosed by the statement of claim filed on 28 October 2020, for the reasons set out in ground 2 of the defendant’s cross appeal.
5. The whole of the statement of claim filed on 28 October 2020 had a tendency to cause embarrassment within the meaning of UCPR 14.28.”
7. For the following reasons, I dismiss the appeal, allow the defendant’s cross-appeal and make the orders sought by the defendant.
Nature of appeal
8. The Court has jurisdiction to hear an appeal from the decision of an Associate Justice in accordance with ss 104 and 118(3) of the Supreme Court Act 1970 (NSW) and r 49.4 of the UCPR
9. In Pao v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2011] NSWSC 1216, Hoeben J set out the principles governing an appeal from the decision of an Associate Justice at [79]-[80]:-
“The application before the Court is an appeal from the decision of an Associate Justice pursuant to UCPR 49.4. The appeal is by way of rehearing (s.75A(5) of the Supreme Act 1970 ) and the Court has the powers and duties of the Court from which the appeal is brought (s.75A(6)). The applicant carries the onus of showing the decision appealed from ought to be reversed. Subject to the power to receive further evidence, the appeal by way of rehearing is conducted on the transcript of evidence taken in the Court below.
Such an appeal is largely governed by the same principles as those applicable to an appeal from a single Judge to the Court of Appeal. Subject to the impact of fresh evidence admitted under UCPR 49.12, the Associate Justice's primary findings of fact are to be followed by the Judge hearing the appeal unless the facts found or inferences drawn attract review under the principles in Warren v Coombes (1979) 142 CLR 531 at 553; Do Carmo v Ford Excavations Pty Limited (1981) 1 NSWLR 409 at 419C-421B.”
10. In Do Carmo v Ford Excavations Pty Ltd (1981) 1 NSWLR 409, Cross J set out the following principles in relation to the approach by a single judge of the Court to findings of fact made by an Associate Justice (referred to by Hoeben J above) at 420A-B:-
“Appeals from a Master go, depending on their subject matter, either to the Court of Appeal (Pt 60, r 17) or to a single judge. The nature of all such appeals, as opposed to their forum or their subject matter, is the same: see s 75A. And the Court of Appeal has always treated appeals from a Master precisely in the same manner as appeals from a judge: see Knight v Kelly (Court of Appeal, 25th July, 1978, unreported). In my view a similar approach should – indeed must – be adopted where the Master’s decision is brought on appeal to a single judge. It follows that on such an appeal, if no fresh evidence is called to warrant a departure from a Master’s primary findings of fact, those findings of fact are binding on the court hearing the appeal unless those findings, or the inferences drawn from them, are so flawed as to attract the approach taken in Warren v Coombes (1979) 53 ALJR 293. In my view this is the manner in which I must approach the findings of fact by the learned Master in the present case.”
11. Cross J went on to outline the ambit of the power of the Court to examine the discretion exercised by the Master in that case at 420C-F:-
“My view is that in relation to the exercise of a discretion by a Master the Judge on appeal is bound to approach the matter in the same way as the Court of Appeal would examine the exercise of a discretion by a Judge (or by a Master in cases under Pt 60, r 17) ie in the manner revealed in the well-known passage from House v The King (1936) 55 CLR 499, at pp 504, 505, where Dixon, Evatt and McTiernan JJ said:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
12. See also Fleet v Royal Society for the Prevention of Cruelty to Animals NSW [2005] NSWSC 926 at [16] per Johnson J.
Notice of Motion to remove first defendant
13. On 20 July 2023, the second day of the hearing, the defendants filed a Notice of Motion seeking an order that the first defendant be removed as a party to the proceedings pursuant to r 6.29(a) of the UCPR. The application was made on the grounds that the first defendant was not a legal person capable of being sued, and Ms Thomas, who appeared for the defendants, invoked s 5 of the Crown Proceedings Act 1988 (NSW), which provides that “[any] person … may bring civil proceedings against the Crown under the title ‘State of New South Wales’ in any competent court.” Thus the Crown, appropriately, undertook to assume any liability that may have been shot home to the named first defendant, the Department of Planning NSW. The plaintiffs agreed with this course of action, and I made the substantive order as sought by the plaintiff.
Factual background
14. The factual background to these proceedings was outlined by Rolfe J in Jazabas v Botany Council, Fitzgerald JA in City of Botany Bay v Jazabas and Simpson J, as her Honour then was, in Jazabas Pty Ltd v Haddad [2006] NSWSC 559 (“Jazabas v Haddad”). I have also had regard to the voluminous affidavit and documentary evidence tendered in these proceedings.
15. During the 1980s, the City of Botany Bay Council (“the Council”) (now the Bayside Council) leased land located at 2–10 Nilson Avenue, Hillsdale (“the Hillsdale land”) from Amcor Limited (“Amcor”) and used that land as a public park. The zoning of the Hillsdale land allowed for medium-density residential development with the Council’s approval.
16. The Hillsdale land was located, in part, on land constituting the Botany Randwick Industrial Complex (“the Complex”). This was the largest industrial area in the Sydney region and accommodated industrial installations and storage terminals, including a number of chlorine storage tanks. Due to health and safety concerns arising from this industry, in 1983 the Department of Planning NSW carried out a Risk Assessment Study (“the 1983 RAS”) of an area that included the Complex and adjacent areas, including the Hillsdale land. This study exposed certain risks around the Complex, including risks of fire, explosion, and toxicity but it was never published. A further study was prepared and published in 1985 (“the 1985 RAS”). It identified a Risk Reduction Zone (“RRZ”) that included the Complex and the Hillsdale land. The RRZ was an area subject to varying degrees of risk of fire and explosion arising from activities in the Complex, but not, according to the plaintiffs, from toxicity. The 1985 RAS established an environmental safety strategy for the Complex that included, inter alia, no intensification of residential development within the risk affected area and the implementation of strict assessment requirements for proposed development to ensure no increase in cumulative risks relative to existing conditions.
17. Both the 1983 RAS and the 1985 RAS were allegedly prepared, written, and approved for publication by Sam Haddad, who is the named second defendant in these proceedings, and who was a public officer of the State of New South Wales, the named third defendant in these proceedings. The plaintiffs allege that the 1985 RAS was a “sanitised” version of the 1983 RAS, and that the 1985 RAS failed to disclose the true nature and extent of the hazard risks in and around the Complex. The plaintiffs say that they did not find out about the 1983 RAS until January 1999, after they initiated the 1998 proceedings, and did not find out about certain annexures to the report until December 2002.
18. In 1993, the Hillsdale land was offered for sale by public auction by Amcor. On 5 November 1993, Amcor applied to the Council for a certificate pursuant to s 149 of the Environmental Planning and Assessment Act 1979 (NSW). That certificate was issued on 11 November 1993 (“the s 149 certificate”). It contained representations that no development control plan applied to the Hillsdale land and that the land was not affected by any council policy to restrict development by reason of land slip, bush fire, flooding, tidal inundation, subsidence or any other risk.
19. The first plaintiff, Stephen William Haigh, was engaged in building and development work in the region of Randwick and adjoining areas. For this purpose, he used various corporate entities including BAS Developments Pty Ltd (“BAS”) and Permtree Pty Ltd (“Permtree”), of which he and his wife were the sole shareholders. The second plaintiff, Dimitrios Kikiras, was a licenced real estate agent and auctioneer operating principally in Randwick and Botany. He and his wife were the sole shareholders of Kikiras Real Estate Pty Ltd (“KRE”).
20. The two plaintiffs met in 1991 and agreed to enter into what is described as a “joint venture” by which BAS would purchase and develop property which KRE would sell. For this purpose, the plaintiffs established Evenvest Pty Ltd (“Evenvest”). They became interested in purchasing and developing the Hillsdale land. In December 1993 Evenvest entered into a contract with Amcor for the purchase of the Hillsdale land. The plaintiffs planned to develop the land by constructing 15 “walk up” units.
21. Due to concerns about possible litigation, the plaintiffs decided to wind up Evenvest and incorporated Jazabas on 12 May 1993. The contract to purchase the Hillsdale land was later novated and Jazabas was substituted as the purchaser. Initially, shares in Jazabas were held by the plaintiffs and their wives, but the shares were later transferred to Permtree and KRE respectively on 24 June 1994. As set out above, at all material times, the plaintiffs were the shareholders in the two companies (Permtree and KRE) that were the sole shareholders of Jazabas.
22. The purchase of the Hillsdale land by Jazabas was completed on 28 June 1994 and it became the registered proprietor. On 24 October 1994, Diane Cuthbert, the Council’s director of Planning and Environment, wrote to Jazabas advising that the Council had prepared a development control plan for the land. On 1 April 1996, Jazabas made an application to the Council for approval of the development of 10 townhouses. This was approved on 4 June 1996. At no point up to this time had the Council disclosed the existence of the 1985 RAS.
23. On 4 September 1997, Metway Bank approved the finance application to fund the development. In October 1997, Jazabas lodged a building application with the Council to build 10 townhouses on the Hillsdale land (“the building application”). At this point, the Council ascertained that the property fell within the RRZ pursuant to the 1985 RAS. Approval for the building application was withheld and the time for approval of the application eventually lapsed.
The Land and Environment Court proceedings
24. On 23 December 1997, Jazabas applied to the Land and Environment Court of NSW (“LEC”) in relation to the Council’s deemed refusal of Jazabas’s application (“the LEC proceedings”). That application was heard by a LEC Assessor who dismissed it on the basis of the 1985 RAS and expert evidence, which established that the land was unsuitable for further residential development. The Council then took the unusual step of appealing against the decision in its favour. On 16 April 1999, Lloyd J delivered a decision allowing the appeal and remitting the proceedings to a LEC Assessor to be determined in accordance with law. Building approval was eventually granted, but not before Jazabas had sold the Hillsdale land in an effort to mitigate its losses arising from the delayed building approval.
The 1998 proceedings
25. On 30 July 1998, Jazabas commenced proceedings against the Council in the Federal Court of Australia, later transferred to the Supreme Court of NSW, which were heard before Rolfe J. It claimed that the Council or its officers had made various negligent or false representations, including in the s 149 certificate, to the effect that the Hillsdale land was not affected by a policy of the Council to restrict development on the land due to any risk and that they were false because of what was contained in the 1985 RAS. Jazabas claimed that, but for those negligent or false representations, Evenvest/Jazabas would not have entered into the contract to purchase the Hillsdale land and would instead have pursued other, more profitable, ventures. The damages claimed were for, inter alia, loss of opportunity and business interruption.
26. Rolfe J held that the various representations each constituted negligent misstatements in breach of the Council’s duty of care and that Evenvest/Jazabas would not have entered into the contract to purchase the Hillsdale land but for those misstatements. His Honour rejected a statutory claim for misleading and deceptive conduct pursuant to ss 52 and 53A of the Trade Practices Act 1974 (Cth) (“TPA”) and s 42 of the Fair Trading Act 1987 (NSW), finding that the Council was not a trading or financial corporation and that the misstatements were not made in the conduct of trade or commerce. Rolfe J awarded Jazabas damages in the sum of $1,218,832: see City of Botany Bay v Jazabas at [262] per Fitzgerald JA.
27. The Council appealed. The Court of Appeal held that the s 149 certificate was not inaccurate or misleading. By majority, the Court held that Jazabas’s alternative claims also failed, and the appeal was allowed. An application for special leave to the High Court was refused on 19 April 2002.
The 2005 proceedings
28. On 3 February 2005, Jazabas, BAS, and Permtree commenced proceedings against Mr Haddad, the State of NSW, and the Council. An application for security for costs was heard by Simpson J, as her Honour then was, on 25 and 26 May 2006. The factual matrix underlying the 2005 proceedings, as identified by her Honour, was largely the same as that in the 1998 proceedings. The Amended Statement of Claim in the 2005 proceedings contained a claim against Mr Haddad in deceit for false representations as to the boundaries of the RRZ in the 1985 RAS. Her Honour further identified that the pleadings contained allegations against Mr Haddad for negligent misrepresentation, in misleading and deceptive conduct pursuant to the TPA, for misfeasance in public office and injurious falsehood. The plaintiffs claimed that they had suffered loss and damage in reliance on those representations.
29. The plaintiffs claimed that the State of NSW was vicariously liable for Mr Haddad’s acts and omissions. Further, they claimed a case in negligence and a case in conspiracy, alleging that the State of NSW “combined and conspired” with Mr Haddad “by unlawful means”. The conspiracy was allegedly aimed at concealing the 1983 RAS and “the unlawful means” were allegedly the misstatement of the risks in the 1985 RAS.
30. As against the Council, the three companies pleaded four causes of action: negligence, deceit, abuse of process and misfeasance in public office. The claim for negligence included a failure to warn persons about the hazards of the relevant areas, adopting a policy of concealment of those risks, failing to produce a plan for acceptable land use in the area; tendering incorrect evidence in the LEC, and appealing from the decision of the LEC Assessor and submitting that the building application should be granted despite the hazards present in the area. The claim in deceit was based upon the representations by Council officers that there was no risk to development on the land. The abuse of process claim relied upon the Council’s appeal from the decision of the LEC Assessor, alleging that it was made for an improper purpose and to obtain a collateral advantage extraneous to those proceedings, to circumvent the 1998 proceedings and to reduce its liability for damages. The pleading of the misfeasance in public office claim asserted that the Council was a public officer within the scope of that tort. It alleged that the Council engaged in unauthorised or invalid acts that caused loss or damage to Jazabas. Her Honour noted that a significant aspect of the pleaded case lay in the assertion that the 1983 RAS was concealed by one or more of the defendants.
31. On 9 June 2006, Simpson J stayed the proceedings until the plaintiffs provided security for the defendants’ costs. The plaintiffs appealed from her Honour’s decision. On 25 October 2007, the Court of Appeal granted leave to appeal but dismissed the appeal: Jazabas Pty Ltd v Haddad [2007] NSWCA 291. After yet another hearing and an appeal, the proceedings were eventually dismissed on 14 September 2010.
The current proceedings
32. The plaintiffs commenced these proceedings on 28 October 2020. The SOC sets out the pleadings and some new allegations of fact. It is appropriate to observe that the pleadings in the SOC are opaque. It is a document that is neither easy to interpret nor follow.
New allegations of fact
33. Three new allegations of fact that were not part of the 2005 proceedings were identified by Harrison AsJ. The plaintiffs submitted that it is a misunderstanding of the plaintiffs’ case that these are the only new allegations made. However, leaving to one side the causes of action advanced by the plaintiffs, the following are the only new allegations that I can discern which comprise the factual matrix of these proceedings which were not part of the 2005 proceedings.
34. In 1988, Mr Haddad prepared a third report establishing an up-to-date environmental planning and safety strategy in respect of the cumulative hazard risks arising from activities in the Complex (“the 1988 report”). The 1988 report noted that since the publication of the 1985 RAS, there had been a number of significant changes in industrial and other developments in the area, including improved safety of existing plant, and that rigorous safety requirements had been applied to new industrial developments. It recommended that “site A”, which included the Hillsdale land, be further reassessed for toxic risk in light of chlorine-safety updates. The 1988 report was not published. The plaintiffs allege that the 1983 RAS and the 1988 report were “abandoned” by the defendants and that the defendants acted in bad faith by not disclosing to the public the cumulative risks identified in the 1988 report.
35. In November 1998, the Minister for Urban Affairs and Planning, upon the recommendation of the Department of Planning NSW, approved the installation of a replacement chlore-alkali plant to produce gaseous chlorine, owned and operated by Orica Australia Pty Ltd at its site within the Complex (“the Orica plant”). The plaintiffs allege that this decision failed to take into account transport risks associated with the transportation of chlorine to and from the plant, and that the decision was made contrary to State Environmental Planning Policy 33 (“SEPP 33”) and Hazardous Industry Planning Advisory Paper No 6 (“HIPAP 6”) and was based upon the 1985 RAS, rather than the 1983 RAS or the 1988 report. The plaintiffs allege that but for these failures, the Orica plant would have been refused.
36. The plaintiffs allege that they first became aware of the true position of the nature and extent of the cumulative hazard risks, including transportation risks to residential and other development in the area of the Complex, when Mr Haigh read the Dangerous Goods Transport Qualitative Risk Assessment, Denison Street, Hillsdale report prepared by Scott Lister dated 12 February 2015 (“the Lister report”). That report was undertaken to assist in the evaluation of a proposed development of a Bunnings Warehouse store on Denison Street, Hillsdale, and to perform a risk assessment of the movement of dangerous goods along Denison Street, which is located within the Complex and close to the Hillsdale land.
37. The plaintiffs submitted that the Lister report revealed the transport risks on Denison Street and that this would have led to the application for the Orica plant being refused. The plaintiffs further submitted that the 1988 report identified traffic hazard risks, meaning that (at least) Mr Haddad knew of those risks and they allege that the defendants concealed the 1988 report. Further, with knowledge of the risks, the plaintiffs allege that the defendants intentionally did not undertake any risk analysis as required by SEPP 33 and HIPAP 6. The plaintiffs allege that this was concealed until 2015, such that the commencement of these proceedings in 2020 was within the six-year limitation period.
Pleaded causes of action
38. As I have said, part of the difficulty in this case is that the pleadings contained in the SOC are unclear. Further, given the submissions advanced by the defendants, I must consider what was pleaded in the 2005 proceedings, and I note that the 2005 Statement of Claim (as observed by Simpson J) was similarly opaque. Nevertheless, the following causes of action were identified by Ms Thomas as being pleaded in the current SOC, and Mr King, who appeared on behalf of the plaintiffs, did not disagree with Ms Thomas’s characterisation of the plaintiffs’ claim:-
1. The tort of misfeasance in public office (“first misfeasance claim”);
2. The tort of deceit;
3. Misleading or deceptive conduct within the meaning of the TPA or the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) (“ACL”) (“the statutory claim”);
4. The tort of collateral abuse of process;
5. The tort of misfeasance in public office (“second misfeasance claim”); and
6. The aforementioned personal injury claim, which was pursued by Mr King at the hearing before Harrison AsJ.
39. At the end of the hearing, Mr King informed the Court that the plaintiffs no longer pressed the collateral abuse of process claim. Otherwise, the SOC, supplemented by a letter from McKell’s Solicitors (“McKell’s”), then solicitors for the plaintiffs, dated 23 April 2021 in response to a letter from the Crown Solicitor’s Office (“CSO”) seeking further and better particulars, sets out the following with respect to each cause of action.
First misfeasance claim
40. The plaintiffs allege that each of the defendants (the Department of Planning NSW being the government department responsible for planning and development decisions, Mr Haddad being an officer of the third defendant and the State of NSW being responsible for the first and second defendants) held public office at all material times and misconducted themselves in their public office. The basis for this claim appears to be the non-publication of the 1983 RAS and the 1988 report, as well as the “sanitisation” of the 1985 RAS. It is alleged that but for these events, the plaintiffs would have been informed, either by reading a planning instrument or by being notified by the Council, that the Hillsdale land was not suitable for development and they would not have purchased the land. The plaintiffs allege that the defendants acted in bad faith because they did not disclose the real hazards to the community and because they failed to provide a Regional Environmental Plan (“REP”) which was lawfully required of them. The plaintiffs further say that in failing to provide a REP, the defendants acted for an ulterior purpose; that is, to promote the development of the Orica plant without regard for the public interest.
Claim in deceit
41. The plaintiffs allege that the second defendant made false representations on 16 February 1998 to the effect that the RRZ was not only founded on risks from fire and explosion but took into account risks from all sources, being a cumulative assessment of risk, and that the Hillsdale land was “within the risk contours notwithstanding”. The plaintiffs say that these representations were false.
42. Further, the plaintiffs allege that Mr Haddad provided statements in both the LEC and the 1998 proceedings repeating the representations noted above, and made further representations to the effect that the 1985 RAS was one of the first of its kind worldwide which considered cumulative risks from all industrial activities in the Complex and the surrounding area. It is further alleged that Mr Haddad falsely represented that the advice from the Department of Planning NSW, contained in correspondence to the Council, was consistent with broad departmental policies for the formulation and implementation of land use planning criteria. The plaintiffs allege that each of these representations were relied upon by the plaintiffs and “their joint venture vehicle Jazabas” and that each representation was made with knowledge that it was false or that each representation was reckless as to whether it was false. The plaintiffs claim they were induced by each representation, acted in reliance upon them and suffered damage as a result.
Personal injury claim
43. I observe that the personal injury claim apparently arises in particulars given for the claim in deceit, being that the harm to the second plaintiff included “… very significant and hurtful family and personal losses.” No further particulars are provided.
Statutory claim for misleading and deceptive conduct
44. The statutory claim for misleading and deceptive conduct is based on the same pleadings as the deceit claim, and appears to be pleaded in the alternative.
Second misfeasance claim
45. The plaintiffs allege that the defendants by their agents made a number of errors with respect to the application for the installation of the Orica plant, which should have been carried out in accordance with SEPP 33 and HIPAP 6 as legally required. They allege that the State of NSW failed to correctly apply those instruments, did not lawfully assess the application and did not undertake a transport risk assessment or risk evaluation study as required by SEPP 33. They allege that had it complied with these requirements, the application to build the Orica plant would have been refused, reducing risks in the area. The plaintiffs allege bad faith on the part of the State of NSW on the basis that the defendants concealed the unacceptably high fatality risk to existing nearby residents and prospective developers. Because of these actions, the plaintiffs allege that they lost the opportunity to retain the Hillsdale land and to continue and maintain their joint venture business activities.
Legislative background
46. Before Harrison AsJ, the defendants sought to have the proceedings summarily dismissed pursuant to r 13.4 of the UCPR, which provides:-
13.4 Frivolous and vexatious proceedings
(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings—
(a) the proceedings are frivolous or vexatious, or
(b) no reasonable cause of action is disclosed, or
(c) the proceedings are an abuse of the process of the court,
the court may order that the proceedings be dismissed generally or in relation to that claim.
(2) The court may receive evidence on the hearing of an application for an order under subrule (1).
47. Alternatively, the defendants relied on r 14.28 of the UCPR, which provides:-
14.28 Circumstances in which court may strike out pleadings
(1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading—
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or
(c) is otherwise an abuse of the process of the court.
(2) The court may receive evidence on the hearing of an application for an order under subrule (1).
48. Both rr 13.4 and 14.28 are aimed at ensuring that the Court has control over its own proceedings and procedure and to allow it to prevent an abuse of its processes. An abuse of process may occur where, for example, the proceedings are doomed to fail, or no reasonable cause of action is disclosed, or the claim or issues in the proceedings have been previously determined. In Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507 at 518-519; [2015] HCA 28 at [24], French CJ, Bell, Gageler, Keane and Nettle JJ remarked that there is an overlap between abuse of process and the doctrine of estoppel and said that:-
“… the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.”
49. As has often been said, the power to dismiss proceedings pursuant to r 13.4 of the UCPR should be exercised sparingly and only when the proceedings are manifestly groundless, or so clearly deficient that it would be inappropriate to allow the proceedings to continue or that no reasonable cause of action is disclosed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 at 129-130. As Harrison AsJ pointed out below, the application needs to be approached upon the basis that only in a very clear case will proceedings be summarily dismissed: Dey v Victorian Railways Commissioners (1948) 78 CLR 62 at 91 (“Dey”). The onus of demonstrating that proceedings are an abuse of process (and should be summarily dismissed) lies on the defendant: Wickstead v Browne (1992) 30 NSWLR 1 at 11.
50. In determining whether proceedings ought to be stayed as an abuse of process (and analogously whether proceedings ought to be dismissed on the same grounds), the test is whether the use of the Court’s procedures occasions unjustifiable oppression to a party or where the use serves to bring the administration of justice into disrepute: UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 at [1] (Kiefel CJ, Bell and Keane JJ) (“UBS”). A court is required to make a broad, merits-based judgment of all of the circumstances of the case in coming to its conclusion: UBS at [7], citing Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 (“Johnson”).
51. However, the fundamental responsibility of a Court is to do justice between the parties and if the Court can cure any prejudice to a fair trial so as to ensure that justice is done by means other than the dismissal of proceedings, it ought to do so: Victoria International Container Terminal Ltd v Lunt (2021) 271 CLR 132; [2021] HCA 11 at [18]-[20] (“Lunt”); see also Dey at [91]. Leave should ordinarily be granted to recast defective pleadings: Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69; [1974] HCA 25 at 97 (“Turner”).
52. The plaintiffs submitted, generally, that the question before the Court was whether or not the plaintiffs had viable causes of action and if so, whether or not they should be given leave to replead them. The defendants accepted that if the plaintiffs had any viable cause of action, leave should be granted for them to replead.
Evidence
53. The parties relied on evidence contained in a joint court book, which was exhibited in the proceedings below. It contained affidavit evidence, the judgments in the 1998 and 2005 proceedings, and other sundry materials that were before Harrison AsJ. It was tendered subject to the objections upheld by her Honour below.
54. In support of their case, the plaintiffs tendered two expert reports: one by Jeremy Swan, town planner, dated 30 August 2021 (“the Swan report”) and one by Tim Watson-Munro, consultant psychologist, dated 15 March 2022 (“the Watson-Munro report”).
55. Mr Swan reviews the approval process with respect to the Orica plant. It concludes that there were a number of shortcomings with the approval, and that a Risk Evaluation Study should have been carried out in accordance with SEPP 33 guidelines, and that the failure of the consent authority to correctly apply SEPP 33 meant that it could not properly assess the application against the relevant matters of consideration provided for in legislation. Mr Swan believes that the application for the development of the Orica plant should have been refused.
56. Mr Watson-Munro first examined the second plaintiff, Mr Kikiras, on 13 January 2021 and his opinion was based on the history obtained from Mr Kikiras. Mr Kikiras reported that after the Council advised their intention to defend the deemed refusal of the development application in the LEC, he began to develop significant symptoms of anxiety, depression and features of an adjustment disorder, which caused him to withdraw from friends, family and work, leading to a compounding and aggregation of his mental health issues. Mr Kikiras then turned to drug use and gambling. Eventually he began supplying cocaine, which led to his arrest, conviction and a 15-month term of imprisonment. Mr Watson-Munro observed that while Mr Kikiras’s mood state has improved somewhat, he continues to suffer a moderate and recurring depressive disorder and features of an anxiety disorder. Mr Watson-Munro believes that the second plaintiff’s depressive disorder developed and escalated because of the delays and events referrable to the purchase of the Hillsdale land.
57. The plaintiff tendered two additional volumes of the court book containing further affidavits, submissions, and the decision from the hearing below. The fresh evidence tendered by the plaintiffs that was not before her Honour included:-
1. An affidavit of Stephen Haigh affirmed on 27 March 2023;
2. An affidavit of Dimitrios Kikiras sworn on 27 March 2023; and
3. An affidavit of Stephen Haigh affirmed on 10 May 2023.
58. Most of the material contained in these three affidavits were submissions pertaining to this appeal and were therefore inadmissible as evidence. What remained contained evidence adduced for the purpose of contradicting the factual findings of Harrison AsJ below and the claims made by the defendants. Subject to objections, the great majority of which were upheld, the defendants did not object to the Court receiving the fresh evidence.
59. The defendants’ fresh material included an affidavit of Bruce Cantrill, solicitor at the CSO, sworn on 21 April 2023, which attached a number of documents including evidence about the shareholdings in Jazabas, BAS, Permtree and KRE and the dates on which the companies associated with the plaintiffs were formally wound up. No objection was taken to the adducing of this fresh evidence. From these documents it is clear that on 24 June 1994, Mr Haigh and his wife transferred their shareholdings in Jazabas to Permtree, and Mr Kikiras and his wife transferred their shareholdings in Jazabas to KRE. Thereafter, Permtree and KRE were the exclusive shareholders (each holding two shares) in Jazabas. I observe that these facts were discernible from other material that was before her Honour below.
Submissions
Plaintiffs’ submissions
60. Mr King did not make submissions, either orally or in writing, which addressed each ground of appeal. I have endeavoured to distil his submissions, as best as possible, from the lengthy oral argument before me.
61. The plaintiffs submitted that there is no commonality between the current proceedings and the previous claims brought in 2005. They submitted that the essence of the present case turns upon the wrongful approval of the Orica plant, which was not raised in 2005. Due to the fatality risks arising from that approval, the plaintiffs say they lost an opportunity to retain the Hillsdale land and to continue and maintain their joint venture business activities.
62. With respect to the reflective loss argument on which her Honour based her decision, the plaintiffs submit that Harrison AsJ erred in finding that the losses claimed by the plaintiffs are not distinct from those of Jazabas. In any event, the plaintiffs submit that they were not shareholders in Jazabas at the relevant times and that the reflective loss principle is limited to persons who hold their shares directly in a company, rather than third-parties, directors, or sub-shareholders. At the hearing, Mr King submitted that Rolfe J erred in treating the losses of “the Haigh Group”, referring to the various persons and corporate entities associated with the plaintiffs, as losses of Jazabas in the 1998 proceedings. It was submitted that in fact the plaintiffs suffered their own distinct losses, separate from Jazabas, due to the misconduct of the defendants in the 1998 proceedings.
63. With respect to the abuse of process grounds raised by the defendants, the plaintiffs submitted that the defendants have failed to demonstrate that the causes of action pleaded in these proceedings ought to have been pleaded in the 2005 proceedings. They submitted that those proceedings are not inconsistent with the current proceedings and that there are no additional factors, such as oppression or injustice, that would satisfy the Court that it would be appropriate to summarily dismiss their claims. The plaintiffs submitted that there was no joinder of issue in the 2005 proceedings, that no defences were filed and that there was no engagement with the merits of the claims. Rather, it was submitted that there was merely a stay and then a dismissal of the 2005 proceedings founded on a failure of the corporate plaintiffs to pay security for costs. The plaintiffs relied on s 91 of the Civil Procedure Act 2005 (NSW) (“CPA”), which provides that dismissal of proceedings does not prevent a fresh claim from being made or from the same relief being claimed in fresh proceedings where there has been no determination on the merits.
64. At the hearing, Mr King submitted that the claims of the plaintiffs are genuine and arise out of a different substratum of facts to the 2005 proceedings, being the lost opportunity suffered by the plaintiffs after 1997 due to the unlawful approval of the Orica plant and the consequential transportation fatality risks. Further, the losses include the “chain of litigation” commencing with the LEC proceedings. The lost opportunities were said to extend up to and including 2018. He submitted that this can be contrasted with the 2005 proceedings, where the loss claimed in those proceedings arose out of business interruption of Jazabas as landlord, and from the purchase of the Hillsdale land in 1993, on the basis of misrepresentations and misconduct.
65. The plaintiffs submitted that they have explained why these claims were not brought earlier. They argue that the causes of action were concealed by the defendants until 2015 when they became aware of the Lister report and the “mental disability” of Mr Kikiras which incapacitated him.
66. In answer to the defendants’ submission that all the plaintiffs’ claims are statute barred, the plaintiffs submitted that it is undesirable that limitation questions should be decided in interlocutory proceedings in advance of the hearing of the action except in the clearest of cases, citing Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; [1992] HCA 55 at [31] (“Wardley”). It was submitted that the instant case was not the clearest case.
Defendants’ submissions
67. The defendants submitted that no reasonable cause of action is disclosed on the pleading and could never be, and that the proceedings are thus an abuse of process. The defendants submitted that all losses claimed by the plaintiffs, apart from the personal injury claim (to which see below), are reflective losses (i.e., Jazabas’s losses) which the plaintiffs cannot recover. They rely on the plaintiffs’ pleadings and particulars, which the defendants submitted all point to losses allegedly suffered by Jazabas.
68. The defendants submitted that the principle of reflective loss applies to situations where a person (corporate or otherwise) is not a direct shareholder of a company. It was submitted that the underlying rationale is that a plaintiff should not be permitted to recover damages for a loss caused by a breach of duty both to the company and to the shareholder, where the shareholder’s loss is in fact that of the company: Thomas v D’Arcy [2005] 1 Qd R 666; QCA 68 at [15]; Ballard v Multiplex (2008) 68 ACSR 208; [2008] NSWSC 1019 at [32]–[41] (“Ballard”); Central Coast Council v Norcross Pictorial Calendars Pty Ltd (2021) 391 ALR 157; [2021] NSWCA 75 (“Central Coast Council”).
69. With respect to abuse of process, the defendants submitted that these proceedings are an archetypal example of an abuse of process because a related party is suing the same defendant(s) in respect of the same loss: see CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202; [2021] NSWCA 316 (“CBRE”) at [22] per Bell P. The defendants submitted that the first three claims correspond almost entirely with claims brought by companies controlled by the plaintiffs in the 2005 proceedings. The only claim based on new facts is the second misfeasance claim, but that claim is based on the same losses and should have been brought in 2005 in accordance with the well-known principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (“Anshun”). Further, it was submitted that the evidentiary basis for this claim neither establishes concealment, nor are the necessary elements set out in the pleadings and particulars.
70. Noting the procedural history of the 2005 proceedings, which involved two interlocutory decisions, an appeal, a further decision, and another appeal, the defendants submitted that allowing the current proceedings to go ahead would give rise to a perception that justice is inefficient, is profligate in its application of public money and contrary to contemporary principles of civil litigation.
71. Further, the defendants submitted that all the claims, including the personal injury claim, are hopelessly statute barred and that this case represents a “clearest case”, in the words of the majority in Wardley, for the proceedings to be dismissed on this ground alone. It was submitted that as Jazabas went into liquidation in 2010, no causes of action pleaded could possibly have crystalised after this date. Finally, it was submitted that the evidence adduced by the plaintiffs with respect to concealment does not rise high enough to prove that any cause of action was in fact concealed.
Consideration
The SOC discloses no reasonable cause of action
The losses sought are those of Jazabas
72. The plaintiffs’ claim appears to be advanced on the basis that purchase of the Hillsdale land and subsequent losses impacted the balance of the ventures of “the Haigh Group”. This is what appears to be meant by the statement in the SOC that the plaintiffs were interrupted from maintaining their dual occupancy business ventures of four per annum. In the 1998 claim, Rolfe J calculated damages based on roughly similar grounds, i.e., that Jazabas would have been able to commence four new dual occupancy projects each year and would have earned profits from an additional twelve developments but for the breaches of the defendants. The fact that losses are being claimed on similar grounds is supported by the particulars provided in the letter from McKell’s dated 23 April 2021, which states the following with respect to (at least) the first misfeasance, deceit, and statutory claims:-
“(i) The alleged loss and damage is from business prevention or interruption to the plaintiffs from their joint venture dual occupancy development activities from 1994 to 2018.
(ii) The nature of the loss and damage is set of in Supreme Court proceeding No 55043/1998 and CA50159/2000, in which Rolfe J found; had the Council advised the plaintiff of the RAS and the RRZ, as it should have, Jazabas would not have purchased the land.
(iii) In Supreme Court proceeding No 55043/1998 damages were assessed on the basis that Jazabas had not purchased the land, it would have commenced 4 dual occupancies every year and,
(iv) The Council did not challenge the trial judges approach to the assessment of the Jazabas damages in the Supreme Court proceedings in the NSW Appeal Court and as such, the calculations for the loss and damage have been assessed on this basis.”
[sic]
73. The SOC is framed as if the losses are those of the plaintiffs. However, the claims arise, ultimately, out of the purchase of the Hillsdale land. The difficulty for the plaintiffs is that they were never the purchasers of the Hillsdale land, which was purchased, and later sold, by Jazabas. The plaintiffs may have suffered losses based on a diminution in the values of their shareholding in Permtree and KRE who were the shareholders of Jazabas, but the losses are still those of Jazabas. In my opinion (and as was the view of Harrison AsJ), the plaintiffs are prevented by the principle of reflective loss from recovering the losses of Jazabas (to which see below). This applies to each pleaded cause of action which I will consider separately.
74. With respect to the first misfeasance claim, the SOC apparently alleges that, had the plaintiffs known about the nature and extent of the risks to residential development in the Complex, “they” would not have purchased the Hillsdale land. “They” must refer to Jazabas, the actual purchaser of the land. With respect to the loss “they” suffered, McKell’s provided the particulars that I have quoted above. I conclude, therefore, that the first misfeasance claim is seeking the losses allegedly sustained by Jazabas.
75. With respect to the deceit and the statutory claims, there are a number of allegations made: first, that the defendants made several representations that misled the Council and the plaintiffs with respect to the RRZ; second, that the second defendant provided a statement to the Council in the LEC proceedings that repeated the above representations; and third, made other representations with respect to the 1985 RAS. The loss claimed is set out in the SOC, which states that:-
“Induced by each representation and in reliance thereon the plaintiffs proceeded with the chain of litigation and ultimately sold the land in reasonable mitigation of their losses.”
76. Later, the SOC sets out that, “[a]s a result of relying on each representation the plaintiffs have suffered loss and damage.” The particulars of 23 April 2021 refer back to those quoted above at [72]. The particulars also provide that the “chain of litigation” refers to the LEC proceedings, the 1998 proceedings and the 2005 proceedings. Jazabas was the plaintiff in all those proceedings, and so any loss suffered as a result of those proceedings, i.e., legal costs, was suffered by Jazabas, not by the plaintiffs. Any loss suffered through the sale of the land was also Jazabas’s loss. I am therefore satisfied that the deceit and statutory claims are seeking the losses of Jazabas.
77. With respect to the second misfeasance claim, it is the claim that has least in common with any claims brought in the 2005 proceedings. At [43], the SOC provides as follows:-
“In the premises by misconduct in public office as alleged in paragraphs 39 to 43 the plaintiffs have suffered the loss and damage alleged herein, and lost the opportunity to retain [the Hillsdale land] and continue and maintain their joint venture business activities.”
78. The only entity that could have lost an opportunity to retain the Hillsdale land is Jazabas, as it was the owner of the land. There is no further elucidation of the alleged losses in the pleadings or particulars. Thus, I am satisfied that the losses claimed are those of Jazabas.
Application of reflective loss principle
79. Mr King submitted that the reflective loss principle does not apply to shareholders who do not hold shares directly in the company. In this respect, Mr King submitted that her Honour erred in stating that this claim was brought by the plaintiffs in their personal capacity as shareholders of Jazabas. To the extent that her Honour’s judgment can be understood as stating that as a fact, it is incorrect. However, notwithstanding her Honour’s comment at [110] of her judgment, in my opinion, she was correct in her ultimate conclusion.
80. The reflective loss principle was explained by Bathurst CJ in Central Coast Council at [103]:-
“What has been described as the reflective loss principle articulated by the English Court of Appeal in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 (Prudential Assurance) at 223-224 (the principle) is that where loss is suffered by a company as a result of wrongdoing in respect of which each of the company and the shareholder has a cause of action, a shareholder cannot sue to recover the diminution in the value of his or her shares (or loss of benefits associated with his or her shareholding) resulting from the loss suffered by the company. The rationale for the principle has been described as the prevention of double recovery (Prudential Assurance at 222; Johnson v Gore Wood & Co [2002] 2 AC 1 (Johnson) at 62-63, 66-67 per Lord Millett, Lord Goff agreeing), or on the basis that the shareholder does not suffer a loss distinct from the company and the shareholder is barred from pursuing the claim by the principle in Foss v Harbottle (1843) 2 Hare 461 (Foss v Harbottle) (Marex at [10] per Lord Reed PSC, Lady Black and Lord Lloyd-Jones JJSC agreeing), or perhaps because the shareholder has no legal or equitable interest in the company’s assets (Marex at [80] per Lord Reed PSC).”
81. At all material times, the shares in Jazabas were held by Permtree and KRE. The plaintiffs, in turn, held shares in those companies and were thereby the ultimate shareholders of Jazabas. Any loss suffered by Jazabas would have become their loss through a diminution of their shareholding in Permtree and KRE. As stated in Central Coast Council, a shareholder cannot recover the diminution in the value of their shares resulting from losses suffered by the company. If the plaintiffs were allowed to recover the loss of Jazabas, it would offend the underlying rationale in circumstances where Jazabas has already tried, unsuccessfully, to recover its loss.
82. Ms Thomas cited the cases of Ballard and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) (2021) 57 WAR 468; [2021] WASCA 105 (“Mineralogy”) in support of her submission that the plaintiffs are prevented from recovering the losses claimed because they are reflective losses. In Ballard, the plaintiff held shares in Wingrove Pty Ltd, which held one-half of the issued shares in Stoneglow Pty Ltd. McDougall J held that a claim for loss of deprivation of income and dividends by Mr Ballard, as a result of Stoneglow Pty Ltd losing work, was a claim for reflective loss and could not be recovered. In Mineralogy, Clive Palmer, the second plaintiff, was variously described as an “ultimate shareholder” or an “ultimate beneficial owner” of the shares in the first plaintiff, Mineralogy Pty Ltd: Mineralogy at [6], [17], [254]. The Western Australian Court of Appeal held that the losses claimed by Mr Palmer reflected the loss suffered by the company and that those claims therefore disclosed no reasonably arguable cause of action.
83. In substance, there is no difference where the loss is that of an ultimate shareholder rather than that of a direct shareholder. In both cases, the loss is the diminution of value in their shareholding and is not a loss distinct from that of the company. In my view, there is no reason in principle to draw the technical distinction cavilled for by the plaintiffs. In any event, Ballard and Mineralogy are cases where Australian Courts, including a State appellate Court, have confirmed this position. I therefore reject the plaintiffs’ submission and accept the submission advanced by Ms Thomas.
84. I am satisfied that Harrison AsJ did not err in holding that the plaintiffs were precluded from recovering the loss that they seek based on the principle of reflective loss. In my view, no reasonable cause of action is disclosed with respect to the four causes of action opaquely pleaded, and they should not proceed. This effectively disposes of the plaintiffs’ appeal. I now turn to the other submissions advanced by the defendants as part of the cross-appeal.
The proceedings are statute barred
85. Mr King relied on the High Court’s statement in Wardley at 533 per Mason CJ, Dawson, Gaudron and McHugh JJ, that it is undesirable that limitation questions should be decided in interlocutory proceedings in advance of the hearing of the action except in the clearest of cases. In response, Ms Thomas submitted that this case is the clearest of cases.
86. The claims advanced by the plaintiffs, except for the statutory claim, are all torts. The limitation period for a cause of action founded on tort is six years from the date on which the cause of action first accrues to the plaintiff: s 14(1)(b) of the Limitation Act 1969 (NSW) (“Limitation Act”). This includes the personal injury claim, which, it is agreed, arises out of the deceit claim. The limitation period for the statutory claim is either three or six years (to which see below). Jazabas was put into voluntary administration in 2010 and was deregistered in 2012. Leaving to one side that a limitation period with respect to a tort will run from the date damage is sustained, and that in this case damage was suffered long, long in the past, any causes of action accrued to Jazabas must have accrued by, at the very latest, 2012 when Jazabas ceased to be a legal entity. These proceedings were commenced eight years later in 2020. Given that I have found that all losses that are claimed are those of Jazabas, all the claims founded in tort are statute barred beyond doubt. This is, indeed, the clearest of cases.
87. With respect to the statutory claim, at [36] of the SOC, the plaintiffs allege that they have “suffered loss or damage entitling them pursuant to section 236, 237 and 243 of the Australian Consumer Law and/or sections 82 and 87 of the Trade Practices Act so as to provide for the amount of the loss and damage”. It is unclear why the plaintiffs have made a claim pursuant to the ACL, which is a part of the legislation that succeeded the TPA in 2010. It is not an alternative to the TPA. If the plaintiffs are claiming damages (or other orders that are not pleaded) under the ACL, then they have not particularised what harm they suffered after the commencement of the CCA in 2010. In other words, there are no pleadings or particulars whatsoever of any misleading or deceptive conduct occurring in or after 2010. In any event, the limitation period for claims made under ss 236 and 237 (s 243 sets out the types of orders that can be made under s 237), is six years: ss 236(2); 237(3) of the ACL. Alternatively, a claim pursuant to ss 82 and 87(1A) of the TPA (although again it is not clear what orders the plaintiffs are seeking) the limitation period is three years: ss 82(2); 87(1CA)(b) of the TPA. Without any doubt, any claim pursuant to either the TPA or the ACL is statute barred. This is the clearest of cases.
88. In response, the plaintiffs submitted that the causes of action were concealed from them until 2015, when Mr Haigh read the Lister report. Although not pleaded, fraudulent concealment which has prevented a plaintiff from bringing a cause of action is governed by s 55 of the Limitation Act, pursuant to which a plaintiff must plead and prove the facts that enliven its operation: Ballard v Multiplex Ltd [2012] NSWSC 426 at [95]. That section was referred to during oral argument, and relevantly provides as follows:-
55 Fraud and deceit
(1) Subject to subsection (3) where—
(a) there is a cause of action based on fraud or deceit, or
(b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed,
the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment.
(2) Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection.
(3) For the purposes of subsection (1), a person is answerable for fraud deceit or concealment if, but only if—
(a) the person is a party to the fraud deceit or concealment, or
(b) the person is, in relation to the cause of action, a successor of a party to the fraud deceit or concealment under a devolution from the party occurring after the date on which the fraud deceit or concealment first occurs.
89. The two misfeasance claims are not actions based on fraud or deceit and do not fall within subs (1)(a): New South Wales v Mulcahy [2006] NSWCA 303. Neither do they fall under subs (1)(b). Apart from bare assertions of fraudulent concealment, the plaintiffs have not elaborated on the assertion in pleadings, particulars or evidence. The first misfeasance claim is based on the non-publication of the 1983 RAS and the 1988 report, and the “sanitisation” of the 1985 RAS. The 1983 RAS was known to the plaintiffs and was part of the 2005 proceedings. In those proceedings, the plaintiffs also pleaded that the 1985 RAS was a “sanitised” version of the 1983 RAS. They also alleged that the 1983 RAS was “concealed” by the defendants. In short, the facts were known to the plaintiffs in 2005.
90. The second misfeasance claim relates to the approval of the Orica plant. This occurred in 1998. The plaintiffs say that they were not aware of the facts giving rise to this claim until the Lister report of 2015. I have read the Lister report. The report states that there had been no prior comprehensive study of dangerous goods on Denison Street and that it is the first study to look at the issue. At its highest, the Lister report proves only that there was no appreciation of the danger (of the transport of dangerous goods in Denison Street) until 2015. There are no suggestions of deception or fraud contained within the report. It certainly does not prove concealment.
91. The deceit claim arises from representations made by Mr Haddad on 16 February 1998, as well as in his evidentiary statement provided during the LEC proceedings and the 1998 proceedings. The same claims, based on the same alleged misrepresentations, were made during the 2005 proceedings. Thus, there was never any concealment. As the statutory claim relies on the same factual matrix as the deceit claim, there was likewise no concealment.
92. In my opinion, s 55 of the Limitation Act is inapplicable in the present case.
Tort of deceit claim and statutory claims
93. Part of the deceit and statutory claims is based upon evidence given by Mr Haddad in the LEC and 1998 proceedings. Ms Thomas correctly submitted that a witness is protected from suit, even if the allegations are that the witness’s acts were deliberate or malicious: D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 at [39]. Thus that part of the pleading is unsustainable and to the extent that it informs those claims, they disclose no reasonable cause of action.
Personal injury claim
94. It is difficult to discern the precise nature of the personal injury claim advanced by Mr Kikiras from the pleadings. The SOC provides no detail, save for mentioning hurtful personal and family losses. Further, in response to a letter from the CSO specifically requesting particulars regarding the alleged loss and damage, as well as the nature, basis and calculations of the loss and damage claimed (referred to above), McKell’s provided no information suggesting that Mr Kikiras had a claim for personal injury arising from mental harm. This claim seems to only have arisen from oral submissions before Harrison AsJ.
95. Damages for psychiatric injury are available for an action in deceit: see Magill v Magill (2006) 226 CLR 551 at 562; [2006] HCA 51 at [20]. Presumably, given the pleadings from which the personal injury claim (apparently) arises, being the pleadings for the deceit claim, it is a claim for intentionally inflicted harm, rather than in negligence. The plaintiffs do not make any claim in negligence in these proceedings.
96. Given the above, the Civil Liability Act 2002 (NSW) (“CLA”) would not apply to this claim: s 3B(1)(a) CLA. However, I observe that the evidence required to prove this claim would be diagnosis of a recognised psychiatric illness rather than psychological damage: Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471; [2007] NSWCA 377 at [73]. No pleadings or particulars of a recognised psychiatric illness have been provided. The Watson-Munro report, which suggests that Mr Kikiras suffers from a depressive disorder and an anxiety disorder, was produced by a psychologist rather than a psychiatrist. I note that a psychologist cannot make such a diagnosis: see Jones v State of New South Wales [2020] NSWSC 830 at [50]. Thus, there are no pleadings or particulars setting out this claim, and no evidence in support of a recognised psychiatric illness. No reasonable cause of action is disclosed, and Harrison AsJ did not err in striking out the pleading (to the extent it exists) pursuant to r 14.28 of the UCPR.
97. There remains a question of whether or not leave should be given to Mr Kikiras to replead his personal injury claim. Harrison AsJ permitted repleading of the claim, on the basis that it was not a claim for reflective loss and may disclose a cause of action, and that it was up to the plaintiffs’ legal representatives to investigate as to whether or not the claim was statute barred. Mr King relied on Lunt and Turner, extracted above, to submit that leave to replead should be given where there may be a reasonable underlying cause of action.
98. It is not in dispute that the personal injury claim attaches to the claim in deceit. That claim relies on representations that occurred on 16 February 1998 and for statements made during the proceedings in the LEC and the 1998 proceedings. The nature of the loss and damage, at least for the deceit claim, is particularised in the letter from McKell’s referring to the purchase of the Hillsdale land, which was sold in 1999. According to the Watson-Munro report, Mr Kikiras believes that his psychological problems began to escalate in about 1996. All these events occurred at least 21 years prior to these proceedings being instituted. The limitation period for a tort is six years. To the extent that any claim can be discerned from the pleadings and from Mr King’s oral submissions, as the personal injury claim attaches to the claim in deceit, it is hopelessly statute barred. This is the clearest of cases. Thus, in my opinion leave should not be granted to replead and I find that this part of claim, to the extent that it exists, should be summarily dismissed.
Second misfeasance claim
99. The second misfeasance claim is the only claim that is based on facts that are, perhaps, somewhat different to those pleaded during the 2005 proceedings. The same losses are sought, and therefore in my view this claim has no reasonable prospects due to the principle of reflective loss. However, even if I am wrong, in my view the claim cannot be maintained as, even at this early stage in the proceedings, it is abundantly clear that the plaintiffs cannot establish the elements of the cause of action.
100. The elements of the tort of misfeasance in public office were recently restated by the Court of Appeal in New South Wales v Spedding [2023] NSWCA 180 at [48]:-
“Putting aside controversy relating to the requirement for the exercise of a public power, the elements of the tort of misfeasance in public office may be stated as follows per Deane J in Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 370; [1995] HCA 65, citing Lord Diplock in Dunlop v Woollahra Municipal Council [1982] AC 158 at 172:
“(1) an invalid or unauthorised act;
(2) done maliciously;
(3) by a public officer;
(4) in the purported discharge of his or her public duties; and
(5) which causes loss or harm to the plaintiff.”
This is an intentional tort although the element of intention to do harm may be satisfied where it is established that the defendant was recklessly indifferent to the harm caused.”
101. The second misfeasance claim is not pleaded against Mr Haddad, but against the State of NSW. A question arises as to whether the State of NSW can be “a public officer” for the purpose of this tort. There is no authoritative statement of a test which determines what constitutes a public officer: see Leerdam v Noori (2009) 227 FLR 210; [2009] NSWCA 90 at [3] per Spigelman CJ. The plaintiffs have raised in their reply to particulars the possibility that the State of NSW held the “office as the State of NSW appointed under Act of Parliament and by her Majesty Queen Elizabeth and her appointed Governor”. In Emanuele v Hedley & Ors (1998) 179 FCR 290 at [36], the Court (Wilcox, Miles and RD Nicholson JJ) stated that:-
“… it is a legal nonsense to suggest there can be conduct of the Commonwealth itself that constitutes a misfeasance in public office. The Commonwealth of Australia is a legal entity created by the Commonwealth of Australia Constitution Act 1900 (Imp). It is a juristic person but, of course, is incapable of acting except through agents. It is incapable itself of committing misfeasance in public office; it does not hold public office.”
102. This reasoning would apply to the State of NSW. Therefore, it cannot be liable as principal for the first or second misfeasance claim. The only possibility is that the State is vicariously liable, which is not pleaded in these proceedings. In my opinion, the defendant rightly submitted that this is fatal to the claim.
103. Another issue with this claim is the absence of pleadings or particulars of facts that are capable of supporting the inference about the requisite state of mind; i.e., that the exercise of power was malicious or in bad faith. Misfeasance will not be established where there is an alternative hypothesis that is consistent with an honest exercise of power: Plaintiff M83A/2019 v Morrison (No 2) [2020] FCA 1198 at [115] per Mortimer J, as her Honour then was. The pleadings have been set out above. They do not set out anything that is inconsistent with an honest exercise of power. The most that can be said about the pleadings is that the Minister did not correctly apply the SEPP 33 and HIPAP 6 and did not consider certain relevant issues. There is a mere conclusion or assertion that the determination was made “in bad faith” and that the defendants “concealed the unacceptably high fatality risk to existing nearby residents and to prospective developers”, but the evidentiary basis for this assertion is not identified. In their particulars, the plaintiffs only reiterate that “[t]he pleadings have adequately identified claims of the tort of misfeasance in public office giving rise to the claim of malice or bad faith and any wrongful conduct being undertaken with intent to injure the plaintiffs.” The Swan report says only that there were shortcomings in the approval of the Orica plant (to which see [55] above.
104. In Northern Territory v Mengel (1995) 185 CLR 307; [1995] HCA 65, Deane J said at 370-371:-
“In the context of misfeasance in public office, the focus of the requisite element of malice is injury to the plaintiff or injury to some other person through an act which injuriously affects the plaintiff. Such malice will exist if the act was done with an actual intention to cause such injury. The requirement of malice will also be satisfied if the act was done with knowledge of invalidity or lack of power and with knowledge that it would cause or be likely to cause such injury. Finally, malice will exist if the act is done with reckless indifference or deliberate blindness to that invalidity or lack of power and that likely injury. Absent such an intention, such knowledge and such reckless indifference or deliberate blindness, the requirement of malice will not be satisfied.”
[citations omitted]
105. The defendants also relied on Lord Millett’s statements in Three Rivers District Council v Governor and Company of the Bank of England [2003] 2 AC 1 (“Three Rivers”). His Lordship said the following at 235:-
“The tort is an intentional tort which can be committed only by a public official. From this two things follow. First, the tort cannot be committed negligently or inadvertently. Secondly, the core concept is abuse of power. This in turn involves other concepts, such as dishonesty, bad faith, and improper purpose. These expressions are often used interchangeably; in some contexts one will be more appropriate, in other contexts another. They are all subjective states of mind.
It is important to bear in mind that excess of power is not the same as abuse of power. Nor is breach of duty the same as abuse of power. The two must be kept distinct if the tort is to be kept separate from breach of statutory duty, which does not necessarily found a cause of action. Even a deliberate excess of power is not necessarily an abuse of power. Just as a deliberate breach of trust is not dishonest if it is committed by the trustee in good faith and in the honest belief that it is for the benefit of those in whose interests he is bound to act, so a conscious excess of official power is not necessarily dishonest. The analogy is closer than may appear because many of the old cases emphasise that the tort is concerned with the abuse of a power granted for the benefit of and therefore held in trust for the general public.”
106. His Lordship further stated at 235 that the tort can be established by proving “targeted malice” as well as “official acts without such intention but in the knowledge that his conduct will harm the plaintiff or such a class.” In both cases, intention must be proved, either by evidence or by inference: Three Rivers at 235. An inference of dishonesty or improper purpose will be “difficult and usually impossible to rebut” if it can be shown that the official appreciated that he was acting in excess of the powers conferred upon him and that his conduct would cause injury to the plaintiff: Three Rivers at 236. I accept these comments, which have been referred to in Australian cases: see, e.g., Neilson v City of Swan (2006) 147 LGERA 136 at 152 at [42]; [2006] WASCA 94.
107. Further, with respect to the requirement to prove fraud, Lord Millett made the following comments in Three Rivers at 291-292:-
“The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”
108. After carefully considering the pleading and the further particulars provided by the plaintiffs, it is clear to me that what is alleged cannot rise to the level of malice, dishonesty or recklessness. There are no pleadings which connect the mental state to the conduct. The Swan report does not allege malice, dishonesty or recklessness. At its highest, all that can be said is that the Minister failed to have regard to the appropriate planning instruments.
109. The second misfeasance claim is merely speculative and should be struck out. As no repleading could ever cure its defect, it should be dismissed.
The proceedings are otherwise an abuse of process
110. The relevant legal principles governing summary dismissal for an abuse of process were helpfully set out by Chen J in Massalski v Owners SP 90255 [2023] NSWSC 23 at [54]:-
“(1) The “varied circumstances in which the use of the courts processes will amount to an abuse … do not lend themselves to exhaustive statement” or being “susceptible of formulation which would confine it to closed categories”: UBS at [1] and [72].
(2) An abuse of process will occur where either of two conditions are met: “where the use of the court procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute”: UBS at [1]; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [25] (Tomlinson).
(3) There is no inflexible rule that a party is precluded from relitigating issues determined in an earlier proceeding, but it might do so: Tomlinson at [26]. The question will be whether, in doing so, it would be unjustifiably oppressive upon the other party or would bring the administration of justice into disrepute - issues that involve a “broad merits based judgment which takes account of the public and private interests and all the circumstances of the case: UBS at [7], citing Johnson v Gore Wood & Co [2002] 2 AC 1, 31.
(4) Whether the circumstances constitute an abuse of process is to be assessed in light of, and must take into account, “the procedural law administered by the court whose processes are engaged”: UBS at [34] and [72].
(5) It is unnecessary, in order to establish abuse of process, that subsequent proceedings involve the same parties as the first one, or their privies: Tomlinson at [26]; UBS at [63]. It is also unnecessary to show a superadded element - such as collateral attack or dishonesty - albeit that the presence of such an element may demonstrate, or assist in doing so: UBS at [67].”
111. In Lunt at [19], the majority cited Gageler J, as his Honour then was, in Strickland (a pseudonym) v Director of Public Prosecutions (Cth) (2018) 266 CLR 325 at 372-373 [113]:-
“The power of a superior court to stay its own proceedings as an abuse of process is a power to protect the integrity of its own processes. The power is in that limited respect and to that limited extent a power to ‘safeguard the administration of justice’.”
[Citations removed]
112. As pointed out by Chen J, there is no inflexible rule that a party is precluded from litigating issues determined in an earlier proceeding. The question is whether doing so would be unjustifiably oppressive to the other party or would bring the administration of justice into disrepute.
113. As I have already observed, it has been said that an archetypal case of abuse of process is one where related parties sue the same defendant in respect of the same loss: CBRE at [22] per Bell P. It has also been said that at the core of an abuse of process is the vexation of being required to deal with claims that should have been resolved in prior proceedings: UBS at [58], [67], [75].
114. Given my findings above with respect to reflective loss, the abuse of process point can be easily determined. It is a fact that these claims, in various incarnations, were brought by related parties in the 2005 proceedings and relate to the recovery of the same losses as sought in those proceedings and in the 1998 proceedings. Permitting such claims to be agitated again would be unjustifiably oppressive to the defendants who have already had to deal with these claims, or very similar claims, twice before. To permit the claims to advance any further would, in my opinion, bring the administration of justice into disrepute, as it gives rise to the perception that justice is inefficient and profligate in spending public time and resources. It is also contrary to contemporary principles of civil litigation.
115. What is required of the Court in determining whether or not there is an abuse of process, is a “broad merits-based approach” taking into account the “underlying public interest” that “there should be finality in litigation and that a party should not be twice vexed in the same manner”: Johnson at 31, cited with approval in UBS at [7]. In this case, the plaintiffs, who were the directing minds of the entities that brought proceedings in 1998 and 2005 have made several attempts to litigate almost entirely the same claims, based on almost entirely the same facts, seeking recovery of the same losses. Significant public resources have been expended to respond to these claims. Even if the plaintiffs’ current claims have any merit, which in my view they do not, they ought to have been brought as part of the 2005 proceedings to the extent that they were not. As I have said, allowing these proceedings to continue would bring the administration of justice into disrepute.
116. In my view, Harrison AsJ ought to have dismissed the proceedings, for the reasons set out above.
117. In my opinion, the proceedings should be dismissed pursuant to r 13.4(1) on the grounds that no reasonable cause of action is disclosed by the SOC because:-
1. The causes of action alleged in the SOC offend the principle of reflective loss;
2. The causes of action alleged in the SOC are statute barred; and
3. The SOC pleads causes of action based on facts engaging the principle of witness immunity.
118. Further, in my opinion the proceedings should be dismissed on the grounds that the whole of the proceedings represent an abuse of process, because:-
1. The claims in the SOC should have been brought in earlier proceedings brought by companies controlled by the plaintiffs;
2. Having regard to the time that has elapsed since the circumstances giving rise to the claims, the proceedings occasion unjustifiable oppression to the defendants; and
3. The continuation of the proceedings would bring the administration of justice into disrepute.
119. I therefore allow the defendants’ cross-appeal.
120. As to costs, they will follow the event in the current proceedings. I note that Harrison AsJ reserved the question of costs with respect to the matter before her. If an agreement cannot be reached as to the disposition of those costs, I will hear the parties on the question of reserved costs in due course. If an agreement can be reached, I will make those orders in chambers.
Orders
121. With respect to the Notice of Motion brought by the defendants dated 20 July 2023, I make the following orders:-
1. The time for service of the Notice of Motion be abridged pursuant to r 1.12 of the UCPR;
2. The first defendant be removed as a party to the proceedings pursuant to r 6.29(a) of the UCPR; and
3. Each of the plaintiffs and the defendants is to bear their own costs of the motion.
122. With respect to the substantive proceedings, I make the following orders:-
1. Orders 2 and 4 made by Harrison AsJ on 21 October 2022 be set aside;
2. Pursuant to r 13.4 of the UCPR, the proceedings are dismissed;
3. The plaintiffs are to pay the defendants’ costs of these proceedings; and
4. In the absence of an agreement as to the costs reserved by Harrison AsJ, the parties are to contact my Associate within 14 days of this judgment, so that the matter can be listed for argument.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 16,014 |
nsw_caselaw:190e85f95931556a67a40e06 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Berejiklian v Independent Commission Against Corruption [2024] NSWCA 177 | https://www.caselaw.nsw.gov.au/decision/190e85f95931556a67a40e06 | 2024-07-26T22:25:57.109245+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Berejiklian v Independent Commission Against Corruption [2024] NSWCA 177
Hearing dates: 26-27 February 2024
Date of orders: 26 July 2024
Decision date: 26 July 2024
Before: Bell CJ and Meagher JA at [1];
Ward P at [311]
Decision: Amended Summons dismissed with costs.
Catchwords: ADMINISTRATIVE LAW — judicial review of “serious corrupt conduct” findings made by Independent Commission Against Corruption against former Premier — where Commission’s report adopted findings of credibility made by person who presided at public inquiries — where the appointment of the person who presided at public inquiries as an Assistant Commissioner expired after conclusion of those public inquiries and that person appointed as a consultant and accordingly officer of Commission prior to report being finalised — whether assistance of presiding officer as consultant in preparation of report outside limits of her authority — whether Commission could adopt credibility assessments made by presiding officer after her appointment as Assistant Commissioner had expired
ADMINISTRATIVE LAW — judicial review of “serious corrupt conduct” findings made by Independent Commission Against Corruption against former Premier — whether “no evidence” to support finding applicant influenced by her private interest in maintaining close personal relationship — whether non-pecuniary personal relationship capable of being “private interest” giving rise to conflict of interest and public duty — whether applicant as parliamentarian and Minister of the Crown had legally enforceable positive duty to act only according to what she believed to be in public interest — whether Commission made findings about merits of funding proposals — whether s 7 of NSW Ministerial Code and cll 10-12 of Schedule to code applies to Premier — whether applicant’s conduct in relation to funding decisions constrained by duty to act impartially — whether finding of partial conduct requires finding that but for unacceptable reason conduct would not have occurred — whether finding of partial conduct requires comparative exercise — whether Commission reached illogical or irrational result by making “serious corrupt conduct” finding but also refusing to recommend advice be sought as to whether to prosecute applicant — whether “dishonest” in s 8(1)(b) of Independent Commission Against Corruption Act 1988 (NSW) requires person to realise his or her conduct dishonest according to standards of ordinary people
Legislation Cited: Constitution Act 1902 (NSW), s 35E(1)
Evidence Act 1995 (NSW), s 55(1)
Independent Commission Against Corruption Act 1988 (NSW), ss 2A, 3(1), 4(1), 5(1), 6, 6A, 7(1), 8, 9, 11, 13, 17, 18(2), 20, 30, 31, 31B, 55, 57B, 74, 74A-74D, 75, 77, 77A, 104B, 107, 111, 112(1), Sch 1, cl 5(4)
Interpretation Act 1987 (NSW), s 35
Restart NSW Fund Act 2011 (NSW), s 3
Supreme Court Act 1970 (NSW), ss 48, 51(2), 69
Independent Commission Against Corruption Regulation 2017 (NSW), cl 5
NSW Ministerial Code of Conduct, Preamble, cll 1, 3, 4, 11, ss 1, 4, 6-12, Sch, cll 2(3)(c), 3(5)(c), 10-13, 27
Cases Cited: Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461
Amaba Pty Ltd v Booth [2010] NSWCA 344
Attorney-General (NSW) v Quin (1990) 170 CLR 1; [1990] HCA 21
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33
Ballina Shire Council v Knapp [2019] NSWCA 146
Balog v Independent Commission Against Corruption (1990) 169 CLR 625; [1990] HCA 28
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36
D’Amore v Independent Commission Against Corruption [2013] NSWCA 187
Edge v Pensions Ombudsman [2000] Ch 602
Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89; [2007] HCA 22
Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125
Hartnett t/as Hartnett Lawyers v Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell (2023) 112 NSWLR 463; [2023] NSWCA 244
Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19
Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64
IW v City of Perth (1997) 191 CLR 1; [1997] HCA 30
Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1
Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32
Local Government Board v Arlidge [1915] AC 120
Macdonald v R; Obeid v R; Obeid v R (2023) 112 NSWLR 402; [2023] NSWCCA 250
Macleod v The Queen (2003) 214 CLR 230; [2003] HCA 24
Maitland v R (2019) 99 NSWLR 376; [2019] NSWCCA 32
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16
New South Wales v Bardolph (1934) 52 CLR 455; [1934] HCA 74
Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7
Boardman v Phipps [1967] 2 AC 46
Project Blue Sky Inc v The Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28
Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v Industrial Relations Secretary of New South Wales [2021] NSWCA 64
R v Boston (1923) 33 CLR 386; [1923] HCA 59
R v Ghosh [1982] QB 1053
R v Love (1989) 17 NSWLR 608
R v Maudsley (2021) 9 QR 587; [2021] QCA 268
R v Obeid (No 2) [2015] NSWSC 1380
Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14
Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57
South Australia v O’Shea (1987) 163 CLR 378; [1987] HCA 39
Taylor v Public Service Board (New South Wales) (1976) 137 CLR 208; [1976] HCA 36
Washer v Western Australia (2007) 234 CLR 492; [2007] HCA 48
Wilkinson v Osborne (1915) 21 CLR 89; [1915] HCA 92
Woodham v Independent Commission Against Corruption (1993) 30 ALD 390
Workers Compensation Nominal Insurer v Hill [2020] NSWCA 54
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
Texts Cited: Anne Twomey, The Constitution of New South Wales (2004, Federation Press)
Explanatory Note to Independent Commission Against Corruption Bill 1988 (No 2) (NSW)
Independent Commission Against Corruption Bill 1988 (No 2) (NSW)
Independent Commission Against Corruption, Investigation into the conduct of the then member of Parliament for Wagga Wagga and then Premier and others (Operation Keppel) (June 2023)
Sir Frederick Jordan, Chapters on Equity in New South Wales (6th ed, 1947, Thomas Henry Tennant)
Category: Principal judgment
Parties: Gladys Berejiklian (Applicant)
Independent Commission Against Corruption (Respondent)
Representation: Counsel:
B Walker SC and H Cooper (Applicant)
S Free SC and J Kennedy (Respondent)
Solicitors:
Johnson Winter Slattery (Applicant)
Corrs Chambers Westgarth (Respondent)
File Number(s): 2023/302494
Publication restriction: Nil
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The applicant, Ms Berejiklian, was first elected as a member of the New South Wales Legislative Assembly on 22 March 2003. Subsequently, she became a Minister of the Crown. She was the Treasurer between 2 April 2015 and 23 January 2017, and Premier between 23 January 2017 and 5 October 2021.
The member representing the electorate of Wagga Wagga between 27 March 1999 and 3 August 2018 was Mr Daryl Maguire. Ms Berejiklian and Mr Maguire were in a “close personal relationship” which commenced before 2016 and ended in September 2020.
Conduct
At all relevant times, Mr Maguire was and regarded himself as the principal proponent within the State government of funding proposals for two entities in the Wagga Wagga electorate — the Australian Clay Target Association (ACTA) and the Riverina Conservatorium of Music (RCM).
In the case of ACTA, by January 2016 funding was sought to build a new clubhouse/national administration office complex on ACTA’s national clay target shooting ground in Wagga Wagga. In early December 2016, the applicant as Treasurer approved this funding request being included on the agenda for an Expenditure Review Committee (ERC) meeting on 14 December 2016. At that meeting, a grant of $5.5 million to ACTA was approved.
In relation to RCM, by August 2015 funding was sought for the construction of a new conservatorium of music, initially on an area of council land in Wagga Wagga, and later on a government-owned site in that city. In February 2017, RCM submitted a further proposal for its relocation to the government-owned site and refurbishment of existing buildings on that site, and for the later demolition of two buildings on that site and the construction of a new wing containing a recital hall and commercial facilities. On 12 April 2018, the ERC, attended by the applicant as Premier, approved the transfer of the government-owned site to “Arts NSW” for the purpose of relocating RCM there. On 24 April 2018, the ERC endorsed grant funding of $10 million to RCM for the purpose of refurbishing that site. In late August 2018, in the context of a by-election for the seat of Wagga Wagga, the applicant and the then Treasurer agreed to a funding reservation of up to $20 million for the construction of a new recital hall for RCM.
Findings
In late June 2023, the applicant was the subject of adverse findings made in a two-volume report of the Independent Commission Against Corruption (the Commission) titled “Investigation into the conduct of the then member of Parliament for Wagga Wagga and then Premier and others (Operation Keppel)” (the Report). The Commission made five findings of “serious corrupt conduct” by the applicant for the purposes of the Independent Commission Against Corruption Act 1988 (NSW) (the Act). The first four findings related to the funding proposals described above.
The first and third findings included that the applicant had engaged in a “breach of public trust” by exercising her official functions in relation to decisions made concerning funding promised and or awarded to ACTA and RCM without disclosing her close personal relationship with Mr Maguire when she was in a position of conflict between her public duty and private interest.
The second and fourth findings included that the applicant had engaged in the “partial” (as distinct from impartial) exercise of her official functions in relation to the ACTA funding and in relation to the RCM funding decision in August 2018. That partial conduct was exercising her official functions influenced by her close personal relationship with Mr Maguire, and her desire to advance or maintain that relationship.
The fifth finding was that the applicant had engaged in conduct which constituted or involved a dishonest or partial exercise of official functions. The specific conduct was the applicant’s failure and refusal to discharge her statutory obligation to report her actual suspicions that Mr Maguire’s activities in relation to three subject matters concerned or might have concerned corrupt conduct. Those subject matters were Mr Maguire’s relationships with particular property owners or developers, from whom it was said that Mr Maguire, with others, had the prospect of receiving commissions.
Preparation of the Report
The Hon Ruth McColl AO SC as an Assistant Commissioner presided over the two public hearings giving rise to the Report. Her appointment as Assistant Commissioner was extended on four occasions, and expired on 31 October 2022. From that date, Ms McColl was engaged as a consultant to the Commission (and thereby continued to be an officer of the Commission) for the purpose of providing it with “services, information or advice”. During the period of her appointment as a consultant, Ms McColl continued her participation in the drafting process which preceded the finalisation of the Report. The draft reports contained assessments as to the credibility of witnesses, including the applicant. The drafts were the subject of a substantive review by a panel presided over by the Chief Commissioner, who had ultimate responsibility for the making of the Report.
The Report was finalised in late June 2023, and on 29 June 2023 presented to the Presiding Officers of the Legislative Council and Legislative Assembly. The Report was accompanied by a letter signed by the Chief Commissioner which described the Report as “the Commission’s report on its investigation” into the conduct of Mr Maguire, the applicant and others.
The application for judicial review
The applicant’s Amended Summons contains 13 grounds of review.
With the exception of ground 1, which is directed to the role of Ms McColl in the preparation or making of the Report, each ground raises a basis upon which it is said the Commission made a material error of law in or in relation to its findings supporting one or more of the five “ultimate” findings that Ms Berejiklian had engaged in “serious corrupt conduct”.
The principal issues raised by the 13 grounds are as follows:
(i) whether the assistance provided to the Commission by Ms McColl as a consultant in the preparation of the Report, and specifically in relation to findings involving the assessment of the credibility of witnesses, was outside the limits of her authority;
(ii) whether there was any evidentiary material to support the Commission’s findings as to whether the applicant had a private interest in, and was influenced by a desire of, maintaining or advancing her close personal relationship with Mr Maguire;
(iii) whether under the general law and under the NSW Ministerial Code (the Code) a non-pecuniary personal relationship was capable of amounting to a “private interest” that could give rise to a conflict of interest and public duty;
(iv) whether the applicant as a Minister owed a legally enforceable positive duty to act only according to what she believed to be in the public interest, as opposed to a negative obligation not to use her position to promote her own pecuniary interest in circumstances of conflict;
(v) whether the applicant’s non-disclosure of her personal relationship with Mr Maguire constituted a breach of public trust for the purposes of s 8(1)(c) of the Act;
(vi) whether the Commission exceeded its authority and institutional competence by purporting to make findings about the merits of the ACTA and RCM funding proposals;
(vii) whether s 7 of the Code and cll 10-12 of the Schedule to the Code (the Schedule) applied to and imposed obligations on the applicant whilst she was Premier;
(viii) whether the applicant’s exercises of ministerial power in connection with the promising and awarding of funding were constrained by a legal duty to act impartially;
(ix) whether the Commission erred in finding that the applicant had engaged in partial exercises of her official functions within s 8(1)(b) of the Act in the absence of a finding that but for an unacceptable reason the applicant would not have engaged in that conduct;
(x) whether the Commission erred in finding that the applicant had engaged in partial exercises of her official functions without having first engaged in a comparative exercise addressing how she would have treated “relevantly identical” funding requests;
(xi) whether the duty to disclose in s 11(2) of the Act needs to be confined to a “matter” involving some specified subject matter;
(xii) whether the Commission reached an illogical or irrational result in finding that the applicant failed to discharge her obligations under s 11(2) of the Act, despite also deciding not to make a statement that consideration be given to obtaining the advice of the Director of Public Prosecutions with respect to the prosecution of the applicant for misconduct in public office; and
(xiii) whether a finding that the exercise of official functions was “dishonest” for the purposes of s 8(1)(b) requires that the person the subject of investigation appreciated or realised that his or her conduct was dishonest according to the standards of ordinary people.
The Court (Bell CJ and Meagher JA, Ward P dissenting as to issue (i) and as to the consequential orders to be made) dismissed the application, holding:
As to (i):
(Bell CJ and Meagher JA)
1. The assistance provided by Ms McColl was not outside the limits of her authority, and in making the Report the Commission did not act beyond its authority or power in obtaining Ms McColl’s assistance as a consultant. That assistance was to the Chief Commissioner in exercising his function of “making” the final report. That function had not been delegated to Ms McColl as an Assistant Commissioner. The Chief Commissioner’s task was to determine the findings, opinions, recommendations and reasons to be made or given in the final report to Parliament. His powers were not expressly qualified as to the sources from which he might acquire information or advice to be taken into account in doing so: Bell CJ and Meagher JA at [79]-[80].
2. Ms McColl was assisting the Chief Commissioner in that task by engaging in the drafting process. She initially did so as an Assistant Commissioner who had presided over the public inquiries, but to whom the function of making a report had not been delegated. Although the Act contemplates such circumstances, it does not expressly provide for how, in those circumstances, the presiding officer’s credibility assessments might be communicated to the Commissioner making the report. The applicant accepts that, as an Assistant Commissioner, Ms McColl could have done so by participating in the process of preparing a report, including through a drafting process by making findings of fact and proposing assessments as to the credibility of witnesses, and notwithstanding that Ms McColl had not been delegated the function of making the report: Bell CJ and Meagher JA at [79].
3. The question raised by the applicant’s argument is whether that outcome could also be achieved by Ms McColl, who had presided at the public hearings, being appointed as a consultant to participate in the process of preparing a report after her appointment as an Assistant Commissioner had expired in circumstances where it could not be renewed. A principal function and power of the Commission is to make findings and form opinions “on the basis of the results of its investigations”. There is no warrant to read down the Commission’s powers to have ongoing access to assistance and information concerning its investigations. Section 104B of the Act in terms provides that a suitably qualified person may be engaged as a consultant (and, accordingly, an officer) to provide the Commission with “services, information or advice”. Having presided over the two public inquiries, Ms McColl continued to be the person best placed to make assessments as to the credibility of witnesses and communicate them to the Chief Commissioner. The Commission did not act beyond its authority or power in obtaining such services from Ms McColl, and in taking the product of those services, and any information or advice, into account in making the findings, recommendations, reasons and opinions in the Report: Bell CJ and Meagher JA at [82]-[86].
(Ward P in dissent)
4. The Commission’s “adoption” of witness credibility assessments made by Ms McColl in a draft report amounted to her assessments being the relevant findings of fact at least on aspects of evidence given in the public hearings. The language of “adopt” used in the Report at [2.37] demonstrates that Ms McColl’s assistance went beyond the provision of “services, information or advice”, and constituted the making of findings that Ms McColl as a consultant did not have power to make. The communication of those findings, in circumstances where they were explicitly adopted by the Commission, amounted in effect to an impermissible delegation of the Chief Commissioner’s task of determining all necessary findings in the making of the Report. The Commission acted beyond its authority or power by in effect delegating to Ms McColl the responsibility for assessing witness credibility and making findings as to that subject: Ward P at [336]-[341].
As to (ii):
5. There was evidentiary material capable of supporting each of the challenged findings, as well as the underlying findings and inferences on which they were based: Bell CJ and Meagher JA at [113]-[143]; Ward P at [343].
As to (iii):
6. It was open to the Commission to find that the close personal relationship between the applicant and Mr Maguire was, from her perspective, a “private interest” that gave rise to a conflict of interest and duty. Under the general law, members of Parliament have a duty to “act according to good conscience, uninfluenced by other considerations, especially personal financial considerations”. Such considerations could be pecuniary or non-pecuniary. The position under the Ministerial Code is not relevantly different: Bell CJ and Meagher JA at [151]-[161]; Ward P at [343].
Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14; Wilkinson v Osborne (1915) 21 CLR 89; [1915] HCA 92, considered.
As to (iv):
7. A Minister’s obligation not to breach public trust is expressed more broadly than an obligation prohibiting the promotion of private pecuniary interests in circumstances where there is a conflict of interest and public duty. That public duty is sufficiently identified as being “to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community”, and “to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations”: Bell CJ and Meagher JA at [165]-[174]; Ward P at [343].
Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64; Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36; R v Boston (1923) 33 CLR 386; [1923] HCA 59; Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14; Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19; Boardman v Phipps [1967] 2 AC 46; Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461; R v Obeid (No 2) [2015] NSWSC 1380, considered.
As to (v):
8. The Commission did not find that the applicant had breached her duty of public trust under s 8(1)(c) simply by not disclosing her relationship. The breaches of that provision as found by the Commission were that she had exercised her official functions whilst in a position of conflict of duty and personal interest: Bell CJ and Meagher JA at [183]-[185]; Ward P at [343].
As to (vi):
9. The Commission did not decide for itself the merits of any of the funding proposals. Rather, it had regard to evidence as to the merits or otherwise of those proposals as perceived at the time by those whose task it was to consider critically the proposals as a circumstance relevant to whether the applicant acted with partiality and was influenced in doing so by her relationship with Mr Maguire: Bell CJ and Meagher JA at [189]-[199]; Ward P at [343].
As to (vii):
10. In its terms the Code applies to all current and future Ministers, and should be construed, if at all possible, so that it has that consequence. The language of cl 27(5) of the Schedule provides the mechanism by which that is to be achieved, providing for “rulings” by the Cabinet when the Minister in question is the Premier. That mechanism permits s 7 of the Code and cll 10-12 of the Schedule to apply consistently to all Ministers, including the Premier: Bell CJ and Meagher JA at [208]-[217]; Ward P at [343].
As to (viii):
11. The Commission did not err in proceeding on the basis that in participating in the funding decisions the applicant was required to act in the public interest and to exercise any relevant power for the purpose for which it was conferred and consistently with any eligibility or assessment criteria. At the same time, the applicant was required not to take into account any extraneous or irrelevant purpose or consideration: Bell CJ and Meagher JA at [228]-[235]; Ward P at [343].
Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14; R v Boston (1923) 33 CLR 386; [1923] HCA 59; Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; Edge v Pensions Ombudsman [2000] Ch 602, considered.
As to (ix):
12. Having a conflicting private interest which is capable of influencing, and does influence, the exercise of a function or power is sufficient to constitute a “partial” exercise of the power under s 8(1)(b), and irrespective of whether the outcome of that exercise would not have been different in the absence of the private interest. This is consistent with the authorities that hold that a member of Parliament and Minister is to act in exercising public functions and powers “uninfluenced” by other considerations, and with “fidelity and with a single-mindedness for the welfare of the community”: Bell CJ and Meagher JA at [246]-[257]; Ward P at [343].
Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14; R v Boston (1923) 33 CLR 386; [1923] HCA 59; Wilkinson v Osborne (1915) 21 CLR 89; [1915] HCA 92; Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; Macdonald v R; Obeid v R; Obeid v R (2023) 112 NSWLR 402; [2023] NSWCCA 250; Maitland v R (2019) 99 NSWLR 376; [2019] NSWCCA 32, considered.
As to (x):
13. Undertaking a comparison in determining whether a public official has engaged in partial conduct may assist in identifying preferences or advantages, depending on the nature of the power. It does not follow that such an approach should be mandatory. In the broad scope of circumstances to which the section might apply, there is no reason in the language of s 8(1)(b) or otherwise for construing the reference to “partial conduct” as confined only to treatment which is different from the treatment of other persons or things in “relevantly identical” circumstances: Bell CJ and Meagher JA at [262]-[264], [273]; Ward P at [343].
Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; Woodham v Independent Commission Against Corruption (1993) 30 ALD 390, considered.
As to (xi):
14. The present facts do not require the determination of the scope of the word “matter” in s 11 as each of the matters which are the subject of the relevant findings involved specific subject matter: Bell CJ and Meagher JA at [279], [290]; Ward P at [343].
As to (xii):
15. There was no illogical or irrational result as the two conclusions can be readily explained. Different rules of evidence apply before the Commission and before a criminal court; the relevant standard of proof is different; and the criminal offence requires proof of elements not essential to the “serious corrupt conduct” findings. Furthermore, the applicant’s argument presupposes that any illogicality or irrationality which might explain the asserted inconsistency is only in relation to the finding of “serious corrupt conduct”, and not in relation to the Commission’s declining to make a statement that advice be sought from the Director of Public Prosecutions: Bell CJ and Meagher JA at [298]-[300]; Ward P at [343].
As to (xiii):
16. There is no reason for construing “dishonest” in the Act other than in its ordinary sense. It follows that conduct is “dishonest” for the purposes of s 8(1)(b) when it would be regarded as such according to the standards of ordinary, decent people. It is not necessary that the accused have also appreciated or realised that his or her conduct would be regarded by such people as “dishonest”: Bell CJ and Meagher JA at [307]-[308]; Ward P at [343].
Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7; Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89; [2007] HCA 22; Macleod v The Queen (2003) 214 CLR 230; [2003] HCA 24, considered.
JUDGMENT
1. BELL CJ AND MEAGHER JA: The applicant, Ms Berejiklian, was first elected as a member of the New South Wales Legislative Assembly for the electorate of Willoughby on 22 March 2003. Between 2 April 2015 and 23 January 2017, Ms Berejiklian was also Treasurer and Minister for Industrial Relations. On the latter date, she relinquished those earlier positions and assumed the position of Premier. Ms Berejiklian resigned as Premier on 5 October 2021 and from Parliament on 30 December 2021.
2. In late June 2023, the applicant was the subject of adverse findings made in a two-volume report of the respondent (ICAC or the Commission) titled “Investigation into the conduct of the then member of Parliament for Wagga Wagga and then Premier and others (Operation Keppel)” (the Report). The member representing the electorate of Wagga Wagga between 27 March 1999 and 3 August 2018 was Mr Daryl Maguire. The adverse findings against Ms Berejiklian included that she had engaged in “serious corrupt conduct” in the exercise of her official functions in connection with funding promised and or awarded in 2016 and 2017 to the Australian Clay Target Association (ACTA) and in 2018 to the Riverina Conservatorium of Music (RCM) in two stages.
3. The applicant seeks judicial review of the Commission’s adverse findings against her. She does so by raising 13 grounds of review. For the reasons which follow, each of these 13 grounds must be rejected, and the proceedings dismissed with costs.
The present proceedings
4. The proceedings before this Court invoke the Supreme Court’s supervisory jurisdiction under Supreme Court Act 1970 (NSW), s 69. Under s 48(2) of that Act, proceedings invoking that jurisdiction in respect of any matter before a “specified tribunal” (as to which see s 48(1)(a)) are assigned to the Court of Appeal. ICAC is not such a tribunal. Nevertheless, the present proceedings were commenced in the Court of Appeal exercising that original jurisdiction, and as such were to be taken as “well commenced”, and, subject to any order of the Court of Appeal remitting the proceedings for hearing by a judge in a Division of the Supreme Court, were able to be continued and disposed of in this Court (s 51(2)). Because of the public importance of the proceedings, when they were first before this Court for directions, no order was made for their remission to a Division, the result being that they should continue in, and be disposed of by, the Court of Appeal exercising the Supreme Court’s supervisory jurisdiction.
5. That jurisdiction is confined to ensuring that the Commission carried out its investigative and reporting functions, including with respect to the making of findings of “serious corrupt conduct”, in accordance with the statutory provisions which govern the performance of those functions and exercise of the relevant powers. As Brennan J said in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36; [1990] HCA 21, “[t]he duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository’s power”.
6. The consequence is that the present proceedings are not an opportunity for this Court to undertake a “merits” review of the Commission’s findings, as it might do in its appellate jurisdiction in an appeal by way of rehearing. As Brennan J also said in Quin (at 36):
The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.
The consequence is that the scope of judicial review must be defined not in terms of the protection of individual interests but in terms of the extent of power and the legality of its exercise. (Emphasis added.)
7. In this context, it is important to note that the making of findings of fact where there is “no evidence” in support of the finding is an error of law going to the legality of the exercise of the Commission’s fact-finding function (Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [91]). Moreover, as Brennan J observed in Quin at 36, the extent or exercise of statutory powers conferred on a repository may be subject to “implied limitations”. Such implications could support the application in judicial review proceedings of a “standard of legal reasonableness” (Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [66] (Hayne, Kiefel and Bell JJ)) to the ultimate decision of the tribunal or fact-finder. The position is less clear in relation to the application of such a standard to a step in the reasoning to such a decision (see Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v Industrial Relations Secretary of New South Wales [2021] NSWCA 64 at [70] (Bathurst CJ, Bell P, Leeming JA)). In any event, none of this involves substituting a court’s view as to the factual merits of a decision for that of the decision-maker (Li at [66] (Hayne, Kiefel and Bell JJ), citing Quin at 36-37).
Brief overview of factual background
Mr Maguire and the ACTA and RCM funding proposals
8. At the relevant times, Mr Maguire was and regarded himself as the “principal proponent” within the State government of the ACTA and RCM funding proposals (Report at [11.3]). In the case of ACTA, by January 2016 funding was sought to build a new clubhouse/national administration office complex on ACTA’s national clay target shooting ground in Wagga Wagga ([11.23]). In early December 2016, the applicant as Treasurer approved this funding request being included on the agenda for the Expenditure Review Committee (ERC) meeting on 14 December 2016. At that meeting, a grant of $5.5 million to ACTA was approved unanimously. The Commission made factual findings that, subsequently, Ms Berejiklian “caus[ed] steps to be taken by staff from her office to follow up on the progress” of that proposal ([11.460.4]).
9. In relation to RCM, by August 2015 funding was sought for the construction of a new conservatorium of music, initially on an area of council land in Wagga Wagga, and later on a government-owned site in that city ([12.6]-[12.13]). In February 2017, RCM submitted a further proposal for its relocation to the government-owned site and refurbishment of existing buildings on that site (together referred to as RCM Stage 1); and for the later demolition of two buildings on that site and the construction of a new wing containing a recital hall and commercial facilities (together referred to as RCM Stage 2) ([12.21]).
10. On 12 April 2018, the ERC, attended by the applicant as Premier, approved the transfer of the government-owned site to “Arts NSW” for the purpose of relocating RCM there ([12.84]). On 24 April 2018, the ERC endorsed grant funding of $10 million to RCM for the purpose of refurbishing and repurposing that site ([12.90]). In late August 2018, in the context of the election campaign preceding the by-election in Wagga Wagga in September 2018 (resulting from Mr Maguire’s resignation from Parliament), the applicant as Premier and the then Treasurer, Mr Perrottet, agreed to a funding reservation of up to $20 million for the construction of the recital hall component of RCM Stage 2 ([12.136]-[12.137]).
The “close personal relationship”
11. The Commission found that Ms Berejiklian and Mr Maguire were in a “close personal relationship” which ended in September 2020. The Commission found that this relationship, being “one of mutual love and a mutual close emotional connection”, had the “capacity… to influence” Ms Berejiklian’s conduct “both personally and in the performance of her public duties” ([10.38]).
12. In assessing the nature of the relationship, the Commission relied in part on lawfully obtained recordings of telephone conversations and electronic copies of text messages between the applicant and Mr Maguire, as well as its assessment of the applicant’s evidence. One such exchange via telephone occurred on 14 February 2018 ([10.20], partially extracted below at [115]). Referring to that exchange and the applicant’s evidence explaining it, the Commission reasoned (at [10.29]):
… this evidence is relevant to the consideration of her exercise of her official functions in relation to the [ACTA] and the [RCM] proposals dealt with later in the report. While it may not have been, as Ms Berejiklian submitted, her real view of the dynamic between them, her concern to address what she perceived as Mr Maguire’s insecurities can, as a matter of human experience, be expected to have manifested itself in a continuing desire to assuage his feelings and support him to the best of her ability. That would include supporting him bringing to fruition two Wagga Wagga projects for which he was a fervent advocate.
The Commission’s findings of “serious corrupt conduct”
13. Ms Berejiklian’s Amended Summons (Judicial Review) identifies the decisions sought to be reviewed by this Court as the Commission’s findings that she engaged in “serious corrupt conduct”. Those findings are set out at [1.5] of the Report:
1.5. The Commission finds that Ms Berejiklian engaged in serious corrupt conduct by:
1.5.1. in 2016 and 2017, breaching public trust by exercising her official functions in relation to funding promised and/or awarded to the Australian Clay Target Association (ACTA) without disclosing her close personal relationship with Mr Maguire when she was in a position of a conflict of interest between her public duty and her private interest which could objectively have the potential to influence the performance of her public duty. Her conduct comprised:
1.5.1.1. causing the ACTA proposal to be included on the agenda for the Expenditure Review Committee (ERC) meeting of 14 December 2016
1.5.1.2. supporting the ACTA proposal in the ERC meeting of 14 December 2016
1.5.1.3. communicating her support for and interest in the ACTA proposal to NSW Treasury staff, at least one ministerial colleague (John Barilaro) and staff within her office
1.5.1.4. causing steps to be taken by staff from her office to follow up on the progress of the ACTA proposal following the ERC ACTA decision, including by communicating a request that the initial benefit cost ratio calculation of 0.88 by the Department of Premier and Cabinet Investment Appraisal Unit be revisited
1.5.2. in 2016 and 2017, partially exercising her official functions in connection with funding promised and awarded to ACTA by exercising her official functions influenced by the existence of her close personal relationship with Mr Maguire and by a desire on her part to maintain or advance that relationship (chapter 11)
1.5.3. in 2018, breaching public trust by exercising her official functions in relation to decisions concerning the Riverina Conservatorium of Music (“the RCM”) proposal which she knew was advanced by Mr Maguire in:
1.5.3.1. participating in the 12 April 2018 ERC decision concerning RCM Stage 1 in relation to the transfer of land at 1 Simmons Street, Wagga Wagga, to provide a site for the RCM
1.5.3.2. participating in the 24 April 2018 ERC decision concerning RCM Stage 1 in relation to the funding granted to RCM Stage 1
1.5.3.3. determining to make a funding reservation of $20 million in relation to RCM Stage 2
1.5.3.4. approving the letter arranging for that funding reservation to be made
without disclosing her close personal relationship with Mr Maguire, when she was in a position of a conflict of interest between her public duty and her private interest in maintaining or advancing her close personal relationship with Mr Maguire, which could objectively have the potential to influence the performance of her public duty
1.5.4. in 2018, in connection with funding promised and awarded to RCM Stage 2 engaging in conduct constituting or involving the partial exercise of her official functions influenced by the existence of her close personal relationship with Mr Maguire, or by a desire on her part to maintain or advance that relationship (chapter 12)
1.5.5. refusing to discharge her duty under s 11 of the ICAC Act to notify the Commission of her suspicion that Mr Maguire had engaged in activities which concerned, or might have concerned, corrupt conduct (chapter 13).
14. The applicant asks this Court to quash these “serious corrupt conduct” findings or, in the alternative, to make a declaration that the Commission’s determination that she had engaged in “serious corrupt conduct” was made “without or in excess of jurisdiction, and is a nullity”. Further, or again in the alternative, the applicant seeks a declaration that on the facts as found the Commission’s determination that she had engaged in any “serious corrupt conduct” was wrong in law.
The Commission and the ICAC Act
15. ICAC was constituted by the Independent Commission Against Corruption Act 1988 (NSW) (the Act). The principal objects of that Act include “to promote the integrity and accountability of public administration” by the creation of an “independent and accountable body to investigate, expose and prevent corruption involving or affecting public authorities and public officials” (s 2A). The principal functions of the Commission include investigating complaints as to corrupt conduct and any matter referred to the Commission by both Houses of Parliament, and communicating to appropriate authorities the results of its investigations (s 13(1)). They also include specific powers to make findings and form opinions as to whether particular persons have engaged in “corrupt conduct” (s 13(3)(a)). The powers conferred on the Commission to enable it to perform these functions include to conduct investigations, and, where necessary, to conduct compulsory examinations and public inquiries (ss 20, 30, 31).
16. The central provisions of the Act and other legislation relevant to the Commission’s findings of “serious corrupt conduct” are set out below.
ICAC Act
17. For the purposes of the Act “corrupt conduct is any conduct which falls within the description of corrupt conduct in section 8, but which is not excluded by section 9” (s 7(1)).
18. Section 8 relevantly provides:
8 General nature of corrupt conduct
(1) Corrupt conduct is—
…
(b) any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions, or
(c) any conduct of a public official or former public official that constitutes or involves a breach of public trust, or
…
19. A “public official” as defined means any individual “having public official functions or acting in a public official capacity”, and relevantly includes a Minister of the Crown (s 3(1)).
20. Section 9 limits the nature of corrupt conduct, providing:
(1) Despite section 8, conduct does not amount to corrupt conduct unless it could constitute or involve—
(a) a criminal offence, or
(b) a disciplinary offence, or
(c) reasonable grounds for dismissing, dispensing with the services of or otherwise terminating the services of a public official, or
(d) in the case of conduct of a Minister of the Crown or Parliamentary Secretary or a member of a House of Parliament—a substantial breach of an applicable code of conduct.
…
(3) For the purposes of this section—
applicable code of conduct means, in relation to—
(a) a Minister of the Crown or Parliamentary Secretary—a ministerial code of conduct prescribed or adopted for the purposes of this section by the regulations…
21. Clause 5 of the Independent Commission Against Corruption Regulation 2017 (NSW) prescribes the NSW Ministerial Code of Conduct (which is set out in the Appendix to that regulation) (the Ministerial Code or Code) as an “applicable code of conduct for the purposes of section 9 of the Act”. The effect of its doing so is considered below at [32]ff.
22. Section 11(2) of the Act imposes a duty on persons, including any Minister of the Crown, “to report to the Commission any matter that the person suspects on reasonable grounds concerns or may concern corrupt conduct”.
23. Section 13 describes the “principal functions” of the Commission, which include:
(3) …
(a) the power to make findings and form opinions, on the basis of the results of its investigations, in respect of any conduct, circumstances or events with which its investigations are concerned, whether or not the findings or opinions relate to corrupt conduct, and
(b) the power to formulate recommendations for the taking of action that the Commission considers should be taken in relation to its findings or opinions or the results of its investigations.
(3A) The Commission may make a finding that a person has engaged or is engaging in corrupt conduct of a kind described in paragraph (a), (b), (c) or (d) of section 9(1) only if satisfied that a person has engaged in or is engaging in conduct that constitutes or involves an offence or thing of the kind described in that paragraph.
24. Sections 13(4) and 74BA contain a further limitation on the Commission’s power to make a finding of “serious corrupt conduct”. Section 13(4) states:
The Commission is not to make a finding, form an opinion or formulate a recommendation which section 74B or 74BA prevents the Commission from including in a report, but section 9(5) and this section are the only restrictions imposed by this Act on the Commission’s powers under subsection (3).
25. Section 74 concerns the making of reports by the Commission to Parliament:
74 Reports on referred matters etc
(1) The Commission may prepare reports in relation to any matter that has been or is the subject of an investigation.
(2) The Commission shall prepare reports in relation to a matter referred to the Commission by both Houses of Parliament, as directed by those Houses.
(3) The Commission shall prepare reports in relation to matters as to which the Commission has conducted a public inquiry, unless the Houses of Parliament have given different directions under subsection (2).
(4) The Commission shall furnish reports prepared under this section to the Presiding Officer of each House of Parliament.
(5), (6) (Repealed)
(7) A report required under this section shall be furnished as soon as possible after the Commission has concluded its involvement in the matter.
(8) The Commission may defer making a report under this section if it is satisfied that it is desirable to do so in the public interest, except as regards a matter referred to the Commission by both Houses of Parliament.
(9) (Repealed)
26. A report under s 74 is not to include findings or opinions that a person has committed a criminal or disciplinary offence (see s 74B). Section 74BA(1) provides:
The Commission is not authorised to include in a report under section 74 a finding or opinion that any conduct of a specified person is corrupt conduct unless the conduct is serious corrupt conduct.
The NSW Ministerial Code
27. Following a preamble, which does not form part of the Code but to which regard may be had in the interpretation of its provisions (Code, s 12(1)), s 1(2) provides that the Code applies “to all current and future Ministers and Governments”.
28. Section 4 of the Code requires compliance with the Schedule to the Code (the Schedule), and provides that a “substantial breach” of the Schedule, if done knowingly, is a “substantial breach” of the Code. Part 3 of the Schedule, headed “Conflicts of interest”, addresses among other topics the duty to disclose conflicts of interest (cl 10), the form of disclosure (cl 11), and the obligation of a Minister to abstain from decision-making in the face of a conflict of interest (cl 12).
29. Sections 6 and 7 of the Code provide:
6 Duty to act honestly and in the public interest
A Minister, in the exercise or performance of their official functions, must not act dishonestly, must act only in what they consider to be the public interest, and must not act improperly for their private benefit or for the private benefit of any other person.
7 Conflicts of interest
(1) A Minister must not knowingly conceal a conflict of interest from the Premier.
(2) A Minister must not, without the written approval of the Premier, make or participate in the making of any decision or take any other action in relation to a matter in which the Minister is aware they have a conflict of interest.
(3) A conflict of interest arises in relation to a Minister if there is a conflict between the public duty and the private interest of the Minister, in which the Minister’s private interest could objectively have the potential to influence the performance of their public duty. Without limiting the above, a Minister is taken to have a conflict of interest in respect of a particular matter on which a decision may be made or other action taken if:
(a) any of the possible decisions or actions (including a decision to take no action) could reasonably be expected to confer a private benefit on the Minister or a family member of the Minister, and
(b) the nature and extent of the interest is such that it could objectively have the potential to influence a Minister in relation to the decision or action.
30. Section 11 of the Code contains definitions which also apply to the Schedule, in each case “unless the context otherwise requires”. The definition of “Minister” includes “any Member of the Executive Council of New South Wales”. Section 11 defines “conflict of interest” as having “the meaning given by section 7(3) of this Code”.
31. A “private benefit” is defined in s 11 to mean:
… any financial or other advantage to a person (other than the State of New South Wales or a department or other government agency representing the State), other than a benefit that—
(a) arises merely because the person is a member of the public or a member of a broad demographic group of the public and is held in common with, and is no different in nature and degree to, the interests of other such members, or
(b) comprises merely the hope or expectation that the manner in which a particular matter is dealt with will enhance a person’s or party’s popular standing.
The effect of prescribing the Ministerial Code under s 9(3) of the Act
32. As set out at [20] above, s 9(1)(d) of the Act provides that conduct of a Minister falling within the scope of s 8 does not amount to “corrupt conduct” unless, in the case of a Minister of the Crown, it could constitute or involve inter alia a “substantial breach of an applicable code of conduct”, relevantly the Ministerial Code.
33. The effect of prescribing the Code under s 9(3) of the Act as “an applicable code of conduct” is, according to the note which follows s 1 of the Code:
… that a suspected breach of the Code may be investigated by the Independent Commission Against Corruption and, if substantiated, give rise to a finding of corrupt conduct. …
34. That conduct amounting to a substantial breach of the Code could give rise to a finding of “corrupt conduct” would appear to follow only if, consistently with the scheme of ss 8 and 9 of the Act, the relevant breach of the Code was also “corrupt conduct” within the more general language of s 8(1), (2) or (2A). That observation is not controverted by the note because regard can only be had to the note in the interpretation of provisions of the Code (s 12(1)), and not those of the Act, and because the note does not form part of the Act for the purposes of Interpretation Act 1987 (NSW), s 35.
The five findings of “serious corrupt conduct”
35. The Commission’s five findings of “serious corrupt conduct” by the applicant are contained in [1.5.1]-[1.5.5] of the Report, extracted above at [13].
36. The first and third of those findings (at [1.5.1] and [1.5.3]) are that the applicant engaged in what amounted to conduct by a public official that constituted or involved a “breach of public trust” (s 8(1)(c) of the Act) ([11.460], [12.223]), which was a substantial breach by a Minister of s 7(2) of the Code, and cll 10(1), 11 and 12 of the Schedule (see s 9(1)(d) and (3), and s 13(3A) of the Act) ([11.489]-[11.491], [12.256]-[12.258]), and constituted “serious corrupt conduct” within s 74BA(1) of the Act ([11.513], [12.263]-[12.264]). That conduct was exercising her official functions in relation to decisions made concerning funding promised and or awarded to ACTA and RCM Stages 1 and 2 without disclosing her close personal relationship with Mr Maguire, when she was in a position of conflict of interest between her public duty and private interest which could objectively have the potential to influence the performance of her public duty.
37. The second and fourth of those findings (at [1.5.2] and [1.5.4]) are that the applicant engaged in what amounted to conduct by a public official that constituted or involved the partial (as distinct from impartial) exercise of that person’s official functions (s 8(1)(b) of the Act) ([11.594], [12.314]), which was a substantial breach by a Minister of s 6 of the Code (see s 9(1)(d) and (3), and s 13(3A) of the Act) ([11.624]-[11.626], [12.328]-[12.331]), and constituted “serious corrupt conduct” within s 74BA(1) of the Act ([11.636], [12.341]). That conduct was exercising her official functions in relation to ACTA and RCM Stage 2 funding influenced by her close personal relationship with Mr Maguire and her desire to advance or maintain that relationship.
38. The fifth of those findings (at [1.5.5]) is that the applicant engaged in what amounted to conduct by a public official that constituted or involved the dishonest or partial exercise of her official functions (s 8(1)(b) of the Act) ([13.389]), which was a substantial breach of s 6 of the Code (see s 9(1)(d) and (3), and s 13(3A) of the Act) ([13.402]-[13.404]), and constituted “serious corrupt conduct” within s 74BA(1) of the Act ([13.405]). That conduct was the applicant’s failure and refusal to discharge her obligations under s 11(2) of the Act to report her actual suspicions that Mr Maguire’s activities in relation to the “Badgerys Creek land deal”, “Country Garden and Mr Hawatt” and “Mr Demian” subject matters (as to which see [282]-[289] below) concerned, or might have concerned, corrupt conduct.
The grounds of review: overview
39. There are 13 grounds of review. With the exception of ground 1, which is directed to the role of the Hon Ruth McColl AO SC in the preparation or making of the Report, each ground raises a basis upon which it is said the Commission made a material error of law in or in relation to its findings supporting one or more of the Commission’s “ultimate” findings that Ms Berejiklian engaged in “serious corrupt conduct”. Ground 2, the “no evidence” ground, is said to relate to each of the Commission’s above findings of “serious corrupt conduct”. Grounds 3, 4, 5, 6 and 7 are directed (not necessarily exclusively) to the findings of a breach of “public trust”. Grounds 6, 8, 9 and 10 relate to the findings as to a partial exercise of official functions; and grounds 9, 11, 12 and 13 to the finding as to a breach of the duty under s 11 of the Act.
40. These grounds of review are dealt with below in the order in which they arise.
Ground of review 1
41. In terms, this ground is:
The Report dated June 2023 was prepared by the Hon Ruth McColl AO SC beyond her authority under the ICAC Act, in circumstances where she was not authorised to exercise the function of preparing or making a report from 1 November 2022 onwards, as that function was exclusively exercisable by a Commissioner or (through a delegation under s 107(6) of the ICAC Act) an Assistant Commissioner. The Commission’s purported “adopt[ion]” of Ms McColl AO SC's findings and opinions in the Report, including as to witness credibility assessments (R [2.37]), was not a valid means of curing Ms McColl AO SC's lack of authority, and those opinions and findings cannot amount to opinions and findings of the Commission.
42. The following provisions of the Act have particular relevance for this ground.
Relevant statutory provisions
43. The Commission is a corporation and consists of a Chief Commissioner and two other Commissioners (ss 4(1), 5(1)). With few exceptions, the functions of the Commission are exercisable by a Commissioner, and any act, matter or thing done in the name of, or on behalf of, the Commission by a Commissioner is taken to have been done by the Commission (s 6(1)). The exceptions include a decision to conduct a public inquiry under s 31, which must be authorised by the Chief Commissioner and at least one other Commissioner (s 6(2)). However, where a Commissioner considers there may be a conflict of interest in such a matter, the Commissioner may request an Assistant Commissioner to give that authorisation (s 6(4)).
44. With the concurrence of the Chief Commissioner, the Governor may appoint one or more Assistant Commissioners who may exercise the “functions conferred or imposed on an Assistant Commissioner by or under this or any other Act” (ss 6A(1), (2)). An Assistant Commissioner is “to assist the Commission, as the Chief Commissioner requires” (s 6A(3)). In addition, s 104B provides that the Commission “may engage any suitably qualified person to provide the Commission with services, information or advice”.
45. As stated at [15] above, the principal functions of the Commission include to investigate allegations or complaints as to corrupt conduct, to investigate any matter referred to the Commission by both Houses of Parliament, and to communicate to appropriate authorities the results of those investigations (s 13(1)). Those functions also include the making of findings “on the basis of the results of its investigations” (s 13(3)(a)). They may include findings that particular persons “have engaged, [or] are engaged… in corrupt conduct”, as well as findings of fact more generally (s 13(3), (5)).
46. As also stated at [15] above, the Commission may for the purposes of an investigation conduct a compulsory examination (s 30) or a public inquiry (s 31). Such an inquiry is to be conducted by a Commissioner or by an Assistant Commissioner, as determined by the Chief Commissioner (s 31(4)).
47. By the terms of s 6(1), the Commission’s function of making a report (s 74) is exercisable by a Commissioner, including the Chief Commissioner.
48. In relation to a matter referred to the Commission by both Houses of Parliament, the Commission is required to “prepare” a report “as directed by those Houses” (s 74(2)). The Commission is also required to “prepare” a report in relation to a matter which has been the subject of a public inquiry unless the Houses of Parliament give different directions (s 74(3)). More generally, the Commission “may prepare” reports in relation to any matter that has been or is the subject of an investigation (s 74(1)).
49. The Commission must “furnish” all reports prepared under s 74 to the Presiding Officer of each House of Parliament (s 74(4)). Such reports “shall be furnished” as soon as possible after the Commission has concluded its involvement in the matter (s 74(7)). Other than in respect of a matter referred to the Commission by both Houses of Parliament, the Commission “may defer making a report” if it is satisfied that it is desirable to do so in the public interest (s 74(8)).
50. Sections 74A to 74D contain matters which the Commission either “is authorised to include in a report under section 74” (see ss 74A, 74C, 74D) or “is not authorised to include” in such a report (ss 74B, 74BA). The matters in s 74A(1) include statements as to the Commission’s “findings, opinions and recommendations” and statements as to the “Commission’s reasons for any of its findings, opinions and recommendations”. The matters which the Commission may not include in a report extend to any findings or opinions “that a specified person is guilty of or has committed, is committing or is about to commit a criminal offence or disciplinary offence” (s 74B(1)(a)), as well as any findings or opinions “that any conduct of a specified person is corrupt conduct unless the conduct is serious corrupt conduct” (s 74BA(1)).
51. As to delegation, s 107(1) permits the Chief Commissioner to “delegate any function of the Commission to an Assistant Commissioner or an officer of the Commission”, “officer” referring to any of a Commissioner, an Assistant Commissioner, a member of staff of the Commission or a person engaged under s 104B (s 3(1)). Section 107(2) empowers a Commissioner to delegate “any of his or her functions to an Assistant Commissioner or an officer of the Commission”, other than the authorisation of a decision of the Commission under s 6(2). Each of these powers is subject to s 107(4), which relevantly precludes the delegation of “a power of delegation conferred by this section” and “a function of making a report” under the Act.
52. The prohibition on delegation in s 107(4) does not apply to a delegation to an “Assistant Commissioner (and to an Assistant Commissioner only) if the Chief Commissioner is of the opinion that there would or might be a conflict of interest or that there would or might be a conflict of interest, or that it would be in the interests of justice to do so” (s 107(6)). It follows that in the absence of such a conflict, the function of making a report must be exercised by a Commissioner, notwithstanding that a public inquiry relating to an investigation may be (or have been) conducted by an Assistant Commissioner (s 31(4)).
53. Section 104B confers a power on the Commission to engage “any suitably qualified person to provide the Commission with services, information or advice”. A person appointed under s 104B may be delegated any function of the Chief Commissioner or a Commissioner except, relevantly, the functions of “making a report under [the] Act” (in any circumstances — cf s 107(6)) or the powers of the Commission or a Commissioner to conduct a compulsory examination or public inquiry under Div 3 of Pt 4 of the Act. A person engaged by the Commission under s 104B to provide the Commission with services, information or advice is an “officer of the Commission” (s 3(1)).
The Operation Keppel investigation and preparation of the Report
54. The investigation which became known as Operation Keppel was conducted on the Commission’s own initiative arising from evidence obtained in another investigation (Operation Dasha). Initially, Operation Keppel concerned the conduct of Mr Maguire. On 1 September 2020, the Commission announced that it would hold a public inquiry as part of its investigation into allegations concerning Mr Maguire. Following the first public inquiry (which concluded on 16 October 2020), the Commission became aware of further allegations concerning grants of public moneys made to ACTA in 2016, and on two occasions to RCM in 2018. In each case, Mr Maguire had been an advocate for those grants, and the applicant had presided over or been a member of the ERC which had approved them. In addition, during its investigation of Mr Maguire, the Commission had become aware of the relationship between Mr Maguire and the applicant. On 30 September 2021, the Commission determined to conduct a further public inquiry for the purpose of investigating allegations involving the applicant. That second public inquiry commenced on 18 October 2021 and concluded on 1 November 2021.
55. Earlier, on 15 July 2020, Ms McColl had been appointed an Assistant Commissioner of ICAC on a part-time basis commencing on that day and until 28 February 2021. By an instrument dated 16 July 2020, the then Chief Commissioner, the Hon Peter Hall QC, delegated to Ms McColl certain powers and functions. Those powers and functions included the powers of the Commission and of a Commissioner under Div 2 of Pt 4 of the Act (Investigations); Div 3 of Pt 4 (Compulsory examinations and public inquiries) except the power to issue a warrant for the arrest of a person; the functions of the Commission under Div 5 of Pt 4 (Miscellaneous), which are not presently relevant; and the powers of a Commissioner under Pt 10 in dealing with contempt of the Commission (except for the power to issue a warrant for the arrest of a person). Finally, and again not presently relevant, the power of the Commission to direct non-publication (s 112(1) of the Act) was also conferred. Most significantly, the Chief Commissioner’s delegation did not include the function of “making a report under this Act”.
56. Ms McColl’s appointment as an Assistant Commissioner was extended on four occasions: on 17 February 2021, to 30 June 2021; on 26 May 2021, to 31 December 2021; on 15 December 2021, to 30 June 2022; and on 8 June 2022, to 31 October 2022. That last date was after Ms McColl had presided over the two Operation Keppel public inquiries, the first concerning conduct of Mr Maguire, and the second concerning that conduct, as well as conduct of the applicant. Following that second inquiry, written submissions were received from Counsel Assisting and affected parties, including the applicant. The last of those submissions was received on 18 October 2022.
57. On 31 October 2022, Ms McColl was engaged under s 104B of the Act as a “suitably qualified person” to provide the Commission with “services, information or advice”. It was common ground that the reason why Ms McColl was not reappointed as an Assistant Commissioner from 1 November 2022 was that cl 5(4) of Sch 1 to the Act provided that a person may not hold the office of Assistant Commissioner “for terms totalling more than 5 years”, Ms McColl having held previous appointments as an Assistant Commissioner in the late 1990s.
58. The fact of Ms McColl’s engagement as a consultant in relation to Operation Keppel was announced by a media release issued by the Commission on about 28 October 2022. That release described those services as “required for the purposes of her finalising the Operation Keppel report, including participating in the review and editing processes of that report”. By a further press release dated 11 January 2023, the Commission provided an “Operation Keppel update” in which it was said that Ms McColl was “working to complete a draft of the report as soon as possible but, given these matters, it [was] not possible to specify a date by which it will be completed”. It also stated that “once the report has been drafted it will need to be subjected to the Commission’s review, editing and production processes”.
59. The “review panel”, consisting of, among others, the Chief Commissioner (the Hon John Hatzistergos AM) and Commissioners the Hon Helen Murrell SC and the Hon Paul Lakatos SC, received a draft report from Ms McColl on 8 February 2023. The members of that panel then met in late February and in early March 2023 to discuss that draft report. Meetings were then held between the Chief Commissioner and Ms McColl to discuss the panel’s primary concerns, suggestions and recommendations and how Ms McColl proposed to address them. The review panel then provided comments to Ms McColl in relation to the draft report, and Ms McColl provided responses to those comments, a process resulting in the production of further drafts. Ms McColl had no further involvement after 6 April 2023. The Report then went through further review, editing and checking, and was finalised on 26 June 2023.
60. The two-volume Report was furnished to the Presiding Officer of each of the Legislative Council and Legislative Assembly on 29 June 2023. Page 3 of Volume 1 of the Report is a signed letter from the Chief Commissioner, the Hon John Hatzistergos AM, to the President of the Legislative Council and the Speaker of the Legislative Assembly, which stated:
In accordance with s 74 of [the Act] I am pleased to present the Commission’s report on its investigation into the conduct of the then member of Parliament for Wagga Wagga and then Premier and others (Operation Keppel).
Assistant Commissioner, the Hon Ruth McColl AO SC, presided at the two public inquires held in aid of this investigation.
Disposition of ground 1
The evolving arguments regarding ground 1
61. The formulation of ground 1 and the argument in support of it focus on Ms McColl’s participation in the drafting and preparation of what became the Report at a time after she had ceased to be an Assistant Commissioner on 31 October 2022. As that argument evolved, it concentrated on Ms McColl’s participation in the process of making of credit assessments of witnesses, and specifically Ms Berejiklian. Ultimately, it is contended that Ms McColl, who had conducted the public inquiries as an Assistant Commissioner, was the only person in a position to make such credit assessments of witnesses based on demeanour. As Ms McColl’s participation in the preparation of draft reports extended beyond her appointment as Assistant Commissioner, questions arise as to whether she could assist in the making and communications of such observations and assessments for the benefit of the Chief Commissioner, and do so while a consultant rather than an Assistant Commissioner, and whether the Commission could in the Report adopt or take into account observations and assessments made or communicated by Ms McColl whilst a consultant to the Commission.
62. As Assistant Commissioner, Ms McColl had not been delegated the function of “making a report” under the Act. In that capacity, as an officer of the Commission, she was required to “assist the Commission, as the Chief Commissioner requires” (s 6A(3)). Where the Chief Commissioner had not conducted the public inquiries but had the function of “making a report” in relation to the Operation Keppel investigations, Ms McColl’s role whilst an Assistant Commissioner included providing the Chief Commissioner with the benefit of her observations and assessments as to the credibility of witnesses.
63. Ms McColl made such assessments, and communicated them to the Commission’s review panel in the form of a draft report or reports. In the Report at [2.37]-[2.38], the Commission described how it had adopted or taken into account assessments made by Ms McColl, making clear that what was contained in the Report were findings of fact, including witness assessments, of the Commission:
Witness credibility
2.37. During this investigation, the Commission heard evidence from a large number of witnesses, some of whom gave evidence on more than one occasion. Aside from independent or objective evidence against which the credibility of witnesses may be assessed, including contemporaneous notes or other records – such as lawfully intercepted telephone calls, emails and text messages, evidence given by disinterested witnesses, the incontrovertible facts and the probabilities involved – the Commission adopts assessments made by the presiding Assistant Commissioner, the Hon Ruth McColl AO SC, who has had regard to other factors in determining the credibility of a witness and the evidence they gave. These factors include the responsiveness or otherwise of answers, a reluctance or otherwise to make appropriate concessions, whether the evidence given was direct or obfuscatory, and whether the witness was cooperative or argumentative.
2.38. Assessments as to witness credibility and reliability are important factors for the Commission to consider in properly weighing the evidence and making findings of fact that are available on that evidence. Witness assessments are included in the relevant chapters of this report. (Emphasis added.)
64. The Commission declined to make a global finding about the credibility of the applicant, instead making the following more general observations:
10.41. Ms Berejiklian gave evidence over a number of days in private and public hearings. In the Commission’s view, it would not be a useful approach to her evidence to make a global finding of the nature for which Counsel Assisting contends. It is true that Ms Berejiklian was an unsatisfactory witness in many respects. Some of that may be explicable on the basis of the period of time over which the evidence ranged, and a tendency to view the witness box as more like a husting than a place from which to respond directly to the question.
10.42. Nevertheless, in such circumstances the Commission has had regard to the objective facts proved independently of Ms Berejiklian’s testimony, in particular by reference to the numerous documents, the numerous records of communications between herself and Mr Maguire, to the extensive evidence of other participants in the events and also to Ms Berejiklian’s motives and to the overall probabilities. (Footnote omitted; emphasis added.)
65. The applicant contends that it cannot be said with any confidence whether the witness assessments adopted or otherwise taken into account by the Commission in “making” the Report were made by Ms McColl in her capacity as an Assistant Commissioner as opposed to being made in her subsequent capacity as a consultant. On the applicant’s argument, it was accepted that there would not have been any “problem” with the validity of findings and opinions such as those expressed above, which rely on such assessments, if the evidence had been capable of establishing that Ms McColl had made those assessments at a time when she was an Assistant Commissioner, and, presumably, if she had also continued to be available to provide assistance to the Commission in that capacity up to the time when the Report was furnished to Parliament.
66. To that end, senior counsel for the applicant submitted:
It is the Commission who makes a report, and an Assistant Commissioner who may be required to conduct public hearings and may be required to assist the Commission in general, but obviously therefore including [in the] very important function of making reports.
By statute [there is] … a person that Parliament contemplates may form the impressions that the person conducting the hearing may form, but [those impressions] are not available to be formed by those who didn’t conduct the hearing. But by statute, that assistance can be given. It’s an assistance as Assistant Commissioner.
…
It is the person who is doing the statutory task who needs to hold the office to which that task appertains. The task is assisting, in this case with respect to witness assessments. You can’t do that unless you’re an Assistant Commissioner.
67. The following exchange occurred shortly before that submission:
BELL CJ: … The difference then is she’d ceased to be an Assistant Commissioner at a point in time we know and what we don’t know is whether she had formed the assessments before or after that time and the question is whether it matters. Really, that’s the question.
WALKER: And I accept that that is the analysis.
68. This argument is different from that made in the applicant’s written submissions, both in chief and reply, which instead described the real question as being whether, following the expiration of her commission on 31 October 2022, Ms McColl herself undertook the function of “making a report” by proposing findings and assessments that were adopted by the Chief Commissioner. This argument directed attention to the scope of the function of “making a report”, which was said to include the functions of preparing and furnishing a report. It also required consideration as to whether Ms McColl undertook the function of “making a report” so understood.
The arguments as formulated in the written submissions
69. The applicant’s written submissions contended that the function of “making a report” in s 107(4)(b) and the expression “making a report” in s 74(8) are each to be understood as a “compendious term encompassing the twin functions of ‘prepar[ing]’ and ‘furnish[ing]’ reports”. In this context, “preparing” was said to include Ms McColl’s producing and amending a draft report, and her participating in the review or editing process which resulted in the publication of the Report. On this construction of that expression, Ms McColl, as an Assistant Commissioner to whom the function of “making” the Report had not been delegated, would not have been authorised to participate in a drafting process that included her providing witness credibility assessments.
70. The expression “making a report” is used in ss 18(2)(c), 74(8) and 107(4)(b) of the Act, and is to be contrasted with the language “prepare reports” and “furnish reports” used in s 74(1)-(4). Statements that the Commission may or shall “prepare” reports describe a process and outcome likely to involve various officers and staff, as well as resources, of the Commission, and over a significant period of time. The function of “making a report” is much more specific. The report is directed to a particular body, in this case Parliament, and the function of making it is to be exercised by a Commissioner, that being the default position as stated in s 6(1), unless that function has been delegated to an Assistant Commissioner in the circumstances described in s 107(6). The exercise of that function includes, from the perspective of a Commissioner as ultimate decision-maker, undertaking responsibility for the final form of a report, including its findings, opinions, recommendations and reasons. As the Commission submits, the “making” of a report describes the exercise of “presenting findings to Parliament [concerning the outcome of an investigation] to which some significance is then attached”, and is not merely a reference to the logistical exercise of preparing or drafting a report.
71. That the expression “making a report” describes the exercise embodied in deciding upon the final form of a report containing the Commission’s findings, opinions and recommendations, and communicating it to the Parliament, finds some support in the decision in Balog v Independent Commission Against Corruption (1990) 169 CLR 625 at 633-634; [1990] HCA 28. Section 18(2) of the Act permits the Commission to “defer making a report”. The Court identified the purpose for which that discretion was conferred as being to protect criminal proceedings before a court from interference arising from the making public of a report containing the findings and observations of the Commission about the same or a related subject matter. The “dangers” which the Court identified the legislature sought to avoid would ordinarily only manifest upon the communication of the final form of a report, not in the preparation of any draft.
72. The applicant’s argument as ultimately made does not contend that Ms McColl, acting either as an Assistant Commissioner or as a consultant, purported to exercise the function of “making” the Report, notwithstanding that in each capacity she had participated in the drafting process by suggesting findings, opinions and recommendations. It was accepted that in allowing Ms McColl to undertake that role in the drafting process as an Assistant Commissioner the Commission did not thereby delegate to her the task of “making” the Commission’s findings in respect of witness credibility assessments, notwithstanding that the Chief Commissioner may ultimately have “adopted” those assessments as findings or assessments of the Commission. Nor is it controversial that this drafting process involved the Chief Commissioner bringing his judgment to bear in relation to any suggested findings, opinions and recommendations contained in a draft report, with a view to his determining the final content of the Commission’s Report.
73. The applicant’s written submissions also suggested that, in circumstances where the Commission was required to address substantial issues of credit in making findings, the principles of natural justice precluded the Chief Commissioner as decision-maker from merely adopting a consultant’s assessment of the credibility of the relevant witnesses. In oral argument, it was made clear that the notion of procedural fairness was invoked in this context solely in support of the proposition that the only person who could provide such assistance to the Chief Commissioner was the person who presided at the inquiry, and only whilst he or she remained an Assistant Commissioner. It was said not to be sufficient that he or she was a consultant at the time such assistance was provided. Such a limitation is not apparent in s 6A(3), which simply says that “[a]n Assistant Commissioner is to assist the Commission, as the Chief Commissioner requires”.
74. It is also important to note here that it was not contended by the applicant that she was denied procedural fairness by the adoption of a process in which the person making the Commission’s findings and assessments was not the person who conducted the public inquiry and could directly make demeanour-based assessments. Whilst natural justice does not permit the implication of authority to delegate the hearing function with respect to the exercise of judicial power, the position is not necessarily the same in relation to an administrative body undertaking an investigative inquiry. See Local Government Board v Arlidge [1915] AC 120 at 132-134 (Viscount Haldane LC); Taylor v Public Service Board (New South Wales) (1976) 137 CLR 208 at 221-222 (Mason J); [1976] HCA 36. See also South Australia v O’Shea (1987) 163 CLR 378; [1987] HCA 39 where Brennan J said at 409-410:
It is not a general rule of administrative procedure as it is of judicial procedure that the person who hears should decide. A need for a further hearing by a repository of a power after a hearing by an expert board may arise if, in the particular circumstances, the interests of a party are affected by some new fact or matter which the decision-maker proposes to take into account and which the party has had no opportunity to deal with. …
If a statute provides for the facts relevant to a decision to be ascertained and evaluated by a board and for the board to report and make a recommendation to the decision-maker, prima facie there is no room for an implication that the power to make the decision is conditioned on the giving of an opportunity for a further hearing. To impose such a condition without statutory warrant would be to force a judicial model on the administrative process. That is not the function of a court. (Citations omitted.)
The arguments as ultimately made
75. As the terms of ground 1 show, the applicant initially contended that the Chief Commissioner’s “adoption” of Ms McColl’s findings and opinions, including as to witness credibility assessments, was not a valid means of curing her lack of authority to “make” such findings and opinions on behalf of the Commission. In effect, it was said that the Report merely recorded findings and opinions of Ms McColl, which had not been actually formed or made by someone authorised to do so on behalf of the Commission (s 6(1)). However, as finally put, the applicant’s argument focused on the Commission’s adoption of Ms McColl’s assessments in the making of its findings as to credibility, rather than the proposition that Ms McColl had made those findings, and the fact that those assessments were made or communicated to the Chief Commissioner at a time when Ms McColl was a consultant. It was not argued that by agreeing to and participating in such a drafting process, both before and during Ms McColl’s appointment as a consultant, the Commission had “in effect” delegated to her (contrary to s 107(4)) part of the function of “making” a report, namely that of making findings involving witness credibility assessments.
76. As put by counsel for the applicant, the following distinction was to be drawn between the character of Ms McColl’s participation before and during her appointment as a consultant:
… of course it’s proper for drafts to be considered prepared by others, of course. It really does go without saying but there is the world of difference between drafting something where you are, however competent, an amanuensis and your opinion being taken by the decision maker as his her or its opinion, that is fine if you are a constitutive element and there is whatever collegial process follows with the Chief Commissioner, as we know, having the whip hand in terms of decision making by the Commission.
It’s equally fine if there is a statutory function of assisting, but when there is neither, and that is this case, in our submission, what you have is somebody whose opinion is being adopted in a critical fashion, and I don’t want to go back over why it’s critical…
77. There is no factual controversy as to the process that generated the Report. In terms, it contains findings, opinions and recommendations of the Commission, as well as statements as to the Commission’s reasons for those findings, opinions and recommendations (as the extracts at [63]-[64] above show). That process involved the provision of draft reports to the Commission’s review panel, whose members included the Chief Commissioner. That panel considered the drafts, provided written and oral comments to Ms McColl, resulting in suggestions and recommendations which were then addressed before the final report was made by the Chief Commissioner in the name of the Commission.
78. The applicant’s remaining argument, identified at [61] above, is that the Commission was not entitled to rely on and adopt Ms McColl’s credibility assessments made or communicated after she had ceased to be an Assistant Commissioner. In the absence of evidence establishing that those assessments were only made and communicated while Ms McColl was an Assistant Commissioner, it must be assumed that this occurred after that appointment had ceased.
79. Until 31 October 2022, when Ms McColl’s appointment as a part-time Assistant Commissioner concluded, the Chief Commissioner was able to require her assistance in that capacity (s 6A(3)) in relation to the drafting of the Report, which process would include her suggesting findings of fact and proposing assessments as to the credibility of witnesses. The applicant accepts that there would have been no want of authority or power in the Chief Commissioner so proceeding in making the Report.
80. In terms of function, authority and power, up to this time the Chief Commissioner was overseeing the preparation of a draft report. In doing so, he was putting himself in a position where he could discharge his function of “making” the final report (s 6(1)), a function he had not delegated to Ms McColl. His ultimate task included determining the findings, opinions, recommendations and reasons to be made or given in the report to Parliament. His power to make such findings (s 13(3), (3A)) was not expressly qualified as to the sources from which he might acquire information or advice to be taken into account.
81. At the same time, Ms McColl was assisting the Commission (and the Chief Commissioner) in that task by engaging in the drafting process. The Act provides for an Assistant Commissioner to conduct a public inquiry (s 31(4)), and expressly acknowledges that issues of witness credibility are likely to arise in the course of the investigation undertaken by that inquiry (s 31B(2)(c)). More significantly, in circumstances where the Act contemplates that a presiding officer (being an Assistant Commissioner) may not be the person having the function of “making the report”, it does not in terms provide for how the presiding officer’s witness credibility assessments might be provided to the relevant Commissioner and taken into account in the preparation of a report as required by s 74(3).
82. From the Commission’s perspective, one obvious way of achieving that outcome is by the Chief Commissioner requiring the presiding officer, if still an Assistant Commissioner, to provide that assistance, if necessary exercising the power under s 6A(3). The question raised by the applicant’s argument, ultimately one of construction, is whether that is the only way of achieving that outcome; or whether it can be achieved by the presiding officer being appointed as a consultant to provide that service, information or advice after his or her appointment as an Assistant Commissioner has expired, including in circumstances where it cannot be renewed because of the time limitations in s 5(4) of the Act and cl 5(4) of Sch 1 to the Act.
83. The Act does not in terms state that the only means by which the Commission might secure that assistance in the preparation of its report is from the presiding officer whilst still an Assistant Commissioner. However, it does in terms provide that a suitably qualified person may be engaged to provide the Commission with “services, information or advice” (s 104B), and in doing so it does not limit in any way the subject matter of the “services, information or advice” which might be provided.
84. Nor does the Act describe the function of providing such assistance as one to be performed by an Assistant Commissioner as part of the function of presiding at a public inquiry or otherwise.
85. There is no warrant to read down the language of s 13(3)(a), which includes as a principal function and power of the Commission the making of findings and forming of opinions “on the basis of the results of its investigations”. In relation to the exercise of that function, acceptance of the applicant’s argument would impose an unwarranted limit upon the Commission’s ongoing access to assistance and information concerning its investigation.
86. For these reasons, this argument should be rejected. The appointment of Ms McColl as a consultant under s 104B was valid and effective. Her assistance in the drafting process was the provision of “services”. It also involved Ms McColl providing “information” or “advice” as to her assessments of the credibility of witnesses. Having presided at the two public inquiries, she continued to be an officer of the Commission (s 3(1)) following her appointment under s 104B, and was the person best placed to make those assessments. Those assessments were “important factors for the Commission to consider in properly weighing the evidence and making [its] findings of fact” ([2.38], extracted at [63] above). In providing those assessments to the Chief Commissioner, Ms McColl was communicating information concerning the results of one part of the Commission’s investigation. The Commission, in making the Report, did not act beyond its authority or power in obtaining services, information or advice from Ms McColl and taking the product of such services or any information or advice into account in the making of its findings, opinions, recommendations and reasons as part of the Report.
87. Ground of review 1 is rejected.
Ground of review 2
88. Ground 2 is:
Further or in the alternative to ground 1, the Commission’s finding that Ms Berejiklian had a private interest in, and was influenced by a desire of, maintaining or advancing her close personal relationship with Mr Maguire was not supported by any probative evidence (R [11.619])…
89. The above extract of ground of review 2 does not include the eight subparagraphs to that ground, which identify the five “ultimate” and three other findings to which the challenged findings are said to be “material”. The “ultimate” findings are those summarised at [35]-[38] above and three other findings are those of “substantial breach” of the Ministerial Code, being intermediate findings supporting the first, third and fifth of those “ultimate” findings.
90. There is an issue as to whether the applicant’s written submissions mischaracterise the findings made in the Report for the purpose of establishing the materiality of the findings for which there is said to be no probative evidence. It is convenient first to address that question and then, having done so, to address whether those findings were supported by any probative evidence.
Threshold issue: whether findings mischaracterised
Submissions
91. The applicant’s written submissions identify two findings as made without any probative evidence. The first challenged finding is that the applicant had a private interest in maintaining or advancing her close personal relationship with Mr Maguire, which she “deliberately” preferred over her public duty. That finding is said to be “critical” to the two findings of “serious corrupt conduct” arising from breaches of public trust (s 8(1)(c)), which are the ultimate findings at [1.5.1] and [1.5.3], described at [36] above. The conduct in each case was exercising official functions in relation to decisions made concerning the ACTA and RCM Stages 1 and 2 funding whilst in a position of conflict of interest and public duty.
92. The second challenged finding is that the applicant engaged in partial conduct “influenced by the existence of her close personal relationship with Mr Maguire and by a desire on her part to maintain or advance that relationship”. That finding is said to be “critical” to the two findings of “serious corrupt conduct” arising from breaches of s 8(1)(b) (partial conduct) and the finding of “serious corrupt conduct” arising from the applicant’s breach of s 11 (duty to notify possible corrupt conduct), which are the ultimate findings at [1.5.2], [1.5.4] and [1.5.5] respectively, described at [37]-[38] above. The conduct to which the partial conduct findings were directed was the partial exercise of the applicant’s official functions in relation to the ACTA and RCM Stage 2 funding influenced by her close personal relationship with Mr Maguire and her desire to maintain or advance that relationship. The conduct to which the s 11 finding relates was the applicant’s failure and refusal to discharge her obligations by reporting her actual suspicions of Mr Maguire’s activities in relation to the three matters described at [38] above.
93. Addressing the asserted “mischaracterisation” of the Report’s findings, the Commission says that the findings of “serious corrupt conduct” arising from breaches of public trust were that the applicant exercised her functions whilst in a position of conflict of interest and duty. It submits that those findings of breach did not depend on any finding that the applicant had “deliberately preferred her private interest… over her public duty”. Nevertheless, the Commission did make such a finding at [12.196], although not material to the s 8(1)(c) finding in the paragraph that follows. In relation to the breach of s 11, its findings were said to be that the applicant did not report her actual suspicions as to Mr Maguire’s activities, and that she did so in order to protect either Mr Maguire’s interests or her own interests, but not in furtherance of her interest in maintaining or advancing their relationship.
94. The Commission accepts that the conduct that it found constituted or involved breaches of s 8(1)(b) was the “partial” exercise of the applicant’s official functions influenced by her close personal relationship with Mr Maguire and her desire to advance or maintain that relationship. Accordingly, the Commission’s position is that ground of review 2 is only material to the “ultimate” findings based on a breach of s 8(1)(b) (partial conduct).
95. In reply, the applicant says that the above analysis is based on an incomplete account of the reasoning leading to the “ultimate” findings. In doing so, that argument makes reference to findings not challenged by the ground of review. First, as to the ultimate findings arising from the breaches of public trust, it is said those findings could not have been made unless the conduct in breach of s 8(1)(c) was found to answer the description of “serious corrupt conduct” (emphasis added) (s 74BA(1)). The findings supporting the Commission’s conclusion to that effect in respect of the ACTA funding included that the applicant “knew [that] or was reckless as to whether” she had to notify her position of conflict, and nevertheless concealed that relationship “over an extended period of time” ([11.507]). In respect of the RCM funding, the finding was that the applicant knew she was in a position of conflict but, “wilfully and in bad faith, deliberately did not disclose it” ([12.261]).
96. Finally, in relation to the breach of s 11, the Commission found that in refusing to discharge that duty the applicant, motivated by self-interest to conceal the truth about what she knew or suspected so as to protect herself, as well as to protect Mr Maguire from further investigation, breached s 6 of the Ministerial Code ([13.387], [13.388], [13.395], cf [13.398]).
Disposition of the threshold issue
97. The Commission was right to accept that a finding that Ms Berejiklian had a private interest in, and was influenced by a desire to, maintain or advance her close personal relationship with Mr Maguire was necessary for its conclusions as to partial conduct. The relevant findings are at [11.594] with respect to ACTA, and [12.314] with respect to RCM Stage 2, and are in terms that the applicant exercised her official functions “influenced by the existence of her close personal relationship with Mr Maguire and by a desire on her part to advance or maintain that relationship”.
98. In relation to its conclusion as to these breaches of s 8(1)(b), the Commission also found concerning the ACTA funding that the applicant had “consciously preferred” Mr Maguire for an “unacceptable reason” ([11.587]), and concerning the RCM Stage 2 funding that the applicant had “consciously preferred Mr Maguire” ([12.313]). Each of those findings is in substance the same as the first of the findings referred to in the applicant’s written submissions (see [91] above).
99. However, as concerns the breach of public trust and s 11 findings, notwithstanding that the applicant has pointed to further findings in support of her submission that the asserted error raised by this ground of review is also material to the “ultimate” findings, she has not sought to amend the ground as formulated. In these circumstances, it is not strictly necessary to consider the additional finding referred to in [92] above. However, in what follows the Court has considered whether that further finding was open on the evidence.
Relevant principles for the “no evidence” ground
100. Properly understood, the “no evidence” ground is that there is no evidentiary material which could rationally affect the decision-maker’s assessment of the probability of the relevant fact or facts in issue (see D’Amore v Independent Commission Against Corruption [2013] NSWCA 187 at [235] (Basten JA, Bathurst CJ agreeing), which in turn cites the earlier decision in Amaba Pty Ltd v Booth [2010] NSWCA 344 at [22]-[24] (Basten JA, Beazley and Giles JJA agreeing)). A finding of fact when there is “no evidence” in support of that finding is an error of law (Kostas at [91]).
101. As to whether there is evidence to “support” a particular finding, Basten JA makes the following observations in Booth at [23]-[24] in a passage cited with approval in Ballina Shire Council v Knapp [2019] NSWCA 146 at [38] and Workers Compensation Nominal Insurer v Hill [2020] NSWCA 54 at [19]:
[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.
102. In respect of inferences drawn from facts as found, the position is as described by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356; [1990] HCA 33:
… 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. (Emphasis in original.)
103. The applicant does not otherwise contend that any of the Commission’s ultimate decisions could be characterised as illogical or irrational (other than by ground of review 12). Nor does she contend that in determining the facts, by way of primary findings and the drawing of inferences, the Commission’s reasoning process was flawed as illogical or irrational (cf the discussion in D’Amore at [227]-[231]).
104. Accordingly, the findings addressed below on the “no evidence” ground are:
* that Ms Berejiklian had a private interest in, and was influenced by a desire of, maintaining or advancing her close personal relationship with Mr Maguire; and
* that Ms Berejiklian engaged in partial conduct influenced by the existence of that relationship, and did so for her own private benefit, which she deliberately preferred over her public duty.
The respective arguments
105. It is not contested that the applicant and Mr Maguire were in a “close personal relationship”. However, it is said that evidence beyond the mere existence of the relationship was required to support the “grave” finding that the applicant’s exercise of public functions was influenced by that relationship, or a desire to maintain or advance it. The applicant asserts that there is no such evidence.
106. It is submitted that only the presence of an “existential threat” to the relationship could “logically” justify a finding that the applicant was influenced by a desire to “maintain” that relationship. Such a broad statement as to likely human behaviour cannot be accepted as true. As a matter of common sense and experience, people in personal relationships act towards each other for all manner of reasons, including because what they do might be well-received by, or please, the other party, and in that respect be conducive to maintaining the relationship. It is certainly not the case that people act in that way only where it is believed to be necessary to do so for the survival of a relationship.
107. As to “advancing” a relationship, the applicant contends that there was no evidence to support a finding that the applicant believed that exercising her public functions was “capable of deepening or strengthening” the relationship. In response the Commission relies on evidence as to the dynamics of the relationship, which suggested that the applicant was conscious of a need to accommodate and assuage Mr Maguire’s insecurities by supporting him and projects for which he was a strident advocate (see [10.29]).
108. The applicant specifically refers to the Commission’s recording (at [11.556]) of Counsel Assisting’s submissions as to matters which “tended in favour of” a conclusion that the applicant had exercised her official functions preferentially in favour of the ACTA proposal influenced by a desire to maintain or advance the relationship:
… [Counsel Assisting] identified the following matters, which they contended, when considered cumulatively, tended in favour of such a conclusion:
11.556.1. the nature and strength of Ms Berejiklian’s close personal relationship with Mr Maguire including Mr Maguire’s status as a member of Ms Berejiklian’s ‘love circle’
11.556.2. Mr Maguire’s role as the ‘principal proponent’ within government for the ACTA proposal to the knowledge of Ms Berejiklian
11.556.3. Mr Maguire’s level of access to Ms Berejiklian and his preparedness to directly lobby her in order to seek to advance projects of which he was supportive, including the ACTA proposal
11.556.4. Mr Maguire’s manner of lobbying – a self-described ‘serial pest’ who was variously described by others as, amongst other things, persistent and aggressive
11.556.5. the absence of any measures taken by Ms Berejiklian to insulate herself from Mr Maguire’s influence over her decision-making insofar as it concerned projects advanced by him
11.556.6. Ms Berejiklian’s apparent preparedness to take, or not take, steps in her public life with a view to placating Mr Maguire and maintaining their personal relationship
11.556.7. Ms Berejiklian’s acknowledgment that the fact that the project was being advanced by Mr Maguire ‘could have been part of the consideration’ and ‘would have been a factor’
11.556.8. the absence of evidence supporting a conclusion that Ms Berejiklian supported the ACTA proposal because she concluded that it was in the public interest to do so.
109. As to these eight subparagraphs, the applicant submits that: the first refers only to the existence of the relationship; the second to fourth refer to matters about Mr Maguire’s position, and do not go to the issue of the applicant’s state of mind; the fifth and eighth refer merely to an absence of evidence; the sixth is question-begging; and the seventh is neutral as to why Mr Maguire’s involvement would be a factor, he also being the local member.
110. Finally, the applicant says that “[i]n the absence of any specific evidence supporting the finding that the applicant was influenced by her relationship in her public functions” Counsel Assisting’s arguments were based on supposition.
111. In response the Commission submits that there was probative evidence upon which its findings were based and from which it drew inferences.
112. Whether that is so requires this Court to consider the evidence referred to by the Commission and whether it provides support for the finding that the applicant was influenced in the exercise of her public functions concerning the ACTA and RCM funding proposals by a desire to maintain or advance her relationship with Mr Maguire.
Disposition of ground 2
113. It is convenient to address the questions of supporting evidence, and availability of inferences, by reference to the following matters which substantially cover those in Counsel Assisting’s submission as recorded at [11.556].
The nature and dynamics of the relationship
114. The Commission considers the nature of the relationship between [10.8] and [10.38]. Its findings include that it “was one of considerable intensity accompanied by mutual and deep feelings of love” ([10.9]), and that the messages between the two were “consistent with physical and emotional intimacy and a romantic relationship having developed” between them ([10.13]).
115. On 14 February 2018, there was a recorded telephone exchange between the applicant and Mr Maguire, which included the following ([10.20]):
BEREJIKLIAN: No but Hokis if I did something bad, I need to I need to perhaps.
MAGUIRE: Well you were just over the top over the top right and you just don’t need to be so mean that’s all.
BEREJIKLIAN: Okay I’m sorry.
MAGUIRE: You just appeared mean.
BEREJIKLIAN: Do you know why because I forget that I need to look like I’m you impress me in front of like I forget that [sic].
MAGUIRE: No you should I impress, I impress a lot of people why aren’t you impressed in front of people you should be.
BEREJIKLIAN: That’s what I mean I forget that I’m meant to be with you know, technically the Premier so, you know. I get that.
MAGUIRE: Hmm anyway.
BEREJIKLIAN: Because you know what I tell you why because normally you’re the boss and it’s hard when we have to switch it around that’s the truth.
MAGUIRE: Yeh but I am the boss, even when you’re the Premier.
BEREJIKLIAN: I know. So therefore it’s hard when I had to switch it around.
MAGUIRE: Glad even when you are the Premier I am the boss alright.
BEREJIKLIAN: Yes I know.
116. This exchange was the subject of the question to the applicant and her answer recorded at [10.21]:
In a private examination during Operation Keppel’s public inquiry into the Maguire allegation (‘the First Public Inquiry’), Ms Berejiklian was asked whether this exchange was ‘a fair understanding of your relationship at that point in time, that in the sense that, at least privately, it was Mr Maguire [who] was the leading party or the boss?’ She replied:
Look, as you can appreciate, when you’re the Premier of the state, it’s very difficult in private relationships to make people feel that – he wanted, he, he wanted to feel equal in the relationship because of my position … To make him feel less insecure in a private capacity I’m talking now, not in a public capacity. In a private capacity, it’s very personal … when you have a position of power, it’s very difficult in a personal relationship to address that position of power, and that’s what I was referring to. It’s very personal and private. It’s got nothing to do with work. It’s actually making him feel that because I was the boss during the day, that I wouldn’t necessarily be exercising that relationship in the private relationship. (Italics in original.)
117. In the light of this evidence, it was open to the Commission to make the findings made at [10.28]-[10.29], which include the finding accepting the submission of Counsel Assisting at [10.23]:
10.23. Nevertheless, Counsel Assisting submitted that the conversation highlighted Ms Berejiklian’s concern about Mr Maguire’s insecurity and her preparedness to seek to placate him in order to preserve their personal relationship. In this sense, Counsel Assisting contended the conversation related directly to how Ms Berejiklian interacted with Mr Maguire in the public sphere. In circumstances where Mr Maguire became aggrieved and insecure over a perceived social slight, Ms Berejiklian was on notice of a risk that Mr Maguire would suffer greater levels of insecurity and disquiet in the event that Ms Berejiklian did not support projects for which he was a strident advocate.
…
10.28. … in the Commission’s view, the 14 February 2018 exchange between Ms Berejiklian and Mr Maguire is probative of the matters for which Counsel Assisting contend. The Commission accepts it is circumstantial evidence, but it is part of the mosaic of information before the Commission which must be carefully considered as part of its investigation of the Berejiklian allegations. It is, as Ms Berejiklian’s submissions recognised, relevant to her exercise of her official functions, albeit she argued the relevance was tenuous.
10.29. … While it may not have been, as Ms Berejiklian submitted, her real view of the dynamic between them, her concern to address what she perceived as Mr Maguire’s insecurities can, as a matter of human experience, be expected to have manifested itself in a continuing desire to assuage his feelings and support him to the best of her ability. That would include supporting him bringing to fruition two Wagga Wagga projects for which he was a fervent advocate. (Emphasis added.)
Mr Maguire’s “lobbying” to the applicant
118. There was evidence that Mr Maguire pressed the applicant to exercise her public functions in particular ways to support his causes, and that the applicant responded accordingly. In doing so Mr Maguire had direct, immediate and informal means of communicating with the applicant and did so without any suggestion that there was some “boundary” between their personal or private lives and their interactions concerning the exercise by the applicant of her public functions.
119. For example, the applicant intervened with Treasury to support funding for the Wagga Wagga Base Hospital on 16 May 2018 after Mr Maguire had been told that “[his] 170 million” dollar funding request was “not a line item”. As he described it to the applicant (then Premier) in a recorded telephone call, the relevant Minister had said to him “I haven’t seen it. I don’t know, it’s up to Treasury”, to which Mr Maguire had replied “you better fucking make sure Wagga’s got money otherwise there’s gonna be a riot on your hands” ([11.528]). The applicant responded to Mr Maguire that she would “deal with it” and “fix it” ([11.529]).
120. The exchanges which then occurred are at [11.530]-[11.532]. They also include reference to funding for the Tumut Hospital:
11.530. Less than two hours later [than the exchange referred to above], at 6:30 pm, Ms Berejiklian called Mr Maguire and told him that she had “got [him] the Wagga Hospital money”:
BEREJIKLIAN: We’ll I’ve already got you the – I’ve already got you the Wagga Hospital –
MAGUIRE: But they –
BEREJIKLIAN: – money.
MAGUIRE: – should have done it.
BEREJIKLIAN: I know I just talked to Dom [treasurer Dominic Perrottet] –
MAGUIRE: Why did they – why do the -
BEREJIKLIAN: I just spoke to Dom and I said put the 140 in the budget. He goes no worries. He just does what I ask I ask him to –
MAGUIRE: But – but –
BEREJIKLIAN: – it’s all fine.
MAGUIRE: – but it’s meant to be 170.
BEREJIKLIAN: Whatever it is 170 I said (UNINTELLIGIBLE) I think it’s around 140, I said just put it in. He’s putting it in whatever it is, okay.
11.531. Mr Maguire continued to complain to Ms Berejiklian, who responded, “Okay can you please not get yourself worked up again because all you do is shout at me sometimes Hokis.” Mr Maguire continued to complain and Ms Berejiklian responded (amongst overtalking), “you don’t need to give me that rubbish we’re giving … Wagga more money than … than ever before”.
11.532. Undaunted, Mr Maguire complained about funding for Tumut Hospital, leading to the following conversation:
MAGUIRE: Anyway, you need to find at least five hundred thousand or a million dollars to keep Tumut planning going.
BEREJIKLIAN: Ehm.
MAGUIRE: Just to have a line item. And – and, you know, five hundred thousand –
BEREJIKLIAN: Can you text Brad – can you stress and text Brad cause I’ve–I’ve got you now got you the one seventy million in five minutes. You can at least get a few hundred thousand from Brad just keep texting him. If you keep bothering him he’ll fix it okay.
MAGUIRE: Yeah – yeah I’ll –
BEREJIKLIAN: You can have me fight –
MAGUIRE: – go see Lee and she’ll fix it.
BEREJIKLIAN: You can’t have me fixing all the problems all the time.
MAGUIRE: I tell you what if you went to the budget without Wagga on it you –
BEREJIKLIAN: Yeah I just fixed it okay.
MAGUIRE: Hokis –
BEREJIKLIAN: Okay it’s done.
MAGUIRE: I – I –
BEREJIKLIAN: Alright.
MAGUIRE: – can’t believe that that was the top of my list and they ignored me.
BEREJIKLIAN: Well luckily you’ve got –
… (Italics and emphasis in original.)
121. These exchanges are capable of supporting findings both as to the extent to and manner in which Mr Maguire pressed the applicant to exercise her public functions to support his causes, as well as the applicant’s preparedness to respond by doing so.
122. Another instance of the applicant’s responding to Mr Maguire’s urgings involved the RCM proposal as it stood in November 2017. The applicant accepted that at that time she was considering “sacking” a Mr Barnes, who was at that time deputy secretary of Regional NSW within the Department of Premier and Cabinet ([12.47]). In that context, the following recorded telephone conversation occurred ([12.46]):
MAGUIRE: Well I had ahh what’s his name Gary Barnes come and see me today they rang me.
BEREJIKLIAN: I can’t stand that guy.
MAGUIRE: Hmm.
BEREJIKLIAN: His head will be gone soon.
MAGUIRE: Gary Barnes?
BEREJIKLIAN: Hmm.
MAGUIRE: Not until he fixes my conservatorium.
BEREJIKLIAN: Yeah okay.
MAGUIRE: He’s the only one that’s come to do it.
BEREJIKLIAN: Alright good tell him to fix it and then after he fixes it, I’m sacking him.
123. As is recorded at [12.47], the applicant agreed that “it was possible that one of the reasons that she decided not to sack [Mr Barnes] immediately was the fact that Mr Maguire wanted him to ‘fix’ his conservatorium”.
124. A further example of the interactions between Mr Maguire and the applicant also concerned the RCM proposal. The following recorded telephone conversation occurred on 1 May 2018, at a time after the ERC decisions concerning Stage 1 had already been made (on 12 and 24 April 2018), though before the decision concerning Stage 2 made on or shortly before 24 August 2018 ([12.95]):
BEREJIKLIAN: We ticked off your conservatorium the other day so that’s a done deal now.
MAGUIRE: Yeah, but that’s only –
BEREJIKLIAN: The money.
MAGUIRE: – that’s – that’s the building and ten million, not the rest of it. Not the next stage -
BEREJIKLIAN: Oh my God. Heaven help us seriously.
MAGUIRE: But it’s two stages.
BEREJIKLIAN: Yes I know. Anyway.
MAGUIRE: So anyway, that – that’s alright they’ll all be happy with that –
BEREJIKLIAN: Thank you for that.
125. On 30 July 2018, following Mr Maguire’s evidence at the Operation Dasha public inquiry on 13 July 2018 ([13.217]-[13.218]) and his subsequent resignation announcement, to take effect on 3 August 2018, the following telephone exchange occurred ([12.103]):
BEREJIKLIAN: You don’t see it you don’t see it I don’t want to argue with you, I just need to go and chill because you have stressed me out.
MAGUIRE: Alright I’ll go and chill you just throw money at Wagga.
BEREJIKLIAN: I will I’ll throw money at Wagga, don’t you worry about that lots of it.
…
BEREJIKLIAN: Alright and I’ll throw money at Wagga you just have to do what’s right from your end otherwise you’ll kill me.
MAGUIRE: I know its fine.
BEREJIKLIAN: Hmm.
MAGUIRE: I’m batting for you. You just need to know what the right things are to throw money at Wagga and you need—
BEREJIKLIAN: I already know you’ve already told me the three top things I already know.
MAGUIRE: And you need and you need and go and give them a stadium give them a fuck—
BEREJIKLIAN: I’ll do that I’ll do that too.
MAGUIRE: —a stadium.
BEREJIKLIAN: I’ll do that too. I’ll do that too don’t worry.
MAGUIRE: Well the bureaucrats knocked it all out they’re idiots.
BEREJIKLIAN: Yes well I yes but I can overrule them anyway.
(Emphasis added.)
126. Mr Maguire’s evidence was that the “three top things” included RCM Stage 2; and the applicant agreed that Mr Maguire said that one of the things the government “should announce” was building a large recital hall for the RCM ([12.104]).
127. There was also evidence that by 31 July 2018 Mr Maguire had advised Dr Wallace (the chair of RCM) that Stage 2 would be funded. He agreed that his confidence as to that being announced was justified because he knew Ms Berejiklian would “accept his advice regarding the three top things” to announce in the by-election campaign ([12.110], [12.112]).
128. It was open on this evidence to find that, as one would expect, in their personal relationship the applicant and Mr Maguire discussed matters being supported or proposed by Mr Maguire; that he would press the applicant for a particular outcome in respect of such matters; and that the applicant made decisions and gave instructions as Treasurer or Premier which had the consequence or effect of giving that matter some immediate preference or priority which it was not otherwise likely to have achieved.
Mr Maguire as principal proponent of the ACTA and RCM proposals
129. In relation to the ACTA proposal generally, Mr Maguire agreed that from time to time he spoke to the applicant about it, and that he would have “encouraged her to take a close interest in it” ([11.543]). There was evidence that he was regarded by senior members of ACTA as its “champion within government” ([11.3], [11.372]). He was also Patron of the NSW Clay Target Association, and agreed that he had a long-term association with ACTA and was the “principal proponent” of its projects to government between at least 2016 and 2018 ([11.371]-[11.373]).
130. As to RCM, the applicant’s evidence was that Mr Maguire had raised the funding for its moving premises, and its later recital hall proposal, over a period of years and on a number of occasions, and that she believed that he had a “particular passion” for the funding of the RCM proposal ([12.79], [12.182]). Dr Wallace described Mr Maguire as RCM’s “go-to person within government” ([12.166]). In turn, Mr Maguire believed that he was the “principal proponent of that project within government” ([12.167]).
131. It was open to the Commission to find on this evidence that the applicant understood or believed that by supporting these two proposals she would please Mr Maguire, and give him a sense of satisfaction and achievement, and thereby strengthen or secure their underlying relationship.
The degree of involvement of the applicant in the ACTA and RCM funding proposals; the adoption of irregular, atypical or unusual processes in the treatment of those proposals; and the involvement of the applicant in influencing their outcome
132. In relation to the ACTA proposal: The Commission found that the circumstances in which this funding application came onto the ERC agenda were “within [the applicant’s] control” and “bespeak irregularity” ([11.572]). As described below, those circumstances were supported by evidence:
11.572.1. Ms Berejiklian agreed that to have a matter put on an ERC meeting agenda urgently would require the intervention or at least the agreement of the treasurer.
11.572.2. Ms Berejiklian accepted that Mr Maguire had had discussions with Mr Bentley [an adviser within the applicant’s office] and her with a view to getting her to give a request or direction that the ACTA matter be placed on the ERC agenda.
11.572.3. Mr Ayres [Minister for Sport] did not recall any direct discussion and agreement with Ms Berejiklian to have the ACTA matter on the agenda.
11.572.4. To the extent that a 5 December 2016 email said, ‘I understand that Minister Ayres has agreed with the Treasurer that a submission seeking $5.5 million for a Clay Target Association in Wagga Wagga be considered by ERC on 14 December’, Mr Ayres interpreted that to mean ‘our officers interacting with each other, not me and the Treasurer’.
11.572.5. Lodging the final ACTA ERC submission one or two days before the ERC meeting was well outside the ordinary timeframes for dealing with an ERC submission.
11.572.6. Placing the ACTA proposal on the ERC agenda at such short notice was not standard procedure; it meant it by-passed ‘a stage where it would be circulated amongst departments’.
11.572.7. On 6 December 2016, at a time when it does not appear the ERC submission could have been seen by Ms Berejiklian, she both placed the matter on the ERC agenda and indicated an inclination to support it.
11.572.8. The premier’s office questioned why the ACTA submission could not be delayed until the new year, to allow time for market testing of costings and project planning to be completed.
11.572.9. Treasury recommended that the ACTA ERC submission not be supported as ‘a net benefit to the State [had] not been adequately demonstrated’.
11.572.10. Mr Blunden:
11.572.10.1. inferred Ms Berejiklian wanted the ACTA matter to proceed in a substantive sense because ‘her office had put it on the agenda’. He drew the same inference about Mr Ayres
11.572.10.2. queried whether this was the most appropriate expenditure of $5.5 million of taxpayers’ money
11.572.10.3. questioned whether the ACTA proposal was a government priority as it ‘didn’t stand out as anything particularly special that was a requirement, and particularly with the lack of a, a rigorous BCR’.
11.572.11. When the matter was taken off the ERC agenda, Mr Maguire ‘fired up’, and Ms Berejiklian reinstated it.
133. The ERC decision was subject to conditions. The evidence of those involved in the implementation of that decision, specifically Mr Barnes, was that the frequency of requests for updates from the Premier’s office about its progress was “atypical” ([11.554]); and, according to Mr Hangar (then a director within the Department of Industry), the way in which the project had come forward and the speed at which his department was required to procure the business case (which had to be revisited) all indicated that there was a “strong interest” from the Premier’s office regarding the project ([11.555]).
134. The applicant accepted that her support for the ACTA proposal “could have been” influenced by the fact that it was being advanced by Mr Maguire ([11.194]). This left for the fact-finder the assessment of whether that evidence, which is extracted in part immediately below, was to be understood as referring only to influence arising from his being the local member, and not to influence arising from their close personal relationship ([11.549]):
This submission finds support in Ms Berejiklian[’s] acceptance that her support for the ACTA proposal ‘could have been’ influenced by the fact it was being advanced by Mr Maguire:
[Counsel Assisting]: Was your support for the Australian Clay Target Association submission influenced by the fact that it was a project being advanced by Mr Maguire?
[Ms Berejiklian]: It could have been part of the consideration, but the absolute consideration for me, the strongest consideration, was the consequence of the Orange by-election. That’s the strongest recollection I have. I don’t remember meeting with him. I don’t remember the meeting.
[Q]: So it was a possible factor, but at least the dominant factor, at least so far as you can recall now–?
[A]: In my mind, yeah.
[Q]: – is the Orange by-election in the way that you and I have been discussing over the last few minutes, is that right?
[A]: Yeah. Yeah. (Italics in original.)
135. It was open on this evidence, in the context of the other findings available to the Commission, to find that Ms Berejiklian’s strong support of the ACTA proposal was influenced, first, by the fact that it was being advanced by Mr Maguire and had been for some time; and, secondly, by the fact that the granting of that funding would constitute a successful outcome to Mr Maguire’s lobbying for which she was in part responsible. She could reasonably expect that the outcome and her participation in it would please Mr Maguire, and be conducive to maintaining their close relationship.
136. In relation to the RCM Stage 2 proposal: The applicant was the effective decision-maker, and set in train the process leading up to the execution of the reservation of funds letter written on or before 24 August 2018, all of which was consistent with her having assured or agreed with Mr Maguire on 30 July 2018 that this funding would be granted, and that this could occur without the support of the “bureaucrats” (see [125] above).
137. As at August 2018, the was no evidence of any assessment having been made at the departmental level as to the feasibility or otherwise of the RCM Stage 2 proposal prior to the applicant approving it for funding. In this respect, the evidence was that none of the witnesses called from the Premier’s office could identify any person within that office other than the applicant who was supportive of the proposal ([12.276]). The evidence of Ms Cruickshank, the applicant’s chief of staff, and Mr Harley, the then head of the parliamentary liaison office in the Premier’s office, was that they were not supportive of the proposal ([12.287]).
138. The RCM Stage 2 funding reservation was announced before the September 2018 by-election. The evidence of Mr Burden, the director of strategy in the applicant’s office, was that he was concerned that by announcing the funding it might be seen that the government was trying to “buy” the election outcome ([12.121]). The evidence also included was that none of the “political staffers” in the applicant’s office supported the announcement of the funding during the by-election. Specifically, the evidence of Ms Cruickshank and Mr Burden was that they thought that the applicant should have nothing to do with Mr Maguire ([12.211]).
139. In relation to RCM Stage 2, there was also evidence that as at 24 August 2018 the scope of works for that project had not been finalised, whether it met the relevant fund guidelines was unknown, and a final business case had not been approved ([12.137]).
140. This evidence as to the applicant’s commitment to the RCM Stage 2 funding reservation, in the absence of any support from “political” or other staffers and absent any business case or assessment of the project at a departmental level, permitted a finding that she was influenced in doing so by the fact that RCM was a “passion” of Mr Maguire and that the outcome would be seen as an acknowledgement of his continuing political “relevance” and as confirming her commitment to their relationship.
Disclosures of conflicts
141. Finally, with respect to a finding that the applicant had “consciously” or “deliberately” preferred her private interests, it is not controversial that the applicant did not disclose her relationship with Mr Maguire, notwithstanding that at each of the ERC meetings there was a request for disclosure of any conflicts of interest. There was also evidence as to the applicant having made disclosures of potential conflicts of interest in circumstances where the relationship disclosed was that of an acquaintance or family member, in each case much less intense, immediate and relevant than that of her relationship with Mr Maguire. Those disclosures included ([11.427]):
11.427.1. In 2013, Ms Berejiklian declared an interest to Cabinet and abstained from discussions regarding the appointment of a particular individual to a government board ‘due to attendance with [that individual] at functions’.
11.427.2. In 2017, Ms Berejiklian made a disclosure under the NSW Ministerial Code of Conduct to the effect that two of her cousins were then employed in the NSW public service.
11.427.3. In 2018, Ms Berejiklian made a declaration of interest to Cabinet in relation to a particular Liberal Party supporter in relation to a potential appointment of that person to a government advisory board.
11.427.4. In 2019, Ms Berejiklian declared to Cabinet that a particular person proposed to be appointed to a government board was ‘known to [her]’.
142. The evidence was that the applicant was well aware of her obligation to disclose conflicts of interest and duty ([12.194]). In addition, the applicant gave a number of reasons for not having done so, thereby suggesting that she had considered those matters in deciding not to do so ([11.439]). As the Commission noted at [11.440], many of the factual premises underlying those “reasons” were contradicted by other evidence. Thus, it was open to the Commission to find that the applicant had turned her mind to the question of disclosure and “deliberately” and “consciously” determined not to do so, thereby preferring her private interest or benefit to her public obligation to disclosure the conflict.
Conclusion to ground 2
143. There was evidentiary material capable of supporting each of the challenged findings (see [104] above), and the underlying findings and inferences on which they were based.
144. Accordingly, the “no evidence” ground of review is not made out.
Ground of review 3
145. This ground is:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that Ms Berejiklian’s non-pecuniary personal relationship with Mr Maguire was capable of amounting to a relevant private interest capable of giving rise to a conflict of interest on Ms Berejiklian’s part (R [10.175])…
146. This ground is directed only to the first and third of the Commission’s findings of “serious corrupt conduct”, which relate to the applicant’s participation as a Minister in decisions made concerning funding promised and or awarded to ACTA and RCM whilst in a position where her private interest “in maintaining or advancing her close personal relationship” with Mr Maguire conflicted with her public duty. The applicant’s participation in that decision-making without disclosing that conflict was found to constitute or involve a “breach of public trust” within s 8(1)(c) of the Act.
147. This ground contends that the applicant’s “non-pecuniary personal relationship” with Mr Maguire was not capable in law of constituting a “private interest” which was in turn capable of giving rise to a conflict of interest and duty in the exercise of the applicant’s official functions. In relation to the “serious corrupt conduct” findings arising in relation to breaches of public trust, findings that there was such a conflict were relevant to establishing breaches of public trust for the purposes of s 8(1)(c) of the Act, as well as breaches of s 7(2) of the Ministerial Code for the purposes of s 9(1)(d) of the Act.
148. The applicant’s contention provides for two steps in an inquiry as to whether there is a conflict of private interest and public duty in breach of s 8(1)(c) of the Act, or a “conflict of interest” as defined in s 7(3) of the Ministerial Code. The first is whether the supposed “private interest” is capable in law of giving rise to such a conflict. The second, adopting the language in s 7(3), is whether that private interest “could objectively have the potential to influence the performance of [the Minister’s] public duty”. It is accepted that the second step requires an evaluative judgment based on the relevant factual circumstances and context.
149. In relation to the first step in this inquiry, the applicant submits that “private interest” is not a term of “unlimited denotation” and that “where, as here, there is no pecuniary interest whatsoever, and no more than a personal connection with a person involved in a matter in his official capacity, there is no private interest”. However, it is not said in support of this proposition that such a “private interest” could not in any relevant circumstances have the potential to influence the performance of a Minister’s public duty. Rather, as the Commission submits, the applicant’s argument asserts that as a matter of law “a conflict can only arise where there is an ‘interest’ involving some pecuniary aspect and which is more than a personal connection” (emphasis added).
150. The Commission submits in response that there is no basis in law for concluding that in order for a Minister of the Crown to be in a position of conflict of interest and duty, the Minister’s “private interest” must at least be as contended for by the applicant. The Commission says that under the general law, and under the Ministerial Code, there is only one question, and that is whether the supposed “private interest” is capable of influencing the exercising of the Minister’s public function in a way which conflicts with the proper exercise of his or her public duty.
151. That submission is correct and must be accepted. The position under the general law is sufficiently stated in Re Day (No 2) (2017) 263 CLR 201; [2017] HCA 14 at [49], where Kiefel CJ, Bell and Edelman JJ describe the content of the duty of a member of Parliament (in a representative parliamentary democracy) as a “duty as a representative of others to act in the public interest”, that duty including “an obligation to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations” (citing Wilkinson v Osborne (1915) 21 CLR 89 at 98-99; [1915] HCA 92). Two things should be noted. First, although the principal as stated expressly extends to being influenced by “personal financial considerations”, it is not confined to being so influenced. Secondly, “personal financial considerations” were not in play, as far as the applicant was concerned.
152. That duty is breached if a member and or Minister is influenced in the exercise of a public function or power by considerations other than proper considerations, and irrespective of whether those other considerations arise from a pecuniary or non-pecuniary private interest.
153. The position under the Ministerial Code is not relevantly different. A “private benefit” (s 11 of the Code) as defined means “any financial or other advantage” (emphasis added), with limited exceptions. Section 6 of the Code prohibits a Minister from acting “improperly” for “their private benefit or the private benefit of any other person”.
154. The definition of “conflict of interest” in s 7(3) also applies in the Schedule to the Code (s 11 of the Code). It describes the circumstances in which a conflict of public duty and private interest will arise for a Minister. In such circumstances, the Minister must abstain from making or participating in any decision with respect to the particular matter; and must also abstain from taking or participating in any action in relation to the matter (Sch cl 12(1)).
155. In this context, the references to a “private interest” of a Minister are to “private benefits” which could reasonably be expected to be conferred on the Minister or a “family member” as a consequence of the making of a decision or the taking of any action in the exercise of a public function or power (s 7(3) of the Code). A “family member” includes a person with whom the Minister “is in an intimate personal relationship” (s 11).
156. Most relevantly, whether there is a conflict between the Minister’s public duty and private interest depends solely on whether that interest (being the expectation of the private benefit) “could objectively have the potential to influence the performance of [the Minister’s] public duty”.
157. The Code and Schedule contain no provisions which indicate that a close personal relationship, and any benefit enjoyed or secured by maintaining and advancing it, is not capable of constituting a “private interest” within the meaning of the Code. Clause 13 of the Schedule contemplates that Ministers “may” if they have “some other substantial personal connection” with a matter, or for any other reason, disclose an interest, even if the interest “might not comprise a conflict of interest”. Other provisions in the Code describe “private benefits” in terms which are capable of including non-pecuniary advantages (see, for example, s 8, the reference there being to “any private benefit”, as well as ss 9 and 10). Indeed, it is worth repeating that the definition of “private benefit” in s 11 is “any financial or other advantage to a person…” (emphasis added).
158. Ultimately, the applicant’s argument as put by reference to the terms of the Code misconstrues the expression “private interest” where used in the definition of “conflict of interest” in s 7(3) of the Code. The argument starts from the position that this expression does not include every kind of non-pecuniary interest; and concludes with the bare assertion that, where there is no more than a personal connection, there is no “private interest”. This construction of that expression would have the effect of excluding from the circumstances in which there might be a conflict of interest within s 7(3) any non-pecuniary “interest” of a Minister, which is no more than a personal connection, notwithstanding that the nature and extent of that interest is such that it could objectively have the potential to influence him or her in the making of any decision or taking of any action. There is no warrant in s 7(3) or the Code more generally for treating the expression “private interest” as doing more than referring to any personal interest of a Minister, leaving the question whether that interest is sufficient to give rise to a conflict of interest, to which the Code applies, to the factual evaluation required by s 7(3).
159. That evaluative exercise is to be undertaken objectively and by reference to the underlying circumstances, including the nature of the interest and its potential to influence the performance of the relevant public duty arising with respect to the making of a decision or taking of any action.
160. The Commission’s findings as to the “close personal relationship” between the applicant and Mr Maguire are at [10.8]-[10.38]. The Commission accepted Counsel Assisting’s submission that an aspect of that relationship was the applicant’s “concern to address what she perceived as Mr Maguire’s insecurities”, which, as a matter of human experience, was “expected to have manifested itself in a continuing desire to assuage his feelings and support him to the best of her ability” ([10.29]). The Commission found that the relationship between Ms Berejiklian and Mr Maguire, “being one of mutual love and a mutual close emotional connection”, was capable of influencing and, as discussed in relation to ground 2, in the case of Ms Berejiklian did “influence her conduct both personally and in the performance of her public duties” ([10.38]).
161. It was open to the Commission to find that the close personal relationship between the applicant and Mr Maguire was, from her perspective, a “private interest” that gave rise to a conflict of interest and duty. Whether it did so called for an evaluative judgment, which it was within the Commission’s authority to undertake.
162. In the result, ground of review 3 is rejected.
Ground of review 4
163. This ground is:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that Ms Berejiklian had a legally enforceable positive duty to act only according to what she believed to be in the public interest (R [10.207], [10.210], [11.409]). Properly understood, Ms Berejiklian’s public duty comprised a negative obligation proscribing the use of her position to promote her own pecuniary interests, or those of certain third parties, in circumstances of a conflict, or a real or substantial possibility of a conflict, between those interests and her duty to the public…
164. The applicant’s position before the Commission (see [3.59]) and in this Court is that, properly understood, a breach of public trust in s 8(1)(c) reduces to breach of a negative obligation proscribing self-interested conduct. That negative obligation is said to have been correctly formulated by Beech-Jones J in R v Obeid (No 2) [2015] NSWSC 1380 when considering the duties of a parliamentarian in the context of a prosecution for misconduct in public office. At [75], his Honour said that:
… the nature and scope of a parliamentarian’s duty reduce to a negative obligation not to use their position to promote their own pecuniary interests… in circumstances in which there is a conflict, or a real or substantial possibility of a conflict, between those interests and their duty to the public.
165. This statement adopts Mason J’s formulation of the proscriptive duty of a fiduciary (Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 103; [1984] HCA 64) and applies it by analogy to a member of Parliament. While the statement in R v Obeid (No 2) treats a parliamentarian like a fiduciary in his or her relation to the state, it does not purport to describe the more general “duty to the public” in respect of which any “conflict” might arise. Nor does it adopt the wider “conflict rule” or extend to the promotion or pursuit of non-pecuniary interests whilst in a position of conflict.
166. Thus, the statement in R v Obeid (No 2) describes the “conflict” as being between a parliamentarian’s pecuniary interests and his or her “duty to the public”, the latter necessarily being something other than the proscriptive duty.
167. That proscriptive duty described prohibits the promotion or pursuit of personal interest, as do the formulations of a fiduciary’s “liability to account” in Chan v Zacharia (1984) 154 CLR 178 at 198-199 (Deane J); [1984] HCA 36. However, as Deane J observed (at 198), in Boardman v Phipps [1967] 2 AC 46 at 123, Lord Upjohn said with respect to the fiduciary’s duty to account and the wider “conflict rule”:
Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case. The relevant rule for the decision of this case is the fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict. (Emphasis added.)
168. As is made clear in Chan v Zacharia (at 198 (Deane J)) and Hospital Products (at 103 (Mason J)), the “wider” conflicts rule referred to by Lord Upjohn – that a person is not to allow a conflict to arise between his or her duty and interest – is not a rule of equity but rather, in the words of Sir Frederick Jordan (Chapters on Equity in New South Wales (6th ed, 1947, Thomas Henry Tennant) at 115), a “counsel of prudence”.
169. Lord Upjohn continued at 124, referring to Lord Cranworth LC’s statement of a fiduciary’s duty in Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461 at 471:
And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect.
170. As Lord Cranworth LC’s formulation of the fiduciary’s obligation makes clear, it is necessary to identify the interests of those whom the fiduciary is “bound to protect”. The fiduciary’s duty in respect of those interests arises where the fiduciary has undertaken “to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense”. The fiduciary thereby “comes under a duty to exercise [that] power or discretion in the interests of the person to whom it is owed” (Hospital Products at 96-97 (Mason J)).
171. The Commission proceeded on the basis that it is a breach of public trust for a parliamentarian to exercise powers or functions whilst in a position where his or her private interests may conflict with the proper exercise of his or her public duty. For this purpose, that public duty is sufficiently described by Isaacs and Rich JJ in R v Boston (1923) 33 CLR 386 at 400; [1923] HCA 59 as “the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community” (italics in original). As has already been said at [151] above, in Re Day (No 2) at [49], that obligation is described by Kiefel CJ, Bell and Edelman JJ as including the duty “to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations”. See also Re Day (No 2) at [179] (Keane J) and [269] (Nettle and Gordon JJ), and Hocking v Director-General of the National Archives of Australia (2020) 271 CLR 1; [2020] HCA 19 at [243], where Edelman J observes that the “loose references” to public powers being exercised “as it were upon trust” are “expressions of the duty of loyalty owed by holders of public offices created ‘for the benefit of the State’”.
172. The findings made by the Commission included that the applicant’s conduct constituted breaches of public trust (s 8(1)(c)) because she had participated in ERC decisions concerning the ACTA and RCM funding proposals whilst in a position where her private interest in her relationship with Mr Maguire, the proponent of those proposals, conflicted with her public duty. The Commission formulated that public duty in positive terms and as requiring that the applicant act only in accordance with what she believed to be the public interest, uninfluenced by other considerations ([11.409]). The Commission cited in support of that conclusion Re Day (No 2) at [49].
173. The Commission also referred (at [11.410]) to cl 1 of the Preamble to the Ministerial Code, which provides that Ministers must “exhibit and be seen to exhibit the highest standards of probity in the exercise of their offices and that they pursue and be seen to pursue the best interests of the people of New South Wales to the exclusion of any other interest”.
174. In this context, the applicant’s contention that there was a material error by the Commission in formulating the broad content of her “public trust” duty must be rejected. First, a Minister’s obligation not to breach public trust is expressed more broadly than an obligation prohibiting the promotion of private pecuniary interests in circumstances where there is a conflict of interest and public duty. Secondly, that public duty is sufficiently identified in the cases cited above, including R v Boston and Re Day (No 2). The Commission did not err in identifying the nature of that duty for the purpose of determining whether there was a conflict of interest and duty. Nor did it err in concluding that the applicant’s having exercised powers and functions whilst in a position of conflict of interest and duty would constitute a breach of public trust within s 8(1)(c).
175. The analysis impugned by this ground was relevant to two points in the Commission’s reasoning in support of each of these “ultimate” findings. The first was in making findings of a breach of public trust under s 8(1)(c) by exercising functions whilst in a position of conflict. In relation to ACTA, that finding is at [11.460]. In relation to RCM Stages 1 and 2, those findings are at [12.223]. The second was in addressing s 9(1)(d) in relation to the conduct found to constitute a breach of s 8(1)(c). In that analysis, which required attention to whether there was a substantial breach of the Ministerial Code, the Commission held that the applicant was in a position of conflict between her public duty “as a representative of others to act in the public interest” and her private interest. In relation to ACTA, the finding is at [11.452]; and in relation to RCM Stages 1 and 2, it is at [12.225]. The Commission concluded for the purposes of s 9(1)(d) that there were substantial breaches of s 7(2) of the Code and of cll 10(1), 11 and 12 of the Schedule to the Code in relation to the ACTA funding ([11.489]) and RCM Stages 1 and 2 ([12.255]).
176. It follows that there was no material error of the kind alleged by this ground in the Commission’s findings of “serious corrupt conduct” relying on breaches of public trust within s 8(1)(c).
177. It is unnecessary to enter further into any debate as to whether the obligations of a fiduciary are only proscriptive or, depending on the relationship, can include affirmative obligations such as that of a company director who is said to owe a fiduciary duty to exercise powers bona fide in the interests of the company a whole (see Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [111]-[114] (Gleeson JA)). What is clear, however, is that there is a difference between the fiduciary obligation prohibiting the pursuit of personal interest and the affirmative public duty of a Minister to exercise powers and functions “with fidelity and with a single-mindedness for the welfare of the community” (R v Boston at 400).
178. This ground is not made out.
Ground of review 5
179. This ground is:
Further or in the alternative to ground 1, the Commission erred in law in finding that Ms Berejiklian engaged in conduct constituting a breach of public trust by failing to “act only according to what she believed to be in the public interest”, with such conduct constituted by her non-disclosure of her non-pecuniary personal relationship with Mr Maguire (R [11.446]-[11.451], [12.181], [12.195]-[12.197], [12.222])… (Emphasis added.)
180. This ground addresses the findings as to the conduct found to be in breach of s 8(1)(c) and characterised as “serious corrupt conduct”. It is said that the material conduct in which the Commission found the applicant had engaged, and in breach of s 8(1)(c), was the applicant’s non-disclosure of her personal relationship with Mr Maguire.
181. The issue between the applicant and Commission is whether, as the applicant contends, the Commission found that the breaches of s 8(1)(c) were the applicant’s non-disclosure of her personal relationship, which constituted a failure to “act only according to what she believed to be in the public interest”.
182. In the applicant’s written submissions, it is said not that the Commission made such a finding, but rather that the Commission “treated” the applicant’s non-disclosure as itself amounting to such a breach.
183. Reference to the Commission’s findings shows that the breach found in the case of the ACTA and RCM Stages 1 and 2 funding was “exercising her official functions in relation to funding promised and/or awarded… without disclosing her close personal relationship with Mr Maguire when she was in a position of conflict of interest between her public duty and her private interest” (as to ACTA, see [11.460]; as to RCM Stages 1 and 2, see [12.223]). Having made those findings, the Commission then turned to s 9(1)(d) and recorded its findings in relation to the breach of s 8(1)(c) as being that “Ms Berejiklian was in a position of conflict when she exercised her official functions” in relation to each of ACTA and RCM (as to the former, see [11.464]; as to the latter, see [12.225]).
184. In considering the question of substantial breach of the Ministerial Code, the lack of disclosure, which the Commission found was “wilful” (as to ACTA, see [11.464]; as to RCM Stages 1 and 2, see [12.196] and [12.221] respectively), informed the Commission’s assessment of whether the applicant’s conduct involved breaches of s 7(2) of the Ministerial Code and cll 10(1), 11 and 12 of the Schedule to the Code, as well as whether those breaches were substantial.
185. For these reasons, ground of review 5 is not made out. The Commission did not find that the applicant breached her duty of public trust under s 8(1)(c) simply by not disclosing her relationship with Mr Maguire. The breaches as found were exercising her official functions whilst in a position of conflict of duty and interest. That involved no error of law. Findings were then made in relation to breaches of the Ministerial Code, which included failures to disclose. However, those findings of breach were made for the purposes of s 9(1)(d) rather than s 8(1)(c).
Ground of review 6
186. This ground is:
Further or in the alternative to ground 1, the Commission exceeded its authority and institutional competence by purporting to make findings as to the merits of the decisions concerning the ACTA and RCM proposals, and using those findings as a basis to assess whether Ms Berejiklian believed her conduct to be in accordance with the public interest (R [11.394]-[11.395], [11.456]-[11.457], [11.609], [12.205], [12.213]-[12.214]). The assessment of the merits of such decisions, and whether they are in fact in the public interest, is the exclusive province of the elected representatives responsible for them…
187. The applicant submits that the Commission assessed for itself whether the exercises of power in relation to the ACTA and RCM funding proposals were in the public interest. Specifically, it is said that the Commission purported to assess the merits of the proposals, and then used those findings as a means of assessing whether the applicant supported them because she believed they were in the public interest. Particular reference is made to 11 paragraphs in the Report. It is said that this assessment of whether these proposals were in the public interest was “beyond ICAC’s institutional competence” and was the “exclusive province of the elected representatives responsible for them”. It is also said that the Commission “was neither equipped for nor tasked with reviewing the merits of such decisions”, and that the Commission erred in law in seeking to do so.
188. The Commission maintains that the applicant’s argument is based upon a misconstruction of its reasons. It says that it did not decide for itself the merits of any of the ACTA or RCM proposals in making its findings of “serious corrupt conduct”. Rather, in assessing whether the applicant had engaged in “partial” conduct in breach of s 8(1)(b), it had regard to contemporaneous assessments and appraisals made by participants engaged in the consideration process which called into question the merits of those proposals. The Commission considered that any such “perceived lack of merit and enthusiasm for the proposals” (emphasis added) was a circumstance to be taken into account and contrasted with the applicant’s support for the proposals, thereby suggesting a degree of partiality on her part. Insofar as the Commission made reference to the perceived merits of any of the proposals in confirming its findings arising from breaches of public trust, it submits that these references were not material to those findings.
189. Eight of the 11 paragraphs in the Report relied on by the applicant in support of this ground (being those identified in the ground of review, plus [11.393] and [11.583]-[11.584]) relate to ACTA. The remaining three relate to RCM.
190. At [11.393]-[11.394], the Commission records the applicant’s submissions as to the relevance of the merits of any of the proposals. First, the applicant submitted that the merits of the ACTA proposal had “little, if any, rational bearing on the allegations against her”. Secondly, it was said that it was beyond the function or role of the Commission to make any “concluded finding as to the merits” of either the ACTA or RCM proposals. Thirdly, it was said that there was “simply no utility” in “dredging through, and making findings on, historical concerns of departmental officers who may have been sceptical as to the merits of the proposal” in circumstances where the ACTA proposal was actively promoted by the relevant Minister (Mr Ayres, the then Minister for Sport) and the subject of a unanimous ERC decision.
191. In response, at [11.395] the Commission states that it had “not itself determined [the ACTA] proposal’s merits”; rather, it had considered evidence of those who were involved in the approval process, politically and administratively, as part of its investigatory process. The Commission maintained that the merits of the proposal — in this context referring to the merits as perceived at the time by those whose task it was to consider critically the merits or otherwise of such a proposal — were “demonstrably germane” to that investigation.
192. When considering whether it should be inferred that the applicant “went out of her way” to ensure the ACTA proposal went forward because of her relationship with Mr Maguire, and not because of its “inherent merits”, the Commission at [11.456] described those inherent merits as “flimsy, if not non-existent”, but not by reference to its own assessment (see, for example, the summary of a Treasury analysis at [11.457]). Earlier, at [11.399], the Commission had also summarised contemporaneous Treasury views concerning the ACTA proposal:
… That was almost inevitable in the light of Treasury opposition (it said the business case analysis was inconsistent with Treasury economic appraisal guidelines and it was unable to accurately assess the economic benefits arising from the project from a state perspective), and the terms of the ERC submission, which recommended that ACTA should enter into a formal commitment with the Office of Sport to ‘independently confirm, through market testing, the capital cost of the project to the level of robustness required in NSW Treasury’s Guidelines for Capital Business’.
193. There was nothing irrational or otherwise impermissible in the Commission’s reasoning process making reference to the merits of the ACTA or RCM proposals as they were perceived at the time by those charged with the making of such assessments. That was a circumstance which could be taken into account in forming a view about the larger question as to whether the applicant’s support for the proposals was partial. It was obviously not the only factor, and, relevantly to this ground, doing so did not involve the Commission impermissibly attempting to form its own view as to the merits of the proposals.
194. At [11.583] and [11.584], the Commission noted, principally by reference to a memorandum of Mr Blunden, the director of strategy of then Premier Baird, dated 12 December 2016, that the ACTA proposal “was to allocate funds based on scant and inadequate information which did not meet the NSW Government’s standards and was not a matter of government policy”. That somewhat colourful memorandum is dealt with more fully by the Commission at [11.153] to [11.169]. Mr Blunden recommended that the proposal be opposed. His view was that the ACTA proposal went “against all of the principles of sound economic management”, of “ensuring that before public money is spent, there’s a sufficient analysis to indicate the level of the benefit to the state by the state spending money”, and of doing so wisely ([11.155]).
195. As to the perceived merits of the ACTA proposal, the Commission found that from the outset Mr Blunden suggested the proposal be removed from the ERC agenda. It was removed, but later restored. There was a question as to whether the applicant was involved in its being restored. None of this involved the Commission making findings as to the merits of the decisions concerning the ACTA proposal. The fact that the memorandum was prepared and circulated was a circumstance that could be taken into account when considering the question of partiality.
196. Finally in relation to the ACTA proposal, the Report at [11.609] contained general observations by the Commission as to its authority to investigate matters arising under the Code, including those identified in cl 6 of the Schedule to the Code. It contains no finding as to the merits of either of the funding proposals or as to whether it was in the public interest for them to proceed.
197. With respect to the RCM proposal, at [12.205] the Commission noted the advice of Mr Bolton (director, Riverina Murray, Department of Premier and Cabinet Regional) that this proposal was “by no means a top order priority for the community and could [be] seen as quite a ‘political’ announcement”.
198. At [12.213] and [12.214], the Commission notes that the applicant “pressed ahead” with her support of the RCM Stage 2 proposal, understanding that the announcement of that funding on 24 August 2024, during the by-election for Mr Maguire’s seat, was not supported by any of her political staffers.
199. None of these findings and observations involves the Commission deciding for itself the merits of either proposal, and doing so for the purpose of assessing whether the exercises of power were in fact in the public interest. Rather, it has had regard to evidence as to the perceived merits or otherwise of the proposals at the time as a circumstance relevant to whether the applicant acted with partiality and was influenced in doing so by her relationship with Mr Maguire.
200. It follows that this ground of review is not made out.
Ground of review 7
201. This ground is:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that cl 7, and cll 10-12 of the Schedule of the Ministerial Code imposed disclosure obligations on Ms Berejiklian when she occupied the office of Premier (R [10.124]). Properly understood, the Premier’s role in the conflict disclosure regime prescribed by the Ministerial Code is the recipient of disclosures, and the maker of rulings as to when Ministers are permitted to act following disclosure. This finding was material to:
a. the ultimate finding that Ms Berejiklian engaged in serious corrupt conduct in connection with decisions concerning the RCM proposal, involving a substantial breach of the Ministerial Code for the purposes of s 9(1)(d) of the ICAC Act (R [1.5.3], [12.255]).
202. Ms Berejiklian accepted that the Ministerial Code applied to her when she was Treasurer, and accordingly at the time the ACTA funding was dealt with at the ERC meeting on 14 December 2016 ([10.76]). However, she maintained that it did not apply to her when she was Premier, and accordingly at the time when the RCM Stage 1 decisions were made at ERC meetings on 12 and 24 April 2018 ([12.84], [12.90]), and when the RCM Stage 2 recital hall funding reservation and commitment were made on 24 August 2018 ([12.137], [12.153]).
203. Each of the findings as to “serious corrupt conduct” involving a “breach of public trust” included for the purposes of s 9(1)(d) that there were also breaches of s 7(2) of the Ministerial Code (as well as breaches of cll 10(1), 11 and 12 of the Schedule to the Code).
204. For convenience, the immediately relevant provisions of the Code are as follows:
Preamble
1 It is essential to the maintenance of public confidence in the integrity of Government that Ministers exhibit and be seen to exhibit the highest standards of probity… and be seen to pursue the best interests of the people of New South Wales to the exclusion of any other interest.
…
3 Ministers have a responsibility to maintain the public trust that has been placed in them by performing their duties with honesty and integrity… and to advance the common good of the people of New South Wales.
4 Ministers acknowledge that they are also bound by the conventions underpinning responsible Government, including the conventions of Cabinet solidarity and confidentiality.
…
11 In particular, Ministers have a responsibility to avoid or otherwise manage appropriately conflicts of interest to ensure the maintenance of both the actuality and appearance of Ministerial integrity.
1 Preliminary
(1) This is the NSW Ministerial Code of Conduct.
(2) The NSW Ministerial Code of Conduct applies to all current and future Ministers and Governments.
…
4 Compliance with the Schedule to the NSW Ministerial Code of Conduct
A Minister must not knowingly breach the Schedule to the NSW Ministerial Code of Conduct. Accordingly, a substantial breach of the Schedule is, if done knowingly, a substantial breach of the NSW Ministerial Code of Conduct.
…
6 Duty to act honestly and in the public interest
A Minister, in the exercise or performance of their official functions, must not act dishonestly, must act only in what they consider to be the public interest, and must not act improperly for their private benefit or for the private benefit of any other person.
7 Conflicts of interest
(1) A Minister must not knowingly conceal a conflict of interest from the Premier.
(2) A Minister must not, without the written approval of the Premier, make or participate in the making of any decision or take any other action in relation to a matter in which the Minister is aware they have a conflict of interest.
(3) A conflict of interest arises in relation to a Minister if there is a conflict between the public duty and the private interest of the Minister, in which the Minister’s private interest could objectively have the potential to influence the performance of their public duty. Without limiting the above, a Minister is taken to have a conflict of interest in respect of a particular matter on which a decision may be made or other action taken if:
(a) any of the possible decisions or actions (including a decision to take no action) could reasonably be expected to confer a private benefit on the Minister or a family member of the Minister, and
(b) the nature and extent of the interest is such that it could objectively have the potential to influence a Minister in relation to the decision or action.
…
11 Definitions
In this Code (including the Schedule), and unless the context otherwise requires:
…
family member, in relation to a Minister, means:
…
(e) any other person with whom the Minister is in an intimate personal relationship.
…
Minister includes:
(a) any Member of the Executive Council of New South Wales, and
…
private benefit means any financial or other advantage to a person (other than the State of New South Wales or a department or other government agency representing the State), other than a benefit that—
(a) arises merely because the person is a member of the public or a member of a broad demographic group of the public and is held in common with, and is no different in nature and degree to, the interests of other such members, or
(b) comprises merely the hope or expectation that the manner in which a particular matter is dealt with will enhance a person’s or party’s popular standing.
ruling means a ruling by the Premier, in accordance with clause 27 of the Schedule to this Code, under clause 1(1) or (4), 2(3), 3(5) or 12(2) of the Schedule.
…
Schedule to the NSW Ministerial Code of Conduct
…
Part 3 Conflicts of interest
10 Duty to disclose
(1) A Minister must promptly give notice to the Premier of any conflict of interest that arises in relation to any matter.
…
11 Form of disclosure
(1) A notice under clause 10 must—
(a) be in writing, signed by the Minister, and
(b) specify the nature and extent of the relevant interest, the matter to which it relates, and the reason why a conflict of interest arises, and
(c) be placed on the Ministerial Register of Interests.
(2) If during a meeting of the Executive Council, the Cabinet or a Cabinet Committee a matter arises in which a Minister has a conflict of interest the Minister must (whether or not the Minister has previously given notice to the Premier):
(a) as soon as practicable after the commencement of the meeting, disclose to those present the conflict of interest and the matter to which it relates, and
(b) ensure that the making of the disclosure is recorded in the official record of the proceedings, and
(c) abstain from decision-making if required by, and in accordance with, clause 12, and
(d) if notice of the conflict of interest has not previously been given to the Premier under subclause (1)—give such notice as soon as practicable after the meeting in accordance with that subclause.
12 Minister to abstain from decision-making
(1) A Minister who has a conflict of interest in a matter must abstain from making, or participating in, any decision or from taking, or participating in, any action in relation to the matter.
(2) However, the Premier may, if satisfied that no conflict of interest arises or that any potential conflict of interest can be appropriately managed, make a ruling authorising the Minister to continue to act.
(3) A Minister who has a conflict of interest in a matter arising during a meeting of the Executive Council, the Cabinet or a Cabinet Committee must:
(a) abstain from participating in any discussion of the matter and from any decision-making in respect of it, and
(b) unless the Premier (or the chair of the meeting in the absence of the Premier) otherwise approves—not be present during any discussion or decision-making on it.
13 Discretion to disclosure and abstain
A Minister may, if they have some other substantial personal connection with a matter or for any other reason, disclose an interest and abstain from decision-making in relation to a matter in accordance with this Part even if the interest might not comprise a conflict of interest.
…
27 Rulings
(1) A Minister must, when applying for a ruling from the Premier, include with the application an accurate statement of all material information that is relevant to the decision whether to give the ruling. A ruling that is obtained on the basis of inaccurate or incomplete information is not effective and may not be relied upon by the Minister for the purposes of the NSW Ministerial Code of Conduct.
…
(5) A ruling in respect of the Premier may be given if approved by the Cabinet.
205. The applicant submitted before the Commission and submits to this Court that the conflicts of interest provision in s 7 of the Code is to be construed as not applying to the Premier. That was said to be the position notwithstanding that the definition of “Minister” includes “any Member of the Executive Council of New South Wales” (s 11), and accordingly the Premier; and notwithstanding that s 1(2) of the Code states that it “applies to all current and future Ministers and Governments”. Moreover, s 35E(1) of the Constitution Act 1902 (NSW), a provision inserted in 1987, makes express reference to the Premier as being a Minister of the Crown. See also New South Wales v Bardolph (1934) 52 CLR 455 at 507; [1934] HCA 74, where Dixon J noted that “in New South Wales the Premier is a Minister of the Crown known to the law”; and Anne Twomey, The Constitution of New South Wales (2004, Federation Press) at 690-691.
206. The argument in support of this submission is as follows. The “key” provisions (s 7 and Sch cl 12) set up a “dichotomy” between Ministers (other than the Premier), on the one hand, and the Premier, on the other. That dichotomy is apparent in s 7(1) and (2), and in a “regime” which provides for the Premier to superintend a Minister’s obligations, receiving their disclosures (Sch cl 10) and making rulings as to whether a potential conflict so disclosed prevents the relevant Minister from continuing to act (s 7(2), Sch cl 12(2)).
207. The Commission rejected this construction of the Code ([10.84]-[10.126]). It did not err in doing so.
208. As the Commission contends, there is no such dichotomy between a Minister, other than the Premier, and the Premier when s 7 of the Code is read together with cl 12 of the Schedule. Section 7(3) in its terms applies to all Ministers, including the Premier. All are “taken” to have a “conflict of interest in respect of a particular matter on which a decision may be made or other action taken” if the first sentence of s 7(3) or s 7(3)(a) and (b) are satisfied. Under cl 12(1) of the Schedule, any Minister having such a conflict of interest must abstain from making or participating in a decision, or from taking or participating in any action in relation to the matter.
209. The obligation to abstain is subject to cl 12(2) and (3). The process in cl 12(2) does not address the position of the Premier, who accordingly could not be subject to a procedure providing for the making of a ruling by him or her. However, that is not the case in relation to cl 12(3), which addresses conflicts arising during a meeting of the Executive Council, the Cabinet or a Cabinet Committee, in which case the Minister having the conflict must abstain from participating, subject to the Premier, or the chair of the meeting in the absence of the Premier, otherwise approving. The application of the ruling regime in cl 12(2) to the Premier is provided for by cl 27(5) of the Schedule, which deals with the subject “Rulings”, and provides that a “ruling in respect of the Premier may be given if approved by the Cabinet”.
210. This construction of these provisions is not strained, and gives effect to the language of s 1(2) of the Code. That subsection provides that the Code is to apply to all current and future Ministers, including the Premier, as the definition of “Minister” in s 11 provides.
211. Section 4 of the Code makes a knowing breach of cl 12(1) of the Schedule (which requires a Minister with a “conflict of interest” as defined in s 7(3) of the Code to abstain from decision-making) a substantial breach of the Code by the Minister concerned. As has already been observed, the Code contains provisions that give the Premier a role in managing and dealing with conflicts of interest, in each case being conflicts other than those of the Premier, which would prevent the relevant Minister from making or participating in the relevant decision or making or participating in any action concerning it. Those provisions in relation to conflicts of interest include s 7(2) of the Code and cll 11(2)(c), 12(2) and (3)(b) of the Schedule.
212. Finally, there is cl 27 of the Schedule, which concerns “rulings” generally, and as described in cl 27(5) contemplates a “ruling in respect of the Premier” that may be given “if approved by the Cabinet”. The definition of “ruling” in s 11 of the Code is “a ruling by the Premier” under certain clauses of the Schedule, including cl 12(2). However, the application of that definition is qualified by the words “unless the context otherwise requires” at the beginning of s 11. The “ruling” referred to in cl 27(5) is one which on its face is capable of applying to the Premier (as first Minister) with respect to the application of cl 12(2) of the Schedule, and accordingly the prohibition in cl 12(1), which is in the same terms as s 7(2).
213. As counsel for the Commission contended, there are in the universe of possibilities three ways of resolving how these provisions are to be understood with respect to their application to the Premier. The first is that contended for by the applicant. As the Premier cannot sensibly be the subject of the permissive regime contemplated or provided for by s 7(2) of the Code and cll 2(3)(c), 3(5)(c) and 12(3)(b) of the Schedule, cl 12(1) should be read down as not applying to the Premier at all, notwithstanding the emphatic language of s 1(2) and 4 of the Code and the language of cll 1, 3, 4 and 11 of the Preamble to the Code (extracted at [204] above). The second is that the Premier is subject to substantially the same restrictions in s 7(2) and cl 12(1) without any mechanism for him or her to seek dispensation. The third possibility is that the power in cl 12(2) to make a ruling authorising the Minister to continue to act may be exercised by the Cabinet where the Minister with the conflict is the Premier, and where such a ruling is made, that ruling would also satisfy the requirement for a written approval in s 7(2).
214. In its terms the Code applies to all current and future Ministers, and should be construed, if at all possible, so that it has that consequence. The language of cl 27(5) of the Schedule provides the mechanism by which that is to be achieved, providing for “rulings” by the Cabinet when the Minister in question is the Premier. That mechanism permits the Code and Schedule to apply consistently to all Ministers, including the Premier. The third of the three possible constructions is clearly to be preferred.
215. Adopting that interpretation, the duty to act honestly and in the public interest, imposed by s 6 of the Code, applies to all Ministers, including the Premier. The description of what constitutes a “conflict of interest” (s 7(3)) in its terms is capable of applying to all Ministers, including the Premier. Section 7(2) in its terms applies to the Premier, except in relation to the obtaining of the “written approval of the Premier”. Clause 12(1) of the Schedule would also apply in those circumstances, and a ruling under cl 12(2), approved by the Cabinet, would prevail and allow the Premier to continue to act.
216. Clause 10(1) requires a Minister who has a conflict of interest to give notice to the Premier in a form required by cl 11(1), and to place that form on the Ministerial Register of Interests.
217. If a matter arises in which a Minister has a conflict of interest during a meeting of the Executive Council, Cabinet or a Cabinet Committee, cll 11(2) and 12 require the Minister, including the Premier, to abstain from participating and being present unless the Premier or chair of the meeting, in the absence of the Premier (including because the Premier is the subject of the conflict), approves otherwise.
218. It follows that none of the material findings made by the Commission with respect to the applicant’s conduct after 23 January 2017 involves an error of law because they treated the relevant provisions of the Ministerial Code as applying to the applicant as Premier.
219. Those specific findings are with respect to ACTA at [11.474], and in respect of RCM Stages 1 and 2 at [12.255]. The following findings, common to each, were made. No notice as required by cll 10(1) and 11 of the Schedule was given to the Cabinet or placed on the Ministerial Register of Interests; the applicant did not abstain from participating in decision-making, thereby breaching cl 12(1) of the Schedule as well as s 7(2) of the Code; and the applicant did not seek a ruling from the Cabinet as provided by cl 12(2). In relation to RCM, a further finding was made that the applicant, in breach of cl 11(2), did not comply with her obligations to disclose a conflict of interest in a meeting of the Cabinet or of a Cabinet Committee ([12.241.4]). A similar finding was made with respect to ACTA ([11.474.1.4]).
220. Each of these findings was found to be a substantial breach of the Ministerial Code for the purpose of s 9(1)(d).
221. This ground of review is not made out.
Ground of review 8
222. This ground is:
Further or in the alternative to ground 1, the Commission, having found that a finding of partial conduct under s 8(1)(b) of the ICAC Act must relate to a duty to act impartially (R [11.570]), made a material error of law in finding that Ms Berejiklian’s conduct in connection with funding promised and awarded to ACTA and RCM Stage 2 was constrained by a legal duty to act impartially (R [10.363])…
223. It is necessary first to place this ground in context. It is directed to funding promised and or awarded to ACTA and RCM Stage 2. The ground is that there was no legal duty upon the applicant to act impartially when exercising her official functions in relation to those funding proposals.
224. The Commission accepted at [11.570] that a “finding of partial conduct must relate to a duty to act impartially”. That statement harks back to the Commission’s discussion at [10.351]-[10.363], which was in turn directed to Gleeson CJ’s observation in Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 at 144 that “the references to partial and impartial conduct in s 8 [of the Act] must be read as relating to conduct where there is a duty to behave impartially”.
225. At [10.363] the Commission said:
… The concept of a duty to act impartially insofar as it relates to a member of Parliament sits within the overriding obligation of such a person to maintain the public trust and to act in the public interest. That is an obligation which, subject to statute as Mahoney JA explained in Greiner v ICAC, imposes a duty to act impartially, that is, always to exercise the power for the purpose for which the public power was granted.
226. The Commission considered and proceeded on the basis that there was “no doubt that Ministers must act impartially when allocating public funds” (see [11.570] in relation to ACTA and [12.303] in relation to RCM Stage 2). In each case the Commission concluded that the applicant consciously preferred the relevant proposal for a reason which was unacceptable, namely “her close personal relationship with Mr Maguire”.
227. The applicant maintains by this ground that as Treasurer and member of the ERC exercising the power to grant funding in relation to ACTA, and as Premier exercising the power to reserve funds in respect of RCM Stage 2, that she had no duty to act impartially. It is said that in determining whether the exercise of a Minister’s functions is subject to a duty to be impartial it is necessary to identify the specific conduct to which the duty attaches.
228. In Greiner, the conduct the subject of investigation involved the appointment of a person to a position in the public service where there was a statutory requirement for that appointment to be made on the basis of merit. Gleeson CJ and Mahoney JA were satisfied that the duty to act impartially was engaged.
229. At 160, Mahoney JA described the mischief the Parliament sought to deal with by its proscription of partiality as being the misuse of public power. As to that misuse, he observed:
It is wrong deliberately to use power for a purpose for which it was not given: partiality is a species of this class of public wrong. Public power has limits in addition to those imposed by the terms on which it is granted. Legislation may, in granting power, impose limits as to the circumstances in which it may be exercised or the mode of its exercise. But there are in addition limits upon the ends for which it may be exercised…
230. The Court of Appeal of England and Wales made the same point in Edge v Pensions Ombudsman [2000] Ch 602 at 627 in the context of the obligation of the trustees of a pension scheme:
… the so-called duty to act impartially—on which the ombudsman placed such reliance—is no more than the ordinary duty which the law imposes on a person who is entrusted with the exercise of a discretionary power: that he exercises the power for the purpose for which it is given, giving proper consideration to the matters which are relevant and excluding from consideration matters which are irrelevant…
231. It is not controversial that the fundamental obligation of a member of Parliament is “the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community” (emphasis in original) (R v Boston at 400 (Isaacs and Rich JJ)). As has already been said at [151] and [171] above, the content of that duty includes “an obligation to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations” (Re Day (No 2) at [49] (Kiefel CJ, Bell and Edelman JJ)). That duty extends, a fortiori, to a Minister to whom specific powers and functions are conferred and supports the existence of a duty to be impartial in circumstances where there are purposes for which those powers and functions may be exercised, as well as standards, criteria or other factors which are to be considered or taken into account in the exercise of those powers and functions. Here, the relevant member of Parliament was the Treasurer or Premier exercising specific powers in relation to the allocation of public funds for variously described purposes.
232. The Commission described the ERC as a “committee of Cabinet” whose role was “to assist Cabinet and the treasurer in framing the fiscal strategy and budget for Cabinet’s consideration” and to consider “proposals with financial implications brought forward by ministers” ([11.170]). The applicant as Treasurer caused the ACTA proposal to be included on the agenda for the ERC meeting of 14 December 2016, which resulted in that committee approving the $5.5 million grant.
233. The grant as approved was to be sourced from the Regional Growth-Environment and Tourism Fund (RGET Fund), which was a part of the Restart NSW Fund, which in turn was established for the purpose of “setting aside funding for and securing the delivery of major infrastructure projects and other necessary infrastructure” (Restart NSW Fund Act 2011 (NSW), s 3). At the time of the ERC ACTA decision, the RGET Fund was a “new fund”, the guidelines of which had not yet been finalised ([11.245]-[11.246]). That fund was formed under the Restart NSW Fund Act 2011 (NSW), and the relevant Minister for that Act was the Treasurer ([11.241]-[11.246]). Although it was proposed that the majority of that funding would go through “competitive grounds based programs”, Mr Barnes’ evidence was that there were “two or three” exceptions to this occurring, including the ACTA funding proposal ([11.249]).
234. In these circumstances the Commission did not err in proceeding on the basis that in participating in decisions concerning any grant allocation from the RGET Fund to ACTA the applicant was required to act in the public interest and to exercise the relevant power for the purpose for which it was conferred and consistently with any eligibility and assessment criteria. At the same time, the applicant was required not to take into account any extraneous or irrelevant purpose or consideration.
235. The position was similar in relation to the RCM Stage 2 proposal. A further $20 million in funding for this stage was the subject of a commitment and funding reservation recorded in the letter on the Premier’s letterhead and signed by Mr Perrottet as Treasurer on or shortly before 24 August 2018. That $20 million was “reserved” against the Regional Communities Development Fund (RCD Fund), which was a “competitive fund” launched through the Regional Growth Fund ([12.137], [12.156]). The effect of that reservation was that available funding in that amount could not be spent on other projects unless the reservation was released.
236. Ground of review 8 should be rejected.
Ground of review 9
237. The terms of this ground are as follows:
Further or in the alternative to ground 1, the Commission made a material error of law in finding partial exercises of Ms Berejiklian’s official functions within the meaning of s 8(1)(b) of the ICAC Act, in the absence of a finding that the conduct would not have been engaged in but for an unacceptable reason (R [10.349]-[10.350])…
238. Section 8(1)(b) provides that “corrupt conduct” includes “any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions”. The applicant submitted before the Commission that conduct is only partial, and thus corrupt, within the meaning of s 8(1)(b) where that conduct would not have been engaged in “but for” the partiality ([10.340]-[10.341]).
239. Limiting the application of s 8(1)(b) to conduct which would not have been engaged in but for the partiality would exclude from the scope of that provision some exercises of a public power or function that were partly but not solely influenced by the prohibited private interest. That would be so because the blunt “but for” test would exclude from the scope of s 8(1)(b) any exercise of a power or function that would have occurred even if the prohibited private interest had not influenced the public official.
240. At this point, the Commission’s findings as to partial conduct in breach of s 8(1)(b) should be recalled. As to the ACTA funding, they are at [11.572] and [11.593]-[11.594], and in the following terms:
11.572. The Commission concludes that Ms Berejiklian did consciously prefer the ACTA proposal for a reason which was unacceptable, namely, her close personal relationship with Mr Maguire. It rejects her evidence to the contrary. The circumstances in which it came onto the ERC agenda bespeak irregularity, all of which was within her control…
…
11.593. The Commission also finds that Ms Berejiklian’s exercise of her official functions in relation to the ACTA proposal was undertaken with a subjective consciousness that she was doing so for an unacceptable reason. This can be imputed to her from the context in which she acted, what she did in the exercise of her official functions and the fact that at least one of the reasons she did so was to prefer Mr Maguire, influenced by the existence of their close personal relationship or at least by a desire on her part to maintain or advance that relationship.
11.594. In all these circumstances, the Commission finds that, in 2016 and 2017, Ms Berejiklian engaged in conduct constituting or involving the partial exercise of her official functions within the meaning of s 8(1)(b) of the ICAC Act in connection with funding promised and awarded to ACTA by exercising her official functions influenced by the existence of her close personal relationship with Mr Maguire and by a desire on her part to maintain or advance that relationship.
241. In relation to RCM Stage 2, the relevant findings are at [12.313]-[12.314]:
12.313. Insofar as Ms Berejiklian approved the funding reservation of RCM Stage 2, the facts are also set out in the s 8(1)(c) section. The Commission finds that in approving the decision to make the funding reservation for RCM Stage 2, Ms Berejiklian consciously preferred Mr Maguire, with whom she was in a close personal relationship and who she knew was its ‘principal proponent’. The Commission also finds that in so doing, Ms Berejiklian knew that decision was wrong, as demonstrated not only by the fact she concealed her relationship at the time, but also by the fact that she approved the funding reservation without any support from either the relevant departmental officers or her own staff. The only apparent purpose of the decision was to throw money at Wagga Wagga as Mr Maguire had demanded.
12.314. The Commission finds that in 2018, Ms Berejiklian engaged in conduct constituting or involving the partial exercise of her official functions within the meaning of s 8(1)(b) of the ICAC Act in connection with funding promised and awarded to RCM Stage 2 by exercising official functions influenced by the existence of her close personal relationship with Mr Maguire or by a desire on her part to maintain or advance that relationship.
242. In relation to the breach of the s 11 duty, the relevant findings are at [13.387]-[13.389]:
13.387. In the Commission’s view, Ms Berejiklian’s conduct in failing to discharge her s 11 duty was motivated by self-interest, in the sense of a desire to conceal the truth about what she knew, and suspected, about Mr Maguire’s conduct to protect herself, as well as by personal concern for Mr Maguire, to protect him from further investigation by the Commission. It was thereby dishonest.
13.388. The Commission also concludes that Ms Berejiklian’s conduct in failing to discharge her s 11 duty was partial in the sense discussed above. She preferred Mr Maguire by concealing his conduct which she suspected concerned, or might have concerned, corrupt conduct for unacceptable reasons, which was to conceal the truth about what she knew, and suspected, about his conduct to protect him from further investigation by the Commission.
13.389. The Commission finds that Ms Berejiklian engaged in corrupt conduct constituting or involving the dishonest or partial exercise of her official functions within the meaning of s 8(1)(b) of the ICAC Act by refusing to discharge her duty under s 11 of the ICAC Act to notify the Commission of her suspicion that Mr Maguire had engaged in activities which concerned, or might have concerned, corrupt conduct.
243. The ground of review contending that the applicant did not have a duty to act impartially has been rejected (see [222]-[236] above). As has already been repeatedly observed, in Re Day (No 2) at [49], Kiefel CJ, Bell and Edelman JJ described a member of Parliament’s “duty as a representative of others to act in the public interest” as including “an obligation to act according to good conscience, uninfluenced by other considerations, especially personal financial considerations” (emphasis added). The duty in s 8(1)(b) and its prohibition of the “partial exercise” of official functions is directed to any exercise of those functions which is influenced by a private interest conflicting with that public duty.
244. In support of a “causal test”, the applicant relies on a statement of Mahoney JA in Greiner at 161. In his discussion of the meaning of “partial” in s 8, Mahoney JA identifies at least five elements that, if present, would be “a sufficient indication of what is involved in partiality of the present kind”. The last of those elements is that “the preference was given not for a purpose for which, in the exercise of the power in question, it was required, allowed or expected that preference could be given, but for a purpose which was, in the sense to which I have referred, extraneous to that power” (Greiner at 161).
245. It is submitted that this element involves “an assessment of the relevant causal role of the reasons for the official’s conduct”, and that where the exercise of the relevant function was also engaged in for a proper or permitted purpose, it would not matter that there was also some perception of partiality, which did not in fact “cause” the conduct. In other words, and in the context of a decision to appoint someone to a position (as in Greiner), it is said that a Minister would not engage in partial conduct in breach of s 8(1)(b) if he or she prefers a particular applicant over another for private gain where more probably than not in the absence of the promise of private gain the Minister would still have chosen the same person.
246. Contrary to the applicant’s submission, however, Mahoney JA’s analysis does not descend into or require any assessment of the “causal” role of the purposes “extraneous” to a proper exercise of a power. Rather, his Honour’s analysis focuses on the purposes and motives of the relevant public official in exercising the power or function, and whether there was any consideration of a purpose which is “extraneous” or a reason which is “unacceptable”. In doing so, his Honour recognised that the form of preference or advantage conferred as a result of partial conduct may lie merely in the process leading to the exercise of a power rather than the conferring of a benefit by the exercise itself. In either case, the critical matter was whether in the decision-making process there was a conscious and intentional preferring or advantaging for an unacceptable reason (at 161-162).
247. In Macdonald v R; Obeid v R; Obeid v R (2023) 112 NSWLR 402; [2023] NSWCCA 250, the Court of Criminal Appeal (Bell CJ, Basten AJA and Button J) considered the elements of the common law offence of “wilful misconduct (or misfeasance) in public office” ([58]). The Court did so in circumstances where it had been submitted, in reliance on the earlier decision in Maitland v R (2019) 99 NSWLR 376; [2019] NSWCCA 32, that one element of that offence required that it be established that the public official would not have done the charged acts “but for” an identified improper purpose (Macdonald at [55], [56]).
248. In considering that question, the Court in Macdonald made plain (at [63]-[66]) that no causative requirement forms part of any breach of a duty of confidentiality or of impartiality of a public official. In doing so, the Court cited Isaacs and Rich JJ in R v Boston at 396-397, where the following was said about a member of Parliament agreeing for pecuniary remuneration to violate the law regulating his duties in that capacity:
Such violation may be positive or negative: it may consist of improper action or improper inaction. It is wholly independent of the merits of the matter in respect of which it takes place. A Judge who agrees for personal advantage to decide a cause in one prescribed way commits a crime, notwithstanding that as between the parties that decision might be just. A public ministerial officer who for private gain prefers one applicant to another is guilty of a crime, even though such preference would be otherwise fully justifiable. And equally, if a member of Parliament agrees for private advantage to act contrary to law in relation to his duty with respect to the public acquisition of land, it is utterly immaterial that the land has not been overvalued or that, apart from the illicit agreement, the same result might, or even would, have followed. (Emphasis added.)
249. Having referred to Maitland at [82] and [83], where there is reference to claims to relief for breaches of fiduciary duty and to remedies for unauthorised exercises of administrative power, in each case where the fiduciary or officer has taken into account both impermissible and permissible purposes, the Court of Criminal Appeal in Macdonald continued:
[65] … Neither involved a deliberate breach of a duty of confidentiality, nor a breach of a duty of impartiality. To release confidential information in circumstances where you know you should not release it cannot usefully engage a test of ‘causation’. In the case of impartiality, both statute and common law principles dictate a different approach. The relevant administrative law principles are those in relation to bias, which encompasses both prejudgment and partiality based upon an interest or association. Both actual bias and a reasonable apprehension of bias disqualify a decision-maker and, if a decision has been made, invalidate the decision. In a statement of principle adopted by Gummow J in IW v City of Perth [(1997) 191 CLR 1 at 51; [1997] HCA 30]:
‘Even though the decision-maker may in fact be scrupulously impartial, the appearance of bias can itself call into question the legitimacy of the decision-making process.’
[66] Public confidence in public administration justifies such a principle, which cannot be diminished by asking whether the decision-maker would have made the same decision absent the appearance of bias.
250. The applicant’s submission as to the “causal test” contended for was rejected by the Commission at [10.340]-[10.350]. Its reasons for doing so included that the language of s 8(1)(b) referring to conduct of a public official that constitutes or involves the partial exercise of an official function is not to be read down or as not applying to or including such conduct where the outcome of the exercise of the official function would have been the same, but for the intrusion and influence of the private interest. The Commission considered that to do so “would not promote the integrity objects of the ICAC Act but, rather, would limit the field of conduct which would fall within its terms” ([10.341]).
251. Focusing on the interactions of ss 8 and 9 of the Act, the Commission also said at [10.348]:
It is a more harmonious construction of the interaction of s 8 and s 9 to have regard to Priestley JA’s view [in Greiner at 182, 184] of s 8 as prima facie capturing as corrupt ‘any conduct adversely affecting the honest and impartial exercise of official functions’ and s 9 as proceeding ‘on the footing’ that the matters it addresses ‘are capable of definite statement’. On this approach, it is more consistent with the context and purpose of the ICAC Act for issues such as any mental element of a criminal or disciplinary offence, dismissal matter or breach of an applicable code of conduct to be considered at the s 9 stage rather than to incorporate a prescriptive mental element into the s 8(1)(b) question. (Footnote omitted.)
252. The reference to “issues such as any mental element of a criminal … offence” harks back to [10.340], where reference is made to the decision in Maitland at [84] and [87]. In that case, the offence with which the Minister was charged was wilful misconduct in public office. There was an issue as to whether the trial judge had misdirected the jury in relation to the mental element of that offence in circumstances where the Minister had embarked on a transaction for purposes which included proper purposes and an improper purpose (so that the improper purpose was not the sole purpose). The Court held that the direction to the jury was not adequate. Fundamentally, it was necessary for the prosecutor to establish beyond reasonable doubt that the Minister exercised and intended to exercise the relevant power for the purpose of conferring the extraneous benefit, that not being the sole purpose. That meant that the prosecutor had to exclude as a reasonable possibility that the power was exercised for the other purpose or purposes.
253. At [84], the Court in Maitland concluded:
… it seems to us that the direction as to the mental element of the offence should have been that Mr Macdonald could only be found to have committed the crime (subject to the other elements being made out) if the power would not have been exercised, except for the illegitimate purpose of conferring a benefit on Mr Maitland and DCM.
254. The Queensland Court of Appeal reached a similar conclusion in R v Maudsley (2021) 9 QR 587; [2021] QCA 268 at [30].
255. The question for this Court is whether the conduct found by the Commission was capable of constituting a “partial exercise” of any of the applicant’s official functions. That conduct was that the applicant had consciously preferred the ACTA and RCM Stage 2 funding proposals, and concealed from the Commission Mr Maguire’s conduct which she suspected concerned or might have concerned “corrupt conduct”, for an “unacceptable” reason. The early High Court authorities of R v Boston and Wilkinson v Osborne, and recent High Court authority of Re Day (No 2), to which reference has been made above, hold that a parliamentary member and Minister is to act in exercising public functions and powers “uninfluenced” by other considerations, and with “fidelity and with a single-mindedness for the welfare of the community”.
256. Under s 8(1)(a), “corrupt conduct” includes any conduct that could adversely affect, directly or indirectly, the honest or impartial exercise of official functions. Similarly, having a conflicting private interest which is capable of influencing, and does influence, the exercise of a function or power is sufficient to constitute a “partial” exercise of the power under s 8(1)(b), and irrespective of whether the outcome of that exercise would not have been different in the absence of the private interest. In such circumstances, the position remains that the power has been exercised “influenced” by other considerations.
257. This conclusion is supported by the reasoning in Macdonald and the often cited and applied dicta of Isaacs and Rich JJ in R v Boston at 396-397.
258. Ground of review 9 should be rejected.
Ground of review 10
259. This ground is as follows:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that Ms Berejiklian’s conduct in connection with funding promised and awarded to ACTA and RCM Stage 2 involved the partial exercising of her official functions, without engaging in any comparative exercise addressing how Ms Berejiklian had or would have treated relevantly identical funding requests (R [10.301]-[10.334])…
260. As with ground 8, this ground is advanced as an error of law vitiating the Commission’s partial conduct findings in relation to the funding promised and or awarded to ACTA ([11.594]) and in relation to the funding reserved and or awarded to RCM Stage 2 ([12.314]). The argument made is that for the Commission to make a valid finding of partial conduct it was legally necessary that it undertake a comparison between the treatment said to involve or constitute partial treatment and the treatment of other persons or things “in relevantly identical circumstances”. It is said that there was no such consideration by the Commission when making the findings referred to above.
261. The same argument was made to and rejected by the Commission ([10.301]-[10.339]). Relying on Mahoney JA’s reasons in Greiner at 161, it was submitted on behalf of the applicant that a finding under s 8(1)(b) required “a comparison between the person granted the so-described ‘partial’ treatment and treatment of other persons in relevantly identical circumstances” ([10.301]). This language adopts a statement made by Grove J in Woodham v Independent Commission Against Corruption (1993) 30 ALD 390 at 396 (see [10.295]). That statement was directed to the absence of evidence in that case supporting a finding of “partiality” in the sense described by Mahoney JA in Greiner at 161. In doing so, Grove J does not say or suggest in Woodham that such a comparison has to be undertaken if there is to be a legally valid finding of a “partial” exercise of any official function within s 8(1)(b).
262. The adoption of a such a prescriptive rule is not supported by Mahoney JA’s reasons or the likelihood that in many cases there will not be a relevantly identical comparator to the preferred or advantaged person or thing. The official function being exercised in Greiner was the appointment of a person to a senior position in the public service. Having described “partiality” by reference to the five elements which together were said to be “a sufficient indication of what is involved in partiality of the present kind” (emphasis added), Mahoney JA continued (at 161-162):
In describing partiality in this way, I am conscious that exceptions, qualifications and explanations may be necessary for the application of the term in particular cases…
The form of the advantage conferred may also vary. Thus, the advantage may be seen in the actual decision, that is, the decision to award a position, a benefit or the like: the advantage may lie in the award of it to one rather than another. But the advantage may lie merely in the process leading to the exercise of a power or the grant of a benefit. A person may be preferred by being put in a position of advantage in the process leading to the decision to award an office or, indeed, by the mere fact of being brought into the contest as one of the contending parties…
Partiality involves, in my opinion, the advantaging of a person for an unacceptable reason. It is to this to which most attention was directed in argument, in one form or another. Preference is not, as such, partiality. A person may be preferred for a reason which the law or the rules of the contest allow. Partiality involves essentially that there be a preference for a reason which is in this sense not acceptable.
263. As these observations make plain, partiality involves a preference or advantage for an unacceptable reason, which may or may not occur in circumstances such as those in an appointment to public office, where the alleged partiality may be between identified individuals or classes whose comparative merits are amenable to analysis. Undertaking a comparison in such circumstances may assist in identifying preferences or advantages, depending on the nature of the power. It does not follow, however, that such an approach should be mandatory, and irrespective of the circumstances in which the alleged preference or advantage has been conferred.
264. The Commission correctly described, “without being exhaustive”, the test generally to be applied (at [10.334]):
… a public official’s conduct can be characterised as ‘partial’ for the purposes of s 8(1)(b) if it involves the conscious advantaging or preferencing of another person, and the public official appreciated, or should have appreciated that, in the circumstances, the advantaging or preferencing was ‘for an unacceptable reason’.
265. In applying that test, and in concluding that there was partial conduct in relation to the ACTA and RCM Stage 2 findings, the Commission relied upon a number of matters as bespeaking “irregularity”, whereby each of those proposals received advantages or preferences in the process leading to the exercise of power, in its exercise, and in subsequent events.
266. The Commission found that, with respect to the ACTA funding proposal, the circumstances in which it came onto the agenda for the ERC meeting on 14 December 2016 included to following, which are extracted at [132] above and again included here for convenience:
11.572.1. Ms Berejiklian agreed that to have a matter put on an ERC meeting agenda urgently would require the intervention or at least the agreement of the treasurer.
11.572.2. Ms Berejiklian accepted that Mr Maguire had had discussions with Mr Bentley [an adviser within the applicant’s office] and her with a view to getting her to give a request or direction that the ACTA matter be placed on the ERC agenda.
11.572.3. Mr Ayres [Minister for Sport] did not recall any direct discussion and agreement with Ms Berejiklian to have the ACTA matter on the agenda.
11.572.4. To the extent that a 5 December 2016 email said, ‘I understand that Minister Ayres has agreed with the Treasurer that a submission seeking $5.5 million for a Clay Target Association in Wagga Wagga be considered by ERC on 14 December’, Mr Ayres interpreted that to mean ‘our officers interacting with each other, not me and the Treasurer’.
11.572.5. Lodging the final ACTA ERC submission one or two days before the ERC meeting was well outside the ordinary timeframes for dealing with an ERC submission.
11.572.6. Placing the ACTA proposal on the ERC agenda at such short notice was not standard procedure; it meant it by-passed ‘a stage where it would be circulated amongst departments’.
11.572.7. On 6 December 2016, at a time when it does not appear the ERC submission could have been seen by Ms Berejiklian, she both placed the matter on the ERC agenda and indicated an inclination to support it.
11.572.8. The premier’s office questioned why the ACTA submission could not be delayed until the new year, to allow time for market testing of costings and project planning to be completed.
11.572.9. Treasury recommended that the ACTA ERC submission not be supported as ‘a net benefit to the State [had] not been adequately demonstrated’.
…
11.572.11. When the matter was taken off the ERC agenda, Mr Maguire ‘fired up’, and Ms Berejiklian reinstated it.
267. As to the period following that ERC decision, the Commission made the following findings:
11.574. That being said, the ERC decision was subject to conditions. Ms Berejiklian’s interest in the ACTA proposal continued. She closely followed its progress, and the fulfilment of those conditions. As explained when dealing with s 8(1)(c), those close to the coal face of the implementation of the ERC ACTA decision, Mr Barnes and Mr Hanger, observed that Ms Berejiklian’s office seemed to be particularly interested in the ACTA proposal. According to Mr Barnes, that degree of attention was atypical.
11.575. … As discussed, the bureaucracy both in the Office of Sport and Treasury did not support the ACTA proposal. From the outset, the ACTA proposal was perceived by the departmental officers who prepared the ERC submission as being a ‘flimsy case for funding’, while Treasury did not support it because it did not benefit the state as a whole and the business case did not comply with its guidelines…
…
11.583. The Commission accepts that the mere fact that Ms Berejiklian spoke on the telephone and exchanged SMSs with Mr Maguire could not be the basis for a finding of partial treatment, nor could the mere fact that individuals with a closer personal or professional relationship to a Cabinet member have a ‘greater level of access’ to her.
11.584. However, this is not a case of ‘mere’ facts. As Mr Toohey described it (a description which was reflected in Mr Blunden’s memorandum to the premier of 12 December 2016) the ACTA proposal was to allocate funds based on scant and inadequate information which did not meet the NSW Government’s standards and was not a matter of government policy.
11.585. The evidence discloses that the conduct of Ms Berejiklian in advancing, and constantly supporting, the ACTA proposal was actuated by her close personal relationship with Mr Maguire.
268. As to the RCM Stage 2 funding proposal, the Commission held that, at the time the applicant as Premier approved the funding reservation on or shortly before 24 August 2018: she had no support from either the relevant departmental officers or her own staff ([12.276], [12.313]); there was no evidence of any assessment as to the feasibility or otherwise of RCM Stage 2 having been made at the departmental level ([12.276]); and the applicant accepted it was possible that her decision to support it was either contrary to or in the absence of departmental advice ([12.281]).
269. Specifically, Mr Harley did not have any recollection of advice sought or received from the department regarding the merits or otherwise of RCM Stage 2 ([12.282]). Ms Cruickshank and Mr Harley were not supportive of the proposal ([12.287]). Mr Burden could not recall anyone within the Premier’s office other than the applicant “wanting to push the project” ([12.289]).
270. As to the sequence of events, as extracted above at [125] on 30 July 2018 the applicant in a recorded telephone conversation with Mr Maguire undertook to him to “throw money at Wagga … lots of it”, and to do so in respect of Mr Maguire’s “three top things”, one of which was RCM Stage 2 ([12.103]-[12.104], [12.277]). From 30 July 2018, the applicant as Premier was the ultimate decision-maker with respect to funding commitments preceding the Wagga Wagga by-election in September 2018 ([12.128]). On or shortly before 24 August 2018, the then Treasurer, Mr Perrottet, signed a letter to Mr Barilaro on the applicant’s letterhead stating that he and the applicant had agreed to the reservation of up to $20 million from the RCD Fund in favour of RCM Stage 2 ([12.137]). As at 24 August 2018, the scope of works for that project had not been finalised. Whether it met the RCD Fund guidelines was unknown, and a final business case had not been approved ([12.137]).
271. At that time, the view of Mr Barnes, then a deputy secretary of Regional NSW, was that the funding was not in the public interest ([12.124]); Ms Cruickshank said she was “definitely not pushing RCM Stage 2” ([12.130]).
272. There was no evidence that anyone other in Government than Mr Maguire supported RCM Stage 2 ([12.133]). Ms Cruickshank said that she would have been “surprised” if she had been aware that Mr Maguire had been consulted regarding any by-election commitments; and Mr Harley agreed that it would have been “a little bit strange” where Mr Maguire was by that time “persona non grata” ([12.280]).
273. In the broad scope of circumstances to which the section might apply, there is no reason in the language of s 8(1)(b) or otherwise for construing the reference to “partial conduct” as confined to treatment which is different from the treatment of other persons or things in “relevantly identical” circumstances. Making such a comparison is but one way to assess whether a person has been preferred or advantaged.
274. This ground of review is rejected.
Ground of review 11
275. This ground is as follows:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that the duty in s 11(2) of the ICAC Act to report to the Commission any matter that the person suspects on reasonable grounds concerns or may concern corrupt conduct does not need to be confined to a ‘matter’ involving some specified subject matter, and may involve a generalised suspicion divorced from any particular subject matter (R [13.11]-[13.21])…
276. Section 11(2) of the Act imposes a duty to report to the Commission “any matter that the person suspects on reasonable grounds concerns or may concern corrupt conduct”. The applicant submits that the “matter” to be reported must be a “specified subject matter”. It is said that the identification of such a subject matter is necessary to permit a sensible consideration of whether there were “reasonable grounds” for a suspicion of corrupt or possibly corrupt conduct. Section 11(2) is said to require the reporting of something which is “articulated sufficiently to permit it sensibly to be regarded as possibly… corrupt”.
277. This argument was made to the Commission. The Commission said in response, and by reference to the guidelines issued under s 11(3), that in its view the reporting provision may be engaged by a broad range of conduct, including where “a person [does] not even have information which identifies the individual” or where a “reporting minister … merely [has] observed an isolated act, which even without a context as to some particular subject matter to which it related, struck them as so out of order in relation to a public official’s conduct that they suspected that it concerned, or may concern, corrupt conduct” ([13.17]).
278. The Commission also rejected the applicant’s contention that Counsel Assisting had “failed adequately to identify the ‘matter’ said to have been reportable”. It continued (at [13.20]):
… Counsel Assisting set out in detail in their submissions the circumstances which they argued gave rise to an actual suspicion on Ms Berejiklian’s part based on reasonable grounds. They identified the time at which they contended those circumstances supported the proposition that it was probable Ms Berejiklian suspected Mr Maguire was engaging in conduct which may have been corrupt. At the end of each relevant section of their submissions, Counsel Assisting have identified the actual suspicion they contend the Commission should find Ms Berejiklian had based on the facts and circumstances which came to her attention concerning Mr Maguire’s conduct and which enlivened her s 11 duty.
279. This ground of review ultimately raises a question as to the construction of s 11(2). That question is whether, for there to be a “matter that [a] person suspects on reasonable grounds concerns or may concern corrupt conduct”, the matter must involve some “specified subject”. The materiality of that question in turn depends on whether the Commission’s findings involved “matters” which were not confined to a “specified subject matter”. For the reasons which follow, that proposition is not established, making it unnecessary to address further any debate about the scope of the word “matter” in s 11.
280. The Commission’s findings of breach of s 11 are at [13.367]-[13.368]. The subject matters of those findings are referred to by the labels “Badgerys Creek land deal”, “Country Garden and Mr Hawatt”, and “Mr Demian”. The findings address the applicant’s state of mind as at September 2017 (in relation to the “Badgerys Creek land deal”) and after 13 July 2018 (in relation to each of the three matters).
281. The significance of those dates is as follows. In August and early September 2017, there was a series of intercepted telephone calls between the applicant and Mr Maguire concerning the “Badgerys Creek land deal”. On 5 July 2018, the applicant and Mr Maguire had a conversation about his appearing as a witness at the Operation Dasha public inquiry on 13 July 2018. As a result of the evidence he gave on 13 July 2018, the applicant called on Mr Maguire to resign, believing that he “had been caught up with some people who… likely had… done some wrong” ([13.142]).
The “Mr Demian” subject matter
282. Mr Hawatt had been a councillor at Canterbury City Council until its amalgamation with Bankstown Council in May 2016 ([2.3]). Country Garden Australia Pty Ltd (Country Garden) was an Australian-based property developer ultimately owned by Chinese interests and held through a Hong Kong listed company. Mr Maguire and Mr Hawatt “worked” together with Country Garden to identify and introduce to Country Garden potential development sites. Mr Demian was a property developer and the owner of such a site, described by the Commission as a “major project with a potential gross realisation of $2.5 Billion” in Camellia ([13.42]). As such, he was seeking a purchaser or joint venturer for that project.
283. At [13.42]-[13.43], the Commission found in relation to Mr Demian:
The section concerning Charbel Demian in chapter [8] deals with the circumstances in which on 25 November 2016, when Ms Berejiklian was still the treasurer, Mr Maguire forwarded to her an email chain concerning steps he was taking to assist Mr Demian. The subject line of the email chain was ‘181 James Ruse Drive, Camellia’. It was apparent from the email chain that Mr Demian was a property developer, associated with the development of a ‘major project with a potential gross realisation of $2.5 Billion’ in Camellia. The email chain revealed Mr Maguire’s assistance to Mr Demian included taking the matter up with the RMS. Mr Maguire did not confine his distribution of the email chain to Ms Berejiklian. He also sent it to staff in the office of the then premier, Mr Baird, and to staff of the then minister for planning, Mr Stokes, with a request that it be forwarded to the premier.
It is significant that Mr Maguire was taking up a matter concerning a property developer with a government department, that the matter had no apparent relation to his electorate and that he was doing so at Mr Demian’s request. And, while Mr Maguire did not confine the email’s distribution to Ms Berejiklian, as far as the evidence reveals, she was the only recipient aware of Mr Maguire’s previous activity seeking commission in connection with property sales.
284. There followed further communications in December 2016 and thereafter ([8.43]-[8.57]). Mr Maguire’s evidence was that he was hoping to receive a financial benefit for assisting Mr Demian ([8.58]). However, Mr Maguire left it to Mr Hawatt to negotiate the commission that “they” would receive from Mr Demian ([8.58]).
The “Country Garden and Mr Hawatt” subject matter
285. In their 5 July 2018 conversation, Mr Maguire said to the applicant that he had been summonsed to the Commission because he had “introduced that idiot Hawatt to Country Garden”, and that “Hawatt… pressured perhaps the general manager [of the Council] and others about planning to get planning approved so he could sell it to Country Garden” ([13.147]). The Commission also held that during this conversation Mr Maguire told the applicant that “he had made representations on behalf of property developers and assisted them by referring properties as potential investments to Country Garden”, and that he had “also acknowledged that an ‘incentive payment’ for his introduction and assistance was within his contemplation” ([13.188]).
286. On 13 July 2018, Mr Maguire gave evidence in the Operation Dasha public inquiry. The Commission summarised that afternoon’s evidence at [13.218]:
… [Mr Maguire] admitted that he and Mr Hawatt were going to share, or were planning on sharing, commissions obtained from property developers who sold their properties to clients of Mr Maguire to whom they were introduced. This included commissions from introductions on behalf of Mr Demian. The way such commission might be earned was either by Mr Hawatt identifying properties which could be sold to interests that Mr Maguire had contact with, such as Country Garden, with a view to money being made by him and Mr Hawatt, and/or from Mr Maguire introducing a joint venture partner – an introduction which might otherwise not have occurred. The value Mr Maguire could bring to the process, as he explained to Mr Hawatt, was that he had ‘more chance of opening the door to our friends than’ Mr Hawatt had. Mr Maguire was to make appointments with people, for example, involved in planning issues, but told Mr Hawatt that he was to take ’them to planning and people like that because you can do that’. Mr Maguire’s evidence concluded at 4.39 pm…
The “Badgerys Creek land deal” subject matter
287. In April 2017, Mr Maguire met Ms Waterhouse and became aware that her family owned land on the western boundary of the Badgerys Creek airport site ([8.81], [8.82]).
288. In early September 2017, Mr Maguire told the applicant that he was interested in a land deal at Badgerys Creek, which “would give him enough money to pay off his debts in the order of $1.5 million” ([13.83]). There were discussions about that land deal between the applicant and Mr Maguire on 5, 6 and 7 September 2017 ([13.79]-[13.94]). At the time of these discussions, Badgerys Creek and the Western Sydney Airport was a “critical, and ongoing, economic development for the NSW Government” ([13.86]). In one of those discussions, Mr Maguire said that “we’ve done our deal so hopefully that’s about half of all that gone now”, to which the applicant responded “That’s good… I don’t need to know about that bit” ([13.87]).
289. In October 2017, Mr Maguire told the applicant that Ms Waterhouse had property at Badgerys Creek and that he had been involved in trying to resolve road access issues for her with the RMS ([8.212], [13.122]). On 18 October 2017, Mr Maguire took Ms Waterhouse to Ms Berejiklian’s office and asked her staff to solve Ms Waterhouse’s “big problem”, which was a need for road access to her Badgerys Creek property ([13.121]-[13.125]).
Conclusion as to ground of review 11
290. The applicant submits that it is “pivotal to the application of s 11(2) that there be sufficient specificity in a putative ‘matter’ as to permit sensible consideration of whether there were ‘reasonable grounds’ for a suspicion of corrupt or possibly corrupt conduct”. Each of the matters which are the subject of the Commission’s s 11 findings is identified by reference to the conduct or subject matter, timing and persons involved, and on its face permits a sensible consideration of whether there were grounds for suspicion of corrupt or possibly corrupt conduct. These reasons outline each of these matters in order to test whether that is so, and do not seek to describe all the circumstances which were subject to evidence taken into account by the Commission. This being the position, and irrespective of the scope of a “matter” which can be the subject of s 11(2), there was no material error on the part of the Commission.
291. Ground of review 11 should be rejected.
Ground of review 12
292. Ground of review 12 is:
Further or in the alternative to ground 1, the Commission, having found that:
a. ‘the obstacles to a prosecution [of Ms Berejiklian] would be so formidable as to make it reasonably clear that any advice from the DPP with respect to the matter would be to the effect that no prosecution would be commenced’ (R [13.416]), and
b. ‘there is insufficient admissible evidence ... for inferences to be drawn that would prove the mens rea of the offence of misconduct in public office to the required standard of beyond reasonable doubt in any criminal prosecution’ (R [13.417]),
reached an illogical or irrational result in finding that it was satisfied to the requisite standard that any breach of s 11(2) of the ICAC Act by Ms Berejiklian was ‘dishonest’ and ‘partial’ within the meaning of s 8(1)(b) of the ICAC Act (R [13.387]-[13.388])…
293. By this ground it is contended that the Commission’s finding that the applicant’s failure to discharge her obligations under s 11(2) of the Act constituted “serious corrupt conduct” is “internally inconsistent” with its subsequent decision in all the circumstances not to make a statement that consideration be given to obtaining the advice of the Director of Public Prosecutions (DPP) with respect to the prosecution of the applicant for misconduct in public office ([13.416]-[13.418]).
294. As noted at [50] above, s 74A of the Act concerns the content of reports made by the Commission to Parliament. Subsection 74A(2) is:
74A Content of reports to Parliament
…
(2) The report must include, in respect of each “affected” person, a statement as to whether or not in all the circumstances the Commission is of the opinion that consideration should be given to the following—
(a) obtaining the advice of the Director of Public Prosecutions with respect to the prosecution of the person for a specified criminal offence,
(b) the taking of action against the person for a specified disciplinary offence,
(c) the taking of action against the person as a public official on specified grounds, with a view to dismissing, dispensing with the services of or otherwise terminating the services of the public official.
295. The Commission decided not to recommend to the obtaining of advice from the DPP at [13.407]-[13.418]. Its reasons included the following:
13.409. The elements of the offence of misconduct in public office have been set out in chapter 3. Counsel Assisting submitted in relation to that element requiring the prosecutor to prove that the accused has ‘wilfully misconduct[ed]’ her or himself, that it is only regarded as proven where it is established that the accused knew that (or was reckless as to whether) her or his conduct constituted misconduct and that the accused would not have engaged in the impugned conduct but for her or his improper purpose.
13.410. Counsel Assisting submitted that as Ms Berejiklian gave her evidence to the Commission under objection, it would not be admissible against her in any criminal proceedings for an offence of misconduct in public office. As a result, proof of her mental state, including as to the question of whether any misconduct by her was ‘wilful’, would be left to inference from the circumstances. However, they submitted that there is a considerable body of evidence independent of Ms Berejiklian’s from which inferences could be drawn as to her state of mind and from which potentially innocent hypotheses could be excluded in relation to her failure to exercise her s 11 duty.
…
13.413. Ms Berejiklian submitted that even if the Commission were satisfied that she breached her s 11 duty, it is at least reasonably clear that any advice from the DPP as to a prosecution for misconduct in public office in relation to that conduct would be that there should be no such prosecution. She submitted, first, that in this circumstantial case, the prosecutor would inevitably fail in proving the mens rea element of the offence. The prosecutor would need to prove, relying solely on inference – as Counsel Assisting acknowledged – not only that Ms Berejiklian had reached the required state of suspicion under s 11(2) of the ICAC Act, but that she appreciated that fact at the relevant time and decided not to report it to the Commission.
13.414. Ms Berejiklian submitted that the prosecutor would need to disprove any other reasonable hypothesis raised at trial for her failure to report, or, as Counsel Assisting acknowledged, would be required to show her guilt was ‘the only rational inference that the circumstances would allow them to draw’. Ms Berejiklian submitted that the absence of a plausible nefarious motive on her part not to comply with her s 11 duty would be an additional obstacle for a prosecutor to prove a wilful intent on her part.
13.415. Secondly, Ms Berejiklian submitted that there was a real question whether the prosecutor could prove that element of the offence of misconduct in public office requiring that the impugned conduct be ‘so serious as to merit criminal punishment’. She submitted that her conduct in relation to her s 11 duty was not capable of meeting such a high bar. She submitted that the absence of a nefarious motive on her part would be fatal to any prosecutor making out this element and further, that a ‘reckless failure’ to comply with s 11(2), even if capable of being proved and satisfying the mens rea element, would not be ‘so serious as to merit criminal punishment’.
13.416. The Commission accepts Ms Berejiklian’s overall submission that the obstacles to a prosecution would be so formidable as to make it reasonably clear that any advice from the DPP with respect to the matter would be to the effect that no prosecution would be commenced. The offence of misconduct in public office requires proof of elements not essential to the matters which constitute corrupt conduct under the ICAC Act. For example, as explained in this report, it is unnecessary to establish such matters as a nefarious motive.
13.417. The Commission is satisfied on the evidence before it to the requisite standard on the balance of probabilities that inferences can be drawn from the facts and circumstances to establish that Ms Berejiklian wilfully failed to comply with her s 11 duty. The Commission concludes, however, that there is insufficient admissible evidence, particularly in the absence of Ms Berejiklian’s evidence, for inferences to be drawn that would prove the mens rea of the offence of misconduct in public office to the required standard of beyond reasonable doubt in any criminal prosecution.
296. The applicant does not contend that the Commission’s finding as to “serious corrupt conduct” was illogical or irrational by reference to that ultimate finding or the reasons supporting it. Had she done so, it would have been necessary to show that the conclusion was one which no logical or rational decision-maker could have arrived at on the available evidence. As Crennan and Bell JJ said in Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 at [130]-[131]:
… an allegation of illogicality or irrationality … is nevertheless an allegation of the same order as a complaint that a decision is ‘clearly unjust’ or ‘arbitrary’ or ‘capricious’ or ‘unreasonable’ in the sense that the state of satisfaction mandated by the statute imports a requirement that the opinion as to the state of satisfaction must be one that could be formed by a reasonable person…
… The complaint of illogicality or irrationality was said to lie in the process of reasoning. But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion.
297. Instead, the applicant contends that the finding that she engaged in “serious corrupt conduct” in failing to discharge her s 11 duty ([13.406]) is inconsistent with the Commission’s subsequently formed opinion that consideration should not be given to obtaining advice with respect to prosecution of the applicant for the offence of misconduct in public office.
298. The proposition that such an inconsistency renders that finding illogical or irrational does not follow. First, it assumes that any illogicality or irrationality which might explain the asserted inconsistency is only in relation to the finding of “serious corrupt conduct”, and not in relation to the Commission’s declining to make a s 74A(2) statement.
299. Secondly, the proposition assumes that, where the factual circumstances justify a “serious corrupt conduct” finding in relation to conduct in breach of s 11, those same factual circumstances must also justify an opinion that consideration be given to prosecuting for the offence of wilful misconduct.
300. More fundamentally, there is no necessary inconsistency between the two conclusions for reasons which are identified by the Commission’s observations at [13.416]-[13.417], which accepted the applicant’s “overall submission” before it on the s 74A(2) question. Whereas the Commission was not bound by the rules of evidence (s 17 of the Act), those strict rules would apply to the prosecution of any criminal charge. In addition, the evidence given by the applicant before the Commission would not be admissible in any criminal proceeding. Moreover, the standard of proof applied by the Commission was the balance of probabilities informed by the principle in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, whereas the standard to be applied in any criminal proceeding is satisfaction beyond reasonable doubt. Finally, as the applicant argued before the Commission ([13.414], [13.416]), the offence of misconduct in public offence requires proof of elements not essential to the matters which constitute “serious corrupt conduct”.
301. Ground of review 12 fails.
Ground of review 13
302. Ground 13 is as follows:
Further or in the alternative to ground 1, the Commission made a material error of law in finding that for a finding of ‘dishonest’ exercise of official functions for the purposes of s 8(1)(b) of the ICAC Act, ‘it is not essential that the person accused of dishonesty appreciated her or his act or omission to be dishonest according to the standards of ordinary people’ (R [13.371])…
303. This ground also addresses the Commission’s finding of “serious corrupt conduct” with respect to the applicant’s failure to discharge her obligations under s 11. The Commission held that failure constituted a “dishonest” exercise of her official functions for the purposes of s 8(1)(b) ([13.387]). It also held, however, that breach of duty was “partial” because the applicant preferred Mr Maguire’s interests in having his conduct concealed in order to protect him from further investigation by the Commission ([13.388]).
304. Success on this “dishonesty” ground of review would not affect the Commission’s separate finding that the same conduct amounted to “partial” conduct. It follows that the error of law contended for by this ground could not itself result in the quashing of the Commission’s findings of serious corrupt conduct based on breaches of s 11.
305. The applicant argues that, on its proper construction, “dishonest” conduct in s 8(1)(b) includes a subjective element requiring that the person appreciated or realised that his or her conduct was dishonest according to the standards of ordinary people.
306. That argument proceeds as follows. Section 8(1)(b) was in the Act when enacted in 1988, and has not been amended. The word “dishonest” in that provision was and remains undefined. The authorities as to the meaning of “dishonest” relied on by the Commission reflect a “modern” interpretation of “dishonest”, whereas the “prevailing understanding” at the time the Act was passed was that the test for dishonesty included whether the person also must have realised the conduct was dishonest by the standards of ordinary people (see R v Ghosh [1982] QB 1053 at 1064; R v Love (1989) 17 NSWLR 608 at 614; and Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7 at [9]-[14] (Toohey and Gaudron JJ)).
307. There is no reason for construing “dishonest” in the Act other than in its ordinary sense, which is “dishonest according to ordinary notions” rather than “dishonest in some special sense” (Peters at [15], [18] (Toohey and Gaudron JJ)). That is a question of fact such that in a criminal trial it is for the jury to determine whether the conduct of the accused was dishonest according to the standards of ordinary, decent people (Peters at [18] (Toohey and Gaudron JJ), [86] (McHugh J, Gummow J agreeing)).
308. The Commission’s finding of “dishonesty” was made on the basis that, for the purposes of s 8(1)(b), for conduct to be “dishonest”, it was necessary that the public official’s conduct answered that description according to the standards of ordinary, decent people ([13.371], citing Peters at [18]). It was uncontroversial that by those standards it was not necessary that the person accused of dishonesty appreciate his or her act or omission to be dishonest according to the standards of ordinary people ([13.371], citing Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89; [2007] HCA 22 at [173], which in turn cites Macleod v The Queen (2003) 214 CLR 230; [2003] HCA 24 at [36]-[37]). The Commission did not err in proceeding on that basis.
309. Accordingly, this ground of review fails.
Conclusion
310. In the result, each ground of review has been rejected. Ms Berejiklian’s application to quash the Commission’s findings of “serious corrupt conduct” or to have those findings declared as made without or in excess of jurisdiction should be dismissed, with costs.
311. WARD P: I have had the opportunity to consider the reasons of the majority (Bell CJ and Meagher JA) in draft. As their Honours have made clear, the proceedings before this Court (being an application for judicial review) do not permit a “merits” review of the findings of the respondent (the Commission). Rather, what is contended is that the Commission’s findings that the applicant had engaged in serious corrupt conduct were affected by jurisdictional error and errors of law on the face of the record. The applicant seeks an order quashing those findings or declaring that they were affected by jurisdictional error or otherwise not made in accordance with law.
312. For the reasons that follow I have reached a different view as to Ground 1 from that reached by the majority.
313. The background to the matter has been comprehensively set out in the majority judgment as have the relevant statutory provisions.
314. As to Ground 1, I did not understand Senior Counsel for the applicant to be abandoning the written submissions provided before the hearing. Rather, I understood the oral submissions to be emphasising a particular aspect of the applicant’s argument that the report entitled “Investigation into the conduct of the then member of Parliament for Wagga Wagga and then Premier and others (Operation Keppel)” (Report) was delivered in excess of jurisdiction. However, nothing ultimately turns on whether the applicant’s oral submissions were so confined given the conclusion I have reached as to the aspect that was emphasised in the applicant’s oral submissions on the lack of authority of the Hon Ruth McColl AO SC (once her appointment as Assistant Commissioner had expired and she was simply a consultant appointed pursuant to s 104B of the Independent Commission Against Corruption Act 1988 (NSW) (the Act) to provide services, information or advice to the Commission) to make witness credibility assessments which could then be ‘adopted’ by the Commission as the basis for the adverse findings it made against the applicant.
315. The constitution of the Commission has been explained in the majority judgment. Relevantly, as their Honours have noted, the Act refers variously to the “making” of a report (s 74(8)), the preparation of a report (see s 74(2)-(4)), and the furnishing of a report (see s 74(7)). The function of making a report under the Act is one that cannot be delegated (s 107(4)), other than to an Assistant Commissioner if the Chief Commissioner is of the opinion that there would or might be a conflict of interest or it would be in the interests of justice to do so (s 107(6)).
316. The applicant has submitted that the notion of “making a report” under s 74 encompasses the functions of both preparing and furnishing a report, referring to the extrinsic materials for the original Independent Commission Against Corruption Bill 1988 (No 2) (NSW); in particular, the reference in the Explanatory Note to cl 76 (which in terms framed the preparation of a report and furnishing of that report as a requirement to “make” reports). The applicant does not submit that “making” a report encompasses all administrative aspects of the preparation of the report along the way.
317. The applicant argues that the restriction on delegation of the function of making a report (as noted above) reflects a choice by Parliament to limit the pivotal functions of preparing and furnishing reports under the Act to Commissioners or, in some circumstances, Assistant Commissioners. The applicant submits that, by specifically providing that a function of making a report may be delegated “to an Assistant Commissioner only”, Parliament manifested its intention that this was the only means of making a valid report (referring in this context to Project Blue Sky Inc v The Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [91]-[93]).
318. Ms McColl was appointed as an Assistant Commissioner under s 6A(1) of the Act on 15 July 2020 on which date the Chief Commissioner executed an instrument under s 107(1)-(2) of the Act delegating specified functions to Ms McColl. Those functions did not include the function of “making a report” (as the Commission accepted in submissions in this Court – see AT 51.41).
319. After a number of extensions, Ms McColl’s appointment as Assistant Commissioner expired. Ms McColl’s engagement as a consultant (after the expiry of her term as Assistant Commissioner) in late October 2022, as announced by the Commission on about 28 October 2022, was “for the purposes of her finalising the [Report], including participating in the review and editing processes of that [Report]”.
320. The Commission received the last of the written submissions in relation to the enquiry on 18 October 2022. There is no suggestion that prior to the expiry of her term as Assistant Commissioner Ms McColl had provided a draft Report to the Commission. Indeed, it is clear that, as at 11 January 2023, Ms McColl had not yet completed her draft of the Report. On that date, the Commission issued a media release stating that Ms McColl was working to complete a draft of the Report as soon as possible and that once the Report had been received it would need to be subjected to the Commission’s “review, editing and production processes”. The draft Report was not received until 8 February 2023; and was not finalised (through the process referred to at [59] of the majority judgment) until 26 June 2023 before being furnished to Parliament on 29 June 2023.
321. The significance of the above timeline of events is that whatever draft “findings” were recommended or included in the draft Report when it was submitted by Ms McColl on 8 February 2023, they must have been made by her at that time in her capacity as a consultant and not as Assistant Commissioner. This is of relevance because the applicant submits that, from 1 November 2022 onwards, the function of preparing a report required under s 74(3) could not be carried out by Ms McColl; that function could be delegated only to an Assistant Commissioner (assuming a perceived or potential conflict of interest subsisted or the interests of justice required).
322. The applicant submits that the media releases by the Commission referred to above provide a sound basis to conclude that Ms McColl was carrying out the function of preparing the Report after the expiration of her Commission on 31 October 2022. I agree. The applicant further submits that the Commission’s role was limited to reviewing and deciding whether or not to adopt Ms McColl’s draft Report. In this regard, the applicant points to the refusal of the Commission to provide disclosure of matters going to Ms McColl’s functions after 31 October 2022, of which the Commission has peculiar knowledge, as providing a ready basis for the drawing of a negative inference against the Commission on this issue (referring to Hartnett t/as Hartnett Lawyers v Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell (2023) 112 NSWLR 463; [2023] NSWCA 244 at [153]-[154], and the cases there cited).
323. The applicant contends that, by continuing to prepare the (draft) Report after the expiration of her appointment as an Assistant Commissioner, Ms McColl exceeded the authority conferred upon her under the Act; and that this amounts to jurisdictional error (citing Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57 at [163], quoted with approval in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1 at [66]), which affects the Report furnished to Parliament, having regard to the Commission’s adoption of the Report prepared by Ms McColl outside the limits of her authority.
324. In oral submissions, Senior Counsel for the applicant made clear that there is no issue taken with the proposition that the Commission may enlist the assistance of persons in connection with the preparation and making of a report (see at AT 4.5-12) but the applicant’s position, as I understand it, is that, insofar as the Commission ‘adopted’ the findings or opinions by Ms McColl as to witness credibility assessments, this amounted to jurisdictional error, as the making of such assessments by Ms McColl at the time that she was merely a consultant was beyond power.
325. In that regard, it is important to note that the Commission expressly noted that it had adopted assessments made by Ms McColl (see [2.37] of the Report, reproduced in the majority judgment at [63]) and that the Commission emphasised that assessments as to witness credibility and reliability were important factors for the Commission to consider in properly weighing the evidence and making findings of fact available on that evidence (see at [2.38] of the Report, also reproduced in the majority judgment).
326. The Commission, in its written submissions, contends that the applicant has not established that the Commission ‘adopted’ a report prepared (in the statutory sense) by Ms McColl or adopted any findings and opinions made by by Ms McColl. However, at least in relation to the assessment of witness credibility, that is squarely contradicted by the Report itself (and, in particular, the statement at [2.37] that has been reproduced in the majority judgment). While the Report does not record particular findings by Ms McColl contained in her draft Report, it cannot be gainsaid that the Commission did adopt Ms McColl’s assessments. That is exactly what the Report says it did.
327. The Commission argues that [2.37] should be understood, in context, as meaning that it took the benefit of Ms McColl’s assessment of factors of the kind set out at [2.37] (such as the responsiveness of otherwise of answers and the like) to assist it in making (its own) findings, including as to credibility. Further, the Commission points to the fact that [2.37] of the Report referred also to “independent or objective evidence against which the credibility of witnesses may be assessed” (referring by way of example of this to [13.181] of the Report).
328. The Commission also notes that, in relation to the assessment of the applicant’s credibility, reference was made in the Report to objective facts proved independently of her testimony and to the “overall probabilities” in assessing the credibility of her evidence (referring by way of example to [11.442], [13.189], [13.196]-[13.197], [13.204], [13.347] and [13.350]-[13.363] of the Report).
329. The Commission argues that the statements on its website (to which the applicant has pointed) indicate only (and unremarkably) that Ms McColl had involvement with drafting the Report and the processes of reviewing and editing the same (after her engagement as consultant) and do not demonstrate that the Report was made by Ms McColl and not the Commission. Nor, it says, can factual inferences be drawn against the Commission because it formed the view under s 111(4)(c) of the Act that it was not necessary in the public interest to disclose information (as to the exercise of Ms McColl’s functions as consultant) that cannot otherwise be disclosed. It is submitted that drawing an adverse inference against the Commission would undermine the purpose of s 111 of the Act.
330. The Commission maintains that it is inherently improbable and impractical to suggest that it is contrary to the Act for the Commission to enlist the assistance of others in the drafting of the Commission’s reports; and that it would be unworkable if the function of “making a report” were to be taken to include every step involved in the formulation of a report, including matters such as drafting parts of a report. The Commission emphasises that what cannot be delegated (except to an Assistant Commissioner in certain circumstances) is the “function” of making a report; and says that s 107(4)(b), construed in context, provides that it is the making of findings, opinions, recommendations and reasons that can be communicated to Parliament which must be exercised by a Commissioner.
331. The Commission argues that the words “making a report under this Act” in s 107(4)(b) are not synonymous with drafting a report (pointing to the use of “make” in various of the statutory provisions in contradistinction to other acts such as “providing” (s 57B(5)) and “submitting” (s 55)); and says that “making a report” is to be understood as the ultimate act, embodied in the final report, of discharging the function of making findings, opinions and recommendations (referring to ss 75, 77 and 77A). The Commission further says that the function of making a report under the Act is not a reference to the logistical exercise of drafting a report but, rather, to the concept embodied by such making of a report; the communication of the Commission’s findings, opinions, recommendations and reasons for Parliament’s consideration.
332. The Commission also argues that nothing turns on the question whether the “preparation” and “furnishing” of a report (as referred to in s 74) are, for the purposes of the Act, acts which are distinct from the “making” of the report itself, again pointing to the ability of the Commission to enlist the assistance of officers as part of the preparation of its reports.
333. The Commission submits that the substantive requirement for making a report under the Act is that a Commissioner brings his or her own mind to the findings, opinions, recommendations and reasons in a report, and that the report comprises the Commissioner’s own findings. The Commission says that it is not inconsistent with that responsibility for a Commissioner to have other officers (including a consultant) to assist with the drafting of a report.
334. As to this last proposition, as adverted to above, the applicant does not cavil with the submission that assistance may be provided in the preparation of a report. However, the above submission by the Commission does highlight the complaint here made. If (as the Report itself states) the Commission ‘adopted’ witness credibility assessments of Ms McColl, then on the face of the Report those assessments are not assessments of the Commission – they are assessments of someone to whom the function of making such assessments had not been delegated at the time the findings based on those assessments are made.
335. I accept that the task of the Chief Commissioner in making the final Report included the determination of the necessary findings, opinions and recommendations; and that (as the majority points out) in terms of the function, authority and power up to this time the Chief Commissioner was in a position to oversee the preparation of a draft of the Report. However, the evidence does not permit a conclusion as to what was done in that regard prior to submission of the draft Report; and the Commission’s own statements in the media releases referred to above and the Report itself suggest that the function of preparing the draft Report was entrusted to Ms McColl and that it was only once that draft Report was received that the process of review by the review panel was to commence. In that regard, I accept that the Chief Commissioner (and the review panel of Commissioners) could draw on the evidence and submissions made to the Commission in the course of the enquiry; and could obtain assistance from services or advice provided by someone in the position of Ms McColl as officer of the Commission.
336. However, the difficulty as I see it is that the stated (and on the face of it unqualified) “adoption” by the Commission of witness credibility assessments made by Ms McColl (as presumably were included in her draft Report) amounts to her assessments being the relevant findings at least on aspects of the evidence given in the public hearings. It may be that those assessments could be (and perhaps were) tested by reference to objective evidence or the like but the Report does not indicate that (or how) this was done; nor how it is that the “adopted” credit assessments were relied upon in the ultimate conclusion (as opposed to assessments drawn from other objective evidence).
337. The conclusion as to a witness’ responsiveness in answering questions, for example, is in practice something most likely to be drawn from observation of the evidence being given rather than by reference, say, to a transcript of that evidence. Similarly, conclusions as to whether a witness was “dissembling” (see [13.181]) must surely have been informed by observation of the witness giving evidence (something that only Ms McColl, not the Commissioners, was able to do).
338. There is nothing to indicate that the opinions expressed in the draft Report by Ms McColl, whatever they were, as to witnesses’ credibility were simply treated by the Commission as submissions that the Commission tested against objective evidence; and observations in the Report suggesting that the applicant treated giving evidence as akin to being on the hustings reinforces, rather than dispels, the conclusion that they were not. The language of “adopt” in relation to the witness credibility assessments demonstrates that Ms McColl’s assistance went beyond providing “services, information or advice” (as permitted by s 104B) and into the making of findings (which the Commission then chose to adopt) something that as a consultant Ms McColl did not have the power to do.
339. As the majority has noted at [83], s 104B does not limit the subject matter of the “service, information or advice” that a consultant appointed therein may provide. However, I do not accept that the assistance provided by Ms McColl (in conveying her assessments of witness credibility, which were “adopt[ed]” by the Commission) can accurately be described as no more than the provision of “services, information or advice”. The communication of Ms McColl’s findings as to witness credibility, in circumstances where those findings were explicitly adopted by the Commission, amounts in effect to a delegation of the Chief Commissioner’s task of determining all necessary findings in the making of the Report. I do not agree that such a finding imposes any unwarranted limit on the Commission’s ability to carry out its principal function and purpose; particularly where those responsibilities that may only be discharged by a Commissioner (or properly appointed Assistant Commissioner) are clearly defined in the Act.
340. I do not enter into the debate as to whether the non-disclosure by the Commission (when such information was sought by the applicant’s legal representatives) as to the functions exercised by Ms McColl gives rise to any adverse inference. It is not necessary to do so in circumstances where the Commission has itself made clear (at [2.37]) that it adopted her witness credibility assessments. The Commission has thus as a practical matter delegated (impermissibly in my opinion) to a consultant the task of making credibility assessments of the witnesses (at least to the extent that this was based on the witnesses’ evidence in the hearings before the consultant when she was Assistant Commissioner); an issue that the Commission correctly recognised was an important factor in the determination of its ultimate conclusions.
341. In those circumstances I respectfully cannot agree with the conclusion by the majority that the Commission in making its Report did not act beyond its authority or power. I consider that the Commission’s own Report establishes that it did more than merely obtain services, information or advice from Ms McColl. It adopted Ms McColl’s assessments. Indeed, the explanation in the Report as to the process by which “suggestions” were made to Ms McColl during the review of the draft Report tends to support the conclusion that the Commission in effect delegated to Ms McColl responsibility for assessing witness credibility in that it inverts the process of the Commission making the Report. Ms McColl’s provision of “services” to the Commission would well involve the making of suggestions to it; not the converse. In any event, having regard to the admitted adoption by the Commission of Ms McColl’s assessments on what was recognised to be such an important issue, I would uphold Ground 1.
342. Senior Counsel for the Commission accepted that if Ground 1 were to be upheld then it would follow that the report was beyond power (AT 2.45-46). Therefore, I would find for the applicant and quash the findings of serious corrupt conduct.
343. As to the remaining grounds of review, I agree with the conclusions reached by the majority.
**********
Amendments
26 July 2024 - Typographical error in date at [61] amended
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 43,763 |
nsw_caselaw:190d89cdca1a0d2e22bc0966 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-24 00:00:00 | Health Care Complaints Commission v Muthukrishna [2024] NSWCATOD 105 | https://www.caselaw.nsw.gov.au/decision/190d89cdca1a0d2e22bc0966 | 2024-07-26T22:25:57.217246+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Health Care Complaints Commission v Muthukrishna [2024] NSWCATOD 105
Hearing dates: 6, 7 and 8 May 2024 (last submissions received 24 May 2024)
Date of orders: 24 July 2024
Decision date: 24 July 2024
Jurisdiction: Occupational Division
Before: Seiden SC DCJ, Deputy President
Dr R Boland, Senior Member
Dr D Shirley, Senior Member
R Wellington, General Member
Decision: (1) Pursuant to s 149C(4)(a) of the Health Practitioner Regulation National Law (NSW), if the practitioner were still registered the Tribunal would have cancelled his registration (pursuant to s 149C(1)(b) of the Health Practitioner Regulation National Law (NSW)).
(2) Pursuant to s 149C(4)(b) of the Health Practitioner Regulation National Law (NSW), the practitioner is disqualified from being registered in the health profession (physiotherapy) for three and a half years from the date of this decision.
(3) Pursuant to s 149C(4)(c) of the Health Practitioner Regulation National Law (NSW), the National Board is required to record the fact that if the practitioner were still registered, the Tribunal would have cancelled his registration in the National Register kept by the Board.
(4) Pursuant to s 149C(5) of the Health Practitioner Regulation National Law (NSW), the practitioner is prohibited from providing a health service for three and a half years or until the Tribunal makes a reinstatement or other order in relation to the practitioner under s 163B of the Health Practitioner Regulation National Law (NSW).
(5) Pursuant to s 149C(7) of the Health Practitioner Regulation National Law (NSW), an application for review of orders 2 and 4 may not be made until three and a half years from the date of these orders.
(6) Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the name of the Friend (as defined in these reasons for decision) is not to be published.
(7) Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the nature and location of Patient A’s employment as referred to in these reasons for decision is not to be published.
(8) Within 14 days of this decision, the applicant is to file evidence and submissions in relation to costs including as to the quantum and nature of the costs the applicant is seeking.
(9) Within 21 days of this decision, the respondent is to file and serve his submissions in relation to costs.
(10) Within 28 days of this decision the applicant is to file and serve a submission in reply in relation to costs.
(11) The parties are also to exchange and file within 28 days of this decision submissions in relation to whether the issue of costs may be determined on the papers, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.
Catchwords: HEALTH — Professional registration and discipline — professional misconduct — unsatisfactory professional conduct — failure to maintain professional boundaries with patient — providing false and misleading information — record keeping failure
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW)
Health Practitioner Regulation National Law (NSW) 2009
Cases Cited: Chen v Health Care Complaints Commission [2017] NSWCA 186
Ex Parte Tziniolis; Re Medical Practitioners Act (1966) 67 SR (NSW) 448
GKN v Medical Council of New South Wales [2024] NSWCATOD 87
Health Care Complaints Commission v Amalakumar [2019] NSWCATOD 173
Health Care Complaints Commission v Aref [2018] NSWCATOD 133
Health Care Complaints Commission v Brush [2015] NSWCATOD 120
Health Care Complaints Commission v Choi [2017] NSWCATOD 82
Health Care Complaints Commission v Collins [2021] NSWCATOD 132
Health Care Complaints Commission v De Lore [2020] NSWCATOD 72
Health Care Complaints Commission v Karalasingham [2007] NSWCA 267
Health Care Complaints Commission v Kesserwani [2020] NSWCATOD 65
Health Care Complaints Commission v Konigson [2021] NSWCATOD 186
Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630
Health Care Complaints Commission v Liu [2016] NSWCATOD 133
Health Care Complaints Commission v Menz (No 2) [2017] NSWCATOD 172
(No 2) [2019] NSWCATOD 48
Health Care Complaints Commission v Muthukrishna [2023] NSWCATOD 110
Health Care Complaints Commission v Nguyen [2018] NSWCATOD 168
Health Care Complaints Commission v Petros [2019] NSWCATOD 83
Health Care Complaints Commission v Robinson
Health Care Complaints Commission v Sare [2018] NSWCATOD 190
Health Care Complaints Commission v Shrimpton [2019] NSWCATOD 25
Health Care Complaints Commission v Shrimpton (No 2) [2019] NSWCATOD 48
[2022] NSWCA 164
Jan v Health Care Complaints Commission [2020] NSWCATOD 75
Pillai v Messiter (No 2) (1989) 16 NSWLR 197
Texts Cited: Physiotherapy Board of Australia, Code of Conduct for Registered Health Practitioners
Category: Principal judgment
Parties: Health Care Complaints Commission (Applicant)
Reshan Muthukrishna (Respondent)
Representation: Health Care Complaints Commission (Applicant)
Respondent (self-represented)
File Number(s): 2024/00029945
Publication restriction: (1) Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the name of the Friend (as defined in these reasons for decision) is not to be published.
(2) Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the nature and location of Patient A’s employment as referred to in these reasons for decision is not to be published.
(3) On 2 February 2024, an order was made under s 64 of the Civil and Administrative Tribunal Act 2013 prohibiting the publication of names set out in the schedule to the Complaint by the Health Care Complaints Commission against Reshan Muthukrishna and dated 24 January 2024.
REASONS FOR DECISION
Background
1. The respondent was registered as a physiotherapist from 7 February 2012 to 3 August 2022. Between 23 December 2021 to 3 August 2022, conditions were placed on his registration by the Physiotherapy Council of NSW (‘the Council’). These included that he not consult, assess and/or treat female patients and that there be audits conducted on his record keeping and file management (the Conditions). Between 3 August 2022 and 28 July 2023, his registration was suspended, pursuant to s 150 of the Health Practitioner Regulation National Law (NSW) (National Law). On 28 July 2023, the Tribunal made orders cancelling his registration and pursuant to s 149C(7) of the National Law, the respondent was not to seek to apply for review of the cancellation order for 18 months: Health Care Complaints Commission v Muthukrishna [2023] NSWCATOD 110 (the first disciplinary proceedings).
2. The circumstances of these proceedings, whilst not the same as those the subject of the first disciplinary proceedings, echo the conduct that ultimately led to his registration being cancelled in the first place. This is discussed further below.
The application for disciplinary findings and orders
3. The application for disciplinary findings and orders, filed by the Health Care Complaints Commission (‘the HCCC’, or ‘the applicant’) on 24 January 2024 was amended on 30 April 2024. Extracts below relate to the amended application.
4. The HCCC alleged four Complaints of unsatisfactory professional conduct as comprehended by s 139B(1)(l) of the National Law. Complaint Five alleges that the practitioner is guilty of professional misconduct as comprehended by section 139E of the National Law (together, ‘the Complaint’).
5. The particulars of the Complaint are set out below, along with the Tribunal’s consideration.
6. The applicant seeks the following orders:
“1. [A non-publication order]
2. An order under section 149C(4)(a) of the National Law that if the practitioner were still registered the Tribunal would have cancelled his registration.
3. An order under section 149C(4)(b) of the National Law that the practitioner is disqualified from being registered in the health profession for 5 years from the date of the decision.
4. An order under section 149C(4)(c) of the National Law that the National Board is required to record the fact that if the practitioner were still registered, the Tribunal would have cancelled his registration in the National Register kept by the Board
5. An order under section 149C(5) of the National Law that the practitioner is prohibited from providing a health service permanently unless and until the Tribunal makes a reinstatement or other order in relation to the respondent under section 163B of the National Law.
6. Pursuant to section 149C(7) of the National Law, an application for review of orders 3 and 5 may not be made until five years from the date of these orders.
7. An order that the Respondent pay the Commission’s costs under clause 13 of Schedule 5D of the National Law as agreed or assessed.”
7. The applicant submits that the conduct particularised is “improper or unethical conduct", as contemplated by s 139B(1)(l) of the National Law.
8. The applicant cites the following relevant principles, which the Tribunal accepts are relevant:
“[9] The relevant principles [See, generally, HCCC v Liu [2016] NSWCATOD 133 at [51]-[55]; HCCC v Nguyen [2018] NSWCATOD 168 at [47]; HCCC v Shrimpton [2019] NSWCATOD 25 at [67]-[69]; HCCC v Petros [2019] NSWCATOD 83 [116]-[121]; HCCC v Konigson [2021] NSWCATOD 186 at [93]-[95]] include:
a. The words “improper” and “unethical” are not defined in the National Law so the Tribunal has considered their dictionary meanings: improper relevantly means not right or not in accordance with propriety of behaviour and unethical relevantly means contrary to moral precept, immoral or in contravention of some code of professional conduct [HCCC v Liu [2016] NSWCATOD 133 at [51]-[52]];
b. the relevant ordinary meanings of improper include not in accordance with truth, fact reason or rule; abnormal, irregular; incorrect, inaccurate, erroneous, wrong [HCCC v Liu [2016] NSWCATOD 133 at [53]];
c. in professional disciplinary proceedings, impropriety means a breach of the standards of conduct that would be expected of a person in the position of the practitioner [HCCC v Liu [2016] NSWCATOD 133 at [54]];
d. it is not necessary to state an exhaustive definition of improper or unethical conduct as it encompasses conduct which, viewed objectively, would be regarded by reasonable persons as falling below the standards of conduct to be expected of practitioners, in that it has a tendency to bring the profession into disrepute or reduces public confidence in the profession [HCCC v Liu [2016] NSWCATOD 133 at [55]];
e. whether conduct is improper is an objective test [HCCC v Liu [2016] NSWCATOD 133 at [54]];
f. to make a finding of improper or unethical conduct, it is not necessary for the Tribunal to be satisfied that the conduct is intentional: improper conduct does not need to be intentional and includes conduct not in conformity with standards of professional conduct [HCCC v Aref [2018] NSWCATOD 133 at [19]-[21]];
g. impropriety does not depend on the practitioner’s consciousness of impropriety, it consists in a breach of the standards of conduct that would be expected of a person in the position of the practitioner by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case [HCCC v Nguyen [2018] NSWCATOD 168 [47]];
h. codes approved by the National Board are admissible evidence of what constitutes appropriate professional conduct or practice for the profession [Section 41 National Law] and may be relevant to whether conduct is improper or unethical.”
9. The extracts from cases below, are relevant here. They outline what constitutes “improper or unethical conduct”, and the process of characterising conduct:
1. In Health Care Complaints Commission v Liu [2016] NSWCATOD 133 at [54]:
“Decisions involving professional disciplinary proceedings have adopted as relevant the discussion of the term 'impropriety' in R v Byrnes and Hopwood (1995) 183 CLR 501; [1995] HCA 1 as being a breach of the standards of conduct that would be expected of a person in the position of the alleged offender (citations omitted). The test of whether the conduct is improper is an objective one."
2. In Health Care Complaints Commission v Sare [2018] NSWCATOD 190 at [31]:
"The Macquarie Dictionary defines 'improper' as 'not in accordance with propriety of behaviour, manners etc or abnormal or irregular' (see also R v Byrnes and Hopwood [1995] HCA 1; 183 CLR 501 at 514-515). Unethical is defined as 'contrary to moral precept; immoral; in contravention of some code of conduct'. As in Health Care Complaints Commission v Little [2016] NSWCATOD 146, we consider it appropriate to adopt the dictionary definition in construing these words as they appear in the National Law. We note that the words are to be read in the context of s 139B(1)(l), namely that the offending conduct is conduct relating to 'the practice or the purported practice of the practitioner's profession.'”
3. In Health Care Complaints Commission v Kesserwani [2020] NSWCATOD 65 at [26], it was stated:
"In our view, the test of 'unethical conduct' has both objective and subjective elements. The word 'unethical' connotes moral opprobrium. The term 'unethical conduct' implies that the conduct concerned not only objectively falls short of a certain professional standard but that the person involved has performed subjectively in a way that is morally dubious or unprincipled and is therefore reprehensible on that ground. It is unnecessary here to provide exhaustive categories of conduct that may be unethical. Conduct may be unethical if it is constituted by a deliberate flouting of significant professional standards. Reckless disregard of, or wilful blindness to, significant ethical standards or principles may also constitute unethical conduct. All will depend on the relevant circumstances."
4. In Health Care Complaints Commission v Amalakumar [2019] NSWCATOD 173 at [26], it was stated:
"In disciplinary proceedings in relation to s 139B(1)(l) of the National Law, the determination of the question as to whether 'any other improper or unethical conduct relating to the practice…of the practitioner's profession' has occurred requires the making of findings of fact as to whether the alleged conduct has occurred, and then the characterisation of that conduct as improper or unethical (or otherwise). If the conduct has occurred, and if that conduct is determined to be improper or unethical, then that conduct is inevitably characterised as unsatisfactory conduct by s 139B(1)(l) of the National Law. There is no discretion to be exercised between the finding that the determination that conduct has occurred which is improper or unethical and the characterisation of that conduct as unsatisfactory conduct."
10. The extracts from the following cases clarify what “professional misconduct” means under s 139E:
1. In Chen v Health Care Complaints Commission [2017] NSWCA 186 at [19]-[20] per Basten JA (Leeming and Payne JJA agreeing):
"The term 'professional misconduct' does not have a specific meaning; it is merely a category of 'unsatisfactory professional conduct' which is sufficiently serious to justify suspension or cancellation…There is no category of unsatisfactory professional conduct which is not capable, depending on the circumstances, of giving rise to professional misconduct and hence engaging the power of either suspension or cancellation of registration. The only requirement is that it be ‘sufficiently serious’ to justify such an order, a characterisation which must depend upon an evaluative judgment made by the Tribunal. Some, perhaps all, categories include conduct which may reveal a defect of character as to which the Tribunal may conclude that the person should not be allowed to practise his or her profession unless at some future date the practitioner is able to satisfy the Tribunal that the defect has been overcome. Incompetence or inadequate care may in some circumstances be remediable by specific steps; in other circumstances the Tribunal may be concerned that the carelessness, for example, is such as to cast doubt on the suitability of the person to practise medicine. Each of the criteria for cancellation or suspension may be analysed in this way. Each case will depend upon an evaluative judgment to be made by the Tribunal as to the nature and seriousness of the conduct. It follows that the legislative scheme is inconsistent with the implication of the abstract condition sought to be imposed by the practitioner on the language of s 149C(1).”
2. In Sabag v Health Care Complaints Commission [2001] NSWCA 411, Sperling J (Beazley JA agreeing) said at [82]:
"The definition of 'professional misconduct' involves a degree of seriousness sufficient to warrant suspension or deregistration, a matter of degree and judgment.”
3. In Health Care Complaints Commission v Karalasingham [2007] NSWCA 267, the NSW Court of Appeal (Basten and Giles JJA and Bergin J agreeing) held at [67] that the definition of 'professional misconduct' is focused on the nature of the conduct, which must have the capacity to justify an order to suspend or cancel a practitioner's registration, whether or not such an order should be made in the particular circumstances.
4. In Pillai v Messiter (No 2) (1989) 16 NSWLR 197 at 200 per Kirby P:
"But the statutory test [for professional misconduct] is not met by mere professional incompetence or by deficiencies in the practice of the profession. Something more is required. It includes a deliberate departure from accepted standards or such serious negligence as, although not deliberate, to portray indifference and an abuse of the privileges which accompany registration as a medical practitioner”
5. In Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 638 per Gleeson CJ, Meagher and Handley JJA:
"The gravity of professional misconduct is not to be measured by reference to the worst cases, but by the extent to which it departs from the proper standards."
6. In Health Care Complaints Commission v Robinson [2022] NSWCA 164, Kirk JA at [35] said:
“The seriousness of the conduct may take colour not only from the acts or omissions in question but also from the circumstances in which they occurred: note, analogously, EFA at [169]-[172]. For example, that conduct was undertaken for an improper purpose may be a very significant factor in determining whether suspension or cancellation is justified. Thus, to look to the facts of this case, inappropriately touching a patient is likely to be more serious if it was done for sexual gratification rather than because of a misguided understanding of clinical justification.”
11. The applicant also submits that it is necessary to make a prohibition order. We accept the following principles are relevant, as submitted at [49]:
“The Commission seeks a prohibition order because the practitioner poses a substantial risk to the health of members of the public:
a. the phrase substantial risk is not defined in the National Law and has been considered by the Tribunal as a risk that is material and real or apparent on the evidence, and not a risk that is without substance or speculative [HCCC v Brush [2015] NSWCATOD 120 at [96]; HCCC v Choi [2017] NSWCATOD 82 at [75]; HCCC v Menz (No 2) [2017] NSWCATOD 172 at [18]; HCCC v Collins [2021] NSWCATOD 132 at [97]];
b. the question of whether a person poses a substantial risk to the health of the public must be assessed by evaluating the risk posed to the public if the person were to be involved in the provision of health services [HCCC v Menz (No 2) [2017] NSWCATOD 172 at [19]; HCCC v De Lore [2020] NSWCATOD 72 at [93]]”.
The National Law
12. Clause 9 of Div 3 of Sch 5 to the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) provides that when the Tribunal is exercising a function for the purposes of the National Law (as we are here), it is under a duty to observe the objectives and principles referred to in ss 3 and 3A of the National Law. This is in addition to s 36(5) of the NCAT Act which provides that the Tribunal is not to exercise any functions conferred or imposed under enabling legislation (here, the National Law), inconsistently with the objects or principles of that legislation.
13. The main guiding principle is that the protection of the health and safety of the public must be the paramount consideration. Relevantly, restrictions on the practice of a health profession are to be imposed only if it is necessary to ensure health services are provided safely.
The evidence
14. The applicant relied on a signed statement of Patient A, dated 18 April 2023. Additionally, Patient A had lodged a complaint with the applicant on 11 July 2022, and this document was before the Tribunal. Patient A had also reported the events the subject of these proceedings, to the police on 28 June 2022 and a police report was before the Tribunal.
15. Patient A was not cross examined and accordingly her evidence is uncontested.
16. The applicant also relied on some documents from Exhibit A: Medicare records, information and records provided by [NOT TO BE PUBLISHED], a statement by the friend of Patient A, [NOT TO BE PUBLISHED] (‘the Friend’), letters from the respondent to the University of Western Sydney and Anytime Fitness, text message conversations between Patient A and her friend, and text and other forms of message conversations between Patient A and the respondent. Further, the applicant relied on some additional materials concerning the website of the respondent’s clinic and message service.
17. The respondent gave oral evidence and was cross examined on the particulars of the Complaint.
18. The respondent relied on a report from a counselling psychologist, Ms Nesli Karadeniz, MA (App.Psyc), MAPs, MCCOUNP, Clinical Psychotherapist & Registered Psychologist. Ms Karadeniz is a counselling psychologist. She has a Bachelor’s degree in Arts in Community Psychology and a Masters degree in Applied Psychology and Political Science. She is a “Registered Psychologist with the NSW Psychologists Registration Board” and a member of the Australian Psychological Society, as well as being a member of the APS Counselling College and an approved psychologist for the Victims of Crimes Tribunal. She has expertise in the areas of depression and anxiety in addition to addictions and relationships with adolescent and adult populations.
Complaint One
19. Complaint One alleged that the practitioner “engaged in improper or unethical conduct relating to the practice or purported practice of physiotherapy”.
20. The particulars of Complaint One are as follows:
“1. Around July 2018 the practitioner entered into an inappropriate sexual relationship with Patient A in circumstances where:
a. The practitioner was providing physiotherapy treatment to Patient A;
b. [NOT TO BE PUBLISHED]
2. The practitioner continued to maintain an inappropriate sexual relationship with Patient A, which included periods where the practitioner and Patient A did not have any sexual contact, until April 2022.
3. By his conduct in particulars 1 and 2 the practitioner breached Section 8.2 of the Physiotherapy Board of Australia Code of Conduct.”
Patient A
21. Relevantly, Patient A’s evidence as to whether the respondent treated her as a patient at a time when they were in a sexual relationship is as follows:
1. Patient A met the respondent at one of the physiotherapy clinics that he operated and practised from, in July 2017.
2. In March 2018 the respondent messaged her on WhatsApp saying “saucy profile pic”.
3. Between March and July 2018 they began communicating more frequently via texts and WhatsApp; and in July 2018, she asked the respondent to provide her with physiotherapy treatment.
4. Prior to the first treatment session Patient A went to her usual GP to get an Enhanced Primary Care Plan (EPC) and completed a patient registration form.
5. The first treatment was 9 July 2018, during which the respondent treated her neck with massage.
6. After that time, there were several other treatment sessions during which the respondent treated Patient A and also during which time they continued to communicate outside treatment sessions through text and WhatsApp.
7. On 16 July 2018, the respondent treated her left knee, including by explaining that her knee was weak due to muscle differences. He showed her squat exercises.
8. On 19 July 2018 the respondent asked her to start using Viber as a private way to communicate.
9. On 21 July 2018 the respondent and Patient A kissed in the treatment room.
10. On 19 September 2018 the respondent treated Patient A for a sprained wrist, with dry needling.
11. On 12 April 2019 the respondent treated Patient A for lower back pain.
12. On 23 July 2018 Patient A and the respondent had sexual intercourse at his home.
13. The sexual relationship continued from July 2018 until June 2019, recommenced in around March 2020 until September 2020 and again briefly in around March 2022.
14. On 9 March 2020, the respondent treated Patient A for her neck pain. Treatment included a diagnosis that her neck has a C4 disc issue and massage therapy.
15. On 14 March 2020, the respondent had an appointment with Patient A, and provided physiotherapy treatment for her neck. A video of Patient A performing the exercises was recorded.
16. Whilst some of the treatment sessions were scheduled and recorded in the clinic’s booking system, not all were. On one occasion, on the respondent’s birthday, a treatment session was booked, but no treatment was performed although they spent time together.
17. On 22 March 2020, the respondent asked Patient A (via text) to get another EPC Plan and to see him for further treatment.
18. On 20 April 2022, the respondent provided treatment to Patient A (via video chat) for her sprained ankle.
19. On 22 April 2022, at the respondent’s apartment over dinner, the respondent assessed Patient A’s ankle and advised Patient A on 25 April 2022 that obtaining an X-ray report from her GP was not necessary as he could obtain it.
22. The applicant highlights that Medicare was billed for providing a service to Patient A on each of 9 and 16 July 2018, based on a Provider Servicing Report.
23. Relevant to other aspects of their relationship, Patient A also said as follows:
1. At the time they commenced their personal relationship, Patient A was 21 and the respondent was 12 years her senior.
2. She was employed [NOT TO BE PUBLISHED].
3. At the time, Patient A had mental health concerns. She describes these as clinical depression, anxiety and severe obsessive-compulsive disorder. Further, Patient A’s mother also had mental health issues, which Patient A describes as borderline personality disorder. Patient A indicated that the respondent was aware that Patient A had mental health concerns and that her mother too had mental health concerns.
4. During the pendency of their intimate relationship, she became pregnant and the pregnancy was terminated.
5. Patient A indicated that if her family discovered the relationship, she feared that her “Muslim family would disown” her.
24. The Tribunal accepts Patient A’s evidence.
25. The respondent does not deny the events and does not seek to contradict what Patient A has said. He also accepts that he received payments from Medicare in relation to treatments provided for Patient A.
26. The respondent maintains that, at least during part of the time, he did not consider he was treating Patient A, as he thought he was looking after her wellbeing as part of their relationship; but he ultimately accepted that he had been treating her.
The psychologist’s evidence
27. Ms Karadeniz treated the respondent along with his then wife, between 2010 and 2017, within the couples therapy framework. During this period Ms Karadeniz learned of the respondent’s wife’s health diagnosis and noted that there was a significant emotional and physical toll on the respondent due to domestic violence against him. Ms Karadeniz described the relationship as “abusive”. Ultimately, the couples therapy was discontinued due to financial reasons. The respondent continued to experience difficulties in “regulating his anxiety and stress and coping with the ongoing trauma, which can impair decision-making abilities.” She identified that the respondent’s abusive marriage created in him “a vulnerable state marked by emotional turmoil and high levels of distress.” Further, she noted that he found “a semblance of comfort and attention in the interactions with [Patient A]. The proximity and attention provided by [Patient A] served as a temporary reprieve from the neglect and emotional turmoil experienced” in the respondent’s marriage. She identified that the adverse effects of the marriage were evident in the poor decision-making process surrounding the inappropriate relationship with a patient under his care. At the time he had no ongoing clinical supervision or peer supervision; and the chronic stress and emotional turmoil compromised his judgement which led to lapses in professional boundaries.
28. Ms Karadeniz identified that the stress of his marriage made him susceptible and that Patient A was aware of his personal struggles. Ms Karadeniz said: “Proximity, combined with Mr. Muthukrishna’s emotional needs, created a potent dynamic that contributed to the improper conduct in question.”
29. Her view was that their proximity “facilitated a bond based on shared vulnerabilities and mutual confiding”. Even though the respondent acknowledges responsibility it was “essential to recognize the role of vulnerability in the initiation of the relationship.”
30. Ms Karadeniz was of the opinion that the respondent has demonstrated “a profound understanding of the factors contributing” to his improper conduct and the implications of his actions. This included the abusive marriage, his wife’s health diagnosis, leading to his impaired judgement and vulnerability which in turn led to the breach of professional boundaries. Nevertheless, he expressed sincere remorse at the hurt he caused Patient A and the integrity of the physiotherapy profession. Ms Karadeniz has the view that he recognises “the gravity of crossing professional boundaries”. She also holds the view that he has taken “proactive steps to address deficiencies in his professional development relating to ethics and professional conduct.” This includes refraining from confiding personal issues with other staff members and patients. Since 11 January 2023 she has treated him for individual clinical supervision but has formed the view that he requires less frequent clinical supervision which in turn supports her view that he has enhanced resilience and coping mechanisms.
31. Ms Karadeniz was cross examined during the hearing. The applicant did not challenge her expertise. Cross examination revealed that whilst the respondent had been fairly forthcoming with her during their sessions, she had not been told, contemporaneously, of his sexual relationship with a patient in 2016 (the subject of the first disciplinary proceedings). Further she was not told that he had asked Patient A to send messages on the Viber app to ensure the messages would not be discovered by his colleagues. Further still, he did not tell her that he had multiple treatment sessions with Patient A while she was [NOT TO BE PUBLISHED]. She was also cross examined on what she had been told about how Patient A “manipulated him”. She said that the respondent “strongly believed that [he had been manipulated]” but that they processed in sessions that “no matter whether the client manipulates or not … the onus was on him”. She further opined that he had come to agree with her on that.
32. Ultimately, she opined that he did not realise “how stressed he was getting” as a result of the stress of his marriage which continued after they separated, combined with the stress of running his practices. He did not focus on self care stress relief, such as catching up with other practitioners or professional development.
33. She opined that the stress lasted a long time and “may have resulted in him not having the best judgement at the time in 2018”. She also indicated that the stresses were continuing in 2020, as he had not yet done anything about it.
34. The Tribunal accepts her evidence.
Conclusion in relation to Complaint One
35. Clause 8.2 of the Physiotherapy Board of Australia, Code of Conduct for Registered Health Practitioners (Code of Conduct) provides as follows:
“8.2 Professional boundaries
Professional boundaries allow a practitioner and a patient/client to engage safely and effectively in a therapeutic relationship. Professional boundaries refers to the clear separation that should exist between professional conduct aimed at meeting the health needs of patients or clients and a practitioner’s own personal views, feelings and relationships which are not relevant to the therapeutic relationship.
Professional boundaries are integral to a good practitioner–patient/client relationship. They promote good care for patients or clients and protect both parties. Good practice involves:
a) maintaining professional boundaries
b) never using a professional position to establish or pursue a sexual, exploitative or otherwise inappropriate relationship with anybody under a practitioner’s care; this includes those close to the patient or client, such as their carer, guardian, spouse or the parent of a child patient or client
c) recognising that sexual and other personal relationships with people who have previously been a practitioner’s patients or clients are usually inappropriate, depending on the extent of the professional relationship and the vulnerability of a previous patient or client, and
d) avoiding the expression of personal beliefs to patients or clients in ways that exploit their vulnerability or that are likely to cause them distress.
Practitioners need to be aware of and comply with any guidelines of their National Board in relation to professional boundaries."
36. The Tribunal is satisfied that the respondent and Patient A commenced a sexual relationship no later than 21 July 2018. The sexual relationship continued from then until June 2019. The relationship recommenced in March 2020 until September 2020 and then again briefly in March 2022.
37. During the period when they were actively in a sexual relationship, the respondent treated her on, at least, 2 occasions: 19 September 2018 and 12 April 2019. However, even before the pair had sexual intercourse, there was an intimate personal relationship, as evidenced by the various texts and other communications. This commenced, in earnest, after the first treatment session.
38. The Tribunal is satisfied that, in engaging in a personal and sexual relationship with Patient A and continuing to treat her, demonstrates that the respondent breached cl 8.2 of the Code of Conduct. The Tribunal is satisfied that the conduct was indeed improper and unethical relating to the respondent’s practice. It was unsatisfactory professional conduct within the meaning of s139B(1)(l) of the National Law.
39. In forming this conclusion, the Tribunal has considered the respondent’s position that he himself was the victim of domestic abuse and vulnerable to the advances of Patient A. We accept that, at the relevant time, the respondent was affected by his relationship with his wife as explained by his psychologist and set out above. Nevertheless, even the respondent does not suggest his conduct should be excused on this basis. The Tribunal agrees with that. Further, as the principles cited above indicate, the question of whether he breached the requisite standards has objective elements. Viewed objectively, his conduct demonstrates a stark departure from the code of conduct.
40. Further, the Tribunal has considered his contention that he had a “blurred” understanding of whether what he was doing amounted to treatment of Patient A, after they commenced their relationship. Contrary to the position advanced by the respondent, the Tribunal sees this as compounding the problem rather than ameliorating it. It demonstrates an inappropriately careless attitude to the practice of his profession.
41. In any event, the Tribunal is not satisfied that the respondent was unaware his conduct was inappropriate or otherwise justified or excused by his personal circumstances. Certainly, from the date that the Conditions were placed on his registration (23 December 2021), he was aware that he could not treat female patients. Yet he treated Patient A in April 2022. Further, the messages to Patient A contained references to the need for confidentiality to protect his career. This reflects a knowledge that his conduct breached the professional standards.
42. Consequently, even viewed subjectively, the Tribunal is satisfied that he was responsible for his conduct and the Tribunal is not satisfied that he was totally oblivious to his departure from professional standards. At best, it demonstrates reckless disregard or wilful blindness to the professional standards. The complete lack of reflection on his conduct is not excused by his personal circumstances. Ultimately, the respondent accepted his responsibility, despite his difficult personal circumstances at the time.
Complaint Two
43. Complaint Two alleged that the respondent engaged in improper or unethical conduct relating to the practice or purported practice of physiotherapy. The particulars are as follows:
“4. On 22 December 2021, at a hearing convened under section 150 of the National Law, the practitioner provided false and misleading information to the Physiotherapy Council in that:
a. A delegate appointed by the Physiotherapy Council asked the practitioner ‘so have you had a sexual relationship with other patients that you’ve treated?’
b. The practitioner responded ‘No, I have not.’
c. A delegate appointed by the Physiotherapy Council asked the practitioner ‘Have you had a sexual relationship with other patients that you’ve met while treating, and stopped treating, and then had a sexual relationship with those people?’
d. The practitioner responded ‘No, I have not.’
e. The practitioner gave this oral evidence in circumstances where he knew he had a sexual relationship with Patient A.
5. The practitioner provided false and misleading information to the Health Care Complaints Commission in that:
a. On 6 December 2022, the Health Care Complaints Commission (“the Commission”) sent a letter to the practitioner under section 28 of the Health Care Complaints Act 1993 containing the words ‘The complaint alleges you … Engaged in other improper or unethical conduct relating to the practice of physiotherapy, including Instructing [Patient A] not to tell anyone about your sexual relationship with her, as it would have serious ramifications for your career.’
b. On 27 December 2022 the practitioner submitted a letter in response to the Commission’s letter dated 6 December 2022. The letter contained the words ‘I agree that I mentioned to [Patient A] to keep our affair confidential as…this information coming out would have affected my marriage and our working relationship at [NOT TO BE PUBLISHED]. At the time, I was not aware that the general advice and assistance that I provided to [Patient A] would be deemed as professional advice and treatment.’
c. The practitioner sent the letter dated 27 December 2022 in circumstances where:
i. He understood Patient A to be a patient of his;
ii. He was aware that his relationship with Patient A could have serious ramifications for his career.”
44. Given the Tribunal’s findings in relation to Complaint One, the Tribunal finds that the answers given at the s 150 hearing on 22 December 2021 (the 2021 s 150 hearing), as extracted above as part of Particular 4, were indeed false and misleading.
45. Particular 5 fairly read, alleges that the response to the Commission’s letter was false and misleading; because at least in part, he asked Patient A to keep their relationship private, as he knew having a relationship with a patient could damage his career. Accordingly, omitting this fact was false and misleading in that it suggested only personal reasons were the cause.
46. The Tribunal finds the answer to the applicant’s letter was false and misleading.
47. Further, the respondent has conceded all matters the subject of the Complaint.
48. However, whilst it is clear that the respondent now accepts that the answers to the questions of the Council and the applicant were false, there remained an open question as to whether the answers he gave were deliberately false.
49. In the 2021 s 150 hearing (about a different patient that he had had a sexual relationship with, Patient X), the respondent did not disclose that he was, at that time, in a relationship with Patient A. The respondent’s reply to the delegates on this question is as follows:
“MR ANDARY: … so have you had a sexual relationship with other patients that you’ve treated?
MR MUTHUKRISHNA: No, I have not.
MR ANDARY: Have you had a sexual relationship with other patients that you’ve met while treating, and stopped treating, and then had a sexual relationship with those people?
MR MUTHUKRISHNA: No, I have not.
50. In the applicant’s cross-examination of the respondent, he was asked about his earlier answers to the Council. The following was said:
“Q. After line 20 it says, ‘So I believe that this situation was an anomaly, a one off’, and you talk about what you were going through at the time. It’s not true to say that the sexual relationship you had with the other patient was a one off, is it.
A. No, it’s not true.
Q. On page 353 at the top of the page the delegates are saying, they might need to consult, they haven’t reached their decision, they might impose conditions and if they do you’d need to comply with them. Did you understand that?
A. Going back to the chronology, complaint 2, particular 4, is about what was said to the counsel during this same hearing. We can see these parts on page 338. So did you - page 338, line 25, do you remember the delegate asking you a question, ‘So have you had a sexual relationship with other patients that you’ve treated’ and you said ‘no, I have not’. Do you remember saying that?
Q. Yes. That’s not true, is it.
A. No, it’s not true.
Q. Then the delegate asked you, ‘Have you had a sexual relationship with any other patients that you’ve met while treating and stopped treating then had a sexual relationship with those people’ and you said, ‘no, I have not’.
A. Yes, that’s not true.
Q. Did you not want to tell the delegates the truth because you were worried about getting into trouble?
A. At the time, considering the nature of the relationship I had with this patient, I never saw our interaction as a patient/therapist relationship hence it was incorrect for me to think at the time I was asked by the delegate this question that I answered in this way. I should have - I had a blurred understanding at the time of this question of what I thought my interaction was with this patient, so this is incorrect.
…
Q. When you gave that false evidence to the 150 delegates, did you do that because you didn’t want to get suspended?
A. No, in reflection I genuinely had a misunderstanding of how things eventuated between this patient and myself and the relationships we had so my answer was incorrect yes, I - I understand that, but that’s genuinely how I thought of it at the time.
…
Q. On the bottom of page 239, the last paragraph, you said, ‘I did not deem that patient A was a patient of mine at the time’. Did you say that to the commission to try and sort of minimise your conduct? To sort of say that she wasn’t really a patient, it’s not really that bad?
A. No, I was being, as I’ve explained, I was just trying to elaborate my understanding, albeit incorrect, of what the relationship was at the time and obviously I was wrong to think that it wasn’t a patient-practitioner relationship at the time, even though we were - we had some intimacy happening prior to that.”
51. The respondent in his oral submissions stated:
“I admit to my inappropriate and unethical conduct as well as providing false and misleading information to both the Physiotherapy Council and the Commission.”
52. The Tribunal is satisfied that the information was false. Given the circumstances, he should have been aware, at the time of answering, that the answers he gave were incorrect or false, and misleading. However, this falls short of it being deliberately and dishonestly false.
53. Nevertheless, the answers demonstrate less than due regard to the significance of the Council’s and the applicant’s questions and a reckless disregard to provide them with honest and comprehensive answers to their questions. It evinces a blatant lack of regard for the importance of upholding the Code of Conduct.
54. The Tribunal is satisfied that the conduct was indeed improper and unethical relating to the respondent’s practice. It was unsatisfactory professional conduct within the meaning of s139B(1)(l) of the National Law.
Complaint Three
55. Complaint Three alleged the practitioner “engaged in improper or unethical conduct relating to the practice or purported practice of physiotherapy.” The particulars of Complaint Three are as follows:
“6. On 16 of July 2018 the practitioner took a photo of Patient A’s bare legs on his mobile phone and subsequently posted the photo to the Improve Your Move Physiotherapy page on Instagram without obtaining prior consent.
7. On 9 January 2019 during the course of a physiotherapy consultation, the practitioner took a photograph of a patient on his mobile phone and sent it to Patient A.
8. On 13 January 2019 the practitioner inappropriately disclosed a patient’s personal information to Patient A in that he sent Patient A a message on Viber stating ‘Let’s talk about old fat ppl. Oh yeah – my 7.30 Patient B who u switched on Friday – u should see the size of his legs – he has lymphoedema.’
9. By his conduct in particulars 7 and 8 the practitioner breached Section 3.4 of the Physiotherapy Board of Australia Code of Conduct.
10. On 13 April 2019 the practitioner provided Patient A with a letter addressed to the University of Western Sydney which contained the following false and misleading information:
a. Patient A attended Improve Your Move Physiotherapy on 11 April 2019, 12 April [2019], and 13 April 2019 ‘for treatment after presenting with an episode of acute lower back pain.’
b. ‘As a result of [Patient A’s] symptoms, she could not travel to attend her classes on those days and this impeded her ability to perform any study’
In circumstances where Patient A did not receive physiotherapy treatment from Improve Your Move Physiotherapy on the relevant dates.
11. On 13 May 2019 the practitioner provided Patient A with a letter addressed to Anytime Fitness Casula which contained the following false and misleading information:
a. ‘[Patient A] has been seeing me for physiotherapy since she sustained a lower back injury on 10/3/2019, [Patient A] requires substantial physiotherapy management and will be unable to perform gym exercise…Hence please be kind enough to terminate her current gym membership and if and once cleared by me to re-commence gym based rehabilitation, she can sign up again.’
In circumstances where Patient A was not unable to perform gym exercise due to a lower back injury and did not require substantial physiotherapy management at the relevant time.
12. By his conduct in particulars 10 and 11 the practitioner breached Section 8.8 of the Physiotherapy Board of Australia Code of Conduct.” (Emphasis in original)
56. Clause 3.4 of the Code of Conduct relevantly provides:
“3.4 Confidentiality and privacy
Practitioners have ethical and legal obligations to protect the privacy of people requiring and receiving care. Patients or clients have a right to expect that practitioners and their staff will hold information about them in confidence, unless release of information is required by law or public interest considerations. Good practice involves:
a) treating information about patients or clients as confidential and applying appropriate security to electronic and hard copy information
b) seeking consent from patients or clients before disclosing information, where practicable
c) being aware of the requirements of the privacy and/or health records legislation that operates in relevant states and territories and applying these requirements to information held in all formats, including electronic information
d) sharing information appropriately about patients or clients for their healthcare while remaining consistent with privacy legislation and professional guidelines about confidentiality
e) where relevant, being aware that there are complex issues relating to genetic information and seeking appropriate advice about disclosure of such information
f) providing appropriate surroundings to enable private and confidential consultations and discussions to take place
g) ensuring that all staff are aware of the need to respect the confidentiality and privacy of patients or clients and refrain from discussing patients or clients in a non-professional context
h) complying with relevant legislation, policies and procedures relating to consent
i) using consent processes, including formal documentation if required, for the release and exchange of health and medical information, and
j) ensuring that use of social media and e-health is consistent with the practitioner’s ethical and legal obligations to protect privacy.”
57. Clause 8.8 of the Code of Conduct relevantly provides:
“8.8 Reports, certificates and giving evidence
The community places a great deal of trust in practitioners. Consequently, some practitioners have been given the authority to sign documents such as sickness or fitness for work certificates on the assumption that they will only sign statements that they know, or reasonably believe, to be true. Good practice involves:
a) being honest and not misleading when writing reports and certificates and only signing documents believed to be accurate
b) taking reasonable steps to verify the content before signing a report or certificate and not omitting relevant information deliberately
c) if so agreed, preparing or signing documents and reports within a reasonable and justifiable timeframe, and
d) making clear the limits of a practitioner’s knowledge and not giving opinion beyond those limits when providing evidence.”
58. Regarding Particular 6 of Complaint 3, Patient A’s evidence supported the applicant’s position that during the treatment session on 16 July 2018, the respondent took a photo of Patient A’s legs and posted it on Instagram. Patient A maintains that she did not give permission for this.
59. Initially, the respondent disputed that he did not have her consent to do this. He submitted that, via the initial patient registration form, Patient A had consented to this conduct. The form said:
“By signing below, you:
… 3. Permit use of any information/ media taken to be used for marketing”
60. However, during the course of the hearing, he conceded that he had not been specific enough in seeking consent for this conduct.
61. The Tribunal is satisfied that the conduct in Particular 6 occurred and constituted a breach of cl 3.4 of the Code of Conduct.
62. As to Particulars 7 and 8, the Tribunal is satisfied that the documentary evidence supports this. The respondent does not deny this.
63. The Tribunal is satisfied that the conduct in Particulars 7 and 8 occurred and constituted a breach of cl 3.4 of the Code of Conduct.
64. As to Particulars 10 and 11, the documentary evidence includes copies of the two letters referred to in the Complaint. Patient A’s evidence confirmed that the information as particularised was indeed false. The respondent does not deny this.
65. The Tribunal is satisfied that the conduct in Particulars 10 and 11 occurred and that this constituted a breach of cl 8.8 of the Code of Conduct.
66. The Tribunal is satisfied that Complaint Three is made out. The conduct demonstrates, objectively at least a stark departure from professional standards. So far as Particular 6 is concerned, even if not a wilful breach of the Code of Conduct, the conduct shows a blatant or reckless disregard of professional standards. So far as the other particulars are concerned, at best, they demonstrate a wilful blindness to professional standards; but on balance, here, they demonstrate a deliberate abuse of the privilege that comes with being a registered health practitioner.
67. The Tribunal is satisfied that the conduct was indeed improper and unethical relating to the respondent’s practice. It was unsatisfactory professional conduct within the meaning of s 139B(1)(l) of the National Law.
Complaint Four
68. Complaint Four alleged the practitioner has “engaged in improper or unethical conduct relating to the practice or purported practice of physiotherapy.” The particulars of this are as follows:
“1. The practitioner’s overall record keeping for his care and treatment of Patient A from July 2018 to March 2020 lacked sufficient information to allow another physiotherapist to continue management of the patient’s case.”
69. Clause 8.4 of the Code of Conduct relevantly provides:
“8.4 Health records
Maintaining clear and accurate health records is essential for the continuing good care of patients or clients. Practitioners should be aware that some National Boards have specific guidelines in relation to records. Good practice involves:
a) keeping accurate, up-to-date, factual, objective and legible records that report relevant details of clinical history, clinical findings, investigations, information given to patients or clients, medication and other management in a form that can be understood by other health practitioners
b) ensuring that records are held securely and are not subject to unauthorised access, regardless of whether they are held electronically and/or in hard copy
c) ensuring that records show respect for patients or clients and do not include demeaning or derogatory remarks
d) ensuring that records are sufficient to facilitate continuity of care
e) making records at the time of events or as soon as possible afterwards
f) recognising the right of patients or clients to access information contained in their health records and facilitating that access, and
g) promptly facilitating the transfer of health information when requested by patients or clients.”
70. The Tribunal was taken to treatment records for Patient A and the respondent was cross-examined on this. The Tribunal is satisfied that the treatment records were wholly inadequate to allow another physiotherapist to continue management of the patient’s case; or even to allow the respondent to continue to adequately treat her. He would have to rely only on his memory, which is inadequate to comply with professional standards.
71. Further, the respondent was cross examined in relation to record keeping generally and he accepted that, at least prior to the 2021 s 150 hearing, he only kept adequate records in a small percentage of cases. This is consistent with his lack of keeping proper records for Patient A during the time particularised.
72. There was a breach of cl 8.4 of the Code of Conduct. The maintenance of proper health records is important for the protection and safety of patients. There was simply no justification for the absence of proper records in relation to Patient A
73. The Tribunal is satisfied that the conduct was indeed improper and unethical relating to the respondent’s practice. It was unsatisfactory professional conduct within the meaning of s 139B(1)(l) of the National Law.
Complaint Five
74. Complaint Five alleges that "the practitioner is guilty of professional misconduct under section 139E of the National Law in that the practitioner has:
i. engaged in unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration, and/or
ii. engaged in more than one instance of unsatisfactory professional conduct that, when the instances are considered together, amount to conduct of a sufficiently serious nature to justify the suspension or cancellation of the practitioner’s registration.”
75. The Particulars of Complaint Five are as follows:
“1. The particulars of Complaints One, Two and Three are repeated and relied upon both individually and in combination.
2. Complaint Four is repeated and relied upon in combination with Complaints One, Two and Three.”
76. The Tribunal is satisfied that taken in combination, the particulars which have each been made out, justify a finding of professional misconduct. The respondent’s conduct demonstrates blatant or reckless indifference to professional standards of conduct. Objectively, the seriousness is demonstrated by the number of breaches, that the breaches range from crossing professional boundaries, to providing false medical certificates, to maintaining wholly inadequate records, to answering questions of the Council and of the applicant falsely (even if not deliberately). This coupled with the longstanding disregard of professional standards supports our conclusion.
77. Further, the Tribunal would have been satisfied that the conduct warranted a conclusion of professional misconduct on the findings of Complaint One alone for the same reasons that have been set out above in relation to that complaint. It was sufficiently serious and longstanding to warrant this.
78. For the reason that we were not satisfied that the conduct the subject of Complaint Two was deliberate, we have not found that this alone would have justified a cancellation of his registration. In relation to Complaint Three, objectively, we are not satisfied that these discrete breaches would have justified cancellation; although by saying this we do not in any way condone or excuse the breaches of standards. The public is entitled to expect privacy and to be treated with dignity from their treating professionals; and that they can accept, as truthful, medical certificates provided by such professionals.
79. Overall, the conduct is sufficiently serious to warrant cancellation of his registration and warrants a finding of professional misconduct.
Protective orders
80. As noted above, we are to pay due regard to the objects and principles of the National Law. The paramount guiding principle is the health and safety of the public. Another guiding principle is that restrictions on the practice of a health profession are to be imposed only if necessary to ensure health services are provided safely and are of an appropriate quality.
81. Where the Complaint has been proved, as here, the Tribunal may exercise any of the powers of Sub-div 6, Div 3 of Pt 8 of the National Law: s 149 of the National Law. Where the practitioner is guilty of professional misconduct, as here, the Tribunal may cancel the practitioner’s registration. Here, the registration is already cancelled. Accordingly, it is open to the Tribunal to decide that if he were still registered, the Tribunal would have cancelled his registration and or in the alternative, decide that the practitioner is disqualified from being registered, or prohibit the person from providing health services for a period: s 149C of the National Law.
Prohibition
82. As extracted above, the applicant seeks an order that the respondent be prohibited from providing any health service, permanently. The applicant submits at [49]:
“c. the practitioner engaged in inappropriate conduct over a lengthy period so there is a risk he may engage in inappropriate conduct with female patients as an unregistered health practitioner in the future;
d. the practitioner may be tempted to interact with female patients and staff at the Clinic where he remains the Director;
e. the practitioner could seek work as a self-employed unregistered health practitioner subject to no oversight or monitoring (such as massage therapy or life coaching)
f. the practitioner poses a risk of inappropriately befriending and touching female patients who he may treat as an unregistered health practitioner;
g. the practitioner engaged in extremely risky conduct as a registered health practitioner (including sexual intercourse at the clinic with a current patient who was also working as a receptionist) so he may take risks as an unregistered health practitioner in future;
h. if the practitioner were permitted to provide health services during the period when his registration is cancelled, it would substantially undermine the protective purpose of that order [HCCC v Shrimpton (No.2) [2019] NSWCATOD 48 at [25]].”
83. The Tribunal accepts that errors in the professional conduct of the respondent could have occurred in another health service as defined in s 5 of the National Law (such as services provided by a masseur) and that that there is an ongoing risk. To protect the safety of the public, a prohibition order is warranted.
Long disqualification and prohibition period
84. It is submitted that a long disqualification and prohibition period is appropriate; and that it be longer than that imposed under the first disciplinary proceedings. The applicant submits a five year disqualification period is appropriate. In addition to finding the particulars of each of the individual Complaints proved, the applicant submits there are other factors that affect the ultimate outcome.
85. Further, given the objective seriousness of the matter, the applicant submits that it is important to denounce the respondent’s conduct.
The first disciplinary proceedings
86. The applicant submits that a longer disqualification period is justified by the fact that this is not the respondent’s first breach of standards. The earlier eighteen month disqualification period was ordered where the Tribunal did not know that a relationship with a second patient occurred, or that the respondent gave false information. The applicant submitted:
“b. The Tribunal imposed an 18 month disqualification period so the practitioner is currently eligible to apply for reinstatement from 23 January 2025;
c. The Tribunal is now aware that the practitioner also breached professional boundaries with Patient A in 2018-2020 and provided false information in medical certificates, to the Council and to the Commission so public and professional confidence cannot now be reposed in him practising as a physiotherapist for a longer period”.
87. Further, the applicant submits that the earlier s 150 proceedings are relevant as they reveal:
"The practitioner lacked insight during his oral evidence during the previous Tribunal proceedings (maintaining that he was safe to work with patients and claiming that he had taken steps to self-reflect since 2016)”
88. When the applicant cross-examined the respondent about the earlier s 150 proceedings, it was said:
“Q. Turning to page 350, can you see at line - between 5 and 10, you said “I reflect over it quite regularly and I believe that I’ve taken the necessary steps over the last five years in terms of reviewing the codes, reaching out to fellow colleagues and practitioners”. Are you in that answer trying to assure the delegates that in the five years since that 2016 conduct that you’d taken some steps to improve yourself?
A. Yes.”
89. Yet, as Ms Karadeniz stated, he had not at that time taken appropriate or sufficient steps to improve.
90. The applicant also points to the facts (which we accept on the evidence and which were not denied by the respondent) that since the first disciplinary proceedings, the reviews on the respondent’s website imply that he is still a registered physiotherapist. Further still, when attending the clinic, he wears a shirt with “Physio” written on it. In other words, he has not shown sufficient insight, despite the sanctions. When asked about this, the respondent maintained that it was not possible for a patient to book a treatment with him. Nonetheless, he has not taken all possible steps to avoid holding himself out as a physiotherapist.
91. It is submitted that the Tribunal, now, could have no confidence that the respondent could or would attain and maintain professional standards in the short to medium term; despite his assurances to the Tribunal and the evidence of his psychologist.
92. The applicant submitted that the Tribunal would have no confidence the conduct would not be repeated. Ultimately, even though the respondent gave evidence at the first disciplinary proceedings that he had been seeing a therapist and had attended courses in ethics, the Tribunal, in the first disciplinary proceedings, was not satisfied that the conduct would not be repeated, as there was no corroborative evidence (at [38]). The applicant submits that we too should not be satisfied.
93. Further, as mentioned above, the circumstances of the first disciplinary proceedings echo the matters here. The Complaint there was particularised as follows at [3] (the 2021 Complaint):
“The Complaint consists of three individual complaints:
(1) Complaint 1 states that Mr Muthukrishna is guilty of unsatisfactory professional conduct (“improper or unethical conduct relating to the practice or purported practice of the practitioner's profession”, National Law, s 139B(1)(l)), by failing to maintain professional boundaries by having a sexual and personal relationship with Patient [X].
(2) Complaint 2 states that Mr Muthukrishna is guilty of unsatisfactory professional conduct (National Law, s 139B(1)(l)), by:
(a) claiming to the Council in s 150 proceedings that the electronic records he produced to the Council of consultations with Patient [X] were contemporaneous records when in fact they were made five years after those consultations;
(b) destroying the handwritten records of those consultations and informing the Council that he could produce those handwritten records.
(3) Complaint 3 states that Mr Muthukrishna is guilty of professional misconduct (“conduct sufficiently serious to justify the sanction of suspension or cancellation of the practitioner’s registration”, National Law, s 139E) because of the unsatisfactory professional conduct particularised in Complaint 1 and 2, individually and taken together.”
94. The respondent, ultimately, did not contest the 2021 Complaint and the Tribunal in the first disciplinary proceedings found the conduct particularised in the first two individual complaints to have been made out and further, that the conduct was unethical and improper (at [18] and [29]). The third complaint was also established (at [32]).
95. As to the timing of the conduct the subject of the 2021 Complaint in the first disciplinary proceedings and the current Complaint:
1. The conduct the subject of the first complaint in the first disciplinary proceedings took place late 2016.
2. The conduct the subject of the second complaint in the first disciplinary proceedings took place late 2021.
3. The 2021 s 150 hearing was on 22 December 2021.
4. In December 2021, the respondent had the Conditions imposed on his registration. These included a condition not to treat female patients and that his record keeping be audited.
5. The conduct the subject of the Complaint One in these proceedings ranges from July 2018 to April 2022.
6. The Tribunal heard the first disciplinary proceedings in May 2023 and delivered its decision in July 2023.
96. By the time the first disciplinary proceedings were heard and determined the conduct the subject of these proceedings had ceased. Nevertheless, long before the first disciplinary proceedings were instituted, the respondent was aware that his conduct was the subject of investigation. It is noted that even after a condition was placed on his registration not to treat female patients, the respondent gave Patient A clinical advice via a video chat, regarding her sprained ankle.
97. As the transcript of the proceedings, the agreed facts and the findings of the Tribunal in first disciplinary proceedings indicate; from at least 2016, when the respondent ceased treating the patient the subject of those proceedings (referred to here as Patient X), he has long been aware that he should not treat patients with whom he was in a sexual relationship; and further, he was aware that it was important to keep his notes of treatment, including in case the patient, or another practitioner wanted to see them.
98. Yet, the conduct the subject of these proceedings occurred.
99. Further still, the applicant highlights that the Tribunal imposed the sanction that it did, without knowledge of the additional egregious conduct the subject of these proceedings. The implication is that had the Tribunal then known of the additional conduct, a greater sanction would have been imposed; and given the multiple breaches of conduct here, a longer sanction is warranted now.
100. These are weighty factors.
Objective seriousness of the conduct and lack of candour
101. The applicant highlights that the conduct was objectively serious. Further, not only did the respondent maintain the relationship with Patient A for some time, he took steps to conceal the relationship.
102. We accept this submission.
Patient A was a vulnerable person
103. The applicant also highlights that the respondent’s attitude to Patient A demonstrated a lack of insight. Initially and even during parts of the hearing of these proceedings, the respondent maintained that he himself was vulnerable and Patient A took advantage of him – although, ultimately, he took responsibility.
104. We accept that Patient A was a vulnerable person and that the conduct was the responsibility of the respondent, despite any of his own vulnerabilities.
The respondent’s submission
105. Whilst the respondent did not contest that his conduct warranted a further period of cancellation of his registration, he submitted that five years (as suggested by the respondent) may be excessive.
106. In essence, the respondent’s position was that he accepts he acted contrary to professional standards. He also accepts that “it was on him”, as shown in the transcript:
“I would not say - use the word forced, but definitely there’s certain degree of coercion and it takes two to tango so - but at the end of the day, it’s up to me. I have the position of authority to make professional decisions and I failed to do so at the time. So that’s on me and that’s my responsibility and my mishap. Yep.”
107. The respondent relied on the submission that his erroneous conduct occurred at a time in his life when he was in emotional distress, vulnerable and with a lack of insight into the seriousness of his conduct.
108. The respondent takes responsibility for the errors that he made, however he maintains that whilst not justifying or excusing his conduct, his personal circumstances provide context, or an explanation as to how he arrived at the position he was in. To underscore that position, he said he took the deliberate step of not being represented before the Tribunal as a way of acknowledging that what he had done was wrong.
109. During the course of the hearing he said:
“The reasons for - that I don’t have any legal representation and that I’m self representing is because I’m here not to argue, I’m here not to challenge things. I know what I have done and I know what I have done wrong, I’m here to admit and I have done that. My only - I fully acknowledge and accept the grave mistakes that I’ve made in my capacity as a physiotherapist in the past. The only complaint I sought to challenge was complaint 3, particular 6 but I now understand that I was wrong there too.”
110. He also submitted that the Tribunal could be satisfied from the steps he has taken to improve his coping strategies and his personal circumstances and knowledge, that he has learned his lesson. He appreciates he made very bad mistakes. The Tribunal, so it was submitted, could have comfort that he would not make the same mistakes again. When answering a question about why he returned to his psychologist in 2023, he said:
“I wanted to improve my analysis and assessment of the situations that I was in and other things, and obtain assistance from her to be able to self reflect and understand where I went wrong and how I went wrong, what were the factors that were involved in that, and I wanted her guidance to pinpoint areas where I went wrong and what I could have done better in terms of my decision-making and for her to emphasise and re-emphasise the strategies that I need to learn so that I can avoid making these mistakes again.”
111. Further, he does not intend to practise for the foreseeable future. Apart from being a consequence of the disciplinary proceedings, not practising will assist him to continue to improve his mental health and coping strategies.
112. Whilst he accepts that he should not be able to practise for some significant time, he submitted that five years goes beyond what is necessary.
The Tribunal’s decision in relation to disciplinary orders
113. Despite his own vulnerabilities and his difficult personal circumstances, the Tribunal is satisfied that the respondent wilfully or recklessly breached the professional standards. This was his responsibility. Further, despite his assurances to the Tribunal, we are satisfied that there is an ongoing risk of a repeat of the egregious conduct. We are not satisfied, despite the evidence of his psychologist, that he has a fully developed insight into the breaches of professional standards. Whilst we have his assurances that he has stress relief processes in place and now understands where he went wrong, other than the evidence of the psychologist, we have no external corroboration of his evidence. As to the psychologist, she accepted under cross-examination that he had not been entirely forthcoming with her about all the circumstances. Further, the respondent has proved, in the past, to be a poor judge of his own stress levels and the effect on his behaviour.
114. Putting the health and safety of the public first and noting that restrictions on a person’s registration should only be done to the extent necessary to protect the health and safety of the public, we are satisfied that a lengthy cancellation and prohibition period is warranted. However, we are not satisfied that five years is necessary.
115. On the one hand, the respondent departed in many ways from appropriate ethical and professional standards. Further, he has shown a continuing lack of insight, at least until these proceedings. The most egregious departure from professional and ethical conduct was his continuing to treat Patient A, once their personal relationship started. This was in circumstances where, from at least 2016 in relation to Patient X, by his own admission, he was aware that it was inappropriate to treat a person he was in a personal or intimate relationship with. Here, he relies on what he describes as blurred lines about whether Patient A continued to be his patient after their relationship started. However, that shows a serious lack of insight. He took steps to conceal the relationship and provided false answers to the Council and the applicant about it and he knowingly provided false medical certificates, which exacerbates the seriousness of the conduct. His almost complete lack of keeping accurate records shows a blatant disregard for his professional duties and the basic tenets of ongoing patient care.
116. On the other hand, despite her vulnerabilities, it could not be said that the sexual relationship between Patient A and the respondent was non-consensual. Further, his evidence is to the effect that as a result of recent further work with his psychologist, he has a deeper insight into the gravity of his mistakes; and his responsibility for them. Further still, he has taken steps to ensure that he has coping mechanisms in place for stress, that he is proactive about reducing stress, that he is continuing with professional and personal development and he has shown remorse and contrition.
117. The Tribunal accepts that his personal circumstances are now much less stressful than they were, he has had some time away from his practice and he has had the benefit of the reasons of the first disciplinary proceedings. Each of these things has given him the space and time and motivation to reflect on his conduct. We accept he has shown remorse and contrition.
118. This Tribunal considers that having regard to the objective seriousness, the initial lack of insight and that this conduct went on for many years with some elements of concealment, including to the applicant, and that we are not satisfied the respondent has yet achieved full insight and needs the time to reflect and to learn to cope with stress, that it is appropriate he be prohibited from being registered or providing health services for three and a half years from the date of this decision. This is more than double the amount of time he was prohibited from being registered, under the first disciplinary proceedings. This prohibition will expire in early 2028; more than five years from the initial suspension.
119. As submitted by the applicant, it is important to demonstrate to the respondent and other practitioners the seriousness with which the Tribunal views sexual activity with a patient. The Tribunal is satisfied that this measure imparts that message of censure and provides the necessary time for rehabilitation and reflection.
120. It is notable that in the event that he indeed seeks a reinstatement order, he will need to convince the Tribunal that he is, at that time, a fit a proper person. At that time, it will be relevant to have regard to what steps he has taken in the interim to satisfy them of this. Reinstatement is by no means automatic: see, for example, Jan v Health Care Complaints Commission [2020] NSWCATOD 75 at [64]-[68], and Zepinic v Health Care Complaints Commission [2020] NSWCA 146. Reinstatement requires asserted reformation of a practitioner’s character that is exceptional and requires clear proof, as said in Ex Parte Tziniolis; Re Medical Practitioners Act (1966) 67 SR (NSW) 448, at 461:
“Reformations of character and of behaviour can doubtless occur but their occurrence is not the usual but the exceptional thing. One cannot assume that a change has occurred merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred. If a man has exhibited serious deficiencies in his standards of conduct and his attitudes, it must require clear proof to show that some years later he has established himself as a different man.”
Publication and disclosure
121. The applicant seeks a non-publication order over the name of the Friend who is referred to in the various documents, such as, her statement (at Exhibit A, pp 219-220). This is because she has an unusual name and could therefore easily be linked to Patient A. This in turn, could lead to the identity of Patient A being revealed.
122. A question was raised in the proceedings as to whether it was appropriate to make a confidentiality order under cl 7 of Sch 5D to the National Law; or alternatively, whether it should be made under s 64 of the NCAT Act. As the source of the Tribunal’s power is an important issue, the Tribunal sought submissions. The Tribunal was assisted by comprehensive submissions from the applicant, who contended that the Tribunal could rely on either provision and that there was no inconsistency or repugnancy as between the two provisions.
123. It was recently determined in GKN v Medical Council of New South Wales [2024] NSWCATOD 87, that when proceedings under the National Law are on foot, it is appropriate that this type of application be considered under cl 7 of Sch 5D to the National Law. That path will be followed here.
124. Clause 7 of Sch 5D to the National Law provides:
7 Release of information [NSW]
(1) The person presiding in proceedings before a Committee or the Tribunal may, if the person presiding thinks it appropriate in the particular circumstances of the case (and whether or not on the request of a complainant, the registered health practitioner or student concerned or any other person)—
(a) direct that the name of any witness is not to be disclosed in the proceedings; or
(b) direct that all or any of the following matters are not to be published—
(i) the name and address of any witness;
(ii) the name and address of a complainant;
(iii) the name and address of a registered health practitioner or student;
(iv) any specified evidence;
(v) the subject-matter of a complaint.
125. It is relevant that the Friend is not a witness. It is, therefore, not open under cl 7 of Sch 5D to the National Law, to make a non-disclosure order in relation to her name. The person presiding may, however, if “appropriate in the particular circumstances of the case” direct that any specified evidence is not to be published: cl 7(1)(b)(iv), Sch 5D. The name of the Friend is such specified evidence.
126. As a suppression and non-publication order has already been made over the name of Patient A and her name could be revealed by the publication of her Friend’s name, it is appropriate that the Tribunal direct that the name of the Friend is not to be published.
127. In addition, though not the subject of submissions, it is appropriate to make a direction that the nature and location of Patient A’s employment is not to be published. The Tribunal considered this might be an avenue, otherwise, to identify Patient A.
128. For completeness, it is noted that a person who contravenes such a direction is guilty of an offence: cl 7(5) of Sch 5D to the National Law.
Costs
129. The applicant has sought costs.
130. Pursuant to cl 13(1) of Sch 5D to the National Law, the Tribunal may award costs. The National Law ousts s 60 of the NCAT Act (regarding costs) and there is no requirement for the party seeking costs to demonstrate special or exceptional circumstances.
131. The applicant has been successful; albeit the cancellation period suggested has not been adopted by the Tribunal. The respondent does not suggest there was any disentitling conduct by the applicant; but he asks what the costs would be. At the close of the hearing, the Tribunal indicated that it would hear from the parties before making any costs order.
132. The Tribunal will hear the parties on costs, including the likely quantum and nature of those costs sought and whether the question of costs may be determined on the papers.
133. It is noted that an order regarding costs is an ancillary order (s 4(1)(b) of the NCAT Act), and accordingly, any decision about costs is to be determined by the Tribunal as constituted by a single member.
Orders
134. The Tribunal orders:
1. Pursuant to s 149C(4)(a) of the Health Practitioner Regulation National Law (NSW), if the practitioner were still registered the Tribunal would have cancelled his registration (pursuant to s 149C(1)(b) of the Health Practitioner Regulation National Law (NSW)).
2. Pursuant to s 149C(4)(b) of the Health Practitioner Regulation National Law (NSW), the practitioner is disqualified from being registered in the health profession (physiotherapy) for three and a half years from the date of this decision.
3. Pursuant to s 149C(4)(c) of the Health Practitioner Regulation National Law (NSW), the National Board is required to record the fact that if the practitioner were still registered, the Tribunal would have cancelled his registration in the National Register kept by the Board.
4. Pursuant to s 149C(5) of the Health Practitioner Regulation National Law (NSW), the practitioner is prohibited from providing a health service for three and a half years or until the Tribunal makes a reinstatement or other order in relation to the practitioner under s 163B of the Health Practitioner Regulation National Law (NSW).
5. Pursuant to s 149C(7) of the Health Practitioner Regulation National Law (NSW), an application for review of orders 2 and 4 may not be made until three and a half years from the date of these orders.
6. Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the name of the Friend (as defined in these reasons for decision) is not to be published.
7. Pursuant to cl 7 of Sch 5D to the Health Practitioner Regulation National Law (NSW), the nature and location of Patient A’s employment as referred to in these reasons for decision is not to be published.
8. Within 14 days of this decision, the applicant is to file evidence and submissions in relation to costs including as to the quantum and nature of the costs the applicant is seeking.
9. Within 21 days of this decision, the respondent is to file and serve his submissions in relation to costs.
10. Within 28 days of this decision the applicant is to file and serve a submission in reply in relation to costs.
11. The parties are also to exchange and file within 28 days of this decision submissions in relation to whether the issue of costs may be determined on the papers, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 24 July 2024 | 13,885 |
nsw_caselaw:190ec1871779655ccc0d1e70 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Wonderful Ornamentation Pty Ltd v Sweet Lu (City) Pty Ltd [2024] NSWDC 312 | https://www.caselaw.nsw.gov.au/decision/190ec1871779655ccc0d1e70 | 2024-07-26T22:25:57.312246+10:00 | District Court
New South Wales
Medium Neutral Citation: Wonderful Ornamentation Pty Ltd v Sweet Lu (City) Pty Ltd [2024] NSWDC 312
Hearing dates: 24 – 27 October 2023
22 November 2023
Date of orders: 26 July 2024
Decision date: 26 July 2024
Jurisdiction: Civil
Before: Waugh SC DCJ
Decision: See paragraphs 238 to 248.
Catchwords: BUILDING AND CONSTRUCTION – Contract – Terms – Instalments payable by effluxion of time – Work “suspended” – Repudiation – Damages – Defects and omissions
Legislation Cited: Nil
Cases Cited: Baltic Shipping Company v Dillon (1993) 176 CLR 344
Bellgrove v Eldridge (1954) 90 CLR 613
Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd (2013) 29 BCL 329, [2012] NSWCA 184
Dominion Coal Co Ltd v Dominion Iron & Steel Co Ltd [1909] AC 293
Foran v Wight (1989) 168 CLR 385
Fox v Percy (2003) 214 CLR 118
Hoenig v Isaacs [1952] 2 All ER 176
Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129, [1980] 2 All ER 29
Jones v Dunkel (1959) 101 CLR 298
Kuhl v Zurich Financial Services (2011) 234 CLR 361
Mann v Patterson Constructions Pty Ltd (2019) 267 CLR 560
Mann v Patterson Constructions Pty Ltd (2019) 267 CLR 560, [2019] HCA 32
Mertens v Home Freeholds Company [1921] 2 KB 526
Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178, (2005) 21 BCL 46
Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151; 95 NSWLR 82
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [2004] HCA 52
Texts Cited: Carter’s Breach of Contract by J W Carter (3rd ed., 2024)
Chitty on Contracts (35th edition, 2023) by H Beale
Category: Principal judgment
Parties: Wonderful Ornamentation Pty Ltd (Plaintiff)
Sweet Lu (City) Pty Ltd (Defendant)
Representation: Counsel:
Ms A Lim (Plaintiff)
Mr A Macauley (Defendant)
Solicitors:
Juris Cor Burwood (Plaintiff)
Du & Associates Lawyers (Defendants)
File Number(s): 21/236139
Publication restriction: Nil
Judgment
A. The context (some basic facts)
1. The parties’ dispute is about the fit-out of a dessert and cake shop in 2020. The shop is in Dixon Street, Haymarket, not far from the Court.
2. The plaintiff, Wonderful Ornamentation, is a commercial shopfitter. It trades under the name TD Shopfitting. It is a private company with 3 directors. The director who dealt with the defendant at all points along the way was Mr Jian Hua Wang, who was known also as Mr James Wang (“Mr Wang”). Wonderful Ornamentation’s project manager on the job was Mr Yibin Lu, known as Robin (“Robin”).
3. The defendant, Sweet Lu, took a lease over the premises in January 2020 with a view to opening a dessert and bakery business. Sweet Lu has one director, who is also the company secretary: Mr Tiansong Hou, known as Mr Steve Hou (“Mr Hou”). Mr Hou was the person at Sweet Lu who dealt with Mr Wang and Robin. Mr Hou’s wife, Lucy Xi Lu (“Lucy” or “Ms Lu”) also had some involvement.
4. Sweet Lu engaged an interior designer, Mr Shao Guo, also known as Tony (“Tony”), of GC Studio Pty Ltd in early 2020 to draw up plans for the fit-out. It was Tony who suggested to Mr Hou that he might use Wonderful Ornamentation to do the work. Tony regularly referred clients to Wonderful Ornamentation. Sweet Lu and Wonderful Ornamentation had not done business together before.
5. Mr Wang and Mr Hou first met in January 2020, although they give different accounts of precisely when that meeting was and what was discussed.
6. In their meetings, Mr Wang and Mr Hou spoke to one another in Mandarin Chinese. They also communicated with one another via WeChat, and there are many WeChat messages in evidence, in Mandarin Chinese together with English translations. Sometimes there was more than one English translation of the same message.
7. On 19 February 2020, Mr Hou sent Mr Wang a copy of the “Interior Concept Design” prepared by Tony. In his affidavit, Mr Wang described this as the design plan for the project. In his WeChat message acknowledging receipt, Mr Wang referred to them as the conceptual design drawings and the CDC drawings. They consist of 46 pages (Court book pages 532 – 577) with computer generated render images, typed pages of “general notes”, a material schedule, plans and drawings. They are quite detailed.
8. It is admitted on the pleadings that Wonderful Ornamentation and Sweet Lu entered into an agreement on 2 March 2020. The agreement was in writing, signed by Mr Wang for Wonderful Ornamentation on 28 February 2020 and by Mr Hou for Sweet Lu on 2 March 2020. It came about as follows.
8.1 On 28 February 2020, Wonderful Ornamentation provided a written offer (or quotation) to Sweet Lu to do the work “based on the drawings and onsite observation” for a price of $190,000 plus GST. The quotation was signed by Mr Wang. It took the form of a five-page letter written in Mandarin Chinese addressed to Mr Hou, together with 2 pages of “Terms & Conditions of Trade” written in English. Most of the letter consisted of a table in 10 sections setting out a description of the work to be done and materials to be provided, with an 11th section setting out work excluded. After the table, a number of “Rules and regulations” were stated. Because of the significance they assume in the case, I will set them out in full:
Rules and regulations
1. Extra charges apply apart from work in the work plan.
2. TD is expected to complete all work relevant to the work schedule 8 weeks after the commencement of the onsite work (Products processed in China shall be delivered to the work site two weeks before the completion of the work. Had there been any delay, the project shall be delayed accordingly. Starting from the arrival of the products onsite, all relevant work shall be completed within two weeks, including all onsite checking before acceptance through relevant authorities.).
3. TD guarantees for 6 months for all work relevant to the contract.
4. Payment period:
A: 15% when signing the contract.
B: 20% 2 weeks after TD’s onsite work.
C: 20% 4 weeks after TD’s onsite work.
D: 20% 6 weeks after TD’s onsite work.
E: 20% 8 weeks after TD’s onsite work.
F: 5% when TD has completed all relevant work according to the contract and submitted the OC to the shop owner.
8.2 When Mr Hou signed the quotation on behalf of Sweet Lu on 2 March 2020, he signed under the Chinese words translated into English as “Authorisation confirmed: We Sweet Lu (City) Pty Ltd hereby accept and grant this price offer and payment period. When the payment is made to your designated bank account, please start your work.”.
9. On 2 March 2020 Sweet Lu paid $3000 to Wonderful Ornamentation by electronic transfer. This was much less than 15% of contract price of $190,000 plus GST.
10. It is common ground on the pleadings that work commenced on 2 March 2020.
11. On 13 March 2020, Mr Wang, Robin, Mr Hou, and his wife Lucy met at the shop to discuss some additional work Wonderful Ornamentation would like to have done. Robin took minutes of the meeting and circulated them afterwards.
12. After some further discussions, on 17 March 2020 Wonderful Ornamentation prepared and submitted to Sweet Lu an updated written quotation to do all of the work, that is to say to do the previously quoted and agreed and the additional work, for a price of $200,000 plus GST. The updated written quotation took the same form as the written quotation of 28 February 2020.
13. Mr Hou says that after receiving this updated quotation, on the same day (17 March 2020) he had a telephone conversation with Mr Wang. Sweet Lu claims (per its amended defence paragraph 3) that this conversation resulted in an oral agreement with Wonderful Ornamentation that Sweet Lu will make payment for fit-out works actually completed by Wonderful Ornamentation from time to time and upon receipt of the relevant tax invoice or payment request from Sweet Lu. Mr Wang denies the conversation and Wonderful Ornamentation denies the agreement.
14. It is common ground that by 19 March 2020 the written contract of 2 March 2020 had been varied and the new price of $200,000 plus GST had been agreed, but the parties are at issue over the precise terms of what was agreed. The difference relates to the work agreed to be done. They each put forward different versions of the updated written quotation said to have been agreed. Both versions set out the same unchanged “Rules and regulations” contained in the initial offer of 28 February 2020 accepted on 2 March 2020, although the English translation of rule and regulation number 4 in Sweet Lu’s version is slightly different, it says “after TD starting the construction”, instead of “after TD’s onsite work”. No one submitted that anything turns on the difference.
15. It is common ground that on 7 October 2020 Sweet Lu “suspended” all work. This followed what appears to have been a tense meeting the day before.
16. By this time, Sweet Lu had paid, by various instalments, a total of $130,000 inclusive of GST of the varied price of $220,000 inclusive of GST (or $200,000 plus GST) under the varied agreement. The instalments had been paid between 2 March and 12 August 2020 in amounts of $3000 (2 March 2020), $3500 (16 March 2020), $45,000 (19 March 2020), $23,500 (20 March 2020), $15,000 (13 May 2020), $20,000 (16 July 2020) and $20,000 (12 August 2020).
17. On 13 October 2020 Sweet Lu began to engage a number of different companies and tradesman, including Multione Construction Pty Ltd (“Multione”), to undertake work at the site.
18. The shop opened and Sweet Lu commenced trading on 20 December 2020.
19. Wonderful Ornamentation did not return to the site to undertake any work after 7 October 2020, and Sweet Lu did not pay it any more money.
B. Wonderful Ornamentation’s claim
20. Wonderful Ornamentation claims the sum of $90,000 inclusive of GST plus interest, which represents the unpaid balance of payments A, B, C, D, E and F under the rules and regulations of the contract. It has abandoned a claim for a further $7,150 inclusive of GST said to have arisen from an “Agreement Additional” made on 6 October 2020 pleaded in its statement of claim.
21. In its statement of claim, Wonderful Ornamentation says it is entitled to the $90,000 because Sweet Lu breached the agreement by failing to make the payments it was obliged to make, which entitled Wonderful Ornamentation to suspend work pursuant to clause 18.1, that Sweet Lu “repudiated” the agreement “by engaging a third party to continue fit out work”, and that the full amount has become payable under clause 18.3. In the statement of claim, the $90,000 is claimed as damages.
22. At the hearing, Wonderful Ornamentation submitted that each instalment became a debt due upon the passing of the relevant number of weeks after it had commenced work.
23. In its statement of claim, Wonderful Ornamentation claimed the sum of $86,150 in the alternative on a quantum meruit basis. That claim was not pursued or sought to be proved at the hearing.
24. Sweet Lu says that Wonderful Ornamentation is not entitled to be paid because it was an entire contract and Wonderful Ornamentation did not complete the work.
25. Wonderful Ornamentation answers this by saying that it was not an entire contract, but even it if was there had been substantial performance, and that in any event the money had become payable as a debt or debts due under the contract, and so was owing.
C. Sweet Lu’s cross-claim
26. Sweet Lu also brings a claim against the Wonderful Ornamentation for damages for (a) the costs of rectifying Wonderful Ornamentation’s defective works, (b) lost profit by reason of having to delay the opening of the store, and (c) the costs of engaging a further shop fitter to complete the fit out and remedial works necessary to enable the shop to commence trading (cross-claim paragraph 33). All up it claims damages of $165,809.65.
27. Sweet Lu calculates its loss by reference to:
1. The cost of the work done by different companies and tradesmen between 13 October 2020 and 6 December 2020 to complete the unfinished work and to rectify defects in the work Wonderful Ornamentation actually did. The amount claimed is $51,269.
2. The cost of work not yet done to rectify further defects in the work Wonderful Ornamentation actually did. The amount claimed is $19,198.08.
3. Damages for defective work in relation to a grease trap which overflowed. The amount claimed is $14,755.75.
4. Rent paid by Sweet Lu to its landlord and not recovered from trading during the period from 15 September 2020 (when Sweet Lus says the shop would have been opened if Wonderful Ornamentation had completed the work on time, as required by the contract) to 20 December 2020 (when the shop actually opened). The amount claimed is $61,665.20.
5. Loss of profit (over and above rent paid and not recovered) for the same period. The amount claimed is $18,921.62.
28. Wonderful Ornamentation disputes Sweet Lu’s claim.
29. It also says, which Sweet Lu accepts, that if Sweet Lu is entitled to damages for the cost of completing the work, it must give credit to the Wonderful Ornamentation for the unpaid balance of the contract price (: Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178, (2005) 21 BCL 46 at [51]-[54] per McColl JA).
D. An issue not raised or pursued: whether the contract was terminated and if so how, why and by whom
30. It is important to recognise that neither party asked the court to make findings that they terminated the contract for the other party’s breach or repudiation of the contract so to discharge both from the further performance of the contract and to give the innocent party an entitlement to loss of bargain damages. Both sides positively eschewed mounting such a case.
31. In Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260, Mason CJ (Deane, Dawson & Toohey JJ agreeing) explained that, “Loss of bargain damages are recoverable only if the contract is at an end. Once termination due to the defendant’s wrongful conduct is established the plaintiff is entitled to damages for loss of bargain”, citing Dominion Coal Co Ltd v Dominion Iron & Steel Co Ltd [1909] AC 293 at 311 - where the Privy Council had said “the plaintiffs are entitled, owing to the wrongful repudiation of the contract by the defendants, to treat the contract itself as at an end and to recover damages for the loss of it, in addition to damages in respect of those breaches of it which may have been committed before repudiation”.
32. A repudiation does not affect the subsistence of the contract unless the innocent party elects to terminate the contract or, as used to be said, rescind. Absent an election by the innocent party, both parties remain bound by the contract. See for example: Foran v Wight (1989) 168 CLR 385 per Brennan J at 416-417 and Dawson J at 441; and “Carter’s Breach of Contract” by J W Carter (3rd ed., 2024) at [10-01] and [10-02].
33. Where a party elects to accept the other party’s repudiation of the contract, both parties are released from contractual obligations which are not yet due for performance, but existing rights and causes of action remain unaffected: Mann v Patterson Constructions Pty Ltd (2019) 267 CLR 560, [2019] HCA 32 per Nettle, Gordon & Edelman JJ at [176].
34. In its statement of claim, Wonderful Ornamentation pleaded that Sweet Lu had “repudiated” the contract, but it did not plead that it had accepted the repudiation and elected to terminate the contract. Nor has Sweet Lu pleaded that it terminated the contract. Neither side sought to prove that the contract had been terminated due to the other’s wrongful conduct, to use the language of Mason CJ.
35. Both sides were alleging that the other was in default before Wonderful Ornamentation “suspended” all work on 7 October 2020: see minutes of meeting 6 October 2020; and Mr Wang’s and Mr Hou’s differing affidavit accounts of the meeting; WeChat message from Mr Wang to Mr Hou and Ms Lu 7 October 2020 (CB857); WeChat messages from Ms Lu to Mr Wang 9 October 2020.
36. In its written closing submissions (paragraph 8), Sweet Lu submitted that there is no doubt that one party or the other had terminated the contract and it is not on foot, but that it was not necessary for me to address the question.
37. In oral closing submissions in reply (T426), in the dying minutes of the hearing, counsel for Wonderful Ornamentation submitted that Sweet Lu was not entitled to damages for completing the unfinished work because it had repudiated the contract. The submission failed to recognise that repudiation of itself does not bring the contract to end. I will return to the submission when considering Sweet Lu’s cross-claim.
38. I can only decide the issues raised by the parties. Those issues do not include whether the contract was terminated and if so how, why and by whom.
E. Issues
39. Having regard to those matters, the issues raised by the parties may be summarised as follows.
40. When the parties varied their contract around 18 March 2020, what did they agree? In writing? Orally?
41. Is there a debt due to the plaintiff by the defendant for the unpaid balance of payments A, B, C, D and E in clause 4 of the “Rules and regulations” of the written contract? The parties say that answering this question involves considering:
41.1 Whether, as the defendant submits, the contract was an entire contract such that no more money is payable to the plaintiff because it did not complete the work.
41.2 Whether, as the plaintiff submits, even if it was an entire contract the plaintiff is nonetheless entitled to be paid because it substantially completed the work.
42. Is the defendant entitled to damages for the cost of completing the work and rectifying defects? If so, how much?
43. Is the defendant entitled to damages for the plaintiff’s delay in doing the work? If so, how much?
44. What orders should the court make?
45. I will address the issues in that order.
F. When the parties varied their contract around 18 March 2020, what did they agree? In writing? Orally?
46. The issues here are whether there was an oral agreement reached on 17 March 2020 about the terms of payment (as alleged by Sweet Lu), and which version of the amended written quotation or offer the parties adopted.
47. I will start with the evidence.
The affidavit evidence of the oral agreement
48. Sweet Lu asserts that the oral agreement arose out of one conversation between Mr Hou and Mr Wang on the telephone.
49. Mr Hou (Steve) gave evidence in his affidavit that after he received the varied offer on 17 March 2020, he had a telephone conversation with Mr Wang on 17 March 2020 with words to the effect of (CB 102):
Me: "James I got the updated contract. Everything looks ok but I just want to confirm again that you are still happy with the payment arrangement we discussed earlier? I see that the new contract still has the same payment schedule as the first contract but as I told you I cannot keep to that schedule. You agreed that I can just pay as we go. I will pay whatever Robin asks me to pay as the work progresses.”
James: "Yes that is fine. We are still happy with that arrangement. You can pay as we go. Robin will ask you for funds."
Me: " Ok great."
50. Mr Hou’s evidence that “as I told you I cannot keep to that schedule. You agreed that I can just pay as we go” is a reference to his account of what he says was an earlier conversation on or about 1 March 2020 after he had received the written quotation or offer of 28 February 2020. Mr Hou gave evidence in his affidavit that on 1 March 2020 he had a telephone conversation with Mr Wang with words to the effect of (CB 100):
Me: "Hi James thanks for sending through the contract. I see that the contract says we need to pay 15% deposit and then by instalments of 20% of the total costs every 2 weeks. I don't think I can meet this schedule. Can we discuss this arrangement?"
James: "That is our standard payment schedule but you don't need to worry too much about it."
Me: "At the moment I do not have enough funds. I have just sold one of my properties in order to raise funds to pay for this fitout. Settlement will happen soon and I will have enough money to pay for the work. But at the same time I have other expenses I need to pay for. I can 't commit to the payment schedule listed on your contract. Can I pay when you need me to pay from time to time?"
James: "Yes no problem. My project manager Robin is in charge of the day to day on this project I will let him know. He manages payments. He will ask you to pay from time to time to cover anticipated work. He will let you know in advance what work is coming up and how much he needs. You can pay as we go ."
Me "Ok great!"
51. In his affidavit evidence, Mr Wang (James) denied the conversation of 17 March 2020 set out in Mr Hou’s affidavit (reproduced above).
52. Mr Wang gave a different account of the telephone conversation he had with Mr Hou on the telephone on 1 March 2020. In his affidavit (CB 51) Mr Wang says the conversation he had with Mr Hou was in Mandarin in words to the following effect:
Steve: “We have received the quotation, unfortunately there has been some issues with my property sales settlement and it's getting delayed. We can't afford to pay a 15% deposit, but we would really like to proceed with our contract, is there anything that we can do?”
Me: Without a deposit we cannot commence work for you. Plus, you have to cooperate with us and Tony to obtain a complying development certificate also known as CDC, otherwise works cannot commence.
Steve: But if commencement does not take place, we still have to pay rent. Can you at least start demolishing works for now?
Me: Demolishing cost money and if you don't pay us, we still can't commence the work.
Steve: We will make future payment on time as I will have more cash flow after property sale. We really hope that this project can proceed, this is our first cooperation but it won 't be the last.
Me: When is the settlement of your property?
Steve: Probably within 2 weeks' time. How about we pay the deposit and first instalment as soon as we reach settlement to provide you with some security? I can pay you $3000 now.
Me: All right, since we have both put a lot of effort into this already, I will start organise demolishing some interiors with $3,000 deposit. But please update us once your funds have come through. My colleague Robin, the project manager, will be working on Sweet Lu with us and he will be in charge with the arrangements onsite. Please contact him for in regards to works and payment. I have given him your contact details and he should get in touch with you soon.
Steve: No problem, thank you! I will speak to Robin as well.
53. Mr Hou denied the conversation set out by Mr Wang and specifically denied that he said “We will make future payment on time”. Mr Hou does say in his affidavit, however, that Robin rang him the next day and said words to the effect “Steve, can you pay $3000 first so that we can start demolition works tomorrow” and he replied “okay I will transfer $3000 today”.
54. It is common ground that Sweet Lu paid $3000 to Wonderful Ornamentation on 2 March 2020.
The contemporaneous WeChat records of messages between 17 and 19 March 2020
55. The contemporaneous WeChat records of messages between 17 and 19 March 2020 establish that the parties had the following communications with one another. Some of these messages were written and others were left as voicemails.
56. There are multiple English translations in evidence for a number of these messages. Some of the messages were exhibited to affidavits included in the Court Book with English translations. Some of those same messages were subsequently duplicated as part of Exhibits D and E, as part of Exhibits 3 and 4 or as in the annexures to Mr Hou’s affidavit of 23 October 2023, but with different English translations. To the extent that some of the translations of particular text or voice messages are duplicated and are materially different relating to the issues raised by the parties I will set out the different translations. I am not equipped to and was not asked to decide which translation was correct in the event of a material difference.
57. On 17 March 2020, in sequence:
57.1 At 12:07 PM Mr Wang sent Mr Hou a new quotation. Wonderful Ornamentation says this is the version ultimately adopted by the parties. It is the version at CB 190 – 203.
57.2 At 12.10 PM Mr Wang sent a message to Mr Hou referring to the document as “the revised contract”, asking whether anything was unclear or needed to be modified.
57.3 Mr Hou left 3 voicemails for Mr Wang (Exhibit D p.2-4):
1. In the first, he told Mr Wang that he had received the document and that he and his wife Lucy would read it as soon as possible today “and will send it over then”.
2. In the second, he said (Exhibit D p.4) “… regarding the way of payment, I think if we could have it amended. That is, according to the situation that actually happens that is written down. That is, we would pay $120,000 before the opening of the business and pay $75,000 at the beginning pay according to the construction progress. Then see how to pay the balance. Then the remaining see to pay at what stage. And will be paid in one instalment. Think it all carefully, then write it down clearly. Then we can do according to what we agree upon.”. There is another translation of this voicemail annexed to Mr Hou’s affidavit of 23 October 2023 (page 14-15), according to that translation he said: “Also, Teacher Wang, I feel like, can we modify the payment method. Just write it down according to what actually happened. That is, we pay 120,000 before opening and pay 70,000 in advance according to the progress of the project, and then we will pay the rest at some point, see how to pay the final payment, and just directly pay it all. Let’s think everything through clearly and then write it down clearly, and then we can do it as agreed.”.
3. In the third, he said (Exhibit D p.4): “and about that $120,000, to be honest, Mr Wang, this is the smallest, smallest, smallest figure. Now honestly speaking, our business is running very well. Now I have the feeling that high chance will be in advance, that is to clear all outstanding. This, I do not like owing money to others. It is meaningless, really. This.”. According to the translation in the annexure to Mr Hou’s affidavit of 23 October 2023 he said: “And that 120,000, to be honest, teacher Wang, this is the smallest number. To be honest, our business is very good now. Now I feel that there is a high probability that it will get ahead of schedule, that is, all the money will be paid. I really don’t like owing money, this”.
57.4 At 6:06 PM Mr Hou returned photographs of 2 pages of the document to Mr Wang with handwritten amendments, and with the message “Mr Wang, I was quite busy during the day and have just finished reading the contract. Basically good except a few minor details would like to check with you”.
57.5 Mr Hou left 10 voicemails for Mr Wang and sent a photograph of one page of the drawings. He commenced the first voicemail by saying “Mr Wang, I’m not texting any messages. Instead, I will leave you a voice message to see if you can understand. If it doesn’t work, I will talk with you. …”. The voicemails are set out in Exhibit D at pages 8 through 18. In them, Mr Hou raises questions about the number of matters, including the bathroom door, whether there will be 5 doors or 6 doors on the façade, the light in the kitchen, the air-conditioner, the plumbing, electric pump, floor drain, decoration of the hall room, the exhaust fan cover, the platform under the working bench and the payments. Because of the significance they assume in submissions I will quote only 2 of them:
4. In the 5th message (on page 12 and 14), Mr Hou said “The stainless equipment and the exhaust fan panel, it is rose gold. This is not reflected here in ours. That’s not rose gold … The stainless equipment and the exhaust fan cover at the bottom, it is rose gold. This is not reflected here in our stuff. That’s not rose gold colour steel. Perhaps it could be added here.”. In the annexure to Mr Hou’s affidavit of 23 October 2023 (page 20) the translation is given as: “The stainless steel equipment below and the exhaust hood the rose gold. We don’t seem to reflect this here. That is the rose gold-coloured steel. Maybe we can add them here.”.
5. In the 7th message (on pages 14 and 16), Mr Hou said “There is no problem with other things. Mainly about the following payments, if we say, pay $120,000 before finish, this contract, now it writes the weekly payments 2, 4, 6, 8 weeks definitely cannot meet this standard. So I am thinking whether we should leave it and sign first or according to what we have agreed, that is to write clearly it’s up to Mr Wang.” In the annexure to Mr Hou’s affidavit of 23 October 2023 (page 21) the English translation is given as: “The main thing is the payment at the end. If we are saying to pay 120,000 before delivery, the 2, 4, 6, 8 weekly payments written in this contract will definitely not meet this standard. So, I’m thinking whether we should leave this and sign first, or should we just agree on, that is, right this clearly. I will leave this with Teacher Wang.”.
57.6 At 8:33 PM Mr Wang replied to Mr Hou.
6. Mr Wang started by saying that he had “just listened to your voice messages”. According to the English translation in the Court Book he then said “This edited contract is the best option based on the agreed payment amount in the contract.”, whilst in the translation in exhibit D he said “The revised contract is the optimal construction plan with the precondition of the contractual price agreed upon.”.
7. He then discusses a number of the specific matters raised by Mr Hou in his 10 voicemail messages.
8. At the end of his reply, Mr Wang says, according to the translation in the Court Book (CB 216-217) “The industrial standards and the contract format in the company are regulated; legally the individual sponsoring agreement to delay payment needs to be drafted by the lawyer and signed by representatives of both parties and is a separate file, containing specific payment time and method, which could be reached later when necessary.”, whilst in the translation in Exhibit D (page 22) he said “the personal guarantee agreement to postpone the payments is a separate document that needs to be drafted by a solicitor and signed by the representatives of both parties under the law. It entails the specific payment timelines and method of payment, can be dealt with separately some time at a later stage.”.
57.7 Mr Hou replied to Mr Wang, according to the translation in the Court Book (CB 219) “Oh right, the matter regarding payment is understood. Thank you, Mr Wang. Thank you also for texting about other details. It’s quite late today so I wouldn’t keep you up. Tomorrow I’ll make a phone call to you to make sure, and it should be fine.”, according to the translation in Exhibit D he said (pages 22 and 24) “Ok. All right. The payment terms are understood. Thank you, Mr Wang. Thank you for listing other details. It is late today so won’t disturb you further. In the daytime tomorrow we will call you to confirm. Shouldn’t have any problems.”.
57.8 At 8:38 PM Mr Wang and Mr Hou exchanged the following messages:
9. According to the translation in the Court Book (CB 219):
Mr Wang: “Tomorrow morning I’ll arrange the office to add the mentioned work details in the contract and send to you after finishing.”
Mr Hou: “Thank you really very much, Mr Wang. I just think that tomorrow we can check all these as soon as possible and carry on.”
Mr Wang: “Yes.”;
10. According to the translation in Exhibit D (page 24):
Mr Wang: “I will arrange the office to add the relevant construction details you mentioned into the contract. Will forward to you once it’s done.”
Mr Hou: “Thank you so much Mr Wang. I hope all of these can be confirmed as quickly as possible tomorrow so it can move on.”
Mr Wang: “Yes.”.
58. On 18 March 2020, in sequence:
58.1 At 9:53 AM Mr Hou sent a message to Mr Wang: “Mr Wang, when are you available, I will call you, OK?”.
58.2 At 10:17 AM Mr Wang sent a message to Mr Hou: “Steve: Good morning! Yes. I will call you now.”.
58.3 At 10:27 AM Mr Wang sent a message to Mr Hou: “Can’t reach you. Call me back when you are free.”.
58.4 Mr Hou sent a message to Mr Wang: “sorry Mr Wang, I was on another line just now. Call now. Called the land line. My mobile signal here is poor.”.
58.5 At 2:14 PM Robin sent Mr Hou a PDF document described as “Sweet Lu Project Contract.pdf”. The document is at CB 600 – 612. This is the version Sweet Lu says the parties adopted.
58.6 At 4:12 PM Mr Hou and Mr Wang had the following exchange:
Mr Hou: “Are you free now, Mr Wang?”
Mr Wang: “I am calling you now from my land line.”
Mr Hou: “OK”.
58.7 At 4:49 PM Mr Hou left a voicemail message for Robin, saying “Hello Robin. I have received this document. I didn’t have time to read it yet. But I just finished the telephone conversation with Mr Wang. I will update you when I have more news.”. (The document Mr Hou was referring to was obviously the one that Robin had sent him at 2.14 PM, being the version Sweet Lu says the parties adopted.)
59. On 19 March 2020, in sequence:
59.1 At 6:04 PM Mr Hou left a voice message for Mr Wang saying (per Exhibit D translation) “Hello. Hello Mr Wang. The drawings you drew, and the contract Robin sent to me yesterday. To be honest, I was too busy and had no time to touch the mobile. But, on my side, I’ll transfer the fund to Robin, I’ll tell him.”, or (per Exhibit 3 translation): “Hello, hello teacher Wang, about this drawing of yours, and the contract Robin gave me yesterday, to be honest, I was so busy that I didn’t even have time to touch my phone, but well, and my site, I will transfer the money to Robin first tonight, and then ask him, tell him, after the transfer is completed.”. The message continued (per exhibit D translation): “I trust your side and be familiar with you. All no problem. This is called contract design whatever, any amendment, we can talk about it again no problem.”.
59.2 At 6:05 PM Mr Hou left a voice message for Robin saying (per Exhibit E): “Hello Robin. I just left a message with Mr Wang. That Mr Wang updated all the drawings today. Plus the contract you sent me yesterday. I am too busy today and I didn’t even have the time to touch the mobile phone at all. However, when I get home this evening,…, I will transfer this fund first and send you the screenshot. It’s that all the people at Mr Wang’s side are trustworthy. No problem. If there are any minor changes, they are to be discussed. Everything is all right. … Give you a heads-up first. If you want to make some work arrangement, there is no problem. But I will transfer this fund to you this evening.”.
59.3 At 7:27 PM Mr Wang sent Mr Hou a message saying (per Exhibit 3 translation): “Steve: Good evening! Thank you for the trust, understanding and support! Let’s continue to work together in a pleasant atmosphere to create the perfect Sweet Lu.”.
59.4 At 7:34 PM Mr Hou left a voice message for Robin saying (per exhibit E): “hello Robin. I just arrived home now. I will transfer you $45,000 when I get home. There is a limit of transfer. I will transfer you the balance tomorrow morning.”.
59.5 At 9:36 PM Mr Hou sent a message to Mr Wang saying (per Exhibit 3) “Yes, Teacher Wang, thank you for your blessing. I believe our early communication and detailed preparations will definitely be of great help to the subsequent work.”
59.6 At 9:41 PM Mr Wang sent Mr Hou a message saying (per exhibit D): “It’s going to be very helpful. Xiao Lu has told me that the payment for the construction from you has been received. Thank you for your trust and support!”.
59.7 Mr Hou replied to Mr Wang: “Thank you, Mr Wang for letting me know. We will complete the work perfectly.”.
59.8 At 9:56 PM Mr Wang sent Mr Hou message, which commenced: “Have informed ‘Sweet Lu’ construction group to assemble at the factory tomorrow morning to start processing work. We’ll come back to the site Monday morning …”.
59.9 Mr Hou replied to Mr Wang: “Thank you, Mr Wang, for your great support and arrangement …”, and asking Mr Wang if Robin could be there in the morning to open the door for someone sent by the landlord to make some measurements.
59.10 At 10:06 PM Mr Wang replied to Mr Hou: “OK. I will arrange Xiao Lu to wait for the landlord on site at 10 o’clock. He can also bring along some semi-products that have been processed. You don’t need to come over. Keep in touch.”.
59.11 Mr Hou replied to Mr Wang: “Great. Thank you, Mr Wang, for the arrangement. If inconvenient, I am ok. Don’t stay up too late. Good night.”.
59.12 At 10:12 PM Mr Wang sent a message to Mr Hou: “don’t mention it. Rest assured and do other work. When it is done, Xiao Lu will report to you the details of the work.”.
59.13 At 10:20 PM Mr Hou sent a message to Mr Wang: “You are so supportive, Mr Wang.”.
59.14 At 10:25 PM Mr Wang sent a message to Mr Hou: “This is what I am supposed to do.”.
60. I infer from the messages exchanged late on 19 March 2020 that when Mr Hou is referring to “Robin” and Mr Wang is referring to “Xiao Lu” they are referring to the same person who is also known as Yibin Lu.
61. On 20 March 2020 Mr Hou sent Robin a message at 7:39 AM (CB 634) saying “Good morning, Robin. Transfer is done, 7.5w (75,000) in total”.
Some other relevant contemporaneous documents
62. There were a number of messages exchanged on 19 and 20 March about payment and receipt of money. I have underlined the relevant entries. Contemporaneous banking records in evidence bear out what is stated in the messages. The banking records show, and it is common ground, that Sweet Lu transferred $45,000 to Wonderful Ornamentation on 19 March 2020 and a further $23,500 the next day.
63. Those 2 payments add up to $68,500. The reference in Mr Hou’s message to Robin of 20 March 2020 of a transfer of $75,000 in total is clearly a reference to those 2 payments together with the 2 earlier payments that had been made on 2 March ($3000) and 16 March ($3500). Those 4 payments add up to a total of $75,000.
64. It is relevant to recognise that under the terms of the written contract, on every version, the price was to be paid in instalments of 15% upon signing the contract and a further 20% 2 weeks after. Bearing in mind that the contract was first signed on 2 March 2020, 2 weeks after would be 17 March 2020. On that basis, under the terms of the written contract 35% of the contract price would have been due as at 17 March 2020. With a contract price of $220,000 inclusive of GST, 35% would be $77,000. The total of the actual payments made by Sweet Lu ($75,000) is remarkably close to that figure.
Further affidavit and oral evidence
65. Apart from the affidavit evidence I have set out above in relation to the alleged oral agreement of 17 March 2020, neither Mr Wang nor Mr Hou say that they had any conversations in person or on the telephone during the relevant period except for one conversation set out by Mr Wang in his affidavit of 1 August 2022 at paragraph 38. He said this conversation occurred on 19 March 2020. He does not say whether the conversation occurred on the phone or in person. Mr Hou does not address it in his affidavit. Otherwise, the communications between Mr Wang and Mr Hou are contained in the contemporaneous WeChat records I have already set out or referred to in detail.
66. The WeChat records show that the version of the updated quotation Sweet Lu relies upon was sent by Robin to Mr Hou as a PDF document at 2:14 PM on 18 March 2020.
67. Mr Wang gave oral evidence that Wonderful Ornamentation had a company rule that all contracts to external parties must be sent by directors or the shareholder of the company. Mr Wang said that it was against the company rule for Robin to send the contract because, whilst he was the project manager for the job, he was not a director.
68. Mr Quifeng Zhu, also known as Elton, one of the other directors of Wonderful Ornamentation, gave oral evidence. He did not give evidence of the “company rule” described by Mr Wang.
69. Neither side called Robin to give evidence as a witness in the proceedings. Mr Zhu said that in 2020, Robin was one of 3 project managers out of 28 employees of Wonderful Ornamentation. Mr Zhu said that Robin stopped being an employee of Wonderful Ornamentation around the end of October 2020. Mr Zhu gave some details of the circumstances in which Robin resigned, which it is unnecessary to recount in this judgment. The exhibit to Mr Wang’s first affidavit includes a number of records of WeChat communications between Robin and Mr Hou. Mr Zhu gave evidence that in preparing the exhibit he had communications with Robin and was able to get many documents from him, and that Robin had been cooperative. Mr Zhu had asked Robin to provide site photos and WeChat conversations. Mr Zhu said he had spoken to Robin about providing an affidavit, and he thought Wonderful Ornamentation had a draft copy of an affidavit from Robin. Mr Zhu said he did not talk to Robin about asking him to come to court.
My analysis and findings ~ alleged oral agreement 17 March 2024
70. In closing submissions, Sweet Lu submitted that the oral agreement was that monies were only required to be paid as demanded by the plaintiff in tandem with the progress of the works. This is probably materially the same as the agreement pleaded in its defence, which I have already referred to.
71. In any event, the critical question here is whether I should accept Mr Hou’s evidence of what he said was discussed in the telephone conversation he had with Mr Wang on 17 March 2020 (which I set out earlier).
72. I cannot place too much weight on Mr Wang’s denial of the conversation. He demonstrated in his oral evidence that he did not have a good memory for conversations.
73. However, I need to test Mr Hou’s evidence of the conversation as far as possible against contemporary materials, objectively established facts and the apparent logic of events (: Fox v Percy (2003) 214 CLR 118 at [31] per Gleeson CJ, Gummow and Kirby JJ).
74. The first, and in my view, most important consideration is that the account Mr Hou gives of the conversation is directly contradicted by the contemporaneous WeChat messages Mr Hou and Mr Wang exchanged on 17 March 2020 at 6.06 PM (the 7th message) and at 8:33 PM. I have already set these out and highlighted some of the relevant parts. Those messages show that Mr Hou asked Mr Wang if they could change the payment terms in the written document – he suggested paying $120,000 before the work was finished. Mr Wang insisted on the written payment terms. He explained that if the payments were to be delayed or postponed, then Mr Hou would need to give a personal guarantee which would need to be drafted by a lawyer and include specific payment times and methods. Mr Hou responded, not by offering to provide a personal guarantee, but by saying that “the matter regarding payment is understood” or “the payment terms are understood”.
75. Not only does this exchange of WeChat messages directly contradict Mr Hou’s evidence of the conversation, showing that his proposal to change the terms of payment was rebuffed, but it shows that he was putting forward a different proposal about payment at the time. His suggestion in the WeChat exchange was to pay $120,000 before the work was finished, not “just pay as we go… whatever Robin asks me to pay as the work progresses” as he says in his affidavit.
76. Having regard to the way in which the parties were communicating by WeChat, if the proposal was as Mr Hou says it was in his evidence of the conversation, one would expect to find it recorded in the WeChat messages, but it is not.
77. Further, it is unlikely that the parties would agree orally and not record it in writing when they had taken such care to document the original agreement and were in the process of documenting the variation.
78. Finally, bearing in mind that the parties had not dealt with one another before, it is unlikely that they would have sufficient trust to agree orally on such an important matter as payment for the work, without recording it, at the same time knowing that it contradicted the written agreement they had signed and were going to sign.
79. For all those reasons I am unable to accept Mr Hou’s evidence of the conversation.
80. I am not satisfied that there was an oral agreement on 17 March 2020 about payment as alleged by Sweet Lu.
My analysis and findings ~ the version of the amended written quotation or offer the parties adopted
81. As I have mentioned already, it is common ground that the parties varied the contract by 19 March 2020. What is in issue is whether they did so by reference to the version of the updated written quotation advocated by Wonderful Ornamentation or the version put forward by Sweet Lu.
82. In addressing that question, it is necessary to look at all of the communications of the parties objectively, from start to finish. When doing that, “What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe”: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [2004] HCA 52 at paragraph [40].
83. Once all of the contemporaneous communications passing between the parties are laid out in full in their chronological sequence, it can be seen that the parties adopted the version put forward by Sweet Lu. I have set out those communications earlier and referred to other objectively ascertained facts in the chronological sequence.
84. They show, by way of summary, that the process started with Mr Wang sending Wonderful Ornamentation’s version (i.e. the one it is saying was ultimately adopted) to Mr Hou; Mr Wang and Mr Hou then discussed (by way of exchange of WeChat messages) making changes to Wonderful Ornamentation’s version; by 8.38 PM on 17 March 2020 the stage had been reached where it was proposed to make some changes to the quotation but not others and Mr Wang said he would arrange for the quotation to be changed the next morning and send it to Mr Hou; the next morning, Robin sent Mr Hou a new different version of the updated quotation (i.e. the one Sweet Lu says the parties adopted); later that day Mr Hou told Robin that he had received the document but had not had time to read it yet; the next day Mr Hou referred to “the contract Robin sent to (him) yesterday” and told Mr Wang, and Robin, that he will transfer the money; Mr Hou transferred the money, which as I have explained earlier was a sum of $68,500, bringing the total payments made to that date to $75,000 which is remarkably close to the 35% stated in the written quotation; Mr Wang told Mr Hou that Robin had told him that “the payment for the construction from you has been received” and Mr Wang thanked Mr Hou for his “trust and support”; Mr Wang then made arrangements for work to commence the next morning in the factory.
85. I am fortified in reaching this conclusion by the fact that Robin was an active participant in these events and Wonderful Ornamentation failed to call him as a witness. I infer that Robin’s evidence would not have assisted Wonderful Ornamentation’s case: Jones v Dunkel (1959) 101 CLR 298 at 308, 312, 320-321; Kuhl v Zurich Financial Services (2011) 234 CLR 361 at 384-385 [63]-[64].
86. In my view, it is not necessary to analyse the parties’ words and conduct with a view to considering whether there was an offer and acceptance leading to the formation of a contract because it is admitted on the pleadings and common ground that they did in fact enter into a contract, or technically agreed to vary their existing contract; what is in issue, as I have already said, is on what terms they did so. The resolution of that issue emerges very clearly from their words and conduct for the reasons I have already given.
87. To the extent it may be necessary to analyse the position in terms of offer and acceptance, I accept and embrace the analysis of the evidence set out by Mr Macauley, counsel for Sweet Lu, at paragraphs 38 to 40 of the Defendant’s Closing Submissions.
88. The submissions of counsel for Wonderful Ornamentation, who also sought to analyse the matter in terms of offer and acceptance, failed to have regard to all of the contemporaneous communications and conduct from start to finish. It is clear that the communications started with Mr Wang sending Mr Hou Wonderful Ornamentation’s version of the amended quotation on 17 March 2020 and ended with Robin confirming to Mr Wang that the payment had been made and Mr Wang telling Mr Hou that the construction group would assemble at the factory in the morning to start processing the work.
89. For those reasons, I find that when the parties varied their contract they adopted the version of the updated written quotation put forward by Sweet Lu. For the avoidance of any doubt, that is the version at pages 600 to 612 of the Court Book.
G. Is there a debt due to Wonderful Ornamentation by Sweet Lu for the unpaid balance of payments A, B, C, D and E in clause 4 of the “Rules and regulations” of the written contract?
The facts
90. The contract provided for the payment of the price by instalments. Each of the first 5 instalments (A, B, C, D & E) was payable upon the occurrence of an event, as opposed to the performance of any particular work or the completion of any particular stage of the work.
91. The first payment of 15% was payable upon signing the contract. The next payment of 20% was payable within 2 weeks of starting on site work or starting the construction. The next payment of 20% was payable within 4 weeks of starting, the next payment of 20% within 6 weeks, the next payment of 20% within 8 weeks.
92. The sixth and final payment of 5% (F) was different. It was payable “when (Wonderful Ornamentation) completes all work related to the contract, and delivers the OC to the store owner”.
93. The contract was first signed on 2 March 2020, and then varied on or about 18 March 2020. It is common ground, as I have already said, that construction started on 2 March 2020.
94. It is also common ground that Wonderful Ornamentation had not completed all work related to the contract when it suspended work on 7 October 2020.
95. Mr Hou set out in his affidavit of 20 May 2023 (paragraph 127) the work that had not been completed when Wonderful Ornamentation stopped work. Mr Wang did not respond to this, nor was it challenged in cross-examination. I therefore accept Mr Hou’s evidence on this aspect. Evidence of the work that had not been completed is also provided by the minutes of meeting taken by Robin on 6 October 2020 (CB430-431).
96. Mr Wang gave evidence in cross-examination that in his opinion Wonderful Ornamentation had completed 95% of the work, but I am unable to accept that evidence because it was a bald statement without any reasoning or reference to objective records.
My analysis
97. The parties invited the court to determine Wonderful Ornamentation’s contractual rights by reference to principles referred to in case law and general commentary about “entire contracts” and “substantial performance”. In my view, in the circumstances of this case, attempting to start there and fit the facts within those principles is not very helpful.
98. One obviously has to start with the terms of the contract in this particular case.
99. The contract provided that the first instalment was payable upon the signing of the contract. The next 4 instalments were payable by the effluxion of time. Once the contract had been signed and the time for each payment had passed, there was, in my view, an accrued right to receive the payment which had become a debt due under the terms of the contract. Although the accrued right to receive payment of the debt arises out of the contractual obligation to pay, it does not represent a claim for damages for breach of contract. See Mann v Patterson Constructions Pty Ltd (2019) 267 CLR 560, [2019] HCA 32 at [10] (Kiefel CJ, Bell & Keane JJ), [42] (Gageler J) and [176] (Nettle, Gordon & Edelman JJ); “Chitty on Contracts” (35th edition, 2023) at paragraph 30-010.
100. By the time 8 weeks had passed from the time it started the work on 2 March 2020, Wonderful Ornamentation had an accrued right to receive payment of the first 5 instalments, and, if necessary, recover any shortfall in payment as a debt due. On my calculations, the 8 weeks passed on 28 April 2020. The first 5 instalments represented payment of 95% of the price, that is to say $209,000. By 12 August 2020, Sweet Lu had paid instalments totalling $130,000. The shortfall at that point was $79,000.
101. Under the terms of the contract, the final instalment of 5% has not fallen due because Wonderful Ornamentation did not “complete all work related to the contract” and did not “deliver the OC to the store owner”.
102. The question arises whether Wonderful Ornamentation retains the right to recover the balance of the due but unpaid instalments as a debt ($79,000), or whether it has lost the right because it did not complete the contract. In my view, the answer to this question is not supplied by attempting to analyse and apply the “entire contract” or “substantial performance” cases, but by an application of the principles considered by the High Court in Baltic Shipping Company v Dillon (1993) 176 CLR 344.
103. In Baltic Shipping, Ms Dillon had paid the full price of her fare before embarking upon her ill-fated voyage on the “Mikhail Lermontov”. The cruise commenced in Sydney on 7 February 1986 and was scheduled to end there on 21 February, however on 16 February the ship struck a shoal off the coast of New Zealand, was holed and sank. Ms Dillon had paid the full price for her cruise but it had not been completed.
104. The lower courts accepted that Ms Dillon was entitled to a full refund because there had been a total failure of consideration. The High Court rejected that conclusion because the failure of consideration was partial and not total, essentially because Ms Dillon had already enjoyed part of the cruise before the ship sank. However a number of members of the Court also considered the principles to be applied, as a matter of contract law, when the price under a contract has been paid in advance of receiving performance.
105. Under those principles, the right of one party to retain money paid in advance may be conditional upon that party’s performance of their obligations under the contract: Mason CJ (176 CLR at 351-353), Brennan J (at 367) and Toohey J (at 383) agreeing with Mason CJ, Gaudron J (at 385) and McHugh J (at 388, 391-393).
106. Mason CJ put the principle this way (176 CLR at 351):
An alternative basis for the recovery of money paid in advance pursuant to a contract in expectation of the receipt of the consideration to be provided by the defendant may arise when the defendant's right to retain the payment is conditional upon performance of his or her obligations under the contract. This basis of recovery has a superficial, but not a close, resemblance to the concept of an entire contract. In this class of case the plaintiff may be entitled to recover so long as the payment remains conditional.
107. And (176 CLR at 352-353), omitting the citation:
The question whether an advance payment, not being a deposit or earnest of performance, is absolute or conditional is one of construction. In determining that question it is material to ascertain whether the payee is required by the contract to perform work and incur expense before completing this performance of his or her obligations under the contract. If the payee is so required then, unless the contract manifests a contrary intention, it would be unreasonable to hold that the payee's right to retain the payment is conditional upon performance of the contractual obligations.
108. In discussing the same principles, McHugh J differentiated between a conditional payment and one that “should be regarded as having been made unconditionally, or no longer the subject of a condition, if the payee has performed work or services or incurred expense prior to the completion of the contract” (176 CLR at 391).
109. Gaudron J stated the principle as (176 CLR at 385): “Quite apart from entire contracts, the parties may provide, expressly or impliedly, that the obligation to pay or the right to retain moneys paid in advance is conditional upon completion of the contract.”. It is significant that her Honour expressed the principle in terms of both “the obligation to pay” and the “right to retain” money.
110. In the first passage above, Mason CJ said that this basis of recovery has a superficial, but not close, resemblance to the concept of an entire contract. Gaudron J said much the same (176 CLR at 386). McHugh J was a little more expansive. His Honour said that focusing on the question of whether the contract was “an entire contract” was not the real issue to address. His Honour said (176 CLR at 393):
If no advance payment had been required, and Baltic had sued to recover the whole of the fare notwithstanding the sinking of the "Mikhail Lermontov", the question whether the contract was an entire one would have had relevance. If the contract was characterized as an entire contract, Baltic would not have been able to recover the price of the fare. But where a payment is made in advance of the completion of a contract, the critical issue is the reason or basis for the payment and not whether the contract was an entire one. A finding that a contract is an entire contract does not necessarily mean that an advance payment is recoverable. Conversely, a finding that a contract is not an entire contract does not necessarily mean that an advance payment is irrecoverable.
111. On the facts, Mason CJ was of the view that there was not an acceptable foundation for holding that the advance payment of the cruise fare created in the appellant no more than a right to retain the payment conditional upon its complete performance of its entire obligations under the contract. It was significant that the contract called for performance by the appellant of its contractual obligations from the very commencement of the voyage and continuously thereafter. His Honour said that the advance payment should be regarded as the provision of consideration for each and every substantial benefit expected under the contract (176 CLR at 353).
112. Once again, McHugh J was a little more expansive in his elaboration of the principles, referring to the decision of the House of Lords in Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129, [1980] 2 All ER 29 by way of illustration, and the application of those principles to the facts. I will not repeat what His Honour said other than the general rule. His Honour put it this way (at 391):
Whether or not a payment is the subject of a condition at the time a contract is discharged depends upon the express and implied terms of the contract. As a general rule, however, absent an indication to the contrary, a payment, made otherwise than to obtain the title to land or goods, should be regarded as having been made unconditionally, or no longer the subject of a condition, if the payee has performed work or services or incurred expense prior to the completion of the contract. If the payment has been made before the work has been performed or expense incurred, it should be regarded as becoming unconditional once work is performed or expense incurred. In that situation, the advance payment is ordinarily made in order to provide a fund from which the payee can meet the cost of performing the work or services or meeting the expenditure incurred or to be incurred before the completion of the contract.
113. Applying those principles to the facts, under the contract Sweet Lu was required to pay the first instalment upon signing the contract, before Wonderful Ornamentation had undertaken any work. This payment was undoubtedly paid in advance. None of the subsequent 4 instalments were tied to or conditioned upon Wonderful Ornamentation undertaking any specific work. No doubt it was anticipated that some or all of the subsequent 4 instalments would be paid in advance of work being done. It is clear, however, that Wonderful Ornamentation was required to perform work and incur expense before completing the contract. In my view it can fairly be said that the purpose of paying the instalments, or being obliged to pay the instalments, was to provide a fund to enable Wonderful Ornamentation to meet the cost of providing benefits associated with the contract without the necessity of using its working capital to meet the outgoings involved. There is no indication in the contract that the instalments were conditional on Wonderful Ornamentation’s performance of its obligations under the contract. In those circumstances, Wonderful Ornamentation’s entitlement to receive or retain the instalment payments was not conditional upon performance of its obligations under the contract.
114. It follows, in my view, that Wonderful Ornamentation has not lost the accrued right to recover the shortfall in the due and unpaid instalments (i.e. $79,000) because it did not complete the work. I find that it is entitled to this sum as a debt payable under the contract.
115. However, at the same time, Sweet Lu’s remedy in respect of Wonderful Ornamentation’s non-performance of its promise to complete the work is an action for damages for breach of contract: Baltic Shipping at 389, 390 and 392 (per McHugh J), at 387 (per Gaudron J). The measure of the damages is the difference in value between what was promised and what was provided: Baltic Shipping at 377 (per Deane and Dawson JJ), and at 387 (per Gaudron J).
116. Or as it was put in Hoenig v Isaacs [1952] 2 All ER 176, the measure is the amount which the work is worth less by reason of the defects and omissions, and is usually calculated by the cost of making them good (at 181 per Lord Denning).
H. Is Sweet Lu entitled to damages for the cost of completing the work and rectifying defects? If so, how much?
117. Sweet Lu claims damages for Wonderful Ornamentation’s failure to perform and to complete the work in accordance with the contract.
118. This is the sort of claim identified by McHugh J in Baltic Shipping (at 47) as the remedy for breach of contract for non-performance of the promise. See too Gaudron J at 387. The measure of the damages is the difference in value between what was promised and what was provided: Baltic Shipping at 377 (per Deane and Dawson JJ), and at 387 (per Gaudron J).
119. It is what in Hoenig v Isaacs [1952] 2 All ER 176 (at 181) Lord Denning called “a cross-claim for defects and omissions” where “the measure is the amount which the work is worth less by reason of the defects and omissions, and is usually calculated by the cost of making them good”.
120. Counsel for Sweet Lu quoted the well-known passage in Bellgrove v Eldridge (1954) 90 CLR 613 at 617 (per Dixon CJ, Webb & Taylor JJ) about the measure of loss:
“In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building of her land which is substantially in accordance with the contract.”
121. As a matter of general principle, on a claim for damages for failure to complete building works in the manner required by the contract, the measure of damages recoverable is the cost to the owner of completion of the work less any amount that would have been payable to the builder had it complied with its obligations under the contract: Mertens v Home Freeholds Company [1921] 2 KB 526 per Lord Sterndale MR at 535. Bathurst CJ (Macfarlan and Meagher JJA agreeing) referred to this statement of principle as uncontroversial in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd (2013) 29 BCL 329, [2012] NSWCA 184 at [202].
122. Sweet Lu breaks its claim down into 3 parts. The first is what I referred to earlier as the cost of the work done by different companies and tradesmen between 13 October 2020 on 6 December 2020 to complete the unfinished work and to rectify defects in the work Wonderful Ornamentation actually did, or as it is described in the cross-claim, the costs of engaging a further shop fitter to complete the fit-out and remedial works necessary to enable the shop to commence trading. The second part is for the cost of work not yet done to rectify further defects in the work Wonderful Ornamentation actually did. The third is the costs and expenses incurred caused by an overflowing grease trap in February 2022.
Part 1 – the claim for work already undertaken
123. Sweet Lu claims $51,269 for the cost of work already undertaken. This sum is in turn broken down into 6 separate components. I will deal with each one in turn.
Multione Construction Pty Ltd ($37,780)
124. This claim is for the $37,780 Sweet Lu paid to Multione for work it did between 13 October and 6 December 2020 to enable Sweet Lu to obtain a final occupation certificate and commence trading.
125. Multione had provided a “defects” report to Sweet Lu on 13 October 2020. The report consisted of a series of photos and brief commentary. Whilst the commentary was not admitted as the truth of what was stated, it did describe work that Multione considered needed to be done to rectify, and in some respects finish, work already undertaken by Wonderful Ornamentation.
126. Having obtained the “defects” report from Multione, Sweet Lu then engaged Multione to undertake the work.
127. Much of the work that Multione did, and did not do, was identified by Mr Hou in paragraph 127 of his affidavit, which I accept for reasons I have already given. He said:
When Wonderful Ornamentation stopped work, they had not completed the following:
a. Hidden LED light strips between kitchen tiles and ceiling - clause 3.8 of the Updated Contract. (Sweet Lu did not eventually complete this item as it was not essential for shop opening.)
b. Incomplete kitchen tiles (one kitchen wall was not tiled. Sweet Lu did not eventually complete this work.)
c. Install flat hinged doors in toilets - clause 3.9 of Updated Contract (Sweet Lu did not eventually complete this work.)
d. Electric water pump for in lift area - clause 5.3 of Updated Contract. (MultiOne completed this work)
e. Installation of CCTV equipment - clause 6.3 of Updated Contract.
f. Installation of speakers - clause 6.4 of Updated Contract.
g. Incorrect and incomplete heated dessert display cabinet - clauses 7.1 and 9 .6 of Updated Contract (The incorrect front glass panel installed by Wonderful Ornamentation was removed and new glass panel ordered and installed by Chris Glass . Chris Glass also fixed the uneven installation by Wonderful Ornamentation as set out in paragraph 120 of my affidavit above).
h. Unfinished banquette seat - clause 7.3 of Updated Contract. (As a temporary measure and in order to save time for the Retail Shop to open for trade, MultiOne fixed the replacement metal frame, cut down pieces of floor tiles to make a seating bench and installed tiles into the metal frame to make up the right section of the seat. To date, this banquette seat has not been properly rectified) .
i. Display shelf on wall facing kitchen - clause 7.6 of Updated Contract. (MultiOne completed this work).
j . Painted hinged wooden door - clause 8.3 of the Updated Contract (MultiOne completed this work).
k. Workbench with single zinc sink - clause 9.3 of the Updated Contract (MultiOne completed this work).
I. Site cleaning and approval paperwork - clause 1 0 and 11 of Updated Contract (I obtained the various certificates after work completed and MultiOne lodged and obtained the final occupation certificate).
128. The “Updated Contract” Mr Hou refers to is the one that I have found the parties adopted when they varied the contract.
129. In paragraph g, Mr Hou referred to what he had set out at paragraph 120 of his affidavit. He said there, which I accept:
The dessert display cabinet was finally installed on about 25 September 2020. However the cabinet did not have glass sliding doors as required and was also missing the top glass panel. The cabinet was also installed incorrectly such that the curvature of the glass panel was not in line with the curvature of the supporting benchtop . At pages 346 - 347 of exhibit TH-1 are two photos I took of the installed glass cabinet which I measured the distance from the glass cabinet to the edge of the benchtop. As is evident from the photos, the distance at one point of the cabinet to the edge of the benchtop is around 5.6cm and at the end of the cabinet to the edge of the benchtop is around 7.6cm.
130. Wonderful Ornamentation submitted that because the contract between Multione and Sweet Lu is not in evidence, all the court knows is that they were paid a certain amount but not what work they were paid for.
131. In response Sweet Lu accepted that the Multione contract was not in evidence, but there is a “defects” report and the Multione invoices. Sweet Lu submitted that in circumstances where Sweet Lu was seeking to finish the shop, got someone to identify the outstanding work and then gets the same person to undertake the work the court would infer the money expended was spent on addressing the issues identified.
132. There was some evidence from Mr Hou about the work Multione actually did. I have set it out above (from paragraphs 127 and 120 of his affidavit).
133. Some of the invoices also provide some information: “patching of shopfront”, “replace skirting to bronze skirting”, “OC collection”.
134. Having regard to that other evidence, as well as the facts referred to by Sweet Lu, I am satisfied that the work carried out and invoiced by Multione was undertaken to rectify defects in the work previously done by Wonderful Ornamentation and to otherwise complete work that Wonderful Ornamentation had promised to do under the varied contract.
135. Wonderful Ornamentation submitted that it was necessary to apportion the Multione costs between work done to rectify defects in Wonderful Ornamentation’s work and work done to complete the work Wonderful Ornamentation had promised to do.
136. It submitted that Sweet Lu is not entitled to damages for completion because it had repudiated the contract. It submitted that Sweet Lu could only lump together the cost of completion and the cost of defects only if demonstrated that this is an entire contract as a set off. It submitted that it was not an entire contract, that it was entitled to a claim in debt under the contract, then Sweet Lu is only entitled to the defects in the work that Wonderful Ornamentation had done, not its costs to complete.
137. Unfortunately I do not have the benefit of a response from Sweet Lu because these are the submissions that I referred to earlier as being made in oral submissions in reply in the dying minutes of the hearing.
138. I do not accept those submissions for the following reasons.
139. First, they are based on the proposition that because Sweet Lu repudiated the contract the contract came to an end for Sweet Lu’s wrongful conduct. As I have explained earlier, a repudiation does not bring the contract to an end automatically. The contract stays on foot until the innocent party elects to terminate it. Wonderful Ornamentation has not sought to plead or prove that it did that. It has not pleaded that it terminated the contract at all. The allegation of repudiation in the pleading therefore went nowhere. In my view it is not open for me to make a finding that the contract came to an end because of Sweet Lu’s wrongful conduct, in light of the way the case has been pleaded and conducted.
140. Secondly, if the contract was not terminated, then Wonderful Ornamentation failed to perform its promise to undertake the work, and finish it, in accordance with the varied contract. In those circumstances Sweet Lu is entitled to bring a claim for breach of contract for non-performance of the promise (as it was put by McHugh J in Baltic Shipping) or for omissions and defects (as it was put by Lord Denning in Hoenig) or to have a result that is “substantially in accordance with the contract” (as put in Bellgrove). In those circumstances there is no need to differentiate between what were omissions and what were defects.
141. Thirdly, in effect Wonderful Ornamentation is saying in this submission that it can have 95% of the price paid to it as a debt, and perhaps have an allowance in its favour for 100% of the price because Sweet Lu is claiming damages, but that it does not have to make any allowance or give any credit itself for the work it left unfinished and did not do. As a matter of general principle if the builder is to be paid the full price it must make some allowance to the owner for the cost of finishing the work it promised to do but did not. Otherwise the builder is being put in a better position than if the contract had been performed, or is taking the full benefit of the contract without having to bear its full burden.
142. For those reasons I find that Sweet Lu is entitled to damages in the sum claimed for the cost of the work done by Multione, $37,780.
L Y Electrical and Data Services ($2,820)
143. According to the invoice dated 6 November 2020, this work was for “electrical shop fittings work” at the shop. According to Mr Hou, as for the other items in this part of the claim, it was done to rectify some of the remaining defects and complete some of the unfinished works so as to enable Sweet Lu to commence trading. Sweet Lu submitted that it was work required to be done under clauses 6.1 and 6.2 of the varied contract.
144. The amount claimed does not seem to be in issue.
145. I therefore allow the full amount claimed, $2,820.
8light LED Specialists ($1,045)
146. According to the invoice dated 29 October 2020 this was for 34 LED downlights. According to Mr Hou it was to supply and install them.
147. Sweet Lu submitted that it was required to be done under clauses 6.2 and 6.5 of the varied contract.
148. The amount claimed does not seem to be in issue.
149. I therefore allow the full amount claimed, $1,045.
Chris’ Glass & Glazing ($5324)
150. This claim is contentious.
151. According to the invoice dated 13 December 2020, this was for the cost of supplying and installing a “curved glass counter display. The glass is in 10mm toughened and laminated starfire glass with polished edges, and silicone sealed to the bench. Size 260mmH x 2500mmG x 650mmD” and supplying and installing “free standing curved glass in 10mm starfire toughened polished edges 260mm x 1004mmG”.
152. Mr Hou describes the work Chris’ Glass & Glazing did in some detail in the sub-paragraph g. of paragraph 127 of his affidavit and paragarph 120, both of which I have set out above.
153. Counsel for Sweet Lu dealt with this claim in his written closing submissions at paragraphs 142 and 143.
154. As I understand it, counsel for Wonderful Ornamentation responds at paragraphs 70 to 74 of her written closing submissions.
155. Clause 7.1 of the varied contract stipulated “colourless white glass”. In their discussions, as recorded in the minutes of a meeting of 26 August 2020, the parties appear to have referred to it as “ultra-white glass”.
156. Sweet Lu complained that the curved glass installed by Wonderful Ornamentation was not colourless, colourless white or ultra-white, but that the glass had a green hue. That certainly appears to be case on the photos I was taken to, including the 2 referred to in Ms Lim’s submissions for Wonderful Ornamentation - the photos at CB847 and CB849. She submitted that the hue was only on the edge of the glass, and the glass was clear and transparent when considered from a normal viewing angle. I am unable to accept the submission that the glass Wonderful Ornamentation installed did not have a green hue. The green hue in the glass is shown in the photos. Regardless of whether there is a difference between colourless white, ultra-white or starfire, the glass was not meant to be green. On that basis, I find that it did not comply with the contract.
157. Sweet Lu also complained that the curved glass was in 2 pieces, instead of being in a single piece. That it was in 2 pieces is shown clearly in the photo at CB 849, and even more clearly in the one at CB367, taken by Mr Wang on 11 August 2020 – which also shows a green hue. Sweet Lu submits that the contractual obligation to supply and install a single piece comes from the drawings because under clause 7.1 “the location, materials and craftsmanship shall follow the drawings”. Sweet Lu relied in particular on the document at CB237, which shows a computer generated image. It is stated to be “Render Image 03”, “Drawing Number 102” and to have the “Drawing Status: FOR CONSTRUCTION”. It is shown again in “Render Image 02” at CB236.
158. Wonderful Ornamentation submitted that these render images did not have any contractual status and were not “drawings” for the purposes of the contract. I am unable to accept that submission. Although they include computer generated images they are unambiguously described as drawings on their face. They are what Mr Wang himself described as “conceptual design drawings” in his WeChat message of 19 February 2020.
159. Otherwise, I accept Sweet Lu’s submissions in relation to this claim.
160. I therefore allow the full amount claimed, $5,324.
Dai ($3,300)
161. This claim is for floor levelling and polishing.
162. Sweet Lu submits that the work was required to be done under clauses 3.4B, 3.4C and 3.4D of the varied contract. Clause 3.4B seems particularly relevant. It refers to “levelling the floor with cement bonded sand”.
163. The amount claimed does not seem to be in issue.
164. I therefore allow the full amount claimed, $3,300.
Dai ($1,000)
165. This claim is for kitchen tile cleaning and Sweet Lu submits that the work was required to be done under clause 10 which provided “Cleaning work after the project is done”.
166. There does not seem to be any issue about the amount claimed. I allow it in full, $1,000.
Part 2 – the claim for rectification work not yet done
167. There are 4 items claimed in respect of this work. They are set out in the table at paragraph 145 of Sweet Lu’s written closing submissions with references there to the parties’ expert evidence on each claim. Sweet Lu relied upon the expert evidence of Mr Bruce Frizzell of Tyrells Building Advisory. He inspected the premises on 23 February 2022 and provided a report on 3 May 2022. Wonderful Ornamentation relied upon the expert evidence of Mr Gordon Xue of Jim’s Building Inspections. He inspected the property on 26 September 2022 and provided a report on 22 May 2023. Mr Frizzell and Mr Xue gave concurrent oral evidence at the hearing.
168. I will deal with each of the 4 claims in turn.
Kitchen door rectification
169. Sweet Lu submitted that the contract required the kitchen door to seamlessly integrate with the surrounding wall, with no handle on its exterior or visible hinges. Clause 3.2 of the contract provided for a “hinged flat door” and that clause 8.3 provided “paint hinged wooden door (the side facing the store shall have the same effect and craftsmanship as the wall surface)”. All drawings displayed the kitchen door as seamlessly integrating with the surrounding wall with no handle on its exterior or visible hinges.
170. The door Wonderful Ornamentation installed is shown in the photograph included in Mr Xue’s report (that CB 911). The photograph shows quite clearly that there are 2 visible hinges on the right-hand side at the door. In his oral evidence, Mr Xue explained that on the left-hand side the flush pull had been installed, which is also visible in the photo.
171. Wonderful Ornamentation submitted, and Mr Xue offered the opinion, that the door that had been fitted complied with the contract because the render images were “indicative only” and did not form part of the contract.
172. I have already explained why in my view the render images do form part of the contract. Further, the combination of clause 3.2, clause 8.3 together with the render images establish that the contractual requirement was that the kitchen door should seamlessly integrate with the surrounding wall with no handle (or flush pull) on its exterior or visible hinges.
173. I therefore find that the door installed by Wonderful Ornamentation did not comply with the contract.
174. Mr Frizzell and Mr Xue had a difference of opinion over what was required to rectify the defect. In Mr Frizzell’s opinion the way to comply with the contractual requirement was to use a pivot hinge. He explained that a pivot hinge is completely invisible, with a pivot in the top and the bottom allowing the door to swing either way without the need for a handle. In Mr Xue’s opinion it was appropriate to use concealed hinges. However he explained that even using “concealed” hinges, the knuckles of the hinges would still be visible. Presumably using his method it would still be necessary to have a handle or flush pull.
175. In my view, the solution offered by Mr Xue would still not comply with the contract. I accept that Mr Frizzell’s solution is the more appropriate alternative.
176. I find that Sweet Lu is entitled to the amount claimed as quantified by Mr Frizzell, being $1,890.
Rectifying finishes, joints and trims
177. Clause 3G of the contract required Wonderful Ornamentation to “make 2 windows on the curved wall of the kitchen (location, size, and modelling shall follow the drawings)”. The drawing stipulated that there was to be “new antique brass panel around the opening window edge”. The material schedule stipulated that the skirting/edging/wall edge should be finished with “337 aged brass panel” supplied by that metal company with a note “please provide the sample to designer for confirmation”.
178. The expert evidence established, which emerged most clearly during their oral evidence, that the trim installed by Wonderful Ornamentation was made of 2 materials. The middle strip of the trim, according to Mr Xue, was made of aluminium. Mr Frizzell was not so sure. He had been instructed that it was made of wood, and thought as much when he carried out his inspection. Mr Xue was of the very firm view that the 2 strips either side of the middle strip were made of painted plastic. Mr Frizzell said that he was instructed it was timber, but agreed that it could be plastic.
179. Both experts agreed that neither of the materials were antique brass.
180. Wonderful Ornamentation made no attempt to prove, whether by testimonial or documentary evidence, that it had used the material stipulated in the material schedule.
181. In any event, it is clear that the contract did not provide for the use of painted plastic.
182. I therefore find that the trim that Wonderful Ornamentation installed did not comply with the contract.
183. In his report, Mr Xue allowed for patching and touch-up of the trim, whilst Mr Frizzell said that it should be removed and replaced.
184. In my view, Sweet Lu is entitled to have the trim removed and replaced so as to make it conform to the contract.
185. I therefore allow the amount claimed and quantified by Mr Frizzell, $6,595.
Uneven finishes to bottom of walls
186. I am not satisfied that Sweet Lu has made out an entitlement to this claim.
187. In his report Mr Frizzell states that there is a failure to comply with the contract because “as the base of the walls have an even finish visible from a normal viewing position, in my opinion the work has not been carried out with due care and skill”.
188. I accept that photographs 35 to 40 inclusive in Mr Frizzell’s report do show an uneven finish and are evidence of work being done to an unacceptable standard.
189. However, it is common ground that this work was patching and painting work undertaken by a different builder after Wonderful Ornamentation “suspended” work on 7 October 2020. It is most likely then that the work was undertaken by Multione. If Multione did not undertake the patching work properly because it should have painted the whole wall, as Mr Frizzell proposes should now be done, then Sweet Lu has a remedy against Multione, or whoever did that work without due care and skill.
190. Sweet Lu calls in aid principles about mitigation of loss. In my view questions of mitigation do not arise in the present circumstances: Having the wall completed or repaired by someone else was not an action taken in an attempt to lessen the extent of damage, which is when the principles come into play: see “McGregor on Damages” (22nd edition, 2024) at paragraph 10-004 and 10–014.
191. For those reasons I do not allow the amount claimed for rectifying finishes, joints and trims.
Blocked floor waste
192. I am not satisfied that Sweet Lu has made out an entitlement to this claim.
193. Mr Frizzell was instructed to assume that the floor waste was blocked. He did not investigate the matter himself to establish that the drain was actually blocked, or I might add that it was not draining properly. On the assumption that the drain was blocked, Mr Frizzell allowed for the cost of engaging a licensed plumber to assess the drainage and unblock the drains as required using a water jetter or similar.
194. In response, Mr Xue took the precaution of having a licensed plumber inspect the drain with a CCTV camera. Mr De Souza, plumber, carried out a CCTV inspection on 13 February 2023. He found that all drains were running and not blocked. He did find, however, that the opening to the main line is “holding a small amount of water”.
195. Mr De Souza’s observation that the drainage line was holding a small amount of water was consistent with the evidence of Mr Hou who said that he observed water in the pipe when looking down through the floor waste. His evidence was that the water accumulated in the pipe and attracted fruit flies, attracted by the foul smell. This led Mr Hou to have a plastic cover put over the floor waste. Since putting the cover on it has “improved a lot” in relation to the fruit fly problem.
196. Having regard to the investigation by Mr De Souza, Mr Xue concluded, and Wonderful Ornamentation submits, that the floor waste is not blocked, such that Sweet Lu is not entitled to the damages sought. I have to agree.
197. Counsel for Sweet Lu sought to establish in cross-examination that the floor waste may not be draining properly for some other reason, other than a blockage, for example because of the orientation of the pipes. He submitted that as both experts had accepted that a blockage could arise from these either a physical impediment or from the orientation of the pipes, it does not matter what the cause is if it is accepted that water is not draining from that floor waste in that water is accumulating and attracting fruit flies. It was submitted that the drain was not operating as required. That may well be right, but it is not the defect alleged and sought to be rectified by applying Mr Frizzell’s solution. His solution was to unblock the drain. If some other solution is required because the drain is not operating efficiently, there is no evidence before the court of what that solution may be or its cost.
198. For those reasons I do not allow the amount claimed for the blocked floor waste.
Preliminaries, builder’s margin and GST
199. Both experts agreed that a margin of 28% should be added to the above figures for preliminaries and builder’s margin, and a further 10% added to the total for GST (T130 – 131).
200. The margin and GST should therefore be added to the 2 claims I have allowed in this part of Sweet Lu’s case.
Part 3 – the claim in relation to the overflowing grease trap
201. On 18 February 2022, Mr Hou discovered waste water leaking through a wall in the shop which led to the discovery that foul looking and smelling waste had been overflowing from what was thought to have been a disused and disconnected grease trap. In order to address the issue, Sweet Lu incurred emergency plumbing fees and other expenses to unblock the drain and install the pump system. Sweet Lu claims those fees and expenses as damages for breach of contract by Wonderful Ornamentation.
202. There is no issue about the quantum of the claim. Sweet Lu claims the sum of $14,755.75, the details of which are set out in its written closing submissions, paragraph 161.
203. The following facts, relevant to the claim, are either established by my previous findings, are common ground, or established by the evidence:
203.1 Clause 5.1 of the varied contract provided that Wonderful Ornamentation was to “Supply and install 2 floor drains in the kitchen area (including the arrangement of related piping systems)”.
203.2 Clause 5.2 of the varied contract provided that Wonderful Ornamentation was to “Supply all equipment and water supply and sewerage system related to the drawings according to the requirements of the drawings. (Complete all relevant construction according to the requirements of the drawings)”.
203.3 Clause 5.3 of the varied contract provided that Wonderful Ornamentation was to “Install the electric pump provided by the store in the lift area and arrange the drainage pipe system”, “the store” being Sweet Lu.
203.4 It is the obligation under clause 5.3 that Sweet Lu relies upon most heavily. Clause 5.3 was not included in the original agreement or in the version of the varied agreement put forward by Wonderful Ornamentation.
203.5 Wonderful Ornamentation did not install an electric water pump provided by Sweet Lu in the lift area before it “suspended” work on 7 October 2020.
203.6 What Wonderful Ornamentation did was to install a grey pipe which connected directly into the grease trap. It also installed pipes for running water (shown as red and black in photographs) next to the grey pipe.
203.7 As at 20 August 2020 (when he gave an assurance by email to the landlord), Robin (Wonderful Ornamentation’s project manager for the site) was of the view that the grease pit had been emptied and there were “no active connections of any type to it”. Whether or not Wonderful Ornamentation had installed the grey pipe prior to or after this date is not disclosed on the evidence. There is no doubt, however, that the grey pipe provided a connection to the grease pit.
203.8 Whilst under the contract Wonderful Ornamentation was required to install an electric pump provided by Sweet Lu and arrange the drainage pipe system, it was not required under the contract to install a sink to be connected to that system.
203.9 Subsequently, after Wonderful Ornamentation had “suspended” work, another builder or plumber installed a sink, in the process connecting the wastewater from the sink into the grey pipe installed by Wonderful Ornamentation. That conclusion follows from the direct observations of Mr Frizzell who inspected the pipes and connections on 22 February 2022, within days of Mr Hou’s discovery. It also seems to have been accepted by Wonderful Ornamentation in closing submissions.
203.10 Over time, wastewater draining from the sink filled up the grease trap until it overflowed and was discovered by Mr Hou on 18 February 2022.
203.11 Following that discovery, the connection of the sink to the grease trap via the grey pipe was removed and in its place a pump out system was installed to the shop’s drainage system using an electric water pump, as envisioned by clause 5.3 of the contract. In the process the grey pipe was either removed entirely or cut down to floor level, and the entry point to the grease trap was capped.
204. Sweet Lu submits that under clause 5.3, Wonderful Ornamentation had the obligation to “install the electric water pump provided by the store in the lift area and arrange the drainage pipe system”. What it had to do therefore was put in the grey pipe, or perhaps a pipe, but it was then meant to do the associated drainage works to provide for that pipe, with the pump, to work so that when it was connected to a sink – to be done by someone else – it operated properly. It did not. If they had done the work they were obliged to do under the contract, the grey pipe would not have been connected to the grease pit and the entry to the grease pit would have been capped, with the result that the grease pit would not have overflowed into the shop.
205. Wonderful Ornamentation submits that whoever installed the sink to the grey pipe was responsible. It submitted that failure to comply with clause 5.3 of the contract would not lead to an action for damages against it if the contractor Sweet Lu engaged to install the sink did so incorrectly or negligently. It submitted that because the grey pipe Wonderful Ornamentation installed was so long, and therefore so high above the level of the floor, the court could infer that it was not meant to be used as a drainage pipe because it was too tall and that its purpose was to serve as an air vent for the grease trap.
206. The starting point is, and I find, that the grey pipe was not installed in accordance with the contract. There was no requirement under the contract to install an air vent to the grease trap. There was no requirement to make any connection to the grease trap at all. It was not part of Wonderful Ornamentation’s compliance with their contractual obligations “to arrange the drainage pipe system” to install a pipe connected to the grease trap. The grey pipe should never have been connected to the grease trap. It is highly likely that the grey pipe was connected to the grease trap by mistake. That seems all the more likely given what Robin told the landlord about the grease trap having been emptied and having no active connections of any type to it.
207. Considered from the point of view of causation, Wonderful Ornamentation’s installation of the grey pipe and connection of it to the grease trap created the conditions in which the plumber who installed the sink could plumb the sink into the grease trap. But for Wonderful Ornamentation installing the grey pipe, a plumber could not have used it to connect the sink to the grease trap.
208. I am not prepared to infer that the grey pipe was not meant to be used as a drainage pipe simply because it was too tall. Nor do I accept that its purpose was to serve as an air vent for the grease trap. An air vent was not required by the contract and it makes no logical sense to install an air vent to discharge foul air from a grease pit into a closed area to be used as part of the shop.
209. For those reasons I find that Sweet Lu is entitled to the amount it claims, $14,755.75.
I. Is Sweet Lu entitled to damages for Wonderful Ornamentation’s delay in doing the work? If so, how much?
210. The English translation of Clause 2 of the “rules and regulations” of the varied contract provided that:
TD will complete all the work related to the project schedule within 8 weeks after starting the construction. (Products processed in China should be delivered to the construction site two weeks before the end of the project. If it is delayed, the project will be postponed. Using the time when the product is delivered to the site, all relevant work will be completed within two weeks, including all on-site acceptance by relevant authorities).
211. This is different to the English translation of Wonderful Ornamentation’s version of the varied contract. It has been translated as:
TD is expected to complete all work relevant to the work schedule 8 weeks after the commencement of the onsite work (Products processed in China shall be delivered to the work site two weeks before the completion of the work. Had there been any delay, the project shall be delayed accordingly. Starting from the arrival of the products onsite, all relevant work shall be completed within two weeks, including all onsite checking before acceptance through relevant authorities.).
212. The English translation of Wonderful Ornamentation’s version of the varied contract is the same as the translation of the original contract.
213. As I understand it, no one suggested that anything turns on the change in wording of the English translation I have highlighted. As I understand it there is no suggestion that this clause was changed when the contract was varied. The difference seems to be explained by the fact that the translations were done by 2 different translators.
214. In written closing submissions (paragraph 103) counsel for Sweet Lu referred to clause 2 as providing for an 8-week forecast which is only an estimate, capable of being “postponed”.
215. I will therefore treat the phrases I have highlighted in bold as being interchangeable.
216. The parties did not address the interpretation of the clauses in full. There was common ground that completion of the project would be delayed or postponed until 2 weeks after products processed in China were delivered to the site.
217. The clause is not well drafted, and it may well not matter too much given the common ground I have just mentioned, however it seems to me that the clause contemplates that completion is expected within 8 weeks of commencing on-site work; that products processed in China should be or shall be or are expected to be delivered 2 weeks before that, that is to say 6 weeks after commencing on-site work; but if there is any delay in products processed in China being delivered on-site, that is to say delay beyond the expected 6 weeks after commencement, then the time for completion of the work is to be delayed until 2 weeks after the products processed in China have been delivered on-site.
218. Both translations refer simply to “products processed in China”. The provision about delay would therefore seem to apply to any and all products falling within that category.
219. Sweet Lu submitted that the words “Using the time when the product is delivered to the site, all relevant work will be completed within two weeks, including all on-site acceptance by relevant authorities” imposed a contractual obligation. It submitted that the two-week deadline was not an aspiration, or an approximate or estimated date of completion. It submitted that once all “products processed in China” had been delivered, there was a hard and fast obligation to complete the fit-out within 2 weeks of that delivery date. Breach of that obligation, it submitted, like any other contractual obligation would sound in damages.
220. Wonderful Ornamentation submitted that given that more than 8 weeks had elapsed since the commencement of works, the contractual promise must be that the works would be completed within 2 weeks of all products arriving from China. It seems to me to be the same interpretation given to the clause as Sweet Lu.
221. However Wonderful Ornamentation submitted that by reason of an application of the “prevention principle” referred to by McColl JA (Beazley ACJ and Macfarlan JA agreeing) in Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151; 95 NSWLR 82 at [114]-[116] because of the delay, in the absence of a contractual mechanism for the substitution of a new date in the events which have occurred, then the time for performance is “at large”, although it should be undertaken within a reasonable time.
222. The idea that the time for performance is “at large” and should be undertaken within a reasonable time in the circumstances comes from what McColl JA said at [116]. Her Honour was speaking specifically in the context of a liquidated damages clause. Sweet Lu is not seeking damages under a liquidated damages clause. I do not accept that the time for performance was “at large” and to be undertaken within a reasonable time as submitted by Wonderful Ornamentation.
223. Nevertheless, Sweet Lu appeared to accept that the prevention principle could have some operation in the circumstances.
224. In paragraph [114] of Probuild McColl JA referred to the essence of the prevention principle as being that a party cannot insist on the performance of a contractual obligation by the other party if itself is the cause of the other parties non-performance. Her Honour explained at paragraph [117] that the operation of the prevention principle can be modified or excluded by contract.
225. In the present case, the parties have made some provision for the consequences of delay in clause 2 of the contract (delay in products processed in China arriving on site), but not delay for other reasons. It is in the case of delay for other reasons that the prevention principle may have some operation. As I understand it, Sweet Lu accepted that.
226. In the circumstances that happened, both parties submitted (and it was therefore common ground) that clause 2 required Wonderful Ornamentation to complete the fit-out within 2 weeks of all products processed in China being delivered to the site.
227. Sweet Lu submitted that under the varied contract, the only products processed in China for the fit out shop were (a) the banquette seats and the ceiling mesh-decorations/finishes and (b) a cake fridge. Wonderful Ornamentation did not cavil with this.
228. Sweet Lu submitted that the banquette seats and the ceiling mesh-decorations/finishes were delivered to the shop on 28 July 2020. It submitted that the cake fridge had also been delivered by that time ,and had been installed by 19 August 2020.
229. Wonderful Ornamentation submitted that “the remaining ceiling mesh” and the rebuilt banquette seats was still to arrive from China “at the date of the contract coming to an end”. I reiterate that the I have not been asked to make any findings about when the contract “came to an end” or the circumstances in which that happened. I take it that the submission relates to the date when Wonderful Ornamentation “suspended” work or sometime thereafter. In any event, there is an issue between the parties as to whether or not all the products being processed in China had been delivered to the site.
230. On that question, the objective contemporaneous evidence before me, particularly the WeChat communications, establishes that:
230.1 The banquette seats were ordered by Sweet Lu from China.
230.2 They arrived on site on 28 July 2020, but they were damaged and had the wrong dimensions (they were too short).
230.3 A decision then had to be made as to whether to have the banquette seats made again in China and shipped to Australia again, or to repair the damage in Australia. Various options were discussed in the WeChat communications.
230.4 Ultimately, Sweet Lu decided to have the banquette seats repaired in Australia by Wonderful Ornamentation.
230.5 By 6 October 2020 Wonderful Ornamentation had repaired the seats and installed them: 6 October 2020 and oral evidence of Mr Wang (T217). There was no evidence of when the repairs were actually done or how long they took.
230.6 The minutes of meeting of 6 October 2020 also record as item number 3 “stone chair repairment materials arriving by air with stone chairs to fixate using steel square tube”. I infer that the “materials arriving by air” were being sent from China. It is not clear to me whether the reference to the “stone chair” is a reference to the banquette seats or some other seating. The important point is that materials to be used by Wonderful Ornamentation in fitting out the shop were still to arrive from China.
230.7 The ceiling mesh was ordered by Sweet Lu from China.
230.8 It arrived on site on 28 July 2020.
230.9 The ceiling mesh that arrived on 28 July 2020 was installed by 4 August 2020, but there wasn’t enough and Sweet Lu ordered more to be processed in China and sent to Australia.
230.10 As at 6 October 2020, it was anticipated that the additional ceiling mesh would arrive on site on 20 October 2020.
231. It follows from the above, and I find, that products processed in China were still yet to be delivered on site as at 6 October 2020. Further it was anticipated that some of those materials (the ceiling mesh) were not anticipated to arrive on site until 20 October 2020. Under clause 2, Wonderful Ornamentation would at least have 2 weeks after that date to complete its work.
232. It is not stated when the “materials arriving by air” for the “stone chair” were expected to arrive. They were possibly arriving at the same time, but by the same token, possibly later – the evidence does not allow me to make a finding. However it does allow me to make a finding that further materials, in addition to the ceiling mesh, were still to make their way to the site from China as at 6 October 2020.
233. As to matters which might bring into play the operation of the prevention principle, one matter that was raised was work to be done in relation to tiling. The evidence before me establishes that:
233.1 The tiles to be used in the fit out had to be chosen and supplied by Sweet Lu.
233.2 On 21 August 2020, Mr Hou told Robin that payment for the wall tiles had been made and they could be picked up the next Monday.
233.3 In the minutes of meeting of 26 August 2020 it was recorded that the designer (i.e. Tony the designer engaged by Sweet Lu) was to provide mosaic pattern on tiles in open kitchen.
233.4 Between 27 August 2020 on 1 September 2020 Robin and Mr Hou exchanged messages about the collection of the tiles from the supplier.
233.5 On 1 September 2020 Robin asked Mr Hou to provide details of the layout design of the tiles. Tony (the designer) was yet to provide the details.
233.6 The tiles were picked up from the supplier on or around 2 September 2020.
233.7 On 8 September 2020 Robin informed Mr Hou that he had just made arrangements for all kinds of trades to attend the site, including the tiler who is due to arrive on site on Friday, 8 September being a Tuesday.
233.8 On 19 September 2020 Mr Hou instructed Robin to purchase particular types of waterproof grouts, which Robin did on the same day.
233.9 The tiling work had been completed by 21 September 2020.
234. Sweet Lu submitted that under the contract, the fit out of the shop should have been completed on 11 August 2022, being 14 days after 28 July 2020 when it says the ceiling mesh-decoration/finishes were delivered to the shop.
235. Wonderful Ornamentation submitted that under the contract the time for completion had not arrived because products were still to arrive from China.
236. I do not accept Sweet Lu’s submission in light of the factual findings I have just made. The evidence establishes that as at 6 October 2020 products processed in China were still to arrive on site. In those circumstances clause 2 of the contract operated to delay the requirement for Wonderful Ornamentation to complete the fit out until 2 weeks after those products arrived on site. When those products arrived on site has not been established on the evidence, but on the evidence before me it was not anticipated to arrive before 20 October 2020 at the earliest. Two weeks after that would have been 3 November 2020. That date, I find, was the earliest date by which Wonderful Ornamentation could have been obliged to complete the work. I say could have been because the evidence did not establish when in fact the additional ceiling mesh and “stone chair repairment materials” did actually arrive from China to the site. Without knowing that it is not possible to fix the time for when Wonderful Ornamentation was required to complete the fit out. I find that Sweet Lu has failed to prove this necessary element of establishing the claimed contractual right to damages for failure to complete in the time provided for by the contract.
237. For those reasons I am not satisfied that Sweet Lu is entitled to damages for delay.
J. What orders should I make?
238. On Wonderful Ornamentation’s statement of claim, I have found that it is entitled to be paid $79,000 as a debt due under the contract. It is therefore entitled to judgment against Sweet Lu in that amount.
239. On Sweet Lu’s cross-claim, I have found that it is entitled to damages for:
1. Multione (par. 142 above) $37,780.00
2. L Y Electrical and Data Services (par. 145 above) 2,820.00
3. 8light LED Specialists (par. 149 above) 1,045.00
4. Chris’ Glass & Glazing (par. 160 above) 5,324.00
5. Dai (par. 164 above) 3,300.00
6. Dai (par. 166 above) 1,000.00
7. Kitchen door rectification (par. 176 above) 1,890.00
8. Rectifying finishes, joints and trims (par. 177 above) 6,595.00
9. Builder’s margin of 28% on items 7. & 8. (par. 200 above) 2,375.80
10. GST on items 7, 8 & 9 (par. 200 above) 1,086.08
11. Overflowing grease trap (par. 209 above) 14,755.75
TOTAL $77,971.63
240. Because Sweet Lu is receiving damages for the cost of completing the work left unfinished, the balance of what it would have had to pay Wonderful Ornamentation under the contract, i.e. payment F (5% of the price), ought to be deducted. The deduction is 5% of $220,000 inclusive of GST, i.e. $11,000.
241. On its cross-claim therefore, Sweet Lu is entitled to judgment against Wonderful Ornamentation in the sum of $66,971.63.
242. Wonderful Ornamentation claimed pre-judgment interest in its statement of claim, calculated by reference to terms in the contract or alternatively pursuant to s.100 of the Civil Procedure Act 2005.
243. Neither of the parties addressed either the entitlement to or calculation of pre-judgment interest in their submissions.
244. I therefore propose to give the parties the opportunity to make submissions about the entitlement to and calculation of pre-judgment interest before entering judgment.
K. Costs
245. Ordinarily costs would follow the event on the statement of claim and on the cross-claim.
246. However Sweet Lu asked to make submissions on costs after the delivery of my judgment.
L. Orders
247. I will list the matter for directions before me at 9.30 am on Friday 2 August 2024 for the purpose of making arrangements to hear from the parties about pre-judgment interest, costs and final orders.
248. I make the following order:
1. List the matter for directions before me at 9.30 am on Friday 2 August 2024.
**********
Amendments
26 July 2024 - removal of additional paragraph number
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 19,575 |
nsw_caselaw:190de714d364c45ce4a9d4c0 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-25 00:00:00 | Council of the Law Society of New South Wales v Lee [2024] NSWCATOD 108 | https://www.caselaw.nsw.gov.au/decision/190de714d364c45ce4a9d4c0 | 2024-07-26T22:25:57.451249+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Council of the Law Society of New South Wales v Lee [2024] NSWCATOD 108
Hearing dates: 20 February 2024, 16 and 27 May 2024
Date of orders: 25 July 2024
Decision date: 25 July 2024
Jurisdiction: Occupational Division
Before: S Westgarth, Deputy President
M Sindler, Senior Member
L Porter, General Member
Decision: (1) The Respondent is reprimanded.
(2) The Respondent is to pay a fine of $10,000 to the Applicant within 2 months or such longer period agreed by the Applicant.
(3) No practising certificate is to be granted to the Respondent until she undertakes further education in the following terms:
(a) The Respondent must undertake, complete and pass, at her own expense, a course that is approved by the Law Society of New South Wales’ Director, Legal Regulation (Director) dealing with Practice Management (Course) and therein achieve a pass mark of not less than 65%.
(b) The Respondent shall, within seven (7) days of receipt of notification of the result of her participation in the Course, provide the original of such notification to the Director.
(4) The Respondent may not apply for a practising certificate that would authorise her to be a principal of a law practice until after she has held five (5) practising certificates in five (5) separate practising certificate years that authorise her to engage in supervised legal practice only.
(5) The Respondent is to pay the Applicant’s costs fixed in the amount of $10,000 within 2 months or such longer time agreed by the Applicant.
Catchwords: OCCUPATIONS — solicitor misconduct — professional misconduct and/or unsatisfactory professional conduct — consideration of ss 10, 334, 335 and0 371 of the Legal Profession Uniform Law — failure to cooperate and thereby obstruct a manager of a law practice — participating in the affairs of a law practice — practising without a current practising certificate or professional indemnity insurance — noncompliance with obligations concerning the stamping of a transfer of real property — failure to comply with a notice issued under s 371 of the Uniform Law — appropriate protective orders — costs.
Legislation Cited: Conveyancers Licensing Act 2003 (NSW)
Legal Profession Uniform Law (NSW)
Legal Profession Uniform General Rules 2015
Taxation Administration Act 1996 (NSW)
Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336
Council of Law Society of NSW v Batalha [2020] NSWCATOD 158
Council of the Law Society of New South Wales v Fisher (No 2) [2021] NSWCATOD to 135
Law Society of New South Wales v Bannister (1993) 4 LPDR 24
Law Society of New South Wales v Foreman (1994) 34 NSWLR 408
Law Society of New South Wales v Walsh [1997] NSWCA 185
New South Wales Bar Association v BRJ (No 2) [2015] NSWCATOD 140
Russo v Legal Services Commissioner [2016] NSWCA 306
Texts Cited: Not applicable
Category: Principal judgment
Parties: Council of the Law Society of New South Wales (Applicant)
Pei Sze Lee (Respondent)
Representation: Counsel:
G Johnson (Applicant)
A Khoury (Respondent)
Solicitors:
Council of the Law Society of New South Wales (Applicant)
File Number(s): 2022/00387744
Publication restriction: Nil
REASONS FOR DECISION
1. On 23 December 2022 the Applicant commenced proceedings against the Respondent by lodgment of an Application for Disciplinary Findings and Orders with the Tribunal. By an Amended Application for Disciplinary Findings and Orders lodged by the Applicant with the Tribunal on 19 March 2024, the Applicant amended the application. This decision proceeds on the basis of the Amended Application.
2. The Amended Application sets out in paragraphs 1 to 6 the orders sought by the Applicant from the Tribunal and thereafter the Amended Application sets out the grounds for the application including particulars.
3. The Amended Application reads as follows:
ORDERS SOUGHT
The Applicant seeks the following orders:
1. The Respondent be reprimanded.
2. The Respondent be required to pay a fine.
3. That no practising certificate be granted to the Respondent until she undertakes further education in the following terms:
a. The Respondent undertake, complete and pass, at her own expense, a course that is approved by the Law Society of New South Wales’ Director, Legal Regulation (Director) dealing with Practice Management (Course) and therein achieve a pass mark of not less than 65%.
b. The Respondent shall, within seven (7) days of receipt of notification of the result of her participation in the Course, provide the original of such notification to the Director.
4. That the Respondent may not apply for a practising certificate that would authorise her to be a principal of a law practice until after she has held five (5) practising certificates in five (5) separate practising certificate years that authorise her to engage in supervised legal practice only.
5. The Respondent pay the costs of the Applicant as agreed or assessed.
6. Any further or other order the Tribunal deems fit.
GROUNDS FOR APPLICATION (INCLUDING PARTICULARS)
DEFINITONS
EDR means Electronic Duties Return: a service that allows an approval holder (approved person) to electronically assess and endorse a range of duties transactions, and to pay duty by way of periodic remittance.
Council means the Council of the Law Society.
Law Practice means the Law Society of New South Wales.
Manager means Mr Richard Stephen Savage who, on 26 July 2016, was appointed by the Council as manager to the Law Practice pursuant to s 334(2) of the Uniform Law.
NAB means the National Australia Bank.
OSR means the Office of State Revenue.
SAI means SAI Global Pty Ltd.
Uniform Law means the Legal Profession Uniform Law (NSW).
Respondent means Ms Pei Sze Lee who is also known by her anglicised name, Carol Lee.
Rules means the Legal Profession Uniform General Rules 2015.
Transfer means the transfer of the property at proposed Lot XXXXX Avenue, Edmondson Park to the purchasers XXXXX and XXXXX.[The address of the property and the identity of the purchasers have been removed in the interests of privacy]
GROUNDS
The Respondent is guilty of professional misconduct on the basis that she engaged in the following conduct:
1. The Respondent failed to cooperate with, and thereby obstructed, the manager appointed to the Law Practice under s 334 of the Uniform Law.
2. The Respondent participated in the affairs of the Law Practice after service on her of notice of the appointment of the manager contrary to s 335(1) of the Uniform Law.
3. The Respondent engaged in legal practice when she was not entitled to do so contrary to s 10 of the Uniform Law.
4. The Respondent engaged in legal practice without holding professional indemnity insurance.
5. The Respondent failed to maintain legal files to a standard of competence and diligence of a reasonably competent lawyer.
6. The Respondent caused the Transfer to be stamped with transaction number 8286386-001 when she knew that duty had not been paid on the transaction, or she did not know and ought to have known whether duty had been paid on the transaction.
7. The Respondent caused the Transfer to be stamped with transaction number 8286386-001 when she knew that the Declaration for ‘Off the Plan’ Purchases had not been completed, or she did not know and ought to have known whether the Declaration for ‘Off the Plan’ Purchases had been completed.
8. The Respondent failed to comply with a notice issued to her pursuant to s 371 of the Uniform Law.
PARTICULARS
General
1. The Respondent:
(a) was born on 23 September 1984;
(b) was admitted as a lawyer in Queensland on 27 April 2009;
(c) from 25 August 2009 to 30 June 2016 held a practising certificate issued by the Council;
(d) has not held a practising certificate issued by the Council since 30 June 2016; and
(e) during the following periods held the following positions at the following law practices:
Period Law Practice Position
1 December 2009 – 30 April 2010 Alliance Law Group Pty Ltd Non-Principal
1 July 2010 – 1 March 2011 and 5 July 2012 to 1 July 2013 Jingxin Corporate Legal Services Pty Ltd (Jingxin) Non-Principal
1 March 2011 – 28 February 2012 Andresakis & Associates Non-Principal
1 July 2013 – 30 June 2014 Jingxin Principal
2 August 2013 – 30 June 2016 Law Practice Principal
Grounds 1 and 2
2. On 26 July 2016:
(a) the Council resolved to appoint the Manager as manager to the Law Practice pursuant to s 334(2) of the Uniform Law; and
(b) the Law Society served the notice of appointment on the Respondent.
3. On or about 27 July 2016 the Manager attended the premises of the Law Practice and requested that the Respondent provide him with all of the Law Practice’s active client files.
4. The Respondent, without reasonable excuse, failed to cooperate with, and thereby obstructed the Manager in relation to the exercise of his functions under Part 6.4 of the Uniform Law, in that the Respondent:
(a) withheld from the Manager some of the Law Practice’s active client files despite his request to be provided with all of the Law Practice’s active client files;
(b) upon discovering in October 2016 client files at her property which were responsive to the Manager’s request and that had not been provided to the Manager, provided the files to her solicitor, rather than to the Manager; and
(c) retained approximately 150 of the Law Practice’s client files until 19 August 2016.
5. On 27 July 2016 the Manager informed the Respondent that he did not authorise her to communicate with the Law Practice’s clients other than in respect of two conveyancing matters to be settled on 27 July 2016.
6. Following the Manager’s appointment, and service of the notice of the Manager’s appointment on the Respondent, the Respondent participated in the affairs of the Law Practice without the Manager’s direct supervision. In particular, from about July 2016 to August 2016 the Respondent:
(a) sent emails to clients on active matters;
(b) made telephone calls to clients;
(c) communicated with the NAB concerning the transaction numbers for registration of particular property conveyances;
(d) communicated with a client to seek written authority to release funds held in trust (by another solicitor) pending a property settlement;
(e) communicated with a client concerning a delay in the settlement of a property conveyance;
(f) forwarded correspondence to clients;
(g) sent an “Off the Plan Declaration Form” to a client for completion; and
(h) exchanged text messages with a client about the need to re-sign a property contract.
7. In the circumstances referred to in paragraphs I and 2 to 4 above the Respondent, contrary to s 364 of the Uniform Law, failed to cooperate with, and thereby obstructed, the Manager appointed to the Law Practice under s 334 of the Uniform Law.
8. In the circumstances referred to in paragraphs 1 and 2, 5 and 6 above the Respondent, contrary to s 335(1) of the Uniform Law, participated in the affairs of the Law Practice after service on her of the notice of appointment of the Manager.
Ground 3
9. Between 1 July 2016 and 26 July 2016 the Respondent did not hold a practising certificate entitling her to engage in legal practice in New South Wales.
10.. Between I July 2016 and 26 July 2016 the Respondent engaged in legal practice in that she provided legal services, including in relation to:
(a) a matter for Ms XXXXX, involving the settlement of a property conveyance at Ashfield, NSW;
(b) active conveyancing matters with the Law Practice; and
(c) active conveyancing matters that were settling in respect of a development at Canterbury, New South Wales.
11. On 22 June 2016 and 23 June 2016 the Law Society sent the Respondent correspondence reminding her that she had not yet applied for renewal of her practising certificate, and reminding her of her obligation to renew her practising certificate.
12. On 7 July 2016 the Law Society sent the Respondent a letter informing her that her practising certificate had expired on 30 June 2016, and reminding her of her obligation not to practise as a solicitor in New South Wales unless she held a current practising certificate.
13. At the time of engaging in the legal work as described in paragraph 10 above the Respondent was not a licensed conveyancer under the Conveyancers Licensing Act 2003 (NSW).
14. In the circumstances referred to in paragraphs 9 to 13 above, the Respondent, contrary to s 10 of the Uniform Law, engaged in legal practice when she was not entitled to do so.
Ground 4
15. The Applicant repeats paragraph 10 above.
16. Between 1 July 2016 and 26 July 2016 the Respondent did not hold professional indemnity insurance.
17. In the circumstances referred to in paragraphs 1, 15 and 16 above the Respondent, contrary to s 211 of the Uniform Law and Part 4.4 of the Rules, engaged in legal practice without holding professional indemnity insurance.
Ground 5
18. Upon investigation by the Manager on 27 July 2016, the Respondent stored the files for the Law Practice at her home in plastic containers.
19. In relation to the Law Practice’s files, which the Manager reviewed in July to August 2016:
(a) No useful matter register had been maintained by the Law Practice.
(b) Files were not kept in any recognisable order and many appeared to be incomplete. For example, most conveyancing files were missing the Contract for Sale.
(c) Many files bore only anglicised adopted forenames of clients rather than the names of the clients that appeared on the contracts contained in the files.
(d) At least 20 matters were identified in which registration had not occurred due to irregularities in the endorsements intended to evidence the payment of duty on the Contract for Sale and Transfer.
20. The Law Practice’s files, which the Law Society’s investigator reviewed in February 2016 to July 2016, contained:
(a) no identity and contact information of the client;
(b) no retainer agreement or costs disclosures;
(c) no invoices;
(d) no advices;
(e) no file notes; and
(f) no information about the status of the matter or whether it had been completed.
21. In the circumstances referred to in paragraphs 1, 18 and 19 above, the Respondent failed to maintain legal files to a standard of competence and diligence of a reasonably competent lawyer.
Grounds 6 and 7
22. The Law Practice was registered as an “Approval Holder with the then OSR. It transacted for the purposes of its conveyancing practice through EDR.
23. The approval to use EDR is subject to conditions prescribed by the Chief Commissioner (Division 2 of Part 6 of the Taxation Administration Act 1996). Conditions of approval include:
(a) that all instruments must be endorsed with OSR-issued accountable stamps immediately after the duty liability on the instrument is confirmed by way of a Duties Notice of Assessment; and
(b) the OSR must receive all EDR payments by the due date displayed on the Return Period Invoice or Duties Notice of Assessment.
24. The Respondent acted for the purchasers XXXX and XXXX on a contract for the purchase of the property at proposed lot XXXX Avenue, Edmondson Park.
25. The contract for sale was exchanged on 21 August 2015 and settlement took place on 1 July 2016.
26. Ms XXXX and Ms XXXX were financed in the purchase by the NAB, which was represented at the settlement by SAI.
27. The Transfer in the matter bore a stamp issued to the Law Practice as client 130926554, upon which had been endorsed “$10.00” Duty (for the Transfer) and an OSR transaction number 8286386-001. On the Transfer, the OSR transaction number 8286386-001 was crossed out and replaced with the number 8773491-001.
28. The transaction number 8286386-001 was an incorrect number and did not relate to the Law Practice.
29. The contract for sale was assessed for duty on 15 July 2016, two weeks after the date of settlement, and the date the stamped Transfer was delivered to SAI.
30. The Respondent caused the Transfer to be stamped with transaction number 8286386001 , when she knew that duty had not been paid on the transaction, or she did not know and ought to have known whether duty had been paid on the transaction.
31. The Respondent also signed a Declaration for “Off the Plan” Purchases (Declaration) on 11 July 2016, 10 days after settlement. The Declaration related to the duty payable on the contract and should have been lodged when stamping an “off the plan” purchase agreement.
32. The Respondent knew, or did not know and ought to have known, that the Declaration had not been completed and submitted to the OSR at the time the Transfer was stamped.
33. In the circumstances referred to in paragraphs 30 to 33 above the Respondent enabled settlement of the property to occur in circumstances where the Transfer and the Declaration indicated that duty had been paid on the Transfer, when in fact it had not been.
Ground 8
34. On 28 July 2017 the Law Society sent the Respondent’s legal representative a letter attaching a copy of a notice, issued pursuant to section 371 of the Uniform Law, which required the Respondent to produce specified information and documents to the Law Society on or before the 21st day after service of the notice, being 18 August 2017 (s 371 notice).
35. On 15 August 2017 the Respondent sought a four week extension of time to respond to the s 371 notice. The Law Society refused to extend time by four weeks, but granted an extension to respond by I September 2017.
36. On 31 August 2017 the Respondent sought a further two week extension of time to respond to the s 371 notice. The Law Society refused to extend time by two weeks, but granted an extension to respond by 4 September 2017.
37. The Respondent failed to respond to the s 371 notice by 4 September 2017, and therefore failed to comply with the s 371 notice.
38. The Respondent sought to respond to the s 371 notice as follows:
(a) on 12 September 2017 she provided to the Law Society (through her solicitor) a statutory declaration she declared in Sydney on “13 September 2017”.
(b) On 14 November 2017 she provided to the Law Society (through her solicitor) an unsworn statutory declaration.
(c) On 15 December 2017 she emailed to the Law Society (through her solicitor) a sworn version of the statutory declaration sent on 14 November 2017, sworn in Kuching, Sarawak (Malaysia). The original document was received by the Law Society on 18 or 19 April 2018.
39. In relation to the Respondent’s statutory declaration provided on 12 September 2017, it did not provide all of the information that the s 371 notice required the Respondent to provide. Neither did the Respondent provide the documents specified in s 371 notice.
40. On 19 September 2017 the Law Society sent a letter to the Respondent (through her solicitor) stating that the Respondent in her response had not answered a majority of questions put to her in the s 371 notice
41. On 3 October 2017 the Respondent (through her solicitor) sent the Law Society an unaffirmed statutory declaration of the solicitor in which the solicitor sought to explain the delay in responding to the s 371 notice.
42. On 4 October 2017 the Law Society sent a further letter to the Respondent advising that a report to the Law Society’s Professional Conduct Committee (PCC) about the complaint would be prepared on the basis of the then present material, and inviting the Respondent to provide anything further in relation to the s 371 notice, or in response to the complaint about her failure to respond to the s 371 notice, by 11 October 2017.
43. On 9 October 2017 the PCC resolved that it was of the opinion that, subject to any submissions, it should resolve to initiate and prosecute proceedings against the Solicitor in the Civil and Administrative Tribunal, Occupational Division, as it was the Committee’s opinion that the alleged conduct may amount to professional misconduct pursuant to section 300(1) of the Uniform Law. It was alleged that the Respondent had “failed to comply with a notice issued pursuant to section 371 of the Legal Profession Uniform Law (NSW)”.
44. On 24 October 2017 the Law Society invited the Respondent’s submissions in response to the resolution within 14 days. On 7 November 2017 the Respondent (through her solicitor) sent a letter to the Law Society foreshadowing a further response to the s 371 notice.
45. On 15 December 2017 the Law Society received from the Respondent Solicitor a statutory declaration dated 15 November 2017. In that statutory declaration the Respondent provided some response to the outstanding questions in the s 371 notice, although for the most part, her response to the questions asked was that she could not recall. No additional documents were provided.
46. In the circumstances referred to in paragraphs 34 to 45 above the Respondent failed to comply with a notice issued to her pursuant to s 371 of the Uniform Law.
4. The Respondent has filed an Amended Reply to the Amended Application. The Amended Reply may be summarised as follows:
1. The Respondent states that in the event of a finding of professional misconduct or unsatisfactory professional conduct she seeks orders to the effect that she be reprimanded, allowed to apply for an unrestricted practising certificate in the year commencing 1 July 2024, be required to undertake further legal education as the Tribunal considers appropriate before applying for a practising certificate and that there be no order for costs.
2. In the event that a finding of professional misconduct or unsatisfactory professional conduct is not made the Respondent seeks orders to the effect that she be allowed to apply for an unrestricted practising certificate in the year commencing 1 July 2024 and that the Applicant pay her costs.
5. The Amended Reply responds to the grounds in the Amended Application as summarised below:
1. In response to ground 1, the Respondent denies failing to cooperate with and thereby obstructing the manager appointed to the Law Practice.
2. In response to ground 2, the Respondent admits that she participated in the affairs of the Law Practice after service of notice of the appointment of the manager contrary to s 335(1) of the Uniform Law but denies that it justifies a finding of professional misconduct.
3. In response to ground 3, the Respondent admits that she engaged in legal practice when she was not entitled to do so contrary to s 10 of the Uniform Law but denies that this justifies a finding of professional misconduct.
4. In response to ground 4, the Respondent admits that she engaged in legal practice without holding professional indemnity insurance, but denies that this justifies a finding of professional misconduct.
5. In response to ground 5, the Respondent admits that there were deficiencies in the maintenance of her legal files but denies that it was to such a low standard of competence and diligence to justify a finding of professional misconduct.
6. In response to ground 6, the Respondent admits the transfer on the conveyance with OSR reference 8773491-00 was stamped using a transfer that had been stamped under OSR no 8286386-00 and that it could have been caused by the Respondent or the Respondent’s staff but the Respondent denies any dishonesty and any allegation that this justifies a finding of professional misconduct.
7. In response to ground 7, the Respondent admits that documents suggest the Transfer was stamped with transaction number 8286386-001 when the Declaration for “Off the Plan” purchases had not been completed but the Respondent says that she cannot remember signing the document and denies that this justifies a finding of professional misconduct.
8. In response to ground 8, the Respondent denies that she failed to comply with a notice issued to her pursuant to s 371 of the Uniform Law.
Applicant’s Evidence
6. The Applicant tendered and relied upon the following affidavit evidence:
1. The affidavit of Valerie Anne Griswold affirmed 18 March 2024 to which is annexed the affidavit of Anthony James Lean affirmed 22 December 2022 (Exhibit A).
2. The affidavit of Lucia Moliterno sworn 17 February 2023 (Exhibit B)
3. The affidavit of Gregory William Livermore affirmed 8 March 2023 (Exhibit C)
4. The affidavit of Richard Stephen Savage sworn 30 March 2023 (Exhibit D).
7. The Respondent did not object to the affidavits of Ms Griswold, Ms Moliterno or Mr Livermore but objected to the expressions of opinion contained in the affidavit of Mr Savage (Exhibit D). We accepted those objections but admitted the offending opinions only as evidence of Mr Savage’s opinions. Mr Savage gave brief oral evidence in chief and was cross-examined by the Respondent’s Counsel.
Respondent’s Evidence
8. The Respondent tendered and relied upon an affidavit affirmed 26 April 2024 (marked as Exhibit 1). Counsel for the Respondent stated that paragraphs 53, 59 and 64 of that affidavit were not read. The Respondent was cross-examined by counsel for the Applicant and re-examined by her counsel.
Applicant’s Submissions and Respondent’s Submissions
9. The Applicant’s submissions acknowledged that the Applicant bears the onus of satisfying the Tribunal to the standard established in Briginshaw v Briginshaw (1938) 60 CLR 336 that the conduct in question amounts to professional misconduct. The expression “professional misconduct” is defined in s 297 of the Uniform Law as follows:
297 Professional Misconduct
(1) For the purposes of this Law, professional misconduct includes—
(a) unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of a lawyer whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the lawyer is not a fit and proper person to engage in legal practice.
(2) For the purpose of deciding whether a lawyer is or is not a fit and proper person to engage in legal practice as referred to in subsection (1)(b), regard may be had to the matters that would be considered if the lawyer were an applicant for admission to the Australian legal profession or for the grant or renewal of an Australian practising certificate and any other relevant matters.
10. “Unsatisfactory professional conduct” is defined in s 296 of the Uniform Law. Section 296 provides:
296 Unsatisfactory professional conduct
For the purposes of this Law, unsatisfactory professional conduct includes conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
Ground 1
11. In support of ground 1 the Applicant submitted that the evidence of Mr Savage demonstrates that the Respondent failed to cooperate and thereby obstructed Mr Savage in the performance of his obligations. He was appointed manager of the Law Practice under s 334 of the Uniform Law on 26 July 2016. He sent a notice of his appointment to the Respondent on the same day by email and met the Respondent at her home on the following day (27 July 2016).
12. The Applicant submitted that by s 364 of the Uniform Law the Respondent was obliged not to obstruct an external intervener exercising a function under the Law without reasonable excuse. An “external intervener” includes a manager.
13. The affidavit of Mr Savage establishes that when he met the Respondent on 27 July 2016, he stated that he needed to be provided with all the active client files of the Law Practice. He directed the Respondent not to participate in the affairs of the Law Practice to any extent other than in respect of two conveyancing matters which were to be settled that day.
14. The affidavit of Ms Griswold attaches an affidavit of Anthony James Lean dated 22 December 2022. He is no longer employed by the Applicant but was the Director, Legal Regulation of the Applicant. His affidavit attaches a statutory declaration of the Respondent provided to the Applicant on or about 18 October 2016. At [33] of that statutory declaration the Respondent stated that she did not hand over to Mr Savage all active files during the period towards the end of July and the beginning of August 2016. She stated that she handed over to Mr Savage all active files where “work needed to be done in the coming month, as well as files for completed matters”. She also stated that she “did not hand over to Mr Savage files for about 150 matters. For these matters, no work needed to be done in the coming one or two months. However, work would need to be done at a later point in time when the settlement dates for the off-the-plan conveyances approach”. The evidence also establishes that the Respondent discovered some additional files that she had not produced to Mr Savage and that she provided those files to her solicitor (Juris Cor Legal). The evidence of Mr Savage is that she also failed to respond to Mr Savage’s requests to provide a copy of the office account statements and delayed until 5 August 2016 in removing funds from the office account as she had been requested to do so by Mr Savage on 29 July 2016. There was further evidence from Mr Savage that the Respondent had not provided assistance in locating missing files and contracts.
15. The Applicant submitted that the evidence establishes that the Respondent failed to engage appropriately with Mr Savage in order to permit him to fulfil his functions under s 334 of the Uniform Law by obstructing him in his role as manager – without any reasonable excuse. The Applicant submitted that the conduct of the Respondent constituted serious misconduct because it undermined the function of the manager who has a specific statutory role to perform and potentially prevented the manager taking action necessary to protect the interests of clients of the Law Practice.
16. The Applicant submitted that the evidence establishes that the Respondent’s contravention of s 334 amounts to professional misconduct under s 297(1)(a) as a substantial failure to reach or maintain a reasonable standard of competence and diligence. It was submitted that it was also professional misconduct under s 297(1)(b) of the Uniform Law as the conduct warrants a finding that the Respondent is not a fit and proper person to engage in legal practice.
17. In response to the Applicant’s submissions the Respondent’s submissions, with respect to ground 1, are summarised in the following paragraphs.
18. The Respondent’s counsel provided written submissions and supplemented these with oral submissions at the hearing on 27 May 2024. The Respondent submitted that she handed to Mr Savage’s agent a few days after his attendance at her home some 300 files. Further, following Mr Savage’s request on 29 July 2016 to remove funds from the office account, the Respondent complied with that request on 5 August 2016. She also acknowledged not handing over some 150 files because they were files not requiring any work to be done “in the coming one or two months”. She also stated that she delivered files for “more remaining matters” to Mr Savage on 19 August 2016.
19. The thrust of the Respondent’s oral submissions at the hearing was to the effect that the Respondent was under a degree of stress and confusion and that to some extent she did cooperate with Mr Savage. The Respondent submitted that s 364 provides for a “reasonable excuse” defence, that she did not in fact obstruct Mr Savage to sufficiently engage the section and that she did not act with the intention of deceiving Mr Savage or acquiring any personal benefit. There was evidence that she thought that his appointment was of a short duration caused by the fact that her practising certificate had not issued. After 23 August the Respondent achieved a higher level of clarity as to her position and from then on, she endeavoured to cooperate. The Respondent further submitted that a finding of professional misconduct normally involves an element of dishonesty or personal gain or gross incompetence. Here, there was no dishonesty and no gross incompetence.
20. The Respondent submitted that ground 1 should be rejected.
Ground 2
21. This ground concerns the requirement imposed by s 335(1) of the Uniform Law to the effect that after service on a law practice of a notice of the appointment of a manager for the law practice and until the appointment is terminated, a legal practitioner associate of the practice who is specified or referred to in the notice must not participate in the affairs of the practice except under the direct supervision of the manager.
22. Section 335 of the Uniform Law provides:
335 Effect of service of notice of appointment
(1) After service on a law practice of a notice of the appointment of a manager for the law practice and until the appointment is terminated, a legal practitioner associate of the practice who is specified or referred to in the notice must not participate in the affairs of the practice except under the direct supervision of the manager.
Penalty: 100 penalty units.
(2) After service on an ADI of a notice of the appointment of a manager for a law practice and until the appointment is terminated, the ADI must ensure that no funds are withdrawn or transferred from a trust account of the law practice unless--
(a) the withdrawal or transfer is made by cheque or other instrument drawn on that account and signed by the manager, a receiver appointed for the law practice or a nominee of the manager or receiver; or
(b) the withdrawal or transfer is made by means of electronic or internet banking facilities, by the manager, a receiver appointed for the law practice or a nominee of the manager or receiver; or
(c) the withdrawal or transfer is made in accordance with an authority to withdraw or transfer funds from the account and signed by the manager, a receiver appointed for the law practice, or a nominee of the manager or receiver.
Civil penalty: 100 penalty units.
(3) After service on a person of a notice of the appointment of a manager for a law practice and until the appointment is terminated, the person must not--
(a) deal with any of the law practice's trust money; or
(b) sign any cheque or other instrument drawn on a trust account of the law practice; or
(c) authorise the withdrawal or transfer of funds from a trust account of the law practice.
Penalty: 100 penalty units.
(4) A manager may, for the purposes of subsection (2)(b), enter into arrangements with an ADI for withdrawing money from a trust account of the law practice concerned by means of electronic or internet banking facilities.
(5) Any money that is withdrawn or transferred in contravention of subsection (2) may be recovered from the ADI concerned by the manager, or a receiver for the law practice, as a debt in any court of competent jurisdiction, and any amount recovered is to be paid into a trust account of the law practice or another trust account nominated by the manager or receiver.
(6) Subsection (3) does not apply to a legal practitioner associate referred to in subsection (1), an ADI or the manager or receiver for the law practice.
23. The Applicant submitted that the evidence of Mr Savage was that he directed the Respondent not to participate in the affairs of the Law Practice to any extent whatsoever, other than in respect of two conveyancing matters that were to settle on the day he met the Respondent (27 July 2016). The evidence tendered by the Applicant in the Affidavit of Ms Griswold established that the Respondent continued to perform legal services for clients (other than the two approved) notwithstanding Mr Savage’s direction. This included the Respondent communicating with National Australia Bank concerning transaction numbers for registration of particular property conveyances, communicating with a client to seek written authority to release funds held in trust (by another solicitor) pending a property settlement, communicating with the client concerning a delay in the settlement of a property, forwarding correspondence to clients, sending an “off-the-plan declaration form” to a client for completion and exchanging text messages with a client about the need to re-sign a property contract.
24. The Respondent’s counsel conceded that this ground has been established to the extent that it would be appropriate for the Tribunal to make a finding to the effect that the Respondent had engaged in unsatisfactory professional conduct. However, the Respondent submitted that a finding of professional misconduct should not be made. In support of this contention, the Respondent submitted that the evidence concerning the Respondent’s conduct came from the Respondent herself – see, for example, her statutory declaration dated 18 October 2016. The Respondent’s counsel submitted that the Respondent was confused as to what she could or could not do, felt under pressure to communicate with various stakeholders in the way that she did, was not seeking any self-gain nor seeking to deceive Mr Savage or avoid the operation of his management. The Respondent submitted that her activities were intended to assist clients.
Ground 3
25. This ground concerns the contention that the Respondent engaged in legal practice when she was not entitled to do so, contrary to s 10 of the Uniform Law
26. Section 10 of the Uniform Law requires an entity not to engage in legal practice unless it is a “qualified entity” (defined in s 6). An Australian legal practitioner who holds a current Australian practising certificate is a qualified entity.
27. The Applicant submitted that between 1 July 2016 and 26 July 2016 the Respondent did not hold a current Australian practising certificate.
28. Mr Griswold’s affidavit established that the Applicant sent to the Respondent a letter dated 23 June 2016 reminding the Respondent of the need for her to renew her practising certificate. That affidavit also attached an email from the Respondent dated 26 July 2016 in which the Respondent acknowledged the delay in applying for the practising certificate attributing the delay to “large workload”. The affidavit also contained evidence that the Respondent subsequently applied for the grant of a practising certificate for the year ending 30 June 2017 and that by letter dated 16 September 2016 the Applicant advised the Respondent that her application had been considered and refused.
29. The Respondent’s statutory declaration of 18 October 2016 contained evidence of work undertaken by the Respondent from 1st July 2016. This work involved advising a client, who resided in China, about her forthcoming conveyancing settlement. The Applicant submitted that the evidence established that the Respondent received into her office account on 20 and 21 July 2016 sums of money totalling approximately $193,000 from the client for the purposes of settling the client’s conveyance. The Respondent did not then have a trust account.
30. The Applicant submitted that the evidence establishes that the Respondent breached s 10 of the Uniform Law having engaged in legal practice for a period at which time she was not an Australian legal practitioner. Further, the Applicant submitted that such conduct constitutes serious misconduct circumventing the protections that the Uniform Law provides for clients who engage lawyers. The Applicant submitted that the Respondent’s conduct is indicative of a substantial failure to reach and maintain a reasonable standard of competence and diligence and is conduct that would justify a finding that she is not a fit and proper person to engage in legal practice. The Applicant’s submission is that the Respondent’s conduct is professional misconduct under s 297(1)(a) and/or (1)(b) of the Uniform Law.
31. We interpose here to record that the affidavit of Mr Livermore contains an attachment being an email he sent to the Respondent on Friday 22 July 2016. In that email he confirms a conversation he had with the Respondent advising the Respondent that she can no longer practice law and therefore cannot run the law practice because she has not renewed her practising certificate.
32. The Respondent’s written submissions stated that between 22 July and 26 July the Respondent did not actively continue to practice. This submission states that “Rather, she was dealing with the flow-on of matters which, prior to 22 July 2016, she was actively running”. The submissions acknowledge that between 1 July 2016 and 22 July 2016 the Tribunal may find that the Respondent erred in failing to renew, but she was not actively aware that she did not have a practising certificate. The submissions refer to the Respondent’s evidence that she had been overwhelmed by workload and forgot to renew. There is no evidence of the Respondent behaving dishonestly, the period in which she was practising was over a relatively short timeframe and the explanations she has provided do not support a finding of professional misconduct.
33. At the hearing Counsel for the Respondent conceded that a finding of unsatisfactory professional conduct was open to the Tribunal.
Ground 4
34. Ground 4 contends that the Respondent engaged in legal practice in breach of s 211 of the Uniform Law by doing so without an approved professional indemnity insurance policy. Section 211 stipulates that an Australian legal practitioner must not engage in legal practice unless the practitioner holds or is covered by an approved insurance policy.
35. The Applicant submitted that the evidence discloses that between 1 July 2016 and 26 July 2016 the Respondent did not hold, or was not covered by, an approved insurance policy covering the Law Practice. In submissions made to the Applicant on her behalf by her solicitors (ie in a letter dated 20th October 2016) the Respondent admitted having failed to have professional indemnity insurance during this period. As with ground 4, the Respondent’s explanation for her failure to hold appropriate insurance was that she was experiencing a heavy workload.
36. The Applicant relies on the same conduct of the Respondent identified with respect to ground 4, by which it is said that the Respondent engaged in legal practice between 1 July 2016 and 26 July 2016 and the Applicant submitted that the alleged breach of s 211 of the Uniform Law is established.
37. The Applicant submitted that conduct consisting of a contravention of the Uniform Law is capable of amounting to unsatisfactory professional conduct or professional misconduct: s 298(a). The Respondent’s conduct in engaging in legal practice without the required insurance is serious misconduct. The objectives of Part 4.4 (in which s 211 is located) are set out in s 209 and include the objective that the requirement is intended to ensure that clients of law practices have adequate protection against the consequences of professional negligence. The Applicant submitted that the Respondent’s breach of s 211 amounts to professional misconduct under s 297(1)(a) of the Uniform Law as it constitutes a substantial failure to reach or maintain a reasonable standard of competence and diligence.
38. The Respondent’s submissions with respect to ground 4 are the same as the submissions responsive to ground 3 and at the hearing the Respondent’s counsel conceded that a finding of unsatisfactory professional conduct may be made by the Tribunal.
Ground 5
39. Ground 5 concerns the Applicant’s contention that the Respondent failed to maintain legal files to a standard of competence and diligence of a reasonably competent lawyer. The particulars concerning ground 5 have been set out earlier in this decision and concern four specific issues identified in subparagraphs (a) to (d) inclusive. Those particulars come from the observations of Mr Savage and in particular his interim reports dated 9 and 16 August 2016, copies of which are exhibited to his affidavit.
40. On 16 February 2017 the Applicant appointed Ms Lucia Moliterno to prepare an investigator’s report. The affidavit of Ms Griswold discloses that Ms Moliterno was appointed an investigator on 16 February 2017 by the Applicant acting pursuant to s 162 of the Uniform Law to investigate aspects of the affairs of the law practice of which the Respondent was the principal. The affidavit of Ms Moliterno discloses that she is a sole practitioner and exhibited to her affidavit is a report concerning the Law Practice dated 7 July 2017.
41. In relying upon the report of Ms Moliterno, the Applicant noted that Ms Moliterno had reviewed 26 client files of the Law Practice in detail and conducted a more limited review of 15 additional files as well as bank statements of the law practice. Paragraph 5.7 of Ms Moliterno’s report states that her task of reviewing files held by the Respondent “has proved difficult and time-consuming due to the lack of material on them, including the inability to determine the identity and other details of the clients for which [the Respondent] was acting. Additionally, the files were not kept in an orderly manner”. Specific deficiencies of the various files of the Law Practice as recorded by Ms Moliterno were:
1. no identity and contact information of the client,
2. no retainer and agreements or cost disclosures,
3. no tax invoices for work performed,
4. no advice to clients,
5. no written or typed file notes of any meaningful kind,
6. no information about the status of the matter or whether it had been completed.
42. In paragraph 6.5 of Ms Moliterno’s report (on page 26), the report stated that the “systematic mode of handling files by [the Respondent] suggests a high level of incompetence. As outlined in this report, it also provides evidence of its dangers and the dire consequences which flow from it. The purchase prices in a number of the matters I reviewed are quite substantial and a few exceed millions of dollars… requiring the exercise of a high degree of care and skill”.
43. The Applicant’s submissions drew attention to the submission made on behalf of the Respondent dated 20 October 2016 from her solicitors in which the Respondent admitted that she had failed to maintain legal files to a standard of competence and diligence of a reasonably competent lawyer. She admitted that she had failed to maintain a register of files opened which complied with r 93 of the Uniform Rules.
44. The Applicant submitted that the keeping of client files in an orderly manner is a fundamental obligation of a practitioner and that the evidence has established that the Respondent’s conduct amounted to professional misconduct under s 297(1)(a) of the Uniform Law. It constituted both a substantial and consistent failure to reach or maintain a reasonable standard of competence and diligence in keeping a file.
45. The Respondent’s submissions were to the effect that the Respondent had herself made significant admissions, which demonstrated a level of self-awareness. The Respondent submitted that she has the capacity to effectively run files when she applies herself and that there is evidence in the report of Ms Moliterno to the effect that she (the Respondent) successfully completed conveyances. The Respondent’s counsel pointed to evidence (such as a comprehensive advice to a client referred to in the report of Ms Moliterno) which demonstrated that the Respondent has the requisite level of knowledge and competence. In short, the submission on behalf of the Respondent was that the particulars relied upon by the Law Society were “out of character”.
Grounds 6 and 7
46. These two grounds arise out of the conveyance where the Respondent acted for purchasers as detailed in the report of Ms Moliterno at [5.7.26]. The conveyance settled on 1 July 2016. The grounds concern the contention that the Respondent caused the conveyancing transfer to be stamped with a particular transaction number when the Respondent knew that duty had not been paid on the transaction or did not know or ought to have known whether duty had been paid.
47. The Applicant submitted that at settlement a stamped and executed transfer for the property was delivered to the purchasers with a discharge of mortgage and certificate of title. The purchasers were financed by the National Australia Bank (NAB) and represented at settlement by SAI Global Ltd. After Mr Savage’s appointment as manager of the Law Practice, he received from SAI Global a schedule of matters where the Law Practice had acted for the purchasers and where registration of the transfer and mortgage had not been possible due to requisitions issuing from NSW Land & Property Information requiring amendments to the transfer to show a correct Office of State Revenue (OSR) ID to evidence duty having being paid.
48. Before settlement on a property can be effected, and to enable the subsequent registration of title documents with NSW Land & Registry Services (formerly NSW Land & Property Information) the Contract for Sale and Transfer must be stamped with applicable duty. The Transfer bears the Respondent’s signature as signatory. The Transfer bore a stamp issued to the Law Practice as client 130926554. Endorsed on the stamp was $10 for duty on the Transfer and an OSR transaction number 8286386- 001. That transaction number was an incorrect number that did not relate to the Law Practice. That incorrect transaction number was crossed out, with the correct transaction number 8773491-001 added.
49. The Applicant’s submissions go on with further detail as follows:
1. The Contract for Sale was assessed for duty on 15 July, about two weeks after the date of settlement and the date the stamped Transfer was delivered to SAI Global.
2. The Applicant submitted that the Respondent caused the Transfer to be stamped with transaction number 8286386001 before duty had been assessed or paid and when she knew that the duty had not been assessed or paid on the transaction. Or, at the least, that she caused the Transfer to be stamped, when she did not know but ought to have known whether duty had been assessed and paid.
3. On 11 July 2016 (ie. 10 days after settlement) the Respondent also signed a Declaration for “Off-the-Plan" purchases (the Declaration). As the Declaration related to the duty payable on the contract for purchase of the property it should have been lodged with the OSR prior to settlement.
50. The Applicant submitted that the conduct of the Respondent amounts to professional misconduct under either s 297(1)(a) and/or (b) of the Uniform Law. It constitutes a failure to reach or maintain a reasonable standard of competence and diligence in conveyancing on behalf of client. The Applicant submitted that, in the alternative, the Respondent’s conduct indicates that she is not a fit and proper person to engage in legal practice.
51. We interpose here to record that in the report of Ms Moliterno, she states that the quoting of the incorrect transaction number on the Transfer when it was first lodged for registration had the following consequences:
1. It induced NAB (through its agent) to effect settlement in the belief that duty had been paid under that transaction number, which turned out to be incorrect.
2. It purported to use funds which belonged to a third party because the transaction number did not correspond to that assigned to the [Respondent] by OSR.
3. It delayed the registration of the Transfer by three months.
4. Presumably, it has delayed the registration of some other transfer to which the transaction number belonged.
52. The Applicant submitted that it was open to the Tribunal to conclude that the Respondent knew or should have known that no duty had been assessed. The Respondent was the only solicitor in the Law Practice.
53. Counsel for the Respondent submitted that the allegation put under this ground is very serious and that the Tribunal should apply the Briginshaw standard of proof. Counsel submitted that there was no direct evidence of the Respondent’s involvement and no evidence of personal gain. The Respondent had employees and it is possible that a member of the staff could have been involved in the stamping of the Transfer. Further, counsel contended that the practice of the Respondent was to have clients pay stamp duty and it can be inferred that the clients in this case paid the duty. The Respondent cannot remember signing the statutory declaration.
54. In reply counsel for the Applicant submitted that at the very least someone under the supervision of the Respondent did sign the Transfer and the Respondent was responsible for what occurred.
Ground 8
55. Ground 8 concerns a failure by the Respondent to comply with a notice issued to her pursuant to s 371 of the Uniform Law. Section 371 states the following:
371 Requirements--complaint investigations
(1) For the purpose of carrying out a complaint investigation in relation to a lawyer or law practice, an investigator may, by notice served on the lawyer or a legal practitioner associate of the law practice (as the case requires), require the lawyer or associate to do any one or more of the following--
(a) to produce, at or before a specified time and at a specified place, any specified document (or a copy of the document);
(b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states);
(c) to otherwise assist in, or cooperate with, the investigation of the complaint in a specified manner.
(2) For the purpose of carrying out a complaint investigation in relation to a lawyer or law practice, the investigator may, on production of evidence of his or her appointment, require any person (other than the lawyer) who has or had control of documents relating to the subject matter of the complaint to give the investigator either or both of the following--
(a) access to the documents relating to the affairs of the lawyer that the investigator reasonably requires;
(b) information relating to the affairs of the lawyer that the investigator reasonably requires (verified by statutory declaration if the requirement so states).
(3) A person who is subject to a requirement under subsection (1) or (2) must comply with the requirement.
Penalty: 50 penalty units.
(4) A requirement imposed on a person under this section is to be notified in writing to the person and is to specify a reasonable time for compliance.
(5) If a notice under subsection (1) is served on the lawyer or legal practitioner associate by the investigator personally, the investigator must produce evidence of his or her appointment for inspection at the time of service.
56. On 28 July 2017 the Applicant served the s 371 notice on the Respondent. By the notice the Applicant sought information from the Respondent about a number of client matters referred to in Ms Moliterno’s report. The notice required the information to be provided on a day before the 21st day after service of the notice, and subsequent extensions of time were granted.
57. The Applicant’s submissions state that the following then occurred:
1. On 12 September 2017 the Respondent’s solicitors’ sent an email to the Applicant attaching a statutory declaration of the Respondent (purportedly declared on 13 September 2017) and which sought to address the s 371 notice.
2. On 19 September 2017 the Applicant sent a letter to the Respondent acknowledging her response to the s 371 notice but stating that the Respondent “does not answer to the majority of questions put to her in the Notice”.
3. On 3 October 2017 the Respondent’s solicitor sent the Applicant a statutory declaration made by the Respondent’s solicitor purporting to explain the reasons for the delay in the Respondent responding to the s 371 notice.
4. On 4 October 2017 the Applicant responded to confirm that its concern was not simply that the Respondent had failed to respond to the notice within the statutory timeframe, but that she had not answered the majority of questions put to her and had provided instead a “general response to most questions”.
5. On 14 November 2017 the Respondent’s solicitor sent to the Applicant by email a further (but unsworn) statutory declaration of the Respondent addressing the questions asked of her in the s 371 notice.
6. On 15 December 2017 the Respondent’s solicitor sent to the Applicant a sworn copy of the statutory declaration, sworn in Malaysia.
58. The Applicant’s submissions point out that a person issued with s 371 notice must comply with it and that a failure to comply with a requirement to produce documents, provide information or otherwise assist in, or cooperate with, an investigation is capable of constituting unsatisfactory professional conduct or professional misconduct: s 466(6) of the Uniform Law.
59. The Applicant submitted that the evidence demonstrates that the Respondent failed to respond to the s 371 notice within the timeframe required, even allowing for extensions of time which were granted by the Applicant. When the Respondent did respond to the notice, it was demonstrably deficient in failing to respond to each of the specific questions asked. The Respondent ultimately did provide a more detailed response although the responses for the most part were vague or generalised.
60. The Applicant submitted that the Respondent failed to comply with a requirement under s 371 and that the Respondent’s failure constitutes professional misconduct.
61. The Respondent submitted that the delays in her response were not unreasonable. The notice came, without warning, nine months after the Respondent or her solicitors had received any substantial communication from the Applicant. The notice contained many questions which required detailed responses and the notice was served with and required reference to the report of Ms Moliterno. That report contained 1241 pages. The questions spanned over many years and the Respondent did not have the benefit of the actual files. Serious matters were raised and required careful analysis and drafting by the Respondent and her solicitor. Part of the delay was caused by her solicitors as is evidenced by the statutory declaration of her solicitor sworn 4 October 2017 and, in a letter sent by the solicitors on 7 November 2017.
62. The Respondent further submitted that the information provided was responsive to the notice. Responses were initially provided in the statutory Declaration sworn 13 September 2017. By her statutory declaration sworn 15 November 2017, the Respondent provided more responses.
63. The Respondent submitted that the allegation that the Respondent failed to comply with the notice is not made out.
The Proposed Orders
64. The Applicant submitted that there is sufficient evidence for the proposed orders to be made. A fine is appropriate as is the order requiring the Respondent to undertake a course of study. It is clear that the Respondent would benefit from further education and supervision. She has demonstrated a lack of insight.
65. In response, counsel for the Respondent made these submissions:
1. A reprimand is agreed.
2. A fine is opposed.
3. Order 3 concerning a proposed course of study is agreed.
4. Order 4 concerning the restriction on the Respondent’s practising certificate for a period of five years is opposed.
5. Order 5 requiring the Respondent to pay the Applicant’s costs is opposed.
66. The Respondent’s counsel submitted that the Respondent had been denied her source of income as a practitioner for about eight years and that she desired to have a full practising certificate. Counsel submitted that the Respondent has the capacity to practise competently. She had practised from 2013 on an unsupervised basis. Additionally, the Tribunal should take into account that no client has lodged a complaint against her.
67. Through her counsel, the Respondent submitted that a costs order should not be made against her. This was because the original application lodged by the Applicant has been amended and three grounds of allegations against the Respondent were dropped. Counsel submitted that if a ground was not made out then costs with respect to such a ground should not attract a cost order.
68. At the conclusion of the hearing we made a direction for the parties to have leave to file written submissions on costs.
Consideration
69. It is accepted by the parties that the Applicant has the onus of proof and that the Applicant must satisfy the Tribunal to the Briginshaw standard that the conduct in question in these proceedings amounts to professional misconduct.
70. It is convenient to deal with each ground separately and to make findings of fact with respect to each ground, and then set out our conclusions as to how the conduct of the Respondent should be characterised.
Ground 1
71. We are satisfied that on 27 July 2016 Mr Savage gave a clear direction to the Respondent that he needed to be provided with all active client files of the Law Practice and that he directed the Respondent not to participate in the affairs of the Law Practice to any extent other than to act on the settlement of two conveyancing matters due to be settled that day. We are comfortably satisfied (as the Applicant has submitted) that:
1. The Respondent failed to immediately hand over to Mr Savage all active client files and in particular withheld about 150 active files until about 19 August 2016.
2. Later in October 2016 the Respondent provided additional files to her solicitor rather than to Mr Savage after discovering the additional files that she had not produced to Mr Savage.
3. The Respondent failed to respond to Mr Savage’s request to provide a copy of the office account statements.
4. The Respondent delayed until 5 August 2016 in removing funds from the office account of the Law Practice as she had been requested to do by Mr Savage on 29 July 2016.
5. The Respondent provided Mr Savage with no assistance in locating missing files and contracts.
72. We agree with the Applicant’s submissions that the findings set out above are clearly established through the evidence of Mr Savage, Ms Griswold and Mr Lean. The particulars set out in the Amended Application are each made out.
73. We find that the conduct of the Respondent breached s 364 of the Uniform Law in that her lack of cooperation with the requirements of the manager constituted an obstruction in the manager’s exercise of his functions under the Uniform Law. There was no reasonable excuse available to the Respondent.
74. We acknowledge that the Respondent did provide the 150 active files after a period of time and that further files were accessed by the manager at a later time. However, in our view, the Respondent did not act with the level of diligence required of her under s 364 of the Uniform Law.
75. We find that the Respondent’s contravention of the obligations imposed under s 364 can be categorised both as professional misconduct under s297(1)(a) as a substantial failure to reach or maintain a reasonable standard of competence and diligence and also as unsatisfactory professional conduct in that the conduct of the Respondent fell short of the standard of diligence and competence required of her.
76. We note that there is evidence that the Respondent thought that the appointment of the manager to the Law Practice might be of short duration because she had applied for the renewal of her practising certificate. In our view that belief does not provide a reasonable excuse for her failure to cooperate with Mr Savage. The Respondent admitted in cross-examination that nothing was said by any representative of the Applicant that documents need not be handed over to the manager (T20.50 to T21.1-2).
77. In our view ground 1 is made out.
Ground 2
78. We are comfortably satisfied that the Applicant has established that the Respondent breached her obligations under s 335(1) of the Uniform Law not to participate in the affairs of the Law Practice except under the direct supervision of the manager.
79. The evidence referred to in the Applicant’s submissions is extensive in demonstrating the Respondent’s activities in dealing with clients or with clients’ affairs. Further in cross-examination the Respondent admitted that she had done so without the approval of the manager.
80. Counsel for the Respondent appropriately made the concession that the evidence established that this ground has been made out and that it would be appropriate for the Tribunal to make a finding that the Respondent had engaged in unsatisfactory professional conduct. Whilst we acknowledge that the Respondent appears to have acted in a manner that did not involve receiving remuneration or other pecuniary gain, nevertheless, the Respondent, in our view, acted not only in breach of the Uniform Law but also directly in defiance of the directions given to her by the manager.
81. In the circumstances we are of the opinion that the Respondent’s conduct constitutes professional misconduct in that she engaged in conduct over a period of weeks, which can be fairly characterised as a consistent failure to maintain a reasonable standard of competence and diligence, having regard to her obligations to act consistently with the requirements of the Uniform Law and with the directions of the manager.
82. In short, ground 2 is made out.
Ground 3
83. We are comfortably satisfied that the Applicant has established that the Respondent breached s 10 of the Uniform Law by engaging in legal practice for a period at which time she was not an Australian legal practitioner because from 1st July 2016 she did not hold a current practising certificate We agree with the Applicant that such conduct constitutes serious misconduct because it circumvents the protections that the Uniform Law provides for clients who engage lawyers. It is fundamental that to undertake any work as a solicitor in New South Wales a person must hold a current practising certificate. Each solicitor knows or should know that this is a critical requirement at all times. In our view, the Respondent’s conduct justifies a finding that the Respondent is not a fit and proper person to engage in unsupervised legal practice.
84. In coming to the conclusions explained above, we have taken account of the Respondent’s submissions that the Respondent acted for a relatively short period and that there is no evidence that the Respondent behaved dishonestly. The Respondent resists a finding of professional misconduct. However, for the reasons set out above, we are of the opinion that the Respondent’s conduct is serious not only because it potentially put the protection of clients at risk, but also it was conduct in defiance of the directions of the manager.
85. Ground 3 is made out.
Ground 4
86. This ground concerns the fact that the Respondent acted during a period when she had no professional indemnity insurance. The Applicant relied upon the same evidence as is applicable to ground 3 and submitted that the Respondent’s conduct amounts to professional misconduct on the basis that it is conduct that constitutes a substantial failure to maintain a reasonable standard of competence and diligence. We agree. We note that the Respondent conceded that a finding of unsatisfactory professional conduct may be made but, in our view, that characterisation of the Respondent’s conduct does not sufficiently reflect the seriousness of the Respondent’s conduct. Ground 4 is made out.
Ground 5
87. This ground concerns the shortcomings in the maintenance of client files. The evidence is detailed and substantial and, in our view, this ground has been clearly made out. We agree with the Applicant that the Respondent’s conduct in this respect has been substantial and consistent, constituting a failure to maintain a reasonable standard of competence and diligence justifying a finding that the Respondent has been guilty of professional misconduct. We make such finding.
88. We have taken account of the Respondent’s submissions to the effect that there was no evidence tendered by the Applicant, suggesting that the Respondent had not been able to successfully complete conveyances. That may be so but the proper maintenance of files and other records is an important obligation imposed on practitioners because it enables clients affairs to be understood and acted upon, to the benefit of the clients, by other practitioners in the event that the practitioner handling a client file is or becomes absent. In other words, the Respondent’s omissions in the maintenance of client files and records potentially put her clients at risk.
89. Accordingly, we are satisfied that this ground has been made out.
Grounds 6 and 7
90. These two grounds concern the stamp duty transaction number not related to the particular transfer in question described in detail earlier in this decision. These grounds also concern the fact that the Respondent signed a Declaration well after settlement in circumstances where the declaration should have been lodged when the purchase agreement was stamped. The particulars alleged in the amended application in respect of these grounds are clearly made out.
91. We agree with the Respondent that these grounds raise a very serious allegation, and we are satisfied that they have been made out to the standard required by Briginshaw v Briginshaw. The suggestion by the Respondent that a member of staff could have been involved in the stamping of the transfer or that a client may have been so involved is unconvincing and we have no reason to think that a client or an employee was involved.
92. We agree with the Applicant that the conduct described constitutes professional misconduct under both s 297(1)(a) and/or (b) of the Uniform Law because the conduct constitutes a substantial failure to reach and maintain a reasonable standard of competence and diligence in acting on conveyancing on behalf of clients. The consequences of such conduct were clearly set out in the Moliterno report. We confirm that grounds 6 and 7 have been made out.
Ground 8
93. We agree with the Applicant that the evidence has established that the Respondent failed to comply with the s 371 notice within the extended timeframes required and that the replies were sufficiently deficient as to constitute, in many cases, a failure to adequately respond.
94. We acknowledge the Respondent’s submissions that the questions were extensive and that they related to events that had occurred a considerable time earlier, and further that the Respondent did provide some information responsive to the Applicant’s notice. Nevertheless, the ground is made out and we are of the opinion that in relation to ground 8 the Respondent has engaged in unsatisfactory professional conduct. Given the matters raised by the Respondent, we are disinclined to characterise the Respondent’s conduct concerning ground 8 (when considered in isolation) as constituting professional misconduct.
Grounds 1 to 8 considered together
95. We agree with the Applicant’s submissions that the Respondent’s conduct when considered in totality constitutes professional misconduct under the Uniform Law. That is of course not surprising as we have already described the Respondent’s conduct as constituting professional misconduct with respect grounds 1 to 7.
96. We agree with the Applicant’s submissions that the Respondent has displayed significant deficiencies in the running of her Law Practice and has failed to abide by the requirements of Uniform Law.
97. In addition, we were not impressed with many of the answers of the Respondent in cross-examination. In some cases the answers were non-responsive and in other cases, the Respondent’s answers demonstrated a lack of respect for or understanding of her obligations as a legal practitioner under the Uniform Law.
The Protective Orders
98. As the Applicant’s written submissions state the purpose of the Tribunal’s jurisdiction to make orders in the context of solicitor disciplinary matters is not punitive but rather protective. In Law Society of New South Wales v Bannister (1993) 4 LPDR 24 at [28], Sheller JA said that:
“The primary consideration is to protect the public by preventing a person unfit to practice from holding himself or herself out to the public as a legal practitioner in whom members of the public might repose confidence. The Tribunal must also act so as to deter the offender in the future and any other practitioner minded to behave in like manner”.
99. Additionally, the Tribunal’s function is consistently educative “publicly marking the seriousness of what the instant solicitor has done” (per Mahoney JA in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441).
100. We agree that it is appropriate that the Respondent be reprimanded and note that the Respondent does not oppose that order.
101. Secondly, we agree with the Applicant that it is appropriate that the Respondent pay a fine. The purpose of imposing a fine is to mark the Tribunal’s disapproval of the solicitor’s conduct (Law Society of New South Wales v Walsh [1997] NSWCA 185 at [40]. The fine to be imposed must convey to the legal profession and to the community in general that such conduct is unacceptable (Russo v Legal Services Commissioner [2016] NSWCA 306 at [82]).
102. The Applicant has proposed a fine in the range of between $10,000 to $15,000. We were not supplied with any evidence as to the financial capacity of the Respondent, but note that the Respondent has apparently not been able to work as a legal practitioner for a considerable period. However, it appears she has practised as a conveyancer. We are of the opinion that the imposition of a fine in the sum of $10,000 is sufficient to mark our disapproval of the Respondent’s conduct as well as to act as a sufficient deterrent more generally.
103. Thirdly, it is appropriate that the Respondent be ordered to take a course in practice management and we agree with the terms of the order proposed by the Applicant. We note that the Respondent does not oppose that order.
104. Fourthly, we agree with the Applicant that the Respondent should be restricted from applying for a principal’s practising certificate unless she has held five practising certificates in five separate practising certificate years authorising her to engage only in supervised legal practice. This order is appropriate both for the Respondent’s own purposes to develop as a legal practitioner, but also as a reasonable protection to the public.
105. We should add that the Respondent presented to us during the course of her cross-examination as someone who found it difficult to face up to her professional responsibilities which involved complying with the various provisions of the Uniform Law. She seemed to be of the opinion that as long as she acted in the interests of her clients by carrying out their instructions the necessity for a practising certificate and professional indemnity insurance could be sorted out in due course. One purpose of the course proposed by the Applicant is to refresh the Respondent’s knowledge of her professional obligations to comply with the law generally, particularly the law regulating legal practitioners. The purpose of the order requiring her to practice in a supervised way for five years is to ensure that she experiences a professional environment that exposes her to the correct ways of discharging her professional responsibilities and, in addition to protect clients.
106. Accordingly, we make the orders proposed by the Applicant in the amended application as follows:
1. The Respondent is reprimanded.
2. The Respondent is to pay a fine of $10,000 to the Applicant within 2 months or such longer period agreed by the Applicant.
3. No practising certificate is to be granted to the Respondent until she undertakes further education in the following terms:
1. The Respondent must undertake, complete and pass, at her own expense, a course that is approved by the Law Society of New South Wales’ Director, Legal Regulation (Director) dealing with Practice Management (Course) and therein achieve a pass mark of not less than 65%.
2. The Respondent shall, within seven (7) days of receipt of notification of the result of her participation in the Course, provide the original of such notification to the Director.
4. The Respondent may not apply for a practising certificate that would authorise her to be a principal of a law practice until after she has held five (5) practising certificates in five (5) separate practising certificate years that authorise her to engage in supervised legal practice only.
Costs
107. At the hearing the Respondent’s counsel addressed us briefly on the question of what costs order should be made. Counsel submitted that the original application lodged by the Applicant contained three grounds which were subsequently dropped. Counsel submitted that if a ground is not sustained, then the Respondent should not have to pay costs with respect to a ground which has been dropped or was not made out.
108. Further, counsel for the Respondent submitted that there had been considerable delay in the Applicant prosecuting these proceedings and such delay should be taken into account in the Respondent’s favour when considering what costs order should be made. Counsel submitted that these factors may amount to exceptional circumstances working in favour of the proposition that the Applicant should not have an unqualified costs order.
109. In view of the inadequate time remaining available we directed the parties to lodge submissions with respect to costs. The Applicant subsequently did so. The Respondent did not file any further submissions but did lodge evidence that she had paid for professional indemnity insurance for the year 2016/17 and further that she had been registered with the Office of the Chief Commissioner for State Revenue for “eDuties”. It appears that the Respondent now practices as a conveyancer.
110. The Applicant’s submissions on costs can be summarised as follows:
1. Clause 23 of schedule 5 to the NCAT Act provides that the Tribunal “must” make orders requiring a respondent lawyer whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs unless the Tribunal is satisfied that the exceptional circumstances exist. Similar provisions are contained s 303 of the Uniform Law.
2. Exceptional circumstances have been held by the Tribunal to be circumstances that are out of the ordinary or unusual or special or uncommon, but need not be unique or unprecedented, or very rare. That description of exceptional circumstances has been applied in Council of the New South Wales Bar Association v BRJ (No 2) [2015] NSWCATOD 140 at [22].
3. Contrary to the submissions advanced on behalf of the Respondent at the hearing, there are no exceptional circumstances in this case that would justify the Tribunal not making a costs order in favour of the Applicant.
4. With respect to the Respondent’s submission concerning the delay in the prosecution of the proceedings, the Applicant’s submission stated that disciplinary investigations do experience delays and such delays do not disentitle the Council to its costs: Council of the Law Society of New South Wales v Fisher (No 2) [2021] NSWCATOD to 135 at [44].
5. The fact that some grounds in the original application were not pressed by the Applicant does not take the matter “out of the ordinary”. Nor does the reduction in the grounds constitute conduct disentitling the Applicant to an order for costs.
6. The Respondent did not provide evidence that it had incurred specific costs in relation to the grounds not pressed. The Respondent at the hearing referred to the decision in Council of Law Society of NSW v Batalha [2020] NSWCATOD 158 where the Tribunal held that exceptional circumstances existed including because the Council determined not to press certain grounds of its application after the Tribunal had reserved its decision. In these proceedings the Applicant determined not to press certain grounds prior to the final hearing of the proceedings.
7. The Applicant’s submissions drew to our attention that the parties had agreed that should the Tribunal find the Respondent guilty of professional misconduct or unsatisfactory professional conduct then they propose that an order requiring the Respondent to pay the Applicant’s costs, fixed in the sum of $10,000, should be made (noting that the Tribunal is not bound by such agreement). The Applicant stated that the amount of $10,000 represents a portion of the Council’s actual costs and disbursements in these proceedings.
We find that there are no exceptional circumstances in this case warranting any order that would depart from the requirements of cl 23 and s 303. We agree that the order proposed by the parties fixing costs at $10,000 is not inappropriate.
111. Accordingly, we make the following order (order 5) as follows:
(5) The Respondent is to pay the Applicant’s costs fixed in the amount of $10,000 within 2 months or such longer time agreed by the Applicant.
************
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 25 July 2024 | 13,498 |
nsw_caselaw:190ddfb7e7c8d7b92d7cbc6f | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Britton v R [2024] NSWCCA 138 | https://www.caselaw.nsw.gov.au/decision/190ddfb7e7c8d7b92d7cbc6f | 2024-07-26T22:25:57.555245+10:00 | Court of Criminal Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Britton v R [2024] NSWCCA 138
Hearing dates: 3 May 2024
Date of orders: 26 July 2024
Decision date: 26 July 2024
Before: Stern JA at [1];
Rothman J at [8];
Yehia J at [163]
Decision: (1) Grant leave to appeal.
(2) Allow the Appeal.
(3) Quash the sentence imposed on the applicant by the District Court on 13 April 2023.
(4) Impose the following sentence on the applicant:
(a) Record a conviction for 2 Counts of unlawful killing on 28 September 2019, the victims for which were Kazzandra Widders and Skye Luland.
(b) Impose an aggregate sentence of a non-parole period of 2 years and 3 months commencing 19 January 2023 and expiring 18 April 2025 with a remainder of term of a further 2 years and 9 months, expiring 18 January 2028.
(5) The applicant is first eligible for parole on 18 April 2025.
(6) The applicant is warned that as a result of these offences, the State may apply for an Order under the Crimes (High Risk Offenders) Act 2006 (NSW) by which she may, after the expiry of her sentence or after parole, be governed by supervision orders and/or continuing detention.
Catchwords: CRIME – appeals – appeal against sentence – manslaughter – where applicant drove motor vehicle towards victims acting in defence of her daughter – whether sentencing judge failed to take into account relevant considerations when assessing objective seriousness – relationship between objective seriousness and moral culpability – identifiable error in the sentencing exercise – applicant re-sentenced.
Legislation Cited: Crimes Act 1900 (NSW), s 24
Crimes Sentencing (Procedure) Act 1999 (NSW), ss 3A, 5, 22A, 23
Criminal Appeal Act 1912 (NSW), s 6(3)
Crimes (High Risk Offenders) Act 2006 (NSW)
Cases Cited: BM v R [2019] NSWCCA 223
Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37
Dinsdale v The Queen (2000) 202 CLR 321; [2000] HCA 54
Director General of Department of Community Services; Re Sophie [2008] NSWCA 250
Douglass v R [2001] NSWCCA 250; (2001) 34 MVR 35
DS v R; DM v R (2022) 109 NSWLR 82; [2022] NSWCCA 156
Elias v The Queen (2013) 248 CLR 483; [2013] HCA 31
House v The King (1936) 55 CLR 499; [1936] HCA 40
Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6
Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221
Paterson v R [2021] NSWCCA 273
R v Blacklidge (Court of Criminal Appeal (NSW), Gleeson CJ, 12 December 1995, unrep)
R v Borkowski [2009] NSWCCA 102; (2009) 195 A Crim R 1
Russell v R (2023) 112 NSWLR 533; [2023] NSWCCA 272
Tepania v R [2018] NSWCCA 247
Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14
Category: Principal judgment
Parties: Linda Maree Britton (Applicant)
Rex (Respondent)
Representation: Counsel:
S J Odgers SC (Applicant)
M Millward (Respondent)
Solicitors:
Legal Aid NSW (Applicant)
Office of the Director of Public Prosecutions (Respondent)
File Number(s): 2019/304059
Publication restriction: Section 15A of the Children (Criminal Proceedings) Act 1987 (NSW) prevents the publication of the name of any child referred to in the proceedings.
Decision under appeal Court or tribunal: District Court of NSW
Jurisdiction: Criminal
Date of Decision: 13 April 2023
Before: Huggett SC DCJ
File Number(s): 2019/304059
HEADNOTE
[This headnote is not to be read as part of the judgment]
On 31 October 2022, following a trial in the District Court of NSW, the applicant, Ms Linda Britton, was found guilty by a jury of two counts of manslaughter. The applicant was sentenced by Huggett SC DCJ (“the sentencing judge”) to an aggregate term of imprisonment for 6 years, commencing on 19 January 2023, with a non-parole period of 3 years.
The factual circumstances of the applicant’s offending occurred during a physical altercation that took place in the car park of a Plaza Shopping Centre in Nambucca Heads between certain members of the applicant’s family and the Widders group. During the unfolding violence, the applicant saw her daughter, Skye Luland, lying face up motionless on the ground with Kazzandra Widders leaning over her and repeatedly punching her. In an attempt to protect her daughter, the applicant decided to drive her motor vehicle towards Kazzandra intending to nudge her off Skye. However, the applicant caused the deaths of both her own daughter and Kazzandra by tragically crushing them with her motor vehicle.
The applicant sought leave to appeal against her sentence on two grounds:
Ground 1: The sentencing judge erred in failing to take into account relevant considerations when assessing the objective seriousness of the offences.
Ground 2: The aggregate sentence was manifestly excessive.
The Court held (Rothman J, Stern JA and Yehia J agreeing) granting leave to appeal, allowing the appeal and resentencing the applicant:
As to Ground 1:
(1) There is a clear distinction between objective seriousness of an offence and the moral culpability of an offender. Nevertheless, some of the circumstances that should be considered in determining moral culpability may be relevant to the determination of objective seriousness, such as provocation, motive, mental illness, and perceived self defence: at [113]- [114] (Rothman J), [2] (Stern JA), [168]-[170] (Yehia J).
BM v R [2019] NSWCCA 223, DS v R; DM v R (2022) 109 NSWLR 82; [2022] NSWCCA 156, Russell v R (2023) 112 NSWLR 533; [2023] NSWCCA 272, referred to.
(2) The sentencing judge failed to take into account a material consideration and there is an identifiable error in the sentencing exercise: at [126] (Rothman J), [3], [6] (Stern JA), [169], [171] (Yehia J).
As to Ground 2:
(3) Having found that error was established in relation to ground 1, it was unnecessary to consider ground 2: at [127] (Rothman J).
(4) As to the principles applicable when considering manifest error: at [95] (Rothman J).
Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 22, referred to.
JUDGMENT
1. STERN JA: I agree with the orders proposed by Rothman J for the reasons his Honour gives. Without in any way derogating from my agreement with his Honour’s reasons, I will add some short additional observations.
2. It is well established that, in making an assessment of the objective seriousness of offending, “all factors which bear upon the seriousness of the offence should be taken into account (unless excluded by statute). Factors such as motive, provocation or non-exculpatory duress may be taken into account in this way”: Tepania v R [2018] NSWCCA 247 at [112] (Johnson J, Payne JA and Simpson AJA agreeing). Those matters may bear upon the nature of the offending notwithstanding that they may also be characterised as relevant to moral culpability. As the Court found in BM v R [2019] NSWCCA 223 at [17], there may be an error in failing to take into account matters of relevance to the objective seriousness of offences even where those matters were taken into account when assessing the moral culpability of the offender.
3. Here, her Honour found that the applicant’s overwhelming desire to assist her daughter had a serious bearing on her decision to act as she did that night, that when the applicant drove towards the victims the applicant was not seeking to engage in violence but was seeking to protect her daughter, that the applicant’s intention was to no more than “nudge” Kazzandra off Skye, and that the applicant’s response to the threat to Skye was “not excessive by a significant margin.” Like Rothman J, I consider that these matters go to, and were required to be taken into account in assessing, the objective seriousness of the offending.
4. Her Honour expressly considered these matters in the section of the remarks on sentence in which her Honour addressed the applicant’s moral culpability. As to this, her Honour expressly found that “[t]hese considerations”, which included the matters I have set out at [3] above, and the impact of the applicant’s own background, led “to a substantial reduction in the [applicant’s] moral culpability for offending that is otherwise, considered objectively, of considerable seriousness” (emphasis added). The use of the word “otherwise” in this context, makes it plain that those matters were not taken into account in her Honour’s earlier assessment of the objective seriousness of the applicant’s offending.
5. It should be observed that, somewhat earlier in the remarks on sentence, shortly after concluding that the objective seriousness of the offences was “considerable”, her Honour said that “[i]t is accepted that the offender perceived it was necessary to act as she did in defence of Skye.” This was in the context of considering a submission on behalf of the applicant that the conduct of the Widders’ group was provocatory. Her Honour did not consider that “this concept [added] anything to the determination of objective seriousness.” Almost immediately after these references her Honour added “I will return to considerations relevant to moral culpability shortly.”
6. Having regard in particular to her Honour’s statement that she would “return” to considerations of moral culpability, and to her Honour’s analysis when considering moral culpability, which I have set out at [4] above, I would infer that, whilst her Honour referred to motive at this earlier point in the remarks on sentence, her Honour did not take these matters into account when assessing objective seriousness. Further, there is nothing to indicate that her Honour had any regard to her finding that the applicant’s response to the threat to her daughter was “not excessive by a significant margin” when assessing objective seriousness.
7. As Rothman J explains, it follows that her Honour failed to have regard to a material consideration when sentencing the applicant.
8. ROTHMAN J: On 31 October 2022, the applicant, Linda Britton, was found guilty of two counts of manslaughter after trial by jury. Initially, the applicant had been charged with four counts, which included two back-up charges of driving in a manner dangerous causing death. The two manslaughter charges, therefore, were Counts 1 and 3 on the indictment.
9. On 13 April 2023, the applicant was sentenced at the District Court of NSW to an aggregate sentence of imprisonment of 6 years, commencing 19 January 2023, with a non-parole period of 3 years, expiring 18 January 2026. The learned sentencing judge nominated indicative sentences of 5 years’ imprisonment for each offence.
10. The applicant seeks leave to appeal and appeals the sentence imposed upon her on the following grounds:
1. Ground 1: The sentencing judge erred in failing to take into account relevant considerations when assessing the objective seriousness of the offences.
2. Ground 2: The aggregate sentence was manifestly excessive.
Circumstances of offending
11. The learned sentencing judge summarised the facts leading up to and involved in the offences. No substantive issue was taken with her Honour’s summary. The following summary is taken from her Honour’s Remarks on Sentence.
12. Her Honour, for reasons which will be explained later in these reasons, could not definitively determine all the circumstances. Her Honour made clear that the events took place: in the car park, where the deaths occurred; they occurred suddenly and unexpectedly at night; and, in an atmosphere that was volatile and frightening.
13. In the early hours of 28 September 2019, Kazzandra Widders, was at an address in Nambucca Heads, where her brother, Harold, lived, to celebrate Harold’s birthday. Kazzandra was 20 years of age and is one of the victims in these offences.
14. On the same afternoon, the applicant’s daughter, Skye Luland, was at another address in Nambucca Heads. She was drinking alcohol and there were several younger children at the premises. At around 7.30pm, on 28 September 2019, Skye left the address on foot apparently to obtain food and drinks.
15. At around 9.30pm, Skye’s niece, “NM”, became concerned at Skye’s failure to return and left to search for her Aunt. NM located Skye lying on the driveway of a nearby motel. Apparently, Skye had tried to kill herself twice by “hopping around cars” and NM and Skye argued, NM informing Skye that she could not act in that way and trying to convince Skye to return to their initial address. Skye continued to express the view that she did not want to live anymore, stood up and walked towards Giinagay Way.
16. At that time, Kazzandra and her two sisters were driving along Giinagay Way in order to buy mixers. As Kazzandra drove towards Skye and MS, Skye stepped in front of Kazzandra’s car forcing her to swerve to miss her.
17. While it seems that Kazzandra and Skye were not known to each other, each had a nephew who were friends. After swerving, Kazzandra stopped the car, got out of it and began yelling at Skye. A physical altercation developed between the two. The physical altercation included pushing, hair pulling and punching. At the conclusion of the altercation, Kazzandra drove away with her sisters.
18. Concerned about Skye, NM tried to call an ambulance, but her phone was out of charge. Skye left and NM returned to the house to use another phone. Police received a call from NM at approximately 10.00-11.00pm. She reported what had happened. NM then rang her step-grandfather, David Luland, who was Skye’s father and the applicant’s partner. NM also called an ambulance.
19. NM informed David Luland that some girl had beaten up Skye and David Luland responded that he would be there in 10 minutes.
20. David Luland then called the applicant who was at their home in Nambucca Heads and informed her that a group of women had bashed Skye and that they needed to go and get her. After being dropped home, David Luland entered the applicant’s car. The applicant’s car was a compact Daewoo Lacetti sedan with a gross mass of 1695 kilograms. The applicant drove to the address from which NM called. The applicant had not been drinking, but David Luland had been.
21. NM informed Police, David Luland and the applicant that Skye had been throwing herself into traffic, stating that she wanted to kill herself and:
“That a group of girls pulled over and ‘bashed’ her and that Skye had run away and that she ([NM]) did not know where Skye was ... [NM] also said that she had herself suffered some injuries helping Skye.” [1]
22. The applicant was upset and stated that the persons who had assaulted Skye should be charged.
23. The applicant then left and took three of her grandchildren to a family residence in Macksville. NM was still at the house with the applicant’s grandson, who was aged 10, and a friend of the grandson.
24. After dropping two off the grandchildren, the applicant returned with her eight-year-old granddaughter and picked up NM and the applicant’s grandson. The grandson’s friend was sent home.
25. While the applicant was dealing with the children, David Luland embarked on foot in search for Skye. The Police were also looking for her. At around the same time, being approximately 11.10pm, David Luland and the Police, separately, located Skye. She appeared to be uninjured and, in conversation, was dismissive about MS’s report that she had been stepping in front of a car.
26. Initially she complained that her handbag and phone had been taken by persons who had assaulted her, but she withdrew that complaint stating that she may have left them in a bus shelter.
27. She was later seen by Police at a nearby bus shelter. They asked her if she had located the bag and phone and she replied in the negative but, that they should not be worried about it. David Luland and Skye then went to the Plaza Shopping Centre. The applicant drove towards the Plaza Shopping Centre with NM in the front seat and the other two grandchildren in the rear. She parked on Bellwood Road to the right of a car park.
28. Coincidently, the Widders group left their location in a white Commodore. Aside from the earlier altercation on Giinagay Way and the friendship between Kazzandra and Skye’s nephews, the Widders group and the Luland group were unknown to each other. The Widders, in the Commodore, pulled into the nearby Plaza Shopping Centre and stopped at the other end of the car park. Four of them alighted and approached the other side of the car park where the applicant had stopped. NM alighted the applicant’s car and approached Skye to hug her. The applicant got out of her car and Skye, seemingly noticing the Widders, said words to the effect:
“Mum, it’s them girls again.”
29. One or more persons from the Widders group said something about their nephew asking, generally to the Luland group:
“What did youse do to my nephew?”
Skye replied and, during that reply, asked what had happened to her phone. Kazzandra approached Skye and started ‘laying into her’, saying:
“I got you earlier on.”
30. As that was happening, at least two persons obtained weapons from their respective cars – a Bundi stick and, in the case of David Luland, a plastic children’s cricket bat. Sticks were also picked up from the ground.
31. The applicant was not the instigator of the violence in the car park but came to believe that one of the women responsible for assaulting Skye earlier when she stepped in front of the car was present, namely Kazzandra.
32. The applicant approached Skye, at which point someone hit the applicant “really hard” from behind. The applicant was also punched in the face while being held by her hair. The applicant managed to break away and move back towards her car, at which point she was struck to the right forearm with an object which she believed was the Bundi stick, and which was probably an injury inflicted when the applicant raised her right arm to protect her face. The applicant called out to David Luland that her arm was broken, and, at about the same time, David Luland was struck to parts of his body including his head and shoulders resulting in him passing out and falling to the ground.
33. At some point, NM intervened and was punched by a female and tackled to the ground. The applicant and NM managed to get back to the Daewoo which was still parked facing east on Bellwood Road. NM entered the back seat where the two grandchildren were sitting. The applicant got into the driver’s side and even though she had suffered a fractured right wrist and a fractured left thumb, was able to drive.
34. One of the males from the Widders group was banging on the outside of the Daewoo. The two grandchildren in the rear were hysterical. “The atmosphere was charged, chaotic and frightening.” NM was urging the applicant to drive, saying words to the effect:
“Go Nan, just drive, Nan just drive, go.”
35. At that point in time, the applicant started the motor vehicle and noticed that Skye and Kazzandra were engaged in an altercation in which Skye was lying face up motionless on the ground with Kazzandra leaning over her. The applicant perceived that Skye was “just getting punched and punched repeatedly…probably six, seven times to the head.” [2]
36. The applicant felt both helpless and scared. She wanted to help Skye and made the decision to attempt to push Kazzandra off Skye with the front bumper bar of her Daewoo. She performed a 270-degree U-turn and “went fast” up the southern gutter which put her onto the grassed footpath verge on Bellwood Road. She accelerated leaving traction marks from the tyres on the grass and the car moved slightly to the right of where Kazzandra and Skye were positioned.
37. The front tyres of the Daewoo struck the guttering bordering the car park, leaving gutter strike marks, and the spinning front wheels left acceleration tyre marks on the concrete of the car park. The Daewoo struck and mounted the next gutter in the car park and travelled onto another grassed area. It then travelled off that grassed area and passed over another gutter leaving a breaking mark and came to land on top of both victims who were very low on the ground, compressing them and killing them.
38. In the summary of the learned trial judge on sentence, repeated in the immediately preceding paragraph, her Honour expressed the view that “another way of describing up and down trajectory of the car is that it ‘bounced’.” The applicant’s car was travelling at a speed of less than 30km/h when it landed on the victims. Both victims were trapped under the Daewoo, at which point the scene became considerably more frantic. People associated with the Widders group began to hit the Daewoo with their fists and with objects. There was significant yelling on their part.
39. Kazzandra was trapped underneath the carriage of the car towards the front. Her cause of death was identified as multiple injuries and a mechanical asphyxia. The motor vehicle, resting on her body, had prevented her ability to breathe and her blood from circulating. Kazzandra had a blood alcohol reading of 0.179 percent at the time and a low level of cannabis was detected.
40. Skye was trapped underneath the carriage of the Daewoo towards the rear. The cause of death in her case was multiple injuries, particularly fractures to multiple ribs affecting her ability to breathe and blood loss. Skye had a blood alcohol reading of 0.155 percent and a low level of methylamphetamine was detected.
41. On postmortem, neither Skye nor Kazzandra was observed to have any significant facial injuries. Kazzandra did not have any injuries to her knuckles.
42. The foregoing summary of events was taken entirely from the summary of the sentencing judge and was unchallenged on appeal.
Remarks on Sentence
43. The learned sentencing judge summarised the facts relevant to sentencing from which the foregoing summary of facts has been taken.
44. It is unnecessary to summarise large parts of the Remarks on Sentence, most of which is uncontentious. As already stated, her Honour set indicative sentences of 5 years for each offence and imposed an aggregate head sentence of 6 years’ imprisonment, with a non-parole period of 3 years. The maximum sentence for manslaughter is 25 years’ imprisonment [3] with no prescribed standard non-parole period.
45. The learned sentencing judge recounted that the Crown had accepted that, at the time of the applicant’s unlawful and dangerous conduct, the applicant honestly perceived it was necessary to conduct herself in that manner to defend her daughter from serious injury or death. The fundamental issue at trial was the reasonableness of the conduct of the applicant.
46. In other words, the trial concerned whether the defence of self-defence (in this context including defence of another) afforded a defence to the conduct of the applicant, which was, if it were not, otherwise criminal. There were issues associated with the accuracy of the observation by the applicant that her daughter was being stomped on and punched severely to the head. The medical evidence in that regard is, in the best case for the applicant, equivocal. Other witnesses testified to the same effect as the observations of the applicant.
47. Her Honour noted in her Remarks on Sentence that the applicant had no alcohol or drugs in her blood. She was taken to hospital to be treated for her injuries at which time a blood sample was taken.
48. Her Honour then recited the evidence as to the conversation between Police and the applicant. The conversation is consistent with the perception by the applicant, genuinely, that the applicant engaged in the conduct in defence of her daughter. The applicant admitted to being the driver of the vehicle that caused death.
49. Her Honour also recounted the injuries to the applicant; to David Luland; and to Harold Widders Jr. There were less serious injuries to others, some of which are recited by her Honour.
50. Her Honour then detailed the distance travelled by the Daewoo from its parked position to the point at which it landed on the victims, being at least 17.5 metres, not including the distance involved in performing the U-turn. Her Honour remarked that the Daewoo travelled a relatively short distance over a short period of time.
51. Her Honour qualified submissions made on the demeanour of the members of the Widders group on the basis that the demeanour disclosed in the Police body worn cameras, was taken at a time after the incident, when the members of the group knew that their loved one had been trapped underneath the car or may have known that she was already deceased and is not, therefore, necessarily indicative of their demeanour before the victim had been trapped.
52. Her Honour then dealt with other paragraphs of the written submissions on behalf of the applicant, after which her Honour remarked that she was moving “now to a consideration of the objective gravity of the offence which [her Honour found] to be considerable for the following reasons.” [4]
53. After reciting that the offences of manslaughter did not involve, and the applicant was not to be sentenced on the basis of, the existence of an intention to kill or even to cause “serious harm”, her Honour remarked that, rather, she is to be sentenced for the commission of an unlawful and dangerous act that led to the death of the two victims. Nevertheless, the offence is one for which, in her Honour’s Remarks on Sentence, a critical consideration will be the taking of a human life, or, in this case, the taking of two lives including the life of her own daughter.
54. Further, the Remarks on Sentence indicate her Honour’s view that this was not a case where the applicant wanted only to frighten the victim, or one of them, but inadvertently struck her. It involved the deliberate use of a motor vehicle as a weapon intending to cause the vehicle to make contact with one of the victims to “nudge” her off the applicant’s daughter.
55. Her Honour found that the:
“Dangerousness of [the applicant’s] conduct was high in the sense that a reasonable person in her position would have appreciated that her actions exposed both victims to an appreciable risk of serious injury including a risk of physical injury as a result of the vehicle striking one or both victims, and a risk of one or both victims being run over and/or crushed by the weight of the car.”
56. Her Honour noted three aspects which her Honour said had a bearing on the dangerousness of the applicant’s conduct, being:
1. the applicant had been assaulted and knew her right wrist had been injured and was painful and floppy when she drove the car;
2. the victims were not standing in an upright position but were low to the ground and did not have the benefit of being warned of her approach by, for example, the beeping of the car horn or flashing of headlights – conduct which would not have endangered life; and
3. the car was being driven along a route that was not an established route but the approach was from an unexpected direction along a path that involved travel up and down curves.
57. Her Honour then listed mitigatory factors in the determination of objective seriousness. These included: spontaneity and the fact that the actions were unplanned; and the actions were the result of a spur of the moment decision made in extreme panic and in a chaotic, volatile and frightening atmosphere. Further, the conduct that led to the commission of the offences took place over a very short period of time.
58. Her Honour dismissed the conduct of the Widders group as provocatory and did not consider that such a concept added anything to the determination of objective seriousness. Her Honour accepted that the applicant perceived it was necessary to act as she did in defence of her daughter. Such an acceptance, her Honour noted, acknowledges that the applicant was reacting to conduct on the part of others.
59. Thereafter, her Honour made the following remark:
“I will return to considerations relevant to moral culpability shortly.” [5]
60. The learned sentencing judge then dealt with the personal circumstances of the applicant. It is unnecessary to summarise them at this point. Then her Honour remarked:
“An assessment of the offender’s moral culpability is an essential part of the sentencing exercise.” [6]
61. Her Honour then dealt with personal circumstances relating to her history of abuse. She also provided information about the sexual abuse of Skye by Skye’s then partner and the applicant’s guilt at failing to protect Skye from that abuse. The learned sentencing judge accepted that the applicant’s overwhelming desire to assist Skye in the face of her post-traumatic stress disorder (“PTSD”) and belief she had failed to protect her daughter in the past, had a serious bearing on her decision to act as she did during the incident.
62. The applicant, on her Honour’s findings, reacted to a threat she perceived was being made to her daughter’s life. Her Honour also noted that the injuries to the applicant and to David Luland demonstrated the seriousness of the threat to which the applicant was responding.
63. Her Honour then said:
“When she [the applicant] drove towards the victims, the [applicant] was not seeking to engage in violence but was seeking to protect her daughter and her intention was to do no more than “nudge” Kazzandra off Skye. She believed what she did was necessary and was the only option available to her to protect her daughter.
In all the circumstances, while her response to that threat was excessive, it was not excessive by a significant margin.
These considerations, coupled with the application of the principles of Bugmy v The Queen [2013] HCA 37 arising from the [applicant’s] own background which left its mark on her and caused her to feel that she had failed Skye in a context which Skye had experienced similar events in her own life, leads to a substantial reduction in the [applicant’s] moral culpability for offending that was otherwise, considered objectively, of considerable seriousness.” [7]
64. Her Honour took the view that the factors mentioned in the above extract also reduced the extent to which the applicant is an appropriate subject for general deterrence. Her Honour suggested that this is not a case for specific deterrence.
65. Her Honour referred to the applicant’s history of offending, which included drug offences, assault offences, contraventions of an Apprehended Violence Order (“AVO”) and a high range PCA. None of the offending resulted in the imposition of a prison sentence as a consequence of which the applicant is now serving her first term of imprisonment.
66. Her Honour then referred to the conviction against the applicant in 2018 for common assault for which a Conditional Release Order (“CRO”) was imposed, which was binding on the applicant at the time of offences, the sentence for which is now under appeal. Her Honour took the view that the circumstance that the applicant was on a bond, at the time of the commission of the offence, was not, in the particular circumstances of this sentence and these offences, a matter of aggravation and also took no action in relation to the breach. Her Honour took the view that, in light of the applicant’s antecedents, she was not disentitled to a degree of leniency.
67. Her Honour also found that there was little or no risk of re-offending and her prospects of rehabilitation were good. Her Honour explained the remorse and guilt felt by the applicant at causing the death of her own daughter whom she sought to protect and discussed the more complicated nature of the applicant’s feelings towards the offending that caused the loss of life to Kazzandra.
68. Her Honour took the view that the applicant had not reached full insight into her offending but found that she was remorseful that the lives of two young women had been lost, with which fact she will live each day. Her Honour found that the applicant would benefit significantly from psychological support.
69. Her Honour also took into account the applicant’s early admissions as to being the driver, which significantly assisted the investigations and was otherwise a matter that may have been in contention, given that a number of witnesses considered that David Luland may have been the driver and he was found in the driver’s seat when the Police arrived.
70. Her Honour also took into account the delay in the trial resolving, which was greater than the usual time taken for a matter to travel through the criminal justice system and involved delays in the case conferencing process and an aborted first trial on account of jury impropriety.
71. The applicant and her extended family were compelled to leave Nambucca Heads as a result of threats of violence and her Honour accepted this constituted a form of extra curial punishment.
72. Her Honour considered it unproductive to consider the history of sentences imposed for the offence of Dangerous Driving Occasioning Death, relying on the description of Howie J of the hierarchy of offences in relation to motor vehicles, with manslaughter at the pinnacle of that structure. [8]
73. As is obvious from the earlier recital of sentences imposed and the indicative sentence, her Honour took into account that the two offences arose out of one incident of driving but was unable to determine that the sentence for one offence encompassed the criminality for the other offence and therefore accumulated the sentence by 12 months for the additional manslaughter.
Submissions
Ground 1: Failure to Take Into Account Relevant Considerations When Assessing Objective Seriousness
74. The applicant argued that the learned sentencing judge, in assessing the objective seriousness of the offences, expressed no consideration of:
1. the motivation for the offending, being to defend the applicant’s daughter and save her life;
2. the applicant’s intention to do no more than make contact with the victim other than her daughter, with the bumper bar at a slow speed and “nudge” her off her daughter;
3. the belief that the action was necessary to defend her daughter and that it was the only option available to her; and
4. the applicant’s response was excessive, but not by a significant margin.
75. Each of the foregoing were findings of her Honour that were taken into account in assessing moral culpability but, on the submission of the applicant, were not taken into account in assessing objectiveness seriousness. These considerations were the subject of submission on objective seriousness before the sentencing judge.
76. On this ground, the Crown submits that the evaluation of objective seriousness is “quintessentially” a matter for the sentencing judge. The facts on sentence were well known to her Honour and her Honour observed, early in her Remarks on Sentence, that the Crown did not dispute that the applicant believed it was necessary to engage in the conduct to defend her daughter.
77. The Crown referred to the Remarks on Sentence at 19.5 [9] that, in assessing objective gravity, the learned sentencing judge had regard to the applicant’s intention “to cause the vehicle to make contact with Kazzandra so as to ‘nudge’ her off Skye.” The Crown also relied upon the passage at Appeal Book p 27 (Remarks on Sentence at 20.7) in her Honour’s Remarks on Sentence, summarised above, mitigating objective seriousness, including “spontaneous and unplanned” conduct, “extreme panic”, “volatile and frightening atmosphere” and that the offences occurred over a “very short period of time.” The Crown also relied upon the passage at Appeal Book p 27 (Remarks on Sentence at 20.7) to the effect that the applicant perceived it was necessary to act in defence of her daughter.
78. The Crown submitted that it was unnecessary for her Honour to repeat those factors that were relevant to moral culpability and taken into account by her Honour in express terms in dealing with the objective seriousness with which the offence was assessed. Further, even though her Honour did not describe the extent to which the applicant’s conduct went beyond that which was reasonable in dealing with objective seriousness, the Crown submits that her Honour took into account, in assessing the objective gravity of the offences, all of the facts that gave rise to that issue and which were noted in dealing with objective seriousness.
79. The Crown submits that the sentencing judge was able to assess the objective seriousness as considerable in circumstances where the applicant intended to use her vehicle as a weapon, a vehicle weighing almost 1700 kilograms, and intended to do more than merely frighten the victim, or one of them. Further, the dangerousness of the applicant’s conduct was high; she drove deliberately at Kazzandra; the route taken was not an established route, but a route over two grass verges which required her to “go fast” up the first gutter, accelerate over the first grass verge and continue on to a section of the car park where she again left acceleration marks before travelling over the second grass area, where the vehicle left brake marks.
80. The applicant was required to accelerate significantly to reach between 20 and 30 kilometres over a relatively short distance and did so at a time when her ability to navigate the vehicle was compromised by her injuries. As noted by her Honour, the Crown submits that the applicant did not utilise the horn or flash headlights as an alternative means of breaking up the physical altercation or to alert the victims to her impending approach.
81. The Crown also relied upon the use of the term “otherwise” in relation to the objective consideration of considerable seriousness. [10]
Ground 2: Manifest Excess
82. The applicant submits that the assessment of objective seriousness as “considerable” was too high. First, on the submission, her Honour erred, in taking into account in assessing objective seriousness, that two lives were taken, because the fact that death resulted is common in all manslaughter offences. It is not, therefore, on the submission, a fact in determining the level of objective seriousness of a particular offence.
83. Secondly, the applicant submits that while unlawful death can be very serious, some cases of manslaughter allow for a non-custodial sentence, which demonstrates the need to approach the fact of death with care and to be weary of generalisations.
84. Thirdly, to the extent that the sentencing judge took into account the fact that two lives were taken, rather than one, when assessing the objective seriousness of each particular offence, that would effectively constitute erroneous double counting. The submissions on manifest excess repeat, to some extent, understandably, the factors relating to consideration of objective seriousness.
85. The applicant then relies upon the reference to Bugmy considerations to which her Honour referred and the existence of PTSD arising from that traumatic childhood. There was also a reduced need for general deterrence and her Honour’s expression that weight needed to be given to “discourage and not condone the use of motor vehicles”, utilises the applicant as a vehicle for general deterrence in circumstances where the applicant was “an entirely inappropriate vehicle for general deterrence”.
86. Further to the foregoing, the “use” of the motor vehicle as a weapon was limited to an intention to make contact at a very slow speed; engaged in circumstances where the applicant believed it was necessary to defend her daughter and was the only option available to her; decided upon instinctively in a chaotic, volatile and frightening atmosphere where the applicant had been seriously assaulted; and engaged as a consequence of the applicant’s PTSD which resulted in a feeling of failure to protect her daughter and an overwhelming need to protect her in the current situation. The applicant submitted that the indicative sentences were unreasonable and plainly unjust and the aggregate sentence manifestly excessive.
87. The Crown referred the Court to the various authorities on manifest excess; that the applicant stood to be sentenced to two offences of manslaughter, each of which carried a maximum penalty of 25 years imprisonment; and that the sentence to be imposed must be such as properly to reflect the fact that the offence involved the taking of human life. Each of those offences was assessed by the sentencing judge as being of “considerable” objective seriousness.
88. The reference to the taking of two lives was not indicative of double counting, on the submission of the Crown, but, rather, the statement of an incontrovertible fact and that her Honour recognised that each of the offences related only to a single victim.
89. The Crown also submitted that even though the subjective circumstances of the applicant were referred to, the applicant was not an “entirely inappropriate vehicle for general deterrence” [11] but rendered the applicant less appropriate as a vehicle for general deterrence, which was the submission before the sentencing judge. The lessening of the appropriateness of the applicant as a vehicle for general deterrence does not render general deterrence of no weight.
90. As to the submissions as to the use of the vehicle, once the applicant decided to use her vehicle to make contact with Kazzandra (even for the purpose of a “nudge”), the vehicle was being used as a weapon.
91. The Crown also defended the sentencing judge’s application of the principle of totality and submitted that the applicant enjoyed the benefit of a “very generous” finding of special circumstances, by which I understand the submission to be that the effect of the finding of special circumstances was “very generous”. The Crown submits that the sentence imposed, after trial, is neither unreasonable nor plainly unjust.
Consideration
92. The Court has been asked to intervene in the sentence imposed upon the applicant on two fundamentally different bases. Ground 1 is alleged to be an identifiable error. Ground 2 relies upon manifest error.
93. It is now trite that for an intermediate appellate court to intervene in the exercise of a discretion, including the imposition of a sentence, the Court is required to find that the judicial officer, at first instance, has acted upon a wrong principle; has allowed extraneous or irrelevant matters to guide or affect the exercise of discretion; has mistaken the facts; or has failed to take into account some material consideration. [12]
94. If an error of the foregoing kind cannot be identified, an appeal court may nevertheless intervene if it were to appear to the court that, on the facts and circumstances before it, the result is unreasonable or plainly unjust. In those circumstances, the court infers error of the kind to which reference is above made, even though it cannot be identified. Such an error is manifest error and, as stated, may be corrected only in circumstances where the result is “unreasonable or plainly unjust.” [13]
95. In Obeid, [14] supra, this Court summarised the principles applicable to intervention based upon manifest error and said at [443] (R A Hulme J, with whom Bathurst CJ, Leeming JA, Hamill and N Adams JJ agreed):
“When it is contended that a sentence is manifestly excessive it is necessary to have regard to the following principles derived from House v The King at 505; Lowndes v The Queen (1999) 195 CLR 665; [1999] HCA 29 at [15]; Dinsdale v The Queen (2000) 202 CLR 321; [2000] HCA 54 at [6]; Wong v The Queen (2001) 207 CLR 584; [2001] HCA 64 at [58]; Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [25], [27]; and Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45 at [59]:
• Appellate intervention is not justified simply because the result arrived at in the court below is markedly different from sentences imposed in other cases.
• Intervention is only warranted where the difference is such that it may be concluded that there must have been some misapplication of principle, even though where and how is not apparent from the reasons of the sentencing judge, or where the sentence imposed is so far outside the range of sentences available that there must have been error.
• It is not to the point that this court might have exercised the sentencing discretion differently.
• There is no single correct sentence and judges at first instance are allowed as much flexibility in sentencing as is consonant with consistency of approach and application of principle.
• It is for the applicant to establish that the sentence was unreasonable or plainly unjust.”
96. Ordinarily, if an identifiable error is disclosed, there is a requirement on the appeal court to re-sentence and submissions on manifest error, be it manifest excess or manifest inadequacy, fall away. Nevertheless, such submissions are relevant to the sentence to be imposed in the re-sentencing exercise of the appeal court.
97. In dealing with whether error has been disclosed in the Remarks on Sentence of a judicial officer, it is important to reiterate that a court on appeal should not be concerned with “looseness of language”, nor “unhappy phrasing”. [15] Further, once an appeal court has identified error then any excess or inadequacy may be explained in which case it would be unnecessary to determine whether manifest error has occurred. Whether or not the identifiable error explains any arguable manifest excess or inadequacy, the circumstance that the appeal court is required to re-sentence renders academic, any ground relying upon manifest error.
98. It is necessary also to deal with the process of sentencing in order to explain that which the learned sentencing judge undertook and that which the Court is required to examine. Regardless of the seriousness of a charge compared with other charges, the Court is required to assess the objective seriousness of a particular offence within the range of conduct covered by the offence. It is necessary to assess the conduct of the applicant to determine where, objectively, in the range of seriousness of the offence of manslaughter, this offence fits. This was the exercise performed by the learned sentencing judge.
99. While the maximum sentence for manslaughter is 25 years’ imprisonment, such a maximum sentence is imposed only in circumstances where the objective seriousness of the offence, and the subjective circumstances of the applicant, warrant the imposition of the maximum sentence. While the term has been deprecated, it was earlier stated that the maximum sentence was applicable only in the “worst category of cases”.
100. In fixing a sentence, a sentencing judge is required to consider both the objective circumstances of the conduct and the subjective aspects relating to the applicant. A sentence is imposed that seeks to achieve the purposes of sentencing as prescribed by s 3A of the Crimes Sentencing (Procedure) Act 1999 (NSW). Those prescribed purposes reflect previous common law principles and include: the protection of society; the deterrence of the applicant, and of others who might be tempted to offend; retribution and reform.
101. The foregoing objectives overlap and may often, if not always, point in different directions. None of the purposes can be considered in isolation and each is a guidepost to the appropriate sentence to be imposed.
102. Sentencing is neither logical nor mathematical. The process of sentencing is often described as “intuitive” or “instinctive” synthesis. Such a process requires the assessment and weighing of each of the objective and subjective circumstances in order to achieve an appropriate sentence that, in the view of the sentencing judge, fulfils the overall objectives undertaken in the sentencing process. [16]
103. The determination of objective seriousness requires a process that may seem difficult to understand for those who are unfamiliar with the process of sentencing. The difficulty is exacerbated when one is dealing with a serious crime.
104. In fixing an appropriate sentence, the Court is required to assess the objective seriousness of the offence, as earlier stated. In doing so, the Court examines the range of conduct that may generally be involved in the offence that has been committed. It is therefore necessary to assess the conduct of the applicant to determine where, in the range of seriousness of conduct, that gave rise to the offence, an offence may fit. The Court in so doing assesses the level of objective seriousness of the offence with which the Court is dealing within the range that exists for an offence of such a kind.
105. It is only in circumstances where the conduct involved, compared with other conduct that could give rise to an offence of this kind in other circumstances, is so grave as to warrant the maximum penalty that the Court could appropriately impose the maximum penalty. In so doing, the Court is not confined to an offence for which it is impossible to conceive of an even worse instance.
106. In assessing objective seriousness, the Court is required to assess objectively the features of the offence and the circumstances of its commission to determine whether it is in the category of worst-case, or lower on the scale of seriousness. The scale is the notional range between the lowest level of seriousness and the worst category of cases.
107. The relative seriousness of an offence, compared with other different offences, is established by the legislature. The objective seriousness of an offence, ascertained for the purpose of sentencing, is the objective assessment of seriousness of the particular offence within the range of seriousness for that particular offence.
108. In that respect, it is appropriate to note that the taking of human life is always serious. For that reason, the legislature has set the maximum sentence prescribed by the legislation for each of murder and manslaughter. That the applicant has taken a life is a necessary aspect of each of murder and manslaughter and does not impact where, in the range of conduct that may give rise to murder or manslaughter, a particular offence may fit.
109. The sanctity of human life is an important aspect of criminal law which the legislature has factored into the maximum sentences available for each of murder and manslaughter. Where a life has been taken with an intention so to do, or even with the lesser intention of causing really serious injury, the conduct amounts to murder and is said to be the most serious crime in the criminal calendar. The maximum sentence for such a crime is life imprisonment.
110. Manslaughter, relevant to these proceedings, is caused by an unlawful and dangerous act. Manslaughter encompasses every kind of punishable homicide, other than murder.
111. Manslaughter still involves punishment for the taking of a human life, but in circumstances that do not involve an intention that renders the injury in the more serious category of murder. It was best described in the following passage:
“The crime of manslaughter comprehends all forms of punishable homicide other than murder. For presently relevant purposes, the crime of murder is taken to have been committed where the act of the accused, causing death, was done with intent to kill or inflict grievous bodily harm, or with reckless indifference to human life. Some forms of manslaughter, … involve conduct which would amount to murder, except for the presence of some recognised mitigating circumstance. Other forms of manslaughter, sometimes referred to as ‘involuntary’, do not involve an intent to kill or inflict grievous bodily harm, or reckless indifference to human life. They may, for example, involve causing death by an unlawful and dangerous act.
It has long been recognised that the circumstances which may give rise to a conviction for manslaughter are so various, and the range of degrees of culpability is so wide, that it is not possible to point to any established sentencing tariff which can be applied to such cases. Of all crimes, manslaughter throws up the greatest variety of circumstances affecting culpability.
At the same time, the courts have repeatedly stressed that what is involved in every case of manslaughter is the felonious taking of a human life. That is the starting point for a consideration of the appropriate penalty, and a key element in the assessment of the gravity of the objective circumstances of the case.” [17]
112. As already indicated, manslaughter involves the broadest range of conduct and does not easily fit within particular pigeonholes or comparisons between one offence and one offender and others. The Court is required to arrive at a sentence that is just, in all the circumstances. This involves individualised justice and a wide sentencing discretion. [18]
113. Some factors may be relevant both to the objective seriousness of an offence and the subjective circumstances of the offender, including moral culpability. Mental illness is an obvious example as is the age of the offender. Others may include motive and provocation. [19]
114. In DS, [20] the Court clarified that there is a clear distinction between objective seriousness of an offence and the moral culpability of an offender. Nevertheless, some of the circumstances that should be considered in determining moral culpability may be relevant to the determination of objective seriousness, such as provocation, motive, mental illness, and perceived self‑defence.
115. The fact that a particular circumstance may be relevant to both objective seriousness and moral culpability or subjective circumstances, does not necessitate double counting. As earlier stated, the process of sentencing is intuitive or instinctive and the determination of an appropriate sentence, bearing in mind such factors in each of objective and subjective circumstances, is inherent in the process and that which, with other factors, renders the exercise a difficult one.
116. As already indicated, in the summary of the Remarks on Sentence, her Honour [21] assessed the “objective gravity of the offences” as “considerable”. Her Honour then set out the reasons, which it is unnecessary to repeat.
117. While her Honour “accepted” that the offence was committed in circumstances that were perceived by the applicant as necessary in defence of her daughter, the comment was a prelude to the expression of opinion that her Honour would return to considerations relevant to moral culpability. Her Honour then dealt with, inter alia, moral culpability, which her Honour suggested was “an essential part of the sentencing exercise”.
118. Her Honour then expressed the view that the considerations that her Honour mentioned, led to a substantial reduction in the applicant’s “moral culpability for offending that was otherwise, considered objectively, of considerable seriousness”. In other words, the use of the term “otherwise” did not signify an alteration in her Honour’s assessment of the objective seriousness.
119. In other words, her Honour’s assessment of the objective gravity or objective seriousness of the offence as “considerable” was not performed having regard to the factors her Honour later mentioned, including acting in defence of her daughter. Moreover, her Honour seems to differentiate between the subjective and objective elements of self-defence or defence of another.
120. Her Honour referred to the applicant perceiving “it was necessary to act as she did”. This is a reference to the objective aspects of self-defence (which term I use here to include defence of another).
121. Self-defence requires two aspects: the subjective motivation for the act, being that the act was done in defence of oneself or another; and, that the act done was reasonable. In this case, it was accepted that the subjective element was satisfied and the applicant acted in defence of her daughter.
122. The issue in the trial was whether the conduct was reasonable in all the circumstances, which, by virtue of the verdict reached, the jury did not accept. Nevertheless, her Honour accepted that the applicant perceived it was necessary and/or reasonable.
123. There is one of two errors that are fundamental in the foregoing. Either the learned sentencing judge has not factored into the assessment of objective seriousness, a circumstance that the applicant was acting in defence of her daughter; or, if the expression recited above was intended to deal with that issue, then the learned sentencing judge has not factored into the assessment, the circumstance that the response in defence of her daughter, while excessive, was not excessive by a significant margin. The last-mentioned aspect was a consideration in moral culpability, but not in the objective seriousness of the offence committed.
124. There is a difference between accepting that the applicant perceived it was necessary to act in defence of her daughter and accepting that the applicant acted in defence of her daughter to which her Honour referred under moral culpability but not in assessing objective seriousness. The only issue in dispute between the Crown and the applicant at trial, was whether, in acting in defence of her daughter, which the applicant did, the applicant’s act was a reasonable response in all of the circumstances.
125. It is necessary to bear in mind the admonition that the Court should not examine the Remarks on Sentence with an eye “finely tuned to error.” [22] However, it would seem that the insignificant excess in the response was a factor that her Honour did not take into account in determining objective seriousness and concluding that the objective seriousness was “considerable.”
126. In those circumstances, the learned sentencing judge has failed to take into account a material consideration and there is an identifiable error in the sentencing exercise. Ground 1 has been established and, pursuant to the terms of s 6(3) of the Criminal Appeal Act 1912 (NSW), the Court should quash the sentence and move to re-sentencing. The omission is material and I do not consider that no lesser sentence is warranted in law.
127. As a consequence of the finding in relation to Ground 1, it is strictly unnecessary to deal with the submissions on manifest excess. Nevertheless, those submissions are relevant, in a different context, to the exercise that needs to be undertaken by the Court, on re‑sentencing the applicant.
Re-Sentencing
128. The circumstances of the offence have been summarised above and it is unnecessary to reiterate those circumstances. It is necessary to make some further comments in relation to the assessment of objective seriousness. This a truly exceptional set of circumstances.
129. First, the uncontroversial circumstance, namely, that the applicant was acting in defence of her daughter, is a matter that is relevant to the determination of objective seriousness and should be taken into account. Secondly, I agree with the assessment of the learned sentencing judge that the degree to which the applicant responded to the threat to her daughter was not excessive by a significant margin.
130. The degree to which the conduct in response to the threat to her daughter was unreasonable or excessive is an important aspect to be factored into the determination of objective seriousness. Whether reasonable or unreasonable, it is also important to remark that the applicant, even in hindsight, could not identify other action she could have taken that would have been effective in relieving her daughter of the perceived threat and causing the assault to cease.
131. Given the injuries that the applicant had sustained, it would have been difficult for the applicant to intervene personally to break up the fight or to stop the threat to her daughter. The obvious recourse was to have called the Police, but it is unclear what, if any, delay would occur from such a course.
132. More importantly, the action that the applicant undertook was a serious risk to the safety of the two victims and others in circumstances where, objectively, the risk to the applicant’s daughter arising from the assault involved far less injury.
133. In discussing the issue of objective seriousness, the learned sentencing judge dealt with the speed at which the applicant was driving, being 20-30kph, in the short distance of 17.5 metres. In so doing, the learned sentencing judge concentrated on the speed of the vehicle. Such speed, or more accurately the velocity, being the speed in the direction of the victims, is relevant to objective seriousness and to the subjective circumstances of the offence and of the applicant.
134. The speed, at which the applicant was travelling towards the victims, discloses that the stated intention of the applicant only to “nudge” Kazzandra, is objectively confirmed. It discloses that the applicant was not seeking to move quickly or travel at an excessive speed.
135. However, it has less relevance to circumstances of the offence itself. As already summarised, the applicant drove the car over two kerbs and grass verges. At the last grass verge, there were brake marks, which discloses that the applicant was seeking to slow down. More importantly, the car did not hit the victims head on. Because the car did not hit the victims head on, the linear velocity of the car is only indirectly relevant.
136. In order to drive over the two kerbs, and the grass verges, a driver would be required to increase the power or torque of the vehicle, rather than its speed. At the time of the incident, the vehicle landed on top of the two victims. Given that the car did not drive over the victims, the front wheels of the car necessarily were in the air. This is a description given by witnesses.
137. The Daewoo Lacetti is a compact car (forerunner to the Holden Cruze), which is front wheel drive. Because the Daewoo is front wheel drive, once the front wheels were airborne, the car was incapable of accelerating or sustaining its speed.
138. Rather, the damage was done by the effect of the car pivoting on its rear wheels and moving downwards on top of the victims. Further, the weight of the vehicle that crushed the victims, was not the totality of the weight of the vehicle, because the vehicle was hinged by its back tyres and the weight that ultimately crushed the victims is relevant to the angle from horizontal from which the bottom of the car dropped. It is unnecessary to be any more technical.
139. However, the power utilised to mount the kerb (or both of them), and move across the grass verges, would have accelerated the car, until it became airborne. The force which ultimately caused the death was dependant upon the height of the front wheels (or, more accurately, the part of the bottom of the car that ultimately made contact with each victim). The velocity (being the speed towards the victims) of the motor vehicle is relevant only to the issue of the intention of the applicant and in calculating the circular motion of the car in a downward direction.
140. Whatever be the mechanism by which death was caused to each of the victims, it was caused by the applicant driving in the manner that she did over a route that caused the vehicle to act as it did.
141. While dealing with objective seriousness, it is necessary to deal with a submission of the applicant that the sanctity of human life, or seriousness of taking human life, is not a factor in determining the objective seriousness of the offence. Of course, the circumstance that manslaughter involves the unlawful killing of another human being, and the sanctity with which the law treats human life, are factors which render manslaughter, and its more serious counterpart, murder, serious offences.
142. The seriousness of those offences is exemplified by the maximum sentence fixed by the legislature. It is not an error for a sentencing judge to remark that the taking of human life is a serious offence and impacts the objective seriousness of the offence in question. Such a remark does no more than reflect the seriousness with which the legislature treats such offences. On the other hand, such a remark says nothing about the relative seriousness of the offence within the range of offences that may comprise manslaughter.
143. Given the circumstances of this offending, I would assess the objective seriousness of the offence as well below mid-range in seriousness.
144. In terms of subjective circumstances, I rely upon those matters to which the learned sentencing judge referred without rehearsing them or reiterating them. Most of them have been the subject of earlier comment in these reasons.
145. One of the matters, to which earlier reference has not been made, is the evidence relating to the childhood of the applicant. The applicant had a difficult childhood which involved sexual and physical abuse and a dysfunctional upbringing.
146. The applicant left home at 15 and was in foster care for a year before falling pregnant with a partner who was, once more, physically abusive. As the sentencing judge correctly noted, the applicant’s upbringing falls within the principles to which the High Court referred in Bugmy. [23] As commented by the learned sentencing judge, those factors lead to a substantial reduction in the applicant’s moral culpability for the offending and I allow for that factor in the sentence to be imposed.
147. The applicant has a criminal history although none of that history is of the seriousness of the offences with which we are now dealing. She had early assault offences, although they seem relatively minor, and was convicted of drug offences. The applicant was also convicted of contravening an AVO Order and driving with a high range of the prescribed concentration of alcohol.
148. In 2018, the applicant was convicted of common assault and a CRO, as earlier stated, was imposed upon her. The current offence occurred at the time that the applicant was on this conditional liberty. I also agree with the learned sentencing judge that, given the extraordinary circumstances of this offending, the history of offending does not operate to disentitle the applicant to a degree of leniency.
149. As it has been pointed out by both the learned sentencing judge and earlier in these reasons, the only issue before the Court at trial was whether the conduct of the applicant was a reasonable response in the circumstances as the applicant perceived them. As a consequence, much of the controversy in evidence was avoided.
150. Given that witnesses in the Widders group stated that David Luland was driving the vehicle at the time of the incident, the admission of the applicant that she was driving the vehicle was extremely important to the administration of justice. If each of the applicant and David Luland were to have denied driving the vehicle (or not admitted to it), it may have been very difficult for the Crown to prove beyond reasonable doubt that the applicant was driving the vehicle. The applicant’s admission was extremely significant. Further, it discloses that the applicant has taken responsibility for the conduct.
151. The admission by the applicant of the fact that she was driving the vehicle at the time facilitated the administration of justice to a significant degree, as did the conduct of the proceedings on that basis and with the limited area of controversy involved. Because of that facilitation, the Court is entitled to impose a lesser penalty than would otherwise be the case under either or both s 22A and s 23 of the Crimes (Sentencing Procedure) Act. Of course, the Court is not entitled to impose a sentence that is “unreasonably” disproportionate to the nature and circumstances of the offence, but it is important to understand that what is prohibited is an unreasonably disproportionate sentence, not a disproportionate sentence.
152. I also accept and would emphasise that the applicant’s risk of re-offending is such that there is no real chance of similar offending occurring again. I also consider that the applicant’s prospects of rehabilitation are extremely good.
153. I take a slightly different view of remorse and contrition than did the sentencing judge. As did the sentencing judge, I consider that remorse is extreme in relation to the death of the applicant’s daughter but do not consider that the remorse in relation to Kazzandra is as complete. While the applicant takes responsibility for the conduct and acknowledges the injury caused by her conduct, her attitude to the conduct, in so far as it affects Kazzandra, does not, in my view, involve deep shame at the commission of the offence and engaging in the conduct in question.
154. There is also the issue of extra curial punishment. Over and above the factors mentioned by her Honour, because the applicant’s daughter is a victim of the offence, the necessary and unintended effect of the applicant’s offending is that the applicant will live the rest of her life without her daughter and with the knowledge that her conduct caused her daughter’s death, in circumstances where the applicant was seeking to protect her daughter. In those circumstances, while not as profound a punishment as that to which this Court referred in Douglass [24] , some allowance for this additional extra curial effect should be made. In Douglass, this Court said at [13] (R A Hulme J, with whom Spigelman CJ and Howie J agreed):
“The second is the situation of the applicant himself. Although any death or permanent injury to a family member caused by stupidity such as that of the applicant will almost inevitably have repercussions which amount to some punishment of the offender, such consequences cannot in the ordinary case be allowed to substitute for that for which Parliament has provided. But in this case, the impact on the applicant is such that those consequences may fairly be taken into account. The extent to which he has immersed himself in his wife's care provides justification for the observation of counsel for the applicant that the applicant has effectively served some three and a half years' home detention during the time that his wife has been out of hospital since the accident.” [25]
155. The Court must be particularly careful in allowing extra curial punishment as a factor in the determination of the sentence because, particularly in circumstances such as the present, one cannot substitute the difficulties associated with the effect of criminal punishment with the punishment prescribed by the legislature. Nevertheless, at least in relation to the manslaughter of Skye, the effect on the applicant is profound.
156. As already stated, I find special circumstances, as did the sentencing judge. The prospects of rehabilitation and the confidence with which the Court can approach the likelihood of any re-offending is such that the non-parole period can be significantly shorter than the ratio prescribed by the statute. There is an important and significant need for the applicant to be treated in the community over an extensive period, particularly because this offence itself may exacerbate the PTSD suffered and the feelings as to the failure to protect her daughter.
157. Lastly, there is the issue of totality. The two offences arise out of the one course of conduct. More importantly, the two offences arise out of the one act in circumstances where there was no intention to inflict serious damage on anyone. The circumstance that as a result of the conduct there were two deaths is a wholly unintended and unexpected effect of the applicant’s conduct. It is, however, a factor that has been measured in assessing the dangerousness of the conduct.
158. I consider it is appropriate to impose an aggregate sentence. I note that, in my view, the threshold set by s 5 of the Crimes (Sentencing Procedure) Act has been satisfied and a full-time custodial sentence is appropriate, and no other sentence is appropriate. Given the comments earlier made in these reasons relating to the difference in the two offences in remorse, and the effect of extra curial punishment, I would not set the same punishment for each offence. I would propose that an aggregate sentence be imposed, and I nominate the following indicative sentences:
1. for the unlawful killing of Skye Luland as charged in Count 3, 4 years’ imprisonment;
2. for the unlawful killing of Kazzandra Widders as charged in Count 1, 4 years and 3 months’ imprisonment.
159. In part, because the legislature has recognised the range of sentences that are capable of being appropriate for manslaughter, it has not set a standard non‑parole period and I do not set a non-parole period in the indicative sentence.
160. I propose that the Court impose an aggregate sentence of imprisonment of 5 years commencing 19 January 2023 and expiring 18 January 2028, with a non‑parole period of 2 years and 3 months, expiring 18 April 2025.
161. While the circumstances of the offending is such that it is most unlikely that a High Risk Offenders Order will be necessary, the Court, assuming it accepts the foregoing proposals, is also required to warn the applicant that because the sentence imposed upon her is for manslaughter and carries a maximum sentence of 25 years, the State is capable of making an application to the Supreme Court before the expiry of her sentence to obtain orders under the Crimes (High Risk Offenders) Act 2006 (NSW).
162. In the circumstances, I propose that the Court make the following Orders:
1. Grant leave to appeal.
2. Allow the Appeal.
3. Quash the sentence imposed on the applicant by the District Court on 13 April 2023.
4. Impose the following sentence on the applicant:
1. Record a conviction for 2 Counts of unlawful killing on 28 September 2019, the victims for which were Kazzandra Widders and Skye Luland.
2. Impose an aggregate sentence of a non-parole period of 2 years and 3 months commencing 19 January 2023 and expiring 18 April 2025 with a remainder of term of a further 2 years and 9 months, expiring 18 January 2028.
5. The applicant is first eligible for parole on 18 April 2025.
6. The applicant is warned that as a result of these offences, the State may apply for an Order under the Crimes (High Risk Offenders) Act 2006 (NSW) by which she may, after the expiry of her sentence or after parole, be governed by supervision orders and/or continuing detention.
163. YEHIA J: I have had the advantage of reading the draft judgment of Rothman J and am grateful for his Honour’s summary of the facts and the Remarks on Sentence. I agree with his Honour’s proposed orders. I have also had the advantage of reading the additional observations of Stern JA, with which I agree. In agreeing with the proposed orders, I make the following observations.
164. The sentencing judge was faced with a difficult sentencing exercise given the unique set of circumstances which resulted in the tragic death of two young women, one of them being the applicant’s daughter. The error that has been established is in part due to what can be described as a vexing issue for sentencing judges in determining the factors relevant to an assessment of objective seriousness on the one hand and moral culpability, on the other.
165. The sentencing exercise is a complex but integrated process requiring an evaluative assessment of all relevant factors in determining the proportionate sentence. An assessment of the objective seriousness of an offence and the moral culpability of an offender, are essential components of the sentencing process. The objective seriousness of an offence relates to the circumstances of the offending, while moral culpability relates to the moral blameworthiness of the offender. However, the factors informing an assessment of objective seriousness and moral culpability can sometimes overlap, and have, on occasion, resulted in a conflation of the two concepts.
166. In Paterson v R [2021] NSWCCA 273, Beech-Jones CJ at CL (as his Honour then was) stated as follows at [29]:
“In relation to ground 1, it is necessary to address how the sentencing judge addressed the submissions of the parties concerning two separate but related concepts of importance to sentencing, namely the “objective seriousness” of an offence and the “moral culpability” of the offender. As its name implies, the former involves an objective assessment of the seriousness of the crime and the matters causally related to it. The latter is concerned with an offender’s moral blameworthiness for an offence. A determination of moral culpability can involve a consideration of a wider set of subjective factors affecting an offender than the former (see: Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [27] and [54]; Bugmy v The Queen (2013) 249 CLR 571 at [44]; Veen v The Queen (No. 2) (1987-1988) 164 CLR 465; [1988] HCA 14; Munda v Western Australia (2013) 249 CLR 600; [2013] HCA 38 at [57]; Zreika v R [2021] NSWCCA 243 at [55]).”
167. In Tepania v R [2018] NSWCCA 247 at [112] Johnson J described the matters that can bear upon the assessment of objective seriousness as follows:
“In sentencing for an offence (whether or not a standard non-parole period offence), a court should make an assessment of the objective gravity of the offence applying general law principles, so that all factors which bear upon the seriousness of the offence should be taken into account (unless excluded by statute). Factors such as motive, provocation or non-exculpatory duress may be taken into account in this way. Regard may be had to factors personal to the offender that are causally connected with or materially contributed to the commission of the offences, including (if it be the case) a mental disorder or mental impairment. It was recognised at common law that motive or emotional stress which accounts for criminal conduct is always material to the consideration of an appropriate sentence: Neal v The Queen (1982) 149 CLR 305; [1982] HCA 55 at 324-325 (Brennan J). Motive for the commission of an offence is an important factor on sentence: Cheung v The Queen (2001) 209 CLR 1; [2001] HCA 67 at 55-56 [171]-[172] (Callinan J).”
168. In practice, the distinction between factors personal to the offender that are relevant only to an assessment of moral culpability and factors personal to the offender that are relevant only to an assessment of objective seriousness, is not a straightforward one. The present case demonstrates the complexity of the issue. The sentencing judge took into account, in assessing the applicant’s moral culpability, the applicant’s motivation, namely, her genuine belief that she had to act as she did to defend her daughter. Although this was a factor going to the state of mind of the applicant, and therefore arguably a factor personal to the applicant, it was causally connected with the commission of the offences and therefore relevant to an assessment of the objective seriousness of the offence.
169. Equally, the finding that the applicant’s response in defence of her daughter, while excessive, was not excessive by a significant margin, is a factor relevant to the circumstances of the offending and, thereby, an assessment of the objective seriousness of the offence.
170. In DS v R; DM v R (2022) 109 NSWLR 82; [2022] NSWCCA 156, this Court (Beech-Jones CJ at CL (as his Honour then was), N Adams and Cavanagh JJ) rejected an argument that an assessment of an offender’s moral culpability forms part of the determination of the objective seriousness of their offending. The Court again emphasised that the objective seriousness of an offence and the moral culpability of the offender are separate but related concepts: see also Russell v R (2023) 112 NSWLR 533; [2023] NSWCCA 272 at [423].
171. Although the sentencing judge, in her careful Remarks on Sentence, took into account these factors in reducing the applicant’s moral culpability, they were factors relevant to the assessment of the objective seriousness of the offences, a separate, albeit related, concept.
**********
Endnotes
1. Appeal Book p 14, Remarks on Sentence, p 7.
2. Appeal Book p 18, Remarks on Sentence, p 11.
3. Crimes Act 1900 (NSW), s 24.
4. Appeal Book p 25-26, Remarks on Sentence p 18-19.
5. Appeal Book p 27, Remarks on Sentence p 20.
6. Appeal Book p 30, Remarks on Sentence p 23.
7. Appeal Book p 32, Remarks on Sentence p 25.
8. R v Borkowski [2009] NSWCCA 102; (2009) 195 A Crim R 1 at [58].
9. Appeal Book p 26.
10. Appeal Book p 32, Remarks on Sentence p 25.8.
11. Applicant’s written submissions at [21].
12. House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40 (Dixon, Evatt and McTiernan JJ).
13. Ibid; see also Dinsdale v The Queen (2000) 202 CLR 321; [2000] HCA 54 at [6] (Gleeson CJ and Hayne J); Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 at [443] (R A Hulme J, with whom Bathurst CJ, Leeming JA, Hamill and N Adams JJ agreed).
14. Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221.
15. Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; [1996] HCA 6 (Brennan CJ, Toohey, McHugh and Gummow JJ).
16. Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14.
17. R v Blacklidge (Court of Criminal Appeal (NSW), Gleeson CJ, 12 December 1995, unrep).
18. Elias v The Queen (2013) 248 CLR 483; [2013] HCA 31 at [27] (French CJ, Hayne, Kiefel, Bell and Keane JJ).
19. DS v R; DM v R (2022) 109 NSWLR 82; [2022] NSWCCA at [71] (Beech-Jones CJ at CL (as his Honour then was), N Adams and Cavanagh JJ).
20. Ibid.
21. Appeal Book pp 25-26; Remarks on Sentence pp 18-19.
22. Director General of Department of Community Services; Re Sophie [2008] NSWCA 250 at [54] (Sackville AJA). See also Wu Shan Liang, supra, at 272 (Brennan CJ, Toohey, McHugh and Gummow JJ).
23. Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37.
24. Douglass v R [2001] NSWCCA 250; (2001) 34 MVR 35.
25. Ibid at [13] (R A Hulme J, with whom Spigelman CJ and Howie J agreed).
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 13,684 |
nsw_caselaw:190e728b9bcbbde24ee18296 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Kemp v Findlay [2024] NSWSC 902 | https://www.caselaw.nsw.gov.au/decision/190e728b9bcbbde24ee18296 | 2024-07-26T22:25:57.795249+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Kemp v Findlay [2024] NSWSC 902
Hearing dates: 8-9, 11 July 2024
Date of orders: 26 July 2024
Decision date: 26 July 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision: Declare pursuant to s 8 of the Succession Act 2006 (NSW) that the electronic Microsoft word document titled “ADF WILL NEW PLK” dated 5 June 2019 constitutes the last will of ANDREW DAVID FINDLAY and grant Probate in solemn form to David William Findlay, the Executor named therein.
Catchwords: SUCCESSION – informal wills – s 8(2)(a), Succession Act 2006 (NSW) – principles at [143]-[153] – businessman makes will leaving $13.5M estate to defacto wife – couple separate in 2019 – both amend wills, leaving estate to their children instead – businessman amends will on computer only but not printed or signed – tells defacto wife, new executor and family law solicitor – emails Microsoft Word document to new executor – settles protracted family law proceedings including mutual release of claims on estates – difficult post-separation relationship with former defacto – happy in new relationship – dies in boating accident in 2023 – former defacto seeks probate of earlier signed will – whether businessman intended Microsoft Word document “to form his … will” – so satisfied.
Legislation Cited: Succession Act 2006 (NSW) ss 6, 8(2)(a)
Cases Cited: Bell v Crewes [2011] NSWSC 1159
Estate of Laura Angius; Angius v Angius [2013] NSWSC 1895
Estate of John James Dunn; Anderson v Scrivener [2002] NSWSC 900
Fast v Rockman [2013] VSC 18
Hatsatouris v Hatsatouris [2001] NSWCA 408
Lindsay v McGrath [2016] 2 Qd R 160; [2015] QCA 160
Macey v Finch [2002] NSWSC 933
National Australia Trustees Ltd v Fazey [2011] NSWSC 559
Oreski v Ikac [2008] WASCA 220
Re Application of Tristram [2012] NSWSC 657
Re Estate of Masters (decd); Hill v Plummer (1994) 33 NSWLR 446
Re Estate of Schwartzkopff (2006) 94 SASR 465; [2006] SASC 131
Re the Estate of Kiepas (dec’d); Twemlow v Kiepas [2004] NSWSC 452
Re Yu (2013) 11 ASTLR 490; [2013] QSC 322
Rodny v Weisbord (2020) 102 NSWLR 403; [2020] NSWCA 22
Smith v O’Neill [2014] NSWSC 1119
The Application of Kencalo (In the Estate of Ruth Buharoff) (Unreported, Supreme Court of New South Wales, 23 October 1991)
Yazbek v Yazbek [2012] NSWSC 594
Category: Principal judgment
Parties: Elizabeth Anne Kemp (Plaintiff)
David William Findlay (Defendant)
Representation: Counsel:
MK Condon SC / PG Bolster (Plaintiff)
Mr L Ellison SC (Defendant)
Solicitors:
Keypoint Law (Plaintiff)
L Rundle & Co Solicitors (Defendant)
File Number(s): 2024/108017
JUDGMENT
1. HER HONOUR: In July 2023, Andrew Findlay tragically died in a boating accident off Sydney Harbour, aged 50, leaving three children aged from 6 to 9. Mr Findlay had executed a will in 2015 (2015 Will), leaving his estate to the mother of his children, being the plaintiff Elizabeth Kemp. The plaintiff seeks a grant of probate of this will. In 2019, however, the couple’s relationship had foundered. Mr Findlay amended the will on his computer, leaving his estate to the children instead. He did not print nor execute the document. Mr Findlay’s cousin, the defendant David Findlay, contends that Mr Findlay thereby revoked the 2015 Will and seeks a grant of probate of the electronic Microsoft Word document (2019 Document).
2. The issue is whether Mr Findlay intended the 2019 Document “to form his … will”, as required by s 8(2)(a) of the Succession Act 2006 (NSW). In seeking to establish that proposition, the defendant relied on a short compass of facts: the fact that the 2019 Document was created shortly after his separation from Ms Kemp; that it was promptly emailed to the defendant with the explanation “This is my new will” and “If I went under a bus between now and then my wishes will at least be clear”; and that Mr Findlay told his family law solicitor a week later that he had changed his will.
3. Ms Kemp contested this proposition having regard to a wider factual compass, ranging from the onset of relationship problems until Mr Findlay’s death. Ms Kemp contended that the 2019 Document was drafted “at the peak of an emotionally turbulent period” but Mr Findlay, an experienced businessman, did not proceed to execute the 2019 Document as he continued to love her and they continued to conduct their personal, financial and business affairs together in a cohesive post-separation relationship. Mr Findlay wanted to give her more money and regarded Ms Kemp “as putting the children ahead of all else.” Given Ms Kemp’s case, it has been necessary to examine the couple’s post-separation relationship. The legal issue remains, however, as stated.
4. The net value of Mr Findlay’s estate is some $13.5 million. Obviously enough, if Ms Kemp succeeds then the children stand to receive nothing under either will. Notice of these proceedings has been served on the children by their tutor, being Ms Kemp’s mother Elizabeth Crosby, as persons adversely affected by Ms Kemp’s application.
Witnesses and documents
5. A considerable body of evidentiary material was relied upon by the parties. Some 25 affidavits were read plus two expert reports (and two joint expert reports). Some 1,500 pages of documents were tendered.
6. Turning to witnesses, Ms Kemp gave evidence and also relied on the evidence of counsellor and psychotherapist Monica Masero, au pair Jessica Denniff, management consultant William Berryman, friend Pieta Taylor and computer forensics and information technology specialist Rodney McKemmish. Ms Masero and Mr Berryman were cross-examined; no issues of credit arose.
7. Ms Kemp was cross-examined and was pleasant, poised and softly-spoken. She gave evidence in a guarded, careful, and sometimes evasive manner. Ms Kemp volunteered unkind remarks about the defendant and Mr Findlay’s older sister, Katharine Jackson. Ms Kemp got into difficulty in cross-examination in three respects, in light of which I have approached her evidence with caution.
8. First, Ms Kemp said that, if there was any indication to her knowledge that Mr Findlay had made a new will, she would have put it in her affidavit. In answer to a notice to produce calling for production of communications with Mr Findlay from 1 January 2019 until his death, Ms Kemp said she went through documents looking for references to a will, “I’ve tried to go through everything I could,” but had not located anything beyond what was in the court books. Ms Kemp failed to produce a damaging email, which contains a clear admission that she was aware that Mr Findlay had made the 2019 Document by at least February 2020: see [88].
9. Second, Ms Kemp failed to produce all wills made by her from 2013 until Mr Findlay’s death, in answer to a notice to produce. Ms Kemp produced a will prepared in November 2013 and another in 2015. Ms Kemp agreed, however, “there could be one more that was made” but did not recall the date. Ms Kemp also reluctantly agreed that the will would have been created in the context of finalising her property affairs with Mr Findlay, “Perhaps, yes.” Ms Kemp believed that the beneficiaries of this other will were her children.
10. In short, after her separation from Mr Findlay, Ms Kemp made a will leaving her estate to her children, that is, in the same terms as the 2019 Document. Why that will was not produced in answer to the notice to produce was not satisfactorily explained by the witness. I infer that Ms Kemp did not produce this other will as she thought it may undermine her challenge to the 2019 Document as reflecting Mr Findlay’s testamentary intentions, where she had executed a document evidencing that the same testamentary intentions were held by herself at that time.
11. Third, and most importantly, Ms Kemp sought to shift the date of separation from May 2019 until sometime after Mr Findlay had prepared the 2019 Document. In her first affidavit, Ms Kemp said that she separated from Mr Findlay in about May 2019. In Ms Kemp’s defence to the cross-claim, she pleaded that the couple separated in May 2019 although they continued to live under the same roof. The date of final separation was recorded as May 2019 in Family Court documents, which Ms Kemp signed in 2021 when legally represented.
12. The import of Ms Kemp’s third affidavit, however, was that her relationship with Mr Findlay continued to an indefinite end-point, but certainly well after Mr Findlay prepared the 2019 Document. In her sixth affidavit, Ms Kemp said they separated later than May 2019, the date of separation recorded in the Family Court documents was an error, and she found the issue of when they separated to be “confusing”. Where Ms Kemp had been involved in two family law matters before preparing affidavits in these proceedings (having divorced before commencing a relationship with Mr Findlay), it is unlikely that she was confused. In her seventh affidavit, Ms Kemp added that she and Mr Findlay maintained intimate relations in May and June 2019. I attach little weight to this evidence, where this detail was not mentioned in her preceding six affidavits. In cross-examination, Ms Kemp firmed up the date of separation, saying “we worked on trying to keep it together through May and through June.” Ms Kemp’s final position was, “I would say end of June”. As will be seen, the couple separated on or about 27 May 2019.
13. The defendant gave evidence and also relied on the evidence of Ms Jackson, the Findlay family’s solicitor Emma Grimes, Mr Findlay’s family law solicitor Nabil Wahhab, Mr Findlay’s accountant Justin Woods, Mr Findlay’s friends Naomi Roth and Amanda Lintott, and cyber security and digital forensic specialist, Ajoy Ghosh. Mr Woods and Mr Ghosh were not required for cross-examination; I accept their evidence.
14. David Findlay distinguished himself by his dispassion, objectivity, accuracy and fairness. He did not overstate the extent of his knowledge. Ms Lintott falls into the same category: she is a pleasant, professional person who gave evidence in a fair and accurate manner. I accept their evidence.
15. Ms Grimes was a friend of the Findlay family for many years and her evidence had a slightly partisan quality. That said, no issues of credit arose. Her evidence was given carefully and I accept what she said. Mr Wahhab was a precisely spoken solicitor who was not shaken in cross-examination, maintaining that he had an actual recollection of Mr Findlay giving instructions that he had made a new will leaving everything to his children. I have accepted his evidence when viewed together with other evidence.
16. Ms Jackson was cross-examined. It was clear that there is no love lost between her and Ms Kemp. She did, however, make reasonable concessions. I have generally accepted her evidence. Naomi Roth gave evidence after reading a newspaper article about this case on 16 June 2024, and getting in touch with the Findlay family. I approached Ms Roth’s evidence with caution, where she appeared keen to participate in the proceedings. That said, she was untouched in cross-examination and much of what she said Mr Findlay told her could only have come from him; I accept her evidence.
17. One person who did not give evidence was, obviously, Mr Findlay. His version of events was, however, tolerably clear as he kept detailed notebooks. Four of his ‘regular’ notebooks were in evidence, maintained from March 2019 to February 2020, in which Mr Findlay largely recorded his business pursuits including notes of meetings, ‘to do’ lists and plans. In May 2019, Mr Findlay also began a separate notebook, entitled “A daring new ending May 2019”, kept in respect of counselling and self-improvement following the breakdown of his relationship with Ms Kemp. Finally, in June 2021 Mr Findlay began a notebook entitled “LPP”, containing notes in respect of the dissolution of financial arrangements with his sisters.
18. Before considering the affidavit and oral evidence of witnesses, I read the contemporaneous documents in strict chronological order alongside a ‘page turn’ of corresponding entries in Mr Findlay’s notebooks. From this exercise, a clear picture emerged of Mr Findlay’s intentions at critical points in time. Mr Findlay clearly understood that his relationship with Ms Kemp had been definitively terminated by her in May 2019, this being a position from which Ms Kemp did not waiver in the years which followed. The fact that, from time to time thereafter, Mr Findlay made kind or loving remarks to Ms Kemp was because he sincerely aspired to conduct post-separation relations with the mother of his children in an ethical and generous spirit. Mr Findlay did not always succeed in this endeavour, but he certainly tried.
19. It is also, regrettably, necessary to record that Mr Findlay’s efforts were never reciprocated by Ms Kemp, who maintained an unflinching stance on parenting and property matters. Whilst I accept that Ms Kemp’s firmly-held view of these events is different, her view is not strictly relevant in these proceedings, where it is Mr Findlay’s testamentary intentions which are in issue.
Mr Findlay and family
20. Mr Findlay was the son of David and Carmen Findlay. He had an older sister, Ms Jackson, and a younger sister, Georgia Moffat. One of Mr Findlay’s cousins was the defendant. Another cousin was Jason Downing, who is a barrister and, indeed, senior counsel. Mr Downing is married to Ms Lintott.
21. Mr Findlay was very close to the defendant; their families regularly spent time together during their childhood. Mr Findlay and the defendant went to the same school, albeit not at the same time, as the defendant was two years older than Mr Findlay. After high school, Mr Findlay and the defendant moved in similar social circles. Mr Findlay obtained a Bachelor of Business and moved to the United Kingdom for two years on a working holiday. The defendant was living and working in London at the same time. They shared apartments in Kensington and Notting Hill. The defendant said that he and Mr Findlay did almost everything together aside from work, regularly having dinner, playing sport, travelling together and sharing a common group of friends.
22. Mr Findlay’s father had started a company in 1973, which is now a licensed telecommunications carrier known as Vertel Telecoms Pty Ltd. In 1995, Mr Findlay returned to Sydney to work for Vertel, and did so for the next 25 years until he died. The defendant returned to Sydney too; the cousins shared mutual friends and ran in the same friendship circles. They often attended social events and dinners together a few times a month. Mr Findlay was the defendant’s best man and, as the years unfolded, they became godfather to one another’s children.
23. Mr Findlay never married. In 2011, Mr Findlay and Ms Kemp began a relationship. In 2012, Ms Kemp moved into Mr Findlay’s Paddington home, together with her child from a previous marriage. In October 2013, the couple welcomed the arrival of twins.
2013 Draft
24. The arrival of children prompted the couple to prepare wills. Ms Kemp made a will, leaving her estate to Mr Findlay. Mr Findlay arranged for a will to be drafted to like effect. Although Mr Findlay did not execute this will at the time – and indeed did not execute the will until two years later – the draft will gained prominence where he later amended this draft on his computer to become the 2019 Document. Mr Findlay’s interactions with Ms Grimes in respect of this will are also important as they shed light on the extent of Mr Findlay’s knowledge of the requirements for making a valid will.
25. On 6 November 2013, Ms Grimes’ secretary emailed a draft will to Mr Findlay advising, “Should it be in accordance with your wishes please telephone Emma Grimes … and she will arrange for you to sign it. Please note Emma is happy to meet you at a time and place convenient to you.” The draft will provided that Mr Findlay would appoint Ms Kemp as his executor or, alternatively, Ms Jackson, with the whole of his estate given to Ms Kemp. The substitute beneficiaries were the children upon them attaining the age of 25 years, albeit the children were not named. The further substitute beneficiaries were Mr Findlay’s sisters. Ms Jackson was also appointed as testamentary guardian of the children.
26. On 11 November 2013, Mr Findlay emailed Ms Grimes’ secretary, attaching the draft will “ADF WILL.doc” (2013 Draft). Mr Findlay advised “I have made some minor modifications to this document. What is the process from here? It needs si[gn]ing and witnessing. Where do we do that?” Ms Grimes’ secretary offered to “re-print the amended Will and pass it on to Emma Grimes. Emma is able to meet at a time and place convenient for you and you may contact her directly”.
27. So far as the evidence reveals, this was the first time that Mr Findlay had made a will. These emails indicate that Mr Findlay was not familiar with the process but apprehended that the will needed to be signed and witnessed, apparently by Ms Grimes. He did not appear to appreciate that the execution of the document needed to be witnessed by two people, neither of which had to be a solicitor. Nor did he give the completion of this task any particular priority, as he did not complete the exercise for another two years.
2015 Will
28. In 2015, Ms Kemp made another will, leaving $1 million to her son from her previous marriage and the balance of her estate to Mr Findlay. Presumably, this prompted Mr Findlay to complete the will-making task as well. On 4 August 2015, Mr Findlay emailed Ms Grimes, attaching the 2013 Draft. Mr Findlay requested a “slight modification” and asked, “Can I get this signed / witnessed please.” Again, Mr Findlay clearly appreciated that the document needed to be signed and witnessed, albeit he does not necessarily appear to have understood that the document needed to be witnessed by two people.
29. On 19 September 2015, Mr Findlay executed the will, largely in the same terms as the 2013 Draft (2015 Will). The only change was that Ms Crosby was added as a substitute guardian for the children in the event that Ms Jackson was unwilling or unable to act. It is this will for which Ms Kemp seeks a grant of probate.
30. Ms Grimes witnessed the 2015 Will. The other witness was Ms Grimes’ mother. Ms Grimes said the 2015 Will was not signed at her office but may have been signed at the home of Mr Findlay’s mother. Whilst Ms Grimes did not recall with any certainty, it was likely that she suggested that, as their mothers were seeing each other on the weekend, they should get together then for the will to be signed. On the same date, Mr Findlay also executed an enduring power of attorney, appointing Ms Kemp and Ms Jackson as his attorneys. Mr Findlay also executed an Appointment of Enduring Guardian, appointing Ms Kemp as his enduring guardian. Ms Grimes witnessed the execution of these documents too. On 7 October 2015, Ms Grimes sent Mr Findlay a copy of the will, power of attorney and guardianship documents, noting that the originals were held in the solicitor’s safe.
31. In January 2016, Mr Findlay sold his Paddington home. The family moved to a house at Centennial Park, which was purchased in Ms Kemp’s name.
32. In June 2016, Mr Findlay began to work with Ms Lintott for six months to set up a new venture, which later became AetherX Pty Ltd: see [106]. The business was intended to be an innovation hub for ideas, technologies and business models. As mentioned, Ms Lintott was married to Mr Findlay’s cousin, Mr Downing, and had known Mr Findlay for many years. Mr Findlay and Ms Lintott remained close friends after this period of working together. Mr Findlay regularly came to Mr Downing and Ms Lintott’s house, often with his children, as they lived nearby. Every few months, Mr Findlay and Ms Lintott would meet up to walk around Centennial Park, where they talked about business ideas, parenting, relationships and gardening. Of Mr Findlay’s interactions with her husband, Ms Lintott said, “We lived so close by. We shared so many of the same streets, the same gym.”
33. In 2017, the couple welcomed the arrival of their third child.
Separation
34. When Mr Findlay was reviewing his text messages some years later, after he had settled family law proceedings with Ms Kemp and in relation to a dispute with his sisters, he jotted down that he had been having relationship problems with Ms Kemp in January 2019: see [102]. Presumably there were text messages on his phone which evidenced such problems, sufficient for Mr Findlay to make a note to that effect. Consistently with this, Ms Kemp contacted a counsellor, Ms Masero, and attended her first counselling session on 2 May 2019. Ms Kemp agreed that the counselling concerned relationship problems that had been present for a few months. I conclude that the couple were having relationship problems from January 2019 on.
35. These problems came to a head in May 2019. Mr Findlay’s mother had been battling pancreatic cancer for some time. The Findlay family arranged a Mother’s Day weekend at Palm Beach on 11 and 12 May 2019, as the Findlay family expected that this would be their mother’s last Mother’s Day. Mr Findlay, Ms Kemp and their children were due to attend. A couple of days before the Mother’s Day weekend, Mr Findlay told Ms Jackson, “Lizzie and her mother won’t come. It’s terrible between us. We are having the worst time.” Ms Jackson offered to call Ms Kemp and encourage her to come but Mr Findlay said “No she won’t come. Just leave it.” Mr Findlay came to Palm Beach with the children but was withdrawn and disengaged.
36. Ms Kemp said she did not attend the Mother’s Day weekend as she was bedridden with the flu. The couple were also due to meet with their financial adviser on 16 May 2019. On 14 May 2019, Ms Kemp postponed the meeting, emailing “I have been 8 days homebound with the flu/bronchitis”. On 16 May 2019, Ms Kemp was well enough to attend couple’s counselling with Ms Masero instead. Ms Kemp said the couple agreed to attend couples counselling initially to repair the relationship and to try to work it out. I accept this.
37. Ms Masero’s recollection of the first couple’s counselling session was hampered by the loss of her clinical notes. Ms Masero said “Andrew came in very willing to take responsibility for what had been happening in the marriage.” (So far as the evidence reveals, the complaint was that Mr Findlay’s time spent on work meant that he was not sufficiently available for his family.) Ms Masero recalled, “He wanted to work on himself. … we explored the potential for having a diagnosis … that … it might be ADHD [Attention Deficit Hyperactivity Disorder], [b]ecause there were some things around disorganisation and … a little bit chaotic … in his work. … I can’t recall him saying anything specifically now about what he wanted to happen with Lizzie.” As to whether Mr Findlay wanted the family to stay together or not, Ms Masero’s recollection was that “he did not want to break up with Lizzie, and he wanted the family together, and that that’s what he was there for.” I accept this.
38. Mr Findlay frequently spoke to the defendant about his relationship with Ms Kemp. He was obviously talking to the defendant at the time. On 19 May 2019, the defendant texted Mr Findlay, “Chin up. Plenty of goodness out there”. When Mr Findlay later reviewed his text messages in respect of the dispute with his sisters, Mr Findlay recorded “separated with Liz on May 20 2019”: see [102]. Ms Kemp said nothing significant happened on 20 May 2019. It is likely that there was a significant text message between the couple on that date but I accept that the decision to separate was not made until some days later.
39. On 22 May 2019, the couple saw the counsellor, but separately. On 23 May 2019, Mr Findlay arranged for Ms Kemp to be given a business email account, with an email signature noting that Ms Kemp was the Executive Assistant to Mr Findlay. (Whilst Ms Kemp was on Vertel’s payroll, Ms Jackson said that she had never seen Ms Kemp do any work for the company or for Mr Findlay in a work capacity.) Ms Kemp was also to have full access to Mr Findlay’s diary. Presumably, this was something which Ms Kemp had requested during the counselling sessions and which Mr Findlay actioned.
40. On 27 May 2019, the defendant texted Mr Findlay, asking how his day went, “Hopefully improved.” Mr Findlay replied, “Marginally. We are seeing the counselor tonight.” The couple saw the counsellor together for a second joint session. Mr Findlay’s notes record that they talked about “telling people.”
41. On 29 May 2019, the defendant texted Mr Findlay, “How did it go the other night?”. Mr Findlay replied, “A good session. I am calm and accepting of it. We are not compatible and she won’t change. Maybe we find a flat together???”. The defendant replied “Could work for sure. … Would need to be a clubhouse. Room for kids.” (The defendant was then in the process of his own divorce.) The defendant said that Mr Findlay spoke to him in May 2019 about the decision the couple had made to end their relationship. Such a conversation is consistent with this text message and I accept the defendant’s evidence.
42. On 30 May 2019, Mr Findlay told his mother and Ms Jackson that he and Ms Kemp had separated. Ms Jackson was in a Melbourne hotel room with her mother when Mr Findlay called; she put the telephone on speaker. Mr Findlay said, “I want to tell you both that Lizzie and I have split up. It’s the right thing. We are both really committed to doing the right thing for the kids.” Ms Jackson said she was saddened but not surprised at the news. Consistently with this, on 31 May 2019, Ms Jackson texted Ms Kemp, “I was sorry to hear that you and Andrew have separated.” Ms Moffat sent a similar text message to Ms Kemp, who replied, “I am a broken bird at the moment and really just need some space.”
43. Later on 31 May 2019, Ms Kemp emailed Mr Findlay with detailed plans as to which parent was doing what with which child over the course of the weekend. The formality and detail of the email is consistent with the couple having separated and needing to make clear arrangements for shared parenting. On 4 June 2019, emails ensued between Ms Kemp and Mr Findlay in respect of the children’s medical appointments, household repair and maintenance tasks and children’s sporting fixtures. The formal nature of these emails again suggest that a decision had been made to separate.
44. Likely, Mr Findlay began his separate notebook at about this time, entitled “A daring new ending May 2019”. The title of the notebook itself confirms that Mr Findlay understood that his relationship with Ms Kemp was over. Overall, and having regard to the (largely) contemporaneous records, I find that the couple had decided to finally separate by the second counselling session with Ms Masero on 27 May 2019.
2019 Document
45. On 4 June or 5 June 2019, Mr Findlay undertook some internet searches and added bookmarks to his internet browser for two websites, www.divorceresource.com and www.moneysmart.gov.au.
46. On 4 June 2019, Mr Findlay created the 2019 Document on his computer by amending the 2013 Draft that had been provided to him by Ms Grimes six years’ earlier. Specifically:
1. Mr Findlay changed the date of the will to 5 June 2019 in two places: 5 June 2019 appears on the first line and under the execution clause on the second page. The fact that Mr Findlay manually dated the 2019 Document for the following day indicates that he did not plan to execute the new will that evening but the next day.
2. Mr Findlay’s address was changed from Paddington to Centennial Park, where he had moved in the intervening years since the 2013 Draft was prepared.
3. Ms Kemp was removed as the sole executor and trustee, replaced by the defendant. Mr Findlay corrected the spelling of Ms Jackson’s name (incorrectly) but otherwise left unchanged his sister as a substitute executor. The executor’s powers remained unchanged.
4. Ms Kemp was removed as the sole beneficiary. Mr Findlay’s three children were named as the residuary beneficiaries. (In the 2013 Draft, the children were not named but rather ‘my children’ were a class of substitutionary beneficiaries). He left unchanged his sisters as substitutionary beneficiaries.
5. Mr Downing replaced Ms Jackson as a testamentary guardian for his infant children. Ms Mofatt replaced Ms Crosby as a substitute testamentary guardian. Ms Moffat’s surname was also changed, she having divorced since the 2015 Will.
47. Mr Findlay did a careful job from the first line to the end, adding commas and changing “she” to “he” where necessary. He also made formatting changes, removing spaces so that the ‘backsheet’ of the 2013 Draft was brought onto the second page of the document. A small correction was also made to the address of Ms Grimes’ law firm on the last page, although query whether this final amendment was done automatically by the Microsoft Word program, as opposed to by Mr Findlay.
48. Mr Findlay changed the file name from “ADF WILL.doc” to “ADF WILL NEW PLK”. There were various suggestions by the parties as to the significance of the file name. Obviously enough, “ADF” were Mr Findlay’s initials. “LK” no doubt referred to Ms Kemp, called “Lizzie” by Mr Findlay. “P” most likely meant “post”, where Mr Findlay prepared the 2019 Document after his relationship with Ms Kemp had come to an end. The 2019 Document was last saved at 5:53pm on 4 June 2019.
Mr Findlay tells Ms Kemp
49. The first person that Mr Findlay told that he had prepared the 2019 Document was Ms Kemp. This fact emerges, not from Ms Kemp, but from the contemporaneous documents, in particular, the email which Ms Kemp failed to produce in answer to a notice to produce. Nine months after their separation, Ms Kemp sent a long email to Mr Findlay on a range of issues. Ms Kemp pressed for a property settlement and concluded:
“I guess though knowing 8 days after we separated you changed your will I learnt quickly what I was dealing with.”
50. Ms Kemp denied that, by the date of that email, she knew that Mr Findlay had made a new will. Ms Kemp said she did not recall the email and was unable to provide the Court with any explanation of its content “because I do not recall it … I can only assume maybe he’s said something, but I just don’t recall that, I’m sorry”. I do not accept the witness’ evidence on this subject.
51. Ms Kemp’s email contains a powerful admission against interest, evidencing that Ms Kemp was aware at the time that Mr Findlay had prepared the 2019 Document, which she understood to be “your will”. Ms Kemp’s comment – “I learned quickly what I was dealing with” – also indicates she was displeased with the changes which Mr Findlay had made to his will, consistent with having been told that she was no longer a beneficiary. I note also Ms Kemp’s observation that she came to know “8 days after we separated you changed your will”. I have already found that the couple decided to separate on 27 May 2019. Eight days after this is 4 June 2019, being the date on which Mr Findlay prepared the 2019 Document. On the morning of 5 June 2019, Mr Findlay “had a meeting with Lizzie to talk through a plan”: see [54]. Most likely, Mr Findlay told Ms Kemp about his new will at this meeting. That is, Ms Kemp’s email is consistent with the events as I have found them to have occurred. Where Ms Kemp could not be expected to remember this level of detail nine months later, when she sent the email, the precision of the timeframes in her email also indicates that she was prudently keeping a note of events as they unfolded, when the information was needed in family law proceedings.
52. Further corroboration of the fact that Mr Findlay told Ms Kemp that he had prepared the 2019 Document may be found in Ms Kemp’s email of 2 September 2019, where Ms Kemp recorded her understanding that Mr Findlay had appointed Ms Moffat as a guardian of the children: see [78]-[81]. The only will in which Mr Findlay appointed Ms Moffat to such a role was in the 2019 Document. Corroboration may also be found in Ms Kemp’s emails to the defendant after Mr Findlay’s death, which indicate that she understood that Mr Findlay had made a new will, “Silly question but assumed that it was signed and there will be no issue with Probate?”: see [125]. Ms Kemp’s email indicates that she was aware that Mr Findlay had made a new will after their separation but became aware of the fact before the will was signed, which was certainly the case on the morning of 5 June 2019. Ms Kemp’s email to Ms Grimes on 5 September 2023, noting “It appears that the Will I was told existed in 2019 is unsigned”, is again consistent with having been told in 2019 that Mr Findlay had made a new will: see [126]. That is, the only surprise for Ms Kemp on Mr Findlay’s passing was not that he had made a new will, but that he had neglected to execute it.
Mr Findlay tells executor
53. The second person that Mr Findlay told about the 2019 Document was the new executor. On 5 June 2019, Mr Findlay emailed the 2019 Document to the defendant, advising:
“This is my new will. I am yet to get it signed in front of Emma Grimes (my lawyer) but I intend [t]o.”
54. The defendant replied, “Is this the right Dave Findlay? I [didn’t] open it”. Mr Findlay promptly replied, “Yep”. (The defendant explained that he asked whether Mr Findlay meant to send the will to him or to Mr Findlay’s father, who was also named David.) Mr Findlay added:
“I had a meeting with Lizzie this morning to talk through a plan and I suggested one of her girlfriends assist. She said no and the only person she would speak with was you.
I’ve made you the executor btw.”
55. The defendant replied, “Okay, sure. Will have a look at it for sure.” Soon afterwards, Mr Findlay sent a further email to the defendant:
“I just sent you the will as I haven’t changed it with my lawyer yet. If I went under a bus between now and then my wishes would at least be clear.
I’ll let you know if / when you can come in to mediate.”
56. As I read it, Mr Findlay thereby sought to give a further explanation to the defendant as to why he had sent the defendant the will, “I just sent you the will as I haven’t changed it with my lawyer yet.” As I read the italicised words, Mr Findlay was explaining that he had not yet changed his 2015 Will. Mr Findlay wished to record and publish his testamentary intentions to the executor under the new will, should anything happen to him before the will was properly executed.
57. The next day, on 6 June 2019, Mr Findlay made an appointment with family law solicitor, Mr Wahhab, for 11 June 2019, and recorded the details in his work notebook. That evening, Mr Findlay went to the defendant’s apartment to plan a cards night that they were going to host a couple of weeks later. The defendant asked “Is there anything I need to do regarding yesterday’s emails?” Mr Findlay replied “No, you’re all sorted. I intend to get it signed. It’s all taken care of.” Although the defendant remained close with Mr Findlay until his death, speaking to him regularly by telephone and in person, they never spoke about the will again.
58. On 7 June 2019, Mr Findlay saw the counsellor by himself. Mr Findlay made a page of notes of this session, which he appears to have subsequently revised and reflected upon. I do not read the notes as indicative of a wish to continue the relationship with Ms Kemp but a consideration of how to interact with her and the children post-separation. Later on 7 June 2019, Mr Findlay sent an email to Ms Kemp, apparently on the death of Ms Kemp’s friend, repeating good things said by the friend about Ms Kemp, “she was right. I love you for all that you are Lizzie.” Whilst Ms Kemp relied on this email as evidence that their relationship continued at that time, I read it rather as a compassionate and kind email by Mr Findlay. All communications between the couple to that point were courteous and careful. Mr Findlay’s accountant also sought various information in respect of expenses in Mr Findlay’s tax return and Mr Findlay sought Ms Kemp’s assistance in this regard.
59. On the morning of 11 June 2019, the couple spoke. Mr Findlay emailed Ms Kemp, thanking her for talking that morning:
“I love you and I am deeply sorry for taking your generosity of giving and support for granted and equally not being there for you, not stepping up to those critical situations when you most needed it.
If we can use the next session with Monica to work out how I can give you that emotional space you need to process everything/disengage from the hassles of me then that would be something that I could really focus on and show you that I mean it when I say I love you.”
60. As I read it, Mr Findlay apologised for his deficiencies in the relationship and wished to participate in a joint counselling session for the purposes of facilitating a harmonious separation; I do not read this email as Mr Findlay pressing for the relationship to continue. Consistently with this, that afternoon Mr Findlay kept his appointment with family law solicitor, Mr Wahhab.
Mr Findlay tells family law solicitor
61. In the afternoon on 11 June 2019, Mr Findlay met with Mr Wahhab. The conference lasted for almost two hours. Mr Wahhab recorded extensive details of current parenting arrangements, the couple’s relationship, their respective assets and details of Mr Findlay’s family business and financial arrangements.
62. The solicitor’s “Initial Instructions Sheet” called for a date of separation; Mr Wahhab wrote “under same roof late May 19”. Mr Wahhab said, “That’s his instructions to me.” The solicitor’s file note recorded “If/when leave → he’ll stay East side”. Mr Wahhab explained, “because they were both living under the same roof and that’s the if.” Mr Wahhab rejected the suggestion that his note recorded the fact that Mr Findlay was not then certain that he would be leaving Ms Kemp.
63. Mr Wahhab said his usual practice when a new client arrived was to provide them with a package explaining the family law process. The package included a four-page checklist, the first item of which was “CHANGE YOUR WILL”. Mr Wahhab said his usual practice was to bring the package to the client’s attention and refer them to the checklist. Each item on the checklist was expanded upon in the package, including:
“CHANGE YOUR WILL
If you have a Will, that Will may provide that all or part of your estate on your death be given to your (now) former spouse. This may not be what you now want to do given the separation. In the event that you do not change your Will and you die, then, until you are divorced (divorce is not the same as finalising your property settlement or parenting issues), your former spouse will benefit from your estate on your death.
… It is therefore important that you carefully consider changing your Will. York Law would be happy to prepare a new Will for you.
If you have a Will, the Will may provide that a certain person be appointed as the executor or trustee of your estate on your death. In some cases, people appoint their former spouse or their former spouse’s relative or friend to be the executor. This may no longer suit if the spouses separate as generally separated spouses would not want their former spouse or their relatives or friends to administer their estate. It is therefore important that you review your Will and confirm the identity of your executor.
York Law would be happy to prepare a Will with a new Executor.”
64. Mr Wahhab’s 18-page file note suggests that he raised the matters in the checklist at the end of the conference. Mr Wahhab recalled handing Mr Findlay a copy of the package. Mr Wahhab said he gave Mr Findlay advice about the matters in the checklist. His usual practice in respect of the first item in the checklist was to inform and advise clients to change their wills and read the firm’s document carefully, as it contained tips and important steps to take now that they were separated, including changing their wills. Mr Wahhab’s file note then records:
“H[usband] said he’ll be transparent
He ∆d will recently.”
65. Mr Wahhab said he used the triangle as the Greek letter, delta, meaning change. He added the letter “d” at the end to make it past tense rather than “ing” to indicate that Mr Findlay was changing his will. Mr Wahhab said he meant to record Mr Findlay’s instructions that he had changed his will.
66. According to Mr Wahhab, Mr Findlay said, “I have changed my Will recently. The new Will gives all my assets to my children.” The second sentence does not appear in Mr Wahhab’s file note. Mr Wahhab denied that he had no recollection beyond his file note, maintaining that he recalled this matter for a number of reasons. I am inclined to accept Mr Wahhab’s evidence, where there is no dispute that Mr Findlay had in fact recently amended the 2013 Draft to leave his estate to his three children. Mr Wahhab did not have a copy of the 2019 Document and thus the only source of that information could have been Mr Findlay.
Moving forward
67. So far as the defendant’s case is concerned, the legal issue can effectively be determined at this point. In order to consider the additional matters raised by Ms Kemp, however, it is necessary to proceed further. The couple continued to live under the same roof, although Mr Findlay appears to have found this difficult and stayed elsewhere much of the time. As Mr Findlay later emailed Ms Kemp, “I spent the first 6 months of our separation in and out of Centennial Park and sleeping in the spare rooms of family and friends.” One of the places where Mr Findlay stayed was at the defendant’s house.
68. Ms Kemp said Mr Findlay constantly left post-it notes for her saying “I promise I will be more present for you and for our family” and that he would “make changes to myself”. I accept that Mr Findlay did this; it is consistent with notes made in his notebooks. But I do not accept that Mr Findlay thereby indicated that he wished to continue his relationship with Ms Kemp as opposed to a building a good post-separation relationship.
69. On 17 June 2019, Mr Findlay saw the counsellor alone. On 19 June 2019, Mr Findlay saw the counsellor alone and the couple last saw the counsellor together. Based on her electronic records, Ms Masero said that it is likely that the couple discussed their formal separation at this last joint couple counselling session. Mr Findlay made notes which are consistent with the counsellor working with the couple to enable them to deal with one another appropriately post-separation, including being “understanding and respectful” of Ms Kemp’s boundaries and “generous and flexible in arrangements” in relation to their children. Mr Findlay provided a copy of his note of the counselling session to Ms Kemp. These notes do not appear in Mr Findlay’s notebooks; it is unclear whether he made these notes elsewhere or whether some pages have been removed from his notebooks. (None of the notebooks are complete, as a page-count reveals when compared with the pages of the notebook as sold.) Ms Kemp said she had not removed any pages from the notebooks.
70. On 19 June 2019, the couple finally met with their financial planner, where Ms Kemp had re-scheduled the meeting a few times. A Record of Advice later provided by the financial planner recorded:
“… Unfortunately you’ve experienced some challenges in your relationship and have chosen to separate as a result. You have begun the process of understanding the implications of this decision, both from a financial perspective and in relation to your children. You have engaged Roy Ditmarsch to assist you with this exercise, whilst being mindful that you will terminate this engagement if you feel a conflict of interest presents itself.
In light of your decision we spent the rest of the meeting discussing matters relating to how your assets may be split. …
Your goals for the short-term are to determine how to proceed with your separation and retain your super fund investment strategy and insurance for Andrew as is for now. Your long-term goals are unclear at this stage given this development.”
Ms Kemp said that Mr Findlay did not mention that he had made a new will at the meeting. I accept this.
71. On 24 June 2019, Ms Kemp saw the counsellor alone. On 26 June 2019, Mr Findlay saw the counsellor alone. Later that day, Mr Findlay emailed Ms Kemp and apologised for a recent outburst, noting that he had then been “feeling anxious and fearful that our separation and anger/coldness with each other is affecting the kids.” Mr Findlay noted that he was focussed on being “positive, constructive, caring and supportive” of Ms Kemp, trying not to react notwithstanding that they were “at the anger stage of our emotions”.
72. From late June 2019 on, Mr Findlay was the primary carer for his mother, who was receiving palliative care at home at a time when Mr Findlay’s sisters were overseas.
73. From 30 June 2019 to 6 July 2019, Ms Kemp travelled with her mother and the twins to Samoa; the youngest child stayed with Mr Findlay. On 4 July 2019, Mr Findlay made notes, apparently in respect of a potential property settlement with Ms Kemp, and also noted “Together until we are separate”. It is not clear what this meant in the context of the overall note.
74. On 6 July 2019, Ms Kemp and the twins returned from overseas. Mr Findlay texted Ms Kemp, “I’d really like to do something tomorrow together” with “you and the kids”. I do not read these text messages as indicating a wish to reconcile with Ms Kemp. On 10 July 2019, the counsellor saw Mr Findlay and Ms Kemp separately. On 12 July 2019, Mr Findlay’s notebook indicates that he was looking for a rental property. On 22 July 2019, Mr Findlay met with Mr Wahhab and made detailed notes in respect of his financial position. On 26 July 2019, Mr Findlay made an entry in his notebook, apparently the product of a counselling session, concerning his “failed relationship” and a concern that he was not providing enough support or love for his family or Ms Kemp. On 6 August 2019, Mr Findlay saw the counsellor alone. Some days later, his notebook refers to an apparent upset with Ms Kemp; Mr Findlay records, “You do not like me”.
75. On 23 August 2019, Mr Findlay’s mother passed away. The defendant said that Mr Findlay was grief stricken by his mother’s death and stayed overnight at the defendant’s home regularly.
76. On 26 August 2019 is the first record of strong discontent between the separated couple, when Mr Findlay expressed unhappiness that Ms Kemp was travelling to New York for 10 days whilst he was also overseas on business, “We do not have the Au pair so you can travel the world and live a life that is beyond our current financial means and out of touch with raising young children. … If you feel that you are unable to fulfill the role as the primary carer of our kids then let’s have that conversation when we go and see the mediator?”. It does appear that correspondence between the couple was thereafter undertaken with the drafting assistance of their respective family law solicitors.
77. The funeral of Mr Findlay’s mother was on 30 August 2019. A few days before the funeral, Mr Findlay told Ms Jackson that he had had a huge fight with Ms Kemp and told her that she could not come to the funeral. Mr Findlay said he had seen an email from Ms Crosby to Ms Kemp, who wrote that being in the house together must be very difficult but told Ms Kemp to be patient as she would get more money from the divorce “when ‘the mother’” died. Mr Findlay said he was very upset as Ms Crosby “didn’t even have the decency to use mum’s name and she called her ‘the mother’.”
78. On 2 September 2019, Mr Findlay emailed Ms Kemp querying a transfer of $800 from their joint account, “Where was that money transferred to and what was it for?” He asked Ms Kemp “please do not use any of our joint money” on her holiday. Mr Findlay also expressed “serious concern” about the children being left with Ms Denniff whilst Ms Kemp was overseas. Mr Findlay advised that he had asked his sisters to serve as the primary carers of the children whilst Ms Kemp was away. Further, “In the event of an issue and or emergency, I am nominating Kate Jackson as the guardian of the three children.”
79. Ms Kemp replied in a lengthy email, “Guardianship is something I am currently seeking advice on. … Your Will states Georgia is to be Guardian of the children if you and I are deceased. Mine differs.” Mr Findlay replied 45 minutes later, “I will add Georgia as guardian”. Mr Findlay also complained about Ms Kemp’s operation of their joint account, stating that the arrangement was that they would put all of their money into the account with the idea that Ms Kemp would pay all expenses out of the account, “Not your personal account because there is no visibility there. You have moved money 3 times … without letting me know.”
80. Ms Kemp’s reference to Ms Moffat is curious. Under the 2015 Will, Mr Findlay had appointed Ms Jackson as the testamentary guardian or, alternatively, Ms Crosby. It was only under the 2019 Document that Mr Findlay had appointed Ms Moffat as a testamentary guardian (in the event that Mr Downing was unable to perform this role). Of this curiosity, Ms Kemp said she always believed that Ms Moffat was the guardian appointed under Mr Findlay’s previous wills, but her evidence was unclear as to whether she had seen the 2015 Will before Mr Findlay died (which appointed Ms Jackson as guardian.)
81. Ms Kemp’s email suggests that she was then aware of the 2019 Document but, on its own, is equivocal. So too, for that matter, is Mr Findlay’s reply, where there was no need to add Ms Moffat as guardian as she was already nominated as a substitute guardian under the 2019 Document. What I think this email exchange reflects is that Mr Findlay had already told Ms Kemp that he had made a new will appointing Ms Moffat as guardian of the children but neither of them then had the precise details of the new will in mind. Nor did Mr Findlay go back and check the 2019 Document in the 45 minutes between receiving Ms Kemp’s three-page email and sending a response to the number of issues which her email raised.
82. On the couple’s return from their respective overseas trips, the au pair, Ms Denniff, submitted her hours of work to Ms Kemp and Mr Findlay for payment. Ms Kemp was displeased and replied, “Give[n] the state of the relationship with Andrew and myself I think it is best if I give you 2 weeks’ notice”. Ms Denniff texted Ms Jackson, “I think the problem is I’m caught up between the two of them and I’m taking the brunt of it right now. I have been more than accommodating with the whole scenario and I don’t want to be used as a pawn between them. … I am totally with Andrew by the way.”
83. Ms Denniff’s text messages are at odds with her affidavit evidence. Ms Denniff said that, at the end of August 2019, the couple informed her that they had decided to separate. Mr Denniff was shocked as she had not noticed any “discernible differences in their attitudes towards each other” in the period leading up to their separation. Nor did either of the couple mention to her anything to do with their wills nor their testamentary intentions. (I would have been surprised if they had.) The text messages, I think, give a more accurate indication of the strain in the relationship between the separated couple at the time.
84. On 14 and 16 October 2019, the couple participated in a mediation, resulting in an interim parenting agreement. On 25 November 2019, the financial planner circulated an agenda in advance of a meeting with the couple that day, “looking to cover off” various items including an update on the progress of their personal / financial separation and “recapping the fact that your estate planning has been put on hold”. As matters turned out, Mr Findlay was unavailable to attend and the financial planner met with Ms Kemp alone.
85. Ms Kemp relied on the financial planner’s statement that “estate planning has been put on hold” as an indication that Mr Findlay was not prepared to see the 2019 Document through to execution but had changed his mind. It must be remembered that, at this point in time, the financial planner was retained by the couple, who after their separation would “terminate this engagement if you feel a conflict of interest presents itself”: see [70]. The Record of Advice records that the couple’s estate planning was not a subject on which they sought the financial planner’s assistance, given their separation. Estate planning would obviously look very different were the planning done for a couple or as individuals. Clearly, neither considered it appropriate to engage the financial planner in relation to that issue at that time.
86. In December 2019, Mr Findlay leased an apartment in Clovelly and moved out of the Centennial Park home. Ms Jackson went to the apartment with Ms Moffat to help their brother unpack his belongings and make up bunk beds for the children. Although Ms Jackson felt sorry for her brother standing in the kitchen of a “run down rental”, Mr Findlay was in a good state of mind and told his sisters not to worry about him, “I’m happy to be away from the stress of trying to share a house with Liz.” Ms Lintott also recalls going to be with the children at Mr Findlay’s request at this time, as he said “I want to avoid the handover with Liz.”
87. On 14 January 2020, Mr Findlay made notes in his notebook, “Monica as facilitator of healing process with Liz.” Mr Findlay contemplated how to interact with Ms Kemp including to “collaborate generously” and “let it go”.
88. On 1 February 2020, Ms Kemp send Mr Findlay a long (unpleasant) email on a range of parenting and financial matters concluding, “We are not together now and never will be. There is no healing or mending to occur between us and it’s progression time.” On 4 February 2020, Mr Findlay responded at length, “I would like to have a discussion (that does not turn into a fight) … I am genuinely trying to be more involved in these issues as they relate to the kids’ development.” Mr Findlay asked to discuss these issues rather than email and text, “In the meeting with Monica I want to get a framework for us to have conversations in a way for us to deal with disagreements. … I agree that it is time to progress but that not that there is no healing or mending. We have both said and done things that if left unaddressed will poison our relationship in the future. Like it or not we will have a relationship for the rest of our lives. Neither of us want to be together. I would however hope that we are big enough and care for our kids enough to work out a genuinely supportive and caring relationship going forward.”
89. On 5 February 2020, Ms Kemp replied that she was not then prepared to meet with Mr Findlay and Ms Masero, with the next step being legal mediation; email was her preferred record of communication. As already mentioned, Ms Kemp concluded, “I guess though knowing 8 days after we separated you changed your will I learned quickly what I was dealing with.” Mr Findlay replied, “Is this supposed to help Liz? At least I am able to apologise.”
90. On 10 February 2020, Mr Findlay made a ‘to do’ list for the week, including “Liz proposal”. Mr Findlay met with Mr Wahhab on 17 February 2020. In February and March 2020, it is evident that the couple continued to struggle when dealing with one another in respect of parenting and financial issues, indeed, relations appeared to deteriorate. Mr Findlay complained that he kept putting money in the Westpac credit card “for spending on family items and you continue to spend the money on personal items … Please pay your personal items with your own money.” Ms Kemp responded, “I am a female who is allowed personal appointments”. Mr Findlay disagreed, complaining that Ms Kemp ignored the family budget, “You are out of touch with reality Liz”. In May 2020, Ms Findlay returned some personal possessions to Mr Findlay, who complained, “Leaving my stuff outside in the rain is not appreciated.” Ms Kemp retorted, “Don’t write lies.” Mr Findlay rejoined, “You lack decency let alone class.”
91. Mr Findlay appears to have continued to receive counselling to assist him to deal with the challenges before him. On 2 September 2020, Mr Findlay met with the counsellor. On 12 October 2020, Mr Findlay emailed Ms Kemp in a more sanguine fashion, apologising for a mix-up in the arrangements that weekend, “Despite the situation I can say that I am really trying to get these things right … I am grateful for all the effort that you make for things to work and the flexibility you have in accommodating my schedule.”
92. Ms Kemp was not the only source of disputation in Mr Findlay’s life at the time. His relations with his sisters were also proving difficult. In October 2020, Mr Findlay and his sisters began a number of joint counselling sessions, followed by a meal together. In November 2020, on Ms Jackson’s prompting, Mr Findlay began to investigate whether he suffered from ADHD. With Mr Findlay’s permission, Ms Jackson booked an appointment for her brother at a GP around the corner from Vertel’s offices: see [113].
93. In January 2021, the couple emailed each other as to when they might expect to achieve a property settlement. For his part, Mr Findlay emailed, “I’m in the most stressful and challenging period of my life with work and my family issues. I continue to spend more money than I make every month yet I do not feel that you have any regard or concern for that situation.” Relations soured in February 2021. Ms Kemp pressed for the Centennial Park house to be sold. Mr Findlay emailed, “you ignore any of the logic or fact and heap the blame on others. … Such entitlement Liz”. Further, “You fail to see or understand anyone’s point of view but your own. It is actually a great summary of our relationship.” In March 2021, the couple could not agree on a walk-through of the Centennial Park house to divvy up furniture and artworks; Mr Findlay referred to “just another of your lies then Liz.” On 20 March 2021, Mr Findlay sent a further email in relation to parenting, “nothing you send me surprises me anymore. … At least be the person you are Liz and drop the façade.”
Family law settlement
94. On 14 May 2021, the couple finalised their family law matter, executing agreements in respect of property, child support and spousal maintenance. The documents recorded that the parties had separated on a final basis in May 2019. In short, Mr Findlay paid Ms Kemp some $4.6 million together with child maintenance of $3,000 a month (plus school fees, extra-curricular expenses, health insurance and medical expenses), spousal support of $2,500 a month until 31 January 2024 and agreed to provide an expenses-paid car. Ms Kemp relinquished any interest in Mr Findlay’s assets, including the Centennial Park house, various companies and their family superannuation fund.
95. The couple also executed a Deed of Release under the Succession Act, noting that they had reached agreement for a property settlement and spousal maintenance in the expectation that those agreements would finalise all claims by either party against the other arising out of their relationship. The parties desired to complete the financial severance of their financial relationship by discharging each other’s estates from any potential claim under the Succession Act. Subject to the approval of the Court, the parties mutually and severally released each other of their rights to make an application in relation to the estate or the notional estate of the other: cl 2.
96. On 17 May 2021, the couple filed an application for consent orders in the Family Court of Australia, again noting that they had finally separated in May 2019. Consent orders were made on 18 May 2021 in respect of parenting and property. Of the settlement, Mr Findlay told Ms Lintott that he was happy, “I have everything organised and finalised between myself and Lizzie. I am so relieved to have it done with.” He told Ms Jackson, “I gave her enough money for her to get out of my life and off my back.”
97. Relations between the couple did not improve. Mr Findlay’s efforts to close the joint credit card in accordance with the consent orders encountered difficulty. Ms Kemp emailed, “Your control with money ends now.” Mr Findlay replied, “Seriously Liz. Stop the aggression and threats. I am trying to get this all done … I paid the next month’s money to you in advance as a sign of good faith and you are still going after me.” (emphasis in original) Further, “You treat me like shit … I don’t have any money left Liz. Does that make you happy?” Ms Kemp replied, “I have zero sympathy for you. You have tried to make my life hell with insults, money control and disgraceful antics.” Mr Findlay rejoined, “I will comply with what is in the agreements. It means I no longer have to deal with your stupidity.” Ms Kemp replied that Mr Findlay was “just pathetic” while Mr Findlay concluded the exchange, “I have worked hard for what I have.”
98. On 15 June 2021, Mr Wahhab provided Mr Findlay with various documents signed by Ms Kemp in accordance with the consent orders made in the Family Court, including relinquishing her interest in three trusts and assigning loan accounts in those trusts, together with a signed share transfer form in relation to RGB Investments Pty Ltd. Mr Findlay was advised to sign the share transfer form as “transferee”, date the document and provide it to his accountant. Mr Wahhab also sought Mr Findlay’s instructions on whether he wished to apply to the Supreme Court to seek approval of the Deed of Release, “We strongly advise you to apply for approval.” There is no evidence that Mr Findlay provided Mr Wahhab with these instructions. Nor did Mr Findlay execute the share transfer, such that Ms Kemp remained a director and shareholder of RGB Investments at his death. Likely, this was an oversight on Mr Findlay’s part rather than referable to a wish that Ms Kemp remain involved in the company.
Post-settlement
99. On 1 June 2021, Mr Findlay emailed his accountant, Justin Woods, seeking advice on the structuring of his financial affairs post-separation from Ms Kemp. Mr Findlay wanted to establish a trust from which child maintenance obligations would be paid. Tax lawyer, Michael Hempsall, was engaged to advise on the issue. Mr Wood said that, from then on, he gave advice to Mr Findlay on numerous matters, including establishing a child maintenance trust for the children, whether to transfer the Centennial Park house into the name of the children or the name of a company for the benefit of the children, and advice in relation to the financial settlement following his separation. Mr Woods did not recall Mr Findlay ever discussing his will.
100. Mr Findlay moved back to the Centennial Park house. For her part, Ms Kemp used the $4.6 million to buy a house in Balgowlah. Mr Findlay expressed a concern to Mr Woods that Ms Kemp would want more money from him as she had spent all the money she received from the settlement to buy a house and had not set aside any money to support her lifestyle.
101. According to their emails, relations between the couple did not improve, apart from one incident. On 3 June 2021, Mr Findlay’s apartment was raided by the Australian Securities and Investments Commission (ASIC). At this time, Mr Findlay’s relations with his sisters were poor and it was Ms Kemp who assisted by collecting the children at short notice from his apartment. Mr Findlay was subsequently investigated by ASIC for insider trading. No charges were laid.
102. On 6 June 2021, Mr Findlay commenced the last notebook, entitled “LPP”. The dispute the subject of this notebook concerned the Findlay family. Mr Findlay appears to have trawled through his text messages to collate text messages relevant to this dispute and, in the course of doing so, noted that he was having relationship problems with Ms Kemp in January 2019. Mr Findlay also recorded “separated with Liz on May 20 2019”.
103. At about this time, Mr Findlay formed a casual relationship with long-time friend, Ms Roth. Both had recently concluded family law settlements with ex-partners. They spoke at length on this subject. Ms Roth recalled Mr Findlay telling her that he had concluded the financial arrangements with Ms Kemp and was grateful that he did not have to hand over the Centennial Park house. Further, Mr Findlay said, “My will has been changed, after we split, I wanted to ensure my home and other assets weren’t all just handed over to Liz and my kids are looked after.” Ms Roth did not repeat this conversation to anyone at the time.
104. Whilst it was suggested to Ms Roth in cross-examination that her suggested relationship with Mr Findlay was a fiction, Ms Roth was able to provide additional accurate details about the financial settlement between Mr Findlay and Ms Kemp, which suggest that Mr Findlay did indeed disclose these details to her. Ms Roth added, “He was very frustrated. He had a lot of acrimonious feelings, but it’s not for me to relay any ill feelings. I don’t want anyone to feel bad … He did mention the will. He was very satisfied that his intentions had been closed off and that he’d changed all arrangements for any further privilege or accommodation with Elizabeth.” Mr Findlay also expressed the sentiment that “She would not get her hands on” the Centennial Park property … it was very clear that his intention was that she wouldn’t get either as part of that property settlement or ever in the future her hands on his property at Centennial Park.” Further, “It was a foregone conclusion in his mind that the will had been resolved and that the property, specifically Centennial Park, would not be an entitlement to Elizabeth”.
105. Where Mr Findlay and Ms Roth appear to have bonded over their shared experiences of family law proceedings, I accept that they exchanged details on a subject which they may not have shared with others who had not recently gone through the same experience. Ms Roth had no financial interest in the outcome of these proceedings. I accept her evidence.
106. As Mr Findlay later recorded in an email to his family and friends, in June 2021, Mr Findlay also met Lakshmi Pillai: see [116]. They formed a relationship which continued until Mr Findlay’s death. Mr Findlay told the defendant that he planned for Ms Pillai to move in with him at Centennial Park and to make changes to the house to accommodate their respective children. It does appear from Mr Findlay’s emails that he was happy and settled in the new relationship, which he regarded as committed and intended to be for the long-term.
107. Apparently as a consequence of ASIC’s investigation, Mr Findlay stepped down from his operational role at Vertel and moved his attention to a start-up telecommunications business, being the business he had earlier investigated with Ms Lintott, AetherX Pty Ltd. Mr Findlay lent some $214,000 to AetherX and also obtained a $660,000 bank loan for the company, secured by a mortgage over the Centennial Park house.
108. In July 2021, Mr Berryman began working with Mr Findlay as a management consultant. They spoke weekly in respect of Mr Findlay’s business development ideas and plans. Mr Berryman advised Mr Findlay on establishing structures to operate businesses, on management matters, on corporate compliance and due diligence obligations, corporate practice and governance and other business matters. Mr Berryman made plain to Mr Findlay that he was not qualified to advise on personal finance, nor give financial or taxation advice.
109. Mr Berryman considered himself to be a very close friend of Mr Findlay. Mr Findlay said that there had been negotiations and a settlement with Ms Kemp but did not show Mr Berryman the documents formalising the family law settlement. Nor did Mr Berryman seek to see the documents “in the context of my business relationship with him. Those were matters I spoke about … in a friendly context”. Neither discussed their wills with the other. Mr Berryman recalled that they both expressed a desire that their children be accommodated “and we talked a little about that, about the importance of those things, but we didn’t dwell on those matters”. Mr Findlay did not mention his new will to him.
110. I think the metes and bounds of Mr Berryman’s relationship with Mr Findlay were more accurately revealed in cross-examination. Mr Berryman was retained by Mr Findlay as a management consultant in relation to Mr Findlay’s business concerns. The extent to which they discussed personal matters appears to have been ‘high level’. I consider it is unsurprising that Mr Findlay did not disclose his testamentary arrangements to Mr Berryman.
111. Mr Findlay also confided in Mr Berryman that his relationship with Ms Kemp caused him financial stress, where Mr Findlay did not have a regular income stream, but also spoke about how important Ms Kemp was to him and their children as she prioritised the children and their wellbeing and always had the children’s best interests at heart. Mr Findlay may have said something to Mr Berryman along those lines, but I cannot overlook an abiding theme of Mr Findlay’s emails with Ms Kemp on this topic, expressing concern that Ms Kemp was routinely off-loading the care of their children to the au pair, extracurricular activities or the kindness of others.
112. In October 2021, the couple continued to struggle in relation to parenting matters, with Mr Findlay suggesting that Ms Kemp lacked sense, “Your inability to accept being wrong defines you. I do actually feel sorry for you.” In contrast, Ms Kemp said that in late 2021 she went for a walk with Mr Findlay in Centennial Park and he said, “one day, when I have more money that is not tied up with my family, I would like to give you more.” I find this singularly unlikely. More likely is Ms Lintott’s recollection that Mr Findlay said to her after the property settlement, “Lizzie says she that she needs more money. Surely, it’s time that she got a job”. Such a comment was reflected in Mr Findlay’s emails: see [119], [120].
113. In September 2021, a GP referred Mr Findlay to a psychiatrist for an opinion and diagnostic clarification of ADHD, “He have issue with concentration, often engage in multiple task at time … Symptom are affecting him with work and home relationship.” Mr Findlay saw the specialist in December 2021. The diagnosis is not known save that, in January 2022, Mr Findlay texted Ms Jackson “stated taking adhd [m]eds. Feel more focused which is good.” I infer that the specialist’s diagnosis was along the lines of ADHD; certainly, Mr Findlay appears to have been proceeding on that basis.
114. In March and April 2022, the couple’s communications regarding parenting and financial matters remained difficult. On 17 March 2022, Mr Findlay emailed “Keep fighting Liz – it makes you happy in some perverse way.” In April 2022, when the couple emailed regarding the provision of a new car, Ms Kemp complained “You disgust me. … you’re a complete waste of space who does nothing to help or assist. You’re nothing more than a controlling bully.” Mr Findlay retorted, “It’s you that are the controlling bully Liz. It’s what you do the best.” In June 2022, Mr Findlay emailed Ms Kemp, “I feel our relationship is going backwards rather than improving.”
115. In July 2022, Mr Findlay complained that Ms Kemp was being “spiteful” in blocking Ms Pillai’s calls to the children. Ms Kemp agreed that she blocked Ms Pillai’s calls but rejoined that she had “NO problem with Lakshmi”. Mr Findlay rejoined, “I just want your bullshit out of my life. You are so controlling and damaged but can never take any ownership of it – let alone fix it. … You are such an ungrateful person. You did not say thanks once for a $100k vehicle – it’s just another entitlement you think you are owed because you fill up the kids’ life with activities.”
116. Mr Findlay turned 50 in August 2022. Ms Kemp did not attend Mr Findlay’s birthday party. After the party, Ms Lintott drove the children home to Balgowlah. Ms Lintott said Ms Kemp did not come to the door or speak to her; after the children went inside, the door was closed and it was awkward. Mr Findlay emailed his birthday guests, thanking Ms Pillai for organising the party whilst “dealing with a poorly organised and chaotic me … My life has not been the same since I met Lakshmi 14 months ago.”
117. In October 2022, the financial planner provided a Record of Advice to Mr Findlay in respect of the Findlay Superannuation Fund, where Ms Kemp had ceased to be a member as part of the family law settlement. In respect of estate planning, the financial planner noted, “You have told us that you do not wish to discuss your estate planning needs with us. Given the change in your circumstances (separation from Lizzie), we strongly suggest you review your estate planning arrangement. … You advised that you understand and are comfortable with” the risks of not addressing this matter.
118. Communications between the couple remained fractious regarding parenting and financial matters. In October 2022, Mr Findlay complained that Ms Kemp had organised the children’s schedule without discussion. Ms Kemp replied, “Oh my goodness, I have HAD enough Andrew.” Mr Findlay pressed to be included in working out a schedule, “That way I even get to see the work you do and have a chance to be grateful rather than feel like you just suit yourself.” Ms Kemp was not interested. Mr Findlay pressed, “I am telling you that I want to be involved. Not just told. You don’t like it. Why do you expect me to?”
119. The next day, Mr Findlay emailed again, “I will work with what is in this term but I want to sit down with you in future to go through the schedule before these are locked in. … I don’t want to fight with you every term about this.” (emphasis in original) Ms Kemp was not interested, “I do NOT CARE about your syncing with your girlfriend. … You need to pull your head in. Your disorganisation is your issue.” Mr Findlay replied, “You are such a bully Liz … rather than deal with a simple request you dig up a mountain of drivel. … I disengage from … your barely comprehensible emails as I can’t stand your aggressiveness. … I don’t have to dance to your tune Liz. … Why don’t you get a job next year now that [the youngest child] is at school and I will have the kids more. You might feel good about contributing to the support of the kids rather than just taking all the time.” On 13 October 2022, Ms Kemp replied, “You can go stuff yourself you ungrateful human.” Further unhelpful emails were exchanged in respect of an upcoming children’s birthday party.
120. On 7 November 2022, Mr Findlay emailed Ms Kemp again, “Your continual disregard for and breach of the Parenting Agreement needs to stop.” Ms Kemp was said to be engaged in “a form of bullying” by constantly threatening to take away his time with the children. Mr Findlay also enquired whether Ms Kemp was now working? Ms Kemp denied that she was in breach of any agreement, suggesting that he was just in a bad mood “Perhaps another fallout with Lakshimi. I have heard there are many. Please don’t take it out on the children and myself. I am busy parenting them. … Please stop bullying and controlling me. … It’s very sad the constant attacks.” Further emails to agree on the parents’ respective time with the children over the holiday period were unproductive, with Ms Kemp emailing “Honestly. … Get it right and stop emailing me pls.”
121. According to Ms Kemp, Mr Findlay said to her in about 2023, “I know you have the children’s needs as your priority. You put the children ahead of all else.” Mr Findlay may have said something along these lines, although probably not in such unqualified terms. He did pay compliments to Ms Kemp from time to time and appeared mindful to do so. He also strongly criticised Ms Kemp from time to time for putting her personal and social commitments ahead of the children.
122. In June 2023, Mr Findlay was continuing to communicate with his siblings to try and finalise the separation of family assets, emailing Mr Berryman on 14 June 2023, “I don’t like this.” Ms Jackson agreed that there were multiple tensions and disagreements that grew out of the siblings’ business and commercial interests, but they remained respectful and polite with each other. Further, “I do not consider it will assist the court in determining Andrew’s testamentary intentions if I recount all the small and large ways in which I loved my brother and the means by which I remained connected to him in the last two years of his life.”
Untimely death and aftermath
123. Mr Findlay drowned on 20 July 2023. Ms Jackson organised the funeral. Ms Kemp attended. The defendant gave a eulogy and was a pall bearer.
124. In the weeks after the funeral, Ms Jackson went to the Centennial Park house and began going through Mr Findlay’s personal possessions and papers to locate anything that may be relevant to his Estate. Ms Jackson took possession of Mr Findlay’s laptops.
125. On 22 August 2023, the defendant emailed Ms Kemp in respect of “Will and Probate”, advising that he had met with Ms Jackson to get “the process for Probate and the will all sorted” but were still awaiting the death certificate. The defendant advised that he was conscious of Mr Findlay’s commitments to Ms Kemp in the form of spousal and child support and wanted to make sure “they are still happening and you are not out of pocket. [N]o one wants that.” The defendant offered to make these payments himself, or to “get it from the Findlay side” until probate was awarded, “It’s my first time doing this, so I just want to make sure you are looked after and there are no gaps.” Ms Kemp requested a copy of the will, “Silly question but assumed that it was signed and there will be no issue with Probate?”. The defendant promptly replied, attaching his emails with Mr Findlay of 5 June 2019: see [53]-[55].
126. On 4 September 2023, Ms Kemp provided the defendant with the details of her solicitor. On 5 September 2023, the defendant advised that he had also retained a solicitor to advise on the application for probate. Ms Jackson delivered Mr Findlay’s laptops to the defendant’s solicitors. Ms Kemp emailed Ms Grimes, requesting a copy of Mr Findlay’s last signed will, “it appears that the Will I was told existed in 2019 is unsigned.” Ms Grimes provided Ms Kemp with the 2015 Will, being “the last will of Andrew that I am aware of”.
127. On becoming aware that the 2015 Will was the last signed will made by Mr Findlay and that the defendant was relying upon the 2019 Document as Mr Findlay’s last will, Ms Kemp changed the keypad code to the front door of the Centennial Park house. Ms Kemp had earlier taken possession of Mr Findlay’s Mercedes AMG and transferred registration into her name. Ms Kemp and the children later moved back into the Centennial Park house.
These proceedings
128. The parties made extensive enquiries, none of which resulted in the production of another will. In March 2024, Ms Kemp commenced these proceedings, seeking a grant of probate in respect of the 2015 Will. In April 2024, the defendant filed a cross-claim, seeking a declaration under s 8 of the Succession Act that the 2019 Document constitutes Mr Findlay’s last will.
129. The defendant contends that the 2019 Document embodied Mr Findlay’s testamentary intentions and was intended by him to operate as his last will. The defendant relied on the fact that the document was created shortly after his separation from Ms Kemp, together with the contents of Mr Findlay’s email to the defendant stating “This is my new will. I am yet to get it signed in front of Emma Grimes (my lawyer) but I intend [to]” and “I just sent you the will as I haven’t changed it with my lawyer yet. If I went under a bus between now and then my wishes will at least be clear.” In addition, Mr Findlay told Mr Wahhab a week later that he had changed his will recently.
130. Ms Kemp does not admit that the 2019 Document embodies Mr Findlay’s testamentary intentions, nor that he intended that the document would be a will. Rather, Mr Findlay was a sophisticated businessman and had previously executed a will. He knew the execution requirements under s 6 of the Succession Act for a will to be validly executed. Whilst Mr Findlay regularly dealt with solicitors, he did not execute the 2019 document as a will. Mr Findlay acknowledged in his emails to the defendant that he knew that he needed to print, sign and witness the document before it was a valid will. Whilst the couple had separated in May 2019, they continued to live under the same roof; the 2019 document was drafted “at the peak of an emotionally turbulent period”.
131. Ms Kemp said that, until about mid-July 2019, the couple continued to attend counselling and navigate issues in their relationship “which were causing some disharmony” but continued to live together as a family and to attend social events as a couple. After mid-July 2019, discussion turned to the practicalities of formalising their separation. Notwithstanding this, they “continued to co-parent and conduct our personal, financial and business affairs together and cohesively with each other”. Whilst they engaged in contested litigation in the Family Court, the matter was resolved through mediation and agreement.
132. Ms Kemp said that she and Mr Findlay had differences of opinion on parenting which caused periods of frustration but denied that their relationship was regularly volatile. Despite at times disagreeing, they continued to co-parent and saw each other eight to ten times a fortnight, discussing all things to do with their children. Ms Kemp said the couple continued to operate joint credit cards and bank account until the latter half of 2020 (although the contemporaneous emails suggest that joint accounts were maintained in accordance with the advice of their respective family law solicitors until the family law matter was resolved).
133. Ms Denniff also said that, after the couple’s separation, she did not recall hearing any arguments between the two beyond an occasional “quip” in early 2020. Ms Denniff observed no major change in how the couple interacted with their children after announcing their separation. I defer to Ms Denniff’s text messages as a more likely indicator of the post-separation climate: see [82].
134. I have endeavoured to set out in detail what the contemporaneous documents reveal about the post-separation relationship. These records simply do not support Ms Kemp’s case.
135. Ms Kemp also said that Mr Findlay thought deeply about important matters and also changed his mind before forming a final view. As such, the 2019 Document was unlikely to have reflected his concluded testamentary intentions. Mr Berryman also observed that Mr Findlay solved problems by doing things carefully and properly. Against this, Ms Jackson had worked closely with her brother at Vertel for about 12 years. Ms Jackson agreed that her brother was a considered, highly intelligent and gifted person. However, he was also a “big picture” person, incredibly engaged with technical detail and the development of ideas but “not always able to complete the tasks or steps to get there”. Ms Jackson gave some examples.
Submissions
136. The plaintiff submitted that Mr Findlay should be taken to have known that a will has to be executed with due formality. Knowing this, Mr Findlay would not have thought that there was a valid will by simply drafting the 2019 Document. The document itself contained an attestation clause indicating that the will needed to be signed and witnessed by two persons. Mr Findlay never chose to print the document, being a step necessary for execution. Mr Findlay was also said to have qualified the effect of the 2019 document in his email to the defendant on 5 June 2019, making it clear that he did not intend the document to operate as his will without more as it needed to be changed. The question was whether the 2019 Document embodied Mr Findlay's testamentary intentions and was intended by him to operate as his will, without more. That is, did Mr Findlay intend that that document form his final will and did not want any changes to that document: Lindsay v McGrath [2016] 2 Qd R 160; [2015] QCA 160, [60] and [73] (Boddice J, with whom Gotterson JA agreeing).
137. The plaintiff submitted that the contemporaneous documents indicated that Mr Findlay was conflicted about his feelings. It could not be said that the parties had firmly resolved to separate by early June 2019; their relationship was “multi-faceted”. It was said to be difficult to understand why Mr Findlay would have wanted to sever his finances from Ms Kemp when he was concurrently protesting his love for her and offering to change himself to save the relationship. The 2019 Document should be characterised as a momentary and passing record of a desire by Mr Findlay to stake out a position, to be shared with a potential mediator. (I reject this submission, for reasons earlier stated.) This was not a document which then represented his settled intentions.
138. The plaintiff submitted that Mr Findlay was not prepared to see the matter of a new will through to completion. The financial advisor was told that his "estate planning has been put on hold". The only conclusion was that Mr Findlay changed his mind. Mr Findlay was said to have made conflicting statements about his testamentary intentions to Ms Kemp and Mr Wahhab. Equally telling was said to be the fact that the conference with Mr Wahhab did not cause Mr Findlay to see Ms Grimes or taken any other step to execute the 2019 Document. Rather, he told no one else of the document. Ms Roth's evidence should be rejected where there was said to be significant doubt as to whether she ever had a relationship with Mr Findlay at all. (I have already addressed these submissions in the judgment.)
139. The plaintiff submitted that the suggestion that Mr Findlay was disorganised should not be accepted. Rather, Mr Findlay was unresolved about his feelings for Ms Kemp. He did not list the will in any of his 'to do' lists (although I note this is also consistent with Mr Findlay considering that the will was 'done'). Although he was dealing with a number of solicitors in the years which followed, Mr Findlay did not get anyone to assist him to execute the Will. He did not tell Ms Kemp about the 2019 Document (I have found that he did). Mr Findlay's emails were said to be inconsistent with an understanding on his part that the 2019 Document was his will. (I agree that Mr Findlay’s email regarding his sisters’ guardianship of the children whilst Ms Kemp was overseas is equivocal: see [81].)
140. The defendant submitted that, had the 2019 Document been executed in accordance with s 6, there was no doubt it would have been admitted to probate. The only issue was whether, on or after 5 June 2019, Mr Findlay intended the document to operate as his Will. The changes Mr Findlay made to the draft 2013 Will were considered and detailed. The most significant and rational change was to benefit his three children rather than the plaintiff. The fact that the testator’s name appears typed at the foot of a document has been considered as pointing towards the adoption of the document: Re Yu (2013) 11 ASTLR 490; [2013] QSC 322 at [9]; Yazbek v Yazbek [2012] NSWSC 594 at [113], [116].
141. The defendant submitted there was no doubt that the document embodied Mr Findlay’s testamentary intent. After separation from the plaintiff, Mr Findlay wanted to conclude his financial affairs with her and did so by a series of documents. He had every reason to make the testamentary disposition which he did in 2019. For whatever reason, he chose to create that document himself. It was consistent with his thoughts. The question was whether Mr Findlay intended the document to have an operative effect as a will, which turned on whether, by his conduct no later than 11 June 2019, he converted what might then be an inoperative document into one which had immediate operative effect.
142. There was no doubt Mr Findlay published his will by sending it by email to the defendant. Mr Findlay told the defendant, Mr Wahhab, probably Ms Kemp, and later Ms Roth about it. He also told Ms Lintott in 2021 that everything was organized and finalized between himself and Ms Kemp, and he was relieved to have it done. The fact that, after emailing the will to the defendant, Mr Findlay did nothing further to execute the document was said to be consistent with him considering the document to be a completed task. Mr Findlay was a non-lawyer. He had some business experience and knew that you could execute a will but not necessarily that you had to. He expressed to friends and his lawyer his satisfaction with what he had done in the sense that he had concluded the making of a Will. The Court should use the legislation for what it was intended, that is, to implement the intention of a testator where that intention was in writing.
The law
143. Section 6 of the Succession Act provides, in short, that a will is not valid unless it is in writing and signed by the testator and witnessed by two people. Section 8 permits the Court to dispense with these requirements in certain circumstances, relevantly: (emphasis added)
“8 When may the Court dispense with the requirements for execution, alteration or revocation of wills?
(1) This section applies to a document, or part of a document, that—
(a) purports to state the testamentary intentions of a deceased person, and
(b) has not been executed in accordance with this Part.
(2) The document, or part of the document, forms—
(a) the deceased person’s will—if the Court is satisfied that the person intended it to form his or her will, or
…
(3) In making a decision under subsection (2), the Court may, in addition to the document or part, have regard to—
(a) any evidence relating to the manner in which the document or part was executed, and
(b) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person.
(4) Subsection (3) does not limit the matters that the Court may have regard to in making a decision under subsection (2).”
144. In Re Estate of Masters (decd); Hill v Plummer (1994) 33 NSWLR 446, Mahoney JA noted that the provision should be given a beneficial application. At 462:
“There are, in the history of this branch of the law, many cases in which the intentions of a deceased has not been able to be given effect. That is an evil which should be remedied as far as may be. It may be understood why the legislature decided not to give testamentary effect merely to any statement of testamentary wishes, however casually stated and even if it was not contemplated that legal results would follow. The consequences of that, as far as concerns proof and otherwise, can well be imagined. But the benefits of the change should not be withheld by requiring too rigid a manner of proof that what was put in a document should have legal effect. If a document is on its face such as contemplates legal effect, ordinarily it should be given effect unless - as in this case - there are contexts or circumstances that lead to the contrary conclusion."
See likewise Kirby P at 452.
145. As to the requirement in s 8(2)(a) that “the Court is satisfied that the person intended [the document] to form his or her will,” the principles were recently summarised by Meagher JA in Rodny v Weisbord (2020) 102 NSWLR 403; [2020] NSWCA 22 at [17]-[18]: (citations omitted)
“The requirement that the court be satisfied that the testator intended a document “form” his or her will goes to the testator’s actual intention regarding the operative effect of the document in question. The court must be satisfied that the testator actually intended that the document “operate” and “without more”, thereby constituting his or her will … In The Estate of Masters (deceased); Hill v Plummer (1994) 33 NSWLR 446 at 454-455 … Mahoney JA emphasised … “there is… a distinction between a document which merely sets out what a person wishes or intends as to the way his property shall pass on his death and a document which, setting out those things, is intended to cause that to come about, that is, to operate as his will”. …
“Thus, the words of the document and evidence relevant to the deceased’s intention … must establish on the balance of probabilities … that the deceased intended that the document should have a present operation as his or her will …”
146. The plaintiff relied on the formulation of this requirement in Lindsay v McGrath [2015] QCA 206, where Boddice J put it this way, “The evidence must establish on the balance of probabilities that the deceased wanted the particular document to be his or her final Will and did not want to make any changes to that document”: at [60] (emphasis added). I take his Honour to mean that the deceased did not want to make any changes to the document before it took effect as their will. A document operates as a will as and from the date when the relevant intention existed: Hatsatouris v Hatsatouris [2001] NSWCA 408 at [57] (Powell JA). Of course, there is nothing preventing a testator from revoking an informal will by making a formal will or even another informal will. As Powell JA further explained in Hatsatouris v Hatsatouris at [59]:
“However, while it is legitimate to have regard to statements made, and actions taken, by the relevant Deceased, after the relevant document has been brought into being or signed, in determining whether or not at the time when the document was brought into being or signed, the relevant Deceased had the relevant intention, once it be held that the relevant Deceased had the relevant intention recourse cannot be had to subsequent statements or events - unless they fall within the provisions of [s 11, revocation of will] - to deprive the relevant document of its status as a testamentary instrument. …”
147. As Windeyer AJ cautioned in National Australia Trustees Ltd v Fazey [2011] NSWSC 559, “Great care must be taken” in determining whether the deceased intended the document, without more, to form their will; “Many people write out proposals for their wills on pieces of paper headed ‘will’ but often these are no more than present thoughts not testamentary intentions and certainly not intended to be wills”: at [18]. It is not sufficient if the document was intended to be a note of instructions, a draft will or a ‘trial run’: Oreski v Ikac [2008] WASCA 220 at [54] (Newnes AJA, with whom Martin CJ and McLure JA agreed). In Oreski v Ikac, the Court adopted Young CJ in Eq’s observation in Macey v Finch [2002] NSWSC 933, “It is quite common for a person when he or she sees a draft of what has been typed up to realise that there needs to be some change in expression, or even in disposition”: at [23].
148. Further, “because of the nature of probate, the consequences of any findings that may be made and the inability to hear any evidence from the deceased as to his actual intentions, the Court needs to evaluate the evidence with great care in accordance with the Briginshaw v Briginshaw principle”: Fast v Rockman [2013] VSC 18 at [48] (Habersberger J); Re Estate of Schwartzkopff (2006) 94 SASR 465; [2006] SASC 131 at [36] (Gray J). In deciding whether the burden of proof has been discharged, the Court may take into account that the size of the estate is substantial and the differences between the documents being propounded: Smith v O’Neill [2014] NSWSC 1119 at [148] (Hallen J).
149. As to whether a testator intended that the document, without more, would operate as their will, the testator's previous will-making habits may be relevant but not dispositive. For example, in Estate of John James Dunn; Anderson v Scrivener [2002] NSWSC 900, Campbell J observed, “All his previous Wills had been formal wills, drafted by a solicitor. He went to a solicitor to draft a will even though he was, at least at one time, of the view that his solicitor charged too much for altering a will. There is no reason to believe that the Testator either knew, or suspected, that it was possible to make a will with anything other than full formality”: at [43]. By contrast, in Estate of Laura Angius; Angius v Angius [2013] NSWSC 1895, the fact that the deceased knew that, for a document to have legal effect as a will, it had to be signed, did not preclude the document being recognised where there was no suggestion that the deceased wanted to think further about what they had written, where the deceased’s acts and words ‘adopted’ the document as their intended will, and where the deceased referred to the document as a will: at [285(e), (g)] (Hallen J).
150. That is, the testator's previous will-making habits “is only one of the factual circumstances which a court will take into account in assessing what ultimately is a question of fact as to whether the requisite intention existed”: Fast v Rockman at [113]. Habersberger J there noted at [112]:
“I accept that a deceased’s awareness of the formalities required for a will may bear on a court’s assessment as to whether he or she intended an informal document to [be] his or her will. Where a deceased is aware of those formalities and had an opportunity for the will to be executed in conformity with those requirements but failed to do so, that failure tends to point against the conclusion that the deceased intended the document to be his or her will. Conversely, a lack of full familiarity or awareness with those formalities may allow a court more readily to infer that the deceased intended the informal document to have legal effect according to its terms after his or her death. …”
151. Three examples of the application of these principles may assist. In Bell v Crewes [2011] NSWSC 1159, the testator reviewed an amended will and told his solicitor wife, “I have read the new will – that’s what we want – that’s it.” His wife told him they would need to have the will signed, and he agreed, but died suddenly without having done so. White J declined to grant relief under s 8, including because it was clear that the deceased intended to execute his will at the same time as his wife executed her new will: at [20]. There was insufficient evidence to conclude that the deceased intended the document to operate before signature and before his wife’s new will was operative: at [21].
152. A similar case to the circumstances at hand is Yazbek v Yazbek, where the testator created a Microsoft Word document on his laptop, with the file name “Will.doc”, shortly before he went on an overseas trip. The testator told a business colleague, before getting into a taxi to the airport, that “If anything happens to me there is a will on my computer and also one at home in a drawer”: at [33]-[34]. The testator died a year later. Slattery J was satisfied that the testator intended that the Microsoft Word document would form his will, where he named the electronic file “Will”; “This was his choice, not a default option associated with saving the document. … The act of naming the electronic file … supports the … requirement” that the deceased intended the document to form his will: at [113]. In addition, the testator told someone that he had made a “Will” and the tenor of that conversation was that the will-making process was complete: at [114]. The testator’s imminent international travel was a reason for him to prepare an instrument which would operate, without more, upon his death, namely a will: at [115]. Further, the testator typed his name on the electronic document at the end, representing a degree of adoption of Will.doc as operative: at [116]. Finally, the document was found where the testator had said it would be; he had continued to keep what he told others was his “will”: at [117].
153. By contrast, in Re Application of Tristram [2012] NSWSC 657, two documents were found on the deceased’s computer with file names “willcalcs.xls” and “will.doc”. The latter document set out the deceased’s then thoughts as how he might divide his estate but was replete with unresolved issues and question marks, for example “Survivors???????”. White J considered that the contents of the Microsoft Word document clearly demonstrated that the deceased did not consider that he had completed the task of making a will or even fully stating his testamentary intentions, where it appeared that the deceased had not completed his thinking: at [7], [9]. Further, the deceased did not tell key people that he had made a will, including his son or his de facto partner. The deceased died unexpectedly at a time when his daughter believed that her father felt that he had longer to live: at [11]. The fact that the deceased said to his daughter “I have changed my will” was not evidence of sufficient strength to show that he intended that either of the two computer documents to be his will, “Considering the evidence as a whole, I think it amounts to no more than the deceased’s advising his daughter of changes to his thinking as to how he intended to leave his estate”: at [13], [14].
Consideration
154. It is not in issue that the 2019 Document was a “document” within the meaning of s 3(1) of the Succession Act. Nor is it in issue that the 2019 Document “purports to state the testamentary intentions” of Mr Findlay: s 8(1)(a). The issue is whether Mr Findlay intended the 2019 Document “to form his … will”: s 8(2)(a). The defendant contends that the relevant intention existed as at 5 June 2019. The defendant relies on the nature of the document and the context in which it was prepared (being shortly after his separation from Ms Kemp) together with statements made by Mr Findlay in his emails to the defendant on 5 June 2019 and to Mr Wahhab in conference on 11 June 2019. Statements made by Mr Findlay after this, for example, to Ms Roth, were relied on as supporting the existence of that intention as at 5 June 2019.
155. In considering whether the requirements of s 8(2)(a) have been satisfied, I have borne firmly in mind the nature of probate and the consequences of the findings I am asked to make, particularly in light of the size of the estate and the difference between the documents propounded by the parties. The estate is large. Admitting the 2019 Document to probate notwithstanding that it has not been executed in accordance with the requirements of the Succession Act will have significant consequences for Ms Kemp, on the one hand, and the children, on the other.
The document
156. In considering whether the requirements of s 8(2)(a) have been satisfied, the legislation calls for the Court to have regard to the document itself: chapeau to s 8(3). The 2019 Document certainly looks like a will. The 2019 Document does not contain any unresolved issues or questions. The experts found no evidence that the 2019 Document was modified or accessed after 5 June 2019. Both matters are consistent with the will-making process being complete. Dating the document is often an indication that the document is in its final form and intended to be operative: Re the Estate of Kiepas (dec’d); Twemlow v Kiepas [2004] NSWSC 452 at [31] (Campbell J). Mr Findlay dated the 2019 Document in two places for the following day, 5 June 2019, when he intended to execute the document in front of Ms Grimes.
157. The file name chosen by Mr Findlay is also consistent with the document being his will. Mr Findlay changed the file name from “ADF WILL.doc” to “ADF WILL NEW PLK”. As earlier mentioned, the file name likely referred to Mr Findlay’s will “post” Ms Kemp, recording changes to his will in light of that event. The file name also recorded the fact that the will was “NEW”, being a replacement for the 2015 Will. The fact that Mr Findlay gave the electronic file this file name was his choice and an act supporting his intention that the document would form his will: Yazbek at [113].
158. An important feature of the 2019 Document is that it was not a draft prepared by Ms Grimes to be considered and approved by Mr Findlay, but prepared by the testator himself. As such, it may be distinguished from cases where the testator voiced approval of a will prepared by a solicitor but had yet to see the final version: for example, Bell v Crewes or The Application of Kencalo (In the Estate of Ruth Buharoff) (Unreported, Supreme Court of New South Wales, 23 October 1991), where the testatrix left a message with her solicitor that the will was “satisfactory – very good” but died before the will was engrossed in final form. Here, the testator endorsed each word by the drafting process. I have earlier described the extensive changes made by Mr Findlay to the 2013 Draft and repeat my observations at [46]-[48].
159. As to whether Mr Findlay wanted to make any changes to the 2019 Document, he advised the defendant in his third email, “I just sent you the will as I haven’t changed it with my lawyer yet.” As earlier mentioned, I read the italicised words as Mr Findlay explaining that he had not yet changed the 2015 Will. I do not accept Ms Kemp’s submission that Mr Findlay was indicating that he wished to make further amendments to the 2019 Document with Ms Grimes. This construction of the email is confirmed by the next sentence, “If I went under a bus between now and then my wishes would at least be clear”. That is, the 2019 Document recorded his testamentary intentions clearly as is. I attach no particular significance to Mr Findlay’s reference to the 2019 Document recording his “wishes” as indicating that the 2019 Document was non-binding; there is no evidence that Mr Findlay had a detailed knowledge of the law of probate such that I would attach any particular significance to his choice of noun.
160. Nor do I accept Ms Kemp’s submission that the preparation of the 2019 Document was merely a ‘shot across the bows’ to be deployed in a possible mediation with Ms Kemp. As I read it, each paragraph of the emails dealt with a separate subject. The paragraph of the relevant emails concerning the will was dealt with separately to the topic of a potential mediation.
161. Ms Kemp suggested that the 2019 Document could not be thought to reflect Mr Findlay’s testamentary intentions, as the people appointed to perform various roles under that will made no sense. I disagree. The fact that Mr Findlay changed the beneficiary of his estate from Ms Kemp to the children might be thought rational in the circumstances. The fact that Mr Findlay changed the executor from Ms Kemp to the defendant was also unremarkable. Mr Findlay was clearly very close to the defendant, describing him as “the brother I never had … and a super kind and caring person”.
162. The choice of Mr Downing as testamentary guardian for the children also made sense where Mr Findlay had known Mr Downing all his life and had become close friends with his wife, Ms Lintott. Mr Findlay was obviously comfortable with the children interacting with Mr Downing, Ms Lintott and their children, where the families lived close by. He regularly visited them with the children.
163. The replacement of Ms Kemp’s mother with Ms Moffat as a substitute testamentary guardian also made sense. Mr Findlay later described his younger sister’s “softness” and her ability to make his children “feel OK and safe”. The sisters’ roles under the new will were largely unchanged; they remained substitutionary beneficiaries, executors and testamentary guardians. There is nothing to suggest that Mr Findlay’s relationships with his sisters at that point in time were other than good. In short, Mr Findlay’s choices appear wise and considered.
Manner of execution
164. The legislation requires the Court to consider any evidence relating to the manner in which the document was executed: s 8(3)(a). The 2019 Document was not executed. The experts found no evidence that the 2019 Document was printed after 5 June 2019. Ms Kemp said it would have been easy for Mr Findlay to print the document at home if he had wished, as there was a printer at the Centennial Park house. Execution of the document could have been witnessed by their au pair or neighbours. If Mr Findlay was at Vertel’s offices at the time, printing and executing the document would have been readily achievable. Ms Jackson said Vertel’s offices had some 35 employees at the time, including in-house counsel. I accept this.
165. It is convenient at this juncture to consider Mr Findlay’s will-making habits and the extent of his knowledge of the requirements to make a valid will. Mr Findlay had no will-making habits, having only apparently made one will before preparing the 2019 Document.
166. There is no evidence that Mr Findlay was well-versed in the validity of wills. As earlier mentioned, from the process of making the 2015 Will, Mr Findlay was aware that he needed to sign the document in front of Ms Grimes but did not appreciate that the will could be witnessed by someone other than a solicitor, or that the will needed to be witnessed by two people in order to be validly executed. Ms Grimes did not recall giving an explanation to Mr Findlay as to why he had to sign the will. Ms Grimes did not agree that she had a practice of explaining how to make a will that was valid, “Not in those terms”. Further, “I don’t recall ever saying you need to sign the will in front of two witnesses.” Nor did Ms Grimes accept that she explained to Mr Findlay that he needed two witnesses at the time he executed the will, “Not in so many words.” As an experienced businessperson, Mr Findlay likely thought that he needed to sign the 2019 Document, but there was no evidence that Mr Findlay knew that a will had to be executed before it was valid.
Testator’s statements
167. The legislation invites the Court to have regard to any evidence of the testamentary intentions of Mr Findlay, including statements which he made: s 8(3)(b). Mr Findlay immediately told the person most affected by the 2019 Document – Ms Kemp – that he had changed his will and that the changes did not benefit her. Where he conveyed at least that information, I cannot fathom that Mr Findlay would not also have mentioned that the changes benefitted their children. He also most likely told her, at least, that Ms Moffat was now a (substitute) testamentary guardian of the children. He was obviously clear in what he told Ms Kemp, where she later emailed, “you changed your will”.
168. He also immediately told the new executor, to whom he provided a copy of the document. Mr Findlay’s three emails to the defendant on 5 June 2019 record his understanding that the 2019 Document was a will: “This is my new will.” and “I just sent you the will … If I went under a bus between now and then my wishes would at least be clear.” That is, if he came to an untimely end before he formally executed the new will with Ms Grimes, then he regarded the 2019 Document as recording his intentions as to how his estate would be distributed on his death. He also told the defendant on 6 June 2019 that it was “all sorted. I intend to get it signed. It’s all taken care of.”
169. Mr Findlay told Mr Wahhab a week later that he had changed his will recently and that the new will gave all his assets to the children. Mr Findlay’s instructions record his understanding that the 2019 Document was a will and that it was effective to change the 2015 Will. Nor did Mr Findlay think it necessary to ask Mr Wahhab to do anything further to finalise the document or witness its execution.
170. Mr Wahhab also said that, in the following two years in which he acted for Mr Findlay, Mr Wahhab formed the opinion that Mr Findlay did not want his former de facto spouse to benefit from his estate. That much is clear. I do not accept Ms Kemp’s evidence that Mr Findlay told her he wanted to give her more money, nor Ms Kemp’s submission that Mr Findlay remained content to leave his estate to her as she “put the children ahead of all else”.
171. Mr Findlay’s later statements to Ms Roth are consistent with him having formed an intention, in June 2019, that the 2019 Document was intended to form his will. He said that his will had been changed and that his children, not Ms Kemp, would benefit from his estate. The tenor of Mr Findlay’s conversations with Ms Kemp, the defendant, Mr Wahhab and Ms Roth indicate that the will-making process was complete: Yazbek at [114].
172. There are several people that Mr Findlay did not tell about the 2019 Document. Ms Grimes did she recall having any conversations with Mr Findlay about his will after the 2015 Will. Ms Lintott said that Mr Findlay did not discuss the 2019 Document with her, nor the issue of guardianship of his children. Ms Jackson had not seen the 2019 Document prior to Mr Findlay’s death and said her brother did not discuss changes to his will with her. He did not tell the au pair or a management consultant who began working for him two years later, nor his accountant, who was giving advice on other matters. Mr Findlay was comfortable with the arrangements he had made in respect of his will and did not wish to engage the financial planner’s services in that regard; rather, “You advise that you understand and are comfortable with” the risks of not addressing the matter. The only person in this group who Mr Findlay might have been expected to tell was Ms Grimes. It is unsurprising that he did not tell the others.
Other matters
173. The legislation also makes plain that s 8(3) does not limit the matters to which the Court may have regard in making a decision as to whether a document was intended by a person to form their will: s 8(4). Here, I think the evidence provides an explanation as to why Mr Findlay did not complete the exercise of changing his will with Ms Grimes. The main reason is that this proved to be a most tumultuous period in Mr Findlay’s life, which he later described to Ms Moffat as “quite frankly a shit show”. Not only had his relationship with Ms Kemp broken down, but his mother died and his relations with his sisters encountered substantial difficulties. To this could be added an ASIC raid and insider trading investigation, together with a major change in his work arrangements, moving from Vertel to AetherX. To this could also be added the drain of family law proceedings, the challenges of single parenting and the demands of new relationships.
174. There is also evidence from Ms Masero, Ms Kemp, Ms Jackson and Mr Findlay that Mr Findlay struggled to manage the multiple demands on his time and resources: see [37], [113], [119], [116] and [135]. Mr Findlay described himself as “poorly organised and chaotic”. He saw a specialist in relation to ADHD and took medication following that consultation. Mr Findlay was variously described by those around him as disorganised, chaotic, struggling with concentration and unable to complete tasks. Whilst any person would, I expect, have struggled to deal with the multiple, significant challenges which Mr Findlay faced from 2019 on, he may have particularly struggled to see all tasks through to completion in those trying years.
175. Relevantly, Mr Findlay does not appear to have given instructions to Mr Wahhab to seek court approval in respect of the Deed of Release signed at the conclusion of the family law proceedings. Nor did Mr Findlay action the share transfer form in respect of RGB Investments, such that Ms Kemp remains a director of that company. Nor did he take any steps to revoke the Enduring Power of Attorney or the Appointment of Enduring Guardian, where it can hardly be thought that he wanted Ms Kemp to continue to hold those positions. That is, Mr Findlay left several ‘loose ends’ at the conclusion of the dissolution of his relationship with Ms Kemp.
Conclusion
176. There was a very good reason for Mr Findlay to make a new will at the time that he did. Mr Findlay was an experienced businessman who had accumulated significant wealth. He had become appraised, in no uncertain terms, that his relationship with Ms Kemp was over, “I am calm and accepting of it.” Having apparently undertaken some online research, including on a website www.divorceresource.com, Mr Findlay took the prudent step of changing his will and leaving his estate to his children. Such a step might be thought unremarkable in the circumstances. Ms Kemp did likewise.
177. The quality of Mr Findlay’s amendment of the 2013 Draft suggests that he had some familiarity with drafting. He did a careful job. As an businessperson, Mr Findlay likely thought that it was necessary to sign the 2019 Document. He clearly intended to do so, stating as much in his first and third emails to the defendant on 5 June 2019 and also when he saw the defendant on 6 June 2019. But there was no evidence that Mr Findlay knew that a will had to be executed to be valid. Nor did he consider that non-execution of the 2019 Document was fatal to its validity, emailing the defendant, “If I went under a bus between now and [changing my 2015 Will with Ms Grimes], then my wishes would at least be clear”. He told the defendant it was “all sorted” and “all taken care of”. Mr Findlay told Mr Wahhab that he had changed his will. He later expressed the same understanding to Ms Roth. He resisted the financial planner’s approaches to get involved in the subject.
178. I conclude that Mr Findlay thought that the 2019 Document would ‘do the job’ even if it had not been signed. Whilst Mr Findlay was not aware of the legal niceties of making a valid will, as a businessperson, he proceeded to make the necessary changes proficiently and promptly informed key stakeholders of what he had done. Whilst Ms Kemp submitted that the absence of any reference to the 2019 Document, or the execution of that document, in Mr Findlay’s various ‘to do’ lists in his notebooks was significant, another way of looking at it is that Mr Findlay made no note as he considered he had adequately dealt with this matter; he regarded the 2019 Document as ‘fit for purpose’.
179. Mr Findlay did not get around to having the 2019 Document printed and signed before two witnesses. This was another ‘loose end’ that got lost in the turbulent years which followed, not helped by his personal difficulties with organisation and concentration. But I am satisfied having regard to the document itself, the extent of Mr Findlay’s knowledge and understanding of the requirements for making a valid will, his statements to others and the surrounding circumstances that, in June 2019, Mr Findlay actually intended the 2019 Document to operate as his will, without more. By his acts and words, Mr Findlay ‘adopted’ the document as his intended will and he referred to the document as a will to people who needed to know. I am satisfied that Mr Findlay intended the 2019 Document to form his will.
Orders
180. For these reasons, I make the following orders:
1. Declare pursuant to s 8 of the Succession Act 2006 (NSW) that the electronic Microsoft word document titled “ADF WILL NEW PLK” dated 5 June 2019 (“the 2019 Will”) and emailed on that date to the Cross-Claimant constitutes the last will of ANDREW DAVID FINDLAY (“the deceased”).
2. Order that Probate in solemn form of the will dated 5 June 2019 of the deceased who died on 20 July 2023 be granted to David William Findlay, the Executor named therein.
3. Order that proceedings be remitted to the Registrar in Probate to complete the grant in accordance with the Rules of the Court.
4. Order that the defendant be indemnified for his costs of these proceedings from the Estate of the late ANDREW DAVID FINDLAY.
5. Order the plaintiff to pay the defendant’s costs of the proceedings, either directly or by replenishing the Estate in respect of the defendant’s costs.
6. Parties to notify any errors or omissions within 7 days.
7. Liberty to apply within 7 days if either party seeks a special costs order.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 21,044 |
nsw_caselaw:190e24bf653fd392a854e9af | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-24 00:00:00 | A Class Piling and Drilling Pty Ltd v Seventy Eight Promotions Pty Ltd (No 4) [2024] NSWDC 306 | https://www.caselaw.nsw.gov.au/decision/190e24bf653fd392a854e9af | 2024-07-26T22:25:57.987246+10:00 | District Court
New South Wales
Medium Neutral Citation: A Class Piling and Drilling Pty Ltd v Seventy Eight Promotions Pty Ltd (No 4) [2024] NSWDC 306
Hearing dates: 21-23, 27-29 February, 24 July 2024
Date of orders: 24 July 2024
Decision date: 24 July 2024
Jurisdiction: Civil
Before: Neilson DCJ
Decision: I give judgment for the plaintiff against the defendant for $35,611.68.
Catchwords: BAILMENT for reward – Plaintiff’s drilling rig damaged whilst being carried by Defendant, a haulier – Liability admitted – QUANTUM OF DAMAGE – Whether loss of value of rig or cost of repair and loss of profit – Claim by Plaintiff for wages paid to its employees – Whether recoverable – Other heads of damage including loss of profits.
Legislation Cited: Nil.
Cases Cited: A Class Piling and Drilling Pty Ltd v Seventy Eight Promotions Pty Ltd (No 3).
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, 466.
Blackadder v Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539, [80].
Collier v Sunday Referee Publishing Co. Ltd [1940] 2 KB 647; [1940] 4 All ER 234, 236.
Darbishire v Warran [1963] 1 WLR 1067; [1963] EWCA Civ 2; [1963] 3 All ER 310.
East Ham Corp v Bernard Sunley & Sons Ltd [1966] AC 406.
JQE Hall Ltd v Barclay [1937] 3 All ER 620.
Ruxley Electronics Ltd v Forsyth [1996] 1 AC 344.
Zogiannis v Stevens [2012] VSC 264, [6]-[7].
Texts Cited: Palmer on Bailment, 3rd Ed., 2009 [16-046].
Category: Principal judgment
Parties: Plaintiff – A Class Piling & Drilling Pty Limited
Defendant – Seventy Eight Promotions Pty Limited
Representation: Counsel:
Plaintiff – Young, J.
Defendant – Street, C.
Solicitors:
Plaintiff – Moray & Agnew
Defendant – HWL Ebsworth Lawyers
File Number(s): 2023/00103136
Publication restriction: Nil.
Judgment
Introduction
1. HIS HONOUR: The plaintiff was the owner of a pile drilling rig. On 16 January 2018 it bailed that rig to the defendant for the defendant to transport the rig from the defendant’s depot at Redhead, about 16 kilometres south of Newcastle CBD, to a work site near Hexham, to do work on a job site described as “John Renshaw Drive, Beresfield” for a company known as “CivHix” (Court Book page 194). The rig was loaded into a tri-axial trailer, registration number TB95LJ which was towed by a Volvo 400 rigid truck registration number CB37GF both supplied by the defendant. An incident Report Form completed on behalf of the defendant (Court Book page 125) provides this narrative:
“[Driver] commenced work at 5:30pm driving truck…to pick up a trailer…and Drill rig from Redhead to deliver it to Hexham. [Driver] completed all pre-checks on the truck including checking the hitch for cracks as part of our pre-risk assessment. [Driver] collected the trailer…and drill rig from Redhead. [Driver] attached the trailer…[on] the back of the truck…onto the hitch and loaded the drill rig. The rig was correctly tied down with chains. [Driver] then began to drive to Hexham, via City Road, Merewether. Once on City Road, [Driver] was on the inside lane of a two-lane roadway. [Driver] was on the straight when the connection of the hitch snapped causing the left hand side of the truck to dip and the trailer leaning toward the left. This in turn caused the trailer and drill rig to roll onto the road.
The direct cause of this accident is described in the same document as “the connection (hitch) holding the trailer snapped”. That snapped hitch is clearly shown on an attached photograph.
2. This bailment was for reward. There is no dispute that the defendant “operates a transport business that provides float services for heavy machinery, including drilling rig equipment in the NSW construction industry” according to paragraph 36 of Exhibit A. There is thus no issue as to the liability of the defendant to the plaintiff for damage done to the rig or for any other damage that the defendant may have incurred for which the defendant is in law liable. What is in question is the quantum of damage. The plaintiff claims damages of $216,344.96 in the Statement of Claim but, somewhat surprisingly, not interest. The defendant says that the plaintiff is not entitled to anything other than the payout it has already received from its property insurer, namely $160,000. The plaintiff only seeks its “non-subrogated losses”.
The Plaintiff
3. The plaintiff was originally known as MSB United Pty Ltd. On 17 January 2017 that company changed its name into its current form after it had purchased a business owned by another company that used that name until 17 January 2017. The directors and shareholders of the defendant are Mr Shannon Lee Baker and Mr Morrad Muadin. Mr Baker is a qualified mechanical fitter having worked as such in the construction industry in NSW, Western Australia and Queensland. About April 2013 he became licensed to operate heavy machinery including excavators, skid steer loaders and front end loaders. The former owner of the plaintiffs’ business, Mr David Randell, wrote the following about Mr Baker on 1 October 2016:
“I, DAVID LESLIE RANDELL, of AClass [sic] Piling and Drilling Pty Ltd, a heavy machinery operator of 50 years experience being in business for myself for the previous 30+ years in similar fields. I am a competent operator of heavy equipment.
After working with SHANNON LEE BAKER for 12 months I have observed Shannon to be a proficient operator of all the equipment owned by AClass [sic] Piling and Drilling which includes CFA Drill Rig, Kelly Bar Drill Rig, Concrete Line Pump and Excavator.
I find Shannon to be an upstanding citizen at all times. He is a proficient, responsible, capable, safe operator with good communication skills, patience and common sense. He makes safe decisions and carries them out. Shannon has been extremely coachable and also has managerial skills suited to his position.”
Like Mr Baker, Mr Muadin, in about April 2013, became licensed to operate heavy machinery including excavators, skid steer loaders and front end loaders. He has worked in the drilling and piling industry for approximately 8 years and, before that, in civil earthworks for 10 years. In cross-examination Mr Muadin admitted that he was “not that mechanical” (T129.12 and T130.38).
4. On 19 December 2016, the plaintiff exchanged contracts for the sale of a business with the company then known as A Class Piling and Drilling Pty Ltd for the purchase of that company’s business for $370,000. Completion date for the purchase was 9 January 2017. The purchase price was apportioned as follows:
Goodwill: $180,000
Equipment: $190,000
Clause 40 of the contract was this:
“It is acknowledged by the Vendor that the Purchaser has already paid $165,000 made up as follows:
(a) $37,000 as the Deposit; and
(b) $128,000 as part payment of the Price.”
Clause 43 of the contract was this:
“The Vendor has agreed to assist the Purchaser in completion of this sale by lending to the Purchaser at and from the Completion date, any shortfall in the balance of the Price payable at the Completion date, to be repaid by the Purchaser on or before 9 April 2017.”
These provisions speak of a relaxed or trusting relationship between the effective vendors, Mr David Randell and his wife Mrs Julie Randell who stayed on with the new owners of the business as “Admin”.
5. Annexure A to the Contract for the Sale of Business, which I have transposed into a table for ease of reading, is this:
Name Serial number Model Hours
KELLY BAR DRILL RIG 58795 2004 4,642
Komatsu PC 120-6
CONTINUOUS FLIGHT AUGER DRILL RIG 49327 2003 1,920
Komatsu PC 120-6
CONCRETE PUMP OL0341 2003 2,603
Transcrete Alpha P35
EXCAVATOR L0767 - 3,581
Kubota Asseado ASRX 592
* Associated augers and drilling tools”
The rig damaged in the accident of 16 January 2018 was the first of those pieces of equipment, usually referred to as “the Kelly Bar Rig” and to which I shall refer as “the KBR”.
The KBR
6. Mr Baker in his affidavit of 29 July 2023 (Exhibit A) said this about the KBR:
“15. A Class currently owns plant and equipment which it uses for drilling purposes. As noted in the Contract for Sale of Business, one of the Business’s [sic] main pieces of plant and equipment is a Komatsu PC120-6 converted drilling rig, serial number 58795, which is referred to as a ‘Kelly Bar Rig’ (the Kelly Bar Rig).
16. Exhibited at SB1:38-45 is a copy of the Komatsu PC-120-6 data sheet, including detailed specifications, information and technical data.
17. The Kelly Bar Rig predominantly consists of two main components: the ‘base’ and the ‘mast’. The ‘base’ of the Kelly Bar Rig is the Komatsu PC120-6, and the ‘mast’ is the Clo Zironi, which is imported from Brazil. The Kelly Bar Rig owned by A Class was designed and assembled at Monster Rigs Pty Ltd (Monster Rigs), a business on the Central Coast.
18. A Kelly bar is a drilling tool that attaches to the Komatsu PC120-6 and consists of several hollow steel tubes of different diameters that are nested inside each other. The tubes are connected at the bottom by a square or hexagonal cross section, and at the top by a pin connection. The Kelly bar is a component of a rotary drilling rig which is used when the rig is being used in Kelly drilling configuration. The Kelly bar’s main purpose is to transfer the torque of the rotary drive and crowd pressure of the crown system to the drilling tool. The Kelly is typically about 10 ft (3 m) longer than the drill pipe segments, thus leaving a portion of newly drilled hole open below the bit after a new length of pipe has been added and the drill strong has been lowered until the Kell bushing engages again in the rotary table.
…..
20. The Kelly Bar Rig is the only machine owned by A Class that has been purpose built to operate on hard rocky ground and has the capacity to drill deeper holes with larger diameters than the other equipment owned by A Class. It is not a standard hire machine that can be hired from consumer hire places such as, for example. Kennards Hire or Coates Hire.”
7. The other drilling rig purchased by the plaintiff from the vendor was the Continuous Flight Auger Drill Rig – Komatsu PC 120-6 which can be described shortly as the CFA rig. It obviously has the same base as the KBR. In October 2017 the plaintiff purchased a second CFA rig. Of this second CFA rig, Mr Baker said this in his affidavit:
“21. In October 2017. The Business purchased a Komatsu Continuous Flight Auger (CFA) drill (Spare Komatsu CFA), which was stripped and used for spare parts.
22. The Business never used this Spare Komatsu CFA machine for diling and drilling revenue purposes. The Spare Komatsu CFA was extremely cheap and was being sold because another piling and drilling business had gone into liquidation. Exhibited at SB1:56 is Tax Invoice 201710565 for the purchase of the Kelly Bar Rig from NASCO Auctioneers for the amount of $27,500.00 (incl. GST).”
8. Sometime in January 2018, whether before or after 16 January the evidence does not disclose, the plaintiff purchased another rig, known as the Kobelco rig. Of that Mr Baker said this:
“23. In January 2018 the Business purchased a Continuous Flight Auger Drill Rig, serial number 58795 (Kobelco Rig). These rigs are rarely sold, so I considered it was a good opportunity to purchase a newer piece of machiner.
24. The Kelly Bar Rig and the Kobelco Rig have differing capabilities. The Kelly Bar Rig offers greater drill depth and auger sizes (diameter of drilling holes), whilst weighing less and being smaller in height.
25. There are some jobs that can only be done by the Kelly Bar Rig, and not the Kobelco Rig. There are jobs where there are certain height and/or weigh limits as well as differing requirements for drilling depth and diameter that can only be completed by the Kelly Bar Rig. The type of soil (rocky, clay, sandy etc.) may also impact which drill rig has the capabilities to perform the necessary drilling.
26. Continuous Flight Auger Piles (CFA Piles) are cast-in-place piles, using a single continuous hollow stemmed auger. Vibration free and low noise, this piling system is ideally suited to installation in sandy water charged ground or unstable soil conditions and connected to a concrete pump. CFA Piles are built by drilling a hollow-stem auger into the ground to form the pile’s diameter and a concrete pump is utilised to deliver concrete through the hollow auger stem to the pile. Pile diameters range from 300mm to 1.2 m. Piling Lengths range to 36 m.”
In the following paragraph of his affidavit, Mr Baker annexed information from a website which clearly distinguishes and explains the difference between CFA and rotary based piling which the KBR could do.
9. On the evidence available I have no hesitation in concluding that the KBR was an unique piece of equipment for the plaintiff, that it had no relevant piece of plant to do what the KBR could do, if the KBR were not available for use because it was damaged. During submissions I thought that the CFA Rig referred to in [7] above could do the work of the KBR, but on re-reading the evidence contained in Mr Baker’s affidavit, that belief was erroneous.
Post-Accident Fate of the KBR
10. The KBR was “built” by P.K. Goodman Pty Ltd, in the sense that it fitted to the Komatsu PC120-6 base the Clo Zironi (Brazilian) mast. That company appears to be part of the “Goodman Group”, the principal of which is Mr David Charles Goodman. Another member of the Goodman Group is Monster Rigs Pty Ltd whose premises are at 12 Ketch Close, Fountaindale which is south of Wyong. On 17 January 2018 the defendant arranged for the KBR to be transported to the Monster Rigs premises. Mr Baker did not object to that: he thought Mr Goodman was the optimal repairer as he would know “all the specific details of its design and manufacture” (Exhibit A at [42]).
11. On 21 January 2018, Mr Goodman provided this assessment of the damage and quotations for replacement or repairs:
“Damage Report:
This machine has been extensively damaged and with 30 years of purpose built experience, I am certain that only minimal parts can be salvaged. Also, liability for parts that aren’t visible could be a problem if damaged and failed.
To complete repairs up to engineer acceptability a new base carrier would be required, due to the extensive damage to the machine chassis undercarriage, along with 90% damage of facia and structural components.
Option 1: New Replacement Rig
Estimated Cost = $475,000
Duration = 6 months
Option 2: Replacement (Second hand base and new mast assembly)
Cost Components and Fitting
$120,000 Approx. Base carrier replacement
Second hand Komatsu PC120 w/ Approx. 2000hrs and 4yrs old
$148,000 Mast Assembly
$68,000 Mast Fitting and Testing
Option 3: Repairs
Cost Components and Fitting
$120,000 Approx. Base carrier replacement
Second hand Komatsu PC120 w/ Approx. 2000hrs and 4yrs old
Mast Assembly Repair (some parts salvageable however minimal)
Includes:
- New mast tube
-Crack test and repair where required
- Gear box; dismount, check, reassemble and remount.
$86,000 - Hydraulic Rams; disassembled, crack tested, resealed, reassembled and tested.
- Main Mast Articulation; crack tested.
- Main Winch; Stripped cleaned, reassembled and tested.
- Kelly Bar; Stripped, inspected and tested.
- Flexible Steel Wire Ropes; replaced
- Hydraulic Hoses: replaced
- Electrical Wiring: replace
$28,000 Adapt mast to second hand machine
Testing and Certificates of Conformance
Conclusion:
Based on the current damage, prior condition and age of the drill rig, the recommended option is as follows;
Option 3: Repairs
Cost Components and Fitting
$120,000 Approx. Base carrier replacement
Second hand Komatsu PC120 w/ Approx. 2000hrs and 4yrs old
$86,000 Mast Assembly Repair
$28,000 Adapt mast to second hand machine
$234,000 + GST
Rebuild time:
8 Weeks from acceptance[.]”
The totals of these options were:
Option 1: $475,000
Option 2: $336,000
Option 3: $234,000
A decision was made to choose Option 3.
12. The affidavit of Mr Baker continues thus:
“45. ….Monster Rigs carried out repairs to the Kelly Bar Rig after which it issued a Tax Invoice to A Class dated 17 April 2018 in the amount of $174,000.00 (excl. GST) for repair of the Kelly Bar Rig, inclusive of $60,000 (excl. GST) for strip down inspect start and deposit, and $66,000 (excl. GST) for strip down inspect and start, which is exhibited at SB1:106[.]
46. In later conversations I had with Mr Goodman in January and February 2018, although I cannot now recall the exact words, he advised me that there was more significant damage and greater costs would likely be involved than in his Damage Report and Repair Quotation, because the table drive gearbox also sustained damage from the Incident. To the best of my recollection, he described to me that the drives were cracked, and others were broken, along with the main ring gear which was badly damaged beyond repair. The time it would have taken to source and import one of these drives or getting one made up was going to be far more expensive and cause more downtime in the rebuild than he originally estimated.”
In addition to the Tax Invoice referred to by Mr Baker in that affidavit, a second affidavit sworn by Mr Baker on 26 January 2024 (Exhibit C) annexes a Tax Invoice from Monster Rigs dated 31 March 2018 for a “progress payment” of $60,000 plus GST. In that Affidavit Mr Baker said this:
“7. Exhibited at SB2:2 is a copy of a printout of the A Class cheque account with payments made to Monster Rigs for repairs carried out to the Kelly Bar Rig. I note that the total of the payments made to Monster Rigs in the period 1 April 2018 to 21 August 2018 for the repair to the Kelly Bar Rig was $135,960.00. I believe this amount was for payment of $123,000.00 for the work done by Monster Rigs, plus GST of $12,300.00.”
The printout of the plaintiff’s cheque account can only be read with a magnifying glass. The total paid to Monster Rigs was indeed $135,960 but Mr Baker’s mathematical breakdown is obviously incorrect. If the sum included GST, the base payment was $123,600 and GST was $12,360. Accordingly, Monster Rigs charged the plaintiff $234,000 plus GST but was paid $123,000 plus GST by the plaintiff. Monster Rigs returned the KBR to the plaintiff’s depot at Redhead on 24 April 2018.
13. The plaintiff asks me to accept that from 24 April 2018, Messrs Baker and Muadin worked on the KBR (and, indeed, prior to 24 April 2018). Mr Baker’s affidavit contains this averment:
“54. Due to the extensive nature of the damage, repairs to the Kelly Bar Rig were only completed so that it was available again for hire on or around 28 June 2018. In total, the Kelly Bar Rig was not able to be hired at all and during that time between 17 January 2018 and 28 June 2018, no income was able to be generated by the Kelly Bar Rig at all.”
The KBR’s (Book) Value
14. As stated in [4] above, the contract for the sale of the business valued the company’s equipment at $190,000. The plaintiff’s Depreciation Schedule for the year ended 30 June 2018 assigned these values to that equipment on purchase:
KBR $90,211
CFA $99,702
Excavator and Pump $82
190,000
As at 30 June 2017 the KBR was valued down to $85,529. As at 30 June 2018 i.e. after it became available on about 28 June 2018, its opening value was said to be $77,384 and it was then depreciated by $23,215 to have a “Closing Value” of $54,169. As at 30 June 2019 it was further depreciated by $16,251 to have a “Closing Value" of $37,918.
15. Nevertheless, the plaintiff sold the KBR on 9 July 2021 for $170,000 inclusive of GST, a base of $154,545. What the depreciated value of the KBR was at 30 June 2020 and 30 June 2021, the evidence does not disclose. However, in light of the sale price as at 9 July 2021, the value of the KBR in the plaintiff’s books could not possibly be true considering that it was theoretically purchased on 9 January 2017 for $90,211 but on 9 July 2021, 4.5 years later, was sold for $170,000.
The Defendant’s First Contention
16. The defendant’s first contention is that the Court would only allow to the plaintiff the value of the KBR before it was damaged, less any value it had after it was damaged (if any) rather than the cost of its being repaired. The defendant’s written submissions contain this:
“32. First, applying the usual measure of damages, the plaintiff would be entitled to the arrived sound market value of the Kelly Bar Rig, less the damaged value, not the costs of repairs. The only reliable evidence of the arrived sound market value of the Kelly Bar Rig is the purchase price of $90,211. Assuming that the arrived damaged value was $0.00, then the most the plaintiff could obtain would be $90,211.
33. Secondly, there is no good reason to depart from the usual measure of damages in preference for the costs of repairs. This is especially where the costs of repairs are said to exceed the arrived sound market value. In that setting, it would be contrary to principle and common sense for the plaintiff to be awarded the costs of repairs. It would not put the plaintiff back in the same position as if the contract of carriage had been performed.”
17. In Darbishire v Warran [1963] 1 WLR 1067; [1963] EWCA Civ 2; [1963] 3 All ER 310, Harman LJ said this:
“The law of damages arising out of collisions on land has been developed out of the Admiralty rule on collisions at sea and the rule of liability is the same in Admiralty and common law cases - see lord Dunedin's speech in The Susquehanna (1926 Appeal Cases, p.655, at p.661). The principle is that of restitutio in integrum, that is to say to put the plaintiff in the same position as though the damage had not happened. It has come to be settled that in general the measure of damage is the cost of repairing the damaged article; but there is an exception if it can be proved that the cost of repairs greatly exceeds the value in the market of the damaged article. This arises out of the plaintiff's duty to minimise his damages. Were it otherwise it would be more profitable to destroy the plaintiff's article than to damage it. In the latter cases the measure is the value of the article in the market and this, of course, supposes that there is a market in which the article can be bought. If there is none, then the cost of repairs may still be claimed. This appears from J. & E. Hall Ltd. v. Barclay (1937, 3 All England Reports, p.620) where it was held that the appellant was entitled to the value of the articles converted which was ordinarily the price of similar articles in the market. As there was no market in the articles concerned, the measure of damages was the cost of replacement. That was a case of conversion but the principle applies. Lord Justice Greer said this at page 623:
"In my judgment it is an undoubted fact that there are two rules with which we begin in ascertaining how the damage should be ascertained. The first is this: A plaintiff who is suffering from a wrong committed by a defendant is entitled, so far as money can do it, to be put into the same position as if he had not suffered that wrong. That is what is referred to as restitutio in integrum. The second principle which is accepted is that what he is entitled to, as damages for conversion or detention in respect of the article so detained or converted and not returned, is the value of that article. 'Then the question is, what is the meaning of 'the value of that article'? Where you are dealing with goods which can be readily bought in the market, a man whose rights have been interfered with is never entitled to more than what he would have to pay to buy a similar article in the market. That rule has been acted upon over and over again, and that, I think, means that, where there is a market, the man whose rights have been interfered with is bound to diminish the damages by going into the market and buying the goods in the market, so as to put himself in the position in which he is entitled to be put, namely, the position in which he would have been if he had not suffered any wrong at all; and, in my judgment, the case to which our attention had been called of Banco de Portugal v. Waterlow & Sons, Ltd, has really nothing to do with the question that we have to decide here, except in so far as I think it supports the view which I have been expressing".
He there decided that as the article in that particular case was one for which there was no market and which you could not buy in the market, the loser was entitled to have it replaced.
The Judge here held that the plaintiff was reasonable in having the car repaired notwithstanding that the cost was more than twice the value. It may well be that the plaintiff, so far as he himself was concerned, did act reasonably and that what he got was of more value to him than the damages represented by the value of the car. The plaintiff, however, did not show that he had any special use for which this car alone was suitable, as, for instance, in his business, or anything more than that it was a sound car very well maintained and suited to his ordinary life. In my opinion the Judge asked himself the wrong question. The true question was whether the plaintiff acted reasonably as between himself and the defendant and in view of his duty to mitigate the damages. The evidence was that a Lea Francis 1951 car might be difficult to find but that other similar estate cars were on the market and could be had for between £85 and £100 which the plaintiff himself stated to be the value of his car. The learned Judge relied on the case of O'Grady v. Westminster Scaffolding Ltd. (1962, 2 Lloyds List Reports, p.238) where the learned Judge held the plaintiff entitled to the cost of repairing his car at a cost considerably exceeding its market value. This case, of course, is not binding on us but if it be right it may be supported perhaps on the ground that the car there in question was unique and could not be replaced. It was a remarkable vehicle having been supplied by the plaintiff, the apple of whose eye it was, with no less than three new engines, a new body and other replacements. In my judgment the facts are very different from those in the present case.
Our attention was also drawn to a case in the Court of Session, Pomphrey v. James A.Cuthbertson Ltd. (1951 Session Gases, p.147). That case went off on a point of pleading and the plaintiff in fact asserted a new measure of damages in that he went into the market and bought a new car, the cost of which he claimed against the defendant together with the cost of adapting it upon the footing that this was in fact cheaper for the defendant than the cost of repairs would have been. Nevertheless the Court delivered itself of the following opinion. At the end of the headnote you will find this:
"Opinions that, on the footing that the damaged car was a constructive total loss, the true measure of damages was its market value at the date of the collision plus the cost of hiring a substitute until a new car could be procured and made ready for use, less the 'scrap value' of the damaged car",
so that the decision, such as it was, is in the defendant's favour.
To the same effect is the decision in The Minnehaha (6 Lloyds List Reports, p.12), an Admiralty case where the Master of the Rolls, Lord Sterndale, said this:
"That applies to a matter between assurer and assured, but it is a convenient way of stating the question because unless there is some circumstance to justify him the shipowner does not act reasonably in repairing the ship if the repaired value is very much less than the cost of repairing her. Prima facie that is not reasonable. It may be shown to be reasonable if there are certain special circumstances which make the ship of such great value to him that it is better for him and reasonable to spend a very much larger sum than her repaired value. But it requires some special circumstances to show that, because what lies at the bottom of taking the repair value in a case of this kind is that it is assumed that the owner can go into the market and replace his ship at that value. If he car, satisfy the tribunal that he cannot be replaced in the position in which he was before the collision by being paid the repair value of the ship, because he cannot replace the ship and cannot buy another in the market, that is another matter, but unless he can show these two points he is not acting reasonably in spending this very large sum".”
18. In Zogiannis v Stevens [2012] VSC 264, Davis J said this:
“[6] It is trite law that when goods are damaged by the negligence of a tortfeasor, the owner of the goods suffers an immediate and direct loss in consequence of the damage sustained and a cause of action accrues to the owner to recover that loss. The basic pecuniary loss recoverable by an owner in that circumstance is the diminution in the value of the damaged goods, on the principle that the owner is entitled to be put back, so far as money can do it, into the same position as if the damage had not occurred.
[7] In the case of negligent damage to a car, the authorities establish that if the car is wrecked completely as the result of the collision, the loss that the owner is entitled to recover from the tortfeasor will normally be measured by the cost of replacing the car with another car of comparable type and condition, with an allowance in favour of the tortfeasor for the value of the car in its damaged condition. If the car is repairable, the measure of loss will usually be the costs of repair but if the costs of repair exceed, or would exceed, the market value of the car, a question arises as to whether it is reasonable for the owner to incur the expenditure in repairing the car or whether the reasonable option is to replace the car. Ordinarily, the owner can recover the cost of repairs or the value of the car, whichever is the less. In each case, the onus is on the owner to satisfy the court on the evidence as to which of the measures of damages is reasonable in the circumstances and as to the amount of damages to which the owner is entitled by the application of that method.”
19. In Palmer on Bailment, 3rd Ed., 2009 [16-046] is this:
“16-046 A common case is that of damage to customers’ goods. The amount of recoverable compensation is usually measured in one of two ways. The first is to take the market value of the goods in an undamaged state and to compare it with its value in a damaged state. The second is to take the cost of repair or reinstatement. The measure that:
“…is appropriate will depend on a number of factors, such as the plaintiff’s future intentions as to the use of the property and the reasonableness of those intentions”.295
In the case of goods or things damaged but commonly available, the appropriate measure is the first on the assumption that customers with defective goods will sell them (at less than the price of undamaged goods) and recover the difference in value as damages from the carrier. If the goods are not commonly available, however, and thus cannot be replaced on the market, compensation may be the cost of repair, unless the cost of that is so great as to be unreasonable.296
Another common case is loss of market. Regular carriers know (or should know) when the goods are intended for a market and that late delivery will cause the goods to miss that market, for example a Christmas market298 or regular but periodic livestock market.298 Even if the market is continuous and the customer can show that the delay caused the goods to miss a peak in the market, the carrier may be liable.299 Possible but rather less common is carrier liability in the superficially similar case of customers not being able to use goods at destination so that, for example, there is a loss of production at a customer’s factory there.300”
The authorities cited in footnote 296 are Ruxley Electronics Ltd v Forsyth [1996] 1 AC 344 and East Ham Corp v Bernard Sunley & Sons Ltd [1966] AC 406.
20. I cannot accede to this contention. To use terminology used by Harmm LJ in Darbishire v Warran (supra), relying on JQE Hall Ltd v Barclay [1937] 3 All ER 620, there was no “market” available for KBRs, or, to use terminology from Palmer on Bailment (supra), KBRs were not goods commonly available. The KBR had the base of a Japanese Komatsu PC 120-6 hydraulic excavator. A brochure regarding this piece of equipment is annexure D to Exhibit A commencing at Court Book 78. That piece of equipment was provided with a Backhoe Bucket and Arm combination but neither of those attachments were used on the KBR. Instead it was fitted with a Brazilian Clo Zironi rotary drilling rig. There is no suggestion that the like equipment was available in any market in Australia. The inference to be drawn from the Monster Rigs quotation at [11] above is that it would take 6 months to find and/or build a new replacement rig for $475,000; a replacement with a second hand base and a new mast would cost $336,000 (and would have to wait for a new mast to arrive from Brazil, and the lesser cost was repairs of $234,000. Repairing was the obvious way for the plaintiff to mitigate its loss. If the plaintiff adopted either Option 1 proposed by Monster Rigs or Option 2, it would be open to the defendant to argue that plaintiff had failed to mitigate its loss. Furthermore, the plaintiff had available to it the repaired KBR from at least 28 June 2018 until 9 July 2021, for 3 years and then sold it for $170,000. In these circumstances the defendant’s submission, that “the only reliable evidence of the … market value” of the KBR was its book purchase price of $90,211, cannot be supported.
21. In making that finding, I have not overlooked this evidence given by Mr Baker in his first affidavit:
“48. …. I estimate that the replacement value of an equivalent Kelly Bar Rig at the time of the Incident was approximately $200,000.00 and a replacement machine with the same capabilities to perform equivalent tasks I would expect to have costed approximately $550,000.00 if it was purchased brand new. The above estimates are based on my extensive knowledge of the prices of rigs based on my experience, during which I have regularly searched online for comparable pieces of equipment. For instance online advertisements showing the current prices of new and second-hand drilling rigs similar to the Kelly Bar Rig that I have been able to obtain are:
(d) “constructionsales.com.au”, which is exhibited at SB1:110.
(e) “machines4u.com.au”, which is exhibited at SB1:111-114.
(f) “gumtree.com.au”, which is exhibited at SB1:115.
If the machine were to be purchased and manufactured in Australia, the lead time involved in purchasing a replacement Kelly Bar Rig would at that time have been no less than 6 months. If a replacement machine were to be manufactured overseas and imported, the lead time would have been a minimum of approximately 12 months. A Class did not have the time or capital to acquire a new or replacement machine after the Incident and that is why Morrad and I made the decision to try and rectify it as quickly as possible.”
I have not relied on Mr Baker’s measurements of value as he has not really qualified himself as an expert and, for example, his estimate of the cost of a new replacement ($550,000) was much greater than that of Mr Goodman of Monster Rigs ($475,000).
22. Of greater interest/informative value is the material downloaded by Mr Baker. He does not say when but the downloads from the second and third sites refer to equipment manufactured in 2023. That leads me to assume that the downloads were made shortly before Mr Baker prepared his affidavit which was sworn on 29 July 2023. The download from the first site “constructionsales.com.au” shows two drilling rigs but does not state whether they are rotary drilling rigs or CFA Rigs: the first is described as a 2011 MAIT HR120 on sale for $450,000 plus government charges. The second is described as a 2015 MAIT HR 100 Low Head on sale for $325,000 plus government charges. The download from the second site “machines4u.com.au” describes 4 machines but the second of them is a CFA drilling rig, which I shall overlook. The remaining machines are:
(i) 2023 UHI XR240E 70M Multi-Function Rotary Drilling Rig, priced at $1,100,000 plus GST.
(ii) 2023 UHI XR80E 24M Rotary Drilling Rig priced at $450,000 plus GST.
(iv) 2023 UHI XR 240E 70M Multi-Function Rotary Drilling Rig, priced, against at $1,100,000 plus GST.
The download from “gumtree.com.au” describes two rotary drilling rigs. The first is a 2023 UHI XR 240E 70M Multi Function Drilling Rig priced at $1,210,000 i.e. the same as machines described at (i) and (iv) above. The second is a 2023 UHI XR 80E 24M Rotary Drilling Rig priced at “$495,000 Negotiable” i.e. the same as the machine described at (iii) above. It appears to me that only the download from the first site might be relevant but, again, I do not know if these are rotary drilling rigs.
Work said to have been done by Messrs Baker and Muadin
(a) Can plaintiff claim for wages paid?
23. After providing his estimate of the value of the KBR, Mr Baker said this in his first affidavit:
“49. To save downtime and further costs, Morrad and I attempted to rebuild part of the written off Kelly Bar Rig ourselves to assist Monster Rigs, who could not source a suitable replacement base. We sourced, built and repaired replacement parts for the body structure, track frame, rams and tower as the damage was extensive. Morrad and I attended to making telephone calls to sellers or by searching online at the websites referred to above both in Australia and overseas to source replacement parts for the damaged Kelly Bar Rig. From 17 January 2018 to approximately 30 June 2018, Morrad and I put in 11-hour days for 68 non-consecutive days, working around our other CFA jobs, to assist with the rebuild of the Kelly Bar Rig. No other labourers were used to assist with the rebuild.
50. Exhibited at SB1:116 is a copy of an image I had taken from the 2018 Whiteboard Diary that A Class used to schedule its appointments. The 2018 Whiteboard Diary was also used to record the following dates that Morrad and I were involved in rebuilding the Kelly Bar Rig and whether that was done at Monster Rigs, or after the Kelly Bar Rig was delivered back to our workshop in Redhead, as follows:
Day 1 17 January 2018 Kelly Bar (Goodmans)
Day 2 19 January 2018 Kelly Bar
Day 3 22 January 2018 Kelly Bar (Goodman)
Day 4 29 January 2018 Kelly Bar (Goodman)
Day 5 30 January 2018 Kelly Bar (Goodman)
Day 6 31 January 2018 Kelly Bar (Goodman)
Day 7 1 February 2018 Kelly Bar (Goodman)
Day 8 2 February 2018 Kelly Bar (Goodman)
Day 9 15 February 2018 Kelly Bar
Day 10 19 February 2018 Kelly Bar (Goodman)
Day 11 20 February 2018 Kelly Bar (Goodman)
Day 12 21 February 2018 Kelly Bar (Goodman)
Day 13 26 February 2018 Kelly Bar (Goodman)
Day 14 27 February 2018 Kelly Bar (Goodman)
Day 15 28 February 2018 Kelly Bar
Day 16 1 March 2018 Kelly Bar (Goodman)
Day 17 6 March 2018 Kelly Bar (Goodman)
Day 18 7 March 2018 Kelly Bar
Day 19 8 March 2018 Kelly Bar
Day 20 12 March 2018 Kelly Bar
Day 21 13 March 2018 Kelly Bar
Day 22 15 March 2018 Kelly Bar
Day 23 16 March 2018 Kelly Bar
Day 24 21 March 2018 Kelly Bar
Day 25 22 March 2018 Kelly Bar
Day 26 23 March 2018 Kelly Bar
Day 27 27 March 2018 Kelly Bar (Goodman)
Day 28 28 March 2018 Kelly Bar
Day 29 29 March 2018 Kelly Bar
Day 30 30 March 2018 Kelly Bar
Day 31 3 January 2018 Kelly Bar (Goodman)
Day 32 4 April 2018 Kelly Bar
Day 33 5 April 2018 Kelly Bar
Day 34 6 April 2018 Kelly Bar
Day 35 7 April 2018 Kelly Bar
Day 36 9 April 2018 Kelly Bar
Day 37 12 April 2018 Kelly Bar
Day 38 13 April 2018 Kelly Bar
Day 39 14 April 2018 Kelly Bar
Day 40 17 April 2018 Kelly Bar
Day 41 18 April 2018 Kelly Bar
Day 42 19 April 2018 Kelly Bar
Day 43 20 April 2018 Kelly Bar
Day 44 21 April 2018 Kelly Bar
Day 45 23 April 2018 Kelly Bar
Day 46 24 April 2018 Kelly Bar (Back to Redhead)
Day 47 25 April 2018 Kelly Bar
Day 48 26 April 2018 Kelly Bar
Day 49 27 April 2018 Kelly Bar
Day 50 28 April 2018 Kelly Bar (Redhead)
Day 51 30 April 2018 Kelly Bar (Redhead)
Day 52 1 May 2018 Kelly Bar
Day 53 2 May 2018 Kelly Bar
Day 54 3 May 2018 Kelly Bar (Redhead)
Day 55 4 May 2018 Kelly Bar
Day 56 5 May 2018 Kelly Bar (Redhead)
Day 57 7 May 2018 Kelly Bar
Day 58 9 May 2018 Kelly Bar
Day 59 12 May 2015 Kelly Bar (Redhead)
Day 60 13 May 2018 Kelly Bar
Day 61 19 May 2018 Kelly Bar
Day 62 20 May 2018 Kelly Bar
Day 63 21 May 2018 Kelly Bar (Redhead)
Day 64 22 May 2018 Kelly Bar (Redhead)
Day 65 25 May 2018 Kelly Bar (Redhead)
Day 66 26 May 2018 Kelly Bar (Redhead)
Day 67 27 May 2018 Kelly Bar (Redhead)
Day 68 2 June 2018 Kelly Bar (Redhead)
51. From the above dates, I estimate that Morrad and I were involved in no less than approximately 1,496 hours in assisting with rebuilding the Kelly Bar Rig. During this time, we were not able to work on jobs in the business and draw the usual wage of $35.04 per hour whilst we were completing repairs. Accordingly, I estimate that a total of 1,496 labour hours at a rate of $35.04 per hour was a direct cost to our business, which equates to a total cost of $52,419.00 in our labour time to rebuild the Kelly Bar Rig.”
This evidence has been vigorously contested.
24. To understand this claim it is necessary to understand aspects of the plaintiff’s usual business practice and the status of Messrs Baker and Muadin as far as the actual work they do for the plaintiff. On this first aspect Mr Baker said this in his first affidavit:
“Usual Business Practice
29. A Class’s usual business practice has at all material times been as follows. It has 2 rigs for hire to customers, which each require one operator and one offsider (Hiring Services). Morrad and I are the only operator and offsider for each job. Therefore, when one rig is being used for a job, the other rig would not be able to be used simultaneously as they would both require the labour of the two people.
30. The duration of Hiring Services involving the Kelly Bar Rig varies depending on the material and size of each job.
31. A Class charges for the use of the Kelly Bar Rig based on the nature of the job that it is required for. When we are working on a large site where delays are expected, the Kelly Bar Rig (or any other machine that is required for that job) will be charged out as daily hire. For example, if the specific Geotech report is inconclusive in that the ground is only tested to two metres deep when the client requires drilling up to 6 metres deep, we would charge this out as daily hire as we do not know what is beyond two metres deep. If the Geotech report shows that the job can be done efficiently, we will charge this out as a lineal metre rate of drilling.
……
33. For each job, A Class is required to provide a quote and submit details that are required for the job, such as the diameter of the pile to be drilled and the depth of that pile, for tender documents. We then have an initial site inspection to discuss any issues and we advise our suggested course of action to the client. It may be necessary to have a secondary site inspection to cover off before we start drilling. We then prepare the machinery for the specific site we are attending, which includes swapping augers and completing pre-site maintenance. This usually takes one to two days. Depending on the sire, it willtake us one to three days to transport the machinery and another full day to setup.
34. Once the piling and drilling work is complete, it will usually take us between one to three days to pack down and transport the rig back to our depot. We then complete post drill maintenance and wash down the rig, which usually takes one to three days depending on the maintenance that needs to be completed.
35. However, A Class prepares its invoices to its clients to include only the physical dates that we actually perform drilling on site, which we then label as ‘DRILLING’ on the invoice. If we drill for three days, the job timeframe may in fact take up to two weeks. Hence, there are many days where the piling and drilling is not being undertaken, but preparatory or finishing work for the particular project is still required. However, the only time that is recorded and generally appears on our invoices is the piling and drilling days.”
25. The inference to be drawn from [51] of that affidavit quoted in [23] above is that not only were Messrs Baker & Muadin directors and shareholders of the plaintiff but also its employees. The evidence only speaks of three people working for the plaintiff: Mr Baker, Mr Muadin and Mrs Julie Randell (“Admin”). The plaintiff’s Business Activity Statements annexed to Mr Baker’s first affidavit show this:
Year Quarter Total Salary/Wages PAYG Tax withheld
2017 1 $33,280 $7,280
2 73,280 $17,280
3 $33,280 $7,280
4 $33,280 $7,280
2018 1 $30,720 $6,720
2 $77,280 $21,976
3 $43,492 $10,790
4 $46,838 $11,620
2019 1 $36,132 $8,574
2 $26,095 $4,784
3 $28,102 $5,152
BAS's after 30 June 2019 are monthly and only extend to 30 September 2019, but I have collated the 3 last BASs to compile this table. If these sums be correct, the annual wages bill for 2017 was $173,120, for 2018 was $198,330 and, if one allows the average of the first three quarters of 2019 for the last quarter of that year, the annual wages bill for 2019 was $120,439. Mrs Randell was living with her husband in Laurieton and was not a fulltime employee and may have only done a small amount of “Admin”. These figures confirm, in my opinion, that the company was paying wages to both Mr Baker and Mr Muadin.
26. When piling or drilling work was available for the plaintiff during the period from 17 January to 28 June 2018 it was attended to by Messrs Baker and Muadin. When no such work was available, rather than be idle, they worked, they say, on the KBR for much of that time. The plaintiff now claims the cost of their labour. This raises, firstly, an “industrial” issue.
27. At common law, the primary obligation of an employer is to pay to his employee the remuneration agreed between them provided it is not lower than any stipulated by or under Statute law. However, at common law there is no generally implied term obliging the employer to provide work to his employee. In Collier v Sunday Referee Publishing Co. Ltd [1940] 2 KB 647; [1940] 4 All ER 234, Asquith J said (at All ER 236):
“It is true that a contract of employment does not necessarily, or perhaps normally, oblige the master to provide the servant with work. Provided that I pay my cook her wages, regularly, she cannot complain if I choose to take any or all of my meals out. In some exceptional cases there is an obligation to provide work – where, for instance, the servant is remunerated by commission, or where (as in the case of an actor or singer) the servant bargains, among other things, for publicity: see Marbe v George Edwardes (Daly’s Theatre) Ltd [1928] 1 KB 269. Such cases are, however, anomalous, and the normal role is illustrated by such cases as Lagerwall v Wilkinson, Henderson & Clarke Ltd (1899) 80 LT 55 and Turner v Sawdon & Co [1901] 2 KB 653, where the plaintiffs – commercial traveller and a salesman respectively, retained for a fixed period and remunerated by salary – were held to have no legal complaint so long as the salary continued to be paid, notwithstanding that, owing to the action of their respective employers, they were left with nothing to do. The employer was not bound to provide work to enable the employee to “keep his hand in,” avoid the reproach of idleness, or even make a profit out of travelling allowance. In such a case there is no breach of contract…..”
In Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 Dixon J (as he then was) said at 466:
“….wages are incident to the subsisting relationship of master and servant. A master who sends his servant upon a holiday upon full pay can be sued for wages under the contract, although not on a common money count for work and labour done. They also serve who only stand and wait.”
28. There is a dictum criticising this line of authority given by Callinan and Heydon JJ in Blackadder v Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539 at [80] but I know of no authority overruling this established principle of the common law, but the issue which concerned their Honours does not directly arise in this case as Messrs Baker and Muadin claim to have worked on their employer’s damaged equipment. They were not required to stand idle. That may have occurred if the plaintiff could not find any work. Since the plaintiff was required to pay wages to its employees in any event, it is not open to it to claim those wages from the defendant. What the plaintiff can do is claim from the defendant its loss of profit, which it does. To claim both is, in my view, a form of double counting.
(b) When the KBR was in Monster Rigs’ yard
29. The KBR was in Monster Rigs’ yard from Wednesday, 17 January 2018 until it was sent back to the plaintiff’s depot on Tuesday, 24 April 2018, a total period of 97 days. This included 15 weekends, Australia Day (a Friday), Good Friday (30 March) and Easter Monday (2 April), 33 days on which industrial work is not normally done. The plaintiff claims as work days, Good Friday (30 March) and three Saturdays (7, 14 and 21 April). This raises a number of questions:
1. Was Monster Rigs’ yard open on Good Friday and on Saturdays?
2. When Monster Rigs’ yard was open – for how long was it open?
3. Do the 11 hours claimed per diem include travelling time? The distance between the plaintiff’s depot at Redhead (near which both Mr Baker and Mr Muadin lived) and the Monster Rigs yard at Ketch Close, Fountaindale is 61 kilometres with a travel time of 59 minutes. If the 11 hours does not include travel time, the plaintiff claims that its employees were engaged for 13 hours each day! (see T37).
4. Did Monster Rigs allow customers to do work on their own equipment when it had been bailed to Monster Rigs to repair?
None of these issues was addressed in the evidence, although there is some evidence relating to (iv).
30. It appears to me to be highly unlikely that any actual repair work was done by either Mr Baker or Mr Muadin until after the damaged KBR was assessed by Mr Goodman and his issue of the Damage Report of 21 January 2018 – see [11] above. That rules out the claims for 17 and 19 January 2018. Mr Baker said this in his first affidavit:
“43. On or about 17 January 2018, I attended Monster Rigs, which was the day it was float transported there after the accident. The Kelly Bar Rig had not been pulled apart on this day. My observations were that the Kelly Bar Rig had sustained significant damage, consisting of damage to the machine chassis undercarriage, along with significant damage of up to 90% of facia and structural components. Exhibited at SB1:103 is an image from the Monster Rigs website of when the Kelly Bar Rig as first transported to it after the incident.
44. I spoke with David Goodman, a representative of Monster Rigs, and we had a conversation with words to the following effect:
I said: “How long do you think it will take to repair the Kelly Bar Rig?”
He said: “There is quite a lot of damage, so at present I would estimate it may take about 8 weeks.”
45. Mr Goodman then provided a Damage Report and Repair Quotation prepared by Monster Rigs dated 21 January 2018. Which is exhibited at SB1:104-105. When I read the Damage Report and Repair Quotation, I noted that it provided for 3 options for replacement or repair, of which the recommended option was Option 3, repair.”
This passage of evidence was drawn to Mr Baker’s attention in cross-examination and also the substance of Mr Goodman’s assessment and this evidence was then given:
“Q. Now, to make that assessment, he would have had to have had a pretty good look over the machinery. Correct?
A. Yes.
Q. May I assume therefore that between when the rig arrived there at Monster Rigs on the 17th and when he provided you with this quotation, he would have had time to inspect and make some assessment of the various costs involved--
A. Yeah.
Q. --and also would have had to call the insurance advisors, right? Do you see that?
A. Yeah, that's correct. If you go back to--
Q. During all those times, we assume therefore that between 18 and 21 January, the machine was at Monster Rigs being looked at Mr Goodman?
A. Yes, that's correct.
…..
Q. You see there, the second date on page 28 is 19 January?
A. Yes, that's correct.
Q. But that's when it would have been being inspected or being looked over by Mr Goodman at Monster Rigs?
A. Would've been, yes. Yes, that's correct. So, I think if you go back to page 143, we were actually down there as the rig was getting lifted off by the crane and you can tell that it's how you mention before about it would take a fair bit to inspect but as you can tell by that photo which isn't the best photo either, it's pretty bent and buckled. So, it, it didn't take a great--
Q. When you look at, for example, option 3, repairs and he lists what he thought was necessary, new mask tube, crack test and repair where required, gearbox dismount checked, reassemble, remount. You see all that?
A. Yes, that's - yeah.
Q. He had a good look over it?
A. Well, yeah. Like I said, it was that bent and buckled that you could tell just from looking at it that it was - needed extensive - a lot of repairs and the thing that - like, the whole way through this, we've always taken a cheaper - cheapest and quickest exercises to get it back up and running, and yeah.”
31. I have no hesitation in rejecting the claim that Mr Baker did 11 hours work on the KBR on Good Friday, 30 March 2018. Exhibit 1 is a copy of an Instagram post made by Mr Baker on that day. It appears to have been taken at sunset. It is of an offroad motorcycle, “dirt bike”, of an installation at the side of a road announcing “Lightning Ridge – Black Opal Country.” There are two announcements made by Mr Baker:
“Lightning Ridge, New South Wales
Australia Easter on the west side.”
The next comment is made by Mr Morrad Muadin:
“Luv me 4 strokes”,
which is likely to be a comment on the size of the engine of the dirt bike. The next comment was made by one of Mr Baker’s “best mates”:
“Nice ride baz [one of Mr Baker’s nicknames]! KTM for life…”
KTM was the brand of the dirt bike. When cross-examined about this, one answer given by Mr Baker was this:
“Q: But all of this points to your being up at Lightning Ridge on 30 March 2018, doesn’t it?
A: Yeah, well that’s how it appears, yes.”
The distance between Redhead and Lightning Ridge is 650 kilometres and the travel time is 7 hours and 30minutes. No claim is made for 31 March, 1 April (Easter Day) or 2 April (Easter Monday). It seems highly likely that Mr Baker spent his Easter holiday period at Lightning Ridge, driving up there on Good Friday.
32. Claims are also made for Friday 13 April and Saturday 14 April 2018. Between Friday, 13 April and Sunday. 15 April 2018 the Diesel, Dirt and Turf Expo was held at Penrith. On Friday, 13 April Mr Baker posted on Instagram photographs of the plaintiff’s Kobelco CFA Drill, purchased in January 2018, on display at this Expo. The Instagram post came with this caption:
“Stoked to have our Kobelco Drill Rig front row this weekend at the Sydney Diesel Dirt and Turf Expo #AClassPilingandDrilling #monsterigs Thanks #KobelcoAustralia”
According to Mr Baker, Kobelco, a drill manufacturer, approached Monster Rigs to obtain one of its own machines and exhibit such a machine at the Expo and that was arranged. The plaintiff’s drill was Kobelco’s exhibit – but it also gave some free publicity to the plaintiff. Mr Baker admitted that he and Mr Muadin had attended the Expo but “we just walked around for probably an hour or so” and “it wasn’t too long”. A little later he said in further cross-examination:
“we were lucky enough to get the promotion out of it really, but as for us being there, and we’re not ones to be there and try and talk to people about it, or anything like that. We just went down to kind of see it on the ground and that was it, yes.”
33. However, the trip to the Expo was two hours each way. This visit to Penrith would have absorbed at least half a day on Friday, 13 April, so I can not accept that 11 hours of that day, if any, were spent on repairing the KBR at Monster Rigs.
34. The last topic I discussed does point to a very well established relationship between Messrs Baker and Muadin and Mr Goodman of Monster Rigs. It is possible that he permitted them to do some work on the KBR when it was in his yard to allow the plaintiff to save some money. Paragraph 52 of Mr Baker’s first affidavit lists copies of tax invoices for “interim repair works” carried out on the KBR and replacement parts. There are 32 tax invoices (identified by letters) between 22 January and 27 June 2022. The first 21 of those invoices are dated between 22 January and 9 April 2018. The next invoice is dated 24 April 2018, the day on which the KBR was returned to the plaintiff’s depot. There was no challenge about any of the first 21 tax invoices. They, not having been challenged, are evidence that the plaintiff’s employees were doing some work on the KBR when it was in Monster Rigs’ premises.
(c) Between 24 April and 2 June 2018
35. During this period, wages are claimed for 22 days. These days include Anzac Day (25 April), 5 Saturdays and 3 Sundays. The evidence persuades me that Mr Baker did not work on at least 2 of those days, a weekend which is likely to have been Saturday 19 May and Sunday, 20 May. Mr Baker was cross-examined about an Instagram post made on 21 May 2018. It became Exhibit 3, Mr Baker labelled it “fishing”. It depicts him from behind aiming a rifle towards a creek or canal in bushland. He admitted that he was attending a “Buck’s show”, an event the same as a “Buck’s night’ held over a weekend in an area behind the Watagan Mountains which are west of Lake Macquarie:
“….he’s got a property, we went out there camping over the weekend and a fair few mates and had rally cars and all sorts of fun stuff.”
He went on to admit that his claim to have worked on that weekend, “might have been wrong.” If Mr Baker did not work on this weekend, then neither did Mr Maudin because only Mr Baker was a qualified mechanic. At T129.12 Mr Maudin admitted, “I’m not that mechanical” and also at T130.38, “I’m not that mechanical, no.”
(d) After 2 June 2018
36. During cross-examination, Mr Baker said that the first job on which the KBR was used after it was completed repaired was the “Whitebridge” job which commenced on 30 July 2018 but then added this (at T87.05):
“I don’t know if that was its first one back or there was one similar in Sydney I thought we took it to. But yeah, that was one of its first jobs back after the accident.”
This issue was addressed in re-examination (commencing at T109.17):
“Q. When you said about potentially another job earlier in Sydney, can you tell his Honour what job that was?
A. It was a job down in, in Sydney on a - I just remembered, it was a job in Sydney on a very busy road, sloping block. We took the Kelly bar there and, yeah, that obviously was the first one back.
HIS HONOUR
Q. Sydney, on a very busy road did you say?
A. Yeah. I just, I just forget whereabouts exactly. It was like Western Sydney somewhere.
Q. On a sloping block?
A. Yeah.
YOUNG
Q. Just orientate yourself by remembering that the last - I’ve told you about the 2 August - you’ve seen that 2 August entry.
A. Mm.
Q. You’ve seen that the last entry of work done on that schedule was 2 June.
A. Yep.
Q. Can you tell his Honour where over between those two dates roughly this job occurred?
A. Yeah, well - yeah, it’s so - like, it’s a long time ago obviously. But yeah, now with the - there was a job that we went to, that’s being the one I was trying - starting to explain, and we tried to utilise the drill rig and it ended up having a few little issues that prevented us from being able to complete the job, and after one day of trying to utilise the machine, we had to pull out of the machine and get another - Lance from up Port Macquarie and on the job to complete the job.
Q. Did you get paid anything for that job?
STREET: I object.
WITNESS: I - we virtually--
STREET: I object. Leading question, your Honour.
HIS HONOUR: No, I’ll allow it. You don’t do this sort of work for charity.
WITNESS: I just forget, but I’m pretty sure that we ended up--
HIS HONOUR
Q. You pulled out of the job after a day--
A. Yes, that's correct.
Q. --and you got what, another--
A. LTS Civil, Lance from Port Macquarie, he, he had a bigger soil neck that, yeah, obviously - like, we organised for him to come in so we didn’t stuff the client around, and he completed the project for us.
Q. You sort of sublet the contract?
A. Yes, we couldn’t complete it ourselves, so, yes, we got Lance in.
Q. Did you have to pay Lance?
A. Well, that was a pretty decent job, so Lance was obviously happy to come, in a way, take it over and we, we got nothing. We just virtually handed it to Lance and made nothing off it.
Q. Please answer my question. Did you pay Lance?
A. No.
Q. Who paid Lance?
A. Well, the, the builder.
Q. You say you were paid nothing for a day’s work?
A. Well, it’s a bit hard to make the, the builder - like if we’ve gone to the job and can't complete it on our fault, it’s a bit hard to charge. We had establishment fee to go there, but we had to wear that because of - we couldn’t complete the job, so, yeah. It’s not very nice to pass that on to the builder.”
37. Eventually, an invoice relating to this job was tendered and became Exhibit H. The job was not in the western suburbs of Sydney, but was on President Avenue, Miranda, a suburb in the Sutherland Shire. The invoice was for the cost of “Mobilisation” of the KBR on 6 June 2018 from the plaintiff’s depot to the site for $5,500 plus GST. The invoice is dated 3 June 2018 and was due to be paid by 5 June 2018. After the exhibit was introduced, the following occurred:
“HIS HONOUR
Q. Is this the job that you told me was in western Sydney?
A. Yeah, yes, that's the one.
Q. Well I can assure you that President Avenue, Miranda is in the Sutherland Shire; it's south of Sydney?
YOUNG: I think he said "May have been in western Sydney"--
WITNESS: Yeah, I'm not--
YOUNG: --it was on a slope and there are parts of Miranda on a slope, your Honour.
WITNESS: I'm not really up with Sydney.
HIS HONOUR: Growing up, I lived in a street which is parallel to President Avenue and directly north of it, so I'm very familiar with President Avenue, Miranda. And I know the slopes he's talking about. It goes down a big slope from Kiora Road down to Ewey Creek then up the hill again to Miranda Road then down the hill towards the Camellia Gardens. So it's slopey everywhere.
Q. But anyway, you said you didn't get paid for this but you rendered an invoice--
A. Yeah--
Q. --and got paid for it?
A. --well that's correct. So at - this would have been, like, we didn't get paid for the actual work that took place because there was no real work, but this is for the float and the machine which, yeah, I didn't realise that we got covered for the machine to go there, but - because this invoice is normally paid prior to getting us there, so before we rock up and then, yeah, obviously we rock up and then, yeah. Couldn't do the job.”
38. I accept Mr Baker’s evidence about his job at Miranda. President Avenue is a very busy road, one of the three major east-west arteries of the Sutherland Shire. Clearly the KBR still needed more work to be done on it, work to fix the “few little issues” that remained. Yet neither the affidavit of Mr Baker nor that of Mr Muadin, nor the “Perpetual Year Planner” or “whiteboard” on which Mr Muadin is said to have recorded when work was done on the KBR record this job.
Reliability of Evidence of work alleged to have been done by Messrs Baker and Muadin
39. From the matters I have canvassed between [29] and [38] above I have concluded that the list of days which Messrs Baker and Muadin set out in paragraph 50 of Mr Baker’s first Affidavit (Exhibit A) and the Perpetual Year Planner/2018 Whiteboard found at Court Book page 116 are quite unreliable. I suspect that work was said to have ceased on 2 June because Exhibit H is dated 3 June, and merely looking at Exhibit H, the KBR was “operational” on 6 June 2018, and the plaintiff had other work on 4 and 5 of June. That unreliability in this allegedly contemporaneous record is clearly seen in the other matters upon which Mr Baker was cross-examined. Its mere form as shown on Court Book page 116 obviously suggests it was written up at one time, and, from its failure to mention work after 6 June 2018, it is likely to have been written up a long time thereafter.
Material Supplied by Plaintiff to Repair KBR
40. At [52] of Exhibit A, Mr Baker sets out a table of 32 items, each an invoice, for what Mr Baker called “internal repair works” on the KBR. The total of those invoices is $4,330.96 (incl. GST). I have referred to this earlier at [34] above. The defendant’s expert Mr Richard Victor Ivey of Tremain Ivey Advisory, Forensic Accountants raised only 3 objections to this table. They are:
“1. Two invoices from Bunnings each dated 27 June 2018 are after the period that the owners allegedly undertook repair work. Both invoices are for $250 of Bunnings gift cards and are annotated by hand with “giftcard 4 old mans help.”
2. An invoice from Supercharge Auto for $99.45 (excluding GST) dated 19 June 2018, is after the period that the owners allegedly undertook repair work.
3. Inclusion of a 600mL Pepsi ($3.26 excluding GST) on an invoice from Supercheap Auto dated 19 June 2018.”
As to 1 in this short list each set of $250 gift cards was a present for the fathers of Messrs Baker and Muadin for their assistance. Mr Young withdrew these claims. As to 3, the entire invoice from Supercheap Auto is in the Court Book (at page146) but does not contain an entry for the purchase of a 600mL bottle of Pepsi but a Supercheap invoice dated 9 February 2018 does. As to 2, I allow the claim bearing in mind my finding at [38] above. Accordingly, the sum claimed should be reduced by $503.95, being $500 charged by Bunnings for the gift cards and $3.95 for the Pepsi (incl. GST). That sum is $3,817.01 incl. GST or $3,479.10 (excl. GST).
41. The remaining item of material supplied by the plaintiff to repair the KBR is a table drive gearbox, provided by the plaintiff to Monster Rigs to use in the repairs carried out by Monster Rigs. In a letter addressed “To Whom it May Concern” dated 2 September 2018, on the plaintiff’s stationary, Mrs Julie Randell said this:
“The table drive gearbox that was given to Monster Rigs to assist with the rebuild was originally purchased when Morrad and Shannon bought the business 9 January 2017.
This table drive gearbox was part of the associated equipment that they purchased from A Class Piling and Drilling Pty Ltd ABN 33 083 034 628. This table drive gear box is valued at $31,500.”
This valuation of the gearbox is maintained by Mr Baker in [53] of Exhibit A. In his second affidavit sworn on 26 January 2024 (Exhibit C), Mr Baker sought to support this valuation with this evidence:
“17. In about August 2022, I made enquiries with a supplier in Birmingham, Alabama USA for the supply of 4 Char-Lynn Hydraulic Geroler Disc Valve Motors, which are a key component of the table drive gearbox: for the drive head set up to work you require 4 disc drive motors to make it operational.
18. Exhibited at SB2:5 is a copy of a Quote for a 112-1062 Motor | Char-Lynn Hydraulic Geroler Disc Valve Motor – 6000 from Motion in Birmingham, Alabama. I note the quote provides for a Unit price of $2,527.84 USD per motor and a total price for 4 motors of $10,111.36 USD. I also note the lead time for the delivery to Australia was “40 weeks”, which was approximately the same as the lead time estimates we received when making enquiries in 2018. I do not currently have a copy of those enquiries from 2018.
19. On 8 September 2022, Morrad sent an email enquiry to CZM, a company in Brazil, who I knew supplied parts for a table drive gearbox, specifically the rotary head, which is another key component of the table drive gearbox. To the best of my recollection, we made similar enquiries with CZM in about 2018, although I do not have a copy of those emails now.
20. Exhibited at SB2:6-15 is a copy of the email exchange Morrad had with representatives of CZM from 8 to 14 September 2022,. Seeking a quote to replace the drive motor on a Clo Zoroni CA35 drive motor for a 75mm square Kelly bar, which was the same fitted to the Kelly Bar Rig.
21. Exhibited at SB2:16-20 is a copy of the email exchange Morrad had with representatives of CZM from 20 to 26 October 2022, which included the quote for the rotary head EM240. I note that the quote from CZM to supply the rotary head EM240 was $45,000.00 USD.
22. Exhibited at SB2:21 is a copy of the email exchange Morrad received from CZM in about October 2022, which included the quote for the sea freight to Sydney from Brazil for $1,175.00 USD.”
42. The contract for the sale of the business to the plaintiff allowed $190,000 for equipment. The list of equipment referred to in the contract I have set out at [5] above. The plaintiff’s depreciation schedule for the year ending 30 June 2017 shows this:
Equipment at Cost
1 Continuous Flight Auger Drill Rig 99,707
2 Desktop Computer 2,899
3 Excavator and Pump on purchase 82
4 Kelly Bar Drill Rig 90,211
5 Shannon’s Toolbox Tray 5,455
198,354
Only items which I have numbered as 1,3 and 4 were then depreciated. As far as I can discern there was never any valuation of “Associated augers and drilling tools” referred to in the equipment which the plaintiff obtained from the vendor of the business, and certainly no valuation at any time of spare parts. In the depreciation schedule the plaintiff listed a desktop computer and a toolbox tray but not a spare gearbox which it now says was worth $31,500! One must assume that relevant evidence about the gearbox could have been given by Mr David Randell, who would have acquired the gearbox when he was conducting the business, as to when it was acquired, in what circumstances, how much he may have had to pay for it, or, for instance, if it were recovered from another piece or plant that was “written off.” However, he was not called, he swore no affidavit, and his absence is unexplained. Evidence about the gearbox could also have been given by Mr David Goodman of Monster Rigs to whom it was given by the plaintiff to use in the repair of the KBR: how rare was the gearbox, could he have found another in Australia, what was his view of its value, how old was it, what was its life expectancy and similar questions. However, he did not swear an affidavit, was not called to give evidence, and his absence is unexplained.
43. Mr Baker’s attempt to try to value the gearbox in Exhibit C is extremely belated: the gearbox was given to Monster Rigs to be used in the rebuilding of the KBR which was then returned to the plaintiff on 24 April 2018, yet enquiries seeking to justify the opinion that it was worth $31,500 were only recorded in the second half of 2022, over 4 years later. In cross-examination, Mr Baker gave hearsay evidence as to how the figure of $31,500 was arrived at, after stating his personal view that it was worth more than that sum:
“Q. The table drive gear box is not listed in your 2017 depreciation schedule, is it?
A. No, that's right.
Q. It's not listed as part of the valuable equipment that you bought with the business.
A. No, either is either - like, all the augers and we got a lot of associated equipment.
Q. It's not worth $31,500, is it?
A. Yes, it's worth a lot more actually.
Q. If it was then, it would have - sorry, it's worth more than that, do you say?
A. Yes, that's correct, if you look at the quotes that we got from Brazil.
Q. Don't worry about the quotes, just go to your page 32 of your affidavit.
A. Yep.
Q. You say there that it was valued at approximately $31,500?
A. Yes that's correct.
Q. You've acknowledged you don't have any valuation expertise?
A. Yes.
Q. You've now just said in the witness box that it's in fact worth more than what you put in your affidavit?
A. Yes, well that was - that figure come up with Dave Randell, the previous owner, that - and Dave Goodman in negotiations.
Q. I suggest to you that your evidence--
HIS HONOUR
Q. Sorry and is what you just said that that figure of $31,500 was provided by Mr Randell?
A. And Mr Goodman, yes, in conversation.
Q. And Mr Goodman. All right.
STREET: I object to that, it's hearsay your Honour. But--
HIS HONOUR: I know it's hearsay, I'll ignore it, I often do but if that's the source of the valuation that you're relying upon, you'll need to call them.
STREET: No I just wanted to record that, I'm grateful to your Honour. I'll just move past that.
Q. I'll just suggest to you that that estimation is inflated in any event, isn't it?
A. No, that's not correct.
Q. It's all part of your scam.
A. Incorrect.”
My comment that “if that’s the source of the valuation that you’re relying upon, you’ll need to call them”, was directed to Mr Young, but he ignored the admonition. The hearsay was properly objected to by Mr Street, and I must ignore it.
44. The real question is not what was its value but how much did it cost the plaintiff? It was a spare part which it acquired with the business. I do not know whether it could fulfill any function other than as the replacement part of the KBR. In the Depreciation Schedule which I last quoted it can be seen that 2 pieces of equipment specifically sold with the business, the concrete pump and excavator were jointly valued at $82, yet there is not mention of the gearbox now alleged to have been worth $31,500 in April 2018. I am unable to accept that the purchase of the business, the plaintiff, paid anything like $31,500 to acquire the spare table drive gearbox. I accept that it was purchased by the plaintiff when it bought the business but I could not allow anything more than $5,000 for the purchase price. Its increased value only became evident when it was providentially available because of a piece of astute hoarding by Mr Randell.
Loss of Profit
45. The plaintiff’s solicitors qualified Mr Nicholas Robert Gaudion of Cutcher and Neale, Forensic Accountants, “to prepare a report setting out [his] opinion on the amount of any loss suffered by A Class during the approximate six month period when the damaged [KBR] was not available for use (i.e. from 16 January 2018 to 28 June 2018).” Notwithstanding the Whiteboard, Mr Baker gave evidence that the KBR became available for use “on or around 28 June 2018”, which, in light of the “Miranda job” and the invoice from Supercheap Auto dated 19 June 2018 I am happy to accept. In his report of 12 April 2021, Mr Gaudion expressed his opinion that the loss of profit for the period was $155,975.
46. As I noted in [40] above, the defendant’s expert is Mr Ivey. His first report is dated 19 November 2021. In that report he assessed the loss of profit on two alternative bases:
“Alternative 1:
Based on the actual revenue from 16 January 2017 to 28 June 2017 ($76,414).
Alternative 2:
Based on the actual revenue between 16 January 2017 and 28 June 2017 less a 51% reduction due to the apparent decline in income during this period ($37,142).”
On the first alternative he assesses the loss as $45,568 and on the second alternative he assesses the loss as $17,546. These losses were before tax.
47. There is a Joint Experts’ Report which is Exhibit J. The second section of this report is this:
“2. Summary of Experts’ opinions
2.1 The Experts agree that as a result of the damage caused to the Kelly Bar Rig, A Class suffered a loss of profits.
2.2 The Experts have both been instructed that the Kelly Bar Rig was unavailable during the period from 16 Jnuary 2018 to 28 June 2018 due to repairs being conducted (“the Loss Period”).
2.3 The Experts agree that the most reliable basis on which to form an opinion on the loss of sales is the sales that A Class achieved during the same period in the prior year to the Loss Period, i.e. the sales during the period 16 January 2017 to 28 June 2017 (“the Base Period”.
2.4 The Experts agree that the “Loss of Sales” should be calculated as being the sales during the Base Period (“the Base Period Sales”) less the sales during the Loss Period (“the Loss Period Sales”).
2.5 The Experts agree that the variable expenses that would have been incurred on the Loss of Sales can be calculated as 28.1% of sales.
2.6 The Experts agree that the method of calculating the Loss of Profits should be calculated as the Loss of Sales less the variable expenses of 28.1%.
2.7 The Experts do not agree on [the] amount of the loss of Sales.
2.8 In Gaudion’s opinion, the Loss of Sales should be calculated as the difference between the total sales of the business during the Base Period less the total sales of the business during the Loss Period.
2.9 In Ivey’s opinion, the Loss of Sales should be calculated as either:
(a) The Kelly Bar Rig sales during the Base Period less the Kelly Bar Rig sales during the Loss Period; or,
(b) The Kelly Bar Rig sales during the Base Period reduced by the percentage that other sales declined between the Base and Loss Periods, less the Kelly Bar Rig sales during the Loss Period.
2.10 The table below sets out a summary of the Expert’s opinions.
Gaudion’s opinion Ivey’s Alternative 1 Ivey’s Alternative 2
Base Period Sales 366,691 76,414 37,443
Loss Period Sales 149,758 13,040 13,040
Loss of Sales (difference of above) 216,933 63,374 24,403
Less Variable Costs (calculated at 28.1%) (60,958) (17,808) (6,857)
Loss of Profits 155,975 45,566 17,546
…”
48. Referrable to the dispute between the experts is what has been referred to as “reputational damage”. The primary evidence relied upon by the plaintiff is contained in the affidavit of Mr Muadin of 9 November 2023, Exhibit B:
“31. From my experience as Director and Secretary of A Class and my review of A Class’s books and records, I am aware that A Class experienced a downturn in its business immediately following the Incident.
32. Very soon after the Incident, I became aware that photographs of the Kelly Bar Rig overturned on City Road, Merewether NSW had been uploaded to social media by an Instagram profile named ‘drilljunkies’ (Instagram Post). The Instagram Post has 242 ‘likes’ and the caption reads:
‘#failfriday [emoji] a very unfortunate loss for @aclasspiling when their brand new rig was totaled (sic) because of the pin on the trailer coupling on the back of the tipper snapped off…’
33. Exhibited at MM1:25-35 are screenshots of the Instagram Post including the ‘comments’ posted on the Instagram Post by other Instagram profiles.
34. Although I cannot now recall with who, in the few months following the Incident, I recall having at least half a dozen conversations with personnel from freight companies such as Troy’s Heavy Haulage to the effect that A Class was thought to be:
(a) “rough” because its equipment had “come off the back of a truck”;
(b) “cheap”;
(c) “running a dodgy operation”; and
(d) “using “shit contractors”[“].
35. Based on these conversations, it became apparent to me that A Class’s reputation was tarnished by the Incident and customers may have been choosing to engage other drilling and piling contractors whose equipment had not been significantly damaged like the Kelly Bar Rig.”
For reasons I gave in A Class Piling and Drilling Pty Ltd v Seventy Eight Promotions Pty Ltd (No 3) I rejected the tender of paragraph 34 of that affidavit. It logically follows that paragraph 35 was also inadmissible: see T120.42 to T122.06. Mr Gaudion, in the Joint Expert Report, at 3.3 to 3.5 sets out other material to the same effect, but there is not any evidence to that effect. Even if the evidence were admissible, in my view, it has no probative value: why would one accept the opinions of employees of hauliers as to the quality of the equipment of, and work done, by a piling and drilling company, when that company’s equipment had been damaged because of an act, neglect and default of a haulier? A company such as the plaintiff is usually retained by a builder, developer or property owner i.e. by businesspeople who are generally astute, conscious of the value of money and of the quality of work performed by them. That is to be contrasted with the type of work done by employees of a haulier. In my view, a businessperson considering the plaintiff’s position, after the damage to the KBR would be more likely to feel sympathetic to the plaintiff; damage to its equipment was not due to any act, neglect or default of the plaintiff. If anyone were to be criticised, it ought to have been the defendant. I therefore reject Mr Gaudion’s contention that because of “reputational damage”, the total sale of the plaintiff’s business must be considered in calculating the plaintiff’s loss of profits.
49. In the Joint Expert Report, Mr Ivey enumerates a number of other consideration which speak against the proposition that the plaintiff’s income was affected by “reputational damage”. Those points are:
“Contrary factors which suggest that there was no reputational related income reduction due to damage to the rig include:
(a) The damage was caused by a third party. It would have been obvious to any interested party that the problems were unrelated to any actions of A Class.
(b) At paragraph 36 of his affidavit dated 9 November 2023, Mr Muadin advises that Mr Goodman, a preeminent figure in the drilling and pilling [sic] industry, supported A Class to obtain further work immediately after the incident. That a “preeminent” figure in the industry supported A Class and enabled them to obtain further work immediately after the incident should have reduced or eliminated any reputational loss, in Mr Ivey’s opinion.
(c) If reputational damage had resulted in loss of income immediately after the incident, Mr Ivey expects that A Class would have provided evidence of some specific cancellations of contract work utilising other items of equipment which were due to start soon after 16 January 2018, but which were subsequently cancelled. These have not been provided.
(d) A Class profit and Loss statements show trading income has increased substantially in the years following the incident. Trading income more than doubled from $604,763 to $1,380,739 between the 2019 and 2022 financial years. Although there were many factors contributing to this increase, it does not per se demonstrate any reputational related loss of income over these years.”
50. In the Joint Expert Report, Mr Gaudion says this about Mr Ivey’s Alternative 1:
“5.9 Under My [sic] Ivey’s Alternative 1, he assessed the Loss of Sales based on the assumption that in the absence of the incident, the loss of sales was confined to the revenue of the Kelly Bar rig. He assessed the Loss of Sales based only on the revenue of the Kelly Bar rig and the difference between the Kelly Bar rig revenue during the Base Period and Loss Period.
5.10 Mr Ivey states at lines 1 and 2 of page 11 of his report that:
I conclude that most of the reduced revenue in 2018 appears to have been caused by a reduction in available work arising from factors other than the impact of the incident.
5.11 However, Mr Ivey does not provide any support for this statement. Nor does he specifically mention or identify any of the “factors other than the impact of the incident” to which he asserts caused the reduction in total sales of A Class during the Loss Period. Therefore, Mr Ivey does not appear to have a valid basis on which to form his opinion that the loss of sales only related to the Kelly Bar rig and Mr Ivey’s assessment of the Loss of Profits under his Alternative 1 should not be accepted.”
With respect, the onus of proving the loss of profit falls upon the plaintiff, not upon the defendant. Mr Gaudion states that Mr Ivey does not state what the other factors might be. One can speculate: were there unfavourable weather conditions? Were there unfavourable economic conditions in this period? Was there merely a lack of work? Was there a competitor undercharging, who soon left the market? Does the plaintiff’s expert, Mr Gaudion himself, rule out any such considerations? The answer to that question is “no”.
51. In his reply to Mr Gaudion’s contention Mr Ivey said, inter alia:
“6.6 Under Mr Ivey’s Alternatives 1 and 2, only losses arising from the reduced sales for the Kelly Bar rig are considered. No loss from the reduced sales from other, undamaged, items of equipment are accounted for. This is because in Mr Ivey’s opinion, no valid objective evidence has been presented or is available which supports the contention that sales from other equipment were adversely affected by the damage to the Kelly Bar rig. In fact, the opposite may have been expected. Mr Ivey understands that only one rig could be operated at a time – there was insufficient labour and expertise within the business to operate more than one rig at the same time. Under these conditions it might be expected that sales from other rigs would have increased above the level expected from these other items, had the Kelly Bar rig not been damaged.”
52. Quite frankly, I found Mr Ivey’s evidence and arguments much more convincing than Mr Gaudion’s evidence and arguments, the latter being heavily influenced by the alleged “reputational damage” and its implicit deviation from item 2.3 of the Joint Expert Report which I cited above at [47]. I prefer Mr Ivey’s Alternative 1 to Mr Gaudion’s assessment.
53. The remaining issue is whether I should accept Mr Ivey’s Alternative 2 to his Alternative 1. The difference between the alternatives is succinctly stated by Mr Gaudion, in the Joint Expert Report, thus:
“5.2 Under My [sic] Ivey’s Alternative 2, he assessed the Loss of Sales based on the assumption that in the absence of the incident, the loss of sales was confined to the revenue of the Kelly Bar rig and that the revenue from the Kelly Bar rig would have declined by the same proportion as did the revenue from the CFA rig. Mr Ivey asserts that the revenue from the CFA Rig declined by 51% and therefore the expected sales for the Kelly Bar rig would have also declined by 51%.”
In my view, Mr Ivey’s argument to that effect is fallacious. As Mr Ivey himself argued at 6.6, quoted in [51] above, “….it might be expected that sales from other rigs would have increased above the level expected from these other items, had the KBR not been damaged.” Again, what conditions were during the period is not disclosed in any detail at all. Furthermore, at 5.3 of the Joint Expert Report, Mr Gaudion presents sound evidence that there was no correlation between income generated by rigs of different types and the report includes a graph, which relevantly shows this:
Period 2017 Proportions of Relevant Income
CFA Rig KBR
April – June 3 1
July – Sept. 7 1
Oct - Dec 1 3
Furthermore, during the period when the KBR was not available for use, the plaintiff had two CFA Rigs, the original purchased with the business in January 2017 and the new Kobelco CFA. Furthermore, a CFA Rig was used to complete a job the KBR had been doing at Merewether before the incident, on 7 and 8 February 2018; (see Joint Expert Report, Exhibit J, page 7 paragraph 5.5(b)) so that it was possible, but not preferable for a CFA Rig to do part of the job of the KBR. In these circumstances I do not accept Mr Ivey’s Alternative 2.
54. Accordingly, I allow for loss of profit Mr Ivey’s Alternative 1, $45,566.
Other Matters
55. At [1] above, I described the job to which the KBR was being carried, when it was damaged. In his primary report of 19 November 2021, Exhibit FD) Mr Ivey said this:
“5.3 CivHix Losses
An amount of $9,625 (excluding GST) was allegedly paid by A Class to its customer CivHix for losses sustained as a consequence of Kelly bar rig being unable to the contracted work because the incident.
An invoice for the above amount has been provided which appears to indicate that the losses relate to extra labour and contractor costs allegedly incurred by CivHix due to the incident. The invoice is undated.
It is not clear whether the amount claimed arose out of the terms of a contract agreement between CivHix and A Class. No agreement has been provided to me.
A schedule of payments to Hix Group Pty Ltd between 23 August 2018 and 23 November 2019, claimed to have been extracted from A Class’ Xero accounting program has been provided. The payments in this schedule total $9,625 (excluding GST).
No primary documentation of payments such as banked statements or receipts have been provided.”
The Receipt for CivHix for this payment may be found as an annexure to Mr Baker’s primary affidavit (Exhibit A) at page 154 of the Exhibit, page 194 of the Court Book. The receipt bears this title: “Cost of works due to Piling rig not attending night works due to float drive having accident time of commencement of job.” I therefore allow to the plaintiff the sum of $9,625.00.
56. At Exhibit A page 150 (Court Book page 190) commences a formal quotation given by the plaintiff to CivHix dated 1 December 2017. It purports to be a 3 page document but there are two pages numbered “Page 3 of 3”. The only sum certain on the quotation is the cost of “Mobilisation for Drilling Rig only” for $1,850. The first page 3 of 3 has not been completed by the offeree (Civ Hix). The last line of this page 3 is: “This quote is valid for 90 days from 1 December 2017.” The second page 3 of 3 was executed by the offeree on 6 December 2017.
57. The last mentioned quotation throws into focus another aspect of the claim for loss of profit. There is no quotation for other work planned to be done with the KBR after 16 January 2018. There is no estimate or opinion as to how much the plaintiff may have earned for the CivHix job if the KBR could have been engaged, whether it be 1 hour, 6 hours or 60 hours, or what a job of such magnitude would have paid. I do know from the quantum that the minimum hire was for 6 hours for $2,200 and $400 for each additional hour. The income forgone therefor because of the inability to do this job has not been the subject of any evidence.
58. Similarly, there was no evidence called to state that enquiries were made by customers as to their ability to hire the KBR, and that such customers had to be rebuffed because of its unavailability. No customer was called to say that he or she had a job for a KBR that would have been offered to the plaintiff if its machine were available.
59. Similar to the matter raised in [57] above, no evidence was given about the “Miranda job” (see [36] to [38]), as to how long it may have taken, if the KBR were operable, as to the income for the plaintiff that that job might have generated. Prior to this job being identified as being at Miranda, Mr Baker said in re-examination:
“Q. When you said about potentially another job earlier in Sydney, can you tell his Honour what job that was?
A. It was a job down in, in Sydney on a - I just remembered, it was a job in Sydney on a very busy road, sloping block. We took the Kelly bar there and, yeah, that obviously was the first one back.
HIS HONOUR
Q. Sydney, on a very busy road did you say?
A. Yeah. I just, I just forget whereabouts exactly. It was like Western Sydney somewhere.
Q. On a sloping block?
A. Yeah.
YOUNG
Q. Just orientate yourself by remembering that the last - I’ve told you about the 2 August - you’ve seen that 2 August entry.
A. Mm.
Q. You’ve seen that the last entry of work done on that schedule was 2 June.
A. Yep.
Q. Can you tell his Honour where over between those two dates roughly this job occurred?
A. Yeah, well - yeah, it’s so - like, it’s a long time ago obviously. But yeah, now with the - there was a job that we went to, that’s being the one I was trying - starting to explain, and we tried to utilise the drill rig and it ended up having a few little issues that prevented us from being able to complete the job, and after one day of trying to utilise the machine, we had to pull out of the machine and get another - Lance from up Port Macquarie and on the job to complete the job.”
The job was actually done by Lance (obviously the given name of someone known to Mr Baker) from Port Macquarie. The records of that gentleman’s business would show the length of the job and the revenue earned, but they were not tendered. Nor was their absence explained.
60. In cross-examination Mr Baker gave this evidence:
“Q. ….. you didn't cancel any particular jobs after the incident referrable to the Kelly bar rig, did you?
A. Well we had to cancel all the jobs because we didn't have a drill rig.
Q. No, you didn't cancel any particular jobs after the incident referable to the Kelly bar rig, did you?
A. We had to cancel all jobs and we couldn't quote Kelly bar jobs because we didn't know when the machine would be up and running.”
There is no evidence that any particular job after the CivHix job was cancelled. There is no documentary evidence that any such job existed. The excuse that the plaintiff was not able to provide quotations after the accident is repeated elsewhere, and was offered because the plaintiff did not want to be seen as unreliable. However, one of the documents annexed to Exhibit A, Mr Baker’s primary affidavit, at page 267 (Court Book page 307) is a letter in the plaintiff’s stationary, under the hand of Mrs Julie Randell (“Admin”), the second paragraph of which states this:
“Early part of the year [i.e. 2018] we quote on jobs that often happen later in the year. We have put 4 quotes in since the accident and to our knowledge haven’t won those jobs. We haven’t been quoting on many jobs not knowing when we would have a Rig available. We didn’t want to give our clients false hopes.”
This letter is dated 19 March 2018 and is addressed to Mr Matthew Laing of Procare Recovery Specialists. The plaintiff’s insurer was Sura Plant and Equipment Pty Ltd (“Sura”). As I understand the evidence, the Procare group were acting for Sura, as were “PC Legal”. The statement I which I have quoted was directed, eventually, by the plaintiff to its own property insurer. None of those quotes, some of which could have been oral only, has made its way into evidence. Mr Baker’s responses to questions based on the letter I have just quoted were not satisfactory. This want of evidence relevant to the loss of profit claim is something I have had to weigh when considering the experts’ reports.
61. Relevant to the alleged “reputational damage” is the role of Mr David Goodman. As I have pointed out, he constructed the KBR. At about the time the KBR was damaged, Mr Goodman sold the new Kobelco CFA rig to the plaintiff. When the KBR was damaged it was taken to the yard of Monster Rigs Pty Ltd, “Part of the Goodman Group”, for assessment by Mr Goodman and was left with him for repair. Mr Goodman arranged for the plaintiff’s Kobelco CFA rig to be displayed at Diesel, Dirt and Turf Expo at Penrith between 13 and 15 August 2018. Mr Goodman did that at the behest of Kobelco, but the display of the plaintiff’s new rig could only be to its advantage. In Exhibit B, Mr Muadin’s affidavit of 9 November 2023, Mr Muadin said this:
“36. Of the little work that A Class did win immediately after the Incident, some of this work was sourced by Dave Goodman (Mr Goodman), a preeminent figure in the drilling and piling industry and relation to David Randall, one of the principals of the vendor of the Existing Business as defined in paragraphs 12 and 13 of Mr Baker’s Affidavit. This was done as a favour to Shannon Baker and I [sic], and to try and help us get back on our feet after the Incident.”
The evidence strongly supports Mr Muadin’s assessment that Mr Goodman is a “pre-eminent figure in the drilling and piling industry”. Those with a job to be done might consult him about that job, and he could direct that job to the plaintiff. When the doyen in the field supports the plaintiff why would any rational person listen to the gossip of employees of hauliers to negative such support? This was not alluded to at all by the plaintiff’s expert, Mr Gaudion.
62. Lest the matter go further, I should comment on credit. Mr Young submitted that “Mr Baker and Mr Muadin were each honest and reliable witnesses” (MFI 7, [11]). Mr Street’s constant refrain when cross-examining these witnesses was that the plaintiff’s claim was a “scam” i.e. a fraud. I am unable to accept either of these positions. It must be conceded that Messrs Baker and Muadin gave their evidence a long time after the relevant events i.e. between January and June 2018. Mr Baker swore his primary affidavit on 29 July 2023 – five years later. Mr Muadin swore his affidavit on 9 November 2023, almost five and a half years later. Their oral evidence was given in February 2024, some 6 years after the KBR was damaged. Delay affects memory, which becomes more unreliable with the passage of time. During delay favourable matters are often considered and, at times, “built up”; unfavourable matters are often forgotten or minimised. I did not form a view that these gentlemen were fraudsters, but men whose expectations had increased with the passage of time. I have sought to demonstrate unreliabilities in the evidence. Often objective evidence showed that what a witness or the witnesses said was unreliable. Much of the oral evidence displayed exaggeration, a common occurrence in many cases that come before the Courts, when the plaintiffs seek damages for losses arising from accidents. I have, accordingly, approached the evidence with circumspection.
Summary
63. I allow the following:
ITEM AMOUNT REFERENCE
1. Paid to Monster Rigs Pty Ltd $123,000.00 [12]
2. Wages 0 [23] to [39]
3. Materials supplied $3,479.10 [40]
4. Table Drive Gearbox $5,000.00 [41] to [44]
5. Loss of Profit $45,566.00 [45] to [54]
6. Payment to CivHix $9,625.00 [55]
TOTAL $186,670.10
From that total sum must be deducted the sum of $160,000 paid to the plaintiff by its insurer, Sura: see Exhibit A, [78] and Deed of Release annexed to Exhibit A at page 278 (Court Book page 318). The plaintiff is entitled to a basal judgment in its favour of $26,670.10 which I round off at $26,670.
64. The plaintiff is entitled to pre-judgment interest on the sum of $26,670. The question then arises as to the date on which interest should commence. Item 1 in [63] was paid between 1 April 2018 and 21 August 2018. The last materials in item 3 were purchased on 27 June 2018. The last payment to CivHix for item 6 was made on 23 November 2019. It appeared to me that a logical date to commence interest was when the KBR returned to service on 26 June 2018. I trust I shall be forgiven for commencing interest on 1 July 2018, for ease of calculation. At [36.7.10] Ritchies Uniform Civil Procedure NSW sets out the interest rates to be used for calculation of pre-judgment interest in the NSW District Court according to the UCPR 36.7:
Judgment and pre-judgment interest rate table
Period RBA publication RBA rate % Pre-judgement interest rate (RBA + 4%) % Post judgment interest rate (RBA + 6%) %
1 Jul — 31 Dec 2014 7 Aug 2013 2.50 6.50 8.50
1 Jan — 30 Jun 2015 7 Aug 2013 2.50 6.50 8.50
1 Jul — 31 Dec 2015 6 May 2015 2.00 6.00 8.00
1 Jan — 30 Jun 2016 6 May 2015 2.00 6.00 8.00
1 Jul — 31 Dec 2016 4 May 2016 1.75 5.75 7.75
1 Jan — 30 Jun 2017 3 Aug 2016 1.50 5.50 7.50
1 July — 31 Dec 2017 3 Aug 2016 1.50 5.50 7.50
1 Jan — 30 Jun 2018 3 Aug 2016 1.50 5.50 7.50
1 July — 31 Dec 2018 3 Aug 2016 1.50 5.50 7.50
1 Jan — 30 Jun 2019 3 Aug 2016 1.50 5.50 7.50
1 July — 31 Dec 2019 5 Jun 2019 1.25 5.25 7.25
1 Jan — 30 Jun 2020 2 Oct 2019 0.75 4.75 6.75
1 July — 31 Dec 2020 20 Mar 2020 0.25 4.25 6.25
1 Jan — 30 Jun 2021 4 Nov 2020 0.10 4.10 6.10
1 July — 31 Dec 2021 4 Nov 2020 0.10 4.10 6.10
1 Jan — 30 Jun 2022 4 Nov 2020 0.10 4.10 6.10
1 July — 31 Dec 2022 8 Jun 2022 0.85 4.85 6.85
1 Jan — 30 June 2023 7 Dec 2022 3.10 7.10 9.10
1 July — 31 Dec 2023 7 Jun 2023 4.10 8.10 10.10
1 Jan — 30 June 2024 6 Dec 2023 4.35 8.35 10.35
Pre-judgment interest, therefore, amounts to $8,941.68 per calculations set out below:
Start Date End Date Days Rate Amount Per Day Total
01/Jul/2018 31/Dec/2018 184 5.5% $4.0188 $739.45
01/Jan/2019 30/Jun/2019 181 5.5% $4.0188 $727.40
01/Jul/2019 31/Dec/2019 184 5.25% $3.8361 $705.84
01/Jan/2020 30/Jun/2020 182 4.75% $3.4613 $629.95
01/Jul/2020 31/Dec/2020 184 4.25% $3.0969 $569.83
01/Jan/2021 30/Jun/2021 181 4.1% $2.9958 $542.24
01/Jul/2021 31/Dec/2021 184 4.1% $2.9958 $551.23
01/Jan/2022 30/Jun/2022 181 4.1% $2.9958 $542.24
01/Jul/2022 31/Dec/2022 184 4.85% $3.5438 $652.06
01/Jan/2023 30/Jun/2023 181 7.1% $5.1879 $939.00
01/Jul/2023 31/Dec/2023 184 8.1% $5.9185 $1089.01
01/Jan/2024 30/Jun/2024 182 8.35% $6.0845 $1107.39
01/Jul/2024 24/Jul/2024 24 8.35% $6.0845 $146.03
Total 2216 $8941.68
Order
65. I give judgment for the plaintiff against the defendant for $35,611.68.
Costs
66. I shall hear the parties on the question of costs. However, I must draw attention to UCPR 42.35.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 24 July 2024 | 18,371 |
nsw_caselaw:190c86d892120e9138172a00 | decision | new_south_wales | nsw_caselaw | text/html | 2024-03-15 00:00:00 | R v Holman (No 1) [2024] NSWDC 267 | https://www.caselaw.nsw.gov.au/decision/190c86d892120e9138172a00 | 2024-07-26T22:25:58.089249+10:00 | District Court
New South Wales
Medium Neutral Citation: R v Holman (No 1) [2024] NSWDC 267
Hearing dates: 19 – 23 February 2024, 26 February 2024, 15 March 2024
Date of orders: 15 March 2024
Decision date: 15 March 2024
Jurisdiction: Criminal
Before: Sutherland SC DCJ
Decision: Verdict of Guilty with respect to Counts 1, 2, 3, 4, 6, verdict of Not Guilty with respect to Count 5, at [395] – [396].
Catchwords: CRIMINAL PROCEDURE — Trial — Judge alone — Reasons of trial judge — Verdict — Guilty on 5 counts, Not Guilty on 1 count
CRIME — Domestic violence offences — Intimidation, use offensive weapon with intent to commit serious offence, common assault, choking — Six alleged offences across three incidents alleged by complainant — Crown submission complainant behaviour consistent with cycle of domestic violence — Volatile nature of relationship — Tendency evidence — Complaint evidence — Corroboration of complainant's evidence — Defence case that complainant not a witness of truth and influenced by high level of methamphetamine use
Legislation Cited: Crimes (Domestic and Personal Violence) Act 2007 (NSW)
Crimes Act 1900 (NSW)
Criminal Procedure Act 1986 (NSW)
Firearms Act 1996 (NSW)
Cases Cited: AK v Western Australia (2008) HCA 8; (2008) 232 CLR 438
Fleming v R (1998) 197 CLR 250
Texts Cited: Nil
Category: Principal judgment
Parties: Rex (Crown)
Jeremy Holman (Offender)
Representation: Counsel:
B Queenan (Crown)
P Cranney (Offender)
Solicitors:
Director of Public Prosecutions (NSW) (Crown)
Tony Cox Lawyers & Conveyancers (Offender)
File Number(s): 2022/00080854
Publication restriction: Nil
JUDGMENT and reasons on verdict
OVERVIEW
1. Jeremy Holman pleaded not guilty on his arraignment in Taree District Court on 19 February 2024 with respect to an indictment which contained six counts. The six counts in the indictment related to allegations of conduct on three separate occasions.
2. Counts 1 and 2 in the indictment alleged conduct said to have occurred at Wingham in the course of a relationship between the accused and a woman named Brearn Morris.
3. Count 1 alleged the use of an offensive weapon, with intent to commit an indictable offence, namely assault, contrary to s 33B(1)(a) of the Crimes Act 1900. The offence was alleged to have occurred between 26 December 2021 and 7 January 2022.
4. On the same occasion, the accused was alleged to have intimidated Brearn Morris with the intention of causing her to fear physical or mental harm. This was Count 2 in the indictment and alleged a contravention of s 13(1) of the Crimes (Domestic and Personal Violence) Act 2007.
5. Counts 3 and 4 related to an incident described during the trial as having occurred ‘in the forest’. In circumstances to which I will make reference in due course, the accused was charged in Count 3 with intimidating Brearn Morris at Cedar Party with the intention of causing her physical or mental harm on 8 January 2022. This similarly alleged a contravention of s 13(1) of the Crimes (Domestic and Personal Violence) Act 2007.
6. Count 4 alleged an assault by the accused of Brearn Morris on the same occasion. This was an alleged contravention of s 61 of the Crimes Act 1900.
7. Counts 5 and 6 in the indictment related to an alleged incident on 18 January 2022 at Taree.
8. Count 5 was an allegation of assault against Brearn Morris occasioning actual bodily harm contrary to the provisions of s 59(1) of the Crimes Act 1900.
9. Count 6 was a further allegation of intimidation contrary to s 13(1) of the Crimes (Domestic and Personal Violence) Act 2007, on the same occasion.
10. A pre-trial objection to the Crown introducing evidence of tendency was the subject of a judgment on 20 February 2024 which permitted the adducing of some of the tendency evidence sought to be relied upon by the Crown.
TRIAL BY JUDGE ALONE
11. Application had been made for the trial to proceed as a judge-alone trial, which application had been consented to by the Crown. As such the Court had no discretion and the matter proceeded as a judge-alone trial (see s 132 of the Criminal Procedure Act 1986). The trial thereafter proceeded as a judge-alone trial on 21 February and continued until the evidence and submissions were completed on 27 February 2024.
12. Section 133 of the Criminal Procedure Act 1986 sets out the provisions which are applicable to a verdict by a single judge on the question of the guilt of an accused person. Subsection (2) requires that the judge must include in his or her judgment the principles of law that the judge has applied and the findings of fact on which the judge relies.
13. The requirements of a trial judge sitting alone as to the giving of reasons were considered by the High Court in AK v Western Australia (2008) HCA 8; (2008) 232 CLR 438. A trial judge is required to summarise the crucial arguments of the parties, to formulate the issues for decision, and to resolve any issues of law and fact that need to be determined. To comply with ss 133(2) and 133(3) of the Criminal Procedure Act and as required by the decision of the High Court in Fleming v R (1998) 197 CLR 250 I remind myself of the following principles of law.
FUNCTION
14. As the accused has pleaded not guilty and elected to proceed to a trial by judge alone it becomes my duty and responsibility to consider whether the accused is guilty or not guilty of each of the charges and return my verdict according to the evidence. As the tribunal of fact I am required to make findings of fact from the evidence that has been presented and then apply the relevant legal principles to those findings of fact. The findings of fact must be drawn only from the evidence that has been presented. There can be no intrusion into that finding by considerations of sympathy, bias, prejudice or any other emotion.
BURDEN AND STANDARD OF PROOF
15. It is convenient to start with some general principles.
16. The burden of proof of the guilt of the accused rests upon the Crown. That onus rests upon the Crown in respect of every element of each of the charges. There is no onus of proof on the accused at all. It is not for the accused to prove his innocence, but it is for the Crown to prove his guilt and to prove it beyond reasonable doubt. The Crown does not have to prove, however, every single fact in the case beyond reasonable doubt.
17. The onus which rests upon the Crown is to prove the elements of the charge beyond reasonable doubt. That is the high standard of proof that the Crown must achieve before I can convict the accused of any of the separate counts in the indictment. It is vitally important to remind myself that the accused must not be found guilty if any one of the essential ingredients or elements of the charges has not been proved to my satisfaction beyond reasonable doubt. It follows that if I am left unable to decide whether the Crown has proved its case beyond reasonable doubt in relation to any such element or ingredient, even though I might suspect the accused of that matter, the accused is entitled to the benefit of that doubt and I must in such circumstance find him not guilty.
18. The accused is being tried jointly with respect to six separate offences in the indictment. The joinder of these six counts is a matter of convenience. There are six identified incidents of alleged misconduct in respect of which the trials are being held jointly. The evidence with respect to an individual count must be considered separately notwithstanding that there is a substantial amount of commonality required to be considered with respect to the evidence.
19. In a criminal trial there is only one ultimate issue: Has the Crown proved the guilt of the accused with respect to an individual count beyond reasonable doubt? If the answer is “Yes” the appropriate verdict is guilty; if the answer is “No” the verdict must be not guilty.
20. Although an accused person is entitled to give or to call evidence in a criminal trial there is no obligation upon him to do so. The Crown bears the onus of satisfying me beyond reasonable doubt that the accused is guilty of the offences which have been charged. The accused bears no onus of proof in respect of any fact that is in dispute.
21. The accused is presumed to be innocent until and unless I have been satisfied beyond reasonable doubt by the evidence led by the Crown that he is guilty of a particular offence charged. Therefore it follows that the accused is entitled to say nothing and to make the Crown prove his guilt to the high standard which is required.
22. In the present trial the accused did not give evidence. The decision of the accused not to give evidence cannot be used against him in any way at all in my determination of the verdict. The decision not to give evidence cannot be used as amounting to an admission of guilt. I cannot draw any inference or reach any conclusion based upon the fact that the accused decided not to give evidence. That fact cannot be used to fill any gaps that I might think exist in the evidence tendered by the Crown. It cannot be used in any way as strengthening the Crown case or in assisting the Crown to prove its case beyond reasonable doubt.
23. In the present matter there is no evidence regarding the circumstance of the accused being arrested nor of any caution or conversation with him. There is, however, a copy of a letter which was admitted into evidence over objection, which the accused sent to the Supreme Court in support of an application for bail. That handwritten letter was admitted as Exhibit 10A in the Crown case. The contents of it are responses by the accused to assertions of fact in the Crown Case Statement. In order to make intelligible and understandable those responses the Crown Case Statement was admitted as Exhibit 10B. The contents were not admitted as proof of the truth of the statements contained in it but on the clearly limited basis of making intelligible the contents of the accused’s letter.
24. A consideration of the contents of that letter form part of the totality of the evidence in the trial. However, those contents will be the subject of a Liberato direction which I will now remind myself of.
LIBERATO DIRECTION
25. If I find that I accept the exculpatory statements in the accused’s letter to the Supreme Court I must acquit him. The proper verdict must be a verdict of not guilty.
26. If I find that the exculpatory statements by the accused in that letter provide a possible version of what occurred I must similarly return a verdict of not guilty.
27. However if I reject the account given by the accused and am not satisfied that it provides a reasonably possible version of the events or any of them, I must, to the extent that I so find, put it to one side and consider whether the Crown evidence has established proof of the guilt of the accused beyond reasonable doubt.
INFERENCES AND CIRCUMSTANTIAL EVIDENCE
28. I may in my role as the judge of the facts draw inferences from direct evidence. I may only draw an inference adverse to the accused from proven facts if such inference is a reasonable inference that can properly be drawn from those facts. The present case is fundamentally a direct evidence case relying principally as it does upon the evidence of the complainant.
29. There are however some surrounding circumstances in the present matter from which the Crown seeks that inferences be drawn from established facts to draw a conclusion as to the existence of further facts. To the extent that such aspects of the case rely upon circumstantial evidence, I remind myself of some fundamental principles.
30. How convincing and reliable a circumstantial inference may be depends upon the number and nature of the basic facts relied upon by the Crown when considered as a whole. The question as to whether all of the evidence in a particular respect leads to an unavoidable conclusion requires careful consideration.
31. In the present matter, with respect to some incidents, the Crown relies upon circumstances relating to the existence of facts which support the allegation. This is particularly so with respect to Count 6. I remind myself of the need to be satisfied beyond reasonable doubt of the existence of any fact or circumstance which is critical to a finding of guilt.
WITNESSES
32. It is for me to assess the witnesses called in the trial and to decide whether they are reliable. Reliability depends upon two different but sometimes overlapping considerations. One is the witness’s honesty and the other is the witness’s accuracy. The honesty of a witness involves considering not only what the witness said or perhaps did not say, but also the impression the witness has made on me in my capacity as the tribunal of fact.
33. In the present matter the Crown case largely depends on an acceptance of the reliability of the complainant. That being so, unless I am satisfied ultimately beyond reasonable doubt that she is both an honest and accurate witness with respect to the elements of the individual counts in the indictment about which she has given evidence, I cannot find the accused guilty. With respect to each such count it will be necessary to examine the evidence of the complainant very carefully in order to satisfy myself that it is both honest and reliable with respect to the particular counts in the indictment.
COMPLAINT
34. The Crown seeks to rely upon evidence of complaint to others with respect to particular counts in the indictment. If I find that the complaint in a particular matter was made in the way alleged by the Crown, I can use evidence of what was said in the complaint as some evidence that the incident, the subject of the particular charge being considered, did occur. That is, I can use it as some evidence independent of the evidence given by the complainant.
35. A tribunal of fact is entitled to consider whether a complaint is made at a time and in a manner that would indicate that the allegation was reliable. That is, that the allegation is less likely to have been fabricated by a complainant and is more likely to be accurate.
36. Ultimately, it is a matter for me as to whether I draw that conclusion in this trial with respect to any particular allegation. If complaint evidence is used as some evidence in relation to a specific count, what weight is to be given to the evidence is a matter for me as the tribunal of fact.
MURRAY DIRECTION
37. I remind myself of the appropriate direction where there is one witness essential to a Crown case. Accordingly, I give myself a so-called “Murray” direction and remind myself that unless I am satisfied beyond reasonable doubt that the complainant is both an honest and accurate witness with respect to the elements of a particular offence, in the account she has given, I cannot find the accused guilty.
38. I must examine her evidence very carefully to satisfy myself that I can safely act upon that evidence to the high standard that is required in a criminal trial. The need for particular caution arises because of the onus and standard of proof placed upon the Crown. I am of course clearly entitled to convict the accused based on the evidence of the complainant provided I have carefully examined and satisfied myself that it is reliable beyond reasonable doubt. In considering whether the complainant’s evidence does satisfy me to the requisite standard I should, of course, look to see if it is supported by other evidence.
MARKULESKI DIRECTION
39. Given that there are multiple counts in the indictment, I remind myself that I must give separate consideration to the individual counts. However, I am entitled to bring in a verdict or verdicts of guilty on some counts and not guilty on other counts if there is a logical reason for that decision.
40. However, if I were to find the accused not guilty on any individual count, particularly if that was because I had doubts about the reliability of the complainant’s evidence regarding that count, I would have to consider how that conclusion affected my consideration of the remaining counts.
ELEMENTS OF CHARGES
41. After reminding myself of the relevant directions which I would have given to a jury, and accordingly have given to myself, I turn now to the elements of the charges brought against the accused.
42. As I have indicated, Count 1 is brought under s 33B(1)(a) of the Crimes Act 1900. The elements of that offence are that the accused used an offensive weapon and that he did so in circumstances where he had an intent to commit an indictable offence, namely common assault.
43. The Crown must prove that he used an offensive weapon, in the present matter, a gun, and in so doing he intended to cause fear or apprehension in the complainant such as to amount to a common assault.
44. I remind myself that an assault is any act which intentionally or recklessly causes another person to apprehend immediate and unlawful violence.
45. Counts 2, 3 and 6 each allege an act of intimidation with the intention of causing the complainant to fear physical or mental harm contrary to the provisions of s 13(1) of the Crimes (Domestic and Personal Violence) Act.
46. ‘Intimidation’ is defined in s 7 of the Act itself and includes conduct amounting to harassment or molestation of a person; an approach made to the person by any means that causes the person to fear for his or her safety; or any conduct that causes a reasonable apprehension of injury to a person with whom they have a domestic relationship or of violence or damage to any person.
47. I also direct myself that for the purpose of determining whether a person’s conduct amounts to intimidation the Court may have regard to any pattern of violence, especially violence constituting a domestic violence offence, in the person’s behaviour.
48. Count 4 in the indictment is an allegation of indictable assault. The definition of assault to which I have earlier referred is the single element required to be proved beyond reasonable doubt.
49. Count 5 in the indictment alleges assault thereby occasioning actual bodily harm to the complainant. I must be satisfied beyond reasonable doubt that the action alleged to constitute the assault occurred and that such an assault caused actual bodily harm. The term “bodily harm” is to be given its ordinary meaning and includes any hurt or injury calculated to interfere with the health or comfort of the victim. Such hurt or injury need not be permanent, but must be more than merely transient and trifling.
50. I turn now to the evidence in the trial.
EVIDENCE IN THE TRIAL
Brearn Morris
51. Brean Morris, the complainant in these proceedings, was the first witness called. She was born on 17 November 1997 and had turned 26 years of age at the time of the trial.
52. She had known Jeremy Holman most of her life as he had been friends with her two older brothers.
53. The nature of their relationship changed around the time of her birthday in 2021. Ms Morris was staying at the time in a granny flat which was downstairs in the premises at 4 East Combined Street in Wingham. Ms Morris said that she gave Jeremy Holman a place to stay because “he made me believe that he didn’t have anywhere else to stay, so I allowed him to stay at mine.”
54. Ms Morris said that they had commenced being intimate shortly after he moved in with her at the granny flat. She said that the intimate relationship lasted for roughly 2 to 3 months. She said that the reason it did not last was because he became very aggressive and controlling towards her.
55. She described his behaviour as follows:
“… He would try and control me in ways that I wasn’t allowed to go to my friends or even see family, and if I would try and do these things he would physically stop me by either raising his fist in my face, threatening me, and – or, like, getting me to get in a car and saying that he’s going to take me and I would end up somewhere completely else.”
56. Ms Morris gave evidence that there were external video surveillance cameras installed on the outside of the house. They had been installed by Cody Chapman who also resided at the house together with his mother and his grandmother. Mr Chapman’s mother, Leissa Worth, and his grandmother, Mrs Beverly Worth lived upstairs in the premises.
57. On the ground floor there were two bedrooms in addition to the granny flat. Cody Chapman lived in one and the second was used by his sister Jenna Chapman when she came back home from university.
58. There were two external video cameras. One was at the front of the house pointing towards the driveway, and the second one was above the bedroom window of the granny flat pointing towards the side of the house. Ms Morris said that the footage from the video cameras was able to be accessed from Cody Chapman’s mobile phone and also Jeremy Holman’s phone.
59. The complainant gave evidence of a particular incident which occurred at approximately 5am early one morning some time before New Year’s eve. She said that she woke up to hear a clicking sound and the accused, Jeremy Holman, was standing beside the bed making a clicking sound which she saw was the clicking sound of him pulling the trigger of a gun which was held towards her head.
60. She said that she had seen the firearm once before and that she had told the accused to get rid of it. She described it quite specifically in the trial: “it was a massive shot gun. It had 2 big barrels, a wooden handle, and it came in a brown bag.” Ms Morris said that it was held about 2 to 3 cm away from her head while she was lying face up on the bed. She said that the accused was standing next to the bed but over the top of her ‘in a way’.
61. The complainant said that Mr Morris accused her of cheating because she had messaged someone in a group chat. He was also wondering where the bullets for the gun were. She described having been in a group chat with her friend Rachel Clauscen and a male friend whose name she could not remember. He had been with Rachel Clauscen on an occasion when she had come over to the house to pick the complainant up. Rachel and the male friend had attended some four or five days earlier.
62. She then said that the accused was looking around the granny flat for the bullets. Ms Morris told him he had to leave and to pack up his stuff. The accused kept saying: “Where are the bullets? Where are the bullets?”
63. The accused then then packed his things, including the gun, and left the premises.
64. Ms Morris then said she ran upstairs and informed ‘Nan’, “not entirely what was going on, but I told her that I did kick him out and that I was scared, and I hid upstairs.” She explained that by ‘Nan’ she meant Leissa Worth’s mother.
65. Later that morning, while she was still upstairs, Cody Chapman came back with Jeremy Holman and let him back into the granny flat. While she couldn’t see what they were doing she said that she heard them searching throughout the granny flat. In due course Cody Chapman came upstairs and Ms Morris said that she told Cody Chapman that Jeremy had held a gun to her head and was pulling the trigger and going crazy.
66. She asked Cody not to let Jeremy know that she was upstairs and sometime later she thought Cody Chapman had helped Jeremy to get his clothes and they left to go back to wherever he was staying.
67. The incident with the gun is relied upon by the Crown with respect to Count 1 in the indictment: namely using an offensive weapon with intent to commit an indictable offence, namely common assault.
68. The Crown relies upon the entire incident as described by the complainant, including the gun held to the complainant’s head, the accused’s threats and his attempts to locate the bullets as constituting the completed offence of intimidation. This is Count 2 in the indictment.
69. The complainant next gave evidence that over the next couple of nights “or that same night”, the accused was outside her window and she could see him peeking through a section where the curtains did not cover the bottom corner of the window. She said that he was sneaking around and trying to listen to see who she was talking to, whether it was on the phone or in person, or to see if she was alone “or anything like that”. She said that he asked her to let him in and she recognised his voice.
70. Ms Morris said that it happened on a number of occasions and she could hear him sneaking around on the grass. She said that she would be either on the phone or talking to Leissa or Jenna and saying “I can hear him out there, I know he’s hovering.” She said that they thought that she was kind of crazy. She said that she would then get phone calls from him saying that he could hear what she was saying.
71. She said that on other occasions he said that he was sorry and to let him in. He told her to get over it and he didn’t mean any of it.
72. She said that on one occasion she was staying upstairs in the spare room because she felt safer upstairs and she could see him from the veranda walking from the Ag Farm at the back of the premises to the side paddock. She said he was saying how he was going to kill himself and trying to make her feel bad. She said that he said he would kill himself either by crashing into a tree or taking pills.
73. She said that on one occasion he was streaming the feed from the surveillance camera from his phone through Google Chromecast onto the TV. She recorded the images on the TV with her phone and captured an image of him walking back towards the house and going to go in between the garage and the house gate. She recognised it as Jeremy outside the premises. She said that she stopped recording when he was about to come back in.
74. The video recording was tendered as Exhibit #1.
75. Ms Morris was next asked questions about an occasion when she had come home and found that Cody Chapman had invited Jeremy Morris into the granny flat. She said that she come back from going to Coles in Wingham and when she entered the granny flat she found that Jeremy was sitting there talking with Cody Chapman. Ms Morris said that Leissa Worth came downstairs and after noticing that Jeremy was there she asked Ms Morris if she was okay with this. The complainant said that she said “yes” because she was standing in front of Jeremy at the time. She explained that she in fact was not okay with his presence but effectively felt constrained to say “yes”.
76. Ms Morris said that at that point the relationship was over so far as she was concerned, although she said: “It was ongoing on his behalf, if that makes sense.”
77. The complainant next gave evidence about a number of trips that she made with the accused from Wingham to Newcastle. She said that she was made to undertake those trips and if she didn’t want to go with him there would be a massive argument. She said: “he would literally threaten me, like with his fist in my face, if I didn’t go.” Ms Morris said that the trips to Newcastle were undertaken more than once but she could not remember how many times they went.
78. The complainant was then taken in her evidence to a specific incident which occurred while driving back from Newcastle towards Wingham. She described an incident which occurred while they were driving through the Yarrack Forest towards Taree. The reference in the trial transcript reads “Yarrack (as said) Forest”. Whilst not clarified in the course of the trial I suspect that the area through which they were said to be driving was most likely the ‘Yarratt’ Forest.
79. Just why they were driving through the Yarratt Forest, which is some distance to the north of both Taree and Wingham, when they were said to be driving to Taree or Wingham from Newcastle, was not explored at all during the trial. (Although I do note that the recollection of Rachel Clauscen was that they had been visiting a friend’s place and were on their way back from there).
80. At all events the complainant described her brother, Anthony Morris, as being in the car with her and Jeremy Holman as they drove back towards Taree from Newcastle. She said that the day before a particular incident, the accused crashed the car which she thought was a silver BMW. She was in the front passenger seat and the accused was speeding up to drift around a corner when he suddenly went too fast and went off the side of the road. The vehicle collided with a tree. The damage to the passenger side was such that she was not able to open the door and had to climb out of the driver’s side.
81. Ms Morris said that Jeremy Holman called up a mate to come out and collect Anthony Morris to give him a lift back to Taree. The complainant said that she and Jeremy Holman went with the vehicle while it was taken to Coopernook to be repaired. She was unable to recall how the car was taken from the site of the crash to a farm at Coopernook where, as she described, it was repaired “to the best of what Jeremy could do.”
82. They left the next day to apparently continue their journey home.
83. At some point in the journey, at a location not otherwise described, Ms Morris said that Jeremy started screaming at her again for cheating, and he threw his own phone out of the car window. The accused went off the road and stopped the vehicle and told her to get out and look for his phone because it was her fault. She said that Jeremy had to meet up with “a friend who was coming out to see him or help with the car or something.”
84. The complainant then described a vehicle with a male and female in it which arrived and they stopped and got out “to help Jeremy.” Ms Morris had walked some distance up the road and had sent a location pin indicating where she was to a friend of hers, Rachel Claucsen.
85. Ms Morris described the female who had arrived as ‘Amy’ although she could not remember the name of Amy’s male partner. She said they had arrived to help Jeremy look for his phone and “whatever else was planned to do”, she was not sure. She said that she had started walking off and had got some distance away when she noticed that Amy and her partner had started to drive off. They were driving towards where she was walking, and she said that she made eye contact with Amy in the front and tried waving them down to help. She said: “they didn’t – she eventually messaged me, but my phone had died.”.
86. She said they saw her but did not stop. Ms Morris continued:
“I just watched them drive off, and then I knew Jeremy wouldn’t be far behind from here, so I started running, and he had gotten the car back onto the road and was following me, threatening to skull drag me.”
87. She described Jeremy screaming at her to get in the car and then having got out of the car and started chasing her. She wasn’t sure where they were but it was still on a dirt road “heading towards Taree.”
88. The next thing she described was seeing Rachel Clauscen’s mother’s car arriving at the scene. She recognised the car which she was familiar with and Rachel’s mother who was driving the car. She said: “I didn’t see Rachel but she informed me later on that she did duck as she didn’t want him to see her.” She said as the car got closer Jeremy got hold of her and she said she “collapsed”. She said: “I had no more energy in me to run or to try fight back to get away. I just collapsed.” She said that as the car went past he was cuddling her and hugging her. She said Jeremy then walked her back over to the car and put her in the car.
89. With respect to the overall circumstances of what was said to have taken place on the dirt road and, what by implication, was still the forest gives rise to two counts in the indictment. The Crown relies on the alleged intimidation whilst driving and after they stopped and the threats attributed by the complainant to the accused in support of Count 3, a charge of intimidation.
90. With respect to the ‘hugging’ or ‘cuddling’ while the vehicle driven by Rachel Clauscen’s mother drove past, the Crown relies upon that circumstance in support of Count 4, namely common assault.
91. Ms Morris then described that after getting back into the car she was driven home.
92. She was taken to communications that she had with Rachel Clauscen after the incident. A screenshot of messages on the complainant’s mobile phone, which she said she had sent to Rachel Clauscen, was tendered without objection as Exhibit #2. The messages, at 11:40am on 10 January read as follows:
“Yeah I wasn’t cuddling him. He kept following me in the car and then got out to skull drag me but because you were driving pass he cuddled me
He went to pick me up few moments before you went pass and I was that scared I almost fainted and dropped trying to run away but he kept grabbing hold of me or would go to run me over. Fucking his mate and girlfriend didn’t even stop the gronks just before all that shit started.” (sic)
93. A second message sent and in the same screenshot read:
“He came out mine that night and was begging for me to let him in and I went upstairs to hide from him.”
94. The video recording which had previously been played and tendered as Exhibit 1 was then replayed after the vision was able to be rotated and viewed in its correct perspective. The replayed video was substituted as Exhibit #1.
95. The complainant identified the accused as the person whose image can be recognised as walking outside the house. When asked what the accused was holding she responded: “a gun”. It should be noted in passing that a replaying of Exhibit 1 on a computer screen rather than the large screens which were displayed in Court, clearly shows the man in the video holding what appears to be a rifle.
96. Ms Morris was next taken to an incident at a motel. She identified the relevant motel as the ‘Taree Motor Lodge’ which was located next to another motel called the Marco Polo.
97. The complainant gave no real explanation as to why they were at a motel room in Taree. She described having been there with the accused Holman and another male person by the nickname ‘Gabby’ (as transcribed). This was established in evidence to be Mr Andrew Cadogan.
98. She described that the accused was playing pokies on her mobile phone. She asked for her phone back on numerous occasions and the accused just ignored her and told her to go away. She said she had finally had enough after an hour or two hours and demanded the phone back.
99. Ms Morris said the accused then put his hand around her neck and lifted her off the ground with his hand squeezing the sides of her neck. She demonstrated how he placed his hand and said that she was still able to yell and scream and breathe and that he did not cut off her airway. She demonstrated part of her hand between the first finger and her thumb effectively being wrapped around her neck as he lifted her up. She said that he then placed her down and barged out of the motel room. She said that he walked towards where they had previously parked his vehicle which was a black Mustang, which she said was a newish model.
100. She said that he still had her phone and she ‘took off’ down the main street towards Cundletown and took the back footpath behind all of the motels and went to the carpark at the riverbank.
101. The complainant said that she could hear the Mustang before it actually arrived in the carpark. She met somebody who she knew as Jack Debbo (Jack Debreceny) who she saw talking with his mates in the carpark. She said that she ran up to him and asked if she could sit and hide in his car because her ex was chasing her, and she feared he would find her. Jack said she could jump in his car which she did.
102. She said she actually “tucked up” under the dashboard because she didn’t want to place the car seat down or anything, because it would show that someone was lying down in the car hiding.
103. Not long after she hid in Jack’s car the Mustang showed up with Jeremy in it. She said he asked Jack if he had seen a girl running down the street. She said she recognised the voice of the person talking to Jack and that it was Jeremy. In due course she asked Jack if the coast was clear and then Jack drove off with the complainant in his car.
104. She said the first place they drove to was her friend Rachel’s and she ran up and knocked on the window and got no response. They then drove from Taree to Wingham and went to somebody called Dean Butts’ house where again she knocked on the door and did not get a response. She said at that point they went to the ATM at the service centre at Purfleet. She said that she did that because she knew she still had money in her account and Jeremy still had hold of her phone “which meant that he could have gambled it all away”.
105. She said that she withdrew the $590 which was the balance in her account at the time and took it with her. She thought that left the account with no money in it but she couldn’t tell fully because she didn’t have her phone. She confirmed that her evidence was that Jeremy still had her phone at that stage. She subsequently took a screenshot from her mobile phone after it had been returned to her which showed the transaction at the ATM and the withdrawal of $590.
106. There was no evidence as to when the screenshot was taken. It became Exhibit #3.
107. After leaving the ATM at the service centre at Purfleet she said they then went back to Bushland (presumably Bushland Drive, Taree) where she went and knocked on the door of her younger brother’s house. She said that his girlfriend opened the door and they allowed her to stay at their home until the following day.
108. The next morning, she got in contact with Rachel Clauscen and went to her place. She described the Mustang arriving outside Rachel’s house. Her older brother Anthony was with Jeremy Holman in the Mustang. Anthony Morris ran up and knocked on the screen door just as the complainant locked it. She gave evidence that she told her brother that she didn’t want to have anything to do with Jeremy and she went and hid behind the door in Rachel’s room.
109. She then asked Rachel to message one of her neighbours to get them to call the Police. Shortly afterwards Police did arrive. She described that Jeremy left just in time. She said: “… everytime, it was like the Police doing a lap Jeremy would just leave, like, it was cat and mouse.”
110. She said that Jeremy came to the house more than once that day. On each occasion he was in the same Mustang. She thought that she continued to stay with Rachel for some time but said that she didn’t really remember. She said that after a week or a couple of days had gone by she went back and saw Dean Butts before ultimately leaving the Taree area.
111. Before closing her evidence-in-chief the learned Crown Prosecutor led from her that she had subsequently gone back to the granny flat after she had stopped living there and had retrieved two cartridge cases from .308 bullets which she had found in the granny flat. Photographs of those objects were tendered without objection as Exhibit #4.
112. In cross-examination Ms Morris agreed that the accused Jeremy Holman had grown up in the Taree area and that he had lots of friends in the area. A series of names were put to her as people who were good friends with the accused. They included Cody Chapman, Ms Morris’ brother Anthony, Holman’s sister Stevie at Old Bar, Leslie and Dale in Upper Lansdowne, and Dylan Spicer and his girlfriend Amy, who was also friends with the complainant. She agreed with all of those names though she qualified her response saying that he became friends with Cody Chapman as a result of her.
113. It was suggested that the accused could stay with each of those people, other than Anthony Morris, if need be. The complainant said she did not know.
114. She agreed that he was good with cars and could fix cars and in one of her statements she had said that she always knew him to be in different cars. Questions in cross-examination referred to a white Kia as well as an Audi and the BMW which she had described in chief.
115. Cross-examination focused on the layout of the granny flat and the adjacent bedrooms and established that Cody Chapman had access to the granny flat area. The complainant agreed that Amy had been in a relationship with Cody Chapman and that she subsequently went out with Dylan Spicer. During the time that the complainant was living in the granny flat Amy would sometimes come over with Dylan Spicer. On occasion the four of them, namely Amy, Dylan Spicer, Jeremy Holman and the complainant would go on a trip to Sydney.
116. Ms Morris agreed that she had given three statements to Police, the first being in February 2022. She was asked some questions about what she had told Police. She agreed that she had told a support agency that had assisted her to leave Taree about an incident with a weapon. She was asked whether she had described the weapon as a .308 shotgun. She said she didn’t know. She didn’t recall having said that he broke the window before entering the flat.
117. Ms Morris was asked how many people she had told about the gun being pointed at her. She remembered telling Cody Chapman and also his mother. She told Rachel Clauscen on the same day that it had occurred.
118. Cross-examination continued during which it was suggested that the disagreements between the complainant and the accused related to money and allegations of money having been taken and were not related to intimidation or threats.
119. A series of screenshots of phone messages between Ms Morris and Leissa Worth (Cody Chapman’s mother) were shown to the complainant and tendered as Exhibit #5.
120. The first screenshot was of a conversation via SMS on 16 December 2021 at 10:04pm. Mrs Worth had asked Brearn Morris if she was ok. A short while later Ms Morris responded “yes” and said that Jeremy did not realise how much his actions had caused her reaction.
121. She agreed that she had sent a message saying: “I pretty much made it clear how it is and I’m not going to be walked all over by his childish selfish acts atm… pretty much laid it down and said stop with the bullshit or leave.”
122. A further screenshot of a conversation on 26 December at 9:33pm was again initiated by Leissa Worth who asked the complainant if she was ok. In her reply Ms Morris said that Jeremy would not give her the money she won because she did not want to go down to Sydney with him. She said: “and all I asked for out of it was 100.”
123. Ms Morris went on to say that he was not going to give her the money. She said “I’ve told him to get out and take all his shit or I will throw it out.” She went on in that message stream to say “I just want him gone after him (putting) his fist up towards me in my face.” Mrs Worth asked “Is he going”. She said “I hope so” and that he was “packing now”.
124. After being invited to read through the messages Ms Morris said there were multiple times that the accused would take money that she had won on the pokies. She agreed that she had asked him to leave on multiple occasions and ultimately agreed that the messages were probably the night before the gun was pulled on her.
125. She was asked about whether there had been an argument about $2,000 which had been said to be missing from Jeremy Holman’s jacket. She said he had accused her of taking money but he had never said the amount. She agreed that she had told Police in her most recent statement, done earlier that week, that Jeremy had accused her of hiding his cash and drugs on the morning that he left.
126. It was put to her that money was the cause of him leaving and not allegations about cheating. She agreed that she had said that he saw some chat logs on her phone and became jealous. She agreed that she did not provide evidence of the chat log to Police because Jeremy had deleted a lot of things from her phone. In further cross-examination Ms Morris said she had not let him back into the granny flat because she was scared of him.
127. She was then taken to a paragraph in her original Police statement where she described an incident where Jeremy had come back to the flat and wanted to talk to her. She described having opened the door to him and he told her that he wanted to apologise and also to look in the flat for more things he had left behind. She told Police that he had offered her cash and goods and had offered to buy a nice handbag to make up for his behaviour. He sat at the end of her bed in tears and said he was sorry.
128. She told Police that she had thanked him for his apology but still asked him to leave. In cross-examination she said that she was still uncertain about the time. In the course of her cross-examination she was not sure if it was after the time Cody had the accused back at the flat and that she said that she had subsequently changed the timeline in later statements.
129. It was put to her that on the occasion she came back from Coles she was laughing and having a good time. She disagreed. It was also put to her that Leissa did not ask her in front of Jeremy if she was ok with him being there but that Leissa had taken her upstairs and asked her in private. Ms Morris rejected that proposition and said that she had been asked in front of him. She denied that she was quite happy to be in Jeremy’s company.
130. It was put to her that she was not afraid of him because he had never threatened her with a gun. She rejected that proposition. It was suggested to her in cross-examination that the accused had not been sneaking around the flat after she had kicked him out. She similarly disagreed with that suggestion.
131. She agreed that she had said he was calling and texting her a lot and that she did not give such text messages or logs to Police. She said that his number was blocked and that they would have come up under ‘private’. She said that they came up as a private number and that she hadn’t provided them to Police because she wasn’t in Taree very often after she had left.
132. She agreed that she had said that both Jenna Chapman and Leissa Worth had said that she was crazy when she said Jeremy was outside her room and had been sneaking around.
133. She was asked how much methamphetamine she was consuming in December 2021 and she initially said not much. When the month was placed in context about the time she had asked Jeremy to leave she said she was taking none around that time. She agreed that she had used methamphetamine before that time but that she was not using it then.
134. She was unable to say the date she had last used methamphetamine. She accepted that she was given an ‘infringement notice’ for using methamphetamine this year. It was suggested to her that she was using a lot of methamphetamine in December 2021 and January 2022 with the accused and that it was a big part of their relationship.
135. With respect to the incident in the forest where Ms Morris said the accused had thrown his own phone out of the car, it was put to her that in fact she had thrown a bum bag out of the window that had his phone in it. Ms Morris denied that suggestion.
136. It was put to her that she was under the effects of methamphetamine at the time which she similarly denied.
137. It was put to her that the accused never threatened to ‘skull drag’ her back to the car and she responded that he did. It was put to her that when he hugged her he was not about to assault her and he was not being malicious. She responded that he was. She said that he carried her back to the car. She agreed that after she was put back into the car Mr Holman drove her home and dropped her off.
138. It was put to her that there had not been any car accident and that she had exaggerated the entire event. She did not accept that.
139. She was next asked questions about the attendance at Taree Lodge Motel and her subsequent meeting up with Jack Debrenecy in the carpark. She was asked if she remembered telling him that she did not want to stay in the same place for too long because she was worried Jeremy might be tracking the mobile phone’s location. She said she had not said such a thing because the accused had her phone. She was asked how she contacted Rachel the next day and she said it was though her little brother’s Facebook account, using his phone.
140. It was put to her in terms that Mr Holman was never at a motel with her on this occasion. She denied that suggestion. It was put to her that he never took her mobile phone because he wasn’t there. She said she had no phone because the accused had it.
141. In the course of an extensive cross-examination she continued to refute the suggestion that she had retained possession of her mobile phone.
142. With respect to the allegation of an assault and a squeezing or choking of her neck or throat area she said that she had bruises which became obvious as time went by. She was cross-examined about why no photos were taken of the bruises.
143. The following day she had gone to Rachel Clauscen’s house, this being the occasion that Jeremy Holman and her brother Anthony Morris came to the house. She said that she could not recall having told a female police officer that Jeremy had tried to break into Rachel’s house.
144. She repeatedly said she could not remember the conversation with the Police officer so could not answer the question. She agreed that Anthony and Jeremy were at Rachel’s and were not leaving and reiterated that she could not remember what she had told the Police officer.
145. With respect to the bullet casings which she said she found in the granny flat and provided to Police she did not accept a question suggesting she had taken the bullet casings with her to Wingham. She was asked if she knew the difference between shotgun shells and rifle bullets and she said that she did not know guns at all.
146. There was no re-examination and that concluded her evidence.
Corey Maher
147. The next witness called was Corey Maher. He was a neighbour who lived across the road from Rachel Clauscen in Rosewood Crescent in Taree.
148. He received a Facebook messenger call from Rachel Clauscen at 8.42 am on Wednesday, 19 January 2022. He said that she sounded “pretty panicked” and asked that he call the Police. He immediately phoned 000.
149. A recording of the 000 call, together with a transcript was tendered (Exhibits #6A and #6B).
150. In that call, he told Police that he could see two fellows who were loitering in front of Rachel’s house on the veranda. He told Police that the vehicle was a gun-metal grey Mustang. The operator at Police emergency said that Police were on their way.
151. Following the call to 000 Mr Maher sent a text message to Rachel Clauscen telling her “they are on their way”. The screenshot of that message was tendered as Exhibit #7.
152. In the course of his evidence Mr Maher gave a more detailed description of his observations. He described observing the first man, who was the driver, standing on the front porch “knocking pretty obnoxiously on the door screaming for Rachel.” He described seeing the second man get out on the passenger side of the vehicle and after they stood around “for a bit” the first man went back to the driver’s side and got into the vehicle.
153. Mr Maher described him, saying: “He slammed the door. He was obviously pretty angry.” He described in further detail each of the men getting back up and knocking on the door before, as he described it: “He stormed back to the car with the shits. Started the car up, and took off up the street.” He described the Mustang doing a burnout at the end of the street and then going around the block and coming back into their street.
154. The screenshot, Exhibit #7, also included a further message from Rachel Clauscen to Corey Maher at 9:25am. The message said: “Thankyou for this morning Corey. Breezy appreciates it!” I infer that this was a reference to Brearn Morris.
Jack Debreceny
155. The next witness called was Jack Debreceny. He had known Brearn Morris since High School and was a friend of hers as well as of her younger brother, Deru. He gave evidence that on an evening in January 2022 he and a mate, who was driving a second car, went to the carpark behind the KFC premises in Taree.
156. He said that it was 7:00pm or 7:30pm and that it was dark. Debreceny was near the boat ramp and talking with his mate from the other vehicle.
157. He described seeing a female pacing back and forth between each end of a building near the carpark. He described seeing a car drive down and the person disappearing on the dark side of the building on the river side. He said the car would then take off and you would again see the person pacing back and forth at the bottom side of the building. He described the vehicle as a dark coloured ford Mustang. He said that it was a newer model.
158. Mr Debreceny said that after this happened a couple of times, at one of the times, the car had gone, the female walked towards him and asked to get in his car. He said he had no idea who it was until she came up to him.
159. He said that she appeared very scared and asked to get in his car. He said he and his mate were both outside their vehicles and he was standing on the driver’s side of his car.
160. He said that Brearn Morris, who he knew as Bree, got into the passenger side of his vehicle. He said that he noticed that she “rolled the seat back” and was lying down hiding inside his car. He said the Mustang came back and that it appeared to be looking for someone because it was moving from side to side with the headlights looking in different places.
161. He said that the Mustang had come down twice before she had got into his vehicle and that it came down one more time after she got in his car. He was asked if he had any interaction with the Mustang himself and he said “No”. He asked Bree if she was ok, and she said no. He said that her demeanour was very scared and very shaken.
162. After a while he asked her if they should go for a drive just to keep her safe. They left the carpark and drove out to a service centre because she told him that she wanted to get money out of her account. She explained that she wanted to get money out of her account before her ‘ex’ took the money from her. They went to a service station where they got money out of an account, presumably from an ATM. He said that he knew that she did that because he saw her counting it when she went back to the car.
163. After she’d got back in the car Debreceny’s recollection was that Ms Morris said that she was going to try and make a phone call to someone in Wingham to see if she could stay there. They then drove to Wingham. He said she could not get onto this person so she went and knocked on the door and there was no response.
164. He then said that they parked next to the Police Station in Wingham for probably half an hour while Ms Morris was trying to work out where she could go from there.
165. Debreceny at one stage suggested that she go and tell the Police. She said that she didn’t want the Police involved at that point in time. Debreceny was asked if she had told him why she was fearful of her ‘ex’ and he said that she had told him that he was going to kill her. She also told him that she had been woken with a gun to her head which had been pointed at her by her ‘ex’.
166. After sitting outside the Police Station for a period of time he drove her to her brother’s house where she stayed. That brother was Deru who Mr Debreceny said he was friendly with. He said he did not hear from Ms Morris again.
167. He drew on a map on which he indicated where his vehicle was parked in the carpark and the direction of travel of the Mustang which he had observed. That map and diagram was tendered as Exhibit #8.
168. In order to make sense of the Exhibit and taking into account local geographical knowledge, Mr Debreceny’s map indicates the Mustang travelled in a generally easterly direction along River Street before turning right into Stevenson Street and down into the carpark area adjacent to the Manning River Rowing Club. It then completed an effective circumnavigation of the carpark area before travelling generally north and then turning right into the dead-end portion of River Street and driving around and into a parking area behind the Rowing Club.
169. Exhibit #8 then indicates the Mustang doing a u-turn and coming out of River Street before turning right into Stevenson Street and proceeding up to the main road of Victoria Street and turning left at the KFC. Whilst there was no cross-examination, the implication was that the Mustang made those movements on three occasions.
170. In cross-examination Mr Debreceny confirmed that he had no criminal history, that he had never given evidence before, and that he had never given a statement to Police previously. He said that he had been honest in his statement and had tried to give all the details he could remember.
171. He said he had made his Police Statement in August 2022. I note that this was some six months after the incidents which he was describing.
172. In the course of cross-examination it was put to him that he was in the carpark at about 7:00pm and he was there for a little bit chatting with his friend and that it was dark. Mr Debreceny agreed with those propositions.
173. I am constrained to observe in passing that at 7pm in January in Taree the light would certainly not be described as dark. My own experience at Taree would make the same observation at 7:30pm. I should observe that no cross-examination or questioning of his recollection of arriving at the carpark between 7:00pm and 7:30pm and his recollection of it being dark when the complainant was in the carpark was pursued by either counsel.
174. Following his agreement that it was dark, in the course of cross-examination the witness agreed that he could not see who the driver was nor how many passengers, if any, were in the car.
175. He agreed with a series of propositions contained in his statement to Police, each of which was consistent with the proposition that the complainant had her mobile phone in her possession. He had told Police that she was worried her ex-partner could be tracking her mobile phone’s location and also that she tried to ring someone in Wingham and that she was using her phone while they were parked outside the Police station. Mr Debreceny said that she had not said anything at that time about her ex-partner taking her phone. It is appropriate to note in passing that this evidence is in direct contrast to the evidence of the complainant regarding possession of her phone.
176. The witness was asked if Ms Morris had told him that she had been assaulted by her partner that night. He replied “yep” and said that he could remember her saying such things but could not recall the detail.
177. He agreed with the proposition that she told him that she had a fight with her ex-partner and she was worried he was going to kill her or do something really bad. The final point in cross-examination was to confirm his evidence that when Ms Morris got in his car she reclined the seat back so that she was lying down and could not be seen.
178. This similarly is a different recollection than that given by Ms Morris where she had said she did not recline the seat.
179. I note that the Crown submitted in closing address that the witness had not used the word ‘recline’ in his evidence-in-chief as was suggested to him, but rather he had said that she “rolled the seat back”.
Andrew Cadogan
180. The next witness was Andrew Cadogan. He knew the complainant but was actually friends with her two older brothers. He viewed her as his mate’s sister.
181. He also knew and was friends with Jeremy Holman. Although they had grown up in the same community he had only known him as a friend for about a year and a half. In late 2021 and early 2022 he said he had been in a bad state on drugs at that time. He had been on heroin and fentanyl and ended up in a drug-induced psychosis. He said he didn’t really remember much over a period of probably four to five months. He said it was over the Christmas period.
182. He was asked about staying at the Taree Lodge Motel. He said he had stayed there for a few months and whilst he had remembered when he first stayed there, he could not remember when he left. He was shown a bundle of documents which were registrations made through Booking.com. Mr Cadogan said that he didn’t only book the motel through Booking.com and about half the time he paid cash. He described the “Indian motel dude” who would give him a weekly rate for cash rather than having to pay the daily rate of $110 or $120 nightly. He got the full week for $550 which effectively meant he was getting seven nights for the price of five.
183. The records from Booking.com were tendered as Exhibit #9. The reservations and payments on Booking.com in Exhibit #9 indicate bookings for Mr Cadogan for two days from 8 January 2022 to 10 January 2022; 2 days from 12 January 2022 to 14 January 2022; 2 days from 20 January 2022 – 22 January 2022 2 days from 3 June 2022 – 5 June 2022; and 2 days from 7 June 2022 – 9 June 2022. With respect to the first booking pursuant to Booking.com being in early January 2022 Cadogan thought there would be bookings from earlier as he thought he was there over Christmas. He had no recollection as to whether Bree or Jeremy visited him while he was staying at the Motel. He recalled Jeremy at one stage driving a little white Subaru and had no memory of seeing a dark coloured Mustang.
184. In cross-examination Mr Cadogan was asked if he had ever used ice or methylamphetamine with Bree Morris. He said he had years ago. He was asked by me how many years ago and he replied “over the years, growing up, I suppose.”
185. In further cross-examination he ‘supposed’ that he agreed with the suggestion that Ms Morris was using methamphetamine in late 2021 or early 2022. When asked to clarify whether that was during the time he was at the motel, he said “not around that time, no. As I said, I can’t recollect any of that time. So I can’t tell you.”
Anthony Morris
186. The next witness called was the complainant’s brother, Anthony Morris. He had known Jeremy Holman since childhood. He said their parents used to be friends and they used to go to the same primary school.
187. After becoming adults he said that he did not stay in much touch with Mr Holman. In late 2021 and early 2022 he said he would see Jeremy Holman around but that he didn’t really hang around with him. At some stage he heard that his sister and Jeremy Holman were seeing each other but he denied ever seeing them together. He said that he did not have much to do with Mr Holman at that time. He was asked whether he had ever gone in a car with Holman in trips either down to Newcastle or Sydney. He said “No” to both propositions. He was asked whether he had ever been in a car with Holman in a forest where he was involved in the car coming off the road and being damaged. He said he had never been in a car with Holman and his sister.
188. He couldn’t recall what type of car Mr Holman was driving at that time and had no recollection of a dark coloured Mustang. He didn’t think he had ever been in a dark coloured Mustang with Mr Holman.
189. Mr Morris was asked if he knew Rachel Clauscen and he said that he did and had known her since childhood. He denied ever visiting her at her house and said he had no recollection of ever going to where she was staying and banging on the door and asking his sister to come out. He similarly had no recollection of going to that location with Mr Holman.
190. Notwithstanding his evidence clearly being unfavourable to the Crown there was no application to cross-examine pursuant to s 38.
191. The Crown next sought to tender a copy of a letter sent by the accused to the Supreme Court in support of an application for bail. On its face it was a commentary on various propositions contained in the Crown Case Statement which had been provided to this Court in relation to the pre-trial application. The Crown sought to tender the Crown Case Statement together with the letter from the accused in order that his responses might be intelligible.
192. After hearing submissions in opposition to the reception of this material the Crown Case Statement was admitted into evidence, not as proof of the truth of the statements contained therein but in order to give a proper understanding of the accused’s letter to the Supreme Court.
193. In short, he accepted some aspects of statements made in the Crown Case Statement, while rejecting or disputing other parts. The document was admitted on the basis that his admissions regarding his presence at relevant locations on particular occasions would fall within the definition of an admission, notwithstanding that the allegations regarding his actions were disputed. The documents became respectively Exhibits #10A and #10B.
194. Prior to the commencement of the trial proper, a pre-trial issue regarding the proposed tender of tendency evidence was dealt with. The evidence related to prior incidents in relation to the accused’s relationship with previous domestic partners. Evidence was admitted regarding two of the three sets of circumstances sought to be relied upon by the Crown. The tendency sought to be proved was the tendency of the accused to physically assault and threaten violence towards his domestic partners.
195. The first incident involved Jeremy Holman, and a complainant Sharntel Collins, in September 2015. They had been in a domestic relationship for three years which had ceased by September 2015. Holman attended the victim’s premises in Boyce Street Taree on 11 September 2015 where he joined her in the lounge room whilst smoking ice in a glass pipe. After a disagreement between them Holman took hold of Ms Collins and pushed her backwards causing her to fall on a coffee table and a broken glass ice pipe. After the victim got up Mr Holman threatened her before punching her with a closed fist to her face. He wrestled her into a headlock before subsequently again hitting her with a ‘full arm swing closed fist punch’.
196. At the time of the assault Ms Collins feared calling the Police and did not report the matter at that time. Around 20 September 2015, Mr Holman and Ms Collins again split up. The evidence tendered with respect to these facts were the statement of facts tendered in the Local Court and a Certificate of conviction. These became Exhibit #11.
197. On the evening of 25 September 2015 Ms Collins was out in Taree with a number of friends. She saw Mr Holman outside the hotel where she was located. She was later given a lift home by a friend. After arriving in the vicinity of her home at 25 Boyce Street, Taree, Ms Collins went into her sister’s house located next door at 23 Boyce Street, Taree.
198. Whilst at her sister’s home Ms Collins saw a vehicle in which Mr Holman was a passenger, drive past the premises on a number of occasions with Mr Holman yelling out of the vehicle. Ms Collins felt intimidated by his actions and called the Police.
199. At about 1:30am Ms Collins returned to her own home which was next door to her sister’s. Mr Holman climbed over a fence into the yard at the rear of the premises and banged on the lounge room window and threatened to kill Ms Collins. He yelled: “I hope he was worth it. I hope he is coming here. I am going to kill you.” One of Ms Collins’ friends chased Mr Holman from the yard and observed him jumping over the side fence. Ms Collins then went back next door to her sister’s home and the Police were called.
200. Police arrested Holman later that day. A bag in his possession was found to contain a quantity of approximately 10 grams of methylamphetamine. He was subsequently convicted of assault occasioning actual bodily harm for which he was sentenced to a term of imprisonment.
201. No certificate of conviction was tendered with respect to those incidents. The statement of facts tendered in the Local Court became Exhibit #12.
202. The defence position had originally been an objection to receipt of this material. I had ruled on 20 February 2024 that some parts of the tendency evidence sought to be relied upon by the Crown was admissible. The defence position in due course, after the tendency evidence was allowed, was that the Certificate of Conviction could be received under s 91 of the Evidence Act and that the facts could be received “in the way your Honour has determined”.
Jenna Chapman
203. The Crown next tendered a statement of Jenna Chapman. She was not required for cross-examination. Her statement became Exhibit #13.
204. In 2021 Jenna Chapman was living in Armidale while she was studying at University to become a teacher. She returned to the family home at 4 East Combined Street, Wingham for the 2021 Christmas Holidays. She was aware that Brearn Morris had moved into the downstairs living area of the home and that she was a friend of her brother, Cody Chapman. She did not socialise with Cody or any of his friends, including Jeremy Holman. She said she had nothing to do with them or their world.
205. At the time Cody and his friends were heavy drug users, especially ‘ice’. She wanted nothing to do with any of that and stayed away from all of them.
206. However, after she had moved back home for the holidays she spent time with Ms Morris. She said they would hang out together if they were home at the same time and she often chatted to her. She would help Ms Morris by giving her lifts to the shops to buy groceries as she didn’t have a car. Ms Chapman described their relationship as more like flatmates than friends.
207. I observe in passing that her relationship with Brearn Morris in light of her expressed rejection of her brother and his friends on account of their drug use, is, prima facie, consistent with Ms Morris’ evidence that she was not using methamphetamine at this time.
208. During the time she was back at the household she didn’t observe any domestic violence between Brearn and Jeremy Holman. She didn’t observe any physical altercations, physical behaviour, aggression or intimidation between them.
209. She did recall there being general conversations where Ms Morris would talk about Jeremy not treating her well. However, she could not recall the exact concerns that were referred to or the nature of the conversations.
210. She did have a recollection of Brearn once telling her that Jeremy had a gun. She could not remember the context of how she said it or any detail about the gun. She subsequently told her mother, Leissa Worth, about Brearn having told her that Jeremy had a gun.
211. She did recall one time where Ms Morris was at home and was “freaking out”. She was told that Jeremy had come over and scared Ms Morris before getting into a fight with Cody’s friends. Ms Chapman did not hear or see that incident but was told about it after it had happened.
Rachel Clauscen
212. The next witness called was Rachel Clauscen. She had appeared pursuant to a warrant which had been issued to compel her attendance. The warrant had been issued at the request of the Crown after clear indication had been given of her disinclination to attend.
213. She attended with her mother, Ms Tracy Anderson, who was herself a potential witness. Ms Anderson had been nominated as the driver of the vehicle that attended the location in the forest after Ms Morris had sent to Rachel Clauscen a pin location. Ms Clauscen had originally requested that her mother be present in Court as a support witness. The Crown requested that that not be permitted as, although they did not have a statement from Ms Anderson, it was possible that she would be called as a witness. Ms Clauscen, who was at least 30 years of age, was required to give evidence without a support person.
214. In her evidence-in-chief Clauscen said that she knew Bree Morris because she was friends with her older brother Anthony. She knew of Jeremy Holman as the person that Ms Morris was ‘with’. Ms Morris had told her she was with him and she also saw him in her presence. She visited Ms Morris when she was living in the granny flat at Wingham.
215. She was directed to an occasion when she received a message in which she was told by Ms Morris that she had woken up that morning to find Holman in front of her pointing a gun straight at her. After receiving that message Clauscen drove out to Wingham and went to see Ms Morris. Ms Clauscen was asked whether Jeremy was there when she arrived and she was quite adamant that he was not there.
216. She was asked whether she had looked for the Facebook message which referred to a gun. She said that she had and that she had found it. However, she went on to say that she didn’t have it with her, and it was on an old phone with a different number which she didn’t have anymore. She had found the message but didn’t have a copy of it.
217. She subsequently thought the message might have been an SMS.
218. When she got out to Wingham and spoke with Ms Morris she said that she remembered Ms Morris telling her quite distinctly what had happened. She observed Ms Morris to be quite distressed and scared. She said that she was worried to go to the Police and she didn’t want to do that at the time because she was very scared of him. While she was there she said that Cody Chapman was also there “kind of loitering”. She thought she had remained at Wingham for about 4 to 5 hours. Ms Clauscen said she encouraged Ms Morris to go to Police.
219. She was next taken to an incident on Saturday 8 January 2022. She said that she had received messages from Ms Morris which indicated that she needed assistance and received a pinpoint showing Brearn’s location.
220. Ms Clauscen said she took her mother with her and asked her mother to drive and they went out together. She estimated that it was 7 -10 kilometres away from their home in Rosewood Crescent, Taree.
221. When they got to the location she thought they had seen another vehicle and then saw Brearn and Jeremy on the side of the road. Holman was close to Ms Morris and she said it looked like he’d either let her go or he was grabbing her.
222. After initially recalling that Ms Morris had come back to town with them she refreshed her memory from a statement given to Police at an earlier point in time and agreed that Ms Morris did not go home with her. She said that they had slowed down without stopping and she was concerned about aggression or hostility and they drove home without stopping at the scene.
223. She identified Exhibit #2 which was the message she subsequently received from Ms Morris saying that she had not been cuddling Holman at the time.
224. The next incident she was taken to was Wednesday 19 January 2022. She said that they had made plans to go to the Aquatic Centre at Taree. She believed she had picked Ms Morris up from Wingham at the granny flat but also said “I may have had to pick her up from somewhere else.”
225. In due course she was more certain that she had picked her up at Wingham and described the detail of collecting her on that occasion. She said they went to the pool and then back to her place at Rosewood Crescent. She gave the detail of what they were doing when the Mustang turned up outside her premises which was captured on surveillance cameras at the house. She recognised Anthony Morris and also Jeremy Holman. She described the “really nice” Mustang that was being driven. She described each of the men coming to the door seeking to get Ms Morris to go outside. She said that she told Anthony to leave the property because she was calling the Police. She identified an image from the security camera at her home which was tendered as Exhibit #14.
226. A disc showing a short video showing the video from the surveillance cameras was tendered as Exhibit #15.
227. After initially not recalling that she had contacted anyone else she was permitted to be asked questions from her statement pursuant to an application under s 38 of the Evidence Act. The application was not opposed and Ms Clauscen was taken to identify paragraphs of her statement.
228. She confirmed that she did contact her neighbour Cory to see if he could assist to call the Police. She also confirmed that she received a message back to confirm that he had contacted Police.
229. She was also assisted with her memory from her statement that she had not collected Ms Morris from Wingham but had collected her from her younger brother, Daru’s home, and then taken her back to Rosewood Crescent. She still said that they had gone to the swimming pool but said they had not stayed there for long because of everything that had happened.
230. She gave evidence that before the Police arrived at her home the two men had left. Similarly, to the evidence given by Cory Maher she said: “I am quite sure that it was a speedy drive off and a kind of, I don’t know, a burn out or something…”
231. She also gave evidence about what she told Police after they arrived. She said that she had whispered Jeremy Holman’s name to them because Ms Morris, as she described, it “initially wanted it to negate away from the Police and she was obviously very scared [sic].”
232. She was asked whether Ms Morris had told her of any other incidents other than the incident involving a gun. She recalled that one specific time was an occasion of being choked and her being picked up off the ground. She described seeing some red marks or red swelling which she demonstrated with a hand around the “lower” part of the neck.
233. In cross-examination she agreed that she had known Ms Morris since they were young. She agreed that they were like sisters for each other. She did not agree with the proposition that Ms Morris was prone to exaggerate. She said she was unaware as to whether Ms Morris used ice and said that she herself did not use methamphetamine. It was put to her that in January 2022 she was using methamphetamine and she responded “No, actually I wasn’t.” She agreed that she told Police that she was introduced to Jeremy Holman by Ms Morris in about June or July 2021 as her new boyfriend.
234. She agreed she had never witnessed any violence towards Mr Holman by Ms Morris. She also agreed that any worries about Mr Holman and what he might do to Ms Morris stemmed from what Ms Morris had told her had happened.
235. She confirmed that she had received a text message about the gun being pointed in Ms Morris’ face, and that the phone on which it had been received was not changed until some considerable time after she had given her initial statement to Police.
236. She said there was no reason she would not have provided it to Police if she had been asked for it. She agreed that she had said it was a Facebook message to Police but now believed it was likely to have been a text message.
237. She agreed that her statement to police said that they had looked through her Facebook messenger and it appeared the message had been cleared. She had told Police that she cleared the chat history because data would build up and she did not have much memory space on her phone.
238. After being shown portions of her statement she agreed that Ms Morris had told her the night before the gun was held at her head that Jeremy said he had lost his drugs and had been frantically looking for them. Ms Morris had also said that she had asked Mr Holman to leave and he wasn’t going. This had occurred before the incident with the gun to her face.
239. She was then cross-examined about going to Yarratt Forest on 8 January 2022. She agreed that she received a message that Ms Morris was out in the bush and couldn’t talk. After getting the pinpoint location and driving to the location with her mother she agreed that she saw Dylan Spicer in a car. She also saw Ms Morris and Holman “close to each other and it appeared Jeremy was cuddling Brearn”. She agreed that while they did not stop she did not have sufficient concerns to warrant calling the Police. She said that the look on Ms Morris’ face did cause her concern and it was put to her that it was not enough concern to stop. She said that she was actually pretty scared of Jeremy.
240. The cross-examination then turned to the attendance at her home by Anthony Morris and Holman on 19 January 2022. She agreed that they had not tried to kick the door in or force it.
Leissa Worth
241. The next witness called was Leissa Worth, Cody Chapman’s mother.
242. Ms Worth confirmed that she had lived at the address at Wingham for about 10 years. She was asked about the CCTV cameras at the premises and significantly she said that they did not video record. They just showed images of what was happening in real time. She confirmed that there was no hard drive and it was not being recorded to a device. “You could simply see it on your phone.”
243. A plan of the premises was tendered as Exhibit #16. Six photographs depicting the granny flat area were also tendered as Exhibit #17. Ms Worth’s recollection was that Ms Morris had moved in towards the end of March 2021. It was initially agreed that she would stay for about 2 weeks. She ultimately stayed for about eight months.
244. Ms Worth’s recollection was that she met Jeremy Holman just before Christmas at some time in December 2021. Ms Morris introduced him as a friend and he would come and go from time to time. At some point Ms Morris told Ms Worth that things had changed and she and Holman were going to be more than friends.
245. She described on occasion hearing arguments and raised voices from downstairs. She said that Ms Morris tended to be a lot louder than Jeremy.
246. She recalled one day when she heard loud voices early at about 5:00am in the morning. She herself left for work at about 5:30am. She said she was concerned because her mother lived upstairs. The next day she told Ms Morris that the arguing needed to stop and Ms Morris told her that she and Mr Holman had parted ways and that she had told him to get out and was either going or had gone.
247. She was shown Exhibit #5 which were a series of Facebook messages between herself and Ms Morris. She did recall one of the messages relating to having heard loud voices in which Ms Morris was angry and annoyed that Jeremy had money of hers and would not give it back.
248. Ms Worth also gave evidence about an occasion in January after Ms Morris had been down to Sydney with him and when she came back she was upset and scared. Bree had described Holman having tried to crash the car twice.
249. Ms Worth also gave evidence of an occasion when Jeremy had come back to the premises late one night. Ms Morris had said that Jeremy was ringing her and that he wouldn’t stop ringing her and she was scared. At one stage Ms Worth answered the phone and talked to Jeremy. She said she recognised his voice. She told him it was the wrong time and the wrong place and that he needed to calm down and go home.
250. Ms Worth also said there were numerous times that Bree had kicked him out and he would come back.
251. When she would go downstairs, they were laughing and joking.
252. She was asked how she knew at that point that Jeremy was outside the flat. She said that she could hear Bri’s voice on the phone which she said must have been on speaker. It was outside the premises and the speaker might have been in the car that was on the road outside.
253. At one stage Ms Morris had told her that Jeremy had tried to choke her and tried to show her some marks on her neck. Ms Worth could not see any marks at that time. Ms Worth said she had no problems with Jeremy, he was always very pleasant and she had never seen a bad side of him. In relation to the occasion when he was on the phone she had noticed his voice sounded angry but he calmed down when Ms Worth talked to him.
254. Ms Morris subsequently told Ms Worth that she was leaving Taree and going to Townsville because she wanted to get away from Jeremy. Ms Worth said she came back “about 12 months later” and told Ms Worth that she had a bullet that she needed to give to Police. She showed Ms Worth the bullet and Ms Worth got a plastic bag for her to put it in.
255. She had previously been told that Jeremy had a gun. She thought it was her daughter who had told her after her daughter had been told by Ms Morris. She herself had never seen a gun.
256. In cross examination she was shown the screenshots in Exhibit #5. She was not able to say that they related to the occasion when she heard the argument at 5:00am.
257. With respect to the occasion when she had asked Ms Morris if she was ok for Mr Holman to be in the granny flat she said that she got Ms Morris out of the bedroom to have the conversation. She did, however, say that the conversation occurred in the granny flat. I note in passing that it was not upstairs, as it was put in cross-examination.
258. Ms Worth was asked questions about the trips to Sydney by Ms Morris and Jeremy. She said she thought the first time was for New Years Eve and she wasn’t sure about the second. She said she couldn’t understand why Ms Morris went again if she was scared. Ms Morris had never mentioned to her that she didn’t want to go.
259. Of some significance, Ms Worth agreed that she had told Police that she had known Bree to exaggerate things when telling stories and that she could sometimes be ‘over-the-top’ and overreact. She said that most of what was [said] was what had actually happened. She said “like there was always truth in what she said, but, it was the degree of.” She confirmed that she had said in her Police Statement: “I think there is definitely some truth in what Bree has told me, but I just don’t know if she has exaggerated the facts.” She was asked in relation to the night that she spoke to Jeremy on the phone that she had told the Police in her statement that that had occurred after the 8th of January 2022.
260. She also said that she was sure that there was only one bullet that was located and put aside in a plastic bag for the Police to come and collect. When the Police did not come and collect the bullet Ms Morris at some stage ended up coming back and getting it herself.
Detective Senior Constable Layne Scrymgour
261. The Detective read from his statement.
262. He had been tasked with the investigation of an allegation of domestic violence with the use of a firearm on 3 February 2022. Police had become aware of the allegations through a local community welfare support organisation.
263. Detective Scrymgour contacted Ms Morris by phone and spoke with her at length for several hours. He obtained a detailed version of all incidents of physical violence and intimidation. Morris at that stage was hiding interstate after fleeing Taree to escape Holman.
264. The detective recorded that although Morris could vividly recall individual incidents of violence she struggled to recall the exact date or date ranges where the incidents occurred or the correct chronological sequences of events.
265. The six-page statement was then taken from Rachel Clauscen on 10 February 2022. Clauscen supplied Police with various screenshots and material from the CCTV at her home.
266. On 28 February 2022 the detective received an unexpected telephone call from Ms Morris, who had returned to Taree and was going to be attending the Taree Police Station shortly to sign her statement. Ms Morris attended the Police Station before the Detective had finished converting his notes from a third party version into a first person statement. She refused to wait for that to be completed and as a consequence there was a gap in the statement before being completed in third person.
267. On the 8th of March 2022, the Detective again spoke with Morris who informed him that she had found and located two used ammunition casings in a plastic resealable bag. He requested that she deliver the bag to the Taree Police Station the following day. The two casings were delivered to Taree Police Station on 9 March 2022.
268. I should note in passing that this was not 12 months after the events as had been the recollection of Ms Worth.
269. On 12 March 2022 Holman was charged by way of unserved future Court Attendance Notices with numerous domestic violence offences committed against Morris. A provisional Apprehended Domestic Violence Order was also obtained and Holman was listed as wanted for arrest. I should note in passing, there is no evidence adduced as to the date he was arrested.
270. In a subsequent statement by the Detective he noted a telephone conversation in December 2023 with Brearn Morris. Morris disclosed that she had a video recording on her mobile phone of the television screen playing CCTV footage of Holman walking through the backyard at 4 East Combined Street, Wingham whilst armed with a rifle.
271. Morris informed Detective Scrymgour that she had recorded the video file on her mobile phone in late 2021 before the reported domestic violence incidents had occurred. Morris sent a copy of the video recording via a multimedia message to the Detective’s police mobile phone. There was no metadata included in the copy received by the officer. Detective Scrymgour correctly observed that as the file downloaded on his mobile phone was a copy of the original recording, “no metadata, such as the original recording date, location, or source equipment was included in the copy.”
272. Attempts were made to obtain the metadata from the complainant’s phone. However when she presented the phone to Police it had a damaged screen and was not able to be operated. The Detective’s evidence included attempts to obtain a witness statement from Rachel Clauscen’s mother, Mrs Anderson. Clauscen advised Police that her mother was chronically ill and was unable to assist and could not be involved.
273. The officer’s evidence also included conversations with Leissa Worth regarding her son Cody Chapman. Mrs Worth had advised Police that “there was zero chance of Chapman providing a statement to Police regarding his friend, Holman.”
274. In January 2023 Police made contact with Anthony Morris, who was in Wagga Wagga. Anthony Morris declined to make a statement of his knowledge or involvement in the incidents and told Police that he did not want to say anything about the matter. He was cautioned and asked questions about assisting Holman in locating and intimidating his sister at Rosewood Crescent at Taree on 19 January 2022. Morris denied having assisted Holman and declined to make any further comment. He was told he would be subpoenaed.
275. A certificate pursuant to s 87 of the Firearms Act indicating that Holman was not the holder of a firearms licence was tendered and became Exhibit #18.
276. In cross examination Detective Scrymgour was taken to what was described as an Intelligence Report which included a third party account to Police of information the support agency had apparently obtained from Brearn Morris. He confirmed that the account recorded described the weapon pointed at Morris’ head as being a .308 shotgun. He confirmed that a .308 bullet was for a rifle and would not have any relevance to a shotgun.
277. The officer was also taken to a paragraph of the Intelligence Report which said that at the incident on 19 January at Rosewood Crescent the accused and another male had attempted to kick in the doors. The Information Report was tendered as Exhibit #19.
278. The officer was next taken to a lengthy COPS entry of some 25 pages which had been created following the lengthy conversation with Ms Morris. That account included a description that Ms Morris had said with respect to the gun incident that Holman “jumped off the bed” and began looking for ammunition.
279. Detective Scrymgour was asked about the carpark where Mr Debreceny and Ms Morris had met. The officer described it as not being particularly secluded and being well-lit near KFC. He said “plenty of people stop there to eat their food.” He said it was somewhere where you might go to meet someone or socialise.
280. The last topic the officer was taken to in cross-examination related to his attempts to collect evidence of bookings from the Taree Lodge Motel for January 2022. The Detective had made enquiries and said that no bookings for that period could be retrieved and the motel did not keep ledgers that far back.
Cody Chapman
281. The last witness in the Crown case was Cody Chapman, who was, in effect, called cold, having never provided a statement. Mr Chapman agreed with questions about the layout of the premises in Wingham and also that he knew both the complainant and the accused. He recalled Holman visiting Morris when she was living in the granny flat and described their relationship as “good”. He said he did not remember ever hearing any arguments or hearing any fights. He couldn’t remember ever seeing a dark coloured Ford Mustang. He couldn’t remember any particular vehicles that Mr Holman had driven.
282. He said that he couldn’t recall any conversations with Ms Morris where she had said anything about Holman or suggested that he had done something to her. He said he effectively had no memory because he had been pretty hard on drugs at that time. He said he had no memory of there ever being any conversation about a firearm and he did not remember ever seeing one. With respect to the video cameras at the house he said that he had installed them and that what you could view from the cameras on his phone “it was all just live”. He had no memory of anyone else having access to the footage.
283. In the course of cross-examination he appeared to move from a blanket position of an inability to remember, to acknowledging the possibility that suggestions or questions put to him may have happened or they accorded with his belief.
284. When asked if Jeremy Holman had ever told him that he suspected Ms Morris had taken some money from him he said “it could have happened”. He was asked if he knew that Ms Morris had used ‘ice’ in the past and he replied “I believe so”. He was asked if that was during the time she was living at Wingham and he said “ I think so”.
285. He was asked if he thought Ms Morris was ever prone to exaggerate. He responded, “I do believe so, yeah”. He went on to add that he remembered that she would just exaggerate. He said that he did not remember ever seeing a gun in the granny flat nor any bullets or shell casings. He did not remember Holman wandering around the back yard with a gun.
286. He was asked if he ever observed Holman to be jealous or possessive of Ms Morris and he said “no”. At the end of his cross-examination he was asked from the bench on what basis he held the belief that Ms Morris was using ice when she was at Wingham. He said that he was using it pretty heavily and in his words “I believe she was on it as well”. He said that he thought he had seen her do it before and he believed that he had such a recollection.
287. The Crown pursued that topic in cross-examination as to where Ms Morris was when Chapman claimed to have seen her do ice. He said he thought it was at his place but that it was “like, it was years ago. Like I said, I was on drugs myself and I can’t really remember.” He agreed that he was not really sure when it was.
288. That concluded the evidence in the trial and there was no case called for the defence.
CROWN SUBMISSIONS
289. The Crown pointed out that their case rested on four separate limbs. The first was the evidence of the complainant herself. The second was complaint evidence. The third part of the Crown case was described as corroboration and the fourth limb was tendency evidence. The complainant had given evidence of three separate incidents which made up the six separate counts in the indictment. There were two counts with respect to each of the identified incidents.
290. In his submissions, the learned Crown prosecutor paraphrased the evidence of the complainant. I do not propose to repeat that summary. With respect to what the Crown found as a slight inconsistency in the evidence regarding conversation between Ms Morris and Leissa Worth about precisely whether she was happy for Jeremy Holman to stay, whilst there was an inconsistency about precisely where in the granny flat the conversation took place, the Crown pointed out there was no dispute that such a conversation did take place nor that the complainant had actually said that she was happy for him to stay. The Crown submitted that this was consistent with the cycle of domestic violence.
291. The Crown submitted with respect to the incident broadly described as “in the forest” and described the incidents which were said to have occurred as “very consistent with domestic violence.”
292. In the Crown’s submission, following that incident the evidence of Ms Morris that she was surprised that the accused drove her home illustrated that she was being honest.
293. With respect to the motel incident and the complainant having met up with Jack Debreceny the Crown acknowledged that there was an issue in the trial about whether she still had possession of her phone or whether the accused had it. The Crown submitted that the reason she was taken to an ATM to withdraw money was specifically because the accused had her phone and she was concerned that he could transfer the funds in her account. There was no other explanation for them going to the ATM.
294. The Crown pointed out that the complainant’s evidence following the ATM withdrawal was that she was concerned that as soon as she’d taken the money out of the ATM the accused would know where she was. This was because a notification is sent through to the phone that money has been withdrawn at a particular place. In the Crown’s submission her evidence regarding this was consistent with someone not having their phone, giving rise to that concern, she expressed,because he had it.
295. The Crown dealt with some of the issues raised with the complainant in the course of cross examination. With respect to the difference between whether the accused was standing beside the bed or on the bed in the Crown’s submission such a difference adds very little to a consideration of her credibility.
296. In the Crown’s submission a woman having had a gun pointed close to her head might lead the Court to find that minor details were not foremost in her mind. Her evidence on this point had been that he was leaning against the bed. The Crown pointed to a number of aspects of evidence which the Crown said pointed to her honesty and reliability.
297. In this respect the Crown pointed to her lack of knowledge that the accused was using drugs at the time and her lack of knowledge regarding the purpose of the trips to Sydney. The Crown pointed out that in due course she did end up getting the phone back later.
298. In the Crown’s submission the complainant was a witness who was trying her best to tell the truth with respect to things that had happened which were incredibly traumatic to her.
299. In the Crown’s submission the Court would accept her evidence of the incidents beyond reasonable doubt and would accordingly convict with respect to all charges.
300. The Crown made reference to some of the independent evidence. Cory Maher, the neighbour across the road from Rachel Clauscen described the demeanour and conduct of the accused which by inference was consistent with the description by the complainant of the nature of the relationship.
301. The Crown also made reference to the evidence of Jack Debreceny and submitted that the complainant’s demeanour and the circumstance of her trying to hide from the accused provided clear corroboration of what she said had happened at the motel.
302. With respect to an apparent inconsistency with respect to the seat being reclined or not the Crown pointed out that in cross-examination it had been put to Debreceny that that was what he had said in his evidence-in-chief:
“Q: You also told us that when Ms Morris got in the car she reclined the seat back.
A: Yes.
Q: and she was laying so as not to be seen.
A: Yes.” (TT128)
303. The Crown submitted that that was not what was said in examination in chief. At TT121 the evidence-in-chief was as follows:
“She got into the passenger side of my vehicle…
… and while she was in the front passenger seat I noticed she had rolled the seat back and was laying down hiding inside my car.”
304. The Crown made reference to Andrew Cadogan who had effectively said he had no real memory of pretty much anything in-chief but was then able to remember that Bree was using drugs when asked in cross-examination.
305. The Crown next made reference to Anthony Morris and submitted succinctly “He had no real memory of anything and I won’t say any more.”
306. With respect to Jenna Chapman the Crown reminded the Court that the complainant had told her about the accused having a gun.
307. The Crown also reminded the Court of the detail of Rachel Clauscen’s evidence. There is no necessity to restate that detail.
308. With respect to complaint the Crown pointed to the evidence of complaint to Rachel Clauscen and also to Jack Debreceny. He had specifically been told that the accused said he was going to kill her and that she had been woken with a gun to her head.
309. With respect to Leissa Worth, she had been told about him deliberately trying to crash the vehicle.
310. The Crown also pointed to the tendency evidence as having a number of specific similarities with the account of the present complainant.
311. After identifying a number of apparent inconsistencies the Crown ultimately submitted that the fundamental allegations by the complainant were supported by the other evidence and that the Court would be satisfied beyond reasonable doubt with respect to all of the counts.
DEFENCE SUBMISSIONS
312. On behalf of the accused Mr Cranney of counsel submitted that the nature of the relationship between the complainant and the accused revolved around methamphetamine use.
313. In the defence’s submission, Ms Morris was a part of the drug world described by Jenna Chapman. I observe in passing that was not stated by Ms Chapman in her statement. Cadogan and Cody Chapman were similarly part of that world and in Mr Cranney’s submission “they both gave evidence pointing towards the complainant’s involvement, and I’m talking about frequent use of methamphetamines”. Mr Cranney addressed with respect to a Murray direction and a Markuleski direction with respect to the evidence of the complainant. He submitted that there should be a Liberato direction regarding the letter written by the accused.
314. With respect to the gun incident Mr Cranney pointed to the difference between an account with respect to rifle bullets and the description of a shotgun. The defence also pointed to the difference between standing over the complainant whilst beside the bed and getting off the bed.
315. It was submitted that the proposition that the complainant told Cody Chapman about the incident with the gun was not substantiated.
316. Mr Cranney pointed out that the complainant had not said anything in her evidence in chief about Rachel Clauscen coming over during the day after the gun had supposedly been held at her head. She had, however, agreed in cross-examination with the suggestion that Rachel had come over but said that it was only for a brief period. The difference with Rachel Clauscen’s version in which she recalled staying there for four or five hours was highlighted.
317. With respect to the video of the images on the TV screen taken from the surveillance cameras, the defence submitted that the Court could not be satisfied with the identification of the person on the video and queried whether one could be certain that the person was holding a firearm. Mr Cranney raised the question of whether it could be someone other than the accused.
318. The defence acknowledged that the Court would entertain some suspicions of the accused at some time possessing a firearm, but put succinctly, “that’s not going to get the Crown over the line.” In the course of an exchange with Mr Cranney during his submissions both Mr Cranney and the Crown were in agreement that the Court needed to put out of the judicial mind, in consideration of the trial issues, knowledge of the description given by Ms Morris of the weapon which was contained in her statement and which had been provided to the court in the pre-trial application.
319. Both parties were agreed that any knowledge of what Ms Morris said in that statement regarding the description of a weapon should be ignored and put to one side.
320. I should make clear that I do so and only note that the Crown opened the trial with specific reference to an anticipated Crown Case involving the accused having access to a ‘rifle’ and standing over her with a rifle held a short distance from her head.
321. I remind myself that a submission or a Crown opening is not evidence but merely an expectation of what will be lead in evidence and that the actual evidence in the course of the trial and the information to Police made reference to a shotgun while the bullets retrieved and tendered are clearly bullet casings or shells from a rifle.
322. Mr Cranney addressed in some detail regarding the ‘forest incident’. In his submission the complainant had failed to take reasonable opportunities to leave with her brother or with her friend Amy, and Dylan Spicer. Mr Cranney pointed out that if Dylan and Amy were there, then what he described as the accused’s ‘rampage’ and the surrounding circumstances all happened in front of those witnesses and they were not called to give evidence.
323. Mr Cranney pointed out that the complainant denied that they were there while Rachel Clauscen placed them there. I should note that the complainant’s evidence varied, in that sometimes she placed him there, and sometimes she did not.
324. In Mr Cranney’s submission the message to Rachel Clauscen to be picked up was not simply consistent with fear of the accused but was consistent with wanting a lift home because she was not getting home fast enough.
325. The defence also pointed to the absence of corroboration regarding the dates of Cadogan being at the Taree Lodge Motel.
326. In the defence submission the Court could not be satisfied as to who was driving the Mustang in the carpark. With respect to the movements of the complainant Mr Cranney submitted:
“she goes to Cundletown. She goes that way. Its not the direction of the carpark. And we don’t know how long she goes there for. She wouldn’t be pinned down on how long she ran for. But, what I’m saying is, is that it’s the opposite direction of the carpark and there’s no evidence that the accused would have or must have known that she must have doubled back at some point.”
327. Mr Cranney further submitted that even if the court was satisfied that the accused was driving the Mustang, the Court could not be certain he was looking for Ms Morris. The defence made submissions regarding evidence which was consistent with the complainant being paranoid and submitted that this was consistent with her being influenced by a high level of methamphetamine use.
328. Mr Cranney pointed to the failure to produce the logs regarding messages between the complainant and Ms Clauscen as being a “convenient excuse” for the lack of proof regarding those messages.
329. In the defence submission Ms Clauscen was not a witness of truth.
330. With respect to the factual material relied upon as tendency the defence submitted that the complainant in the earlier matters was not called in evidence. While the Fact Sheet was before the Court there was an absence of detailed knowledge about what had happened between the parties. In the Defence submission a relevant pattern of conduct was not demonstrated.
331. The ultimate defence submission regarding the complainant was that the court could not be satisfied beyond reasonable doubt of the facts where it was necessary to believe the complainant.
CONSIDERATION
332. There is no doubt that the evidence of the specific incidents which have been charged require belief of the account given by the complainant with regard to the elements of the charge brought in each respective instance and that such belief must be to a level of satisfaction beyond reasonable doubt.
333. The defence has submitted strongly that the evidence of Ms Leissa Worth regarding her experience with the complainant exaggerating things must lead, inexorably, to the presence of a reasonable doubt. It is important to be conscious of what Ms Worth said in evidence to which I have referred earlier in these remarks. Ms Worth said: “like there was always truth in what she said, but, it was the degree of.” She had also said “I think there is definitely some truth in what Bree has told me, I just do not know if she has exaggerated the facts.”
334. In giving careful consideration to the evidence of Brearn Morris the current tribunal of fact watched the demeanour of the witness at the time she gave her evidence from the remote witness room. The Court has also had, somewhat unusually, not only the transcript of her evidence but also the video recording of her evidence which was available and able to be watched and listened to in order to check some aspects of the trial transcript.
335. Such errors in transcription as were occasionally found were not major. However, the replaying of a substantial portion of the complainant’s evidence also permitted the Court to refresh the judicial memory regarding her demeanour as the recording had included, at the request of the Crown, the video of the witness, in addition to the audio recording. The discs had been obtained during the course of the trial at the request of the defence.
336. The frequency of requests by the complainant for a short break, and at one stage an assertion that she would no longer be cross-examined were also able to be observed and taken into account in an assessment of her credibility and reliability.
337. There is, to my mind, no doubt that her recollection regarding some matters was potentially unreliable and on occasion demonstrated inconsistencies. However, the description by Ms Worth that in her experience there was “definitely some truth” in accounts by the complainant was confirmed by my own assessment of the accounts given by the complainant.
338. The critical question with respect to the separate incidents she described is whether, and to what extent, there may have been an element of exaggeration and whether or not such inconsistencies which might exist would or should lead to a finding of a reasonable doubt with respect to the core elements of each individual allegation.
339. I am satisfied beyond reasonable doubt with respect to the evidence of Ms Morris that the nature of the domestic relationship between herself and the accused during the period December 2021 and January 2022 was troubled. The evidence of Leissa Worth regarding audible arguments between those two protagonists in the house provides corroboration for such a conclusion. Evidence to the contrary, such as the evidence adduced from Cody Chapman, I have no hesitation in rejecting.
340. It is one thing to find that the relationship was troubled and that it involved fights and arguments. It is another to find that individual acts or threats specifically occurred. A consideration of whether individual acts of either assault or intimidation took place must be viewed against the overall perspective of what the complainant did and said, and how she reacted on different occasions during the relevant period.
341. The unchallenged evidence is that by the time the complainant was assisted by a support agency in Taree and the matter reported by them initially to Police, she had expressed sufficient fears regarding Jeremy Holman as to be assisted in relocating her residence interstate.
342. I propose initially to give detailed consideration to the last relevant incident giving rise to the charges before this court, namely the circumstances giving rise to Counts 5 and 6.
343. Count 5 relates to the alleged choking incident which is said to have occurred in the Taree Lodge Motel on what can be calculated to have been the 18th January 2022. Ms Morris’ account placed herself and the accused in a room at the motel which was occupied by Andrew Cadogan. She described the accused having possession of her mobile phone and using it to “play the pokies”. She described the incident of the accused squeezing her neck and lifting her from the floor by means of his hand around her neck or throat area and under her chin and physically elevating her as high as he could reach.
344. I refer to this as a ‘choking’ incident simply to identify it with clarity, noting that the Director of Public Prosecutions has brought an allegation of assault occasioning rather than an offence under the relevant choking or strangulation provisions. The action described by Ms Morris and the resultant alleged actual bodily harm was the subject of detailed questioning regarding the nature of the placement of Mr Holman’s hand and questions with respect to the alleged resultant actual bodily harm, namely red marks and bruising.
345. There was little, if any, questioning about the physical possibilities of the actions she described in lifting her physically off the ground. The Crown relies on a subsequent complaint to Ms Leissa Worth and also to Rachel Clauscen regarding this physical act. Ms Worth looked but could not see any marks on either the throat or the neck of the complainant. Ms Clauscen on the other hand described red marks in a statement to Police and subsequently grey marks in her oral testimony. The Crown also pointed to the fear expressed by Ms Morris regarding the accused during her interaction with Jack Debreceny shortly after the alleged physical assault. He had said in evidence that she did say something about an assault but he could not recall any detail. While her expressions of fear and concern to Mr Debreceny are not inconsistent with such an assault having occurred the fact of such fears does not establish the nature of any actual assault.
346. The Crown relies specifically on the marks and bruising said to have been sustained to her throat and neck as evidence both of the fact of the assault and of the injury thereby occasioned. The complete absence of any photographs does not assist in an acceptance of the account by the complainant. The absence of any marks when she made complaint to Ms Worth, similarly affords no real corroboration. The accounts given by Ms Clauscen were both variable on the one hand and also placed the markings said to be observed at a different part of the throat or neck than described by the complainant. In all of these circumstances I am left with a question mark as to whether there were threats of violence, or whether there was an actual physical assault occasioning actual bodily harm. In all of the circumstances, whilst I am of the view that there is a likely element of truth in what is alleged by Ms Morris, I cannot be satisfied beyond reasonable doubt that the actual assault, as described by her, took place. Accordingly, there must be a verdict of not guilty with respect to Count 5.
347. I have dealt with this count first notwithstanding its chronological sequence in the various incidents described by Ms Morris. I have done so because it will be important to give consideration to my reservation regarding the accuracy of what she has described in determining her credibility and reliability with respect to incidents which occurred earlier in the chronological sequence.
348. I do, however, accept Ms Morris’ account that she effectively fled from the motel with fears and concern for her safety. Her description of the route which she took makes abundant common sense when one is familiar with the geography of that part of Taree and the location of the pedestrian path which she took after initially running towards the direction of Cundletown. The route from the motel and the way in which she describes it clearly took her down the first street down to the right after running in a generally east direction away from the Motel. That route then takes one along a pedestrian walkway leading back effectively behind the motels and ultimately comes to the area of the carpark where Mr Debreceny was with his mates.
349. The circumstantial evidence and her concern that the accused would follow and try to find her was then objectively manifested in the evidence by the appearance at the location of the carpark of a dark coloured Mustang. There is an irresistible conclusion based on the observations of Debreceny that Ms Morris was trying to hide when the Mustang drove into the carpark for the first time. Her fear and concerns for her safety were patent and clear in her interaction with Mr Debreceny who she happened to come across and who she happened to know.
350. The circumstance that she got into the passenger side of his vehicle and positioned herself so as to hide from the Mustang was unchallenged. Of critical importance are the circumstances that unfolded with respect to the Mustang.
351. Ms Morris described hearing the car at a distance as it drove around. She described the Mustang as making quite a distinctive noise. She had described the Mustang having earlier been parked in the motel carpark.
352. There was unchallenged evidence that the following morning at the premises occupied by Rachel Clauscen the offender was driving the dark-coloured Mustang which was recorded on the surveillance cameras and also observed by the neighbour Cory Maher.
353. On the previous night, after Ms Morris fled from the motel, the actions of the vehicle which appeared in the carpark were described in detail in a map and diagram tendered as Exhibit #8.
354. As I described earlier, the Mustang was first observed by Debreceny travelling in an easterly direction along River Street towards the carpark and the Manning River Rowing Club. To have come from that direction it must have entered from the main road, namely Victoria Street, and driven down Florence Street towards the river where the street turns left and becomes River Street.
355. After progressing along River Street the Mustang turned right into Stevenson Street which in turn runs into the open area of the carpark. Mr Debreceny then drew on his map the vehicle circumnavigating the carpark before exiting back up Stevenson Street and then turning right into the dead-end portion of River Street which runs into a vehicular path behind the Rowing Club and down to a dirt area adjacent to the river.
356. The vehicle then returned from that direction back to River Street before turning right into Stevenson Street and then back onto Victoria Street, turning left at the KFC.
357. Mr Debreceny indicated that the Mustang came into the carpark and effectively circumnavigated it on two occasions before Bree got into his car, and on a third occasion, after she entered his car.
358. The analysis of these movements leads inevitably to a conclusion that the only explanation for the Mustang’s movements in and around the area were consistent with the driver trying to find someone.
359. The route taken is completely consistent with the account of the complainant. Mr Debreceny was not challenged with respect to his observations or the accuracy of his diagram and directions on the map.
360. I am satisfied beyond reasonable doubt that this was the Mustang being driven by the accused and that his actions were clearly directed towards the complainant, who he was trying to find.
361. The necessity of finding specific intent in his actions leaves me with no doubt regarding his intentions.
362. His intention to locate Ms Morris continued in his actions the following day when he attended with her brother at the premises at Rosewood Crescent. The actions on the morning of the 19th of January are not separately relied upon by the Crown as an act of intimidation but they provide contextual support for the conclusion regarding his intentions the previous evening. I am satisfied that the act of intimidation alleged by the Crown in Count 6 is proved beyond reasonable doubt. There will be a verdict of guilty with respect to that count.
363. I turn now to Counts 1 and 2 in the indictment. These charges derive from the alleged incident where the complainant says she was woken up with a gun pointed at her head and hearing clicking sounds consistent with the trigger being pulled.
364. The defence case was that the incident did not occur. It was put to Ms Morris in terms during her cross-examination: “He never threatened you with a gun.” In the letter by the accused sent to the Supreme Court, Exhibit #10A, the accused had said: “there was no firearm incident as I do not own one.”
365. The complainant gave evidence that she had seen the gun in the granny flat on an earlier occasion and that when the accused left after the incident he took it with him in a brown bag. Clearly, if the accused did not own or possess a gun, the incident as described could not have occurred. The first question for consideration is whether there is evidence of a gun at the relevant time. The second question is that if he did possess or have access to a gun, did he use it in the fashion described by the complainant and was such use with intent to commit common assault. In the way in which the case has been conducted this requires consideration of whether there was indeed a clicking sound of the trigger being pulled which, if it occurred, would place the complainant in immediate fear and apprehension such as to constitute the offence of common assault. I note in this respect that the Crown did not allege that this offence was intimidation.
366. The evidence of Rachel Clauscen was that she was told by the complainant that a gun had been pointed straight at her when she had woken up and she received that message on the day it had occurred. The complainant had not given that evidence in Chief but when asked in cross-examination who she had told about the gun being pointed at her she nominated that she had told Rachel the same day.
367. She recalled that Rachel had come over that day during her cross-examination despite not having given evidence of that circumstance in her evidence-in-chief. She said that the first person she told about the gun being pointed at her was Cody Chapman.
368. When she had gone upstairs and first spoken to ‘Nan’, that is Ms Worth’s mother, Cody Chapman’s grandmother, she had not told her all of the details.
369. She thought she had told Leissa Worth. Ms Worth’s evidence, as I have already noted, was that she had been told by her daughter that Jeremy had a gun but her evidence did not extend to her being told that it had been pointed at the complainant.
370. The failure of Cody Chapman to provide corroboration of the fact that he was told and his professed inability to recall almost anything of relevance, whilst not assisting to support the complainant’s account, in my view provides no material upon which she is contradicted. His mother had expressed a clear opinion that he would not assist in providing evidence against his friend Jeremy Holman and I have little doubt that that was an accurate observation. I simply put his evidence on that point to one side.
371. Jenna Chapman had also been told that Jeremy Holman had a gun at the granny flat. Whilst not called her written statement gives the indication of a responsible person whose evidence could be accepted. She had told her mother about the presence of the gun based on what she had been told by the complainant.
372. Of significance on the question of whether there was a gun present is the video which was tendered from the surveillance camera. The evidence from the complainant, which was unchallenged, was that she had recorded that on her phone in December 2021. The evidence from Leissa Worth was that the vision from the surveillance cameras was not recorded on a hard drive or any other device. It was only able to be viewed in real time. The evidence of Cody Chapman on this aspect was similarly that it was viewed live.
373. The unchallenged evidence of the complainant was that the vision from the surveillance cameras could be accessed by Jeremy Holman’s mobile phone and that his phone could project to the TV by means of a Google Chromecast device. The vision on the screen was recorded by Ms Morris on her own mobile phone and she said that she stopped recording when Mr Holman was about to “come back in.” She said that the image had been recorded earlier in December than the matters of intimidation about which she gave evidence.
374. Her identification of the person in the video as being Jeremy Holman was not challenged in cross-examination. All of this evidence supports a conclusion that the accused possessed what appears to be a rifle in the course of him being captured by the surveillance cameras outside the premises and in the area between the house and the garage.
375. Also of importance in consideration of an acceptance of the account by the complainant is her complaint made to Jack Debreceny on the evening of 18 January 2022. She told Debreceny that her ‘ex’ had told her he was going to kill her and also that she had been woken with a gun to her head. It should be noted that this complaint to Debreceny was made at a point in time before she had spoken with Police and at a time when she was endeavouring to hide from the accused.
376. Against the acceptance of her account and the support for the proposition that the accused had held a gun towards her head is a consideration of her description of the detail of the weapon as a double-barrelled shotgun. I have already observed that the Crown in his opening anticipated that the evidence would be that the weapon was a rifle. The complainant was queried in cross-examination as to whether she had taken the .308 bullets to Wingham, in other words, whether she had planted the evidence. She refuted such an implication. There is no doubt that the bullet casings provided to Police are from a rifle and are not capable of use in a shotgun. The ultimate question is whether the mismatch between the bullets and the weapon described in evidence by her, and also the recorded description of a shotgun in the Police information report, are such as to create a reasonable doubt about the core allegation, namely that a gun was pointed at her head when she woke up.
377. I have given careful consideration of the reservation regarding her evidence I have entertained with respect to the so-called choking incident. I have also given careful reflection to the timing of the requests for short breaks during cross-examination and the ultimate threat by her to stop giving evidence. I have also reviewed the demeanour of the witness during her time in the remote witness area. After due consideration I am satisfied beyond reasonable doubt that an offensive weapon was pointed at her and that she was intentionally intimidated by a clicking of the trigger mechanism. I am not of the view that what may be a misdescription or an exaggeration with which she has persisted in describing the detail of a double barrelled shotgun leads to the entertaining of a reasonable doubt about the core elements of the offence. Her likely misdescription, whether intentional or inadvertent, does not lead me to detract from that conclusion.
378. I am satisfied, in circumstances where he had been requested to leave the premises the night before, that Leissa Worth’s recollection of raised voices on one particular morning at about 5:00am is consistent with the complainant’s estimation of the time on the morning she claimed to have been woken by the clicking sound and a gun pointed at her.
379. I am satisfied beyond reasonable doubt that the bullet casings that were located by the complainant were found in the granny flat and the difference in recollection of Ms Worth thinking it was 12 months later and that there was only one bullet is an inaccurate recollection by her. The objective facts are that there were two bullet casings and they were provided to Police in early March 2022. I am satisfied that threats were made to the complainant and the surrounding circumstances including threatening her physically with the gun constitute a completed offence of intimidation.
380. There will be a verdict of guilty with respect to Count 1 and also Count 2.
381. I turn next to the incident described as ‘in the forest’. The circumstances surrounding this incident are difficult to establish with clarity. As I pointed out in my summary of the evidence the apparent location of this incident is some distance to the north from both Taree and also Wingham. It is inconsistent with a return journey to Taree from either Newcastle or Sydney. Whether the occupants of Mr Holman’s vehicle, however many there were, were returning from a trip to Newcastle or from visiting somewhere else is left completely uncertain and unexamined in cross-examination. Ms Clauscen’s evidence suggests she received a message that they had been visiting a friend.
382. The circumstances of an apparent leaving of the roadway and a collision with a tree or trees and precisely when that occurred is also very vague. The proposition that Mr Anthony Morris had been in the vehicle when an accident occurred and that he was conveyed back home by someone else, who remains unidentified, is similarly left unexplained and to a considerable degree unexplored. Two identified persons who are said to have come on the scene of the relevant incidents involving an alleged common assault by means of a hug or cuddle and threats amounting to intimidation, namely the girl called Amy and her subsequently identified partner, Dylan Spicer, were neither called nor has any evidence been proffered as to the reason for their absence.
383. Ms Rachel Clauscen resisted attempts to obtain a statement from her mother. However, when conveyed to court pursuant to a warrant having been issued for the purpose of securing her own attendance to give evidence, Ms Clauscen was accompanied to Court by her mother.
384. After seeking for her mother to be present in court as a support person her mother was excluded from the courtroom due to the prospect of her being a witness in the proceedings. The Crown subsequently indicated that she would not be called.
385. Whether she had provided a statement or not the provisions of s 38 of the Evidence Act were introduced by the Law Reform Commission specifically to enable relevant witnesses to be called in a criminal proceeding. In my view Mrs Anderson was both a relevant and potentially significant witness. Her absence does not assist the Crown case.
386. The actions and observations of Ms Clauscen are consistent with the following conclusions.
387. She entertained sufficient concern about her friend to recruit her mother to drive them both out of Taree and into the Yarratt Forest to the location which had been indicated by Ms Morris. However, what she observed at the scene including what she took to be a cuddle sufficiently allayed her concerns so as not to stop or offer to take her friend away from the scene. However, what is clear is that the surrounding circumstances were such that Ms Morris had got out of the vehicle and had either walked, run, or at least moved a distance from it in an attempt to leave the vicinity.
388. The description by Ms Morris of what took place in the car and subsequent events leads inevitably to a finding that there was some level of disagreement in the vehicle. On her account the accused threw his phone out the window and the vehicle was then stopped and steps taken to try and retrieve the phone. The defence case as put in cross examination was that she had thrown a bum bag out the window which had contained the phone.
389. Whichever version is accurate there seems to be no dispute between the parties that by some means or other, Holman’s phone ended up out a window and outside the car.
390. The car was then stopped and Ms Morris gives an account of being abused regarding the phone and in the face of threats from Mr Morris she effectively sought to decamp from the scene.
391. The evidence of Clauscen was that the complainant and Holman had gone out of town to see some friends. She said the complainant told her that an argument took place and she required assistance and sent the pinpoint location to Clauscen.
392. It must be noted that whether she was told there was an argument or whether that was an inference she drew was not clear on the evidence. However, on arrival at the scene it was clear that Ms Morris was not in the vehicle and at the time neither was Mr Holman.
393. Notwithstanding the absence of other potential material witnesses, the surrounding circumstances and the physical situation of the complainant being out of the vehicle lead me to a conclusion, beyond reasonable doubt, that what Ms Morris described and what Ms Clauscen observed, was not a reciprocated or consensual hug or cuddle. I reach that conclusion despite its physical appearance apparently having the effect of Ms Clauscen concluding as she expressed to the Court, “I just thought it would be best to leave – let Bree be, if that makes sense.” Despite its apparent minor physical nature, I am satisfied that this action constituted a common assault.
394. In circumstances of the volatile nature of their relationship, the complainant’s communications with Rachel Clauscen and her sending of the pin location so that she could be collected, and the tendency of Mr Holman, I am satisfied that the actions and abuse directed towards Ms Morris by Holman did occur and, together with the physical interaction, amounted to intimidation of her. I should make abundantly clear, that I am satisfied beyond reasonable doubt.
395. Accordingly, there will be a verdict of guilty with respect to both Count 3 and 4.
396. Mr Holman will be convicted in relation to Counts 1, 2,3,4 and 6. There will be a verdict of Not Guilty with respect to Count 5.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2024 | 24,070 |
nsw_caselaw:190dcbae8cd7b1b9e6415271 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | Brown v R [2024] NSWCCA 136 | https://www.caselaw.nsw.gov.au/decision/190dcbae8cd7b1b9e6415271 | 2024-07-26T22:25:58.220246+10:00 | Court of Criminal Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Brown v R [2024] NSWCCA 136
Hearing dates: 25 March 2024
Decision date: 26 July 2024
Before: Harrison CJ at CL at [1];
Button J at [2];
Dhanji J at [96]
Decision: (1) Leave to appeal against sentence granted, appeal upheld, and sentence imposed at first instance quashed.
(2) Instead, the applicant is sentenced to an aggregate head sentence of 4 years, to commence on 1 February 2023 and expire on 31 January 2027, with a non-parole period of 2 years 10 months, to expire on 30 November 2025.
(3) The first date upon which it appears the applicant will be eligible for possible release to parole is 30 November 2025.
Catchwords: CRIME – appeals – sentence appeal – where applicant pleaded guilty to numerous property offences – where applicant on conditional liberty at time of offending – new aggregate sentence partly cumulative upon balance of parole – whether error in failure to consider the effect of the applicant’s balance of parole on the “statutory ratio” between total non-parole period and total head sentence – where special circumstances not found – no evidence of express intention to extend ratio beyond 75% – appeal allowed – discussion of issues arising from Kentwell v The Queen and Lehn v R – applicant resentenced afresh – lesser sentence warranted in law
CRIME – appeals – sentence appeal – where applicant pleaded guilty to numerous property offences – one count of enter dwelling-house with intent to commit larceny – circumstances of aggravation – whether error in finding the offending was aggravated by the fact that it was committed in a home – discussion of complexities surrounding aggravating factors listed in Crimes (Sentencing Procedure) Act 1999 (NSW) – no error by way of double counting established – breadth of statutory definition of “dwelling-house” – authorities to the effect that concepts underpinning “dwelling-house” and “home” are different
CRIME – appeals – sentence appeal – manifest excess – extensive criminal record – offending whilst subject to conditional liberty – history of disciplinary actions in custody – background of profound deprivation – mental illness – drug and alcohol dependence – whether sentence imposed failed to reflect appropriate consideration of the applicant’s disadvantaged upbringing and history of abuse – difference between satisfaction that sentence imposed is manifestly excessive and satisfaction that lesser sentence is warranted in law on resentence – sentence imposed not manifestly excessive
Legislation Cited: Crimes Act 1900 (NSW) ss 4, 99(1), 105A(f), 111(2), 112, 117, 154F, 195(1)(b)
Crimes (Sentencing Procedure) Act 1999 (NSW) s 21A(2)(eb)
Criminal Appeal Act 1912 (NSW) s 6(3)
Drug Misuse and Trafficking Act 1985 (NSW) s 10(1)
Cases Cited: Baxter v R (2007) 173 A Crim R 284; [2007] NSWCCA 237
BB v R [2017] NSWCCA 189
Black v R (2022) 107 NSWLR 225; [2022] NSWCCA 17
Brennan v R [2018] NSWCCA 22
Christian v R [2021] NSWCCA 300
Chung v R [2017] NSWCCA 48
DB v R [2024] NSWCCA 18
Elyard v R (2006) 45 MVR 402; [2006] NSWCCA 43
Hardey v R [2019] NSWCCA 310
Huang v R [2017] NSWCCA 312
Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37
Lehn v R (2016) 93 NSWLR 205; [2016] NSWCCA 255
R v Bennett (2014) 254 A Crim R 1; [2014] NSWCCA 197
Sausa v R [2023] NSWCCA 95
Category: Principal judgment
Parties: Zarad Brown (Applicant)
Rex (Respondent)
Representation: Counsel:
S Kluss (Applicant)
E Wilkins SC (Respondent)
Solicitors:
Ross Hill and Associate Solicitors (Applicant)
Solicitor for Public Prosecutions (NSW) (Respondent)
File Number(s): 2022/150068
Decision under appeal Court or tribunal: District Court of NSW
Jurisdiction: Criminal
Date of Decision: 03 November 2023
Before: Fitzsimmons SC DCJ
File Number(s): 2022/150068
HEADNOTE
[This headnote is not to be read as part of the judgment]
On 24 May 2022, Mr Zarad Brown (the applicant) was arrested for multiple property offences committed the previous afternoon. Over a period of approximately 45 minutes, the applicant engaged in a frenzied and chaotic series of events that resulted in a frightening intrusion into the home of a woman and her two young children, the stealing of two motor vehicles, as well as valuable personal property, and the eventual destruction by fire of one of the vehicles in a suburban street.
At the time of this offending, the applicant was on parole for a previous conviction. He had been living in the community for a little over three months. Upon his arrest, the applicant returned to custody. The State Parole Authority revoked the applicant’s parole from the date of the new offending. The balance of parole to be served was 2 years 5 months 3 weeks and 4 days.
On 3 November 2023, the applicant pleaded guilty to and was sentenced for five offences, with two further offences taken into account on a Form 1. Following the application of 25% discounts for the applicant’s guilty pleas, an aggregate sentence of 4 years 6 months imprisonment was imposed. The sentencing judge set a non-parole period of 3 years 4 months.
The applicant sought leave to appeal against the sentence imposed, ultimately relying on the following grounds of appeal:
1. His Honour erred by imposing a sentence dated during a period of revoked parole that altered the effective sentence and the statutory ratio of the totality of the sentence.
2. His Honour erred in finding as an aggravating circumstance that the offence was committed in a home when this was an element of the charge in relation to sequence 14.
3. The sentence imposed was manifestly excessive and a different sentence is warranted at law.
The Court held (Button J, with Harrison CJ at CL agreeing, and Dhanji J agreeing with additional reasons), granting leave to appeal and allowing the appeal:
As to ground one:
4. It was incumbent upon the parties to alert the sentencing judge to the fact that the imposed sentence’s partial cumulation on the balance of parole being served by the applicant had an effect on the total effective ratio between the total non-parole period and total head sentence: [60].
5. Special circumstances were explicitly not found. No reasons were given for extending the usual ratio beyond 75%. Yet, the total effective ratio imposed was approximately 77.5%; if such an outcome had been intended, the normal course would have been for the sentencing judge to say so: [61]-[62].
6. The applicant’s appeal was allowed on this ground: [1], [63], [96].
7. In additional reasons given by Dhanji J, (with which Harrison CJ at CL and Button J agreed), an adjustment by this Court to the non-parole period to account for the effect of accumulation on previous terms of imprisonment could not be made without re-exercising the sentence discretion generally: [97]-[107].
Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37; Lehn v R (2016) 93 NSWLR 205; [2016] NSWCCA 255; Christian v R [2021] NSWCCA 300; Black v R (2022) 107 NSWLR 225; [2022] NSWCCA 17, considered.
8. The applicant was resentenced to a lesser aggregate sentence of 4 years imprisonment, with a reduced non-parole period of 2 years 10 months to ensure the overall ratio is 75% of the total effective sentence: [95].
9. As to ground two:
10. Though it was remarked that there was a “flavour of practical double counting”, previous decisions of this Court indicate that it was not erroneous for the sentencing judge to find that the offence of entering a dwelling-house with intent to commit a serious indictable offence was aggravated by the fact that it was committed in a home. The definition of dwelling-house has inclusive width and captures more places than just a “home”: [71]-[74].
R v Bennett [2014] NSWCCA 197; Chung v R [2017] NSWCCA 48; BB v R [2017] NSWCCA 189, applied.
11. Additional reasons given by Dhanji J discussed the tension between the authorities allowing for this course, and those that make clear that double counting can nevertheless occur where an aggravating factor taken into account is an inherent characteristic of the offence: [108]-[109].
Elyard v R (2006) 45 MVR 402; [2006] NSWCCA 43; Huang v R [2017] NSWCCA 312, considered.
12. This ground was not upheld.
13. As to ground three:
14. The applicant’s profoundly deprived upbringing, coupled with his resultant psychological problems, could not be ignored. However, his extensive criminal record, history of non-compliance in both custody and the community, and the sheer gravity of the offending committed also had to be considered by the sentencing judge: [79]-[85].
15. Though the sentence imposed by his Honour was a substantial one, it cannot be said that the aggregate term of imprisonment was manifestly excessive: [85].
16. This ground was not upheld.
JUDGMENT
1. HARRISON CJ AT CL: I agree with the orders proposed by Button J. I also agree with the analysis of Dhanji J that in the particular circumstances of this case, this Court must exercise its sentencing discretion afresh in accordance with Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37, as opposed to simply performing an arithmetical adjustment to take account of the identified error.
2. BUTTON J:
Introduction
On 3 November 2023, Judge Fitzsimmons SC sentenced Mr Zarad Brown (the applicant) in the District Court sitting at Campbelltown for various property offences, following pleas of guilty to all of them.
3. The offences were as follows:
1. Sequence 10 – Attempt steal motor vehicle contrary to s 154F of the Crimes Act 1900 (NSW), carrying a maximum penalty of 10 years imprisonment with no standard non-parole period.
2. Sequence 14 – Aggravated enter dwelling-house with intent to commit serious indictable offence, namely larceny, contrary to s 111(2) of the Crimes Act 1900, carrying a maximum penalty of 14 years imprisonment with no standard non-parole period. According to the charge sheet and notice of committal, the circumstance of aggravation was knowing that people were inside the dwelling-house, in accordance with s 105A(f) of the Crimes Act 1900.
1. Taken into account on Sequence 14 were two offences on a Form 1 of steal motor vehicle contrary to s 154F of the Crimes Act 1900 and possess prohibited drug contrary to s 10(1) of the Drug Misuse and Trafficking Act 1985 (NSW). The latter is a wholly summary offence that carries a maximum penalty of imprisonment for 2 years.
3. Sequence 15 – Demand property with menaces with intent to steal, contrary to s 99(1) of the Crimes Act 1900, carrying a maximum penalty of 10 years imprisonment with no standard non-parole period.
4. Sequence 7 – Larceny contrary to s 117 of the Crimes Act 1900, carrying a maximum penalty of 5 years imprisonment with no standard non-parole period.
5. Sequence 8 – Intentionally destroy property by fire contrary to s 195(1)(b) of the Crimes Act 1900, carrying a maximum penalty of 10 years imprisonment with no standard non-parole period.
4. After the application of a discount of 25% for the utilitarian value of the pleas of guilty, the following indicative sentences were provided (all rounded down by the learned sentencing judge):
1. Sequence 10 – 1 year 3 months.
2. Sequence 14 – 2 years 9 months.
3. Sequence 15 – 2 years.
4. Sequence 7 – 7 months.
5. Sequence 8 – 1 year 10 months.
5. An aggregate sentence of 4 years 6 months imprisonment was imposed, to date from 1 February 2023 and to expire on 31 July 2027. A non-parole period of 3 years 4 months was set. The earliest date on which the applicant will be eligible for possible release to parole is 31 May 2026.
6. Special circumstances were not found, and the ratio between the aggregate head sentence and its non-parole period is precisely 74%.
Background
7. The applicant was arrested for the present offences on 24 May 2022. At the time these offences were committed, the applicant was on parole in respect of a sentence for an earlier offence of specially aggravated break, enter and commit a serious indictable offence, namely wounding. That sentence comprised a head sentence of imprisonment for 6 years 9 months commencing on 17 February 2018, with a non-parole period of 4 years expiring on 16 February 2022. The applicant was released to parole on that date.
8. On 8 June 2022, the State Parole Authority revoked the applicant’s parole. Parole was treated as having been revoked from the earliest date of the new offending, 23 May 2022 (regrettably, a little over three months after release to parole). He returned to custody on 24 May 2022. The balance of parole was 2 years 5 months 3 weeks 4 days. If served in its entirety, it would have expired on 17 November 2024.
9. To express all of that a little more simply: the new aggregate sentence imposed by the sentencing judge, dated as it was from 1 February 2023, commenced 8 months 1 week after the commencement of service of the balance of parole on 24 May 2022.
10. Attached to this judgment is a diagram that sets out all of the above in readily comprehensible form.
Grounds of appeal
11. By the conclusion of the hearing in this Court, the applicant was permitted to rely on three grounds of appeal. The amended grounds are as follows:
Ground 1: His Honour erred by imposing a sentence dated during a period of revoked parole that altered the effective sentence and the statutory ratio of the totality of the sentence.
Ground 2: His Honour erred in finding as an aggravating circumstance that the offence was committed in a home when this was an element of the charge in relation to sequence 14.
Ground 3: The sentence imposed was manifestly excessive and a different sentence is warranted at law.
Objective features
12. The following sketch is derived largely from the agreed facts as summarised in the remarks on sentence.
13. Each offence arose from a series of acts which occurred on 23 May 2022, over a period of about 45 minutes. I shall discuss them in chronological order.
14. On 23 May 2022, Mr Ferbigio Lasike had parked his Holden Captiva in the driveway of the family home at Percy Street, Ingleburn. The vehicle was unlocked but the doors were closed.
15. At about 12:30pm, the applicant entered the vehicle. Mr Lasike’s 9-year-old son observed this, and called out to his parents.
16. Mr Lasike’s partner approached the applicant, who had remained in the vehicle and was reaching around under the steering wheel. She challenged the applicant, who then got out and ran down the road. Mr Lasike chased the applicant, but ultimately lost sight of him.
17. This constituted the offence of attempt steal motor vehicle.
18. At about 12:45pm, Ms Deanne Sheehan returned to her home at Enid Place, Ingleburn, in her grey Ford Territory.
19. At about 1pm, Ms Sheehan’s 14-year-old son took out the recycling and noticed that the applicant was seated in the vehicle. He alerted his mother.
20. Ms Sheehan moved to the veranda, by which time the applicant had exited the vehicle. The applicant demanded the keys to the vehicle. Ms Sheehan agreed to provide them, and returned to the house.
21. A short time later, Ms Sheehan noticed the applicant was standing in her hallway. Ms Sheehan’s 14-year-old son was standing behind her. Her four-year-old son was asleep in the lounge room.
22. The applicant said to her: “[J]ust give me the fucking keys, they are after me, just give me the fucking keys.” Ms Sheehan said that she was trying. The applicant said: “[H]urry up, give me the fucking keys.”
23. After Ms Sheehan’s 14-year-old son retrieved a knife from the kitchen, the applicant warned him to stay back and not “do anything dumb.”
24. Ms Sheehan gave the keys to the applicant. The applicant drove away with the vehicle.
25. All of this constituted the offences of aggravated enter dwelling-house with intent to commit serious indictable offence, demand property with menaces with intent to steal, and steal motor vehicle.
26. That same day, Mr Mark Davis had parked his Ford Courier utility vehicle at the front of a property at Bensley Road, Ingleburn.
27. Mr Davis subsequently saw the applicant drive a grey Ford Territory (no doubt the one taken shortly beforehand) up the driveway of the property. The applicant got out and opened the driver’s side door of the Ford Courier.
28. Mr Davis ran downstairs, told the applicant to stop and asked what he was doing. The applicant got back into the original Ford Territory, reversed out of the driveway, collided with a fence, and drove away.
29. The applicant had taken the following items from Mr Davis’ Ford Courier: a Kathmandu vest; two mobile phones; a set of house keys, a garage remote control and the keys to the Ford Courier; a bum bag containing a wallet and $340 in cash; and a driver’s licence, bank cards and various other cards. The total value of the property taken was $700.
30. This constituted the larceny.
31. Mr Davis re-entered the premises and used another mobile phone to call his stolen mobile phone. The applicant answered. Mr Davis told the applicant to bring back his possessions. The applicant asked if Mr Davis had called the police, which Mr Davis confirmed. The applicant replied: “Well go fuck yourself”. The applicant ended the call.
32. The applicant parked the Ford Territory adjacent to his unit block. Shortly after 1:15pm, the applicant set fire to the vehicle. NSW Fire and Rescue attended, but the vehicle was destroyed.
33. This constituted the offence of destroying property by fire.
34. On 24 May 2024, the applicant was arrested. The police conducted a search and located inside a wallet a small resealable plastic bag containing 0.5g of methylamphetamine (this constituted the offence of possessing a prohibited drug). The applicant declined to be interviewed.
35. To provide my own summary of objective aspects: this was serious offending, committed by way of a chaotic series of events, that featured the unnecessary destruction by fire of a motor vehicle, and the no doubt traumatic intrusion into a home with the presence of a woman and two children, one of them a toddler.
Subjective features
36. Again, the following is derived from uncontroversial findings in the remarks on sentence.
37. The applicant was 32 years of age when sentence was imposed. He had a very lengthy criminal record which commenced as a juvenile. Those offences span many years and include driving offences, property-related offences, and break and enter offences. He had first been detained in a juvenile detention centre in 2005, and first incarcerated in 2008. Tragically, since 2012 he has never been at liberty for more than a year before being returned to custody.
38. As I have said, at the time of the offences under appeal, the applicant was subject to conditional liberty by way of parole.
39. The applicant’s custodial record prior to the imposition of sentence revealed 14 breaches of prison discipline. It also showed the applicant was being housed in segregation, as a result of threatening to commit assault. Clearly enough, he has presented a serious management problem whilst incarcerated.
40. The applicant endured a very difficult childhood. His father was incarcerated when the applicant was 9 months old for a period of 9 years. When he was 13 years old, his two maternal half-sisters went into “DOCS care” and later became wards of the state.
41. At the age of 8, the applicant attended a residential rehabilitation centre with his mother so that she could receive treatment for drug and alcohol abuse. Unfortunately, whilst living in that inherently difficult environment for a child, the applicant was sexually abused.
42. The applicant’s substance abuse began at the age of 11, which involved drinking alcohol and smoking cannabis. At 13 years of age, he was given his sister’s ADHD medication by his parents, and also began “doing gas [inhalants, or methylamphetamine?] and continued smoking pot”. At 18, he began injecting heroin and ice, and also abusing “speed, alcohol, pot and sometimes ecstasy”.
43. The applicant left school in year 8. He committed offences to support his family and at the direction of his stepfather, who would threaten the applicant into committing crimes in his childhood and adolescence. He had to offend to survive. As an adult, he offended to support his drug habit, which was in turn an effort to cope with his untreated mental health problems.
44. The applicant was subjected to physical and sexual abuse by his stepfather, as were his mother and sisters. He also experienced abuse on multiple occasions between the ages of 15 and 17 whilst incarcerated in juvenile detention facilities. The applicant disclosed that abuse as part of a compensation claim, which “opened a can of worms and now weighs very heavily on me”.
45. A report of Dr Paul Pusey, clinical and forensic psychologist, expressed the opinion that at the time of the offending, the applicant would have met the diagnosis for: drug-induced psychosis; major depressive disorder; post-traumatic stress disorder; and substance use disorder. As for the first of those conditions, I interpolate that I consider that the statement “They are after me” to Ms Sheehan recounted above certainly has that flavour.
46. The applicant suffers from fluctuations in mood, sleep disruption and lethargy. He admitted to suicidal ideations, but denied any intention to act on them.
47. The applicant reported to Dr Pusey that after his release to parole, he had contact with his mother, which was a significant trauma, and caused him to return to drugs. He was smoking and injecting ice and other drugs. At the time of the offending he was “delusional”, following the consumption of “a lot of drugs”, and after having not slept for days. He stole the car because he felt like someone was chasing him. He believed his poor mental health, substance abuse, and offending were related.
48. The applicant’s primary support was his partner, her family and his sister. He has a young son with his partner and is close to his partner’s other children. He claimed to take the role of stepfather “seriously”.
49. The sentencing judge found that there were aspects of the history provided by the applicant to Dr Pusey that gave rise to issues of reliability. The sentencing judge found that the evidence was more consistent with the applicant failing to embrace opportunities and services offered to him on release, rather than actively engaging in follow-up in the community and a process of reform.
50. The applicant was assessed in his Sentencing Assessment Report as at a high risk of reoffending.
51. The sentencing judge considered the applicant’s prospects of rehabilitation to be poor.
52. Finally, the sentencing judge made no findings as to remorse.
53. To provide my own overview of subjective features: a life damaged if not ruined by the deprivation in which it began, deprivation that led to psychological problems, criminogenic substance abuse, years of incarceration, and a necessarily pessimistic view of the future.
Ground 1: His Honour erred by imposing a sentence dated during a period of revoked parole that altered the effective sentence and the statutory ratio of the totality of the sentence
Submissions of parties
54. Leave was granted for the applicant to raise this ground for the first time at the hearing, and neither party sought an opportunity to file subsequent written submissions. The result is that brief oral submissions only were made, as follows.
55. For the applicant it was said that this aspect of the sentence structure had been originally thought of as a “particular” of the assertion of manifest excess. But on reflection counsel took the view that it was worthy of its own ground.
56. It was said that, although special circumstances were addressed upon and ultimately rejected, the sentencing judge had not been assisted by either lawyer at first instance inviting his attention to the following aspect of the sentence structure.
57. It was said that a common approach is to reduce the non-parole period of a new sentence (whether cumulative or partly cumulative on balance of parole, or some pre-existing sentence) in order to avoid the outcome here: a ratio between the total mandatory period of continuous incarceration and the possible period of continuous incarceration (in other words, total non-parole period and total head sentence) that is longer than the statutory ratio, without any reason for that outcome having been provided.
58. It was also said that that outcome needs to be reflected upon in the context of the lockdowns in custody arising from the pandemic, an outcome that could not have been foreseen at the time when the sentence was imposed for the wounding offence that ended up leading to the balance of parole under discussion.
59. The Crown submitted that: the margin between the statutory ratio and the total ratio actually imposed is quite small; there was no sign of unintended arithmetical error; the sentencing judge certainly reflected on questions of totality, and special circumstances generally; one can infer that this outcome was intended, although not mentioned; special circumstances in this particular case were hardly warranted in any event; in terms of months, the practical difference is neither here nor there; and finally, it was hardly incumbent upon the sentencing judge in late 2023 to reflect upon lockdowns that had long since abated.
Determination
60. In my opinion, the sentencing judge did not receive the assistance to which he was entitled. Bearing in mind the plethora of matters that require consideration on sentence, I think that it was incumbent upon the parties to draw his Honour’s attention, however briefly, to the oft-encountered phenomenon whereby complete or partial cumulation calls for reflection on the ratio between the overall non-parole period and the overall head sentence.
61. It is certainly true that his Honour rejected the submission that special circumstances could be found for any substantive reason. But nothing was said about intentionally extending the overall ratio beyond that of the statute. Because a ratio beyond 75% is, as a matter of reality, extremely unusual – and often very unhelpful to rehabilitation – if such an outcome is indeed intended, sentencing judges should generally say so: see generally Brennan v R [2018] NSWCCA 22; Hardey v R [2019] NSWCCA 310.
62. It is also true that the outcome goes beyond a 75% ratio only by a matter of a couple of months or so. But my response to that is that that length of time is actually very substantial, if one is the prisoner who is serving it.
63. In my opinion, one can infer that this outcome was an oversight, not an intended one. That being so, I would uphold this ground. Whether that should lead to wholesale reconsideration of sentence, in accordance with Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37, or mere arithmetical correction of a discrete aspect, in accordance with Lehn v R (2016) 93 NSWLR 205; [2016] NSWCCA 255, will be discussed later.
Ground 2: His Honour erred in finding as an aggravating circumstance that the offence was committed in a home when this was an element of the charge in relation to sequence 14.
Submissions of parties
64. This ground was raised in the same way, with the same result: only brief oral submissions were received from both parties.
65. It focuses on that part of the remarks on sentence where his Honour said, “Sequences 14 and 15 were committed in the home of the victim, being a further aggravating factor.” Sequence 14, to use the formal language of the Court Attendance Notice, was the offence of entering a dwelling-house with intent to commit a serious indictable offence therein; namely larceny, in circumstances of aggravation; namely, the applicant knew that there were persons present within the said dwelling place.
66. In other words, in light of the elements of the offence and the facts of this case, the question is whether regarding the fact that the premises were the home of the victim constitutes double counting.
67. For the applicant it was said that there was “potentially a flavour” of double counting – in the context of an element of the offence being a dwelling-house, it in fact being lived in, and the circumstance of aggravation being knowledge that persons were present inside it – to regard the fact that the house was in fact the home of a victim as an aggravating feature, in accordance with s 21A(2)(eb) of the Crimes (Sentencing Procedure) Act 1999 (NSW) (the CSPA).
68. Later it was said that there is “an element of double counting”, although it was said to depend on whom one considers to be the victim of that offence.
69. The Crown submitted that the circumstances of aggravation in the Crimes Act 1900 of knowing persons to be present focused on the mind of the applicant, whereas the aggravating factor spoken of in the CSPA focuses on the harm to a victim, who is entitled to feel safe in their home.
70. As for any double counting arising from the fact that an element of the offence was entry into a dwelling-house, and the assessment of that structure being a home as constituting an aggravating feature, the position was maintained that they are, in truth, different things, and there are different reasons for them being spoken of in different legislation. The gravity of the offence was emphasised: the obvious danger; the presence of the 14-year-old who went to obtain a knife; and the readiness of the applicant to commit property offences when there is a distinct possibility that he will interact with his victims.
Determination
71. In my opinion, there is indeed a flavour of practical double-counting in what occurred here: the applicant being sentenced for two offences to do with a dwelling-house, which undoubtedly was an occupied suburban home, and within which persons who were his victims were present to his knowledge, and thereafter the fact the premises were a home being taken into account as an aggravating factor.
72. However, there is clear authority of this Court, in the context of both Crown appeals and appeals by offenders, that that course is legally available: see R v Bennett (2014) 254 A Crim R 1; [2014] NSWCCA 197 at [5]-[13]; Chung v R [2017] NSWCCA 48 at [25]-[49]; BB v R [2017] NSWCCA 189 at [38]. In a nutshell, those cases emphasise the difference between the obvious breadth of the inclusive definition of dwelling-house to be found in s 4 of the Crimes Act 1900, and the narrowness of the concept of a home; and the fact that, despite their superficial similarity, they are based on different underlying concepts.
73. I certainly am not of the view that those decisions are clearly wrong, or that there are compelling reasons to depart from them, especially in the absence of detailed submissions having been made to a bench of five. Nor should the contents of paragraph [71] be taken in any way as criticisms of those decisions, which are dispositive of the ground. That paragraph can be read, however, as a respectful criticism of the complexity and counterintuitive outcomes brought to the criminal justice system by the inclusion of s 21A in the CSPA by Parliament over two decades ago.
74. I would not uphold this ground.
Ground 3: The sentence imposed was manifestly excessive and a different sentence is warranted at law.
75. As against the possibility of the success of ground one leading only to arithmetical adjustment, I proceed to deal with this ground as well.
Submissions for the applicant
76. The applicant submitted that the ultimate sentence imposed fails to reflect a valid consideration of the applicant’s background of profound deprivation and mental health struggles. Counsel for the applicant argued that the sentencing judge erroneously gave little – if any – weight to the applicant’s disadvantaged background, mental illness, and history of sexual abuse in determining what aggregate sentence might be appropriate. Rather, the sentencing judge found that the applicant’s offending was “primarily a result of the offender’s drug-induced condition”, which is expressly excluded as a mitigating factor: see s 21A(5AA) of the CSPA.
77. During the hearing of this application, it was emphasised that most of the applicant’s adult life has been spent in custody. Counsel also asked this Court to reflect on how the deprived childhood of the still-young applicant could be appropriately reflected, in the light of his repeated and lengthening periods of incarceration. The sentencing judge, it was further said, made no reference to the impact of the COVID-19 pandemic on conditions in custody, a further error in the submission of the applicant.
Submissions for the Crown
78. Senior counsel for the Crown contended that, considering the objective criminality of the five offences (with significant maximum penalties and multiple victims), the applicant’s breach of parole, significant criminal history for like offending, poor prospects of rehabilitation, related high risk of re-offending, and even accepting his reduced moral culpability and disadvantaged background, the sentence is not manifestly excessive. The sentencing judge accepted the applicant suffered from mental health conditions and that they were attributable, at least in part, to his dysfunctional upbringing. Even so, it was submitted that the applicant’s intoxication was clearly a factor causally relevant to the offending, and the sentencing judge’s finding that it was the primary cause of the offending was well open.
Determination
79. There is no doubt that the new sentence is a substantial one for offending over a period of 45 minutes, especially when one adds to it a further period of 8 months 1 week of preceding continuous custody by way of the balance of parole.
80. There is also no doubt that the atrocious upbringing of the applicant, and my comfortable satisfaction that it has played a central role in the negative (from every perspective) way in which his life has turned out, deserves full weight, including in reduction of his moral culpability.
81. Furthermore, it is not to be forgotten that he had admitted all he had done by way of his early pleas of guilty.
82. Finally, I think it is clear that this man is stuck in a vicious circle of release from prison every so often, unresolved psychological problems and drug addiction, prompt reoffending, just as prompt reincarceration, and ever-increasing institutionalisation.
83. To be weighed against those factors are the following: his extensive criminal record, his offending whilst on parole, his inability to behave even in prison, and the gravity of some of these offences, including the traumatic and dangerous entry into a suburban home, and the wanton destruction of a motor vehicle by fire.
84. In order for the ground to succeed, the new aggregate head sentence and non-parole period would need to be not just beyond the sentencing discretion, but patently so. Minds may legitimately differ about that sentence. But, having reflected, I cannot say that I am affirmatively satisfied that the aggregate sentence is manifestly excessive.
85. I would not uphold this ground.
Resentence, or mathematical adjustment?
86. I turn now to consider the consequences of my opinion that ground one should be upheld.
87. It is well known that most established errors in sentencing require this Court to consider re-sentence afresh, in accordance with s 6(3) of the Criminal Appeal Act 1912 (NSW), to determine whether a lesser sentence is warranted in law, and, if so, to impose it. A few, however, do not.
88. Subsequent to the hearing of the application, at the request of the Court the parties provided a list of authorities that may be of assistance in determining whether the error that I consider to be established in ground one is the former kind of error –“a Kentwell error” – or the latter—“a Lehn error”. That was of assistance, but because none of those examples of different approaches two different errors taken by this Court was directly on point, I shall not discuss those authorities further.
89. In the event, I have had the benefit of reading the judgment of Dhanji J. I respectfully agree with what his Honour has written about the characterisation of this kind of error as a “Kentwell error”, with the result that I move to consider resentence afresh.
Lesser sentence warranted in law?
90. I repeat in this context all of the countervailing factors that I discussed in rejecting the ground asserting manifest excess; that rejection, of course, does not close off a lesser sentence by way of this entirely separate process.
91. On resentence, I would replicate the indicative sentences provided by the sentencing judge, along with the starting date of the new aggregate sentence of 1 February 2023.
92. Reflecting on all of those factors, and putting from my mind the sentence imposed at first instance, I would impose an aggregate head sentence of imprisonment for 4 years, with a tentative non-parole period of 3 years, the latter reflecting my refusal to find special circumstances for any substantive reason.
93. However, because of the alteration to the overall ratio by way of the process of cumulation, I would reduce the non-parole period to 2 years 10 months, in order to ensure that the overall ratio is 75%.
94. Because the head sentence that I propose is 6 months shorter than that imposed at first instance, it follows that I am satisfied that a lesser sentence is warranted in law, and the appeal against should be upheld.
Proposed orders
95. I therefore propose the following orders:
1. Leave to appeal against sentence granted, appeal upheld, and sentence imposed at first instance quashed.
2. Instead, the applicant is sentenced to an aggregate head sentence of 4 years, to commence on 1 February 2023 and expire on 31 January 2027, with a non-parole period of 2 years 10 months, to expire on 30 November 2025.
3. The first date upon which it appears the applicant will be eligible for possible release to parole is 30 November 2025.
96. DHANJI J: I have had the considerable advantage of reading the reasons of Button J in draft. I agree with his Honour's orders and his reasons for them but make the following additional observations.
Ground 1 - can the error in relation to the effect of cumulation be addressed by an adjustment to the non-parole period or is this Court required to re-exercise the sentencing discretion?
97. As I have indicated I am of the view, for the reasons given by Button J, that ground 1 of the applicant's amended grounds has been established. The error is one of failing to allow for the effect of cumulation when setting the non-parole period of the sentence. This gives rise to a question as to whether this Court should simply adjust the non-parole period of the sentence imposed by the sentencing judge to “correct” for the effect of cumulation so as to achieve a proportion of 75 percent, or, whether this Court must independently exercise the sentencing discretion afresh, the result of which will determine whether some other sentence is warranted in law and should be passed for the purposes of s 6(3) of the Criminal Appeal Act 1912 (NSW). This gives rise to a question as to the ambit of the High Court's decision in Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37. That decision has been discussed in numerous judgments of this Court including by a five judge bench in Lehn v R (2016) 93 NSWLR 205; [2016] NSWCCA 255 where Kentwell v The Queen was the subject of close analysis.
98. First, it is pertinent to observe that the present matter is not one in which the parties expressly agreed that the nature of the appeal could be limited: see Sausa v R [2023] NSWCCA 95 at [31]-[35]. See also the discussion of Sausa v R and other authorities in DB v R [2024] NSWCCA 18 per Hamill J at [3]-[18]. There is thus no issue that the Court is required to determine whether this is a full resentence case, or an adjustment case.
99. In Christian v R [2021] NSWCCA 300, Beech-Jones CJ at CL (as his Honour then was) said:
[35] … For my part I consider that there is a difference between an error in the sentence imposed at first instance, be it arithmetical or otherwise, which can be addressed by giving effect to the sentencing judge’s clear intention when imposing the sentence and an error that can only be addressed by the appellate court making its own assessment as to how the relevant error can be addressed and the sentencing exercise completed.
100. I consider the present case to be in the latter category. The approach I favour is, in my view, dictated by Kentwell v The Queen and Lehn v R. The High Court in Kentwell v The Queen rejected the proposition that a court could dismiss an appeal unless the applicant could demonstrate substantial injustice. The plurality made the following remarks at [42]:
“42 … When a judge acts upon wrong principle, allows extraneous or irrelevant matters to guide or affect the determination, mistakes the facts or does not take into account some material consideration, the Court of Criminal Appeal does not assess whether and to what degree the error influenced the outcome. The discretion in such a case has miscarried and it is the duty of the Court of Criminal Appeal to exercise the discretion afresh taking into account the purposes of sentencing and the factors that the Sentencing Act, and any other Act or rule of law, require or permit. As sentencing is a discretionary judgment that does not yield a single correct result, it follows that a range of sentences in a given case may be said to be 'warranted in law'. A sentence that happens to be within the range but that has been imposed as the result of a legally flawed determination is not 'warranted in law' unless, in the exercise of its independent discretion, the Court of Criminal Appeal determines that it is the appropriate sentence for the offender and the offence. This is not to say that all errors in the sentencing of offenders vitiate the exercise of the sentencer's discretion. By way of example, s 44(1) of the Sentencing Act requires the court when sentencing an offender to imprisonment to first set the non-parole period and then set the balance of the term. Prior to 1 February 2003, a court was required to first set the term of the sentence and then specify the non-parole period. A court which sentences an offender to imprisonment after 1 February 2003 by first setting the term of the sentence commits legal error. Without more, the error does not affect the exercise of the sentencer's discretion.”
101. These remarks, in my opinion, are equally applicable to circumstances where the discretion miscarried in respect of a discrete component of the sentencing process, such as the determination of the non-parole period, as where the sentencing discretion miscarried generally. The question that remains is whether the failure to properly exercise the sentencing discretion can be compartmentalised so as to apply only to that particular component.
102. Here, despite categorising the error as one relating to a failure to have regard to the effect of cumulation on an earlier sentence, I would not regard the error as a mere arithmetical oversight. It is unlike, for example, Black v R (2022) 107 NSWLR 225; [2022] NSWCCA 17, where the error was with respect to the statutorily required discount for a plea of guilty. That was a discount unrelated to a sentencing purpose, to be applied after the determination of the sentence by proper application of the instinctive synthesis. It was, consequently, an error amenable to correction by arithmetical adjustment. By contrast, in Lehn v R, while the error was also with respect to the discount allowed for pleas of guilty, as explained in the judgment, the determination of the discount was, in the circumstances of that case, intertwined with the exercise of the sentencing discretion. That was because the sentencing judge expressly declined to adopt the joint position of the parties that a 25 percent discount was appropriate on the basis that it would result in a sentence which failed to reflect the objective gravity of the offending. Thus, the appropriate discount and the determination of the pre-discount sentence resulting from the exercise of the instinctive synthesis were inextricably linked.
103. In Lehn v R, Bathurst CJ said (at [64]):
“In the present case, the approach the sentencing judge took meant that the discount for the plea was directly connected to a sentencing purpose in that he declined to grant a further utilitarian discount because the resulting sentence would not reflect the objective seriousness of the offence. It was not debated at the hearing whether the reason for the reduction of the discount conflicted with the provisions of s 22(1A) of the Sentencing Procedure Act, but whether it did or not, the question of the extent of the discount directly related to a sentencing purpose, namely, ensuring that the penalty reflected the objective gravity of the offence.”
104. The Chief Justice continued (at [75]):
“In a passage approved by the High Court in Kentwell, [Spigelman CJ in Baxter v R (2007) 173 A Crim R 284; [2007] NSWCCA 237] made the following remarks concerning [79] of his judgment in Simpson: [R v Simpson (2001) 53 NSWLR 704; [2001] NSWCCA 534]:
“[19] The import of [79] of Simpson was to ensure that submissions in the Court of Criminal Appeal did not proceed as if the identification of error created an entitlement on the part of an Applicant to a new sentence, for example, by merely adjusting the sentence actually passed to allow for the error identified. That would be to proceed on the assumption that the sentencing judge was presumptively correct, when the Court has determined that the exercise of the discretion had miscarried. Section 6(3) is directed to ensuring that the Court of Criminal Appeal does not proceed in that manner, but re-exercises the sentencing discretion taking into account all relevant statutory requirements and sentencing principles with a view to formulating the positive opinion for which the subsection provides." (Emphasis added)”
105. The emphasised passage above seems to me to be directly contrary to the proposition that adjustment can be made to a discrete component of the sentence in respect of which an error of discretion occurred, at least in circumstances such as the present.
106. In adjusting for special circumstances on the basis of cumulation, there is, essentially a question of totality being considered. Had the sentencing judge properly considered the impact of cumulation, it may be that it would have resulted in an arithmetical adjustment, but that it is not inevitably the case. When considering totality, it is necessary to take a last look at the sentence to determine whether it reflects the total criminality. What is being engaged is an aspect of the sentencing discretion. It may have been that had the sentencing judge considered cumulation, he would nonetheless have taken the view that no lesser non-parole period could be properly imposed. He may have made a partial adjustment. Importantly, he may have taken the view that the head sentence, in the context of cumulation was too long. The result of proper consideration at first instance is unknowable. The case is not unlike Lehn v R in that regard.
107. Given my view that a finding of special circumstances to take into account cumulation is not independent of the sentence discretion, and that there was no suggestion of the appeal being confined in any way, I am of the view that the Court must re-exercise the sentencing discretion.
Ground 2 – some comments on “double counting”
108. With respect to ground 2, there may be some tension between the authorities referred to by Button J, and authorities that make clear that double counting, and hence error, can occur where an aggravating factor is taken into account and that factor, while not an element of the offence, is an inherent characteristic of offences of that type: see generally Elyard v R (2006) 45 MVR 402; [2006] NSWCCA 43 at [3]-[13].
109. By way of example, it has been held that it is an error to find as an aggravating factor when sentencing for a commercial supply of a prohibited drug that the offence was committed for financial gain, unless the gain was substantially more than would ordinarily be expected: see Huang v R [2017] NSWCCA 312. That is so despite the fact that commercial gain is not only not an element of the offence but that it is, additionally, not difficult to imagine cases of supply of a commercial quantity involving no financial gain, at least on the part of a particular offender. That type of case may be distinguishable from the present, having regard to the breadth of s 112 of the Crimes Act 1900 (NSW) and the definition of “dwelling house”. Be that as it may, ultimately the real question must be whether the sentencing judge has misunderstood where the particular offending to be punished fits on the scale of objective seriousness. Error will be established where it is demonstrated that there has been “double counting” or otherwise an error in the assessment of a matter affecting the consideration of that seriousness. Having regard to the view I take with respect to the need to resentence the applicant as a result of his success on ground 1 of this appeal it is unnecessary to consider this matter further.
110. As I have indicated, above, I agree with the orders proposed by Button J.
Brown v R Sentence Diagram First Instance (2530, pdf)
*****
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 8,394 |
nsw_caselaw:190dcb42fafc7384c52c5147 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-23 00:00:00 | Transport Workers’ Union of New South Wales v N.S.W. Couriers Pty Ltd t/as Aramex (Sydney) [2024] NSWIRComm 1044 | https://www.caselaw.nsw.gov.au/decision/190dcb42fafc7384c52c5147 | 2024-07-26T22:25:58.363245+10:00 | Industrial Relations Commission
New South Wales
Medium Neutral Citation: Transport Workers’ Union of New South Wales v N.S.W. Couriers Pty Ltd t/as Aramex (Sydney) [2024] NSWIRComm 1044
Hearing dates: 15 and 16 May 2024, last submissions received 3 June 2024
Date of orders: 23 July 2024
Decision date: 23 July 2024
Jurisdiction: Industrial Relations Commission
Before: Commissioner Sloan
Decision: Determination to make a contract determination to preclude the principal contractor from deducting from the remuneration of a contract carrier amounts in respect of the costs of scanners, freight forwarding and the engagement of outside hire
Catchwords: EMPLOYMENT AND INDUSTRIAL LAW – Contracts of Carriage – applications for contract determination to prevent certain deductions being made to remuneration of contract carriers – whether contract determination already applies – whether deductions consistent with the existing scheme of industrial regulation – whether deductions otherwise fair and reasonable
Legislation Cited: Industrial Relations Act 1996 ss 3, 10, 17, 118, 119, 146, Ch 6 ss 309, 310, 313, 315
Industrial Relations (General) Regulation 2020 cl 34
Cases Cited: Applications to vary the Transport Industry – General Carriers Contract Determination 2017 and Transport Industry – Courier and Taxi Truck Contract Determination [2022] NSWIRComm 1003
City of Sydney Wages/Salary Award 2014 (2014) 247 IR 386; [2014] NSWIRComm 49
Transport Industry – General Carriers Contract Determination [2016] NSWIRComm 3
Transport Industry – General Carriers Contract Determination 2017 [2017] NSWIRComm 1013
Transport Industry – General Carriers Contract Determination Application by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge [2010] NSWIRComm 133
Transport Workers’ Union of New South Wales v NSW Couriers Pty Ltd t/a Aramex (Sydney) (2023) 323 IR 1; [2023] NSWIRComm 1013
Texts Cited: None
Category: Principal judgment
Parties: Transport Workers’ Union of New South Wales (Applicant)
N.S.W. Couriers Pty Ltd t/as Aramex (Sydney)
Representation: Counsel:
P Boncardo (Applicant)
A Guy (Respondent)
Solicitors:
Piper Alderman (Respondent)
File Number(s): 2023/00421231
Publication restriction: No
DECISION
1. The Transport Workers’ Union of New South Wales (“TWU”) represents contract carriers engaged in the transportation business conducted by N.S.W. Couriers Pty Ltd t/as Aramex (Sydney) (“Aramex Sydney”). A dispute has arisen between the parties as to deductions that Aramex Sydney applies to the remuneration payable to the contract carriers. The TWU seeks that the Commission make a contract determination to avoid such deductions being made in the future.
2. Aramex Sydney opposes the Commission making a contract determination in the terms sought by the TWU. It contends that the proceedings ought to be dismissed.
3. I have determined that it is fair and reasonable to make a contract determination. My reasons follow.
Factual context
The Aramex Sydney business
4. The business conducted by Aramex Sydney, and the arrangements it has in place with the entities moving freight as part of that business, were the subject of consideration by Commissioner Webster in Transport Workers’ Union of New South Wales v NSW Couriers Pty Ltd t/a Aramex (Sydney) (2023) 323 IR 1; [2023] NSWIRComm 1013 (“TWU v NSW Couriers”), particularly at [19]-[29] and [60]-[102]. I will not reproduce those passages.
5. Aramex Sydney led evidence that N.S.W. Couriers Pty Ltd is a wholly-owned subsidiary and franchisee of Australian Couriers Pty Ltd. Both companies were previously part of the Fastway Group. When that Group was acquired by Aramex PJSC in or around 2 February 2016, the branding of the Australian companies was changed to reflect their inclusion in the “Aramex Group”.
6. In broad overview, and relevantly for present purposes, Aramex Sydney operates on a franchise model. Carriers who are described as “Courier Franchisees” (often referred to in the evidence and submissions as “CFs”) are required to purchase a “territory”. This gives them the right, and obligation, to perform all deliveries and pickups of parcels and other freight to and from Aramex customers in that territory.
7. As at the date of the hearing of these proceedings, Aramex Sydney had 123 Courier Franchisees.
8. The terms on which Aramex Sydney contracts with Courier Franchisees are contained in a document titled Courier Franchisee Deed (“CF Deed”). Courier Franchisees are also provided with a document titled “Courier Franchisee Manual” (“CF Manual”), which is defined in cl 1.1 of the CF Deed as being “the operations, procedures and policies manual issued by the Franchisor to the Courier Franchisee in relation to the conduct of the Franchise”. Pursuant to cl 2.4(a) of the CF Deed, a Courier Franchisee must “strictly comply” with its obligations under the CF Manual.
The deductions the subject of these proceedings
9. The CF Manual provides that “Courier Franchisee remuneration is made up of the total earnings for that territory, less any deductions for that territory”. The deductions are described as including, amongst other items, “scanners, depot sort fee, outside hire fees”.
10. The CF Manual further provides that two invoices are produced each week. The first is a recipient created tax invoice which will include “the pickup fees, delivery fees and commission charged by the Courier Franchise [sic] for courier services provided to the Regional Franchisee” (who in this case is Aramex Sydney). The second is described as a “tax invoice from the Regional Franchisee entity to the Courier Franchisee entity for weekly charges such as scanner fees, public liability costs and freight sorting fees”.
11. In simple terms, the amount of the second invoice (that from Aramex Sydney to the Courier Franchisee) is deducted from the first. Any balance is payable to the Courier Franchisee.
12. It is common ground that Aramex Sydney makes weekly deductions from the earnings of Courier Franchisees for the cost of providing scanners and freight sorting services. The quantum of those deductions are, in the majority of cases, $20 and $70 per week respectively. Aramex Sydney also deducts the cost of engaging “outside hire” to perform work in a territory if the Courier Franchisee is unable or unwilling to do so.
13. The TWU objects to Aramex Sydney making the deductions. In a document handed up on the first day of the hearing, it described the relief it seeks in the following terms:
“Under Section 313 of the Industrial Relations Act 1996 (NSW), the Industrial Relations Commission of New South Wales makes a Contract Determination in the following terms:
1. This Contract Determination will operate with respect to contracts of carriage between N.S.W Couriers Pty Ltd T/A Aramex (Sydney) (Aramex) and its contract carriers (Carriers).
2. Aramex will not deduct from the remuneration of the Carriers the following:
a. Any amount for the use of scanners;
b. Costs associated with the sorting of freight; and
c. Costs associated with utilising outside hire where the Carrier cannot complete its service requirements.
3. This Contract Determination will operate from 13 November 2023 for a period of 3 years.” (Italics and bold in original, tracked changes removed)
14. It is necessary to examine the nature of each of the deductions that are the subject of the TWU’s proposed contract determination.
Scanners
15. In a statement relied on by Aramex Sydney, Jason Bovis, its General Manager, stated:
“47. Scanners are a tool of trade which courier businesses (including the courier franchisees of Aramex (Sydney)) need to effectively operate. The scanners perform a range of functions which enable CFs to efficiently operate their businesses, including:
47.1 Identifying their pick ups;
47.2 Enabling parcels to be tracked through scanning events (e.g. onboarding parcels, scanning them to a cage for transport across the network, returning undeliverable parcels, and delivering parcels to their final destination);
47.3 Generating an optimised ‘runsheet’ for pick ups and deliveries, which a CF can adjust, and which provides for a navigation route consistent with the runsheet;
47.4 Allowing for messaging between CFs and Aramex (Sydney);
47.5 Adding customer details;
47.6 Enabling customers to sign for their parcels;
47.7 Taking a photograph of the parcel having been delivered;
47.8 Designating the ‘safe place’ at which a parcel has been left; and
47.9 Designating an item as being delivered to a ‘hubbed’ location.
48. These technical capabilities bring significant efficiencies to the courier businesses which CFs run.
49. Aramex (Sydney) purchases scanners in bulk from an independent supplier and provides CFs with scanners to enable the CFs to conduct their franchise businesses efficiently and effectively.”
16. Under cross-examination, Mr Bovis accepted that scanners were necessary to enable tracking of parcels, and that “tracking is essential to the conduct by Aramex of its courier business”. This included the ability to give customers correct information as to where their parcels are at any one time, enabling the Aramex Sydney customer service team to deal with any complaints or inquiries from customers, and better enabling Aramex Sydney to deal with investigations into damaged goods. Mr Bovis accepted that scanning compliance was “absolutely important…for courier franchisees and for Aramex”.
17. In its written outline of submissions, Aramex Sydney described scanners as “specialised pieces of equipment” which are “essential for the CF to operate pursuant to their franchise deed”. In its oral submissions, it described scanners as a “critical piece of infrastructure” required by Courier Franchisees to “do their job”.
18. The TWU relied on statements from directors of three Courier Franchisees, namely:
1. Houssam Hamady, the director of Sanyara Pty Ltd;
2. Semra Selbik. In her statement, Ms Selbik described herself as the director of Cencik Pty Ltd. In oral evidence she stated that she had executed a transfer deed to operate through a corporate entity known as Selbik Pty Ltd. It seems relatively uncontroversial that Selbik Pty Ltd took over the territory previously serviced by Cencik Pty Ltd; and
3. Fook Wong, the owner of Successful Enterprises Pty Ltd.
19. Each of these witnesses gave evidence to the effect that the use of a scanner, as provided by Aramex Sydney, was necessary for them to perform their work and for them to be paid for that work.
20. Despite describing scanners as “essential” and “critical” to the work of Courier Franchisees, Aramex Sydney contended that the use of scanners was not mandatory. In his statement, Mr Bovis gave evidence that as far as he was aware, Aramex Sydney had not mandated the use of scanners by Courier Franchisees. He gave evidence of “MobileSTAR”, which he described as “an application that can be downloaded to any smart phone [which] allows CFs to complete all their scanner functions from [their] phone”. He stated that “CFs…across the country use this application”.
21. However, Mr Bovis also gave evidence of the limitations of using a mobile phone application in place of the scanner. He stated that, in his view, a “mobile phone with camera to facilitate scanning is not a fit-for-purpose alternative to using a scanner” and set out his reasons for coming to that view. He further stated that the use of the MobileSTAR application “has a number of hurdles…which can cause significant disruptions to the network”. He described it as being Aramex Sydney’s “preference” that Courier Franchisees use scanners.
22. In its written outline of submissions, Aramex Sydney submitted:
“49. Notwithstanding the inefficiencies that may exist with the use of alternatives, there is nothing preventing CF’s [sic] from doing so. It is entirely up to the CF what platform they use.”
23. In light of the totality of Mr Bovis’s evidence, this submission needs to be approached with caution. In addition, I note the following:
1. At items 5.1 and 7.5 of the CF Manual, a scanner is described as “the key piece of technology” that allows a Courier Franchisee to conduct its business.
2. At item 5.2 of the CF Manual, the MobileSTAR application is referred to under the heading “If your scanner fails”.
3. Mr Bovis gave evidence that prior to entering into a CF Deed, prospective Courier Franchisees are provided with a document titled “Disclosure Document”. At item 10.1 of that document, a scanner is described as being a “mandatory” requirement.
4. In her statement, Ms Selbik deposed that she could not recall Aramex Sydney providing her with an alternative way to complete her work that did not rely on the use of a scanner.
24. I am not persuaded that the use of scanners is, or would be perceived by Courier Franchisees engaged by Aramex Sydney as being, truly or practically optional.
25. Mr Bovis also gave evidence as to the costs of scanners, including the initial purchase of the scanner and ongoing costs, such as IT support and insurance. He stated that the amounts paid by Courier Franchisees did “not nearly recover” the costs incurred by Aramex Sydney. Under cross-examination he accepted, “to a degree”, that the purpose of the deductions for scanners was to help Aramex Sydney cover the cost of the scanners.
26. However, also under cross-examination, Mr Bovis accepted that he was not aware of any calculations or assessments having been done “as to how much a scanner actually costs Aramex on a per annum basis”. He conceded that he did not know “one way or the other” whether the annual amount paid by a Courier Franchisee was more or less than “what a scanner is actually worth on a per annum basis”.
27. Mr Hamady stated that he had been given a scanner when he commenced working in the business then operated by Fastway Pty Ltd, which had been replaced with a new one when Aramex took over that business. There was no suggestion that he had ever requested or required a replacement scanner. Mr Hamady stated that he had calculated that his business had paid more than $7,000 in fees for the use of the scanner since 2016. This has to be seen in light of Mr Bovis’s evidence that the “costs associated with the purchase of scanners by Aramex (Sydney)”, not including shipping from the supplier to Aramex Sydney and the costs of any ongoing support services, are less than $2,500.
28. It is also relevant to observe that it was uncontroversial that scanners at all times remain the property of Aramex Sydney, and must be returned by a Courier Franchisee if their contract terminates for any reason.
Freight sorting
29. Aramex Sydney makes a weekly deduction of $70 from the earnings of Courier Franchisees for what is described on the invoices as “Freight Sort”. Mr Bovis accepted under cross-examination that the purpose of the deduction was to assist Aramex Sydney to recoup some of the costs it incurs in sorting freight.
30. As there was little contest on the evidence regarding the sortation of freight, it is convenient to reproduce the following extracts from Mr Bovis’s statement:
“32. CFs run their own franchise businesses. Franchise businesses (in addition to picking up and delivering freight), are required to sort the freight which they carry.
33. Aramex (Sydney) provides CFs with significant and ongoing assistance in freight sorting. The $70 per week freight sorting fee is far less than the amount it costs Aramex (Sydney) to sort freight.
33. Aramex (Sydney) engages external labour hire to conduct freight sorting for the benefit of CFs.
…
36. Additionally, the automation system at Aramex (Sydney)’s depot in Chullora, cost Aramex (Sydney) roughly $9 million AUD to have installed.
…
39. In relation to the sorting work CFs perform, the CFs are only required to feed their conveyable freight onto the automation (that is, they load parcels which meet the size restrictions and shape for automation on to the conveyor belt) and conduct a primary sort of their non-conveyable pickups (moving parcels from their vehicle into cages for designated areas in the ‘bull pen’).
40. Previously, CFs would need to sort all of their small parcels (conveyable items suitable for automation) manually, which represents over 80% of the volume picked up by CFs. The CFs also assisted in sorting the inbound freight that arrived from other branches in the morning for same day delivery and no longer perform this task at all. This isn’t required of CFs (and is no longer possible anymore apart from them sorting their non-conveyable pick-ups when they return to the depot) on account of the automation. Aramex (Sydney) performs the more difficult and time consuming secondary sort. Aramex (Sydney) also provides CFs with the following freight sorting services:
40.1 Performing a primary sort by feeding conveyable international freight, interbranch freight and bulk injection freight onto the automation to sort to courier runs. This is the majority of freight.
40.2 Performing a secondary sort from automation chute to CF trolley and interbranch cage for all conveyable freight put on the automation from international, interbranch, bulk injection and courier pickups;
40.3 Performing a manual primary sort for non-conveyable freight (approximately 25% of all volume) international freight, interbranch freight and bulk injection freight. (The only primary sort Aramex (Sydney) doesn’t do is non-conveyable freight picked up by CFs);
40.4 Performing a secondary sort of non-conveyable freight from primary sorted cages direct to CF runs for all inbound volumes, including the non-conveyable CF picks identified in 40.3 above;
40.5 Performing a secondary sort into the CF trolleys for delivery the next day. This is a result of CFs not taking all their freight out and servicing their exclusive territory as required; and
40.6 Consolidating non-conveyable freight left behind by the CFs (in the morning) into cages so Aramex (Sydney) has a scan for visibility on what was left behind and can’t be covered by a sweeper fleet after CFs have departed the depot.
…
42. CFs now spend considerably less time sorting freight than they have previously done. …”
31. In his statement, Mr Wong gave the following evidence:
“17. When I first purchased the Run, the freight sorting fee was $45 or $50. About 6 or 7 years ago, it was increased to $70. I don’t know why it was increased but I did not have any choice in this. Aramex just increased this fee.”
Outside hire
32. Clause 2.5 of the CF Deed provides as follows:
“2.5 Non-compliance
If the Courier Franchisee fails to meet and maintain its obligations under the Courier Franchisee Manual including failing to provide sufficient Courier Vehicles to service the Exclusive Territory, or pick up and deliver freight within the Franchisor’s expected timeframes, the Franchisor may in its absolute discretion enter into other Courier Franchise Deeds or make other temporary or permanent arrangements in relation to the provision of courier services in the Exclusive Territory to ensure that the Exclusive Territory is serviced to the standard contemplated by the Courier Franchisee Manual subject to the terms of any other Courier Franchise Deeds granted in relation to the Exclusive Territory to that time. Any such arrangements will be at the Courier Franchisee’s sole cost and any failure to pay such costs will constitute a debt owed by the Courier Franchisee to the Franchisor.”
33. These terms are reflected also at item 3.9 of the CF Manual, which is titled “Outside hire” and which includes the following:
“It is your responsibility to cover all pickups and deliveries within your exclusive territory.
If you cannot properly or effectively service your exclusive territory in accordance with the Deed, the Franchisor may, in order to satisfy its obligations under Clause 2.2 (b) of the Deed, use outside hire to service the franchise.
The Franchisor may deduct the cost of the outside hire from your remuneration.”
34. The “temporary arrangements” that Aramex Sydney might make pursuant to cl 2.5 of the CF Deed involve arranging for alternative labour to perform pickups and deliveries that the Courier Franchisee cannot, or will not, perform. That labour is either in the form of a “Blu Courier” or “outside hire”.
35. In his statement, Mr Bovis described “Blu Couriers” (or “Blus”, as they were otherwise referred to in the evidence and submissions) as a “crowd-sourced delivery solution”. He said that they are part of a network set up by Australian Couriers Pty Ltd “to assist with addressing temporary spikes in demand”. On my understanding, Blu Couriers are akin to “gig” workers, who make themselves available through a platform managed by Aramex to perform ad hoc delivery work.
36. Mr Bovis described “outside hire” (often referred to in the evidence and submissions as “OSH”) as “independent third parties”. I understand them to be independent transport businesses which are contracted by Aramex Sydney to carry out pickups and deliveries of parcels.
37. A curious feature of the invoicing arrangements between Aramex Sydney and its Courier Franchisees is that the Courier Franchisee is notionally credited with the earnings it would have received for any parcel delivered by a Blu Courier, or picked up and delivered by outside hire, as if the Courier Franchisee had performed that work. The amount that is paid by Aramex Sydney to the Blu Courier or outside hire – which is usually calculated at a rate per parcel – is then deducted from the amount notionally “payable” by Aramex Sydney to the Courier Franchisee.
38. It was common ground that the amount per parcel paid to a Courier Franchisee is now the same as that paid to a Blu Courier. This appears not to have been the case at the time the witnesses’ statements were prepared. The “net effect” for the Courier Franchisee of the use of a Blu Courier is, therefore, zero. It is for this reason that the TWU’s proposed contract determination does not seek any restraints on deductions being made by Aramex Sydney as a result of the use of Blu Couriers. I observe that in the absence of this apparent change in arrangements, I would not have seen a need to distinguish between Blu Couriers and “outside hire”, at least in so far as a Blu Courier is engaged by or at the initiative of Aramex Sydney.
39. The situation with outside hire is different. The evidence is that the amount paid by Aramex Sydney to outside hire tends to be higher than the parcel rates paid to Courier Franchisees. It follows that each parcel delivered for or in place of a Courier Franchisee comes at a cost to that Courier Franchisee.
40. It is this cost which is at the heart of the grievances in the written evidence of the TWU’s witnesses. I note in particular that:
1. Ms Selbik stated that she “stands to lose money” when outside hire is used, that the deductions have a significant effect on her company’s ability to operate profitably, that the charges for outside hire are unpredictable and often made without her knowledge or consent, and that she has no control over when she will “encounter” the deductions;
2. Mr Wong deposed that he has not had a holiday in 20 years as he is “worried about the fees Aramex would charge [him] for outside hire”; and
3. Mr Hamady stated that the rate paid by Aramex Sydney to outside hire is “much higher than the rate paid to Sanyara Pty Ltd”. I observe that under cross-examination, Mr Hamady accepted that his “main complaint” was not the fact that outside hire may be engaged, but rather how much is charged for the outside hire.
41. In his statement, Mr Bovis deposed:
“20. If a CF is failing to service their exclusive territory, Aramex (Sydney) is bound by the CF Deeds to intervene to ensure that the territory is serviced, because the Aramex network throughout Australia (and internationally) depends upon efficient pick ups and deliveries throughout the whole network. For context, the deliveries performed in Sydney come from other CF exclusive territories from around the entire country.
…
75. OSH are engaged by Aramex (Sydney) on behalf of CFs when a CF has failed to meet their pick up and delivery obligations pursuant to the CF Deed (e.g. absenteeism or freight being left behind by a CF which the CF was required to ensure was delivered that day), and also in company-owned territories. If Aramex (Sydney) did not intervene, the freight would remain undelivered by the CF, and the breach by the CF of their pick up and delivery obligations would impact the Aramex network.
76. By engaging OSH on behalf of a CF in their exclusive territory, Aramex (Sydney) prevents the CF’s failure to meet its obligations under the CF Deed from causing damage to Aramex (Sydney) and other third parties in the Aramex network.
77. If Aramex (Sydney) could not ‘cure’ the breach by obtaining an alternative means of delivery at the CF’s cost, Aramex (Sydney) will need to address the breaches by CFs by alternative measures.
78. I anticipate that this would mean taking action in response to the CF’s breach of their CF Deed, in accordance with the CF Deed.
79. Aramex (Sydney) does not always enforce its right to charge CFs for the use of OSH in circumstances where CFs have not complied with their obligations under their CF Deed. Aramex (Sydney) does not typically charge for OSH where Aramex (Sydney) has determined that there is too much volume for the CF to reasonably service the territory in the short term, where the CF has ensured they have taken aged and priority freight, or if the CF cannot fit the amount of freight in their vehicle (although, if this issue persists, the CF may be expected to address their capacity constraints).
80. In practice, the rates paid to OSH are not sustainable for Aramex (Sydney). …”
42. As to the rates paid to outside hire, Mr Bovis gave the following evidence under cross-examination:
“Q. You gave some evidence earlier to Mr Guy that outside hire was now $3.35 per parcel. Have I understood that correctly?
A. The majority are, yes.
Q. And that was a rate which was proposed by Aramex to the outside hire providers Aramex engages?
A. Yes.
Q. And some of them accepted it, some of them haven’t?
A. Yes.
Q. The rate that outside hire is paid is a rate that is determined at all times by Aramex, correct?
A. Yes.
Q. And Aramex is responsible for paying that rate to outside hire?
A. Yes.”
43. Mr Bovis gave the following further evidence under cross-examination:
“Q. You used the expression ‘unlikely to pass the loss on’, does that mean that even if, for whatever reason, their van’s full and they physically can’t take the goods, there might be a circumstances where you would impose the deduction?
A. I’m not aware of any in my time where we have. It’s one of the rules I’ve put in place with the guys, that if they’re doing the right thing and doing all they can, then I don’t believe we should pass that cost on.
Q. Right?
A. But if they’re going out with minimal deliveries and, you know, we roughly know what couriers can do in their various territories. If they’re just looking to have an easy day or of the like [sic], we probably would pass it on because we believe they could have done it.
Q. Is it a fair summary of what you’ve just told us, sir, to say that it depends ultimately on your view about how the couriers is performing the work and whether they’re doing the best that they can in the circumstances?
A. Yeah, based on the capacity in their vehicle. And if that was to continue beyond, you know, a reasonable time, say a week or two, we expect the courier to either get a bigger van or make alternative arrangements for [an] authorised driver. If they weren’t to do that, they’d likely incur the costs to service their exclusive territory.
Q. So, outside hire could be engaged by Aramex for instance where a courier franchisee is ill and can’t perform, pick up some deliveries and is unable to find an alternate driver?
A. Yes.
Q. And in that situation, as I understand your evidence, you would charge the courier franchisee?
A. Yes.
Q. For the cost of the outside hire?
A. Yes.
Q. Without question?
A. Yes.
…
Q. Now, if a contract carrier engaged by Aramex took annual leave but they were unable to find an alternate driver to do pick up and deliveries, would they be charged outside hire?
GUY: Oh, I--
WITNESS: Yes. Sorry.
BONCARDO: ‘Yes’ is the answer to my question.”
The Initial Franchise Fee
44. In order to “purchase” a run from Aramex Sydney, a prospective Courier Franchisee must pay an “initial franchise fee”. Mr Bovis accepted that this is a “minimum requirement” for working as a Courier Franchisee for Aramex Sydney. The amount of the initial franchise fee varies from run to run.
45. Each of the Courier Franchisees from whom the TWU called evidence deposed as to having paid an initial franchise fee. Sanyara Pty Ltd paid $44,000 in 2016 and Cencik Pty Ltd paid $23,000 in 2017. In 2006 Successful Enterprises Pty Ltd paid $45,000 to purchase a run from another company, which was at that time providing courier services to Fastway Pty Ltd.
46. Under cross-examination, Mr Bovis was unable to explain what use Aramex Sydney made of the initial franchise fee.
The parties’ positions in overview
The TWU
47. There are two broad limbs to the case advanced by the TWU.
48. First, the TWU contends that the deductions are contrary to s 118 of the Industrial Relations Act 1996 (“Act”), or in the alternative, to s 119 of the Act, rendering them unlawful. It follows, in the TWU’s submission, that “it will be axiomatically fair and reasonable to make a contract determination which requires Aramex to cease making what are unlawful deductions”.
49. Second, and in the alternative, the TWU argues that the deductions are neither fair nor reasonable in that:
1. they do not appear congruent with any costs actually incurred by Aramex Sydney in facilitating the performance of its transport business;
2. they are costs which should be borne by Aramex Sydney as the principal contractor;
3. the deductions are industrially unfair and unconscionable, “[g]iven the exorbitant amounts Aramex requires carriers to pay to have the privilege of working for it”; and
4. the deductions undermine the capacity of the carriers to achieve cost recovery and operate profitable businesses.
50. In its opening submissions at the hearing, the TWU summarised its case in respect of the deductions as follows:
“The scanners are and the evidence, we say, will demonstrate an integral part of the principle contractors [sic] system, and the way that it conducts its business and enable it to, amongst other things, track the location of every single parcel in its system, and monitor the performance of work by each of the contract carriers, and the contract carriers have no real or practical choice but to use the scanners provided to them by Aramex which scanners remain the property of Aramex.
In respect to sorting, so far as can be discerned from the respondent’s case, the sorting fee apparently relates to the sorting of freight by labour hire employees engaged by a labour hire company that the respondent engages to provide labour to its Chullora depot, and to defray costs it has incurred on the evidence of Mr Bovis, in installing an automated system, and those are costs, that, with respect to the respondent, are costs of a [principal] contractor in the course of running a courier business. They are not costs which, in our respectful submission, are legitimate business costs of contract carriers who are performing and are engaged to perform contracts of carriage.
The outside hire costs which are deducted are also not legitimate business costs in our respectful submission for the contract carriers to bear, as appears from Mr Bovis’s evidence, it is Aramex that engages the outside hire and it is Aramex who pays and derives the benefit of the services provided by outside hire, and seeks to defray its costs in that respect by charging - by way of deduction [of] an amount, or amounts, for outside hire on the contract carriers.”
Aramex Sydney
51. The case advanced by Aramex Sydney can similarly be reduced to a few broad propositions.
52. First, in its written outline of submissions, Aramex Sydney contended that its “primary position” was that the proposed contract determination should not be made because the TWU had not presented any evidence from a Courier Franchisee which would be covered by it. It argued that none of the entities from whom the TWU called evidence was a contract carrier within the meaning of Ch 6 of the Act. It was said, consequentially, that there was “no utility” in the Commission making the proposed determination.
53. Although Aramex Sydney referred in its submissions to the proposed contract determination lacking “utility”, I do not consider that to properly reflect the arguments advanced. The company’s position is better to be understood as contending that in the absence of evidence from a Courier Franchisee which is a contract carrier within the meaning of Ch 6 of the Act, the case for the Commission’s intervention to make a contract determination has not been made out.
54. Second, and in the alternative, Aramex Sydney submitted that the deductions relate to expenses which Courier Franchisees must incur in running their businesses. It was consequently justified and reasonable that they pay for those expenses by way of the deductions made by Aramex Sydney. Its position was well summarised in the following passages in its written outline of submissions:
“40. In considering the present matter, the correct approach is therefore to recognise that the CF’s to which any contract determination may apply, are independent contractors who take their own chances of profit and risk of loss. They run their own businesses and must, as any business owner does, bear the cost of their business expenses.
41. Put in the simplest of terms, CF’s that are contract carriers, being independent contractors must bear the cost of their business expenses. The cost of and deductions for scanners, freight sorting and the use of [outside hire] …are business expenses no different to that of tyres, fuel, maintenance, and registration of which there is no dispute the carriers must pay for.
42. By making a determination that exempts contract carriers from deductions for scanners, OSH and Blu Couriers, and freight sorting, the Commission will create a relationship between the parties that is unfair and not industrially sound. The TWU’s applications seek to move the legitimate business expenses of contract carriers on to their principal contractor. A circumstance that is wholly unsatisfactory and undermines the very purpose of the contract carrier/principal contractor relationship.”
55. Aramex Sydney also submitted:
“26. The practical reality of exercising the discretion to make a determination or not is however, one that is not taken lightly. As part of exercising the discretion in the present matter, the Commission should also take into account that:
a. the making of a determination would create a new remedy on top of the existing section 118 and 119 provisions that is not needed;
b. none of the persons giving evidence in the TWU’s case are contract carriers; and
c. there are presently contract determinations already in place that deal with the same subject matter. In particular, in both the General Carriers Contract Determination and the Courier and Taxi Truck Determination.”
56. Finally, Aramex Sydney submitted that, were the Commission to be satisfied that a contract determination ought to be made, then in light of the evidence it should be limited in its scope to Courier Franchisees which are contract carriers. It should not extend to the category of carriers known as “Courier Lites”.
57. It is not necessary for present purposes to explore what is meant by a “Courier Lite” and how they fit within the business conducted by Aramex Sydney. I confine myself to referring to TWU v NSW Couriers at [20]-[21]. Mr Bovis gave uncontroverted evidence that “[t]here are no existing Courier Lites engaged by Aramex (Sydney)”.
Relevant law and principles
58. Pursuant to s 313(1) of the Act, the Commission is empowered to inquire into any matter arising under contracts of carriage and to make a contract determination with respect to remuneration of the carrier, and any condition, under such a contract. The term “contract of carriage” is defined in the Act as follows:
309 Contract of carriage—meaning
(1) For the purposes of this Chapter, a contract of carriage is a contract (whether written or oral or partly written and partly oral) for the transportation of goods by means of a motor vehicle or bicycle in the course of a business of transporting goods of that kind by motor vehicle or bicycle, but only—
(a) where the carrier is not a partnership or body corporate—if no person except the carrier is, except in the prescribed circumstances, employed (whether pursuant to a contract of employment or not and whether by the carrier or not) in driving or riding on that or any other motor vehicle or bicycle in the course of that business, or
(b) where the carrier is a partnership—if no person other than a partner is, except in the prescribed circumstances, employed (whether pursuant to a contract of employment or not and whether by the partnership or not) in driving or riding on that or any other motor vehicle or bicycle in the course of that business, or
(c) where the carrier is a body corporate—if no person is, except in the prescribed circumstances, employed (whether pursuant to a contract of employment or not and whether by the body corporate or not) in driving or riding on that or any other motor vehicle or bicycle in the course of that business unless the person is—
(i) a director of the body corporate or a member of the family of a director of the body corporate, or
(ii) a person who, together with the members of his or her family, has a controlling interest in the body corporate, or
(iii) a member of the family of a person who, together with the members of his or her family, has a controlling interest in the body corporate.
(2) For the purposes of subsection (1), a reference to a carrier includes a carrier carrying on business under a franchise or other arrangement.
…
59. I digress to deal with a matter of clarification. In their written and oral submissions, the parties in these proceedings used the term “contract carriers”. That term appears in the Act, in the context of multiple references to “an association of contract carriers”. The Act does not, however, define “contract carrier”. To my mind, it is tolerably clear that a reference to a “contract carrier” is one to a carrier engaged under a contract of carriage, as defined in s 309. Where the term is used in this decision, it should be read as having that meaning.
60. Section 315 of the Act provides that when an application is made for the Commission to make a contract determination, it must conduct a conference at which it is to, amongst other things, “take all reasonable steps to effect an amicable settlement of any matters in dispute”. It is not controversial that this requirement has been met: Commissioner O’Sullivan convened conferences with the parties on 28 November 2023 and 6 December 2023.
61. In exercising its functions under the Act, the Commission must take into account the public interest and, for that purpose, must have regard to, amongst other things, the objects of the Act: s 146(2). Those objects are contained at s 3 of the Act, which relevantly provides:
3 Objects
The objects of this Act are as follows—
(a) to provide a framework for the conduct of industrial relations that is fair and just,
(b) to promote efficiency and productivity in the economy of the State,
…
(e) to facilitate appropriate regulation of employment through awards, enterprise agreements and other industrial instruments,
…
(h) to encourage and facilitate co-operative workplace reform and equitable, innovative and productive workplace relations,
…
62. In Transport Industry – General Carriers Contract Determination [2016] NSWIRComm 3, Kite AJ (as he then was) observed:
“30. A number of parties made reference to the decision of Haylen J in Transport Industry - General Carriers Contract Determination Application by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge [2010] NSWIRComm 133 (‘Special Fuel Price Surcharge Case’). In that matter his Honour stated at [16]:
There was no dispute between the parties that there was a general and wide discretion provided by s 320 of the Act to vary a Determination. It was broadly accepted that, in exercising that power to vary a Determination, the Commission may be guided by similar considerations contained within s 10 and s 17, namely, that the Determination should set fair and reasonable rates and that in making a variation, the public interest is to be considered provided there is a substantial reason for making the variation.
…
34. It has long been recognized that Industrial Tribunals are in a different position to the general courts. The duty of the Commission is to make an award or determination which prescribes fair and reasonable rates and conditions. In doing so the Commission is not bound by the rules of evidence or to act in a formal manner but ‘is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.’ See s 163 (1)(c) of the Act.
35. The various authorities referring to the ‘onus’ [borne] by a party are to be understood in that context. There must be information before the Commission which allows it to be satisfied that the determination or award, if made, will provide just and reasonable rates and conditions. The assessment of the adequacy of that material will vary according to the nature of the case, including the degree of consent, before the Commission: see In re Butchers, Wholesale (Cumberland) Award 1971 AR 425 especially at 437- 440.
36. I intend to approach the matter in that light.” (Emphasis in original)
63. In Transport Industry – General Carriers Contract Determination 2017 [2017] NSWIRComm 1013 (“TI – GCCD 2017”) Newall C:
1. accepted as correct the proposition derived from Transport Industry – General Carriers Contract Determination Application by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge [2010] NSWIRComm 133 that in exercising the power to vary a contract determination the Commission may be guided by similar considerations to those arising in respect of ss 10 and 17 of the Act: at [12]; and
2. observed that, like an award, a contract determination ought to set fair and reasonable rates. The overarching duty of the Commission when it is dealing with the setting of rates and conditions is that it must make rates and conditions which are fair and reasonable: see [12] and [16].
Aramex Sydney’s “utility” argument
64. As stated above, Aramex Sydney’s “primary position” was that the proposed contract determination should not be made as there was no evidence from a Courier Franchisee which would be covered by it. The key premise of the contention was that that none of the entities from whom the TWU called evidence was a contract carrier.
65. In TWU v NSW Couriers at [126], Commissioner Webster concluded that a contract of carriage within the meaning of s 309(1) of the Act existed between Courier Franchisees and Aramex Sydney, and that Aramex Sydney is a “principal contractor” within the meaning of s 310 of the Act. That decision was not the subject of appeal and its correctness was not challenged before me.
66. To the contrary, in its written outline of submissions, Aramex Sydney submitted that as a result of Commissioner Webster’s decision, the matter of jurisdiction was “settled” and that “there is no doubt that the relationship between [Courier Franchisees] and Aramex Sydney is one of a contract of carriage provided [the Courier Franchisees] meet the legislative requirements of such a relationship as outlined in section 309 of the IR Act”.
67. The “utility” argument advanced by Aramex Sydney was that none of the Courier Franchisees from whom the TWU called evidence met those legislative requirements. It submitted that Sanyara Pty Ltd and Selbik Pty Ltd “regularly utilise Blu Couriers to perform work for and on behalf their enterprises”, while Successful Enterprises Pty Ltd “for an extended period…heavily utilised Blu Couriers and additional drivers to service their run”. This was said to take each company outside the definition of “contract of carriage”, having regard to the terms of s 309(1)(c) of the Act.
68. Aramex Sydney relied on evidence from Mr Bovis to the effect that:
1. Sanyara Ptd Ltd had allocated work to Blu Couriers on 23 occasions between May 2022 and January 2024;
2. Aramex Sydney “allocates excess freight which Selbik Pty Ltd has failed to deliver to Blus when they are available”; and
3. Successful Enterprises Pty Ltd “has historically heavily utilised Blus”, observing that in 2019 the company “allocated around 3,542 parcels to Blu[s]”.
69. There are three observations to make. First, the utilisation by a Courier Franchisee of Blu Couriers, or any other form of labour, is not of itself sufficient to conclude that the Courier Franchisee cannot be a contract carrier. Section 309(1)(c) of the Act anticipates that third party labour can be used in “the prescribed circumstances”, without affecting the carrier’s status. By cl 34(1)(a) of the Industrial Relations (General) Regulation 2020, the prescribed circumstances include the employment of a person “to temporarily take the place of a person directly involved in the business who is sick, on annual leave or otherwise temporarily unavailable”.
70. Second, the premise of Aramex Sydney’s position in respect of Selbik Pty Ltd is that the company ceases to be a carrier under a contract of carriage as a result of Aramex Sydney engaging Blu Couriers to perform deliveries that Selbik Pty Ltd had not completed. I have a great deal of difficulty accepting the proposition that an entity could avoid the creation of a contract of carriage, and hence regulation under Ch 6 of the Act, by arranging for third parties to perform cartage work that would otherwise be performed by a carrier, potentially even without the carrier’s knowledge or consent.
71. Third, and in a related manner, the evidence raises doubts as to whether a Blu Courier engaged by Aramex Sydney is, to use the language of s 309(1)(c) of the Act, “employed…in the course of [the Courier Franchisee’s] business”. The relationship, certainly when the Blu Courier is engaged by Aramex Sydney, seems to be between those parties, not between the Blu Courier and the Courier Franchisee. This is borne out by the evidence given under cross-examination by Mr Bovis that “it’s Aramex who sets the Blu Courier fee”. Further, Mr Bovis had the following exchange with counsel for the TWU:
“Q. I think you’d answered my question that a Blu Courier applies via a website set up by Aramex to become a Blu Courier?
A. Yes.
Q. They complete an online application form?
A. Yes.
Q. A Blu Courier manager then contacts them?
A. Yes.
Q. They’re on-boarded by Aramex?
A. Yes.
Q. They’re trained by Aramex?
A. Yes.
Q. They’re inducted into Aramex’s systems by Aramex?
A. Yes.
Q. They have an application on their mobile phones, don’t they--
A. They do.
Q. --that they use?
A. They do, yes.
Q. And they’re able to log onto that application and accept deliveries, correct?
A. Yes.
Q. That application is one which has been designed by Aramex?
A. Yes.
Q. And they’re able to accept and reject work via that application?
A. Yes.
Q. If they accept work, they will collect deliveries from a location nominated by the application?
A. Yes.
Q. That location could be the Chullora depot, it could be somewhere else, correct?
A. Yes.
Q. And they pick up parcels?
A. Yes.
Q. And they then deliver them to the addresses set out in the application, correct?
A. Yes.
…
Q. Now, Aramex expects Blu Couriers to deliver the parcels they’ve accepted for delivery, correct?
A. Yes.
Q. Aramex expects that if a Blu Courier is unable to make a delivery, they return the parcels to Aramex or re-attempt delivery?
A. Yes.
Q. Blu Couriers are paid by Aramex on a ‘per parcel’ basis?
A. Yes.
Q. They’re paid weekly in arrears by Aramex?
A. Yes.
Q. When a courier franchisee decides, for whatever reason, they can’t deliver certain parcels, they allocate those parcels on their scanner to Blu Couriers?
A. Yes, can’t or won’t, yes.
Q. And by a means that’s entirely controlled by Aramex those potential parcel deliveries pop up on a mobile phone application of a Blu Courier who can select to make those deliveries?
A. Yeah, so they’re grouped by the CF when they scan into the portal, so the Blu Courier selects a group which might be 40 parcels, usually the minimum, and it’s basically they log on, they accept that run, then they’ll come in and collect those parcels.
Q. Alternatively, from time to time a courier franchisee will give their regional franchise manager parcels that they cannot, for whatever reason, deliver and the regional franchise manager will allocate them to a Blu Courier for delivery?
A. That’s generally not the case.
Q. But it does happen?
A. I’m not too aware of it happening where they give them to us to deliver to them, scan it to the portal, we’ve had cases with Cencik where she left them behind, intentionally, and that was the cheapest volume you can deliver.
Q. When a courier franchisee allocates parcels to Blu Couriers, they don’t know and cannot know which particular Blu Courier will deliver the parcels?
A. No, not if they’re following the process.”
72. In relation to the observation at [69] above, Aramex Sydney led no evidence as to the circumstances in which Sanyara Pty Ltd or Successful Enterprises Pty Ltd engaged Blu Couriers. It asks, in effect, that the Commission assume or infer that any engagement was not in a “prescribed circumstance”.
73. Mr Wong gave evidence that in July 2019 he had to take time off work as a result of surgery to remove his appendix. One could easily infer that this was a “temporary unavailability”. There is little evidence to suggest that the use of Blu Couriers has continued, and if so in what circumstances. Under cross-examination, Mr Wong confirmed that he had never had another driver on his run.
74. Aramex Sydney has failed to persuade me that Sanyara Pty Ltd or Successful Enterprises Pty Ltd are not contract carriers. This is sufficient to dispose of its “primary position”, without needing to express a concluded view on the second and third observations referred to at [70]-[71] above. That said, I note one further matter.
75. As I have previously remarked, Aramex Sydney did not challenge the correctness of TWU v NSW Couriers. Unlike the position it took in that case, Aramex Sydney raised no jurisdictional objection to the Commission making the contract determination sought by the TWU in these proceedings. To the contrary, it described the question of jurisdiction as having been “settled”. As the TWU submitted in its closing oral submissions, “[it] doesn’t appear in dispute, because there’s been no jurisdictional objection, that some of the carriers engaged by Aramex at least, even accepted by Aramex, are contract carriers”.
76. I am prepared to draw the inference that at least some of the 123 Courier Franchisees engaged by Aramex Sydney are contract carriers. It follows that even were I to have been persuaded that none of Sanyara Pty Ltd, Selbik Pty Ltd or Successful Enterprises Pty Ltd are contract carriers, it would not have sufficed for me to dismiss the matter.
TWU’s reliance on alleged breaches of sections 118 and 119 of the Act
77. One of the bases on which the TWU relied was the contention that the disputed deductions are contrary to ss 118 and 119 of the Act. The TWU submitted that if this contention were correct, the deductions would necessarily be unfair and unreasonable on the basis that they were unlawful, which would support the Commission making the proposed contract determination.
78. For the reasons which follow, and the conclusions that I have reached, it is not necessary for me to traverse the arguments advanced by the parties in relation to this issue.
Relationship between Aramex Sydney and the Courier Franchisees
The case presented by Aramex Sydney
79. Despite there being no challenge to the correctness of TWU v NSW Couriers, the case presented by Aramex Sydney did not reflect a full appreciation or acceptance of Commissioner Webster’s decision. Throughout his statement, Mr Bovis emphasised the fact that Courier Franchisees are, indeed, franchisees which operate their own businesses, purportedly separate to that of Aramex Sydney. For example, he stated:
“14. CFs do not perform work for Aramex (Sydney). They elect to purchase the right to an exclusive territory, consistent with their CF Deed, and run a courier business within that territory. CFs are granted to the exclusion of Aramex (Sydney) and others a licence to establish and operate the Franchise in their exclusive territory, consistent with clause 2.1 of the CF Deed. Territories may be purchased from Aramex (Sydney), or from an existing CF, in accordance with the terms of that existing CF’s CF Deed.
15. CFs are required to service their exclusive territory, which broadly means they must fulfil all their obligations regarding deliveries and pickups within their exclusive territory. All pick ups and deliveries which arise in that exclusive territory are the responsibility of the CF. To the extent the authorised driver of a CF is unwell, on leave, or otherwise unavailable, the CF is expected to make alternative arrangements to ensure it meets its obligations to service its exclusive territory in accordance with its CF Deed.
16. Aramex (Sydney) expects a CF to meet the demand in their business…
…
21. CFs, as franchisees, are independent businesses. As businesses, they are only successful if work is done to grow and maintain those businesses, including building relationships with and securing new customers. This is a fundamental requirement of a franchising model.
…
32. CFs run their own franchise businesses. …” (Emphasis added)
80. The arguments advanced by Aramex Sydney referred to at [54] above also do not fully engage with, much less embrace, Commissioner Webster’s findings in TWU v NSW Couriers. As the Commissioner recognised at [35] of her decision, s 309(2) of the Act “envisages that a contract of carriage may co-exist with a franchise arrangement”.
81. Chapter 6 of the Act does not detract from the fact that contract carriers are businesses in their own right. However, the Act recognises that the nature of the relationship created by a contract of carriage calls for particular rights, protections and obligations, for both the contract carrier and the principal contractor. These are reflected in the contract determinations made by the Commission pursuant to Ch 6.
The contract determination that already applies
82. This gives rise to the question as to whether Courier Franchisees which are contract carriers are already covered by a contract determination and, if so, which one. The terms of any applicable contract determination may be relevant to the dispute before the Commission.
83. This was not a question to which either party gave much attention in their cases. The TWU submitted that the Transport Industry – General Carriers Contract Determination 2017 (“GCCD”) applies to Courier Franchisees which are contract carriers. It did not explore the implications of that coverage.
84. In the written submissions of Aramex Sydney referred to at [55] above it was contended that one of the reasons for which the Commission would decline to make the proposed contract determination was that “there are presently contract determinations already in place that deal with the same subject matter”, referring to the GCCD and the Transport Industry – Courier and Taxi Truck Contract Determination (“CTTCD”). The submissions seem to suggest that both contract determinations apply, which for reasons explored below cannot be correct. The submissions did not identify how and to which Courier Franchisees the contract determinations apply, or how they were said to “deal with the same subject matter”.
85. After the parties had finished their closing oral submissions, I raised this issue with them. I posed, in effect, three questions. First, whether either the GCCD or the CTTCD applies to Courier Franchisees which are contract carriers. Second, if either contract determination applies, whether on its terms it provided an answer, in whole or in part, to the TWU’s claim. Third, whether the deductions were otherwise inconsistent with the basis on which those contract determinations had been made. I invited the parties to make further written submissions on these matters.
86. The parties accepted that invitation and each provided supplementary written submissions. The TWU maintained that the GCCD applies. Aramex Sydney contended that the CTTCD applies.
87. At first glance, the CTTCD might appear apt. The descriptor “Courier Franchisee” might be seen as indicating the nature of work performed. Mr Bovis described Aramex Sydney as running a “courier business”. The CF Deed contains references to the Courier Franchisee performing “courier services” and conducting certain activities “in the course of a courier business”. However, this evidence is not determinative as to whether the CTTCD applies.
88. Aramex Sydney relied on the definition of “Courier Work” in cl 1 of the CTTCD, which is in these terms:
“Courier Work” means the transportation by means of a courier or taxi truck vehicle of goods of up to a maximum of 250 kilograms of weight from one place to another by a contract carrier for reward at the behest of a principal contractor pursuant to a contract of carriage and where it is intended by the parties that the time to be taken is either:
(a) within a standard time requested of the contract carrier by the principal contractor and advertised as such (to be known for the purposes of this determination [as] ‘standard service’), or
(b) within a time required of the contract carrier by the principal contractor which is the shortest possible time or within a time which is less than the standard time as in (a) above and advertised as such (to be known for the purposes of this determination as ‘Express/Priority/V.I.P. Service’) and where it is intended that in any event completion is to be effected on the same day as commencement or by the earliest reasonable time on the following normal working day.
89. There is no controversy that Courier Franchisees utilise a “courier or taxi truck vehicle” and transport “goods of up to a maximum of 250 kilograms of weight”. Aramex Sydney contended further, however, that it requests or requires Courier Franchisees to transport goods either within the “standard service” or “Express/Priority V.I.P. Service” timeframes. In support of this contention, it referred me to particular terms of the CF Deed and CF Manual, and provided links to its website.
90. There is only limited reference in the evidence on which Aramex Sydney relied that specifies delivery times. The high point is item 7.40 of the CF Manual, which provides that a Courier Franchisee must deliver all freight on the day that it arrives into their bay at the depot. Under cross-examination, Mr Bovis confirmed that requirement, but the context in which he gave evidence is telling:
“Q. And they’re required to attend Chullora every morning to collect the parcels they’re required to deliver that day?
A. Yes.
Q. They’re also required to attend Chullora at the finish of each day, aren’t they?
A. To return the parcels, yes.
Q. When they attend in the morning, they’re obliged to sort out the freight that they are to deliver?
A. They’re required to sort the freight they’re loading into their vehicle that’s been presented to them.
Q. So they’re required to collect up the parcels that have been reserved to them, which they are to deliver that day?
A. Yes.
Q. They load the parcels onto their vehicle?
A. Yes.
Q. And then they go out and perform their work, correct?
A. Yep.
Q. They’re required to deliver those parcels within any timeframes that Aramex may stipulate from time to time?
A. We don’t stipulate the time.
Q. It’s not a matter of their discretion to deliver the parcels a week after they’re received though, is it?
A. No, they’re to be delivered that day but we don’t stipulate specific times they’re to be done by.
Q. So the parcels allocated to the courier franchisee must be delivered the day that the courier franchisee collects them from the depot, is that right?
A. Yes.”
(Emphasis added)
91. Further, as the TWU submitted, nothing in the evidence to which Aramex Sydney referred me, including its website, discloses that the company advertises particular delivery times, whether by way of a “standard time” or a “time which is less than the standard time”. The requirement that delivery times be “advertised as such” is necessary for the work to be “courier work” as defined in cl 1 of the CTTCD.
92. There is another obstacle to the application of the CTTCD. The Courier Franchisees are required to attend the depot at Chullora each morning, and load their vehicles with the parcels to be delivered in their “territory”. They are also required during the day to pick up parcels that customers seek to have transported through Aramex network, and take them to the depot and load them, subject to size restrictions, onto the sortation system.
93. Clause 2.2(e) of the CTTCD provides that the contract determination will not apply to “contracts of carriage performed by contract carriers involved principally in parcel work”. “Parcel Work” is defined in cl 1 of the CTTCD as follows:
“Parcel Work” means the transportation of individual items or goods by a contract carrier participating in a system of distribution of goods from one place to another for reward at the behest of a principal contractor pursuant to a contract or contracts of carriage by means of a motor vehicle which system of distribution usually involves:
(a) transportation to a depot;
(b) unloading and sorting into groups, each group comprising items to be delivered to places within a logical geographical zone;
(c) reloading onto vehicles; and
(d) transportation to such other place(s) either on the same day or on the following normal working day.
94. The “system of distribution” operated by Aramex Sydney in which the Courier Franchisees are engaged involves “parcel work” as defined. The CTTCD does not apply to that work.
95. Clause 2.1 of the GCCD provides that it applies to “all Contracts of Carriage” other than those covered by a “Nominated Contract Determination” or which are performed using a “Specialised Vehicle”. There is no evidence of a Courier Franchisee using a Specialised Vehicle. There is no “Nominated Contract Determination” (as set out in Sch G to the GCCD) which is contended to apply, other than the CTTCD (which I have found not to apply).
96. It follows that I find that the GCCD applies to Courier Franchisees which are contract carriers.
Relevant terms of the GCCD
97. Amongst other things, the GCCD sets minimum rates of remuneration for the contract carriers to which it applies. When making the GCCD, Commissioner Newall observed in TI – GCCD 2017:
“19. I have made reference to the fact that the submissions before the Commission have advanced that this matter comes before the Commission by consent as an industrial compromise or an industrial agreement between the parties, but it ought not be thought, in my view at least, that this is simply a matter of the parties doing a deal. The parties - and I will return to this again later, the importance of this approach - rather than simply haggling out some figures that they could live with, have adopted the approach of developing a quite sophisticated cost and rate model which is now exhibit 5 in these proceedings. I have not seen an exercise of that complexity undertaken by any industry in advancing a new proposal for the structure of rates and conditions at any time whether in this Commission or in my experience in other industrial tribunals.
20. I accept what has been said to me that this model has been developed with the investment of significant time and resources. Its value it seems to me to lie in this: not only does it provide a proper justification for the rates that are advanced in the present contract determination application, but it provides a platform for dealing with disputes if there any during the life of the determination and further, for dealing with variations to the determination going forward. Based on that model and based on the reports and input that went into developing the model I am satisfied, as I have said, that the new rates do set a fair and reasonable safety net of cartage rates for contract carriers.
21. I accept, as it was submitted to me by the NSW Business Chamber, one of the employer group representatives, that the rates reflect proper cost recovery principles and therefore they allow contract carriers to be properly remunerated including covering costs. On the other hand they do not impose unfair costs on principal contractors or provide any kind of windfall gain. They are properly calculated rates factoring in cost recovery and, as was pointed out in submissions today, a margin.”
98. The GCCD contemplated a phasing in of “New Rates” to “Old Rates”. Schedule F to the GCCD makes clear that the “Old Rates” take into account and include payment for a range of items, including registration, insurance, fuel, oil, tyres, repairs and maintenance. This is significant having regard to the fact that the GCCD places the obligation on the contract carrier to register, repair and maintain their vehicle at their expense (cll 5.2 and 5.3), to “pay all of the running costs associated with” the vehicle (cl 5.4) and to maintain relevant insurances at their expense (cl 14.1).
99. At the time it was made by Commissioner Newall, the GCCD did not set rates for vehicles with a carrying capacity of less than two tonnes. As a result of Applications to vary the Transport Industry – General Carriers Contract Determination 2017 and Transport Industry – Courier and Taxi Truck Contract Determination [2022] NSWIRComm 1003, the GCCD was varied so as to insert rates of remuneration for “Light Vehicles”, being those with a carrying capacity of up to and including three tonnes. The same rates were inserted into the CTTCD, subject to phasing-in arrangements.
100. As the decision makes clear, those rates were derived from a process similar to that adopted in respect of TI – GCCD 2017, on the basis of achieving cost recovery for a contract carrier (albeit that there was some reservation expressed by the TWU in those proceedings as to whether the rates achieved “true cost recovery” – see [19(2)]).
101. In this context, the submissions of Aramex Sydney that “[t]he cost of and deductions for scanners, freight sorting and the use of [outside hire]…are business expenses no different to that of tyres, fuel, maintenance, and registration of which there is no dispute the carriers must pay for” represents a fundamental misapprehension as to the regulation of contract carriers under the GCCD, including in particular how the minimum rates of remuneration in the GCCD (and the CTTCD) were derived.
102. In its supplementary written submissions, Aramex Sydney submitted:
“20. If however, the Commission is minded to consider the fairness or otherwise of the Respondent’s present remuneration regime. The Commission should find that the present model of remuneration provides fair and reasonable remuneration for any contract carrier who may be engaged by the Respondent to adequately recover their costs and indeed provides a mechanism to allow contract carriers to make reasonable earnings above the CTTD.
21. In particular, the Courier Franchise Deed provides significant benefits to any contract carrier who may be engaged by the Respondent above that of the ordinary remuneration they may earn from traditional ‘courier work,’ in particular:
a. exclusivity of territories and capacity to grow the business within them;
b. commissions; and
c. provision for capital growth of exclusive area.
22. These factors, taken as part of the overall manner in which a contract carrier who may be engaged with the Respondent performs their role with the Respondent, provide for a fair and equitable level of remuneration that allows proper cost recovery.” (Reproduced verbatim, footnotes removed)
103. As the TWU submitted, the contentions at par 22 of the above extract are “made in an evidentiary vacuum”. The high point of the evidence led by Aramex Sydney in this regard was a table in Mr Bovis’s statement containing the earnings, deductions and net earnings for each of Sanyara Pty Ltd, Selbik Pty Ltd and Successful Enterprises Pty Ltd for the “Full Year 2023”. Aramex Sydney made no attempt to explain how those gross figures compared to the amounts payable to the relevant Courier Franchisee under the GCCD (or the CTTCD, assuming that to apply) for the relevant period, nor did it provide any evidence that would allow for such a comparison to be conducted. Similarly, there is no evidence as to the costs incurred by the Courier Franchisees so as to test the proposition that their remuneration provides them with “proper cost recovery”.
104. It is also relevant to observe that in a number of instances, the GCCD provides that if the principal contractor seeks to impose a requirement on a contract carrier, it must do so at its own expense. This is seen, for example, in:
1. cl 5.9, which entitles the principal contractor to paint or sign-write the contract carrier’s vehicle, provided that the principal contractor pays for the costs of the painting or sign-writing, and for making good the vehicle at the end of the engagement; and
2. cl 8, which provides that if the principal contractor requires the contract carrier to wear a uniform, it must supply that uniform at no cost to the contract carrier (cl 8.1). The uniform remains the property of the principal contractor (cl 8.3).
105. Clause 5.7 of the GCCD is of particular relevance to the deduction in respect of scanners. That clause relevantly provides as follows:
“5.7 Communication and Related Technology
(a) The Principal Contractor may supply the Contract Carrier with communication and related technology for use in the Contract Carrier’s Vehicle.
(b) Where such communication and/or related technology is supplied by the Principal Contractor:
(i) The Principal Contractor must install and maintain the communication and related technology required by the Principal Contractor and the Contract Carrier must operate it efficiently as directed by the Principal Contractor.
(ii) The Contract Carrier has full responsibility for the safe custody of the communication and related technology.
…
(d) Immediately upon the ending or termination of any head contract under which the Contract Carrier performs the Cartage Work:
(i) the Contract Carrier must return the communication and related technology to the Principal Contractor in good order and condition, save for any fair wear and tear only; and
(ii) the Principal Contractor must make good any repairs to the Contract Carrier’s Vehicle arising from the removal of the communication and related technology.”
106. The term “communication and related technology” is not defined in the GCCD. It is at least arguable that it would extend to scanners. There is nothing in the GCCD which suggests that a principal contractor can require a contract carrier to pay for the cost of the communication and related technology. The obligation on the part of the principal contractor to make good the contract carrier’s vehicle on removal of the technology might suggest that the costs of supplying and installing it are also to be borne by the principal contractor, by analogy with cl 5.9.
107. Clause 10 of the GCCD has potential relevance to the deduction for outside hire. It relevantly provides as follows:
10. Annual Leave
10.1 Entitlement
A Regular Contract Carrier may take four weeks' annual leave without payment.
…
10.4 Utilisation of Vehicle
To avoid any doubt, and unless otherwise agreed between the parties, during any period of annual leave the Contract Carrier has no obligation to present their Vehicle to the Principal Contractor for Cartage Work.
108. The GCCD at cl 1.1 defines a Regular Contract Carrier as a contract carrier “who operates under a contract with a Principal Contractor and who is wholly or principally engaged by that Principal Contractor”. In light of the evidence as to the basis on which Courier Franchisees are engaged by Aramex Sydney, this definition would apply to a Courier Franchisee which is a contract carrier.
109. The entitlement of a contract carrier to take four weeks annual leave is at odds with a requirement that a Courier Franchisee perform work “year-round”, as the documents reflecting their terms of engagement anticipate.
110. I am mindful that Courier Franchisees will have executed a CF Deed, binding them to comply with the CF Manual. I also have regard to the fact that some Courier Franchisees, including Cencik Pty Limited and Successful Enterprises Pty Ltd, signed documents titled “Deduction acknowledgement form”, authorising Aramex Sydney to deduct from their remuneration amounts for the scanners, freight sorting and outside hire, amongst other things.
111. However, it was not suggested by Aramex Sydney that these matters are to be taken as an agreement within the meaning of cl 10.4 of the GCCD. This is unsurprising given that it disputes that the GCCD has any application. That said, there is no basis on which I could find on the evidence that the contractual arrangements between Aramex Sydney and its Courier Franchisees contemplated cl 10 of the GCCD and that, as a consequence, an agreement for the purposes of cl 10.4 is to be inferred.
112. Absent such agreement, the premise of Aramex Sydney’s justification for deducting the costs of outside hire falls away, if those costs are incurred while a Courier Franchisee which is a contract carrier is on annual leave. There is little evidence as to whether this occurs. To the contrary, Mr Wong deposed that he has not taken annual leave for some years out of concern for the costs that he would incur through the engagement by Aramex Sydney of outside hire. This brings into focus the extent to which the arrangements Aramex Sydney has with its Courier Franchisees depart from the protections offered by the GCCD.
Implications were the CTTCD to apply
113. Notwithstanding my finding that the GCCD applies to Contract Franchisees which are contract carriers, there are several observations that can be made were I to have accepted Aramex Sydney’s contention that the CTTCD was the applicable contract determination. As these remarks are necessarily obiter dicta, I will keep them brief.
114. In short, Aramex Sydney failed to acknowledge or address the implications of the CTTCD applying, both for itself and the relevant Courier Franchisees.
115. As I have already canvassed at [99]-[100] above, the rates of remuneration contained in the CTTCD were calculated having regard to the principle of “cost recovery” for a contract carrier. Aramex Sydney did not grapple with the question as to whether its practice of making deductions from Courier Franchisees’ remuneration is consistent with that principle.
116. Further, the CTTCD provides:
12. Remuneration
…
12.3 The principal contractor shall be entitled to deduct and retain from any remuneration the contract carrier is entitled to receive:
12.3.1 any amounts payable to the principal contractor by the contract carrier pursuant to this contract determination, provided that the contract carrier has first given written authority to the principal contractor specifying the nature and the amounts which may be so deducted; and/or
12.3.2 a maximum of the sum of five hundred dollars in the event of the contract carrier ceasing to perform further contracts of carriage with the principal contractor. …
12.4 The following deductions are not permitted, whether by agreement or otherwise:
• Radio or radio accessory fees or charges.
• Fees or charges for on-board computers or display screens or mobile data units or similar equipment, or for computer consumables.
• Administration fees.
• Contributions towards bonus schemes.
117. Scanners appear to be a form of “mobile data units or similar equipment”. On its terms, cl 12.4 would preclude deductions being made in respect of them.
118. The TWU submitted that “administration fees” would extend to costs associated with freight sorting. I am not entirely persuaded by those submissions, but it is not necessary that I form a concluded view on the matter. It suffices to say that it is an arguable point.
119. Even if it were determined that cl 12.4 did not cover freight sorting, and noting that nothing in that provision could be said to encompass the costs of engaging outside hire, there is a further argument that cl 12.3 delimits the deductions that can be made from a contract carrier’s remuneration. If that were found to be the case, it is significant that nothing in the CTTCD anticipates a contract carrier being liable for costs incurred by the principal contractor in sorting freight or engaging outside hire to perform work for or in place of the contract carrier. It follows that those amounts could not be said to be payable “pursuant to this contract determination”. Again, this is not a matter on which I need to express a concluded view.
120. The TWU drew my attention to a number of provisions of the CTTCD which were to a similar effect to those of the GCCD referred to at [104] above. That is, that made the principal contractor responsible for the costs of imposing a particular requirement on a contract carrier. I will not traverse those provisions.
Whether existing industrial coverage is sufficient
121. In its supplementary written submissions, Aramex Sydney submitted:
“23. If the Commission is so minded as to determine the current dispute by making a finding that the CTTD applies to any contract carrier that may be engaged by the Respondent (or if it is to determine the dispute on the basis that the GCCD applies) then the Commission should not make any determination as to whether the Respondent has contravened sections 118 or 119 of the IR Act. It is not necessary for the Commission to make a determination when the CTTD and the IR act, together, already provide fair and reasonable conditions. If the Commissioner is satisfied that the existing suite of industrial regulation is adequate to secure fair and just, then it would serve no practical purpose to make duplicative obligations. To the contrary, a determination would create greater complexity and creating more administrative burden.
…
25. In addition to the above, if the Commission is to find that an overarching determination such as the CTTD or the GCCD applies then the Commission should not make the determination are sought by the Applicant.
26. In circumstances where the Commission finds that either the GCCD or the CTTD applies, the relevant determination provides a comprehensive industrial framework for the management of the relationship between the Respondent and any contract carrier that they may engage.
27. Making the contract determination as sought by the Applicant would only create an unnecessary, more burdensome and potentially duplicate system of reregulation. …” (Reproduced verbatim)
122. It is well-settled that awards of the Commission are presumed to set fair and reasonable conditions of employment: City of Sydney Wages/Salary Award 2014 (2014) 247 IR 386; [2014] NSWIRComm 49 at [12]. In light of the authorities to which I have referred at [62]-[63] above, I consider that contract determinations should be subject to the same presumption.
123. It follows that had Aramex Sydney demonstrated that the relevant deductions were permitted by an applicable contract determination, it would have had the benefit of the presumption and it would have been for the TWU to rebut it. However, the presumptive fairness and reasonableness of an applicable contract determination would only assist Aramex Sydney were it able to demonstrate that the arrangements that it has in place with its contract carriers are contemplated by and consistent with that contract determination. The application of a presumptively fair and reasonable contract determination provides no defence to a principal contractor if it is engaging in conduct which is not contemplated by that contract determination and which is not fair and reasonable.
Conclusions
124. Having considered all of the evidence and submissions, and in particular having regard to the discussion at [15]-[43] above, I do not consider that it is fair and reasonable for deductions to be made in respect of scanners, freight sorting and outside hire.
125. I do not accept these submissions advanced by Aramex Sydney that the deductions are primarily for the benefit of Courier Franchisees. In relation to scanners, and while I accept that there may be efficiency and convenience resulting from their use by Courier Franchisees, I am not persuaded that they are properly to be regarded as “optional”. They are an integral part of the business operated by Aramex Sydney and its affiliated companies, allowing for the effective tracking of freight throughout the “network”. They also facilitate the management of the systems under which Aramex Sydney pays its Courier Franchisees.
126. The deduction for freight sorting similarly seems to be directed more towards defraying the costs to Aramex Sydney of installing and maintaining the sortation system at its Chullora depot. The possibility that freeing Courier Franchisees from the responsibility of sorting freight may enable them to do more work on their runs and so “grow their business”, as Aramex Sydney submitted, strikes me as a potential byproduct, but not a real and substantial motivator, for the current arrangements.
127. It is difficult to see any tangible benefits flowing to Courier Franchisees as a result of the engagement by Aramex Sydney of outside hire. At most, it might be said that their business does not suffer as a result of their territory not being serviced during any period for which they are unable to perform work. However, it was clear from the evidence of Mr Bovis that the primary goal of Aramex Sydney when engaging outside hire is to maintain the integrity of the broader Aramex network.
128. I also have concerns with the absence of a rationale as to the quantum of the deductions in respect of scanners and freight sorting. On the evidence of Mr Bovis, the amounts seem to be arbitrary.
129. As to the cost of engaging outside hire, it suffices to observe that the third party companies to be engaged, and the rates they are to be paid, are entirely at the discretion of Aramex Sydney.
130. In considering the quantum of the deductions, I also have regard to the fact that prospective Courier Franchisees must pay a non-refundable initial franchise fee to Aramex Sydney as a pre-condition to being engaged. As counsel for the TWU submitted in oral submissions:
“Can I just make one additional point in respect to the initial franchise fee, that franchise fee as Mr Bovis set out is not an insignificant fee and it is one which Mr Bovis could not explain where it went, what it was applied to but it is one that in order to have the privilege of working for Aramex a contract carrier has to pay and the fact that a carrier has to pay that fee, which Aramex retains the benefit of, the carrier never gets it back, they terminate the contract for whatever reason and they do not get reimbursed that fee, that is a relevant matter pointing to these additional deductions being unfair in the circumstances.”
131. Finally, I consider that the deductions are inconsistent with the scheme of regulation of contract carriers contemplated by the GCCD. Having regard to my remarks above at [97]-[112] concerning the terms of the GCCD, I am in broad agreement with the following contentions in the TWU’s supplementary written submissions:
“28. It is antithetical to the regime established by the GCCD for a principal contractor to deduct moneys from a contract carrier’s remuneration for:
a. scanners, which are an item of communication and related technology in which the GCCD contemplates the principal contractor is responsible for;
b. freight sorting, which the GCCD does not contemplate carriers are responsible for; or
c. for work performed by ‘outside hire’ or other carriers.
29. Expenses of the kind described in paragraph 26 [sic – 27?] above are not matters for which carriers are remunerated under the GCCD. Imposition of deductions for such expenses involves carriers being burdened with costs which: (i) they are not contemplated by the GCCD to bear; (ii) which they are not otherwise remunerated for; and (iii) which the GCCD, whether expressly or impliedly, contemplates the principal contractor is responsible for.”
132. For these reasons, I have determined that it is fair and reasonable that a contract determination be made precluding Aramex Sydney deducting from the remuneration payable to its Courier Franchisees which are contract carriers amounts in respect of scanners, freight sorting and the engagement of outside hire. I observe in particular that as there is room for argument as to whether scanners are “communication and related technology” within the meaning of cl 5.7 of the GCCD, a contract determination will serve to avoid any disputes in this regard.
133. I accept the submissions of Aramex Sydney that the contract determination should be clear on its terms that it will apply only in respect of Courier Franchisees which are contract carriers, and not to any other class of carrier which may be engaged by Aramex Sydney (such as Courier Lites). The only evidence before the Commission concerns the arrangements between Aramex Sydney and Courier Franchisees.
134. I acknowledge that the making of the contract determination could have implications for the Courier Franchisees. In this regard, I draw attention to pars 76-78 of Mr Bovis’s statement, reproduced at [41] above.
Determination and directions
135. I have determined to make a contract determination. Without limitation to terms which may be necessary to meet the requirements for approval under the Act, the contract determination will:
1. operate with respect to contracts of carriage between Aramex Sydney and its Courier Franchisees;
2. for the avoidance of doubt, contain definitions to the following effect:
1. “contract of carriage” has the meaning given to that term in s 309 of the Act;
2. “outside hire” refers to third party transport providers, but does not include Blu Couriers; and
3. “scanners” refers to handheld devices used by Courier Franchisees in the performance of their duties, and all associated technology and equipment;
3. provide that Aramex Sydney must not deduct from the remuneration of a Courier Franchisee:
1. any amount for the supply, installation, maintenance and use of scanners. This does not include costs resulting from the misuse or mistreatment of the technology by the Courier Franchisee;
2. costs associated with the sorting of freight; or
3. costs associated with utilising outside hire; and
4. have a nominal term of three years commencing from the date on which it is made.
136. I make the following directions:
1. The parties are to confer with a view to reaching agreement on short minutes of order to give effect to my determination at [135] above, including the terms of the contract determination to be made.
2. By 4.00pm on Friday, 9 August 2024 the TWU is to:
1. file and serve the agreed short minutes of order and proposed contract determination; or
2. failing agreement between the parties as to the terms of the short minutes of order or proposed contract determination, inform the Commission by way of email to the Registry as to the status of the matter, including the outcome of discussions between the parties in accordance with the direction at [136(1)] above, the issues remaining in dispute between them, whether those issues are likely to be resolved through further discussions between the parties and, if so, the timeframe within which it is anticipated that an agreement will be reached.
Damian Sloan
Commissioner
**********
Amendments
23 July 2024 - Corrected the year under 'Hearing Dates', 'Date of orders' and 'Decision date' from '2023' to '2024'.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2024 | 14,783 |
nsw_caselaw:190e31804db62bf3b8821b8e | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-25 00:00:00 | Whites Beach Investments Pty Ltd v Byron Shire Council [2024] NSWLEC 75 | https://www.caselaw.nsw.gov.au/decision/190e31804db62bf3b8821b8e | 2024-07-26T22:25:58.451245+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Whites Beach Investments Pty Ltd v Byron Shire Council [2024] NSWLEC 75
Hearing dates: 20 May, 19 June 2024
Date of orders: 25 July 2024
Decision date: 25 July 2024
Jurisdiction: Class 4
Before: Pain J
Decision: The Court declares:
(1) Development consent to Development Application dated 16 October 1978 for the erection of a country dwelling at Lot 334 Riverside Crescent, Brunswick Heads (being Lot 334 in Deposited Plan 755692) issued by the Respondent on 6 November 1978 was physically commenced before 1 September 1982 in accordance with s 99(1)(a)(i) of the Environmental Planning and Assessment Act 1979 (NSW) (as then in force).
The Court orders:
(1) Prayer 3 of the summons dated 2 February 2024 is stood over to 1 August 2024 or until further order of the Court.
(2) Costs reserved.
Catchwords: JUDICIAL REVIEW – whether development consent has lapsed – whether evidence establishes physical commencement – whether declaration appropriate where no contradictor
Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), s 99 (repealed)
Evidence Act 1995 (NSW), s 144
Local Government Act 1919 (NSW) (repealed)
Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 (NSW), s 2, Sch 3 cll 1, 7 (repealed)
Interim Development Order No 1 – Shire of Byron 1968 (NSW)
Cases Cited: Ashfield Municipal Council v Armstrong (2002) 122 LGERA 105; [2002] NSWCA 269
Gattellaro v Westpac Banking Corporation (2004) 78 ALJR 394; [2004] HCA 6
Iron Gates Developments Pty Ltd v Richmond-Evans Environmental Society Inc (1992) 81 LGERA 132
JMS Capital Pty Ltd v Tweed Shire Council [2006] NSWLEC 535
Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154
Norlex Holdings Pty Ltd v Wingecarribee Shire Council (2010) 177 LGERA 261; [2010] NSWLEC 149
PAG Services Pty Ltd v Byron Shire Council [2023] NSWLEC 40
Smith v Wyong Shire Council [2008] NSWLEC 115
Stephen Bowers Architects Pty Limited v Waverley Council (2003) 125 LGERA 292; [2003] NSWLEC 16
Williams v Coffs Harbour City Council (2007) 155 LGERA 344; [2007] NSWLEC 440
Zaymill Pty Ltd v Ryde City Council [2009] NSWLEC 86
Texts Cited: Macquarie Dictionary, online ed, accessed July 2024
Oxford English Dictionary, online ed, accessed July 2024
Category: Principal judgment
Parties: Whites Beach Investments Pty Ltd (Applicant)
Byron Shire Council (Respondent)
Representation: Counsel:
F Berglund (Applicant)
N/A (Respondent)
Solicitors:
McCartney Young Lawyers (Applicant)
Marsdens Law Group (Respondent)
File Number(s): 2024/00041788
JUDGMENT
1. The Applicant Whites Beach Investments Pty Ltd is the owner of Lot 334 in DP 755692 at Riverside Crescent, Brunswick Heads (Property). A development consent was granted to a former owner of Lot 334 on 6 November 1978 by the Respondent Byron Shire Council (the Council) for a ‘country dwelling’ (1978 Consent). At issue is whether the 1978 Consent has lapsed.
2. The Applicant filed a summons on 2 February 2024 seeking the following relief:
1. A declaration that development consent to Development Application dated 16 October 1978 for the erection of a country dwelling at Lot 334 Riverside Crescent, Brunswick Heads (being Lot 334 Deposited Plan 755692 – Property) (Consent) issued by the Respondent on 6 November 1978 was physically commenced before 1 September 1982 in accordance with section 99(1)(a)(i) of the Environmental Planning and Assessment Act 1979 (as it was at that time).
2. A declaration that the Consent has not lapsed.
3. A declaration that the “country dwelling” the subject of the Consent is a residential building:
a. designed to provide accommodation for one family or household;
b. which is the only building on the Property other than:
i. buildings incidental to the residential use, including but not limited to a garage, pool and/or shed; and
ii. buildings incidental to a lawful agricultural use, and is otherwise unconstrained by development controls.
4. An Order that the Respondent pays the Applicant’s costs of the proceedings.
3. The Council has filed a submitting appearance save as to costs with the result that the proceeding is being conducted in the absence of a proper contradictor. The Applicant bears the onus of establishing that the relief it seeks ought be made, including in the absence of a contradictor.
4. The Applicant accepted that if it establishes its case either the first or second declaration would be made as there is no utility in making both declarations. The Applicant accepted that it bears the civil onus of establishing the factual basis for making the declarations it seeks. As will become clear that requires asking the Court to draw inferences that events occurred at certain times on the balance of probabilities. Order 3 concerning country dwelling can be stood over if order 1 or 2 is made to enable the Council to make submissions if it so chooses.
5. Three issues arise in relation to whether the 1978 Consent has lapsed:
1. On what date would the 1978 Consent have lapsed if it was not commenced prior – 1 September 1982 or 6 November 1979?
2. Depending on the answer to (1), which was the applicable test for commencement at the date the 1978 Consent would have lapsed if it was not commenced – physical commencement (if 1 September 1982) or substantial commencement (if 6 November 1979)?
3. In either scenario, does the evidence show that on the balance of probabilities the 1978 Consent commenced before the date on which it would otherwise have lapsed?
6. Issues 1 and 2 are linked in that the determination of Issue 1 determines the relevant commencement provision applicable and posed in Issue 2.
Amended chronology
7. The Applicant provided the following amended chronology on 21 June 2024 based on the affidavit of Ms Morison director of the Applicant to which I refer below in more detail. The chronology is helpful in identifying legislation in force at the time of particular events which the Applicant seeks to prove occurred as will be considered further in the context of Issue 3.
Date Event Legislation
16 October 1978 Development application for a ‘country dwelling’ lodged with Byron Shire Council by then owner, Mr Crompton, in respect of Lot 334 in DP 755692 at Riverside Crescent, Brunswick Heads (Property). Interim Development Order No 1 – Shire of Byron 1968 (NSW) (IDO-1) in force included cl 20 under which consent lapsed within one year if not substantially commenced.
6 November 1978 Development consent granted for a ‘country dwelling’ (1978 Consent).
11 December 1978 Correspondence from Mr Crompton to Council regarding whether a survey is required.
10 January 1979 Building application and application to install septic tank lodged by Mr Crompton. Building application was marked cancelled on an unknown date.
8 February 1979 Correspondence from Council regarding flood levels and required fill levels on Property.
23 February 1979 IDO-1 amended to delete cl 20.
1979 Electricity and water connected by 1979.
6 November 1979 Date 1978 Consent would have lapsed if one year period remained in force.
1 December 1979 One electricity pole connected according to Essential Energy records.
1 September 1980 Environmental Planning and Assessment Act 1979 (NSW) commences.
‘Appointed Day’ on which consents with no lapsing date taken to commence.
1 September 1980 Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 (NSW) – Schedule 3 commenced.
1 September 1982 Date 1978 Consent would have lapsed under s 99 if taken to have commenced 1 September 1982.
6 June 1984 1984 development application lodged by then owner, Mr Tait (1984 DA).
5 July 1984 Council’s engineer report recorded existing conditions on site included fill and connections to electricity and water.
Council’s 1984 DA report also showed water and electricity connected.
31 August 1984 1984 development consent granted.
10 December 2021 Property purchased by Whites Beach Investments Pty Ltd (the Applicant).
Appropriate to make declaration in absence of contradictor if basis established
8. The Applicant submits that in the absence of a proper contradictor declaratory relief is nevertheless appropriate in circumstances in which the Applicant, as current owner of the Property and thus the beneficiary of the 1978 Consent if it remains in force, has a real interest in the proceedings, see PAG Services Pty Ltd v Byron Shire Council [2023] NSWLEC 40 (PAG Services) at [72]-[83].
9. There is no entitlement to a declaration and an applicant must demonstrate that such relief is appropriate, see Williams v Coffs Harbour City Council (2007) 155 LGERA 344; [2007] NSWLEC 440 at [13]-[17]. As to whether it is appropriate for the Court to make a declaration if warranted in these circumstances Pritchard J provides a helpful overview of relevant considerations in the absence of a contradictor in PAG Services at [72]-[83] and I adopt Her Honour’s observations. While focussed on the particular circumstances before Her Honour, the same observations apply here to support the making of the declaration sought by the Applicant if it is able to establish its case.
Issue 1: on what date would the 1978 Consent have lapsed if not commenced?
Issue 2: does substantial commencement or physical commencement arise?
10. The Applicant’s primary position is that the lapsing date was 1 September 1982 for the reasons set out below.
11. The 1978 Consent was granted pursuant to Interim Development Order No 1 – Shire of Byron 1968 (NSW) (IDO-1), which at the date the 1978 Consent was granted included the following clause:
20. Any consent of the Council given under this order shall be void if the development to which it refers is not substantially commenced within twelve months after the date of the consent. Provided that the Council may, if good cause be shown grant annual extensions or renewals of such consent beyond such period up to a further period of three years.
12. There was at the time no general provision in the Local Government Act 1919 (NSW) (LG Act) (or any other legislation in force at the time) regarding the time within which a development consent would lapse. There was no equivalent to s 99 (and subsequent similar provisions) which would commence with the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act). The only provision under which the 1978 Consent could lapse was cl 20 of IDO-1.
13. On 23 February 1979, at which time the 1978 Consent was still within the 12 month period and therefore had not lapsed, IDO-1 was amended and cl 20 deleted. There was no transitional provision in the amended IDO-1 by which cl 20 would have continued to apply and, as noted above, no general provision in the legislation under which a development consent would otherwise lapse. Once amended, IDO-1 did not include any clause under which the consent could lapse. Thus the 1978 Consent remained in force with no defined lapsing period.
14. The Applicant submitted that absent a provision either in the legislation or the planning instrument under which a development could lapse, there was no legal mechanism by which the 1978 Consent could lapse and it remained in force. This situation differs from a regime in which there are transitional provisions under which development consents are explicitly governed by the legislation and controls in force at the date the consent is granted such as JMS Capital Pty Ltd v Tweed Shire Council [2006] NSWLEC 535 (JMS Capital) which relates to development consents granted pursuant to the EPA Act.
15. The EPA Act commenced on 1 September 1980. Transitional provisions in cl 7 of Sch 3 of the Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 (NSW) (Planning Repeal Act) provided:
(1) Any consent, approval or permission granted in respect of an application made under a former planning instrument, and in force immediately before the appointed day, shall, subject to subclause (2), continue in full force and effect subject to:
(a) the operation of any provision of that instrument or any term or condition of that consent, approval or permission governing or relating to the currency, duration or continuing legal effect of that consent, approval or permission; and
(b) the operation of any condition (other than that referred to in paragraph (a)), restriction or limitation, subject to which that consent, approval or permission was granted.
(2) Where no provision or term or condition of the type referred to in subclause (1) (a) operates in respect of a consent, approval or permission therein mentioned, the provisions of section 99 of the Environmental Planning and Assessment Act 1979 shall apply to that consent, approval or permission as if it were a consent referred to in that section which had taken effect on the appointed day.
16. The ‘appointed day’ was 1 September 1980, the date on which the EPA Act commenced, pursuant to s 2 and cl 1 of Sch 3 of the Planning Repeal Act. IDO‑1 was a planning instrument in force at that date. Accordingly, the 1978 Consent acquired the same status as a consent referred to in s 99 which had taken effect on 1 September 1980.
17. Since the 1978 Consent was deemed by the commencement of the EPA Act to have commenced on 1 September 1980, s 99 of that Act as at that date applied and continued in this form until at least 1 September 1982. It read:
(1) A consent granted under this Division to a development application shall lapse—
(a) unless the development the subject of that consent is commenced—
(i) except as provided in subparagraph (ii)— within 2 years (or, if the consent authority so approves in accordance with subsection (3), 3 years) of the date upon which that consent becomes effective in accordance with section 93 (in this section referred to as “the prescribed date”); or
(ii) where within one year of the prescribed date a provision of an environmental planning instrument is made having the effect of prohibiting the development— within one year of the date upon which that provision comes into force; and
(b) where a notice referred to in subsection (5) is in force under subsection (6)— unless the development the subject of that consent is completed within the time specified in that notice.
(2) For the purposes of subsection (1) (a)—
(a) where development comprises the erection of a building or the carrying out of a work or the subdivision (involving physical work) of land (including, where applicable, the subsequent use of that building when erected, that work when carried out, or that land when subdivided) —that development is commenced when building, engineering or construction work relating to that development is physically commenced on the land to which the consent applies; or
(b) where development comprises the use of any land, building or work (not being a use referred to in paragraph (a))—that development is commenced when the use of that land, building or work is actually commenced.
18. For completeness, it is noted that at all relevant times a dwelling was permissible development within the zoning (zone 1(b) under cl 2 of IDO-1) and particularly did not become prohibited within one year of the prescribed date. Therefore s 99(1)(ii) did not apply.
19. Pursuant to s 99(1)(a)(i) as in force at the time, the 1978 Consent would have lapsed had it not been physically commenced two years after the date it was deemed to be a consent under the EPA Act, which was 1 September 1982. Pursuant to s 99(2)(a), the 1978 Consent did not lapse if ‘building, engineering or construction work relating to that development [was] physically commenced on the land to which the consent applies’ before 1 September 1982.
20. I find that the Applicant has established that the lapsing date of the 1978 Consent was 1 September 1982 in relation to Issue 1. The legislation then in force operated in the manner set out above in the Applicant’s submissions. With the deletion of cl 20 of IDO-1 in February 1979 which was in effect when the 1978 Consent was granted, the one year requirement for commencement of the 1978 Consent was removed. As the 1978 Consent remained in force in February 1979 it continued to be so until the EPA Act including s 99 was made, coming into effect on 1 September 1980. The transitional provisions in Sch 3 subcll 7(1) and (2) applied s 99(1)(a) of the EPA Act to the 1978 Consent. Consequently the lapsing date was two years after the commencement of the Act, namely 1 September 1982.
21. No case has been identified which considers a similar scenario in which there ceased to be any provision under which a development consent could lapse by reason of an amendment to an IDO or similar instrument and no other statutory provision existed. After the commencement of the EPA Act, the issue has not arisen because there has always been a general provision in force in the legislation under which development consents lapse in a specified time. This provision was lacking before the EPA Act came into effect.
22. Reference was made to JMS Capital. Its relevance is unclear. As the Applicant submitted, the question of which law applies to a development consent at what point in time depends upon the whole legislative framework in place at the relevant time. The question in JMS Capital according to the Applicant was whether previous s 99 or new s 95 of the EPA Act applied. That is not apparent from the judgment. Lloyd J found that the law which determined whether a consent has commenced is the provision in force at the time the consent was granted with no further analysis, suggesting this was not a matter of argument. With the deletion of cl 20 of IDO-1 there (a) ceased to be any provision, in either the legislation or the instrument, under which a development consent could lapse, and (b) was no savings or transitional provision under which the previous provision continued to apply.
23. The finding in Issue 1 means that the relevant criterion for the 1978 Consent in relation to Issue 2 is whether it had been physically commenced by 1 September 1982.
Issue 3: physical commencement by 1 September 1982 established?
24. According to the Applicant physical commencement of a development consent as at 1 September 1982 under s 99(2)(a) of the EPA Act requires consideration of (i) was the work relied on carried out on the land to which the consent applies, (ii) was that work building, engineering or construction work and (iii) did that work relate to the development the subject of the consent?
Affidavit of Ms Morison dated 7 May 2024
25. Ms Morison’s affidavit dated 7 May 2024 annexed various documents identified on the Council’s files produced in relation to Lot 334. The affidavit stated as follows (annexures omitted) with additional extracts included from documents annexed to the affidavit:
Development Consent
7 On 16 October 1978 a previous owner of the Property, Mr Kevin Victor Crompton lodged or caused to be lodged a development application (DA) for development described as “Country Dwelling” on the Property. At page 23 of Exh MM1 is a copy of the document that comprised the DA.
8 The DA was determined by approval by Council on 6 November 1978. At page 24 of Exh MM1 is a copy of the development consent (Consent).
“Re: Development Application – Lot 334, off Riverside Crescent, Parish of Brunswick – Erection of a Country Dwelling.
With reference to the above Development Application dated 16th October, 1978, I wish to advise that Council has given its approval subject to lodgement of a satisfactory building application”
Building Application
9 On 10 January 1979, Mr Crompton lodged a building application with Council (BA 11/79). At pages 25 to 49 of Exh MM1 is a copy of the building application.
10 On Council’s file there is a note concerning the relevant floor levels for the country dwelling. At page 50 of Exh MM1 is a copy of the note.
11 On 8 February 1979, Council wrote to Mr Crompton concerning the relevant floor levels, which may have referred to the note set out in paragraph 11 immediately above (8 February 1979 Council Letter). At page 50 of Exh MM1 is a copy of the letter.
“I refer to the above application and now wish to advise that council’s building Inspector is in possession of data from the Engineering Department concerning the requirements for the filling required on your allotment, and also in connection with minimum floor levels of the building.
A photostat of the information is enclosed herewith for your benefit and you are requested to carry out the necessary investigation to establish the requirements of depths of fill and height of floor level, in order that you may advise Council as to the depth and heights.
Should you require any information in connection with this matter, would you kindly contact Council’s Building Inspector.”
12 The building application was subsequently cancelled on an unknown date, but having regard to a notation on the building application, the date is likely to be sometime after 8 February 1979.
Electricity Connection
13 On or around 5 July 1984, Council prepared a Development Application Report concerning a development application for a dwelling on the Property (DA 841258) (1984 DA Report). At page 53 of Exh MM1 is a copy of the 1984 DA Report.
14 The 1984 DA Report noted that the Property benefited from electricity services.
15 A document entitled “6344 84/258 D.R. Tait- Engineering Comments” is at page 56 of Exh MM1 (Engineer Report). This document is presumably a document prepared by Council’s engineer at the time as part of the assessment for DA 84/258.
16 The Engineer Report includes the comment that:
“Electricity has been extended to the allotments ...”.
…
18 On 7 December 2005, Mr Wal Leeke, who I understand was at the time a real estate agent in the Byron Shire, wrote a letter to Country Energy on behalf of Mr Tait (Leeke Letter). At page 60 of Exh MM1 is a copy of the letter. This letter refers to electricity poles located at the Property with numbers “7 4214, 7 4213 & 7 4212”.
“Re: Electricity poles numbered 7 4214, 7 4213 & 7 4212 at Riverside Cres; Brunswick Head NSW 2483
These poles reticulate/carry electricity to lots 332 & 334 in DP755692. This land is owned by Donald Tait…”
19 Recently taken photos of the electricity poles located at the Property are at pages 61 to 82 of Exh MM 1.
20 On 21 December 2005, Country Energy sent a letter to Mr Wal Leeke, a copy of which is at page 83 of Exh MM1. The letter notes that:
“The poles in question have been there for many years, certainly well before 1979. Unfortunately though, Country Energy has no records of when the poles were installed, when power was first connected to the lots or when it was last disconnected. The poles and wires are still there but it has been a long time since we had a connection to the block.”
…
23 A copy of a survey prepared by Canty’s Surveyors dated 10 May 2010 is at page 87 of Exh MM1 (2010 Survey). The 2010 Survey shows an electricity service pole located at the Property along with a single overhead power line connecting from the road reserve to the service pole on the Property.
24 When Whites Beach purchased the Property, the previous owner of the Property was Julian Matthew Dawson, as shown on the title search at page 88 of Exh MM 1. The wife of Mr Dawson, Ms Freya Dawson, provided me with an email that she had received from Essential Energy dated 28 March 2019. A copy of that email is at pages 89 to 90 of Exh MM 1.
Water Connection
25 The 1984 DA Report (at page 53 of Exh MM1) noted that the Property benefited from a water services connection: “Rous CC”. I understand that this refers to Rous County Council which is the local government authority in the Northern Rivers responsible for bulk water supply and rural water supply.
26 The Engineer Report (at page 56 of Exh MM1) includes the comment that:
“... and there is a water supply taken from the Rous County Council main ...”.
27 The Tait Letter [2005] (at page 57 of Exh MM1) states that “...water supply has been connected from the Rous County Council water line to the site”.
28 On 20 December 2005, Rous County Council (under the operating name of Rous Water) sent a letter to Mr Leeke on behalf of Mr Tait. At page 91 of Exh MM1 is a copy of the letter. That letter includes the following:
“The original connection was made under the name of Crompton. Council cannot confirm the year the water service was connected to the property, however, Council’s Meter Reader has indicated that the connection was made prior to 1979.”
…
Filling of Property
32 The 8 February 1979 Council Letter (at page 50 of Exh MM1 included via the flood level note it enclosed dated 5 February 1979) recommended a minimum fill level of RL 1.75m at the Property.
33 The Engineer Report (at page 56 of Exh MM1), includes the following comment:
“... (existing ground level is in the vicinity of RL 1. 7 AHO).”
The Tait letter 2005 states “…31/08/1984 A development Application by Tait to erect a dwelling was approved by Council. The application lapsed while I was overseas. Approval was subject to land filling and at the time I had commenced to have soil trucked in to build up the land…”
34 The 2010 Survey notes the RL heights of the Property as being between 1.66 and 1.67.
35 In December 2022, I obtained a further survey of the Property, a copy of which is at page 93 of Exh MM1.
36 In June 2023, I obtained a Geotechnical Report for the Property, a copy of which is at pages 94 to 113 of Exh MM1.
37 I have obtained a Tree Report from Byron Bay Tree Services dated April 2024. A copy of the Tree Report is at pages 114 to 131 of Exh MM1.
Oral evidence
26. In examination in chief Ms Morison explained to the Court how she formed the views and obtained the documents contained in her affidavit dated 7 May 2024, set out above in [25].
27. In oral evidence Mr Marquet solicitor for the Applicant explained that he obtained a copy of the Council file for the 1978 Consent by lodging an access request. The file was then provided in its entirety to Ms Morison.
Relevant principles
28. In Hunter Development Brokerage Pty Ltd v Cessnock City Council (2005) 63 NSWLR 124; [2005] NSWCA 169 (Hunter Brokerage) Tobias JA (Santow AJA and Stein AJA agreeing) held at [83]-[86], [104]:
83 In my opinion, the expression “engineering work” in its context of forming part of the composite phrase “building, engineering or construction work”, should be given a broad meaning to include all those activities associated with, and forming a necessary part of, the discipline of engineering applicable to the subdivision of land. There can be no doubt that engineering as such can involve many different elements: relevantly with respect to a subdivision, it involves civil engineering work such as the design and (possibly) the construction of roads, sewerage systems, drainage and the like.
84 But once consent is granted for a subdivision, the implementation of that consent ultimately resulting in the construction of the subdivision roads, drainage and sewer lines as well as the laying out of the allotments in accordance with the approved layout, requires as a necessary first step in the engineering or construction of that subdivision, including the physical works contemplated thereby, the setting out by survey upon the land of each of the component elements of the subdivision in accordance with the approved plan. This would accord with common sense and industry practice (as to which see at [13] above).
85 The carrying out of survey work to establish the correct location of these elements, in my opinion, is capable of constituting a first step in the performance of the engineering and/or construction work involved in the creation of a subdivision. Accordingly, it follows that the natural and ordinary meaning of the expression “engineering work” in the context relevant to the present issue is capable of including physical survey work of the nature and extent of that the subject of these appeals.
86 That is not to say that any survey work, albeit of a physical nature, would so qualify. Simply entering land in respect of which a subdivision has been approved and knocking in one or two pegs would not, in my view, necessarily qualify. There is an element of fact and degree in each case. Although in Besmaw Pty Ltd, Talbot J (at [112]) observed that once Parliament had decided to delete the requirement of substantiality, there was little room for an argument that the works must not be de minimus, and that it was therefore reasonable to exclude any test of the degree and extent of the work under the present statutory regime, nonetheless the requirement that the relevant work relate to the approved subdivision requires a real nexus between them. In particular, the concept that the work must be “physically commenced”, requires physical activity which involves an appearance of reality and which is not merely a sham. In other words, the relevant work must be more than merely notional or equivocal in that it must truly be work relating in a real sense to that which has been approved: cf Besmaw Pty Ltd at [111].
…
104 I accept that the ambit of the expression “relating to” depends upon the context in which it appears: Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at [68]‑[69]. It involves, at the very least some real relationship or connection between the work and the subdivision in respect of which the consent has been granted. In my opinion, the required connection or relationship is satisfied if the relevant work is a necessary step in, or part of, the process required for, or involved in, the erection of the building, the subdivision of the land or the carrying out of the work (as the case may be) which is authorised by the consent.
29. Physical commencement was distinguished from the former legislative provision requiring ‘substantial commencement’, Tobias JA at [110]-[111] stating that describing work as preparatory is not a relevant distinction. The approach to physical commencement identified at [83]-[80], [104] in the context of a development consent for subdivision will be considered in relation to the evidence relied on by the Applicant.
30. The Applicant submitted that an inference can be drawn on the balance of probabilities that work had been done sufficient to give rise to physical commencement as at 1 September 1982 as follows:
1. fill had been placed on the site prior to 1984 most likely in 1979;
2. an electricity pole had been erected on Lot 334 by late 1979 and electricity connected; and
3. water had been connected by 1979.
31. The Applicant did not address to any extent whether these activities are building, construction or engineering works relating to the development consent for a country dwelling, simply submitting that they satisfied physical commencement requirements of s 99(2)(a). There is no definition of building, construction, or engineering work in the EPA Act. In the Oxford English Dictionary (online ed, accessed July 2024) construction is defined as ‘[t]he action of framing, devising, or forming, by the putting together of parts; erection, building’. In the Macquarie Dictionary (online ed, accessed July 2024) construction means ‘the way in which a thing is constructed’. Engineering means ‘action, works or profession of an engineer’. The categories of construction and engineering may well overlap depending on the nature of the work, Hunter Brokerage at [110]. The cases relied on by the Applicant, Norlex Holdings Pty Ltd v Wingecarribee Shire Council (2010) 177 LGERA 261; [2010] NSWLEC 149 (Norlex), Zaymill Pty Ltd v Ryde City Council [2009] NSWLEC 86 (Zaymill) and Smith v Wyong Shire Council [2008] NSWLEC 115 (Smith) considered these terms in the circumstances of those cases.
32. The findings in the cases relied on by the Applicant were informed by the nature of the development the subject of the development application (DA) in question. In Hunter Brokerage, extracted above, survey work comprising land clearing, pegging and the erection of permanent survey marks involving physical activities on the land was capable of constituting engineering or construction work in relation to the approved subdivision. In Norlex the development approved was the collection of spring water extracted under commercial licence. That the water was extracted, and an acoustic engineer engaged to undertake an acoustic assessment, was held to be sufficient physical commencement, at [95]. In Zaymill the consent permitted the construction of 32 dwellings, excavation work was undertaken in various areas of the site and significant quantities of soil removed to be tested as part of the preparation of a remediation report required by the consent. This work was accepted to be engineering work related to the approved development, consistent with [83]‑[88] of Hunter Brokerage. In Smith development consent permitted demolition of existing site improvements and the erection of a residential flat building. Work relied on to establish commencement of demolition of structures on the land and other construction and engineering work was found to be lawful and the consent had therefore not lapsed. Any physical activity must involve an appearance of reality and not be a sham, Hunter Brokerage at [86].
33. Considering the placement of fill, such activity can be considered construction or engineering work within the meaning of those terms as considered in Hunter Brokerage. The issue arises of whether the Court can infer that fill was placed on Lot 334 on or after 1979 and before 1 September 1982 given the evidence does not establish precisely when fill was placed on Lot 334. The 1978 Consent permitted the construction of a country dwelling on 6 November 1978. A building application was lodged with the Council on 10 January 1979. Reference is made to required fill levels of 1.75m in 1979 by a council officer in a letter to the then owner Mr Crompton dated 8 February 1979. The building application was cancelled on a date unknown (likely after 8 February 1979 according to Ms Morison). No dwelling has been built on Lot 334.
34. Another DA was filed with the Council on 6 June 1984 by the then owner Mr Tait (1984 DA). The presence of 1.7m of fill on Lot 334 was identified in the Council engineer’s report on the Council file prepared in relation to the 1984 DA. The 1984 DA was approved in August 1984. A letter sent by Mr Tait to the Council in 2005 referred to the lodgement by him of the 1984 DA and grant of development consent and stated ‘approval was subject to land filling and at the time I had commenced to have soil trucked in to build up the land …’, giving rise to the possibility that Mr Tait commenced putting fill on Lot 334 around the time he lodged the 1984 DA with the Council.
35. There is no indication provided in the Council file or in any other material relied on by the Applicant to establish when fill was placed on Lot 334 in the period between the grant of the 1978 Consent on 6 November 1978 and the Council engineer’s report prepared around 5 July 1984. The Applicant asked the Court to draw the inference that it was placed before 1 September 1982. The 2005 letter from Mr Tait to the Council supports a possible inference that he commenced bringing fill onto Lot 334 around the time he made the 1984 DA. His statement is unclear about precise timing. The building application lodged after the 1978 Consent was cancelled and no house built.
36. The 2010 survey in evidence shows fill levels on Lot 334. A geotechnical report for Lot 334 dated June 2023 stated that fill had been placed on Lot 334 in the past. An arborist report dated April 2024 estimated that ‘fill material was imported to the site circa 1970s-1990s’ and that trees between 20-40 years old were planted after this event. None of this material sheds any light on when fill was placed on Lot 334 simply confirming that it was.
37. Taking all the available circumstances into account does not support drawing an inference that fill was placed on Lot 334 in 1979, or before 1 September 1982. The Applicant has not discharged its onus which must arise by inference on the balance of probabilities that the fill referred to by the Council engineer in 1984 was in place before 1 September 1982.
38. Considering the provision of water to the Property, the Council’s 1984 DA report states ‘Rous CC’ under ‘water’. The Council engineer’s report for the 1984 DA identifies that water supply is taken from the Rous County Council main. A letter from Rous County Council to Mr Leeke real estate agent dated 20 December 2005 stated that connection was first made for the name of Crompton, the connection year could not be confirmed and the Council’s meter reader indicated that the connection was made prior to 1979. What is meant by the reference to meter reader is unclear. There is no evidence of a water meter on Lot 334. The inference arises that water was connected to Lot 334 by 1984 and most likely by 1979 given the reference to Crompton the then owner. In drawing that inference the next issue to arise is whether s 99(2)(a) was satisfied, namely did the connection of water to Lot 334 amount to building, engineering or construction work relating to that development being physically carried out on Lot 334.
39. There is no evidence of what physical acts resulted in the connection of water to and, more relevantly, on Lot 334. The Court was asked to take judicial notice that a water meter must have been installed on Lot 334 at a location unknown in or around 1979 because of the reference to connection in the Council’s 1984 DA report and engineering report for the 1984 DA. I appreciate that the Applicant has a difficult task in that Rous Water and other records it seeks to rely on are somewhat scant but whether the presence of a water meter on Lot 334 can be assumed as at 1979 up to 1 September 1982 cannot be dealt with by way of judicial notice. There is no evidence of a water meter being installed anywhere relevant to Lot 334. Apart from referring to judicial notice no submission was made about how that concept can apply in this context. I was unassisted at the hearing by reference to s 144 of the Evidence Act 1995 (NSW) concerning matters of common knowledge. Section 144 has replaced the common law doctrine of judicial notice of matters of general knowledge according to Gattellaro v Westpac Banking Corporation (2004) 78 ALJR 394; [2004] HCA 6 at [17] (Gleeson CJ, McHugh, Hayne and Heydon JJ).
40. Section 144 of the Evidence Act states:
144 Matters of common knowledge
(1) Proof is not required about knowledge that is not reasonably open to question and is—
(a) common knowledge in the locality in which the proceeding is being held or generally, or
(b) capable of verification by reference to a document the authority of which cannot reasonably be questioned.
(2) The judge may acquire knowledge of that kind in any way the judge thinks fit.
(3) The court (including, if there is a jury, the jury) is to take knowledge of that kind into account.
(4) The judge is to give a party such opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of knowledge of that kind as is necessary to ensure that the party is not unfairly prejudiced.
41. Subsection (1) commences with ‘proof is not required about knowledge that is not reasonably open to question’, so that only knowledge that is not reasonably open to question can be considered in moving to subss (1)(a) and (1)(b). I am not convinced that the presence on Lot 334 of a water meter in or around 1979 satisfies the preamble to subs (1), nor if it did whether this was common knowledge in the locality or generally, or capable of verification by a document whose authority cannot be questioned. At the hearing the Applicant had the opportunity to make submissions and refer to relevant information as identified in subs (4). The Applicant has not discharged its onus of proving that the supply of water gave rise to physical commencement in the relevant period.
42. Considering the supply of electricity, at issue is whether the evidence establishes by inference the installation of electricity by physical activity on Lot 334 before 1 September 1982. That electricity had been supplied to Lot 334 was noted in the Council’s 1984 DA report and the Council’s engineering report. A 2005 letter from a real estate agent to Country Energy identified poles with sequential numbers 7 4214, 7 4213 and 7 4212 as providing electricity to Lot 334. Country Energy responded in December 2005 that the poles had ‘been there for many years, certainly well before 1979’, further stating that no records existed for when the poles were installed or when power was first connected to Lot 334. An employee of Essential Energy sent an email to another former owner Ms Dawson in March 2019 attaching a diagram showing pole 7 4214 installed 23 March 2007 and 7 4213 installed 1 December 1979. The boundary of Lot 334 is not shown in that diagram. An electricity pole is shown on Lot 334 and an electricity pole is shown on the next door land which I was informed was a road reserve in the 2010 survey. A survey prepared in or around December 2022 shows an electricity pole on Lot 334 and an electricity pole on the next door road reserve. The numbering of the poles on Lot 334 is not shown on the surveys.
43. Undated photographs described as being taken recently were attached to Ms Morison’s affidavit and show electricity poles with the numbers 7 4213 and 7 4214 on metal plates attached to the poles. The location of the numbered poles on a map or where the photographs were taken was not provided in the affidavit. The Applicant’s counsel asserted, based on instructions, what pole was where in the photographs to the effect that pole 7 4214 was located on Lot 334 and Lot 7 4213 was outside Lot 334. As I understand the Applicant’s case it relies on the pole numbered 7 4214 being placed on Lot 334 sometime between 1979 and before 1 September 1982.
44. There is no clear evidence of the number of the pole currently on Lot 334 being 7 4214 in any of the diagrams or surveys in evidence. The location of the poles in the photographs attached to Ms Morison’s affidavit is not made clear in her affidavit. Giving the Applicant’s director the benefit of the doubt I will accept counsel’s submission based on her instructions that pole 7 4214 is on Lot 334. The evidence about when the electricity pole 7 4214 was erected on Lot 334 is equivocal. The only record in evidence which identifies when pole 7 4214 was installed is the March 2019 email from Essential Energy with the date of installation of 23 March 2007. The Applicant submitted that this must be inferred to be a replacement of that pole given that other evidence gives rise to an inference that electricity was connected to Lot 334 earlier than 2007, in 1979 or earlier. Pole 7 4213 on the land next door was installed on 1 December 1979 according to the Essential Energy diagram. The 2005 real estate agent letter to Country Energy refers to the three sequentially numbered poles supplying electricity to Lot 334.
45. Taking these various matters into account including the sequential numbering of the poles the evidence does establish by inference that an electricity pole 7 4214 on Lot 334 was built before 1 September 1982. The next issue to consider is does that erection of an electricity pole amount to building, construction and engineering work relating to the approved development on the land to which the 1978 Consent applies, as required by s 99(2)(a) of the EPA Act? Given that the development approved at the end of 1978 was for a country dwelling for which electricity would be needed I consider that work on Lot 334 is construction work for the purposes of the 1978 Consent, is not a sham and can be relied on for the purposes of s 99(2)(a) to establish physical commencement.
46. I note for completeness that Ms Morison’s affidavit referred to another document prepared well after the period in question. Around 2008/2009, the Council commissioned an assessment by a firm Parsons Brinkerhoff to consider whether certain lots could be considered for rezoning including Lot 334 which identified the possibility that the 1978 Consent or the 1984 DA could be considered commenced. The general nature of the opinions and observations made about events around 1979 were essentially speculative and did not assist the Court’s consideration of the matters in issue.
Was work relied on lawful?
47. The Applicant can only rely on work which was carried out lawfully at the relevant time, Iron Gates Developments Pty Ltd v Richmond‑Evans Environmental Society Inc (1992) 81 LGERA 132 at 135. This must be considered in the context of the electricity pole erected on Lot 334. It submits that the works it relies on should be presumed to be lawful absent any evidence to the contrary. Firstly, the work was not carried out in breach of a condition of the 1978 Consent. Secondly, nothing in the LG Act in effect at the time suggests approval was needed. Thirdly, the presumption of regularity ought to apply to the effect that the Applicant can rely on the work being carried out lawfully in the absence of any evidence that the work was not carried out lawfully, Minister for Natural Resources v New South Wales Aboriginal Land Council (1987) 9 NSWLR 154 at 169-170 (Clarke AJA), Ashfield Municipal Council v Armstrong (2002) 122 LGERA 105; [2002] NSWCA 269 at [40] (Davies AJA, Mason P and Handley JA agreeing), Stephen Bowers Architects Pty Limited v Waverley Council (2003) 125 LGERA 292; [2003] NSWLEC 16 at [18]-[21].
48. While I do not have any submissions about the legal regime which applied to the supply of electricity to a lot in 1979 or thereabouts, the Council’s recognition that electricity was connected at the time of the 1984 DA being lodged with no issues being identified in any of the correspondence or reports suggests that the presumption can be relied on for this purpose and that there was no breach of the 1978 Consent. The Council engineer who inspected the site in 1984 made no observation that any service connection was unlawful.
49. Accordingly the Applicant has established that construction work occurred on Lot 334 warranting a finding that physical commencement occurred by 1 September 1982. This finding supports the making of the first declaration sought by the Applicant in its summons. It is unnecessary to make the second declaration.
Country dwelling – prayer 3
50. In relation to the relief sought in prayer 3 of the summons concerning a declaration in relation to ‘country dwelling’, it is appropriate to give the Applicant the opportunity to approach the Council to seek to reach agreement on that matter. Orders enabling this opportunity will be made before prayer 3 of the summons is finalised.
Costs
51. The Applicant seeks an order that the Council pay its costs. The Applicant wishes to reserve submissions on costs until delivery of the final judgment. The appropriate order if any will be discussed with the Applicant.
Declaration and order
52. The Court declares:
1. Development consent to Development Application dated 16 October 1978 for the erection of a country dwelling at Lot 334 Riverside Crescent, Brunswick Heads (being Lot 334 in Deposited Plan 755692) issued by the Respondent on 6 November 1978 was physically commenced before 1 September 1982 in accordance with s 99(1)(a)(i) of the Environmental Planning and Assessment Act 1979 (NSW) (as then in force).
53. The Court orders:
1. Prayer 3 of the summons dated 2 February 2024 is stood over to 1 August 2024 or until further order of the Court.
2. Costs reserved.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 July 2024 | 8,195 |
nsw_caselaw:190c942e64b31aec5e1e9c33 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-23 00:00:00 | GCL v Commissioner of Victims Rights [2024] NSWCATAD 200 | https://www.caselaw.nsw.gov.au/decision/190c942e64b31aec5e1e9c33 | 2024-07-26T22:25:58.549245+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: GCL v Commissioner of Victims Rights [2024] NSWCATAD 200
Hearing dates: 2 February 2024, 26 April 2024
Date of orders: 23 July 2024
Decision date: 23 July 2024
Jurisdiction: Administrative and Equal Opportunity Division
Before: J McAteer, Senior Member
Decision: (1) In proceedings 2023/00424691, the decision of the respondent dated 9 November 2023 is set aside. The applicant, GCL, is eligible for a Category C Recognition Payment in accordance with s 35 (3) (a) and s 36 (1) (d) of the Victims Rights and Support Act 2013.
(2) In proceedings 2024/00152567:
(i) time to lodge the application is extended to 24 April 2024 pursuant to s 41 (1) of the Civil and Administrative Tribunal Act 2013.
(ii) The application is dismissed pursuant to s 55 (1) (b) of the Civil and Administrative Tribunal Act 2013.
(3) In proceedings 2024/00152575:
(i) time to lodge the application is extended to 24 April 2024 pursuant to s 41 (1) of the Civil and Administrative Tribunal Act 2013.
(ii) The decision of the respondent dated 9 November 2023 is set aside. The applicant, GCL, is eligible for a Category B Recognition Payment in accordance with s 35 (3) (a) and s 36 (1) (c) of the Victims Rights and Support Act 2013.
Catchwords: VICTIMS SUPPORT — Administrative law — act of violence — whether evidence satisfied elements of act of violence — whether a series of related acts of violence constituting one act of violence — whether medical evidence verifies injury — sufficiency of evidence — whether applicant primary victim of act of violence — whether evidence established on balance of probabilities — beneficial legislation
Legislation Cited: Administrative Decisions Review Act 1997
Civil and Administrative Tribunal Act 2013
Victims Rights and Support Act 2013
Victims Support and Rehabilitation Act 1996 (repealed)
Victims Support and Rehabilitation Regulation 2019
Cases Cited: Drake v Minister for Immigration and Ethnic Affairs [1979] AATA; (1979) 46 FLR 409
R v Donovan [1934] 2 KB 498
Victims Compensation Fund Corporation v Brown [2003] HCA 54
Victims Compensation Fund Corporation v GM & 5 Ors [2004] NSWCA 185
Texts Cited: Nil
Category: Principal judgment
Parties: GCL (Applicant)
Commissioner of Victims Rights (Respondent)
Representation: Applicant (self-represented)
Solicitors:
K Douch (Victims Services Legal) (Respondent)
File Number(s): 2023/00424691
2024/00152575
2024/00152567
Publication restriction: Section 64 (1) of the Civil and Administrative Tribunal Act 2013 applies to the identity of the applicant.
REASONS FOR DECISION
Introduction
1. The applicant has made claims seeking recognition payments under the victims of crime scheme. The applicant asserts that he is a victim of violent crime and has suffered injury as a result. The victims of crime scheme provides that eligible victims may recover financial grants and access to the provision of services under the Victims Rights and Support Act 2013 (the Act).
2. In order to be eligible to recover under the scheme, a victim must either be a primary victim (the victim of an assault), or a secondary victim or family victim. As will be explained in these reasons, victims of crime must pass through various factual thresholds as set out in the Act in order to receive benefits under the scheme. In the current matter, the applicant has established that he is eligible to receive a victims recognition payment in claims before the Tribunal.
3. These proceedings concern whether the applicant in each of his claims has established that he was a victim of a violent crime (the statutory term being ‘act of violence’) in accordance with the Act, and is entitled to a recognition payment.
Background
4. The applicant has lodged three applications for administrative review with the Tribunal. Initially only one application was lodged because the Commissioner of Victims Rights made a joint decision on the three applications lodged by the applicant. However, prior to the final hearing the applicant attended to the filing of two further reviews to address the second and third claim in the Commissioner’s joint decision. Each application concerns an administrative review of how the respondent has dealt with his initial applications and internal reviews for Victims Support. The applicant in these proceedings before the Tribunal is referred to as ‘GCL’.
5. All three of these applications concern incidents that occurred when GCL was detained in immigration detention. The incidents all allegedly occurred on the same day in November 2017 where GCL states that he was sexually assaulted in immigration detention in NSW by three different perpetrators on the same day. Much of the evidence considered both by the Commissioner’s delegates (the assessors) and the Tribunal concerned establishing whether (a) an act of violence had occurred, and (b) whether the three claims related to distinctly separate acts of violence or could be characterised as three incidents constituting a series of related acts.
Summary of the claims
6. Below is a summary of the alleged violent conduct perpetrated against GCL for each of the three claims.
1. Proceedings no. 2023/00424691 (NCAT) 475141 (Victims Services)
1. A sexual assault allegedly perpetrated by a person with the nick name ‘Big Fella’ at Villawood in the State of New South Wales.
2. Proceedings no. 2024/00152575 (NCAT) 475221 (Victims Services)
1. A sexual assault allegedly perpetrated by a person named ‘L.B’ (identified) at Villawood in the State of New South Wales.
3. Proceedings no. 2024/00152567 (NCAT) 475228 (Victims Services)
1. A sexual assault allegedly perpetrated by a person with the nick name ‘Ratu’ at Villawood in the State of New South Wales.
All three incidents are alleged to have occurred on 16 November 2017.
7. Because of the number of claims, I believe that it is appropriate to set out briefly the key elements of the scheme and how the matters have been decided prior to the applications for administrative review.
Legislation
8. As the Tribunal has previously observed, the Victims Rights and Support Act 2013 continues a scheme which provides eligibility criteria for victims of violent crime to receive support and assistance. The current Act replaced the former Victims Support and Rehabilitation Act 1996 (repealed) (the former Act) but maintained its central provisions as to an eligible victim of crime, in that claimants are required to establish that they are a victim of an ‘act of violence’. The relevant current provisions are set out in the following sections of the Act:
5 Meaning of “victim of crime”
(1) For the purposes of this Part, a victim of crime is a person who suffers harm as a direct result of an act committed, or apparently committed, by another person in the course of a criminal offence…
(2) A person suffers harm if, as a result of such an act—
(a) the person suffers actual physical bodily harm or psychological or psychiatric harm, or
(b) the person’s property is deliberately taken, destroyed or damaged.
(3) If the person dies as a result of the act concerned, a member of the person’s immediate family is also a victim of crime for the purposes of this Part.
(4) If a person dies as a result of the act concerned and there is more than one member of the person’s immediate family, members of the immediate family may nominate a representative for the purposes of the Charter of Victims Rights.
….
19 Meaning of “act of violence”
(1) In this Act, act of violence means an act or series of related acts, whether committed by one or more persons—
(a) that has apparently occurred in the course of the commission of an offence, and
(b) that has involved violent conduct against one or more persons, and
(c) that has resulted in injury or death to one or more of those persons.
2) For the avoidance of doubt, the reference to an offence in subsection (1) (a) extends to conduct of a person that would constitute an offence were it not for the fact that the person cannot, or might not, be held to be criminally responsible for the conduct because of the person’s age or mental illness or impairment.
(3) For the purposes of this section, violent conduct extends to sexual assault and domestic violence.
(4) Except as provided by subsections (5) and (6), a series of related acts is two or more acts that are related because—
(a) they were committed against the same person, and
(b) in the opinion of the Tribunal or the Commissioner—
(i) they were committed at approximately the same time, or
(ii) they were committed over a period of time by the same person or group of persons, or
(iii) they were, for any other reason, related to each other.
(5) An act is not related to another act if, in the opinion of the Tribunal or the Commissioner, having regard to the particular circumstances of those acts, they ought not to be treated as related acts.
(6) An act is not related to any earlier act in respect of which support is given under this Act if it occurs after the support is given.
(7) For the purposes of this Act, a series of related acts, whether committed by one or more persons, constitutes a single act of violence.
…
20 Meaning of “primary victim”
(1) A primary victim of an act of violence is a person who is injured, or dies, as a direct result of that act.
(2) A primary victim of an act of violence extends to a person who is injured, or dies, as a direct result of—
(a) trying to prevent another person from committing that act, or
(b) trying to help or rescue another person against whom that act is being committed or has just been committed, or
(c) trying to arrest another person who is committing, or who has just committed, that act.
9. The Act provides for a number of areas of support for victims of violent crime. These three reviews concern an area of support referred to as a Recognition Payment. Section 34 of the Act defines the term Recognition Payment.
34 Definitions
…
recognition payment means a payment made in recognition of the trauma suffered by a victim of an act of violence.
…
10. Prior to accessing a Recognition Payment an applicant must satisfy the criteria set out in s 39 of the Act. This requires that the incident be reported to relevant entities. This requirement is in addition to establishing that they are the victim of an ‘act of violence’. The section has been amended since the Act commenced. The section currently provides:
39 Documentary evidence
(1) An application for victims support is to be accompanied by such documentary evidence as may be required by the approved form.
(2) Without limiting subsection (1), the documentary evidence to be required—
(a) for an application for financial assistance for immediate needs under section 26—is documentary evidence (such as a medical or police report or a report by an agency that provides support services to victims of crime) sufficient to support, on the balance of probability, the applicant’s claim to be a victim of an act of violence, and
(b) for an application for financial assistance for economic loss under section 26 or 27 or for a recognition payment—is—
(i) a police report, or a report by a Government agency or any other agency that provides support services to victims of crime, sufficient to support, on the balance of probability, the applicant’s claim to be a victim of an act of violence, and
(ii) a medical, dental or counselling report verifying that the applicant or child who is the primary victim concerned has actually been injured as a result of an act of violence.
…
(Emphasis added)
11. These pathways or preconditions under the Act which lead to a recognition payment are a threshold issue to an applicant accessing the benefits of the victims of crime scheme. Once an eligible victim (of an act of violence) has passed through the initial threshold, an assessment of the circumstances of the incident(s) and level of injury is carried out to determine the appropriate recognition payment.
12. In the initial three applications, the initial decision maker dismissed the claim that the behaviour amounted to sexual assaults and made a finding that the actions of the three perpetrators satisfied the criteria for an act of violence, but determined under s 19(4) (as set out at [8] above), that those actions constituted a series of related acts comprising one act of violence. The senior assessor on review reached the same conclusion as the initial decision maker. Like these reasons, both earlier decision in the three applications were covered in one set of reasons for decision.
13. The relevant part of GCL’s version of events contained in the decision under review is as follows:
On 16 November 2017…. As I approached the room door I noticed a detainee standing near my room’s door. This detainee was involved in an incident prior to lunch in the compound so I felt something bad and rushed to open my room door. As I opened the room door he pulled me and pushed me away.
At this time ‘L.B.’ from nowhere came near me and punched my face many times and I fell on the floor. As I feel to the floor ‘L.B.’ with his shoes heel stepped on to my hand palm and the second time I took my hand away then he kicked on my face but I dodged with my hands and began to yell for help. Then I crawled to reach the main entrance door I saw a detainee with a beard entering thorough the main entrance door, he pulled down my pants and beat on to my buttock and said, ‘This c,,, got a sexy ass’. I felt embarrassed and I heard them laughing and felt like a man with no manliness. Then I pulled up my pants and continued to crawl quickly towards the entrance door and that is when he started to kick me which left shoe marks…. He kicked me many times which left shoe mark on me. Yelling for help I managed to get my body half way out of the main entrance door and that’s when I saw emergency response team (ERT) staffs running towards me and helped to get me up.
14. The Tribunal notes that the version of events subsequently before the Tribunal was more detailed and elaborate than that outlined above. However even before the assessor the version of events had expanded from the initial description, where the reference to pulling GCL’s pants down and smacking or slapping him on the bare buttock while making suggestive remarks was added two weeks later by way of an amended description.
15. When the matter was before the Tribunal GCL identified that there were three different claims relating to three different acts of violence. As noted at [6] above in contrast to the matters outlined above at [13], GCL submitted that each claim was identified and distinguished by the involvement of one discrete perpetrator.
16. In all three claims the senior assessor determined that GCL was the victim of an act of violence on 16 November 2017 at Villawood. The senior assessor then determined: ‘After careful consideration of the evidence, I have found that that the violence perpetrated by the three offenders constitute a series of related acts. In making this finding I refer [GCL] to the ‘Report a Crime’ confirmation email from the Australian Federal Police (AFP) dated 8 February 2018, the letter from the Australian Border Force to [GCL] dated 11 July 2018, records form Internal Health and Medical Services (IHMC) between 9 July 2019 and 28 November 2019 and the letter from [GLC] dated 16 January 2018 regarding a meeting with him and an officer at Villawood detention Centre. These documents all appear to refer to a single incident or assault which was perpetrated against him on 16 November 2017.
17. The senior assessor goes on to make a statement about the evidence before making their final determination on this ‘single or series of related acts’ issue:
The only evidence that I have before me to the violence by three persons being distinct are records made after (GCL’s) applications for victims support, made more than five yeas after the act of violence occurred.
On the basis of the available evidence I consider that the three alleged offenders listed in applications 00475141, 00475221 and 00475228 forms a series of related acts.
18. Having found a single act of violence (by adopting a series of related acts as one act of violence), the senior assessor then proceeds to determine what Category of Recognition Payment to award GCL. As noted from s 35 of the Act, Categories of Recognition Payments are identified by reference to the nature of the assault or the injury or impact of the assault. Section 35 relevantly provides:
35 Categories of recognition payment
…
(2) A category B recognition payment is a payment given in respect of an act of violence or act of modern slavery of the following kinds—
(a) a sexual assault resulting in serious bodily injury or which involved an offensive weapon or was carried out by 2 or more persons,
(b) a sexual assault, sexual touching or sexual act or attempted sexual assault involving violence that is one of a series of related acts.
(3) A category C recognition payment is a payment given in respect of an act of violence or act of modern slavery involving any of the following—
(a) a sexual assault other than one referred to in subsection (2) (b),
(b) an attempted sexual assault resulting in serious bodily injury,
(c) an assault resulting in grievous bodily harm,
…
(4) A category D recognition payment is a payment given in respect of an act of violence or act of modern slavery involving any of the following—
(a) sexual touching or sexual act,
(b) an attempted sexual assault involving violence other than one referred to in subsection (3) (b),
…
(d) an assault (not resulting in grievous bodily harm).
19. The senior assessor determines that the violence against GCL was not sexual in nature.
I am not satisfied that the violence that was perpetrated against [GCL] was sexual in nature. I have considered the available evidence and I note that in the documents that were produced in the months following the act of violence there is no reference to any sexual violence being perpetrated against [GCL]. Again, the first reference to any sexual violence occurred after [GCL] made his first application for Victims support.
I acknowledge that [GCL] has indicated that he was embarrassed to report the sexual violence that was perpetrated against him. However, the evidence provided by him does not satisfy me on the balance of probabilities that this sexual violence took place.
20. As a result of this finding the senior assessor does not approve a Category B payment but approved a Category D payment for an act of violence not causing grievous bodily harm. The senior assessor, having made their finding concerning the lack of any sexual violence, would have applied s 35 (4) (d) to make the payment rather than s 35 (4) (a) or (b) as set out at [18] above. As a result, GCL received a recognition payment of $1,500 by way of victims support.
21. After receiving the notice of determination for the Internal Reviews on 9 November 2023 GCL filed an application for Administrative Review on 23 November 2023. That matter was clearly lodged within time. As discussed above at [4], GCL subsequently filed two more applications for administrative review (effectively by consent) and time for lodgement has been extended by orders detailed above to receive the two later applications 2024/00152567 and 2024/00152575 procedurally.
Jurisdiction
22. There is no dispute that the Tribunal has jurisdiction to hear the administrative reviews lodged. Section 51 of the Act provides for administrative review by the Tribunal.
51 Application to Tribunal for administrative review of decision concerning recognition payment
(1) An applicant for a recognition payment who is aggrieved by the decision of a decision maker in respect of the application may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision made by the Commissioner following an internal review under section 49 of the decision maker’s decision with respect to the recognition payment.
(2) An applicant for a recognition payment who is aggrieved by the decision of the Commissioner in respect of the application may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision made by the Commissioner.
23. The Tribunal’s powers in relation to an application for administrative review are governed by s 63 of the Administrative Decisions Review Act 1997 (ADR Act), which provides:
63 Determination of administrative review by Tribunal
(1) In determining an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following:
(a) any relevant factual material,
(b) any applicable written or unwritten law.
(2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision.
(3) In determining an application for the administrative review of an administratively reviewable decision, the Tribunal may decide:
(a) to affirm the administratively reviewable decision, or
(b) to vary the administratively reviewable decision, or
(c) to set aside the administratively reviewable decision and make a decision in substitution for the administratively reviewable decision it set aside, or
(d) to set aside the administratively reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal.
24. The Tribunal’s function on review under section 63 of the ADR Act is to make the correct and preferable decision having regard to the material before it, and any applicable written or unwritten law. It is well established that in considering an application for review the Tribunal is not constrained to have regard only to the material that was before the agency, but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs [1979] AATA; (1979) 46 FLR 409.
The Hearing
25. The matters were heard over two sittings of the Tribunal. The applicant (GCL) gave lengthy evidence in chief and was subject to cross-examination during those hearings. In order to distinguish the evidence before the Tribunal and the different position that it reached on the evidence contrasted with the earlier findings, it is necessary to detail a significant amount of GCL’s sworn evidence before the Tribunal.
GCL’s evidence
26. In his applications for Administrative Review GCL stated the following basis for the review requests:
The Assessors finding that all incident [sic] are a series of related acts is an error as the documentary evidence provided from the victims services stating that there are more than one act of violence and to submit an application per offender was not considered as part of the internal review.
The category of recognition payment decision was not made on application for victims support [sic] instead on a withdrawn application thus the decision in not approving category B recognition payment sought in error.
27. GCL prepared a statutory declaration (Exhibit ‘A-1‘) declared on 5 January 2024 where he details his reporting of the incidents and the obtaining of legal advice prior to confirming all aspects of the incidents.
28. GCL also relied upon a Certificate of Injury form for each claim (Exhibit ‘A-2’), whereby GCL is given a diagnosis of Post Traumatic Stress Disorder (PTSD) in addition to intrusive thoughts, nightmares, fear of going out and inability to sleep. The incidents were said to compound the symptoms and condition.
29. GCL relied upon an extract for the Australian Human Rights Report into his treatment in immigration detention, tendering extracts for paragraphs [135] – [181] and [238] – [248]. (Exhibit ‘A-3’).
30. GCL relied on much of the material in the Commissioner’s s 58 bundle and provided a written reply on 16 April 2024 between hearing dates.
GCL’s evidence at hearing
31. GCL provide evidence that the first incident involved the perpetrator identified as ‘Big Fella’, the second incident involved ‘L.B.’ as the perpetrator and the third incident involved ‘Ratu’ (who had a beard) as the perpetrator. Whilst only ‘L.B.’s true identity is known the operator Serco and the Commissioner do not dispute that GCL was assaulted by the other two individuals.
32. GCL said that he was involved in ‘activities’ at Villawood on 16 November 2027 after 1:00pm. He said that he was at lunch and then he went back to the Unit at 2:00pm. There are five buildings in the compound where he was held. He went to Unit 4’s main entrance door and he walked towards his room where ‘Big Fella’ was standing in front of his room. GCL said that Big Fella was standing next to the door.
33. GCL told the Tribunal that he went through the door and inside his room and Big Fella followed him in. Big Fella pushed GCL who fell towards his bed as a result. GCL then sat on the bed and Big Fella asked him for his phone cards and insulted GCL. Big Fella asked for the mattress to be lifted (looking for phone cards). GCL said he lifted the mattress and then got hit in the head with a book belonging to his roommate.
34. At this point Big Fella allegedly asked GCL to show him his genitals, saying that if he didn’t, he would tell others that GCL was a paedophile and that if he did, he would still blackmail him. GCL told the Tribunal that he ‘showed’ his penis to Big Fella at which time Big Fella put the roommate’s book down and pulled GCL’s pants down and held onto his penis with his hands and then ‘sucked’ GCL’s testicles. GCL’s evidence was that after that Big Fella put GCL’s penis in his mouth. At this moment GCL immediately pushed Big Fella away and ran outside of his room. GCL said that when he did this, he was not wearing underpants in the rush.
35. GCL said that when he did this he immediately went and sat with his roommate ‘K’ in the common area where the television (TV) was. GCL said that Big Fella left the Unit Block by the emergency exit. After Big Fella had left GCL said that he spent about 10 minutes in the TV area. After that time, GCL said that he went back to his room as his head was hurting. GCL said that he then went to the toilet and washed his genitals and that they were sore and red. GCL’s roommate went out to do activities. At this time GCL said that he checked for officers and that none were visible, and he went back to the TV area. After a further two or three minutes GCL said that he went outside to ‘have a smoke’.
36. GCL said that he then went back inside the room to the kitchenette to wash his face. He said that he was bending down washing his face and then ‘L.B.’ was behind him and pushing his penis into his backside. ‘L.B.’ pushed GCL towards the room during which time GCL said that he could not move. GCL said that he ‘tried to escape’ and run towards the exit door but ‘L.B.’ came again from behind and punched GCL with a fist (GCL said because he would not have sex with ‘L.B.’). GCL said that he then collapsed.
37. GCL said that he woke up some time later and was unable to stand up, so he crawled to the exit door to go out. It was at this time that ‘Ratu’ came in the exit door. GCL said that ‘Ratu’ smiled and stomped on GCL’s right palm. GCL said that ‘Ratu’ pulled GCL’s pants down and exposed his buttocks. ‘Ratu’ then beat GCL’s buttocks with his hand two times. GCL said that he tried to pull away and pull his pants up and crawl. GCL said that he was on all fours and had managed to get the top half of his body out of the exit door. It was at that time that two officers from the facility came in. After the incident was over GCL said that he had a smoke and spat out some blood.
38. On day two GCL was cross-examined on some of the logistical matters concerning reporting and obtaining advice. GCL said that there was a free legal advice service that detainees could access at the facility every Tuesday in the Austin Learning Centre. GCL said that each time he went to this service for advice there would be a different lawyer present. GCL said that the lawyers were provided by the firm HBL Ebsworth.
39. GCL said that he told the lawyers about three physical assaults and later amended the application to one of the offenders engaging in a sexual manner towards him. GCL said that the lawyer had advised him that incidents of violent nature occurring in immigration detention were considered domestic violence incidents at law.
40. In respect of his Victims Services applications, GCL said that he did the applications online and that he believed that he would obtain the documents that the Commissioner required under s 39 of the Act (Police and health reports detailing the elements of the act of violence) later.
41. GCL said that he saw the lawyers every Tuesday and eventually after considering advice removed references to domestic violence and characterised his claims as being based on sexual assault. GCL said that he later received a conformation email from Victims Services saying that his applications had been ‘accepted’. Later he received an email advising that for his claim to progress the matter ‘needed to be reported in accordance with the requirements of s 39 of the Act’ (which was explained in the email).
42. GCL stated that he was new to the application process and when the Commissioner relies on what was written in the application form (at page 80 of the s 58 documents) GCL noted that the form requires only a ‘brief description’. GCL referred to his statutory declaration (Exhibit ‘A-1’) where he declares that on 17November2017 he reported the incidents to Serco staff as ‘rape’, ‘attempted rape’ and ‘assault’.
43. Regarding the reporting and description of the incidents, in his statutory declaration GCL states:
I have said of each incident to the NSW Legal Aid and asked for advise [sic] prior to signing the report to police form as it has only one option to report an incident or assault. Due to fear others may know the incidents, I tried not to share with others while in immigration detention. Once released into the community I have said to a friend and lawyers from Homeless Persons Legal Service.
After lodging initial application, I became aware that rape and attempted rape incidents are also considered sexual assault and then submitted SARO report as sexual assault.
I understand that wilfully providing false information and documents is punishable under the law and its consequences.
I say that the facts stated in the Applicants Submissions to the Tribunal, victims support applications lodged with victims services, the documentary evidences [sic] providing the Tribunal is genuine and correct according to my knowledge…
44. GCL was asked about the Incident Report contained within ‘A-1’. That report outlines CCTV footage showing GCL entering Unit 4 and followed by another detainee. On the footage, staff later observed the detainee assault GCL by striking him five or six times with a closed fist to the upper body area and GCL falls to the ground. The detainee then kicks GCL at least once whilst he is on the ground.
45. GCL said that he did not sign the Police Reporting form given to him by the Serco officer but described the incident to the officer.
Commissioner’s submissions
46. The Commissioner submitted that the matter was initially considered by the Australian Federal Police (AFP) following GCL signing a notification for Police investigation form in November 2017. However, after referral to the AFP the referral was rejected on 26 March 2018 on the basis of being low priority and the availability of resources.
47. The Commissioner submitted that there had been inconsistent reporting by GCL about the incidents with the initial report to Victims Services being that three men assaulted him as he refused to hand over phone cards. The Commissioner submitted that this version was consistent with the contemporaneous evidence of the matter. Significant reliance was placed by the Commissioner on the specifics and terms of the wording of the initial application to them.
48. The Commissioner submitted that in email correspondence GCL initially advised that the assaults were related and not separate incidents involving three persons acting independently.
49. The Commissioner referred to the Sexual Assault Reporting Option (SARO) submitted by GCL to NSW Police on 22 June 2023. Reliance was placed on this report being submitted more than four years after the incident. Further references were made to inconsistencies between what was referred to in the initial application and what was referred to in the SARO. Other inconsistences were referred to in submissions by the Commissioner.
GCL’s submissions
50. GCL submitted that there were valid reasons for the inconsistencies in some of his reports. GCL submitted that he did provide the necessary details to Serco officers at the time of the incidents. He submitted that their incident reports are full of error and illustrated this by reference to the incident report which sets out CCTV footage (at [44] above). GCL submitted that the reference to CCTV in that report is an error and he does not know how that version of events was concocted. GCL relied on his Exhibit ‘A-3’ which detailed aspects of the Australian Human Rights Commission Report. At [168] of that report the following is set out:
168. … A Facility Operations Manger [sic] witnessed a detainee punch Mr VA (GCL) five or six times with a closed fist to his ‘upper body’ (which appears to have included his face). Mr VA then collapsed to the ground and was kicked twice by the same detainee. A post-incident report suggested that the incident was captured in CCTV, but the Department later told the Commissioner that this was an error and that there was no CCTV camera in the location where Mr VA was assaulted and that therefore no CCTV footage ever existed.
51. GCL also submitted that each one of his entries or reports referred to the desire to provide further information and more complete information at a later time. GCL referred to the fact that he was never contacted by the AFP and as a result was not given an opportunity at that time to provide further information as they never followed up his report. GCL maintained that it is entirely open to the Tribunal to apply the most complete and most recent evidence of what transpired, not just what was initially recorded with an ongoing wish to elaborate and qualify matters.
52. GCL submitted that each incident has enough evidence to show that they were perpetrated by one person. In respect of submissions that one incident had never been referred to earlier as a sexual assault type incident, GCL submitted that was because of what he said in an email to Victims Services on 14 April 2023, being that he was assaulted mainly in the face in that particular incident so he did not identify it as being possibly characterised as a sexual assault.
Consideration
53. The main contest in these applications appears to concern the position that: (a) different versions of events have been provided by GCL at different times, (b) the recent evidence is far more detailed than much of the initial evidence, and (c) whilst GCL had provided detailed evidence now, which appears to meet all of the requirements of s 39 of the Act, the explanations for holding back on some of the earlier evidence are either illogical or otherwise do not make sense. Arising from all of this is the separate acts / related acts question.
54. I note that both the initial assessor and the senior assessor on review found that GCL was the victim of an act of violence and neither assessor had any argument with GCL’s contention that he was assaulted by three different men.
55. Dealing with the applications in the manner required by the Act, the first matter to address is s 19 concerning act of violence. This aspect of GCL’s claims is the most straightforward. On the earlier evidence both assessors were able to find that the crucial threshold of s 19 had been met. On my assessment the elements of s 19 are met on the earlier evidence but also on the more recent and more detailed evidence given at the hearing. Big Fella assaulted GCL predominantly in his room. ‘L.B.’ assaulted GCL in the kitchenette area and the common areas of the Mackenzie Centre. ‘Ratu’ assaulted GCL in the common area and towards the exit of that area.
56. Section 39 (2) (b) (i) criteria has been met (Police report). This is established from the evidence considered by the Assessor in respect of the report to the AFP in 2018, and the follow up SARO reports on each application also as referred to by the assessor.
57. There is also a requirement under s 39 (2) (b) (ii) that there be a medical or dental or counselling report verifying that the applicant or child who is the primary victim concerned has actually been injured as a result of an act of violence. Those words arise directly from the Statute and the operation of ss 39 (2) (b) (i) and (ii) is conjunctive.
(i) a police report, or a report by a Government agency or any other agency that provides support services to victims of crime, sufficient to support, on the balance of probability, the applicant’s claim to be a victim of an act of violence, and
(ii) a medical, dental or counselling report verifying that the applicant or child who is the primary victim concerned has actually been injured as a result of an act of violence.
(Emphasis added)
58. As in previous determinations of this Tribunal I take the meaning of the words at the end of s 39 (2) (b) (ii) ‘as a result of an act of violence’ to mean: as a result of the act of violence upon which the relevant claim being assessed is based.
59. Whilst I might find that on the available evidence s 19 (1) (a) and (b) have been met, s 19 (1) (c) concerns whether the applicant has been injured as a result of the act of violence. The definition of injury in Part 4 Division 1 of the Act is as follows under s – 18:
injury means actual bodily harm, grievous bodily harm or psychological or psychiatric harm but does not include injury arising from loss or damage to property.
60. Reading s 39 (2) (b) (ii) and 19 (1) (c) together, it is clear that the legislature requires that a recognition payment to be only made when there is independent professional evidence indicating that injury has arisen as a direct result of the violence.
61. On my assessment of the evidence, there is relevant evidence of injury. Initially there is the Liverpool Hospital records which show physical injuries to the face and head. Additional physical injuries to the hand are also noted. Psychological evidence identifies trauma, fear, anxiousness and difficulty sleeping. Other records record: paranoia and fear. Symptoms of vertigo and mental health concerns are also recorded.
62. There are other medical records referred to in the decisions under review. These records refer to Victims Services approved counselling. It appears that in those records the incidents in November 2017 are somewhat conflated with other stressors relating to GCL’s immigration status and the immigration detention process generally.
63. There are however Certificates of Injury (being a Victims Services proscribed form or document) which victims of violent crime may complete to navigate in part s 19 (1) (c) and s 39 (2) (b) (ii) of the Act.
64. These certificates of Injury were received as Exhibit ‘A2’. For the claim relating to ‘Big Fella’ the Certificate completed 1 February 2024 records:
[GCL] states that he was stunned by the physical attack. Then he became shocked and froze when he was being sexually assaulted. He eventually found the strength to push the offender away and ran out of the room into the lounge. He noted that he felt disgusted, extremely distressed and fearful. He continues to relive this event via thoughts, feelings and memories. He is fearful of going out.
Under provisional diagnosis the clinician records:
Chronic Post Traumatic Stress Disorder [GCL] continues to experience the symptoms of PTSD even after 6 years. Panic attacks as part of the reliving symptoms of PTSD. He has moral trauma because the offender has not been charged.
65. For the claim relating to ‘L.B.’ the Certificate completed 1 February 2024 records:
[GCL] states that he was shocked by this event, especially as he had just been sexually and physically attacked. He felt intense distress, excruciating pain and thought he would be raped. This incident compounded the traumatic stress from the previous one that day. He stated that he could not sleep, had nightmares, felt that he would be attacked again so avoided being alone in his room.
Under provisional diagnosis the clinician records:
Chronic Post Traumatic Stress Disorder [GCL] continues to experience the symptoms of PTSD even after 6 years. Panic attacks as part of the reliving symptoms of PTSD. He has moral trauma because the offender has not been charged.
66. For the claim relating to ‘Ratu’ the Certificate completed 1 February 2024 records:
[GCL] states that he was shocked by this event, especially as he had just had 2 sexual and physical assault incidents. He felt intense distress, excruciating pain and ashamed at being exposed. The incident compounded the traumatic stress from the 2 previous ones that day. He stated that he could not sleep, had nightmares, felt that he would be attacked again so avoided being alone in his room.
Under provisional diagnosis the clinician records:
Chronic Post Traumatic Stress Disorder [GCL] continues to experience the symptoms of PTSD, depression even after 6 years. Panic attacks as part of the reliving symptoms of PTSD. He has moral trauma because the offender has not been charged.
67. I note that these Certificates were all completed on the same date. However, I also note that the Counsellor has had a therapeutic relationship with GCL for some time and has provided a number of prior treatment sessions.
68. Whilst the Commissioner placed significant weight on matters relating to changes in GCL’s evidence about what occurred, and changes in the nature of the medical evidence and diagnosis, for the purposes of considering claims under the Act, I note the prior findings of act of violence. In doing so I note that both of the Commissioner’s Delegates made findings that GCL was the victim of three acts of violence, which for the purposes of s 19 (4) of the Act, were grouped as a series of related acts of violence thereby constituting one grouped act of violence to become a single act for the purposes of the provision in the statute.
69. In order to find an act of violence for each claim (albeit ultimately concluded that they were a series of related acts) the delegate was required to establish that all of the discrete elements of s 19 (1) of the Act were met.
70. Because of the types of categories of injury that GCL was or is seeking, for the purpose of determining Category, the nature of the trauma or impact of the matters on him are of less significance than the circumstances of the assaults. The central question is whether they should be considered a series of related acts. That is because s 35 of the Act is more focused on the circumstances or nature of what occurred rather than the impacts in the majority of the descriptors.
71. Section 35 provides:
35 Categories of recognition payment
(1) A category A recognition payment is a payment given in respect of an act of violence or act of modern slavery that apparently occurred in the course of the commission of a homicide.
(2) A category B recognition payment is a payment given in respect of an act of violence or act of modern slavery of the following kinds—
(a) a sexual assault resulting in serious bodily injury or which involved an offensive weapon or was carried out by 2 or more persons,
(b) a sexual assault, sexual touching or sexual act or attempted sexual assault involving violence that is one of a series of related acts.
(3) A category C recognition payment is a payment given in respect of an act of violence or act of modern slavery involving any of the following—
(a) a sexual assault other than one referred to in subsection (2) (b),
(b) an attempted sexual assault resulting in serious bodily injury,
(c) an assault resulting in grievous bodily harm,
(d) physical assault of a child that is one of a series of related acts.
(4) A category D recognition payment is a payment given in respect of an act of violence or act of modern slavery involving any of the following—
(a) sexual touching or sexual act,
(b) an attempted sexual assault involving violence other than one referred to in subsection (3) (b),
(c) a robbery involving violence,
(d) an assault (not resulting in grievous bodily harm).
72. Only a part of s 35 (2) (b) or s 35 (3) (c) is a reference made to the impact of the act of violence on the victim. All other references are to the nature and circumstances of the act of violence.
73. Whilst the assessors ultimately confirmed a Category D Recognition Payment, in respect of medical evidence, the only matter established by them was that GCL did not sustain injury equating to grievous bodily harm as a result of the acts of violence. Other than that finding (by choice of category of Recognition Payment), there is no current need nor was there any earlier need to scrutinise the medical evidence any further having established the injury component of s 19 (1) (c) of the Act.
74. I note that in finding injury, because of the findings that they made, both assessors have determined that GCL sustained injury as a direct result of each (related) act of violence, being injury that was of some significance.
75. I note that psychological harm is of a low threshold and the guidance on the term ‘harm’ (under the former Act) comes from a guideline under s 65 of that Act. The reference is that the injury (to constitute harm) must be something more than transient or trifling.
76. As the Tribunal has previously observed, the case of R v Donovan [1934] 2 KB 498 at 509 provides authority for the proposition that actual bodily harm means “any hurt or injury to a person, which does not have to be permanent, but is more than merely transient or trifling". Whilst that case deals with actual bodily harm, in an instance of psychological harm, the harm must also be more than transient or trifling. Both physical and psychological or psychiatric injuries through different types of evidence constitute harm to the person. The threshold is that the hurt or injury must also be something that has an effect (general or specific) but importantly one that is more than transient or trifling.
77. On my assessment of the medical evidence GCL has suffered psychological harm arising from all three assaults, and there is medical evidence of physical harm from a least two of the assaults and possibly all three. That evidence is more than something that is merely transient or trifling.
78. I therefore make a finding that the applicant (GCL) is the victim of an act of violence suffering psychological or mental harm / trauma and physical harm / injury as a result of assaults at Villawood in the State of New South Wales on 16 November 2017.
79. Having regard to the totality of the evidence, and noting the beneficial nature of the scheme as set out in Victims Compensation Fund Corporation v GM and 5 Ors [2004] NSWCA 185 and by the High Court in Victims Compensation Fund Corporation v Brown [2003] HCA 54, I find that the elements of s 39 (2) (b) (ii) are made out on the available evidence. The reports verify that GCL has been injured by the acts of violence and I so find.
80. On the question of whether the assaults constitute separate acts of violence or a series of related acts, I find as follows.
81. In my view the first assault involving the perpetrator ‘Big Fella’ is a discrete matter. The assault effectively occurred in GCL’s room. It involved both sexual touching and a sexual assault as well as at least one instance of a physical assault.
82. I note that in the decision under review the assessor appears to rely in the currency of the records pointing to the matters being separate. The assessor says the following in respect of the acts being related.
26. … I acknowledge [GCL]’s submissions, however his assertions are not supported by the available contemporaneous evidence.
27. In making this finding I refer [GCL] to the ‘Report a Crime’ confirmation email from the Australian Federal Police (AFP) dated 8 February 2018., the letter from The Australian Border Force to [GCL] dated 11 July 2018. Records from Internal Health and Medical Services (HMS) dated 28 November 2007, the Mental Health Consultation records from HMS between 9 July 2019 and 28 November 2019 and the letter from [GCL] dated 16 January 2018 regarding a meeting with him and an officer at Villawood Detention Centre. These documents appear to refer to a single incident or assault which was perpetrated against him on 16 November 2017.
28. The only evidence that I have before me to the violence by the three persons being distinct are records made after [GCL]’s applications for victims support more than five years after the act of violence.
29. On the basis of the available evidence I consider that the violence perpetrated by the three alleged offenders listed in applications 00475141, 00475221, and 00475258 forms a series of related acts.
(Emphasis added)
83. I have had the benefit of more evidence from GCL on this issue. In his submissions and evidence before the Tribunal (both written and oral) GCL has given logical and cogent responses to the questions raised by the Commissioner and their representative about how he has previously particularised matters. In my view the explanations are valid. GCL is a lay person. He was at the relevant time a person who was being held in immigration detention.
84. GCL availed himself of free legal assistance and as that resource came to terms with the somewhat complex situation, the nature of both his instructions and the advice received changed. In accepting the general nature of the act of violence (as accepted by the assessors) I note that little of the facts were actually in dispute, other than the descriptors of how and the full context of where the assaults occurred.
85. Having had the benefit of the better evidence where GCL gave evidence on oath and that evidence was tested by cross examination, I find that the assault by ‘Big Fella’ is a separate act of violence. The only matters linking that act with the others is that GCL was the victim, and that it occurred at the same address and was perpetrated on the same day by other detainees. In the best available evidence, the reference to the phone cards only arises with ‘Big Fella’. As noted, this incident predominantly occurs in GCL’s room when the roommate was absent. I note that generalised references to seeking phone cards as recorded elsewhere in the records, but I place little weight on that matter having heard GCL’s own evidence.
86. In making this finding in respect of the category of Recognition Payment I note that the circumstances of the offences would appear to meet the criteria of Category C Recognition Payment as defined at s 35 (3) (a) of the Act.
(3) A category C recognition payment is a payment given in respect of an act of violence or act of modern slavery involving any of the following—
(a) a sexual assault other than one referred to in subsection (2) (b),
…
(Emphasis added)
87. In respect of the other two incidents involving ‘L.B.’ and ‘Ratu’, there is more to potentially link these incidents than the earlier one. Both incidents on the best evidence occur or predominantly occur in the common area in the Mackenzie Unit. After the earlier incident GCL goes and sits with his roommate in the TV area and later goes outside to have a cigarette. He then goes to the toilet and is then washing his face. It is at this time that ‘L.B.’ comes up behind him and attempts to have sex with him (in GCL’s own words) and that ‘L.B.’ is behind him and pushing his penis into his backside.
88. Then GCL said that ‘L.B.’ pushed him towards the room during which time GCL said that he could not move. GCL said that he ‘tried to escape’ and run towards the exit door but ‘L.B.’ came again from behind and punched GCL with a fist (GCL said that action was because he would not have sex with ‘L.B.’). GCL said that he then collapsed. By the time of the third assault by ‘Ratu’ GLC appears to be still in the common area as when he woke up (being unable to stand) he ‘crawled’ to the exit door, so it would appear from his evidence in an attempt to get outside.
89. This third incident begins with ‘Ratu’ coming in the exit door and stomping on GCL’s right palm. GCL said that ‘Ratu’ then pulled GCL’s pants down and exposed his buttocks. ‘Ratu’ then beat GCL’s buttocks with his hand two times and commented as outlined at [13] above. GCL said that he tried to pull away and pull his pants up and crawl. GCL said that he was on all fours and had managed to get the top half of his body out of the exit door. It was at that time that two officers from the facility came in and the incident ended.
90. In my view these incidents are related in that they both deal with attempts by the perpetrators to sexually assault or engage in sexual touching or a sexual act in the context of physical assaults. They predominantly occur in the common area (Ratu’s assault appears to do so in its entirety). The similarities with the first matter are only that GCL was assaulted earlier that same day.
91. Having regard to section 19 (4) of the Act it is clear that they were committed against the same person, and in my opinion, they were also related having regard to s 19 (4) (b) (ii) being that: they were, for any other reason, related to each other. This is because of the nature of what actually transpired as outlined at [89] and [90] above. I therefore find that the assaults by ‘L.B.’ and ‘Ratu’ are a series of related acts of violence for the purposes of s 19 (4) of the Act.
92. In making this finding in respect of the category of Recognition Payment I note that the circumstances of the offences would appear to meet the criteria of Category B Recognition Payment as defined at s 35 (2) (b) of the Act.
(2) A category B recognition payment is a payment given in respect of an act of violence or act of modern slavery of the following kinds—
(a) a sexual assault resulting in serious bodily injury or which involved an offensive weapon or was carried out by 2 or more persons,
(b) a sexual assault, sexual touching or sexual act or attempted sexual assault involving violence that is one of a series of related acts.
(Emphasis added)
93. I find that the actions of ‘L.B.’ constitute attempted sexual assault involving violence, and that the action of ‘Ratu’ comprise sexual touching that involves violence. Collectively because of the earlier finding that I have made at [91] they each constitute an act that is one of a series of related acts for the purposed of s 19 but also s 35 (2) (b) of the Act.
94. Section 36 of the Act sets out how recognition payments (as described in s 35) are payable:
36 Recognition payments
(1) Recognition payments are payable as follows:
(a) a category A recognition payment of an amount prescribed by the regulations is payable—
(i) to each family victim (other than a child referred to in subparagraph (ii)) who, immediately before the death of a primary victim as a result of an act of violence described in section 35 (1), was financially dependent on the primary victim, and
(ii) to each child of a primary victim who, immediately before the death of the primary victim as a result of an act of violence described in section 35 (1), was under the age of 18 years,
(b) a category A recognition payment of an amount prescribed by the regulations is payable to the following who were not, immediately before the death of the primary victim concerned, financially dependent on a primary victim who died as a result of an act of violence described in section 35 (1):
(i) a parent, step-parent or guardian of the primary victim,
(ii) any person who, immediately before the death of the primary victim, was the victim’s spouse or de facto partner as referred to in section 22 (3) (b),
(c) a category B recognition payment of an amount prescribed by the regulations is payable to a primary victim who suffered injury as a result of an act of violence described in section 35 (2),
(d) a category C recognition payment of an amount prescribed by the regulations is payable to a primary victim who suffered injury as a result of an act of violence described in section 35 (3),
(e) a category D recognition payment of an amount prescribed by the regulations is payable to a primary victim who suffered injury as a result of an act of violence described in section 35 (4).
(2) Only one recognition payment is payable to a single victim in respect of a series of related acts of violence against the victim.
(Emphasis added)
95. Clause 14 of the Victims Rights and Support Regulation 2019 provides the following amounts payable for the various categories of recognition payments:
14 Recognition payments
The following are the prescribed amounts of recognition payment for the purposes of section 36 of the Act—
(a) for a category A recognition payment referred to in section 36(1)(a) of the Act—$15,000,
(b) for a category A recognition payment referred to in section 36(1)(b) of the Act—$7,500,
(c) for a category B recognition payment—$10,000,
(d) for a category C recognition payment—$5,000,
(e) for a category D recognition payment—$1,500.
(Emphasis added)
96. Having regard to the nature of GCL’s concerns about his fellow detainees, matters relating to intimidation, coming to harm, and retribution, I accept why the initial AFP report was made in the manner that it was, and that much of the evidence was particularised and clarified after GCL was released from immigration detention. In addition, GCL has given logical and reasoned evidence as to why his case has been presented over the last six or so years in the manner that it has. I do not place any greater weight on the earlier records over the more recent records for those reasons.
97. I note that the Commissioner’s delegates seem to have drawn some adverse inference at GCL’s evidence which was only placed in an admissible form after the Victims Support claims were lodged (see [82] above). If such a view is being put, then I do not share that view. I do not believe that there is any statutory basis to rank evidence based on the date it was adduced. All evidence of probative value should, where necessary, be tested and weighed accordingly. That is what I have done with the evidence before the Tribunal. The Commissioner being required to deal with all matters without a hearing does not have the same abilities to test evidence in this manner.
98. Therefore, having regard to the provisions of s 44 of the Act, I decline to not approve or reduce the giving of support by way of a recognition payment.
99. On the basis of the above findings above, the correct and preferable decision is to set aside the decisions of the respondent. The applicant (GCL) will be entitled to a Category C Recognition Payment in respect of proceedings 2024/00424691. In addition, a Category B Recognition Payment is administratively awarded against application 2024/00152575. As a result of that finding, claim 2024/00152567 will need to be administratively dismissed, as it and claim 2024/00152575 collectively form an act of violence based on a series of related acts.
100. As a result, GCL is entitled to a Recognition Payment in the total amount of $15,000 comprising a $10,000.00 Category B Recognition Payment and a $5,000.00 Category C Recognition Payment.
101. Thus, the total amount of $15,000.00 will be payable to GCL less any amount of $1,500.00 that may have already been paid (if applicable).
102. There remains one minor matter that was raised in GCL’s applications to the Tribunal. GCL submitted that the Tribunal has power to consider and grant his applications for financial assistance.
103. Financial Assistance like Recognition Payments are a form of Victims Support under the Act. Eligible persons may apply for a range of Victims Support comprising Victims Recognition, Financial Assistance and Approved Counselling under the Act. However pursuant to s 51 of the Act the Tribunal only has power to Administratively Review decisions of the Commissioner concerning Recognition Payments.
104. Section 51 provides:
51 Application to Tribunal for administrative review of decision concerning recognition payment
(1) An applicant for a recognition payment who is aggrieved by the decision of a decision maker in respect of the application may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision made by the Commissioner following an internal review under section 49 of the decision maker’s decision with respect to the recognition payment.
(2) An applicant for a recognition payment who is aggrieved by the decision of the Commissioner in respect of the application may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision made by the Commissioner.
105. There is no power under the Act for the Tribunal to conduct an Administrative Review of any decision other than a decision concerning a Recognition Payment. During the hearing whilst GCL was adamant that the Tribunal could deal with that aspect of his application he was unable to point to any legislative authority or basis to confer jurisdiction on the Tribunal.
106. I therefore reject that aspect of GCL’s application for the reasons outlined at [103] – [105] above.
Conclusion
107. For the reasons outlined above, the decision of the respondent will be set aside in all three claims but in substitution of the decision in proceedings 2024/00152567, the proceedings will be dismissed pursuant to s 55 (1) (b) of the Civil and Administrative Tribunal Act 2013 as that matter is captured by the Category B Recognition Payment award.
Orders
108. The Tribunal makes the following orders:
1. In proceedings 2023/00424691, the decision of the respondent dated 9 November 2023 is set aside. The applicant, GCL, is eligible for a Category C Recognition Payment in accordance with s 35 (3) (a) and s 36 (1) (d) of the Victims Rights and Support Act 2013.
2. In proceedings 2024/00152567:
1. time to lodge the application is extended to 24 April 2024 pursuant to s 41 (1) of the Civil and Administrative Tribunal Act 2013.
2. The application is dismissed pursuant to s 55 (1) (b) of the Civil and Administrative Tribunal Act 2013.
3. In proceedings 2024/00152575:
1. time to lodge the application is extended to 24 April 2024 pursuant to s 41 (1) of the Civil and Administrative Tribunal Act 2013.
2. The decision of the respondent dated 9 November 2023 is set aside. The applicant, GCL, is eligible for a Category B Recognition Payment in accordance with s 35 (3) (a) and s 36 (1) (c) of the Victims Rights and Support Act 2013.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2024 | 10,994 |
nsw_caselaw:190dd91c1833cf9307c245c4 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-25 00:00:00 | Moujalli v Penrith City Council [2024] NSWLEC 1424 | https://www.caselaw.nsw.gov.au/decision/190dd91c1833cf9307c245c4 | 2024-07-26T22:25:58.610245+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Moujalli v Penrith City Council [2024] NSWLEC 1424
Hearing dates: 28 – 30 May 2024, written submissions 4, 7, 11 June 2024
Date of orders: 25 July 2024
Decision date: 25 July 2024
Jurisdiction: Class 1
Before: Dickson C
Decision: The Court orders that:
(1) The appeal is dismissed.
(2) Development application DA23/0161 seeking consent for the demolition of existing structures and construction of a three-storey mixed use development containing a 131 place childcare centre and commercial office space over two levels of basement carparking at 55 Stafford Street, Kingswood is refused.
(3) Exhibits are returned with exception of Exhibits 1, A.
Catchwords: DEVELOPMENT APPLICATION – mixed use development with approval for use of ground and first floors as a childcare centre – whether, given its width, the site is suitable for the proposed development – whether the proposed development provides safe access to the basement and parking spaces - whether built form of the proposed development is incompatible with the character of the locality – insufficient landscaping and impacts on trees – whether the proposed development will have an unacceptable impact on the amenity of neighbouring residential properties – whether the internal amenity of the proposed childcare centre is acceptable -whether the development has been designed and will be constructed and operated in a sustainable manner- appeal dismissed.
Legislation Cited: Environmental Planning and Assessment Act 1979, ss 4.15, 8.7,
Land and Environment Court Act 1979, ss 34, 39
Penrith Local Environmental Plan 2010, cll 2.3, 4.3, 4.4, 7.4, 7.30,
State Environmental Planning Policy (Transport and Infrastructure) 2021, ss 2.3, 3.22, 3.23, 3.26, 3.27, Ch 3
Cases Cited: Saffioti v Kiama Municipal Council [2019] NSWLEC 57
Texts Cited: Education and Care Services National Regulations 2011
Child Care Planning Guideline 2021
Penrith Development Control Plan 2014
Australian Standard AS 2890.2-2002 Parking Facilities Part 2: Off-Street commercial vehicle facilities
Category: Principal judgment
Parties: Christopher Moujalli (Applicant)
Penrith City Council (Respondent)
Representation: Counsel:
C Koikas (Applicant)
R O’Gorman-Hughes (Respondent)
Solicitors:
Fortis Law (Applicant)
Penrith City Council (Respondent)
File Number(s): 2023/155954
Publication restriction: Nil
JUDGMENT
1. COMMISSIONER: This is an appeal by the Applicant, Christopher Moujalli, against the deemed refusal of their development application (DA 23/0161) by Penrith City Council (the Respondent). The Applicant filed a Class 1 Application pursuant to s 8.7(1) of the Environmental Planning and Assessment Act 1979 (EPA Act). The development application seeks consent for demolition, removal of vegetation and construction of a three-storey mixed use building comprising a 131 place child care centre and commercial office (Proposed Development) at 55 Stafford Street, Kingswood (Lot 376 in DP 14333) (Site).
2. A conciliation conference was held on 23 October 2023 pursuant to s 34 of the Land and Environment Court Act 1979 (LEC Act). The parties were unable to reach an agreement at, or following the conciliation. The conciliation conference was terminated, and the matter was listed for hearing.
3. Since the filing of the appeal, the Applicant has been granted leave to amend and provide additional information in support of their development application firstly by the Registrar in February and April 2024, and subsequently at the commencement of the hearing.
4. In its amended form, the Application seeks consent for the following:
1. Demolition of all existing structures on the site, including an existing dwelling and ancillary building;
2. Excavation to create two basement levels;
3. Removal of existing vegetation, associated landscaping and drainage works.
4. Construction of a three-storey mixed use building containing a 131 place child care centre and commercial office, configured as follows:
1. Basement parking accessed via a one-way ramp, containing 49 car spaces, loading bay, a laundry for the child care centre, a waste storage room for the child care centre, a waste storage room for the commercial, storage area, lift and stairs access and on-site detention within the ceiling;
2. Ground floor with separate entries from the street and basement for the child care centre and commercial. At this level the childcare centre includes kitchen and storage facilities, a cot room, bathroom facilities, and indoor and outdoor play areas allocated to 0-2-year-olds and 3-5-year-olds.
3. First floor contains a staff room, meeting room, office, storage facilities, bathroom facilities and indoor and outdoor play areas allocated to 2-3-year-olds;
4. Second floor contains commercial office space of 396m², stairs and bathroom facilities;
5. Acoustic fencing to the side and rear boundaries, to the boundaries of the Outdoor Play Area 1 (Ground Level), and Outdoor Play Area 2 (First Floor).
5. The childcare centre proposes to operate Monday-to-Friday during the hours of 7.00am to 6.00pm. The childcare centre will accommodate 131 children, employing 28 staff (21 permanent childcare educators, 1 full time director, 4 part time support educators and 1 part time cook) and comprising:
1. 0-2 years: 19 children;
2. 2-3 years: 50 children;
3. 3-5 years: 60 children.
Issues
6. The Respondent maintains that the development application should be refused for the following reasons. I note this grouping of contentions was detailed in the opening of the Respondent’s Counsel Mr O’Gorman Hughes:
1. The site doesn’t have the characteristics necessary for the extent of development sought in the development application. In particular, on the expert evidence regarding how the narrow width of the site impacts the functionality and safety of vehicular access and the acceptability of the interface with adjoining properties.
2. The development has a commercial three storey appearance in circumstances where it falls within a designated “residential edge character area” of the Penrith Hospital Precinct at Section 12.2.1 of 12.4 Character Areas in E12 Penrith Health and Education Precinct of the Penrith Development Control Plan 2014 (DCP 2014);
3. The intensity of the development sought is too great for the site and that intensity results in:
1. poor internal amenity of the proposed childcare centre,
2. unacceptable impacts on the amenity of adjoining properties,
3. an impractical plan of management (POM), and
4. a failure to satisfy the requirements of cl 7.30 ‘Urban Heat’ in Penrith Local Environmental Plan 2010. In particular the requirements in subcl (3) to “(a) maximise green infrastructure” and “(c) use design measures to ensure the thermal performance of the development achieves a high degree of passive cooling”.
Outcome of the appeal
7. For the reasons set out in the remainder of the judgment, as summarised below, I find that development consent should not be granted to the development. Having undertaken an evaluation of the development application against the matters for consideration at s 4.15(1) of the EPA Act, I conclude that having given these matters consideration they support a determination of refusal:
1. There are identifiable safety risks arising from the narrowness of the proposed basement and its access. The design results in conflicts between entering and exiting vehicles with those who are parking. The internal parking design results in difficult and uncertain manoeuvrability. The swept paths provided demonstrate some parking spaces cannot be accessed without traversing other parking spaces or the loading bay. Further, on the evidence of the Respondent’s expert, which I accept, the application varies maximum driveway grade in 3.4.4 “Driveway Grade” in Australian Standard AS 2890.2-2002 Parking Facilities Part 2: Off- Street commercial vehicle facilities (AS2890.2) which results in a greater risk of collision between pedestrians outside the site and exiting vehicles. I find these are material, unacceptable detrimental impacts arising from the development: s 4.15(1)(b) of the EPA Act that are sufficient to warrant the refusal of the development application.
2. The provisions of the Penrith Development Control Plan 2014 (DCP 2014) at Control 7 in Section 12.2.1 of 12.2 Land Use Controls in E12 Penrith Health and Education Precinct relating to the minimum site width for mixed development should not, on merit, be varied in this case: s 4.15(1)(a)(iii) of the EPA Act. Following a consideration of s 4.15(3A)(b) of the EPA Act, I find that the objective of the controls, namely “to create legible safe access and circulation in mixed use development” is not met by the development application.
3. Further, pursuant to s 3.23 of State Environmental Planning Policy (Transport and Infrastructure) 2021 (SEPP TI), I am required to consider the Child Care Planning Guideline (CC Guidelines). The CC Guidelines includes Section 3.8 ‘Traffic, parking and pedestrian circulation’ which seeks to ensure that car parking areas are safe for all visitors to the site and that design solutions are incorporated to provide a safe pedestrian environment in the basement and the site generally. Whilst not mandatory controls, the considerations contained within the guidelines provide useful and clear outcomes that inform how a child care centre can be developed on land considering all relevant design and environmental considerations. The non-conformance of the development application with the CC Guidelines, in conjunction with the non-compliance with the development standard relating to minimum site width, supports the refusal of the development application.
4. The conclusion of my assessment of the development application is that it should be refused on two grounds. Firstly, due to its design, the development has an unacceptable risk to safety. Secondly, because the width of the subject site is non-compliant with development controls in circumstances where no reasonable alternative solution proposed achieves the objectives of those standards.
8. It follows from the preceding that this judgment does not make findings on the remaining contentions raised by the Respondent. This is for two reasons. Firstly, I have found that the development should not be approved for the reasons detailed in the preceding. Given their importance I am satisfied that they are sufficient to dispose of the proceedings. Secondly, any comments I may make on the remaining contentions would be of no benefit to the parties, because to address the concerns that support the refusal of the application will require a significant redesign of the proposed development making any comments on the remaining matters redundant.
Subject site and locality
9. The site is legally described as Lot 376 in Deposited Plan 1433, being 55 Stafford Street, Kingswood. The site is flat, has an area of approximately 1556 m² and is located on the northern side of Stafford Street. The site has a frontage of 20.15m.
10. The existing development within the immediate vicinity of the site is comprised of low to medium density: a two-storey strata titled townhouses and single-storey residential development to the north, east, south and west. Located immediately to the north-west (rear corner) is a multi-storey mixed-use development up to 8 storeys at 48-56 Derby Street, Kingswood and beyond that site is the Nepean Hospital in Derby Street and Kingswood Station to the north-east approximately a 1.1km walk from the site.
Planning Controls
11. The site is zoned MU1 Mixed Use under the provisions of Penrith Local Environmental Plan 2010 (LEP 2010). The objectives of the MU1 Mixed Use zone are:
(a) To encourage a diversity of business, retail, office and light industrial land uses that generate employment opportunities.
(b) To ensure that new development provides diverse and active street frontages to attract pedestrian traffic and to contribute to vibrant, diverse and functional streets and public spaces.
(c) To minimise conflict between land uses within this zone and land uses within adjoining zones.
(d) To encourage business, retail, community and other non-residential land uses on the ground floor of buildings.
(e) To allow for residential development in accessible locations to maximise public transport patronage and encourage walking and cycling.
12. The land use table to the MU1 Mixed Use zone provide that development for the purposes of "Centre-based child care facility" and “Commercial premises” are permitted with consent in the zone.
13. The properties located opposite the site, on the southern side of Stafford Street, are zoned R3 Medium Density Residential. As required by cl 2.3(2) of LEP 2010, I have considered the objectives of the zone in determining the development application. An extract of the zoning map in LEP 2010 is in Figure 1 below (site outlined in yellow):
Figure 1
14. The following provisions of LEP 2010 are relevant to the issues in dispute in the proceedings.
1. Clause 7.4 “Sustainable development” provides mandatory matters for consideration for the consent authority. The provision states:
7.4 Sustainable development
In deciding whether to grant development consent for development, the consent authority must have regard to the principles of sustainable development as they relate to the development based on a “whole of building” approach by considering each of the following—
(a) conserving energy and reducing carbon dioxide emissions,
(b) embodied energy in materials and building processes,
(c) building design and orientation,
(d) passive solar design and day lighting,
(e) natural ventilation,
(f) energy efficiency and conservation,
(g) water conservation and water reuse,
(h) waste minimisation and recycling,
(i) reduction of vehicle dependence,
(j) potential for adaptive reuse.
2. Clause 7.30 “Urban Heat” applies to the development as the site is within a mixed-use zone. This provision, at subcl (3), contains a precondition to the grant of consent which requires the consent authority to be satisfied that planning and design measures are incorporated in the development to reduce the urban heat island effect that:
(a) maximise green infrastructure, and
(b) retain water in the landscape, and
(c) use design measures to ensure the thermal performance of the development achieves a high degree of passive cooling, and
(d) use building, paving and other materials that minimise heat impacts, and
(e) reduce reliance on mechanical ventilation and cooling systems, to conserve energy and to minimise heat sources.
3. Within clause 7.30 of LEP 2010 the following terms are defined:
green infrastructure means the network of green spaces, natural systems and semi-natural systems including waterways, bushland, tree canopy, green ground cover, parks and open spaces, that—
(a) supports sustainable communities, and
(b) is strategically designed and managed to support a good quality of life in an urban environment.
Urban heat island effect is a result of conditions that contribute to higher temperatures in urban areas, including—
(a) use of roads, car parks, pavements, roofs, walls and other hard and dark surfaces, and
(b) activities that generate heat, including waste air from mechanical cooling systems, and
(c) reduction in green infrastructure.
15. The Site is subject to a maximum FSR development standard of 2:1 under cl 4.4 of LEP 2010. On the Applicant’s calculations the amended development application has an FSR of 0.8:1. There is a dispute between the planning experts as to the application of the definition of gross floor area to the development application, but it is agreed that even on the most conservative reading of the definition, the proposed development is compliant with the FSR standard.
16. Pursuant to cl 4.3 of LEP 2010 the site is subject to a maximum height of buildings development standard of 12m with which the amended development application is compliant.
17. As the development application seeks consent for a centre based childcare centre, ch 3 of SEPP TI applies.
18. Section 3.22 of SEPP TI provides that a consent authority must not grant consent to a development for the purposes of centre based childcare facility if the outdoor space requirements for the building or place do not comply with regulation 108. Regulation 108 of the Education and Care Services National Regulations 2011 (Childcare Regulations) requires at least 7m² of unencumbered outdoor space for each child. The parties disagree whether the amended development application is compliant with this provision of the regulation, and accordingly whether the concurrence of the regulatory authority is required. Pursuant to s 39 of the LEC Act, the Court could grant such concurrence, however given my findings that the development application warrants refusal on other grounds, a determination on this issue has not be made, see [8].
19. Section 3.23 of SEPP TI requires consideration of the CC Guideline by the consent authority prior to the grant of consent. Relevant to the issues in dispute, the CC Guideline includes the following matters for consideration:
“3.1 Site Selection and Location
Objective: To ensure that the site selected for a proposed childcare facility is suitable for the use.
C2:
…
- The characteristics of the site are suitable for the scale and type of development proposed having regard to:
- length of street frontage, lot configuration, dimensions and overall size.
…
- There are suitable and safe drop off and pick up areas, and off and on street parking.
…
3.8 Traffic, parking and pedestrian circulation
Objective: To provide a safe and connected environment for pedestrians both on and around the site.
C35:
The following design solutions may be incorporated into a development to help provide a safe pedestrian environment.
…
- defined pedestrian crossings and defined/separate paths included in large car parking areas.
…
- delivery, loading and vehicle turnaround areas located away from the main pedestrian access to the building and in clearly designated and separate facilities,
- minimise the number of locations where pedestrians and vehicles cross each other.
- in commercial or industrial zones and mixed-use developments, the path of travel from the car park to the centre entrance physically separated from any truck circulation or parking areas.
…
- clear sightlines are maintained for drivers to child pedestrians, particularly at crossing locations.
C36
Mixed use developments should include:
…
- drop off and pick up zones that are exclusively available for use during the facility’s operating hours with spaces clearly marked accordingly, close to the main entrance and preferably on the same floor level. Alternatively direct access should avoid crossing driveways or manoeuvring areas used by vehicles accessing other parts of the site.”
20. Section 3.26 of the SEPP TI specifies non-discretionary development standards that, if met, preclude more onerous standards from being used to refuse the development. Subs (2) details those standards as follows:
(2) The following are non-discretionary development standards for the purposes of section 4.15(2) and (3) of the Act in relation to the carrying out of development for the purposes of a centre-based child care facility—
(a) location—the development may be located at any distance from an existing or proposed early education and care facility,
(b) indoor or outdoor space
(i) for development to which regulation 107 (indoor unencumbered space requirements) or 108 (outdoor unencumbered space requirements) of the Education and Care Services National Regulations applies—the unencumbered area of indoor space and the unencumbered area of outdoor space for the development complies with the requirements of those regulations, or
(ii) for development to which clause 28 (unencumbered indoor space and useable outdoor play space) of the Children (Education and Care Services) Supplementary Provisions Regulation 2012 applies—the development complies with the indoor space requirements or the useable outdoor play space requirements in that clause,
(c) site area and site dimensions—the development may be located on a site of any size and have any length of street frontage or any allotment depth,
(d) colour of building materials or shade structures—the development may be of any colour or colour scheme unless it is a State or local heritage item or in a heritage conservation area.
21. Sections 4.15(2) and (3) of the EPA Act state:
(2) Compliance with non-discretionary development standards—development other than complying development If an environmental planning instrument or a regulation contains non-discretionary development standards and development, not being complying development, the subject of a development application complies with those standards, the consent authority—
(a) is not entitled to take those standards into further consideration in determining the development application, and
(b) must not refuse the application on the ground that the development does not comply with those standards, and
(c) must not impose a condition of consent that has the same, or substantially the same, effect as those standards but is more onerous than those standards, and the discretion of the consent authority under this section and section 4.16 is limited accordingly.
(3) If an environmental planning instrument or a regulation contains non-discretionary development standards and development the subject of a development application does not comply with those standards—
(a) subsection (2) does not apply and the discretion of the consent authority under this section and section 4.16 is not limited as referred to in that subsection, and
(b) a provision of an environmental planning instrument that allows flexibility in the application of a development standard may be applied to the non-discretionary development standard.
22. An environmental planning instrument is defined in the EPA Act as including a State Environmental Planning Instrument or Local Environmental Plan but not including a Development Control Plan. Therefore, the non-discretionary provision at s 3.26(2)(c) of SEPP TI does not have the effect of limiting the consent authority’s consideration of the site width provisions in DCP 2014 in evaluating the merits of the development application.
23. Section 3.27(1) of SEPP TI has the effect of turning to a range of provisions in DCP 2014. That clause states:
3.27 Centre-based child care facility—development control plans
(1) A provision of a development control plan that specifies a requirement, standard or control in relation to any of the following matters (including by reference to ages, age ratios, groupings, numbers or the like, of children) does not apply to development for the purpose of a centre-based child care facility—
(a) operational or management plans or arrangements (including hours of operation),
(b) demonstrated need or demand for child care services,
(c) proximity of facility to other early education and care facilities,
(d) any matter relating to development for the purpose of a centre-based child care facility contained in—
(i) the design principles set out in Part 2 of the Child Care Planning Guideline, or
(ii) the matters for consideration set out in Part 3 or the regulatory requirements set out in Part 4 of that Guideline (other than those concerning building height, side and rear setbacks or car parking rates).
(2) This section applies regardless of when the development control plan was made.
24. Whilst the effect of s 3.27 of SEPP TI is to restrict the effect of DCP 2014, a number of its provisions remain relevant as they are outside the scope of the matters excluded. Where those provisions are relevant to the matters in contention between the parties they are detailed below.
25. The site is identified in DCP 2014 specifically at Figure E12.2 in Chapter E12 ‘Penrith Health and Education Precinct, E12 Part A Hospital Precinct’ as being located within Character Area “C. Residential Edge”. An extract from DCP 2014 Figure E12.2 (with the Site outlined in green) is below:
Figure 2
26. DCP 2014 provides controls for Parking Access and Driveways at Part 10.5 in Chapter C10 “Transport Access and Parking”. The relevant parts of the provisions are:
“10.5.1. Parking
…
B. Objectives
a) To ensure the provision of an appropriate number of vehicular spaces having regard to the activities present and proposed on the land, the nature of the locality and the intensity of the use;
b) To require parking areas to be designed and constructed in accordance with the Australian Standards for efficient and safe vehicle circulation and parking;
c) To reduce pedestrian and vehicle conflicts on development sites.
d) To facilitate an appropriate level of on-site parking provision to cater for a mix of development types;
…
f) To provide adequate space for parking and manoeuvring of vehicles (including service vehicles and bicycles);
…
C. Controls
1) Provision of Parking Spaces
a) Parking provided on site is to meet AS 2890 and where appropriate, AS 1428.
b) For any proposed development, Council will require the provision of on-site car parking to a standard appropriate to the intensity of the proposed development as set out in Table C10.2 below.
…
g) Where relevant, development shall provide on-site loading facilities to accommodate the anticipated heavy vehicle demand for the site.
…
Table C10.2: Carparking Rates
…
…
…
5) Design of Parking and Manoeuvring Areas
a) Car space dimensions must comply with the relevant Australian Standards.
b) The movement of pedestrians throughout the car park should be clearly delineated and be visible for all users of the car park to minimise conflict with vehicles. The car parking and manoeuvring layout should be in accordance with the provisions of AS 2890.1 - 2004.
c) Provision of parking spaces for disabled persons should be in accordance with the Access to Premises Standards, the Building Code of Australia and AS2890.
…
i) All vehicles must be able to enter and leave the site in a forward direction without the need to make more than a three point turn.
j) Council may require the provision of internal directional signs to assist site visitors in locating parking areas.
…
m) Access to security parking shall be designed to ensure the access mechanism is accessible to the vehicle driver on the entry side of the driveway.
n) Provision should be made for all vehicles to enter and exit a secure (i.e. boom-gated) area in a forward direction.
o) Visitor parking should be provided outside the secured parking areas.
p) The design of car parks should ensure adequate separation of staff/visitor parking and loading dock circulation areas for heavy vehicles.
q) Vehicular ramps less than 20m long within developments and parking stations must have a maximum grade of 1 in 5 (20%). Ramp widths must be in accordance with AS2890.
…
s) Loading docks associated with the development shall be provided on-site, with all loading and unloading activities occurring on-site.
t) All loading and unloading areas are to be:
i) integrated into the design of developments,
ii) separated from car parking and waste storage and collection areas,
iii) located away from the circulation path of other vehicles,
iv) provided separately for commercial/retail and residential uses, where part of a mixed use development, and
v) designed for commercial vehicle circulation and access complying with AS 2890.2.
…
z) Access, parking, manoeuvring and loading facilities for commercial and industrial development shall be in accordance with AS 2890.2 - 2004 and accommodate vehicle types as outlined in Table C10.3.
…
Table C10.3: Minimum design vehicle requirements for commercial and industrial developments - minimum design vehicle requirements
10.5.2 Access and Driveways
A. Objectives
a) To ensure satisfactory arrangements are made for access to any development or new allotment created by subdivision;
b) To require that access internal to the development is adequate to accommodate traffic generated by the development;
c) The minimise the impact of vehicle access points on the quality of the public domain;
…
f) To ensure that access ways and driveways provide safe access from a property to a public road; and
g) To ensure driveways do not negatively impact on pedestrian mobility.
B. Controls
1. General Requirements
a) The road access to the site should provide for safe entry to and exit from the site. All vehicles must enter/exit the site in a forward direction. (This does not apply to single dwellings).
b) The entry and exit from the site should provide for appropriate traffic sight distance in both directions, in accordance with the provisions of AS2890.1 and 2 - 2004 for car parking and commercial vehicles respectively.
c) The design of the development driveway should take into consideration the traffic volumes of the surrounding road network.
d) Driveways should be:
i) Provided from lanes and secondary streets rather than the primary street, wherever practical;
ii) Located taking into account any services located within the road reserve, such as power poles, drainage inlet pits and existing street trees;
iii) Setback a minimum of 6m from the perpendicular of any intersection of any two roads; and
iv) Located to minimise noise and amenity impacts on adjacent residential development.
e) The driveway crossing and access roads shall be designed in accordance with the provisions of AS2890.1 and 2 - 2004 for car parking and commercial vehicles respectively.
f) Driveway widths must comply with the relevant Australian Standards.
g) Driveway grades, vehicular ramp width/grades and passing bays must be in accordance with the relevant Australian Standard (AS2890.1).
h) Access to basement parking shall have an entry threshold a minimum of 300mm above the top of the kerb. The threshold shall be increased within areas of flooding or local overland flows to a minimum of 300mm above the flood level. The design of the development shall ensure that floodwater cannot enter the car park in a 1% Annual Exceedance Probability (AEP) flood event.
…
12.2.1 Mixed use development controls
…
B. Objectives
a) To encourage a variety of mixed use developments in the Hospital Precinct;
..
h) To minimise potential conflicts and achieve compatibility between different uses;
…
j) To create legible safe access and circulation in mixed use developments;
…
C Controls
…
7) A minimum site width of 24m is required for any mixed use development.
…
10) Security access controls must be provided to all entrances into private areas, including car parks and internal courtyards.
Public submissions
27. The development application was advertised on 24 March 2023 and notified to adjoining and nearby residents between 24 March and 10 April 2023. In response to the public exhibition, five submissions were received in objection to the development. Those submissions raise the following concerns:
1. The commercial look of the proposed development will have a negative impact on the existing residential streetscape of the locality.
2. The proposed development is not suitable for the location and will lead to traffic congestion in an already narrow street.
3. There is no demand for childcare centres in the locality which is already oversupplied with them.
4. The development application does not justify the variations to councils planning controls sought.
5. The proposed building will result in a loss of solar access for adjoining residents.
6. The childcare centre will result in an increase in daytime noise from children playing outside.
7. On street parking in Stafford Street is marked for essential workers at Nepean Hospital and visitors to the hospital.
8. A street level pickup/drop off zone for the childcare centre should be added to the proposal.
9. The proposed basement carpark is insufficient to cope with the high number of childcare places, and will cause congestion in the morning and the afternoon.
10. During construction, the adjoining properties and nearby residents will experience excessive noise, dust and traffic congestion.
11. There is a potential safety issue arsing from children running onto Stafford Street.
28. During the hearing, provision was made for a number of objectors to address the Court directly and give evidence of their concerns in relation to the proposed development. These objections emphasised many of the concerns summarised in the proceeding.
29. As required by s 4.15(1)(d) of the EPA Act I have taken into consideration the submissions in determining the development application.
Expert evidence
30. The following experts gave evidence in the proceedings:
* Town Planning: Mr Jeremy Swan (Applicant)., Ms Donna Clarke (Respondent)
* Landscape: Mr Mark Santagelo (Applicant)
* Acoustic: Mr Alexander Mendoza (Applicant), Mr Paul Reynolds (Respondent)
* Traffic: Mr Oleg Sannikov (Applicant), Mr Kablan Mowad (Respondent)
* Stormwater, Civil and Water Sensitive Urban Design: Mr Andrew Arida (Applicant), Mr Ganesh Bista (Respondent) and Mr Tim Gowing (Respondent)
* Arboriculture: Mr Scott Freeman (Applicant), Ms Donna Montgomery (Respondent)
31. The pairs of experts prepared joint reports which were admitted into evidence. The traffic, arboriculture, landscape and town planning experts were also called for cross-examination and oral evidence.
The safety of the proposed access and parking
32. In their joint report on traffic, Mr Sannikov and Mr Mowad maintained a difference of opinion on five key issues. Those differences of opinion remained in their oral evidence. Those issues are:
1. Firstly, whether a single lane access ramp between the proposed basement 1 and 2 will create conflict between vehicles entering and exiting and whether that potential can be mitigated by the use of a convex mirror.
2. Secondly, whether access into and out of the delineated carparking spaces is consistent with Control 5(i) in Part C10 Section 10.5.1. “Parking” in DCP 2014, or whether more than a three-point movement is required.
3. Thirdly, the potential safety risks of the required reversing movements to access a number of parking spaces to be utilised for the child care centre, including the proposed disabled parking spaces and the loading bay.
4. Fourthly, the weight to be given to the potential safety risk arising from the swept path of a small waste collection vehicle crossing into an oncoming vehicle path when it enters and exits the property driveway.
5. Fifthly, the consequence of the noncompliance of the driveway ramp grade with AS/NZS 2890.1:2004. Namely:
“3.44 Driveway grade
The maximum grade on an access driveway together with the connecting circulation roadway shall be 1:20 (5%) for a distance extending from the property line for at least 6m or the longest wheelbase of any vehicle likely to use the driveway, whichever is the greater.”
33. In the Traffic Impact Assessment (TIA) (Exhibit A) of the proposed development contains the following traffic generation for the proposed development:
“Additional traffic generated by the proposed development.
Morning peak hour:
68 (CC +C) – 0 (existing) = 68 trips in
48 (CC +C) – 1 (existing) = 47 trips out
Afternoon peak hour:
42 (CC +C) – 1 (existing) = 41 trips in
59 (CC +C) – 0 (existing) = 59 trips out”
34. In his oral evidence, Mr Mowad maintained his significant concerns in relation to safety arising from the following:
1. Lack of confirmation that the two-way portion of the ramp providing access to basement one is of a width that is compliant with AS/NZS 2890.1:2004.
2. The restricted area for passing of vehicles at the base of the ramp into basement 1 creates a risk of conflict. Further, the swept paths show that if a vehicle is in a certain location, it will conflict with the manoeuvring of a vehicle traversing basement 1 to access the ramp to basement 2.
3. The use of the commercial component of the development is unknown and subject to change. Depending on that use, turnover of parking may be high, visitors may be in attendance to the building. The use of basement 2 by visitors to the site or uses that have a high turnover increase the potential for conflicts on a single lane width ramp.
4. Demand for the use of onsite parking by users of the childcare centre (and the future commercial use) will be high due to the documented lack of availability of on street parking.
5. Whilst the plan of management (POM) for the childcare centre seeks to mandate that parents only utilise parking in basement 1, given the projected traffic movements in the TIA, it is likely that demand will overflow to the parking in basement 2. With 106-108 traffic movements per hour in the AM peak, which equates to almost one every 35 seconds, this presents a real risk of conflict arising from parents seeking to enter and exit the single lane ramp at the same time. The use of the POM as a control to mitigate this risk is unsatisfactory.
6. That the reliance of the application on a convex mirror to address the potential of vehicle conflict on the single width ramp between basement 1 and 2 is an inappropriate mitigation. He argues that given the mixed use nature of the site it is likely that users of the basement (such as visitors) will be unfamiliar with the basement and may miss the mirror. In response to the proposed condition advanced by the Applicant to require a traffic light system, Mr Mowad’s evidence was:
“WITNESS MOWAD: Well it would be an improvement, but I only provided that as something to fall back on should the development be approved. But I don't believe it's leading to a good outcome because there's potential for queuing from that traffic signal system. Also if you look at the swept paths, you require a waiting bay be required somewhere in that second basement to facilitate the swept path of the vehicle coming down, so it would have to be a very well designed signal system and then manage the people that, or manage the spaces that are within the swept path of the vehicle coming down to prevent them exiting or existing their space while that signal system is in operation.
So yeah, based on the turnover of the spaces, the lack of queueing area between the top and bottom of the basements at the ramps, it's not an ideal solution but it would work better than the convex mirror.”
(Transcript 29 May 2024, page 24)
7. The fact that the swept path diagrams show numerous encroachments of the vehicle clearances into adjacent spaces, and also a reliance on the loading area being free to access parking spaces.
8. Further the swept paths demonstrate a significant reversing movement of the service vehicle in the centre of the car park area of basement 1, between the two ramps. Such a reversing movement is a clear safety issue given the vulnerable pedestrians associated with a childcare centre and the proximity of the loading bay to the lift access to reception.
9. That a small rigid vehicle would have to cross over an oncoming vehicle's path to exit or enter the basement.
10. the noncompliance of the driveway ramp grade with AS/NZS 2890.1:2004 may result in the potential of a vehicles bonnet, or part of their vehicle, obstructing a clear view of pedestrians creating a safety issue. This risk is greater for a site proposing a child care centre as children (of smaller stature than adults) will be in proximity of the driveway exit. In response to the assessment advanced by the Applicant that the proposed driveway has an effective grade of 12% between the front and rear tyres of an actual vehicle (in the depiction a van), Mr Mowad remained concerned explaining that the variation in the grade required by AS/NZS 2890.1:2004 will reduce a drivers reaction and stopping time if a pedestrian is traversing the driveway at the property boundary.
35. In contrast to Mr Mowad, Mr Sannikov’s evidence on the five key issues is:
1. that any widening of the ramp to facilitate two way traffic is not warranted by the number of traffic movements generated by the development and that any risk of vehicles colliding on the ramp is mitigated by the proposed convex mirror, the short length of the ramp and the fact the use of basement 2 is restricted to employees and visitors to the future commercial use. He notes that the POM for the childcare centre mandates that basement 2 will not be used for drop off and pick up of children. Further, Mr Sannokov notes that the use of such convex mirrors is standard practice, and such a mirror is unlikely to be missed by drivers.
2. That there is no requirement in AS/NZS 2890.1:2004 that requires manoeuvring into and out of carparking spaces to be less than a three-point turn. It was unclear whether he accepts that some spaces will require a three-point turn, but he concludes that the vehicular movements to access the proposed parking spaces are acceptable given the use proposed and the volume of traffic.
3. In relation to the identified reversing movements, he addresses two circumstances. Firstly, the need to reverse into the proposed accessible spaces. In regard to that matter, he concludes that the length of the reversing is acceptable on two grounds, it will be infrequent due to the lower demand for accessible spaces and secondly the length of the reversing is less that that established by AS/NZS 2890.1:2004 for a public carpark. Secondly, he addresses the reversing movement required to access the loading bay. He argues this is acceptable as deliveries will occur outside the operating hours of the child care centre, removing the risk of conflict.
4. He gives little weight to the potential safety risk arising from the swept path of a small waste collection vehicle crossing into an oncoming vehicle path when it enters and exits the property driveway as such a vehicle will access the site outside operating hours. He notes this is a matter that is incorporated in the POM. Further, he disagrees that servicing of the site with a medium rigid vehicle is required.
5. Finally in response to Mr Mowad’s safety concerns about the noncompliance of the driveway ramp grade with AS/NZS 2890.1:2004 Mr Sannikov prepared two detailed cross sections of the proposed ramp. These cross sections emphasise the gradient experienced by the wheel axle of a vehicle on the proposed ramp. Mr Sannikov concludes that while there is a technical exceedance in the ramp grade, it will not impact on whether or not a person driving a vehicle will be able to see pedestrians. He argues this is because there is a crest on the driveway within the first six metres of the site. the grade increases and then decreases, which has the effect that at all times when a vehicle is in the first 6 metres of the boundary, the vehicle will have an effective grade of no greater than the 5 degrees standard prescribed in AS/NZS 2890.1:2004. In fact he argues the effective gradient of a vehicle will be around 2.74%.
36. During oral evidence the experts were asked a series of questions about the potential benefits arising from the installation of a traffic light system to control vehicle movements between basement 1 and 2 where the ramp is a single lane. They were unable to confirm given the variables in how such system was designed and managed whether such a facility would result in queuing of vehicles. In his oral evidence Mr Sannikov disagrees that a traffic light system is required on similar grounds to that summarised at [35(1)]. Mr Mowad raised concerns that such a system usually incorporates a waiting bay for vehicles that was located outside the swept path of a vehicle exiting the ramp. I note the Respondent’s proposed conditions of consent include the following condition:
25. Prior to the issue of any Construction Certificate, a Traffic Management Plan is to be prepared and submitted for approval to the Certifier. The Plan shall include all details of the installation and management of a traffic signal system as well as any traffic control measures installed in relation to the single lane basement ramp(s). The Plan shall include, but not limited to, the provision of:
a) The product and its specifications (including signage and signal lantern dimensions and clearances, with any associated details of loop detectors, signal output controllers and the like).
b) Details of swipe card/security/activation/trigger/trip/manual activation mechanisms and/or positional sensors and their operation (whether inground or surface-mounted for vehicle detection).
c) Signal programming details with regard to “revert to” and “dwell” for green and red signals (for ingressing and egressing vehicles).
d) Nominated system wait times and pre-set clearance timing.
e) Instructions on the use of the system to be given to existing and new tenants.
f) Installation and maintenance details from the installer (including a copy of the user operation manual, or the like), and;
g) Contingencies in the event of a system failure.
Findings
37. I am not satisfied that the access, parking and servicing arrangements proposed by the development application are appropriate for the proposed use. In my assessment the design of the development generates unacceptable inherent risks of conflict between vehicles and pedestrians, and between vehicles themselves. That safety risk needs to be assessed in the context of the use of the proposed building. The proposed use is relevant as it affects the volume of vehicles and pedestrians accessing the building, the rate of turnover of vehicles and when during a typical day those users will be likely to attend the site and how concentrated the peak times of arrival and exit are for the use. In this development, which is a mixed use building in which one of those uses is a childcare centre, each of those factors tend towards a reduced tolerance for risk.
38. I accept the concern raised by the Respondent that the risk of conflict between vehicles and between vehicles and pedestrians in the proposed development is unacceptable and is made out on the evidence. I prefer and adopt the evidence of Mr Mowad as summarised at [34], along with the following reasoning, and conclude that the risk of conflict is an unacceptable risk arising from the development that are determinative.
39. Further, it is unremarkable to say that an assessment of the level of risk of a matter requires consideration of both its likelihood and the consequence of its realisation. I am unpersuaded by Mr Sannikov's evidence about the safety of the proposed basement and ramp access design as his evidence focusses primarily on the first part of risk assessment, namely the likelihood of a safety risk arising. In circumstances where the proposed use is one frequented by children and where the basement does not provide for the separation of pedestrians and vehicles (some who are reversing), this is a shortcoming in his evidence.
40. The development application is accompanied by a swept path analysis. That analysis demonstrates the unacceptable inherent design risk of conflict as follows:
* That if there are two Australian Standard 85th percentile size vehicle (B85 vehicles) entering and exiting the front driveway at the same time, there is little clearance beyond that mandated in the standard, for vehicles to pass.
* If a small waste truck (SRV) is entering the site at the same time that a B85 vehicle is exiting, the SRV crosses over the swept path of the car at the driveway entry into the site.
* A B85 vehicle entering the car park that wishes to utilise the two car spaces in basement 1 directly adjacent the lift reverses over the swept path of a vehicle seeking to exit the carpark that is on or approaching the ramp. Similarly, such vehicle seeking to reverse park in these two spaces crosses the shared zone of the nominated accessible spaces in entering the parking space, and on exiting.
* That to be utilised by parents for ‘drop off’ access to the three spaces located in north eastern section of basement 1 requires complex reversing and manoeuvring actions due to the width of the aisle.
* The swept path for a vehicle accessing the parking space at the end of the aisle, adjacent the northern wall, is in conflict with an adjacent parked vehicle.
* An SRV seeking to access the loading bay is required to reverse within basement one for a length of 20m. The area of the basement where this reversing will occur also contains the lift providing pedestrian access to the reception for the child care centre. On exiting the SRV is required to utilise a portion of the entry lane of the ramp into basement 1.
* Access between basement 1 and basement 2 is via a single lane ramp which will facilitate access or egress by only one vehicle at a time.
* There is no physical control proposed (such as a boom gate or roller door) to restrict access to basement 2 to staff and the future commercial use.
* There are no swept paths provided demonstrating how vehicles will access the two accessible spaces in basement 1.
41. Further, I note that while a roller door is indicated in the architectural plans. Following the hearing the following clarification of its operation was provided by the Applicant:
It is proposed that the roller door to the basement car park will be programmed to automatically open at a pre-set time consistent with the childcare centre opening time and will automatically close at a pre-set time consistent with the closing time of the childcare centre. The garage door will remain open during business hours. There will be a detection loop in the basement slab which will automatically open the garage door for any vehicles trying to leave the basement after the garage door has closed for the day. The childcare centre and the commercial suites will have remote controls to enable the roller door to be opened outside of business hours if any emergency access is required after hours. As such, there is no intention to install infrastructure in the driveway area.
42. On the preceding basis there is not infrastructure proposed to be installed in the driveway which would further affect the swept paths indicated in the development application.
43. In addition, I am not persuaded that the design risk of conflict can be confidently and reliably mitigated, and managed in a POM. In addition to those reasons detailed by Mr Mowad’s evidence, in my view there are two further reasons.
1. Firstly, because one of those risks is that a vehicle exiting the basement will have a reduced line of sight of pedestrians (due to the variation in the maximum ramp grade), a risk which cannot be managed by a measure in the POM.
2. Secondly, because there is a chance of a visitor to the site acting in a manner contrary to the POM. For example, if parents in the peak AM access basement 2 in a desire to locate available parking, they have a high chance of encountering another vehicle on the single lane ramp. The TIA determines that the volume of vehicles entering the basement in the morning peak is forecast to be slightly more than one vehicle a minute entering the basement, and in the same minute a 78% chance of a vehicle exiting. If one of those vehicles need to reverse, there is a high chance of conflict with a vehicle parking (as demonstrated by the swept paths) or pedestrians making their way through the basement. Relevantly, if the vehicle who reverses is at the top of the single lane ramp, they cross the path of a vehicle entering basement 1. There is very little room in either basement for vehicles to pass, manoeuvre or to wait.
44. Pursuant to s 3.23 of SEPP TI in determining the development application I am required to give consideration to the CC Guidelines. Control C35 of those guidelines recommends the adoption of a number of design solutions to create a safe pedestrian environment. A number of these solutions are not adopted by the current development application. For example, the basement fails to provide a defined, or separate, path for pedestrians. The CC Guidelines seek a physical separation between the path of travel for pedestrians accessing the childcare centre entrance and areas of truck circulation or parking. Further, the CC Guidelines require the maintenance of clear sightlines for drivers to child pedestrians at crossing locations. Each of these solutions detailed in the matters for consideration are not included in the design of the proposed development. This lack of consistency with the CC Guidelines leads away from approval of the development, particularly in circumstances where the design of the development does not adopt alternative solutions that create a safe pedestrian environment in the development’s basements or driveway areas.
45. Pursuant to s 4.15(1)(b) of the EPA Act it is necessary for the Court as consent authority to consider the likely impacts of the development in determining a development application. In this case I find that likely safety impacts that arise from the risk of conflict between vehicles and between vehicles and pedestrians in the proposed development is unacceptable. The basements do not have adequate space to separate vehicles and pedestrians nor separate service vehicles from passenger vehicles. Further, the internal parking design results in difficult and uncertain manoeuvrability, lengths of reversing, and areas of clear conflicts between the swept path movements between vehicles. These safety risks are material unacceptable detrimental impacts arising from the development: s 4.15(1)(b) of the EPA Act. Given their importance I am satisfied that the detrimental impacts are sufficient to dispose of the proceedings.
46. Finally, the development application varies control C1(a) at Part 10.5 in Chapter C10 “Transport Access and Parking” as it does not meet the requirements of AS 2890.2. In my view flexibility in the application of this control in these circumstances is not warranted because the objective of the control, namely “to reduce vehicle and pedestrian conflict on development sites” is not achieved.
Variation to the lot width control in DCP 2014
47. The development application relies on a variation to the lot width in Control (7) in Section 12.2.1 of 12.2 Land Use Controls in Part E 12 Penrith Health and Education Precinct. That control provides that a minimum site width of 24m is required for a mixed-use development. The site has a width of 20.15m.
48. The proposed basement design maximises the available width of the site, relying on a nil setback on both the east and west boundaries.
49. The Applicant seeks to utilise the provisions of s 4.15(3A)(b) of the EPA Act which provides as follows:
(3A) Development control plans If a development control plan contains provisions that relate to the development that is the subject of a development application, the consent authority—
…
(b) if those provisions set standards with respect to an aspect of the development and the development application does not comply with those standards—is to be flexible in applying those provisions and allow reasonable alternative solutions that achieve the objects of those standards for dealing with that aspect of the development, and
(c) may consider those provisions only in connection with the assessment of that development application.
In this subsection, standards include performance criteria.
50. It is agreed between the parties that the development control is varied by the development application, as such the Applicant seeks to vary the controls on the basis that the objectives are met. The relevant objectives of the standard are extracted at [25]. In Saffioti v Kiama Municipal Council [2019] NSWLEC 57 (“Saffioti”) Preston CJ at [27-28] held that the reasonable alternative solutions referred to in s 4.15(3A)(b) of the EPA Act are solutions that are embodied in the development that is the subject of the development application and further that the onus is on the Applicant to proffer these alternatives.
51. In his submissions Mr Poisel argues that the reasonable alternative solution is that, despite the variation the objectives of the standard, the development application meets the objectives and there are no unacceptable amenity impacts.
Findings
52. Given my earlier findings, the development application does not create legible safe access and circulation for users and visitors to the proposed mixed use development because the access and parking design generates unacceptable inherent risks of conflict between vehicles and pedestrians and between vehicles themselves. Therefore, arguably the development application does not meet the requirements of being a reasonable alternative solution that achieves the objects of Control 7 in Section 12.2.1 of 12.2 Land Use Controls in Part E12 Penrith Health and Education Precinct of DCP 2014. I find that the narrow frontage and non-compliant width compromises the ability of the site to achieve a suitable width for basement access which has concordant impacts to safe manoeuvring, the provision of access and loading areas for service vehicles, and adequate space to separate vehicles and pedestrians. In my assessment these deficiencies are symptomatic of the lack of suitability of the site for a childcare centre: s 4.15(1)(c) of the EPA Act.
Conclusion
53. At the conclusion of my assessment and evaluation of the I find that the development application for a mixed use development, including a childcare centre, on the subject site should be refused on three grounds. Firstly, that there exists a risk to safety which is a detrimental impact that arises from the proposed development: s 4.15(1)(b) of the EPA Act. Secondly, that the development application relies on a variation to a provision of DCP 2014 in circumstances where the design does not meet the objectives of the control. Thirdly, the narrow frontage and non-compliant width compromises the ability of the site to achieve a suitable width for basement access which has concordant impacts to safe manoeuvring, the provision of access and loading areas for service vehicles and adequate space to separate vehicles and pedestrians which are symptomatic of the lack of suitability of the site for a mixed use development incorporating a childcare centre: s 4.15(1)(c) of the EPA Act.
54. Whilst the Respondent raises other contentions in the proceedings, given the preceding conclusion I am satisfied it is not necessary to address these contentions as I have concluded that the development warrants refusal on the nominated grounds.
Orders
55. The Court orders that:
1. The appeal is dismissed.
2. Development application DA23/0161 seeking consent for the demolition of existing structures and construction of a three-storey mixed use development containing a 131 place childcare centre and commercial office space over two levels of basement carparking at 55 Stafford Street, Kingswood is refused.
3. Exhibits are returned with exception of Exhibits 1 and A.
D Dickson
Commissioner of the Court
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 25 July 2024 | 9,555 |
nsw_caselaw:190e244333141f724b2dd1b5 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-25 00:00:00 | The Croatian Club Limited v Westwood Capital Pty Limited [2024] NSWSC 895 | https://www.caselaw.nsw.gov.au/decision/190e244333141f724b2dd1b5 | 2024-07-26T22:25:59.067246+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: The Croatian Club Limited v Westwood Capital Pty Limited [2024] NSWSC 895
Hearing dates: 27 June 2024, last written submissions received 2 July 2024
Date of orders: 25 July 2024
Decision date: 25 July 2024
Jurisdiction: Equity
Before: Pike J
Decision: (1) Pursuant to s 74O of the Real Property Act 1900 (NSW), the plaintiff has leave to lodge a caveat in the same form as Caveat AR332854 on the title to Lot 1 in DP236825, Lot 14 in DP132440, Lot D in DP382627, and auto-consol 15118-2.
(2) The parties confer and provide to the chambers of Pike J by no later than 5 August 2024 any agreed orders as to costs.
(3) In the event that the parties are not able to reach an agreement as to costs, each party is to provide to the chambers of Pike J by no later than 7 August 2024, any submissions and other material relied on in relation to costs, such submissions not to exceed three pages, whereupon the question of costs will be determined on the papers.
Catchwords: REAL PROPERTY – caveats – application for leave to lodge a caveat – whether lapsing notice was served – whether clause of contract gives rise to caveatable interest or non-monetary obligations – whether Registrar-General has a duty to determine the validity or correctness of material evidencing service of a lapsing notice
Legislation Cited: Real Property Act 1900 (NSW), ss 74J, 74MA, 74O, 138
Statutory Declarations Act 1959 (Cth) s 8
Cases Cited: CJ Redman Construction Pty Ltd v Tarnap Pty Ltd (2005) 12 BPR 23,395
Coco C’Bay Association (Inc) v Paddison [2022] WASC 5
Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Hanover Investments Pty Ltd v Registrar General [1999] NSWSC 21
Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR 11,987
Nguyen v Sage Consultant Group Pty Ltd (2021) 20 BPR 41,989; [2021] NSWSC 753
Patel v H Lal & Associates Pty Ltd [2008] NSWSC 964
Ralph Symonds Australia Pty Ltd v Pacific Property Investments Pty Ltd (1988) 10 BPR 18,729
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Sheik v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FMCA 621
Wells Corporation Pty Ltd v Akkari [2012] NSWSC 323
West Coast Developments Pty Ltd v Lehmann [2013] VSC 617
West Coast Developments v Lehmann [2014] VSC 293
Xcel Rural Properties Pty Ltd v South Creek Dairy Pty Ltd (2002) 10 BPR 19,607; [2002] NSWSC 139
Texts Cited: D J Farrands, The Law of Options and other Pre-Emptive Rights, (3rd ed, 2023, Thomson Reuters)
Category: Principal judgment
Parties: The Croatian Club Limited ACN 000 412 331 (Plaintiff)
Westwood Capital Pty Ltd ACN 169 490 653 (First Defendant)
Registrar-General, Land Registry Services NSW (Second Defendant)
Representation: Counsel:
G Ng SC (Plaintiff)
M Condon SC with J M Kadar (First Defendant)
Solicitors:
Hall & Wilcox (Plaintiff)
Jordan Djundja Lawyers (First Defendant)
File Number(s): 2023/157905
Publication restriction: Nil
JUDGMENT
1. Prior to 13 August 2021, the plaintiff (the Club) was the registered proprietor of the land known as 21 Canterbury Road, Punchbowl (previously 921-925 Punchbowl Road, Punchbowl), constituted by Lot 1 in DP236825, Lot 14 in DP132440, Lot D in DP382627, and auto-consol 15118-2 (collectively the Property). The first defendant (Westwood Capital) is now the registered proprietor of the Property.
2. On 13 August 2021, the Club procured the registration of Caveat AR332854 (Original Caveat) against the title to the Property. That caveat was lapsed on 25 January 2022. By summons filed 17 May 2023, the Club now seeks, inter alia:
(a) a declaration that the Club has a caveatable interest in the Property;
(b) an order that the Original Caveat be reinstated as if it had been continuously registered on the Property since 13 August 2021; or
(c) in the alternative, an order granting the Club leave pursuant to s 74O of the Real Property Act 1900 (NSW) (“the Act”) to lodge a further caveat on the title to the Property in the same terms as either the Original Caveat or a caveat lodged by the Club following the lapsing of the Original Caveat, this being Caveat AT70785 (“the Second Caveat”).
3. The proceedings were heard on 27 June 2024 with further brief written submissions thereafter. Mr G Ng SC appeared for the plaintiff and Mr M Condon SC and Mr J M Kadar appeared for the first defendant. The second defendant, Registrar-General Land, Registry Service NSW, filed a submitting appearance save as to costs.
4. For the reasons set out below the Club should have leave, pursuant to s 74O of the Real Property Act 1900 (NSW) (the Act), to lodge a further caveat on the title to the Property in the same terms as the Original Caveat.
Overview of the facts
5. On 8 July 2014, the Club entered into a Heads of Agreement with Westwood Capital and its sole director and secretary, Bill Gertos (Mr Gertos) pursuant to which, inter alia, the Club agreed to grant a call option in respect of the Property to Westwood Capital.
6. On 29 December 2014, a call option deed (Call Option Deed) was entered into, the terms of which included:
(a) in consideration of the payment of a Call Option Fee in the amount of $2,600,000, the Club granted to Westwood Capital the right to purchase the Property for $26,000,000 (“the Option”) (cl 2.1);
(b) the Option could be exercised during an Exercise Period, defined to mean the period commencing on 29 December 2014 and expiring at 5.00pm on the date that was 28 months after the date of commencement of the Exercise Period (cl 2.7); and
(c) during the Exercise Period, Westwood Capital and Mr Gertos were to use all reasonable endeavours at the former’s cost to obtain all governmental and other approvals required in relation to the mixed use redevelopment of the Property, including the Club Premises, being premises to be constructed as part of the Development from which the Club would operate a licensed club and which was required to be no less than 1,500 square metres (cl 6.1).
7. Clause 4.1 of the Call Option Deed provided:
4.1 Lodging caveat
Unless the Grantee obtains the prior written consent of the Grantor and, if necessary, the Financier, the Grantee must not register a caveat on title to the Property unless and until:
(a) the mortgage granted to the Financier as contemplated by clause 3.2(b) has been registered in accordance with the requirements of the Real Property Act 1900 (NSW); and
(b) the Financier approves the form of caveat proposed to be lodged by the Grantee; and
(c) the Grantee enters into any deed of subordination or other deed or arrangement reasonably required by the Financier in relation to the interests of the Financier.
8. The Exercise Period for the Option was then extended twice, initially pursuant to a Deed of Amendment dated 19 May 2017, and thereafter pursuant to a further Deed of Amendment dated 24 July 2018.
9. On 27 December 2019, and upon the exercise of the Option during the extended Exercise Period, the Club, as vendor, and Westwood Capital, as purchaser, entered into a contract for the sale of land in respect of the Property (the Contract). Clause 15 of the Contract relevantly provides as follows:
(a) The parties acknowledge and agree that the vendor intends to undertake the Development and that the Development will include the Club Premises.
(b) As soon as practicable after the Development Consent for the Development (that includes the Club Premises), the purchaser must prepare a plan of subdivision which identifies the Club Premises and the Additional Area Premises as lots on a proposed plan of subdivision.
(c) In consideration of the payment of $1, the purchaser grants to the vendor an option to acquire the Club Premises and the Additional Area.
(d) Upon receipt of a written request from the vendor, the purchaser must enter into a separate Call Option Deed in the form attached to this contract, which grants a Call Option over the Club Premises and, if requested by the vendor, over the Additional Area Premises.
(e) The vendor may exercise either or both of the Club Premises Option or the Additional Area Option at any time during the Exercise Period by providing written notice to the purchaser. For the avoidance of doubt, the vendor does not need to exercise both the Club Premises and the Additional Area Option simultaneously and may elect to exercise each option independently of one another at any time during the Exercise Period. The contract of sale will be in the form provided by the vendor and based on the NSW General Conditions of contract and the vendor’s nominated special conditions.
(f) As security for the performance of the purchaser’s obligations under this special condition, the purchaser, on and from completion, grants a charge over the Property to the vendor and the purchaser consents to the vendor lodging a caveat, at any time after completion, on title to the Property in respect of that charge and the obligations which it secures. The vendor must consent to the lodging of any plan of subdivision pertaining to the Development and the transfer of any lot on that plan to a third party, unless the plan or transfer would materially impact on the Club Premises and the vendor’s rights under this contract.
(g) If the vendor exercises the Club Premises Option and or the Additional Area Option:
(i) the vendor will pay to the purchaser the Club Premises Price and Additional Areas Premises Price as applicable;
(ii) the purchaser must construct the Club Premises and/or the Additional Areas Premises and completion for the Club Premises will occur once the Club Premises reach practical completion, to the purchaser’s satisfaction; and
(iii) after acquiring the Club Premises, the purchaser must initially use the Club Premises for the operation of the Club.
10. The term “Development” is defined in clause 1 of the Contract to mean “the development of the Property which must include the Club Premises, multiple residential towers with mixed commercial and retail use, open space and basement car parking or as otherwise agreed with the Grantor in writing”. The term “Club Premises” is then given the same definition as in the Call Option Deed, relevantly the premises to be constructed as part of the Development from which the Club will operate a licensed club on the Property. The definition also sets out certain requirements for the Club Premises.
11. The terms “Additional Area Option” and “Club Premises Option” are both defined in clause 1 to mean “the option granted by the purchaser to the vendor under special condition 15(c)” to acquire the Club Premises/Additional Area for the Club Premises Price/Additional Area Purchase Price.
12. The “Exercise Period” is defined as:
The period commencing on completion under this contract and expiring at 5.00pm on the day that is the later of the following dates:
a) the granting of a development approval for the Development;
b) the preparation of a plan of subdivision showing the Club Premises located on a separate lot in accordance with this approval; and
c) 60 days from the date of this contract.
13. Mention should also be made of clause 17 of the Contract, which states:
(a) The purchaser must expeditiously complete the Development by the date which is 28 months after the later to occur of:
(i) completion of this contract (with vacant possession); or
(ii) if a lease to the vendor is granted by the purchaser under special condition, the date on which the vendor (as tenant under such lease) vacates the property (or part of it) occupied under the lease,
unless otherwise agreed in writing by the parties.
(b) For the purposes of this special condition 17, the Development will be deemed to be complete, if the Club Premises are constructed and transferred to the vendor and the vendor is able to access, use and occupy the Club Premises without unreasonable interference from surrounding building works and an occupation certificate has been issued by the relevant authority certifying the Club Premises are fit for occupation.
14. Westwood Capital also initially placed some reliance on clause 22 which provides:
Until special condition 16 has been satisfied, the purchaser may not deal with its interest in the Property, other than by registering a mortgage securing finance provided to complete this contract, including not granting any charge or other security interest, right, option, easement or encumbrance to any person, without the prior written consent of the purchaser [sic vendor]. However, the purchaser may enter into contracts to sell off the plan residential lots in the proposed Development to third parties subject to such contracts of sale not interfering in any way with the vendor’s rights under this contract, including its option over the Club Premises and Additional Areas.
15. The day after the hearing concluded the parties provided to the Court a joint note to the effect that special condition 16 was satisfied upon completion of the Contract and therefore clause 22 ceased to have effect upon completion.
16. Finally, clause 31 states that “[a]ny provision of this contract which is capable of taking effect after completion will not merge on completion but rather will continue in full force and effect.”
17. Westwood Capital became the registered proprietor of the Property on 13 August 2021 and the Original Caveat was recorded on the title to the Property on that day.
18. On 21 November 2021, Westwood Capital made application for the preparation of a lapsing notice in respect of the Original Caveat (Lapsing Notice). It is in dispute as to whether the Lapsing Notice was ever served on 21 December 2021. The Club disputes this and I deal with this issue below.
19. A statutory declaration was subsequently completed and lodged with the Registrar-General contending that the Lapsing Notice was served on 21 December 2021 (Statutory Declaration). Accordingly, on 25 January 2022 the Original Caveat was lapsed in accordance with s 74J of the Act.
20. The lapsing of the Original Caveat did not come to the attention of the Club until early May 2023.
21. On 10 May 2023, Caveat AT70785 (Second Caveat) was registered against the title to the Property.
22. These proceedings were then commenced by Summons filed 17 May 2023.
23. On 16 August 2023, Westwood Capital filed a motion seeking orders to progress a refinance. That motion was settled between the parties on terms that the Second Caveat be withdrawn and then replaced by a third. That refinance occurred on 29 February 2024 and a new mortgage was registered on title. Simultaneously with the registration of the mortgage, the Second Caveat was withdrawn and replaced by Caveat AT864026 (Third Caveat).
24. A Priority Deed was entered into dated 26 February 2024 pursuant to which the Club subordinated its interest to the payment of the incoming mortgagee’s priority – being the sum of $21.5 million.
25. In March 2024, a new caveat, AT889635, was registered on title in favour of “Athemee [sic] Securities Pty Limited” claiming an estate in fee simple in the Property by virtue of adverse possession and stating that the claim is supported by a “Loan Agreement and General Security Agreement dated 12 August 2021”. Documents have since been lodged with the Registrar-General seeking to withdraw this caveat and replace it with another caveat in favour of Athenee Securities Australia Pty Ltd (being the correct name) (Athenee Securities).
26. Athenee Securities was a company of which Mr Gertos was once a director and shareholder. He has not been a director or shareholder since earlier this year.
Overview of the contentions advanced
27. Against this background, the parties raised a number of contentions. Some were raised in written submissions filed prior to the hearing. Others emerged in oral address. As I understood those contentions, the following issues ultimately arose for my determination.
1. Was the Lapsing Notice served on the Club on 21 December 2021 as contended for by Westwood Capital? Westwood Capital contended in effect, that it was not necessary for the Court to determine this issue because even if it was determined that the Lapsing Notice was not served, the Court still had a discretion under s 138 of the Act as to whether to rectify the Register, a discretion which ought to be exercised having regard to the same matters relevant to the exercise of the Court’s discretion under s 74O of the Act.
2. If it was served, the Club contends that the Registrar-General was not justified in relying on the Statutory Declaration provided by Westwood Capital because of its date anomaly and as such, the Registrar-General could not have been satisfied that the requirements of s 74J of the Act had been met and the Court should order pursuant to s 138 of the Act, that the Original Caveat be placed back on the title to the Property. Westwood Capital disputes that there was any anomaly with the Statutory Declaration and/or that the Registrar-General is under any duty to investigate the adequacy of the Statutory Declaration as contended for by the Club and as such, if the Lapsing Notice was served it is a matter for the Club to satisfy the Court under s 74O of the Act that leave should be granted to lodge a further caveat.
3. If the Lapsing Notice was not served, then the Club contends that an order should be made under s 138 of the Act in effect rectifying the Register by reinstating the Original Caveat as if it had been continuously registered on the Property since 13 August 2021. Westwood Capital contends on a number of bases that no order should be made under s 138 of the Act, including:
1. The Club does not have a caveatable interest because, properly construed, the Club does not have any option or, if it does, the charge under clause 15(f) does not create a caveatable interest as it secures only a non-monetary obligation; and
2. Section 138 of the Act confers a discretion on the Court which should be exercised having regard to the same matters that are relevant to an application under s 74O of the Act.
The Club disputed each of these contentions.
4. Whether the Court should grant leave under s 74O of the Act for the Club to lodge a further caveat, it being accepted that leave cannot be granted nunc pro tunc with respect to the Third Caveat. Westwood Capital contended that leave should not be granted. It initially proffered an undertaking by Westwood Capital not to deal with the Property other than for the purposes of refinancing, but this undertaking was withdrawn the day after the hearing concluded. Westwood Capital contended that if leave was to be granted that leave should be on terms which reserve to Westwood Capital the ability to seek to have the caveat removed to permit it to obtain further finance and a form of words was proposed to give effect to this. The Club contended that leave should be granted without terms.
28. It is not necessary for the Court to determine all of these issues.
Was the Lapsing Notice served on the Club?
29. There was no dispute that Mr Constantinos Filis (Mr Filis) attended at the offices of Hall & Wilcox Solicitors – the address stated in the Original Caveat – and hand delivered at about 9.36am or 9.38am, two envelopes which were received by Ms Tracey Pham (Ms Pham) who at that time was occupying the reception at Hall & Wilcox. The dispute relates to what was in the two envelopes.
30. Westwood Capital contends that the Lapsing Notice was in one of the envelopes and that the other contained a covering letter dated 15 December 2021 and an attached letter dated 28 October 2021 relating to the fire safety certificate for the Club Premises. The Club contended that the contents of the two envelopes were identical – being the covering letter and attached letter relating to the fire safety certificate. No Lapsing Notice was served, according to the Club.
31. At 10.21 am on 21 December 2021, Ms Pham sent an email to Maurice Doria of Hall & Wilcox in Sydney – being the person to whom the letters dated 15 December 2021 and 28 October 2021 were addressed – stating:
Please see attached for mail we received at our Melbourne office delivered by Con Filas. Two envelopes were received, though they appear to be the same documents.
32. Attached to the email were four pages in two separate PDF files, each PDF file containing a copy of the letters dated 15 December 2021 and 28 October 2021.
33. Two copies of a statutory declaration purportedly made by “Con Filas”, presumably being Mr Filis, were placed into evidence. Each purports to have been made before Constantine Savell, a Justice of the Peace who is apparently an associate of Mr Gertos. It is apparent on an examination of the two documents that there are subtle differences between them such that it would appear that two declarations were in fact prepared.
34. The first document – which was lodged with the Registrar-General – declares that the declaration was made on Wednesday 29 December 2021, although the date at the bottom of the page next to Mr Savell’s signature and stamp appears to be “24/12/21”. The document also has text struck through in relation to the basis on which Mr Savell was satisfied as to the identity of Mr Filis.
35. The second document contains a different signature for Mr Filis, a different signature and stamp for Mr Savell, and is clearly dated “24/12/21” although the declaration purports to have been made on “Wednesday 29th December 2021”. It also does not have any text struck through.
36. Both Ms Pham and Mr Filis made affidavits and were cross-examined. Paragraphs 5 to 8 of Ms Pham’s affidavit are as follows:
5. While I do not have a specific recollection of the all the events of 21 December 2021, I have refreshed my memory by reviewing the incoming mail booklet and an email that I sent to Maurice Doria, a partner in our Sydney office also on 21 December 2021.
6. The incoming mail booklet records that at 9.36am on 21 December 2021, I accepted delivery of two hand delivered letters. In accordance with my usual practice, I recorded the hand delivery, scanned the documents and emailed them to the intended recipient, Mr Doria.
7. After I opened the envelope, I noticed the letters were identical comprising 2 letters dated 15 December 2021 attaching two additional identical letters dated 28 October 2021. Annexed and marked “A” is a copy of the email and attachments I sent to Mr Doria on 21 December 2021 at 10.21am.
8. Later that day, after I had finished covering reception, I took the letters to the Service Hub. The relevant entry in the incoming mail booklet records that:
a. Con Filas [sic] delivered documents on 21 December 2021 at 9.36am; and
b. At 12.30pm on the same date, I delivered the documents to the Service Hub.
Annexed and marked “B” is a copy of the incoming mail booklet showing the 21 December 2021 entry.
37. In cross-examination, Ms Pham said that she had an actual recollection that:
1. Mr Filis attended reception and delivered the two envelopes;
2. She then sent an email requesting another service hub employee to attend and collect the envelopes; and
3. When no one came to reception to collect the envelopes, she then opened the envelopes and scanned them to Maurice Doria.
38. Ms Pham denied the proposition that she was served with a copy of the Lapsing Notice.
39. Mr Filis’ affidavit evidence was to the following effect:
1. In about the first week of December 2021, Mr Gertos instructed him to serve a Lapsing Notice on Hall & Wilcox in Melbourne and that he should pick up the documents from Mr Gertos’ solicitor;
2. On or about 20 December 2021, he collected the documents from Mr Gertos’ solicitor – they were in two envelopes which were unsealed;
3. He took out the documents from one of the envelopes and observed that it was a document that had the words “Lapsing of Caveat Application” on the document. He says that he had a clear recollection of this as he did not know what a lapsing of caveat document was. He took out the document from the other envelope and saw that the document related to something about fire services;
4. He took the documents, left the office, and sealed the envelopes. The next day, on the morning of 21 December 2021, he travelled to Melbourne, travelled to the Hall & Wilcox office, and left the two envelopes with the receptionist at reception;
5. When he returned to Sydney, he prepared the Statutory Declaration before Mr Con Savell on 29 December 2021; and
6. The two envelopes contained two different documents. They did not contain a duplicate, one of the other.
40. Mr Filis maintained this evidence in cross-examination.
41. On the evidence before me, I am satisfied that the Lapsing Notice was not served on the Club on 21 December 2021, and I so find. I reject the theory advanced by Westwood Capital that Ms Pham lost the Lapsing Notice.
42. Ms Pham struck me as an honest witness, and I accept her evidence. She had an actual recollection of what relevantly occurred.
43. More importantly, her evidence is supported by the contemporaneous email sent to Maurice Doria at 10.21 am to the effect that the two envelopes contained the same documents.
44. This email was sent at the time of scanning which was immediately after Ms Pham opened the two envelopes. There was no reason for Ms Pham to have written what she did in the email unless it recorded her observations at the time. If, as contended for by Westwood Capital, Ms Pham had lost one of the envelopes, or at least its contents, this does not explain why Ms Pham stated that the two envelopes contained the same documents. The email clearly records that two envelopes were received and their contents were the same. If an envelope had been lost, she would likely only have referred to one envelope being received. If the contents of one of the envelopes had been lost, there is no reason by Ms Pham would have stated that the contents were the same.
45. By contrast, Mr Filis’ evidence appears to be based entirely on his recollection – some three and a half years after the event – that he looked in the envelopes and observed that one contained the Lapsing Notice.
46. There is also nothing in Mr Filis’ evidence to give me any real confidence that he in fact served the Lapsing Notice. For example, there is nothing to suggest that Mr Filis took copies of the documents prior to serving them and then used those copies at the time of making this declaration.
47. Mr Filis was also not able to recall making two declarations.
48. Further, no evidence was called from Westwood Capital’s lawyers – who are the same lawyers acting in these proceedings – to the effect that the Lapsing Notice was contained in one of the two envelopes collected by Mr Filis from their offices. I infer that this evidence would not have assisted Westwood Capital: see Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 per Handley JA.
49. In reaching this conclusion, I do not need to go so far as, and do not go so far as, concluding that Mr Filis’ Statutory Declaration was a knowingly false declaration. I am simply not satisfied on the evidence that the Lapsing Notice was in fact served. I am satisfied that it was not.
Does the Club have an option to acquire the Club Premises and Additional Area?
50. I turn now to consider the threshold issue raised by Westwood Capital as to why the Club does not have a caveatable interest – namely that the Club does not have an option to acquire the Club Premises and the Additional Area.
51. The gravamen of the argument advanced by senior counsel for Westwood Capital was that, properly construed, no option to acquire the Club Premises or Additional Area arose until a Call Option Deed was entered into as required under clause 15(d) of the Contract. This is against the background of it not being in dispute that, contrary to what is stated in clause 15(d), there was no “Call Option Deed” attached to the Contract at the time of its execution. Indeed, it was not suggested that there has ever been in existence a “Call Option Deed” which ought to have been attached to the Contract.
52. The Club contended that there was no warrant to construe clause 15 of the Contract as effectively requiring, as a condition precedent to the existence of an option, entry into a Call Option Deed.
53. I do not accept the contentions advanced by Westwood Capital that entry into a Call Option Deed is necessary to create the options.
54. The usual principles of contractual construction apply: D J Farrands, The Law of Options and other Pre-Emptive Rights, (3rd ed, 2023, Thomson Reuters) at page 10ff and the authorities there referred to.
55. Clause 15(c) provides:
In consideration of the payment of $1, the purchaser grants to the vendor an option to acquire the Club Premises and the Additional Area.
56. The plain and ordinary meaning of these words are clear – to grant the option on the payment of the consideration of $1. True it is that these words must be construed in context, including the other sub-clauses in clause 15 and the rest of the Contract. This context confirms the plain meaning of clause 15(c).
57. Clause 15(d) begins “[u]pon receipt of a written request from the vendor, the purchaser must…” suggesting that the obligation of the purchaser to enter into the Call Option Deed is only upon receipt of a written request from the vendor. There is nothing in the language used to require the Club (the vendor) to make a written request. If the parties had intended this to be a formal requirement for the grant of an option, particularly in light of the clear words in clause 15(c), they could easily have said so.
58. The term “Call Option Deed” does not appear to be a defined term.
59. The terms “Club Premises Option” and “Additional Area Option” – which are used throughout clause 15 – are defined terms and are defined in clause 1 in similar terms as “the option granted by the purchaser to the vendor under special condition 15(c)” (my emphasis). These definitions make no reference to clause 15(d) and fit comfortably with the ordinary meaning of clause 15(c) as containing the grant.
60. Clause 15(g) sets out what is to occur, on exercise of either the Club Premises Option or the Additional Area Option and it was not suggested that there are necessary matters that are not set out that would be expected to be contained in the missing Call Option Deed. In other words, it was not suggested that the existing contractual provisions were somehow incomplete.
Should the Court order under s 138 that the Original Caveat be placed back on file?
61. Having determined that the Lapsing Notice was not served on the Club and also having rejected Westwood Capital’s contention that the Club does not have an option, the issue then arises as to whether the Court should order that the Original Caveat be reinstated as if it had been continuously registered on the Property since 13 August 2021.
62. The Club contended that this should occur by reason of two independent arguments. First, because the Lapsing Notice was not in fact served. Second, because the Registrar-General could not have been satisfied, by reason of the alleged incorrect date on the Statutory Declaration provided, attesting to the service of the Lapsing Notice, that the Lapsing Notice had in fact been served.
63. Westwood Capital contended that the Court could not be satisfied that the Club in fact has a caveatable interest, because the charge granted under clause 15 only secures non-monetary obligations. Absent a determination that the Club in fact has a caveatable interest – prayer 5 sought in the Summons – there is no power to make an order under s 138 of the Act, as the power under this section is only ancillary.
64. As to the second basis relied on by the Club, Westwood Capital contended that the Registrar-General had no duty of the kind contended for by the Club, being a duty to in effect determine the correctness of the documentation or exercise a discretion about the evidence provided to it and was perfectly entitled to rely on the Statutory Declaration filed in the present case.
65. I consider each of these issues below. Ultimately, however, it is not necessary for me to reach any final view on either of these grounds as the present dispute is more appropriately resolved through the prism of whether the Club should be permitted to lodge a further caveat under s 74O of the Act.
Does the charge create a caveatable interest?
66. Two related arguments were advanced by Westwood Capital. First, a charge which purports to secure only non-monetary obligations does not create a caveatable interest. Relatedly, there is not a caveatable interest if the charge purports to secure performance of a non-monetary obligation in circumstances where that obligation has not been breached. This latter argument was also raised in the context of whether, as a matter of discretion under s 74O of the Act, the Club should be permitted to lodge a further caveat.
67. Clause 15(f) provides that Westwood Capital grants a charge over the Property “as security for the performance of the purchaser’s obligations under [clause 15]”, i.e. to construct the Club Premises and/or the Additional Area Premises an exercise of either or both options.
68. It was not in dispute that the charge did not secure the performance of a monetary obligation. Senior counsel for Westwood Capital relied on the decision of Bryson J in Ralph Symonds Australia Pty Ltd v Pacific Property Investments Pty Ltd (1988) 10 BPR 18,729 (Ralph Symonds) in support of the proposition that such a charge does not create a caveatable interest.
69. The authorities in this area were relatively recently reviewed by Solomon J in Coco C’Bay Association (Inc) v Paddison [2022] WASC 5 (Coco C’Bay). His Honour considered at [95], that the decision of Young J in Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR 11,987 (Kingstone Constructions), properly understood, stood for the proposition that a charge “may go beyond securing the payment of money and secure the performance of a contract” and in so doing may “operate as a charge that secures damages that flow from a breach of performance.”
70. Solomon J also referred to two related proceedings in the Supreme Court of Victoria – a decision of Robson J in West Coast Developments Pty Ltd v Lehmann [2013] VSC 617 and a decision of McMillan J in West Coast Developments v Lehmann [2014] VSC 293. At [54], Solomon J concluded that each of these decisions stands for the proposition that a serious question to be tried exists as to whether a charge over land can secure non-monetary obligations in a contract.
71. Solomon J also observed that in none of Ralph Symonds, nor either of the West Coast Developments decisions, was any consideration given to the matter raised in Kingstone Constructions as to whether the charge operated in respect of damages that may flow from the failure to perform the agreement.
72. Having regard to the decision of Solomon J in Coco C’Bay and the authorities referred to in that decision, I am satisfied that it is at least arguable that the charge created by clause 15 in the present case is sufficient to create a caveatable interest. Senior counsel for Westwood Capital accepted as much.
73. In circumstances where it is clear, that in the context of considering whether leave should be granted under s 74O of the Act to lodge a further caveat, the Court generally applies the considerations relevant to an application to extend a caveat (see Xcel Rural Properties Pty Ltd v South Creek Dairy Pty Ltd (2002) 10 BPR 19,607; [2002] NSWSC 139 (Xcel Rural Properties) which include whether there is a sufficiently arguable case of a caveatable interest, there is merit in the position advanced by Westwood Capital that the present application should be considered through the prism of s 74O of the Act. The provisions of the Act governing the lapsing and withdrawal of caveats are inherently interlocutory: see Nguyen v Sage Consultants Group Pty Ltd (2021) 20 BPR 41,989; [2021] NSWSC 753 at [363] per Robb J. I propose to consider it through the prism of s 74O of the Act.
74. Although not necessary to decide the point, I incline to the view, having regard to the decision of Young J in Kingstone Constructions, as analysed by Solomon J in Coco C’Bay, that the charge in the present case creates a caveatable interest in the Property.
75. Again, although not strictly necessary to decide this point, I incline to the view, having determined that the Lapsing Notice was not served, and that the Club has a caveatable interest, this would be an appropriate case for the Court to order, pursuant to s 138 of the Act, that the Original Caveat be reinstated as if it had been continuously registered on the Property since 13 August 2021. As will become apparent below, I reject the contentions advanced by Westwood Capital that, in the context of s 74O of the Act, leave should not be granted or terms should be imposed on the grant of leave.
Should the Registrar-General have refused to lapse the Original Caveat?
76. The Club contended that the Registrar-General should not have lapsed the Original Caveat on the basis that because the Statutory Declaration was apparently made on 29 December 2021, but purportedly witnessed on 24 December 2021, the Registrar-General could not have been satisfied, without more, that the Statutory Declaration was valid, and thus could not have been satisfied that the requirements of s 74J of the Act were met.
77. Westwood Capital contended that it was far from obvious that the date of the witnessing of the Statutory Declaration was 24 December 2021 and, in any event, there was no duty on the Registrar-General to check the legal validity or correctness of the material lodged in accordance with s 74J of the Act.
78. Section 74J provides:
(1) Where a caveat lodged under section 74F remains in force, the Registrar-General shall, on an application being made in the approved form by the registered proprietor of an estate or interest in the land described in the caveat, prepare for service on the caveator a notice to the effect that, unless the caveator has, before the expiry of 21 days after the date of service of the notice -
(a) obtained from the Supreme Court an order extending the operation of the caveat for such further period as is specified in the order or until the further order of that Court, and
(b) lodged with the Registrar-General the order or an office copy of the order,
the caveat will (subject to evidence of due service of the notice on the caveator) lapse in accordance with subsection (4).
(2) The applicant must, within 4 weeks after the issue of the notice, lodge with the Registrar-General, in the form of a statutory declaration or such other form as the Registrar-General may accept, evidence of the due service of the notice on the caveator.
(3) If the applicant does not comply with subsection (2), the Registrar-General -
(a) may refuse to take any further action in connection with the notice prepared under subsection (1), or
(b) may serve on the applicant a notice allowing a further 4 weeks from the date of issue of that notice for lodgment of the evidence and, if the evidence is not lodged within the further period, may refuse to take any further action in connection with the notice prepared under subsection (1).
(4) If -
(a) the evidence required by subsection (2) is lodged within the time permitted by this section, and
(b) the caveator has not lodged with the Registrar-General the order or office copy of the order referred to in subsection (1) in accordance with that subsection,
the Registrar-General is to make a recording in the Register to the effect that the caveat has lapsed, and the caveat so lapses on the making of that recording.
79. No authority was cited by the Club in support of the proposition that the Registrar-General had a duty to consider whether the material lodged satisfied the statutory requirements. The Club relied on Sheik v Minister for Immigration [2004] FMCA 621 (Sheik), a decision of McInnis FM of the then Federal Magistrates Court of Australia to the effect that (at [16]) the Migration Review Tribunal, in the context of the relevant statutory provisions, “has a duty to properly assess documents presented to it for and on behalf of the applicant and as a first essential step must determine whether or not in the case of a statutory declaration the document complies with the requirements of law”.
80. McInnis FM held that the statutory declaration which purported to have been declared on 15 December 2001 but witnessed on neither 21 nor 25 December 2001, clearly does not comply with the lawful requirements of a declaration. The lawful requirements referred to are contained in s 8 of the Statutory Declarations Act 1959 (Cth), which requires a declaration to be made before a prescribed person, it being contended that given the discrepancy between the date of witnessing, the statutory declaration could not have been made before a prescribed person.
81. It is clear that the statutory regime relevant in Sheik is far removed from s 74J of the Act, and I did not understand counsel for the Club to contend otherwise. The Migration Review Tribunal was conducting a review of a decision of a delegate of the Minister not to grant a particular visa. Given the markedly different statutory regimes, I do not derive much assistance from Sheik.
82. Such observations which do exist in the context of the Act provide some support for the position advanced by Westwood Capital. In Patel v H Lal & Associates Pty Ltd [2008] NSWSC 964, Brereton J stated at [8]:
[8] Ms Patel has suggested that the Registrar General would not lapse the caveat if aware that the proceedings were on foot. I have to say, first, that that is not the Court's experience of how the Registrar General operates – to the contrary, the Registrar General will lapse a caveat unless a sealed minute of an order of the Court extending the caveat is served before the date on which it is due to lapse; and, secondly, as I understand the operation of Real Property Act, s 74J(4), if evidence of service of the lapsing notice is lodged, the Registrar General has no discretion but is obliged to make a recording in the register to the effect that the caveat has lapsed.
83. His Honour’s observations do not address the present issue of the quality of the material lodged. They really go no further than suggesting a limited role for the Registrar-General.
84. There is nothing in the words of s 74J that obviously imposes a duty on the Registrar-General to consider the quality of the material lodged, or more accurately in the context of the present dispute, whether the Statutory Declaration lodged complies with the legal requirements for a valid statutory declaration. The words of s 74J(2) – “in the form of a statutory declaration or such other form as the Registrar-General may accept” – perhaps suggest a degree of flexibility as to the material the Registrar-General may accept as evidencing service of a lapsing notice.
85. The issue is obviously an important one in the context of the operation of the Act and may well have consequences or implications beyond the statutory scheme for the lapsing of caveats. It is a point on which the Registrar-General may well wish to be heard. Although a party to the present proceedings, the Registrar-General understandably filed a submitting appearance save as to costs, it not being clear at that stage that this point would be raised.
86. Given that it is not necessary for me to determine this issue to decide the present dispute, I do not consider that it would be in the interests of justice to facilitate the Registrar-General being given an opportunity to be heard on this point. I otherwise do not express any concluded views on it.
Should the plaintiff be permitted to lodge a further caveat?
87. It was not in dispute between the parties that s 74O of the Act cannot operate to confer leave nunc pro tunc in respect of a caveat that has already been lodged: see Hanover Investments Pty Ltd v Registrar General [1999] NSWSC 21; CJ Redman Construction Pty Ltd v Tarnap Pty Ltd (2005) 12 BPR 23,395 at [23] per Brereton J (CJ Redman). The Club thus accepted that s 74O operates to deprive the Third Caveat of any effect.
88. The issue was whether leave should be granted to lodge a further caveat.
89. The test to be applied was not in dispute. In Xcel Rural Properties at [4], Campbell J stated:
[4]…The circumstances that give rise to an application under s74O to lodge a further caveat are closely analogous to the circumstances in which application is made to extend a caveat. In my view, similar principles apply, namely, consideration of whether there is a serious question to be tried that the caveator has the interest claimed in the caveat, and whether the balance of convenience favours the making of the order.
90. In its written submissions, Westwood Capital contended that the Court should not, in the exercise of its discretion, grant leave to the Club to lodge a further caveat. Westwood Capital relied on the following matters:
1. The Club already has the benefit of undertakings by Westwood Capital given on 24 August 2023;
2. To the extent that there is a caveatable interest, it protects a right of performance that (presently) has not been translated into damages;
3. The Club took 16 months to react to the lapsing of the First Caveat. Notably, Westwood Capital took no steps to deal with the Property during that period; and
4. The Club lodged the Second Caveat when it had no legal right to do so. That caveat hindered Westwood Capital’s ability to refinance during the course of 2023 and early 2024.
91. Westwood Capital also offered in its written submissions, in lieu of its undertaking given on 24 August 2023, to undertake to the Court that it will not deal with the Property other than to obtain finance to be used to discharge its obligations under clause 15(f) of the Contract. At the hearing on 27 June 2024, I requested that Westwood Capital provide a form of wording of this undertaking.
92. The next day I was notified that Westwood Capital no longer sought to proffer an undertaking to the Court and that in the event that the Court found there to be a caveatable interest and was minded to exercise its discretion (either under s 74O or s 138) to grant leave to permit the Club to lodge a further caveat, Westwood Capital proposed that such leave would be on the following terms:
a) Leave is granted to the plaintiff to lodge the caveat on the basis that the caveat is not intended to prevent the lodgement of dealings by Westwood or any third parties in order to discharge its obligations to undertake the Development defined in Clause 1 of the Contract for Sale dated 27 December 2019, including but not limited to the registration of:
i. Security instruments;
ii. Leases;
iii. Easements required by planning consent;
iv. Covenants required by planning consent;
v. Consolidation of titles.
b) To give effect to Order [XX] above, upon a written request from Westwood to withdraw its Caveat in order to discharge its obligations to undertake the Development defined in Clause 1 of the Contract for Sale dated 27 December 2019 and undertake any other steps required to comply with the obligations, the Club shall withdraw it within 3 business days and thereafter have leave pursuant to s74O to file a Caveat in synonymous terms to the Caveat withdrawn.
93. Given the withdrawal of any undertaking, the first of the matters relied on by Westwood Capital set out above at [90(a)] can be put to one side.
94. As regards the second matter – set out at [90(b)] above, I have already found, as set out above, that the Club has an arguable case that it has a caveatable interest. This is on the basis that the charge presently exists, and it is at least arguable that a charge which secures performance of a non-monetary obligation is sufficient to create a caveatable interest. It was also not in dispute that under clause 15(f) properly construed, Westwood Capital consented to a caveat being lodged at any time after completion – in effect a standing consent. The fact that the right of performance protected has not presently been translated into damages is not of much significance and does not provide a basis for the Court to refuse leave to a further caveat being lodged.
95. Westwood Capital contended that, unlike for example a mortgage securing payment of monies, which can be redeemed by the mortgagor, there is no means by which Westwood Capital can, in effect, redeem the charge. Having regard to the nature of the charge in the present case, Westwood Capital contended that it could remain on the title for a considerable period including up to the expiry of any limitation period for commencement of a claim for damages for breach of the obligations secured.
96. As contended by counsel for the Club, there are many ways in which the charge could, in effect, be redeemed, including if the options are not exercised, the obligations are performed by Westwood Capital or Westwood Capital pays any damages caused by reason of a breach of the obligation. In any event, Westwood Capital consented to a caveat being placed on title. The fact that there is no present intention to enforce the charge is often the case at the time a caveat is lodged on title and does not provide a basis for its removal: see, Wells Corporation Pty Ltd v Akkari [2012] NSWSC 323 at [28] per White J; CJ Redman at [25]ff per Brereton J.
97. As to the third matter relied on – set out at [90(c)] above – it is clear that Westwood Capital took no steps to deal with the Property during the period from February 2022 to May 2023 when there was no caveat on title. The point is, however, of little significance in the discretionary mix, in circumstances where Westwood Capital no longer offers the undertaking that it had previously foreshadowed and where it contractually agreed to the Club placing a caveat on title.
98. The fourth matter relied on, at [90(d)], proceeds on the basis that the lodging of the Second Caveat hindered Westwood Capital’s ability to refinance during the course of 2023 and early 2024. I am not satisfied that this factual contention has been made good on the evidence, at least to the extent that such hindrance was significant. The starting point is obviously that in May 2023 the Club found out that the Original Caveat had been removed in circumstances where it contends, as I have found, that no Lapsing Notice was ever served on the Club. The Club then lodged the Second Caveat, which necessitated Westwood Capital bringing an application by motion dated 16 August 2023 to permit Westwood Capital to carry out a refinance. That application was settled with orders made on 24 August 2023 permitting the refinance to occur, with the Second Caveat being withdrawn and the Third Caveat then being lodged.
99. The Priority Deed was then entered into in February 2024 whereby the Club agreed to subordinate its interest to the incoming financier in the amount of $21.5 million. It appears from the evidence that the Priority Deed was negotiated over several months but there is nothing to suggest that the position adopted by the Club in these negotiations was unreasonable or that the “delay” was of any significance in the overall scheme of the Development.
100. The issue that then arises is whether the presence of a caveat on the title to the Property would likely cause prejudice to Westwood Capital. A related issue is whether the Court should impose a condition on any grant of leave to lodge a further caveat in the terms sought by Westwood Capital as set out above.
101. The gravamen of the position advanced by Westwood Capital in this regard is that the parties obviously contracted on the basis that Westwood Capital would carry out the Development and that it would be necessary to raise funding from third parties to permit this to occur. It was contended that the existence of a caveat from the Club on title would make refinancing and other activities significantly harder. Reliance was placed on the opinion of Mr Gertos, the sole director of Westwood Capital based on his 20 years’ experience as a property developer.
102. The Club disputed that the existence of a caveat would cause any significant prejudice to Westwood Capital pointing to the fact that the Club has an interest in having the Development completed and had cooperated to date in relation to the proposed refinancing, including in subordinating its position under the Priority Deed. Reliance was also placed on the fact that Westwood Capital appears to have no issue with the caveat recently lodged on title by Athenee Securities. To impose the condition sought by Westwood Capital would be to rewrite the contractual bargain between the parties. If Westwood Capital had wanted an express contractual right along the lines now sought to be imposed by way of a condition on the grant of leave, it could and should have bargained for this as it did in clause 4 of the Call Option Deed (extracted above).
103. The existence of the caveat is not likely, in my view, to cause any significant prejudice to Westwood Capital. The concerns expressed by Mr Gertos in his affidavit are stated at a level of generality. To date the Club has adopted a cooperative approach as one would expect given that it has a strong interest in having the Development built. There is no reason to suspect that this position will change. Westwood Capital has not provided any basis to suggest that it might.
104. The fact that Westwood Capital also appears prepared to tolerate the caveat recently placed on title by Athenee Securities also suggests that the existence of any caveat from the Club is unlikely to be of any real significance and certainly not such as to provide a basis to refuse leave to permit a further caveat or to condition the grant of leave in the manner proposed.
105. There is also force in the Club’s submission that the condition sought to be imposed as a term of the grant of leave involves a rewriting of the contractual bargain. If Westwood Capital wanted such an express right, it could and should have sought to have it included in the Contract.
106. Whilst there was no dispute that the background to the Contract was the construction of the Development, that third party finance would be needed to carry out the Development, and that both parties, including the Club, owed implied obligations to do all things necessary to enable the other party to have the benefit of the bargain and correlative negative obligations (see, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607 per Mason J), those matters do not equate to the Club being required to, in effect, consent to lifting its caveat in the circumstances set out in Westwood Capital’s proposed condition.
107. In the event that a dispute arises an application can be brought by Westwood Capital under s 74MA of the Act for the caveat to be withdrawn, which can then be determined in the context of a concrete set of facts.
108. For these reasons, I propose to grant leave to the Club to lodge a further caveat without imposing any conditions on the grant of that leave.
109. As for costs, my preliminary view is that the Club has been successful and should have its costs. I will direct the parties to seek to agree on costs and failing agreement to file brief written submissions and I will determine the issue on the papers.
Orders
110. The Court orders that:
1. Pursuant to s 74O of the Real Property Act 1900 (NSW), the plaintiff has leave to lodge a caveat in the same form as Caveat AR332854 on the title to Lot 1 in DP236825, Lot 14 in DP132440, Lot D in DP382627, and auto-consol 15118-2.
2. The parties confer and provide to the chambers of Pike J by no later than 5 August 2024 any agreed orders as to costs.
3. In the event that the parties are not able to reach an agreement as to costs, each party is to provide to the chambers of Pike J by no later than 7 August 2024, any submissions and other material relied on in relation to costs, such submissions not to exceed three pages, whereupon the question of costs will be determined on the papers.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 25 July 2024 | 9,810 |
nsw_caselaw:190d76e6a3fbdb2d85ad8bcd | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-23 00:00:00 | Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174 | https://www.caselaw.nsw.gov.au/decision/190d76e6a3fbdb2d85ad8bcd | 2024-07-26T22:26:00.700245+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174
Hearing dates: 11-12 July 2024
Decision date: 23 July 2024
Before: Ward ACJ; Leeming JA; Kirk JA
Decision: 1. Dismiss the notice of motion seeking to adduce fresh evidence filed 19 April 2024.
2. Appeal dismissed with costs.
Catchwords: BANKING AND FINANCE – standby letter of credit issued by Chinese bank to secure lender’s/builder’s obligations under construction contract – receivers appointed to beneficiary – receivers made demand on standby letter of credit on behalf of beneficiary – payment by issuing bank stopped by order of Chinese court – whether breach of contract by beneficiary with lender/builder rendered demand invalid – obligations of issuing bank independent of contract between lender/builder and beneficiary – standby letter of credit subject to Rules on International Standby Practices ISP 98 – whether appointment of receivers engaged rule concerning transfer by operation of law – whether interlocutory order made by Chinese court preventing payment a bar to entry of judgment – whether parallel proceedings in Australia and China an abuse of process
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW), s 58
Corporations Act 2001 (Cth), ss 420, 428
Environmental Planning and Assessment Act 1979 (NSW), s 4.55
Evidence Act 1995 (NSW), s 140
Uniform Civil Procedure Rules 2005 (NSW), r 7.1
Cases Cited: Australian Mutual Provident Society v George Myers & Co Ltd (in liq) (1931) 47 CLR 65; [1931] HCA 31
BS Stillwell & Co Pty Ltd v Budget Rent-A-Car System Pty Ltd [1990] VR 589
Carron Iron Company v Maclaren (1955) 5 HL Cas 416; 10 ER 961
Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; 249 ALR 458
Collier v Country Women's Association of NSW [2017] NSWSC 1573
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345; [1997] HCA 33
Dedert Corporation v United Dalby Bio-Refinery Pty Ltd (2017) 59 VR 607; [2017] VSCA 368
Eastone Mining Pty Ltd v Eastone Holding Pty Ltd [2019] NSWSC 1850; 142 ACSR 38
Gaskell v Gosling [1896] 1 QB 669
Gosling v Gaskell [1897] AC 575
Griffin Energy Group Pty Ltd (Subject to Deed of Company Arrangement) v ICICI Bank Ltd [2015] NSWCA 29; 317 ALR 395
House v The King (1936) 55 CLR 499; [1936] HCA 40
In re Metropolitan Amalgamated Estates Ltd; Fairweather v Metropolitan Amalgamated Estates Ltd [1912] 2 Ch 497
Kawasaki Heavy Industries Ltd v Laing O’Rourke Australia Construction Pty Ltd (2017) 96 NSWLR 329; [2017] NSWCA 291
Kell & Rigby Holdings Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777
Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150
Merton v Bank of Queensland Ltd [2013] NSWCA 68
Minister for Local Government v Blue Mountains City Council (2018) 97 NSWLR 1132; [2018] NSWCA 133
Odtojan v Condon [2023] NSWCA 129
PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312
Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730
Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407; [1997] HCA 37
Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd [2022] NSWSC 59
Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405
Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 3) [2023] NSWSC 1596
Shun Sheng Pty Ltd v Lei (No 2) [2023] NSWSC 1623
Talifero v Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107; [2018] NSWCA 227
Tavcol v Valbeet [2014] NSWSC 1563
United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168
Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021
Wolfenden v International Theme Park Pty Ltd (trading as Wonderland) [2008] NSWCA 78
Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443; [1979] HCA 21
Young v Cooke [2017] NSWCA 33
Texts Cited: P Elligner and D Neo, The Law and Practice of Documentary Letters of Credit (Hart Publishing, 2010)
Category: Principal judgment
Parties: Shinetec (Australia) Pty Ltd (First Appellant)
Shanxi Construction Investment Group Co Ltd (Second Appellant)
The Gosford Pty Ltd (First Respondent)
David Anthony Hurst (Second Respondent)
David Henry Sampson (Third Respondent)
Macquarie Bank Ltd (Fourth Respondent) (submitting appearance)
Bank of China Ltd (Fifth Respondent)
Representation: Counsel:
F Assaf SC, M Karam, B Smith (Appellants)
JT Gleeson SC, RJ May (First, Second and Third Respondents)
J Kay Hoyle SC, T Scott (Fifth Respondent)
Solicitors:
Pinsent Masons (Appellants)
Johnson Winter & Slattery (First, Second and Third Respondents)
HWL Ebsworth Lawyers (Fourth Respondent) (submitting appearance)
King & Wood Mallesons (Fifth Respondent)
File Number(s): 2023/00465518
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Equity Division, Commercial List
Citation: [2023] NSWSC 1405
Date of Decision: 20 November 2003
Before: Stevenson J
File Number(s): 2021/220732
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The Gosford Pty Ltd (“Gosford”) and Shinetec (Australia) Pty Ltd (“Shinetec”) were parties to a “Design and Construction Head Contract”, which provided that Shinetec would fund the first $37,000,000 of construction costs of a property development in Gosford, New South Wales. Shinetec agreed to provide a standby letter of credit in the amount of $37,000,000 to secure its funding obligation. Shinetec’s parent company, Shanxi Construction Investment Group Co Ltd (“Shanxi”), procured a standby letter of credit in that amount in favour of Gosford from the Bank of China Ltd, Shanxi Branch. The standby letter of credit expired on 31 July 2021. On 26 July 2021 receivers were appointed to Gosford by a secured creditor. The receivers served a demand on the standby letter of credit on Bank of China on Friday 30 July 2021.
On Monday 2 August 2021, Shinetec sought and obtained interlocutory relief from the Supreme Court of New South Wales. On the same day, Shanxi sought and obtained orders from the Taiyuan Intermediate People’s Court, which have been extended subsequently, and presently remain in place until 24 July 2024. They have at all times bound the Bank of China, preventing it from making payment.
In the Supreme Court of New South Wales, Shinetec sued Gosford, its receivers and their bank, Macquarie Bank Ltd, seeking to maintain that there was no entitlement to serve the demand on Bank of China. Shinetec withdrew its claim against that Bank well before trial, and disavowed fraud. Shinetec sought a declaration that the demand was “invalid and of no effect” and an order that the standby letter of credit be returned. Gosford by a cross-claim sued Bank of China, seeking judgment in the amount of the standby letter of credit, $37,000,000. The Bank’s defences relied on the demand being signed by Gosford’s receivers, and the order of the Taiyuan Intermediate People’s Court. It did not allege fraud.
The primary judge dismissed Shinetec’s claim, and entered judgment in favour of Gosford, but in light of the order of the Chinese court, also issued a stay.
Shinetec appealed, joining Shanxi as the second appellant. Shanxi and Shinetec contended that Gosford’s demand on the standby letter of credit was invalid, or void, or of no effect, because the Construction Contract was suspended, but also because Gosford was subject to an “implied negative stipulation” in the Construction Contract that was breached when the demand was made. Shanxi and Shinetec also relied on the defences run by Bank of China in response to Gosford’s cross claim, that the demand had been signed by Gosford’s receivers, and the order of the Chinese court disentitled Gosford from obtaining judgment.
The Court held, dismissing the appeal:
(1) In the absence of any claim for fraud or unconscionability, any breach of the Construction Contract by Gosford did not mean that its call on the letter of credit was invalid or void or of no effect. It is axiomatic that, absent fraud or unconscionability, the issuing bank must pay if the documents presented are compliant. If the beneficiary is in breach, it will be liable in damages to its contracting party, but that gets determined at a trial, and is not a reason for the bank not to comply with its undertaking to pay: at [11], [134]-[140].
United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168, followed.
(2) In the absence of fraud or unconscionability, an injunction may issue to prevent the beneficiary of a standby letter of credit from making a demand, where the beneficiary has promised only to make a demand in certain circumstances. Equity intervenes to prevent the demand being made, not because it is invalid (or “void” or “of no effect”) as between beneficiary and bank, but because the beneficiary has promised its counterparty that it will only call on the security in certain circumstances. Equity will enforce that promise by an injunction, assuming it can be shown that damages are not an adequate remedy for the breach. In addition to quia timet injunctions, a mandatory injunction is available in principle, although there will often be powerful discretionary considerations telling against such relief. But neither Shinetec nor Shanxi ever sought such relief, either at trial or on appeal: at [12]-[13], [141]-[146].
Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; 249 ALR 458, Dedert Corporation v United Dalby Bio-Refinery Pty Ltd (2017) 59 VR 607; [2017] VSCA 368, Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021, Merton v Bank of Queensland Ltd [2013] NSWCA 68 and Tavcol v Valbeet [2014] NSWSC 1563, followed and applied.
(3) The appointment of receivers to a beneficiary does not change the beneficiary’s name. Nor does it mean that the receivers are authorised transferees of the beneficiary. The receivers act as agents of the company, getting in the company’s property. When the Bank of China received confirmation from Gosford’s bank that the demand was made on Gosford’s letterhead and on its behalf, albeit signed by receivers acting for Gosford, there was no proper basis for the Bank of China not to comply, save for the order made by the Taiyuan Intermediate People’s Court: at [14], [163]-[172].
Australian Mutual Provident Society v George Myers & Co Ltd (in liq) (1931) 47 CLR 65; [1931] HCA 31 and Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407; [1997] HCA 37, applied.
(4) The order obtained by Shanxi from the Taiyuan Intermediate People’s Court which “suspended” the Bank of China’s obligation to pay under the standby letter of credit did not extinguish the debt owed by the Bank to Gosford. It merely prevented the Bank from making payment for the time being. The order was interlocutory, expressed in the language of “suspending”, was made without hearing from Gosford, and made it plain on its face that after the suspension expired, the Bank would have to pay: at [15], [182]-[190].
(5) When Shanxi sued Gosford in China, Shanxi said that Gosford had committed fraud. At trial in Australia, Shinetec disavowed any allegation of fraud. On appeal, neither Shinetec nor Shanxi maintained that Gosford or anyone acting on its behalf had committed fraud. Nonetheless, in this Court, Shinetec and Shanxi insisted that they were permitted to litigate in China irrespective of the outcome of the litigation in Australia. The parallel proceedings maintained in Australia and China were a clear case of an abuse of process: at [16]-[18], [191]-[197].
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 393-394; [1997] HCA 33 and Carron Iron Company v Maclaren (1955) 5 HL Cas 416; 10 ER 961, followed and applied.
JUDGMENT
1. THE COURT: The Gosford Pty Ltd (“Gosford”) and Shinetec (Australia) Pty Ltd (“Shinetec”) were parties to a “Design and Construction Head Contract”, which provided that Shinetec would fund the first $37,000,000 of construction costs of a property development in Gosford, New South Wales. Shinetec agreed to provide a standby letter of credit in the amount of $37,000,000 to secure its funding obligation. Shinetec’s parent company, Shanxi Construction Investment Group Co Ltd (“Shanxi”), procured a standby letter of credit in that amount in favour of Gosford from the Bank of China Ltd, Shanxi Branch. The standby letter of credit expired on 31 July 2021. On 26 July 2021 receivers were appointed to Gosford by a secured creditor (Gemi 149 Pty Ltd). The receivers served a demand on the standby letter of credit on Bank of China on Friday 30 July 2021. The standby letter of credit and the demand are annexed to this judgment.
2. Some three years later, Bank of China has neither honoured nor dishonoured that demand. That is not said by way of criticism of the Bank. It came about because on Monday 2 August 2021, Shinetec sought and obtained interlocutory relief from the Supreme Court of New South Wales, and on the same day Shanxi applied for relief from the Taiyuan Intermediate People’s Court, obtaining an order suspending payment the following day. The orders made by the Supreme Court of New South Wales were made ex parte, and remained in force for a few days, but thereafter continued, consensually, pending the trial, against parties other than Bank of China. The orders made by the Taiyuan Intermediate People’s Court were also made ex parte. They have been extended subsequently, and presently remain in place until 24 July 2024. They have at all times bound the Bank of China. In March 2023, Bank of China itself approached the Shanxi Higher People’s Court to seek a revocation of the orders, but its application was refused.
3. Two proceedings were tried over three days last November in the Commercial List of the Supreme Court of New South Wales.
1. First, Shinetec by summons sued Gosford, its receivers and their bank Macquarie Bank Ltd, seeking to maintain that there was no entitlement to serve the demand on Bank of China. Shinetec had originally joined Bank of China but withdrew its claim against that Bank well before trial. Shinetec did not contend that Gosford or anyone acting on its behalf had committed fraud when making a demand on the standby letter of credit. Shinetec sought a declaration that the demand was “invalid and of no effect” and an order that the standby letter of credit be returned.
2. Secondly, Gosford by a cross-claim sued Bank of China. Gosford said that Bank of China was in breach of its obligations under the standby letter of credit. It sought judgment in the amount of the standby letter of credit, $37,000,000. The Bank’s defences relied on the demand being signed by Gosford’s receivers, and the order of the Taiyuan Intermediate People’s Court. It did not allege fraud.
4. The primary judge dismissed Shinetec’s case and entered judgment on the cross-claim in favour of Gosford against Bank of China: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405.
5. The Bank of China has not appealed from the $37,000,000 judgment entered against it. However, on 14 March 2024 Shinetec appealed (within the time permitted by the Uniform Civil Procedure Rules 2005 (NSW)), and it was subsequently permitted to join as the second appellant its parent company Shanxi, which had obtained the standby letter of credit, and to which the Bank of China would look for payment following a demand.
6. Normally an appellant submits that the primary judge was wrong to reject its submissions. Unusually, a substantial aspect of this appeal concerns arguments sought to be advanced by Shanxi and Shinetec which were not advanced by Shinetec at trial. In particular, Shanxi and Shinetec contend that Gosford’s demand on the standby letter of credit was invalid, or void, or of no effect because Gosford was subject to an “implied negative stipulation” in the Construction Contract that was breached when the demand was made.
7. At the commencement of the hearing at first instance, and again at its conclusion, senior counsel who appeared for Shinetec at trial had sought to make that argument, but Shinetec was refused leave to do so. Shinetec and Shanxi also sought to advance in their appeal substantially the same arguments which had been made on behalf of Bank of China in response to Gosford’s cross-claim concerning why the Bank was not required to make payment pursuant to the standby letter of credit. Gosford said that Shinetec should not be permitted to make arguments which it had not been permitted to make at trial, nor should Shinetec and Shanxi be permitted to make arguments which had been made by Bank of China but which the Bank chose not to make in this appeal.
8. The facts that Shanxi was not party to the proceedings at first instance and that Shinetec seeks to advance different arguments which had not been run at trial mean that a deal of the parties’ submissions on appeal are procedural. We shall address them in due course. Unfortunately, the need to describe aspects of the procedural history of this litigation necessarily lengthens these reasons. Indeed, the parties’ submissions about whether the appellants should be permitted to run new submissions occupied at least as much time at the hearing of the appeal as submissions about the substantive points themselves. We have concluded that Shinetec and Shanxi should not be permitted to run those arguments, because some were outside the issues argued and others were disavowed by Shinetec at trial. However, against the possibility that we are wrong, and because it is better that the parties’ dispute be resolved substantively, rather than merely by reason of the procedural choices made along the way, we have also considered the arguments on their merits.
9. We have also concluded that the substantive arguments advanced by Shinetec and Shanxi are without foundation. They misapprehend when a demand on a letter of credit can be resisted, the nature of the appointment of receivers and the nature of interlocutory relief.
10. The relevant law is not especially complicated.
11. First, it was not contended either at trial or in this appeal that there was any fraud or unconscionability on the part of Gosford or its receivers when it made its demand. Even if Gosford had promised to Shinetec that it would only call on the standby letter of credit in certain circumstances, that did not mean that its call on the letter of credit was invalid or void or of no effect. As between the beneficiary of the standby letter of credit and the issuing bank, it is not to the point that a beneficiary of a letter of credit is in breach of contract when it makes a demand. It is axiomatic that absent fraud or unconscionability, the bank must pay if the documents presented are compliant. Of course, if the beneficiary is in breach, it will be liable in damages to its contracting party, but that gets determined at a trial, and is not a reason for the bank not to comply with its undertaking to pay. Any other position is antithetical to the basic notion of a standby letter of credit.
12. Secondly, it is also true that, in the absence of fraud or unconscionability, an injunction may issue to prevent the beneficiary of a standby letter of credit from making a demand, where the beneficiary has promised only to make a demand in certain circumstances. Decisions to that effect were at the forefront of Shinetec’s and Shanxi’s submissions in this Court. But equity intervenes to prevent the demand being made, not because it is invalid (or “void” or “of no effect”) as between beneficiary and bank, but because the beneficiary has promised its counterparty that it will only call on the security in certain circumstances. Equity will enforce that promise by an injunction, assuming it can be shown that damages are not an adequate remedy for the breach. Most of the cases are cases of quia timet injunctions – where an injunction has issued before the demand has been made. There are occasional cases where an injunction has issued shortly after a demand has been made obliging the beneficiary to withdraw its demand, and we accept that in principle equity may command a beneficiary to withdraw or countermand its demand upon the issuing bank. But neither Shinetec nor Shanxi ever sought such relief, either at trial or on appeal.
13. Thirdly, the result is that when a compliant demand is presented upon a bank which has issued a standby letter of credit, in the absence of an allegation of fraud or unconscionability or an injunction, it must pay in accordance with its undertaking. This is the basal flaw in much of Shinetec’s submissions at trial, and much of the submissions of Shanxi and Shinetec on appeal.
14. Fourthly, the appointment of receivers to a beneficiary does not change the beneficiary’s name. Nor does it mean that the receivers are authorised transferees of the beneficiary. The receivers act as agents of the company, getting in the company’s property. When the Bank of China received confirmation from Gosford’s bank that the demand was made on Gosford’s letterhead and on its behalf, albeit signed by receivers acting for Gosford, there was no proper basis for the Bank of China not to comply, save for the order made by the Taiyuan Intermediate People’s Court.
15. Fifthly, the order obtained by Shanxi from the Taiyuan Intermediate People’s Court which “suspended” the Bank of China’s obligation to pay under the standby letter of credit did not extinguish the debt owed by the Bank to Gosford. It merely prevented the Bank from making payment for the time being. The order was interlocutory, expressed in the language of “suspending”, was made without hearing from Gosford, and made it plain on its face that after the suspension expired, the Bank would have to pay.
16. Finally, when Shanxi sued Gosford in China, Shanxi said that Gosford had committed fraud. At trial in Australia, Shinetec disavowed any allegation of fraud. On appeal, neither Shinetec nor Shanxi maintained that Gosford or anyone acting on its behalf had committed fraud. Nonetheless, in this Court, Shinetec and Shanxi insisted that they were permitted to litigate in China irrespective of the outcome of the litigation in Australia.
17. Thus there are parallel proceedings in Australia and China, commenced on the same day by Shinetec and Shanxi, respectively, against Gosford. In Australia there has been a trial and an appeal, and there has been no allegation of fraud. Yet in China, Shanxi has alleged that Gosford has committed fraud, and relied on that basis in order to obtain orders suspending its bank’s obligation to make payment to Gosford under the standby letter of credit. Shinetec and Shanxi maintain that they are permitted to litigate the validity of Gosford’s demand in Australia without alleging fraud, and yet reserve to themselves an entitlement to run a further trial in China on the validity of Gosford’s demand, this time on the basis that there is fraud.
18. Gosford said that this was an abuse of process. Shinetec and Shanxi said that there was no abuse of process. We agree with Gosford. Indeed, we regard this as a very clear case. Litigants are not permitted to bring parallel proceedings in two countries, and litigate some but not all of the issues in one country, reserving to themselves the right to litigate other aspects of the dispute in the second country. Doing so is unfair to other parties, and if left unchecked may bring the legal systems of both countries into disrepute.
19. The foregoing summarises our reasons for dismissing this appeal. The balance of these reasons takes the following form. First, we summarise the factual background, and then explain in some detail the events at the end of July and the beginning of August 2021 in which receivers were appointed to Gosford, a demand was made on the standby letter of credit, and the litigation commenced in New South Wales and China by Shinetec and Shanxi. Secondly, in light of the submissions to the effect that the case advanced on appeal diverged from what was run at trial, we summarise aspects of the trial. Thirdly, we summarise those parts of the reasons of the primary judge insofar as they are relevant to the appeal. Fourthly, we address each of the grounds of appeal pressed by Shanxi and Shinetec.
Factual background
20. The dispute arises from a failed property development of land in central Gosford owned by the first respondent, Gosford. (Subsequent to the events giving rise to this litigation, in around June 2022 the land was sold to a third party for $32,000,000.)
21. Gosford had the benefit of a development consent described as “Approved Mixed Use Development, Commercial/Retail, Supermarket, Hotel and Shoptop Housing Development”, granted by the local council. By letter dated 18 November 2019, the council modified that consent pursuant to s 4.55(1A) of the Environmental Planning and Assessment Act 1979 (NSW) (being of the view that doing so was a minor modification able to be done without further public consultation), so as to permit certain development, including “demolition of existing structures” to occur prior to the issue of a construction certificate.
The Construction Contract
22. By “Design and Construction Head Contract” made on 15 June 2020 (“Construction Contract”), Gosford as “Principal” agreed with Shinetec as “Contractor” to design and construct the development. The “Formal Instrument of Agreement” stated that the Guaranteed Maximum Price (or GMP) was $185 million plus GST, and the rights, entitlements, liabilities and obligations of the parties were suspended until all conditions precedent were satisfied. One of the conditions precedent was “the Principal securing finance (on terms acceptable to the Principal) sufficient to meet the finance amount”.
23. Clause 37.1A, titled “Contractor funded payment”, acknowledged and agreed that:
pursuant and subject to the terms of a separate agreement between the Contractor and the Principal, the Contractor has agreed to fund the payment of the first part of the GMP and direct design or construction-related costs of variations (but not Contractor additional entitlements), to the amount in the aggregate of the funding amount”.
24. The “funding amount” was defined to be the amount in item 6A of an annexure. That definition took the following form:
$37,000,000 (plus GST) and the parties acknowledge and agree that:
(a) the Contractor shall provide a stand-by letter of credit (SBLC) in favour of the Principal from its parent company or nominee for the purpose of securing the Contractor’s obligation to finance that part of the Works to which the funding amount applies;
(b) the Principal must return the SBLC to the Contractor upon the earlier to occur of:
(i) the termination of the contract;
(ii) the whole of the funding amount being deemed to have been paid to the Contractor in accordance with clause 37.2(d).
25. The words “Terms & Conditions of funding subject to the loan agreement” were written in hand immediately after that definition.
The Loan Agreement
26. So far as the evidence disclosed, there was no extant loan agreement at the time the Construction Contract was entered into. A “Loan Agreement” dated 26 November 2020 identified the development site and its purpose was to assist with Gosford’s construction funding for that site. The Loan Agreement referred to an entitlement on the part of Gosford as borrower to draw down funds from time to time for the loan purpose. It was in the amount of $37,500,000 but nothing was said to turn upon the $500,000 discrepancy.
27. Returning to the Construction Contract, cl 37.2 referred in broadly familiar terms to the making of progress claims and their assessment by a superintendent, following which they were to be paid. However, cl 37.2(d) provided:
prior to the application of the whole of the funding amount in accordance with clause 37.1A(a), be deemed to have paid to the Contractor the amount of the progress certificate as relates to the GMP and direct design or construction-related costs of variations (but not Contractor additional entitlements);
28. The appellants maintained that the Construction Contract and the Loan Agreement were to be read together. When Shinetec performed construction work and made a progress claim, the effect of cl 37.2(d) was to deem there to have been a payment by Gosford of the amount, as well as a draw down notice under the Loan Agreement pursuant to which Shinetec would be paid using its own funds. The practical effect of the deeming for which Shinetec contended is that, for the first $37,000,000 of work done by Shinetec for Gosford, it would be taken to have been paid by monies borrowed by Gosford from itself, and would emerge as if those progress claims had been paid in full but nonetheless Gosford owed Shinetec that amount under the Loan Agreement.
29. That construction is not without its difficulties, not least insofar as its effect appears to be to circumvent the regime established by the Building and Construction Industry Security of Payment Act 1999 (NSW), but they were not the subject of argument and may be passed over for present purposes. We proceed on the basis of the operation of the Construction Contract and Loan Agreement for which the appellants contend, noting that in any event, nothing turns on this.
The standby letter of credit
30. The definition of funding amount in item 6A of the annexure of the Construction Contract not merely identifies the amount of $37,000,000 plus GST, but also includes an acknowledgement and an executory promise by each party. The drafting is less than ideal, but the meaning is clear.
31. Shinetec complied with its obligation to provide a standby letter of credit, and it is the call upon that letter of credit which gives rise to this dispute. Its parent Shanxi applied to the Bank of China, Shanxi Branch. Its application included, as part of what was described as a “solemn commitment”, the following:
We are fully aware of the risks under the Standby Letter of Credit and understand that this falls under the category of cross-border guarantee. Where there is a claim, an advance will be paid by you first and reflected in our company’s credit information. We are will to bear all the risks that may result from this.
32. The standby letter of credit had a transaction reference number of “GC0377020000874”. It was addressed to “The Gosford Pty Limited (ACN 630 253 557)” and then stated Gosford’s address in Sydney. It stated that “Bank of China Ltd, Shanxi Branch”, hereinafter called the “Guarantor”, “have agreed to give the standby letter of credit on behalf of the Contractor”. The Contractor was defined to be Shinetec. There followed:
Therefore, we hereby affirm that we are responsible to you, on behalf of the Contractor, up to a total amount of AUD37,000,000.00 (say Australian dollars thirty seven million only), and we undertake to pay you unconditionally and independently upon our receipt of your first written demand in original paper form declaring the Contractor fails to perform its obligations under the contract and specifying in which respects the Contractor is in failure and amount claimed.
33. The standby letter of credit also provided:
For the purpose of identification, any such demand in original should be presented to us through your bank confirming that the signatures thereon are authentic with their confirmation by authenticated SWIFT.
34. The reference in that passage to “your bank” was a reference to Gosford’s advising bank, Macquarie Bank Limited. Macquarie Bank sent the Bank of China such a confirmation on 30 July 2021.
35. The standby letter of credit was said to be “only personal to you and is not assignable or transferable”. It was expressed to be subject to “ISP 98”, which is a reference to “International Standby Practices 98”, being rules issued by the International Chamber of Commerce in 1998. This Court (coincidentally including two of the judges hearing the present appeal) considered the operation of those rules upon a standby letter of credit in Griffin Energy Group Pty Ltd (Subject to Deed of Company Arrangement) v ICICI Bank Ltd [2015] NSWCA 29; 317 ALR 395. It was common ground between the experts on Chinese law that the wording was sufficient to incorporate those provisions.
36. The standby letter of credit made no provision for its governing law. The primary judge considered that Chinese law was the proper law, reflecting the legal system with which it had the closest connection. No party challenged that finding.
37. The standby letter of credit was expressed to expire on, relevantly, 31 July 2021.
The events leading up to the demand on the standby letter of credit
38. Following the modification of the development consent, various work including demolition occurred on the site and two progress claims were lodged by Shinetec and approved by the superintendent. They were in the amounts of $3,193,225.42 (including GST) and $2,035,668.23 (including GST), and were dated 4 December 2020 and 21 January 2021 respectively.
39. Work thereafter ceased and an exchange of correspondence including show cause notices ensued. No fewer than three sets of receivers were appointed to Gosford. The circumstances in which the first appointment occurred were not fully explained in the evidence, but the appellants said, seemingly uncontroversially, that they were appointed “by a party unrelated to this litigation”. Shinetec appointed Messrs Albarran and Kijurina as receivers and managers of Gosford on around 6 April 2021 seemingly pursuant to an unregistered second mortgage. However, on 26 July 2021 the second and third respondents were appointed receivers, pursuant to a first ranking registered mortgage granted by Gosford in favour of its lender, Gemi 149 Pty Ltd. Correspondence between the receivers was to the effect that the latter, appointed by a first ranking secured creditor, displaced the former; a position which accords with what was said in comparable circumstances in In re Metropolitan Amalgamated Estates Ltd; Fairweather v Metropolitan Amalgamated Estates Ltd [1912] 2 Ch 497 at 502 (“It is clear, however, that notwithstanding the order appointing Whitehill, the first mortgagees were entitled to come in and displace him”). In any event, no challenge was made to the validity of their appointment. The receivers appointed by Gemi 149 caused the demand upon the standby letter of credit to be made. It was common ground that the demand was served on the Shanxi Branch of the Bank of China on 30 July 2021.
40. The demand was a lengthy document, as may be seen from the attachment to these reasons. It concluded as follows:
DEMAND
A. This letter of demand is being presented by and on behalf of Gosford to the counter at the BOC branch at No. 186 Pingyang Rd, Taiyuan, Shanxi Province, being the branch named in the Letter of Credit.
B. Gosford’s bank, Macquarie Bank, has duly confirmed via SWIFT that the signatures on the letter of demand are authentic.
C. This letter constitutes a demand upon your bank to comply with the unconditional and independent undertaking to Gosford in the Letter of Credit to pay the sum of AUD37 million forthwith.
D. This demand is being presented with the original of the Letter of Credit which shall remain in the possession of Gosford’s representative.
E. Your bank is authorised to make the payment by either delivering to Gosford’s representative a bank cheque made out to Gosford for the sum of AUD 37 million or alternatively by EFT to:
Account name: The Gosford Pty Ltd (Receiver and Manager Appointed)
BSB: [XXXXXX]
Account no: [XXXXXX]
Swift Code: [XXXXX]
In the case of the latter, it is a condition that your bank must provide written details of a completed transfer to Gosford’s representative before the representative leaves the branch.
41. The demand was headed as being made by “The Gosford Pty Ltd (Receivers and Managers Appointed)”. It was signed by each of the Receivers as “Joint Receiver & Manager” on behalf of “The Gosford Pty Ltd (Receivers & Managers Appointed)”. It used, including in the passage reproduced above, the term “Gosford”, defined to mean “The Gosford Pty Limited (ACN 630 253 557)”.
42. By SWIFT message dated 30 July 2021, Macquarie Bank confirmed:
In accordance with the terms of the standby letter of credit No. GC0377020000874, for the purpose of identification, as the bank for the named beneficiary, The Gosford Pty Limited (ACN 630 253 557) [address], on a bank-to-bank basis via SWIFT, we confirm that the signatures on the attached original demand made by the beneficiary (The Gosford Pty Limited (ACN 630 253 557)) under the standby letter of credit No. GC0377020000874 have been sighted by us and are authentic signatures of the officers of The Gosford Pty Limited (ACN 630 253 557).
The steps taken thereafter in Australia
43. On Monday 2 August 2021, Shinetec approached the Duty Judge in the Equity Division of the Supreme Court of New South Wales ex parte, appearing by solicitor and counsel. As is usual in this country, orders were made on an interim basis, meaning that they expired of their own force on Friday 6 August unless renewed beforehand, and the onus lay on Shinetec to demonstrate a sufficient reason for their continuation. This was explained by McLelland J in Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 and confirmed in Minister for Local Government v Blue Mountains City Council (2018) 97 NSWLR 1132; [2018] NSWCA 133 at [47]. As is usual in this country, orders were made requiring all five defendants (Gosford, its receivers, Macquarie Bank and Bank of China) to be served promptly with all of the material relied on by Shinetec. As is usual in this country, Shinetec gave the “usual undertaking as to damages”, exposing it to an unlimited liability to anyone (including third parties) if it turned out that the injunctive relief should not have been given and loss was thereby sustained. On that basis, Shinetec obtained temporary orders preventing Gosford, the receivers, the Bank of China and Macquarie Bank from taking any further steps on the demand, or from issuing any further demand. The orders are quite elaborate, including eight substantive injunctions, but all deal with the transfer of money pursuant to the demand and any future demand. All that presently matters is that none required Gosford or its receivers to withdraw or countermand the demand.
44. On the same day, Shanxi approached the Taiyuan Intermediate People’s Court, filing a civil complaint. The defendant was Gosford, and Bank of China Shanxi Branch was identified as the “third party”. As translated, the “Complaint reason” was “Dispute over fraud in relation to letter of credit” and the “Claims” were:
1. The Plaintiff requests to affirm the act of Defendant that demanding Third Party to pay RMB 177 million (AUD 37 million) under a standby letter of credit No. GC0377020000874 has constituted fraud in relation to letter of credit;
2. The Plaintiff requests an order that the Third Party terminate the payment of RMB 177 million (AUD 37 million) under the standby letter of credit No. GCO377020000874;
3. The Defendant shall be responsible for the cost of this proceeding.
45. As translated, the “Facts and Grounds” for the proceeding referred to the Construction Contract and the standby letter of credit, and then stated as follows:
After signing the contract, Shinetec had been actively performing its obligations under the contract and commenced on the site on 2 December 2020. As the Defendant did not have funds to pay relevant fees required by the Council of Gosford for the Development Application, a Construction Certificate was not issued and as a result Shinetec was unable to carry on the construction. On 8 February 2021, Shinetec issued to the Defendant a suspension notice of construction, to which the Defendant did not object. On 26 March 2021, Shinetec received a notice that due to the Defendant’s indebtedness on other projects, the Defendant was unable to perform the contract financially and therefore, the construction contract was terminated. The act of the Defendant has fundamentally breached the contract, and the Defendant shall assume the legal liabilities.
The Defendant, knowing that the payment conditions of the standby letter of credit were not satisfied, and that the standby letter of credit should be returned due to the termination of the construction contract as a result of its breach of contract, still requested the Third Party to make the payment as per the letter of credit. This is an abuse of right to request payment knowing that it did not have such a right, which has constituted fraud in relation to the letter of credit and significantly infringed the Plaintiff's legitimate rights and interests. In accordance with the Provisions of the Supreme People’s Court on Some Issues Concerning the Trial of Cases of Dispute Over Letter of Credit, the Plaintiff has submitted the claims to the Court, and requested orders be made as pleaded.
46. It is not clear whether it was Gosford’s sole director Mr Walker, or the receivers Messrs Hurst and Sampson, or all of them, who were alleged to have known that when they caused Macquarie Bank and their solicitors to present the demand, they had no entitlement to do so and were committing a fraud. During the hearing of the appeal, members of the Court asked, and Mr Gleeson SC who appeared for Gosford and the receivers asked, repeatedly, if proper particulars of fraud had ever been provided. The appellants’ response was to point to the translation reproduced above. To be fair, there is also a similarly worded letter from Shanxi to the Bank of China Shanxi Branch, which relevantly states:
The counterparty has no right to make the claim, and such claim is malicious. According to Clause 6A of the Contract, this letter of credit is a guarantee for advance and is not linked to contract performance; clause 5.2 of the Contract specified that the owner shall withdraw and return the letter of credit when the construction is suspended. The owner confirmed that the contract was suspended before the company was taken over. The creditor abused the right to demand payment under the letter of credit after taking over Gosford.
…
We request the Bank to consider our opinion, review again, and apply appropriate reasons to return the demand and protect the interests and security of overseas state-owned enterprises.
47. On 3 August 2021, the Taiyuan Intermediate People’s Court issued a “Civil Ruling”. A copy of the original ruling was in evidence, and two translations of it. The entirety of the material parts of the ruling, in the translation favoured by the appellants, was as follows:
After review of the dispute, the Court considered that the Applicant Shanxi Construction Investment Group Co., Ltd’s application to suspend payment to the letter of credit complied with the law. According to the provisions of Article 100 of Civil Procedure Law of the People’s Republic of China and Article 12 of Provisions of the Supreme People’s Court on Some Issues Concerning the Trial of Cases of Dispute Over Letter of Credit, it is ruled as follows:
To suspend the payment of RMB 177 million (AUD 37 million) under the standby letter of credit No. GC0377020000874 issued by the third party Bank of China Limited Shanxi Branch with the respondent THE GOSFORD PTY LIMITED as the beneficiary.
This ruling will be enforced immediately upon service.
48. There was also an “Enforcement Assistance Notice” issued to the Bank of China, Shanxi Branch. It, like the Civil Ruling, was sealed by the Taiyuan Intermediate People’s Court. Once again according to the translation preferred by the appellants, it stated:
To Bank of China Limited Shanxi Branch:
Whereas: The Civil Ruling ((2021)JIN01 MlNCHU No.809) has already taken legal effect, that in relation to the dispute of Shanxi Construction Investment Group Co., Ltd, The Gosford Pty Limited and Bank of China Limited Shanxi Branch over fraud in relation to letter of credit, to suspend the payment of RMB 177 million (AUD 37 million) under a standby letter of credit No. GC0377020000874 issued by the third party Bank of China Limited Shanxi Branch with the respondent THE GOSFORD PTY LIMITED as the beneficiary.
Please suspend the payment for 12 months from 4 August 2021 to 4 August 2022.
Where the suspension is expired or the freezing is revoked, the payment may resume.
…
Enclosure: (2021) JIN01 MINCHU No.809 Civil Ruling
49. Both the Civil Ruling and the Enforcement Assistance Notice referred to the allegation of fraud by Shanxi against Gosford. The appellants’ preferred translation of the Civil Ruling recorded that the application was made “on the reason of existing fraud in relation to letter of credit”, and the Enforcement Assistance Notice referred to the dispute “over fraud in relation to letter of credit”. If there was evidence accompanying Shanxi’s application, it was not made available to this Court. The documents do not suggest that there was any evidence supplied, or any perceived need to give reasons for the ruling beyond that it complied with the provisions of two Chinese statutes.
50. The Civil Ruling was not expressed to be limited in time. The Enforcement Assistance Notice requested payment to be suspended for 12 months, until 4 August 2022. This Court was told that the suspension has subsequently been extended, and currently expires on 24 July 2024. This Court was also told that Gosford had not to date been served with process from the Chinese Court.
51. In Australia, an ex parte application is accompanied by an obligation of candour, whereby the moving party is required to point out any salient matter which might tell against the granting of relief. This Court said in Young v Cooke [2017] NSWCA 33 at [27], citing High Court authority, that:
A party making an application to the Court ex parte is bound by a duty of candour and “the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all material facts which that party would presumably have brought forward in his defence to that application”. (Footnotes omitted.)
52. It is unclear whether there is a similar obligation in China. It is also unclear whether there is an equivalent of the usual undertaking as to damages.
53. All competent Australian legal practitioners are aware of the obligations to which they are subject before alleging fraud. In Odtojan v Condon [2023] NSWCA 129 at [30], two of us restated, by reference to an earlier decision of this Court, the nature of those obligations:
In the pleading of fraud, some requirements of the law are clear beyond argument. These requirements are not only rules of pleading and practice established by decisions of the courts. They are rules of ethical conduct binding on members of the legal profession. It is a serious matter to allege fraud against a party in pleadings to which attach the privileges incidental to court proceedings. Reports of such allegations may be recounted in the community and through the public media. They may do great harm to a party before a word of evidence has been offered and submitted to the searching scrutiny of cross-examination or to rebuttal. It is for this reason, amongst others, that legal practitioners must take care to have specific instructions and an appropriate evidentiary foundation, direct or inferred, for alleging and pleading fraud. We say inferred, because it will sometimes be impossible to prove fraud by direct evidence. The tribunal of fact may be invited to draw an irresistible inference of fraud from the facts proved. Of its nature, fraud is often perpetrated covertly. The perpetrators of fraud will often take pains to cover their tracks.
Professional discipline may follow if allegations of fraud are made where the foregoing conditions are not satisfied. By such means, courts protect their process from the abuse which would follow from the too ready assertion of fraud against a party, in circumstances where it could not be proved to the high standard required of such allegations.
54. It is unclear whether the same strictures against alleging fraud as apply in Australia apply in China. Indeed, to be fair, it is unclear whether any lawyer was involved in Shanxi’s application to the Taiyuan Intermediate People’s Court. So far as appears from the original documents and their translations in the appeal books, it seems that Shanxi itself wrote directly to the Court under its own seal. In contrast, a company is not permitted without leave to file an originating process in the Supreme Court of New South Wales in its own name as the sole plaintiff unless it does so by a legal practitioner: UCPR, r 7.1(2).
55. To be quite clear about it, we have made the foregoing observations contrasting the procedures in New South Wales and China not with a view to saying that one jurisdiction is better or worse than another, but in order to provide some explanation for what occurred in each place, which may assist readers who are familiar with one jurisdiction and not another.
Other events prior to trial
56. As noted above, the proceedings pending in the Taiyuan Intermediate People’s Court remain undetermined. There is some evidence that attempts have been made, in early 2024, to serve Gosford. This Court was told that service had not as yet been effected. The orders suspending payment on the standby letter of credit have repeatedly been extended.
57. The proceedings in the Supreme Court of New South Wales returned to the Duty Judge later that week, and on 13 August 2021 the interlocutory orders were continued until further order by consent, once again upon Shinetec by its counsel giving the usual undertaking as to damages. On the same date the proceedings were transferred into the Commercial List.
58. It is not quite clear why it took slightly more than two years for the proceedings to be listed for trial. In part it was a consequence of an unsuccessful application for a stay by Bank of China, based on forum non conveniens principles. The Bank’s motion was filed on 10 October 2021, heard on 1 February 2022 and dismissed for reasons occupying 107 paragraphs on 4 February 2022: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd [2022] NSWSC 59. In part it will have been because the dispute extended to a number of issues of Chinese law, leading to Shinetec and Gosford retaining experts. In part it was because both Shinetec and Gosford advanced claims for damages which were withdrawn before the trial. We are not seeking to attribute blame for the delay between the resolution of the application for a stay in February 2022 and the hearing in October 2023. We wish merely to note that in circumstances where injunctive relief had been obtained preventing payment pursuant to a letter of credit, one would ordinarily have expected the proceedings to have been listed for hearing more swiftly than occurred.
59. One other matter which occurred prior to trial should be noted. In March 2023, the Bank of China approached the Shanxi Higher People’s Court to seek a revocation of the Civil Ruling made by the Taiyuan Intermediate People’s Court. The ruling of that Court was in evidence, as was a translation. The latter records that the Bank submitted that its standby letter of credit was “in essence an independent guarantee”, that the terms of the Chinese statutes were not met, in that contrary to Article 14 of the PRC Independent Guarantee Provisions, “Shanxi Construction Investment failed to sufficiently prove the existence of a high probability of fraud described in Article 12 of the PRC Independent Guarantee Provisions”. The entirety of the reasoning of the Court (as opposed to reproducing the background and Bank of China’s submissions) was as follows:
After examination, the Court believed that the application for suspension of payment of the subject standby letter of credit by Shanxi Construction Investment Group Co., Ltd. was in compliance with the provisions of PRC law, the application of law of the (2021) Jin 01 Min Chu No. 809 Civil Ruling made by the Taiyuan Municipal Intermediate People’s Court was correct. The Australian court also rules to suspend payment under the subject standby letter of credit. The suspension of the payment under the subject standby letter of credit is conductive [sic] to protecting the legitimate rights and interests of the parties.
According to the provisions of Article 157 of the Civil Procedure Law of the People’s Republic of China and Article 13 of the Supreme People’s Court on Several Issues concerning the Trial of Letter of Credit Dispute Cases, the Court rules as follows:
The request for reconsideration made by Bank of China Shanxi Branch shall [be] rejected.
60. We note, lest the position be misunderstood, that the Supreme Court of New South Wales had not “ruled” that there be any suspension of payment pursuant to the standby letter of credit. Orders which had initially been made ex parte for a period of four days were thereafter extended by consent pending trial.
The trial of Shinetec’s summons
61. In light of grounds 1 and 4 of the appeal, it is necessary to summarise some aspects of the case presented by Shinetec at trial.
62. The trial commenced on Wednesday 25 October 2023 and the evidence was complete on Thursday 26 October. As is usual in the Commercial List, the parties had supplied written submissions in support of their cases in advance of the trial (they were dated 20 October). The parties provided written submissions in advance of oral addresses on Monday 30 October. The parties were also granted leave to supply supplementary submissions shortly after the trial, the last of which was supplied on 7 November.
Shinetec’s case at trial
63. Shinetec’s case at trial was that the demand upon the standby letter of credit was invalid. It sought a declaration that the demand was “invalid and of no effect”, and an order for the return of the letter of credit. In its opening written submissions, dated five days before the trial commenced, it abandoned its claim for damages.
64. Shinetec’s further amended summons, filed 3 April 2023, which was the form of the originating process which went to trial, joined Gosford as the first defendant, the receivers as the second and third defendants, and Macquarie Bank as the fifth defendant. There was no fourth defendant. Although Bank of China had originally been joined, Shinetec did not proceed against Bank of China at trial. Bank of China was present at trial, but only as a cross-defendant on Gosford’s cross-claim.
65. At the commencement of a submission made after the conclusion of the trial, Shinetec explained that its decision not to sue Bank of China was deliberate, and that it affected the relief that it sought:
2. It is important to note that when the CLS [Commercial List Statement] was filed on 8 September 2021, Bank of China was not a party to the proceedings. Bank of China has never been a party to the primary proceedings brought by Shinetec and was only subsequently sued in the Cross-Claim, a proceeding to which Shinetec is not a party.
3. Plainly, a declaration as to invalidity could not bind a non-party, namely the Bank of China. In any event, the absence of a contractual entitlement under the Construction Contract between Shinetec and The Gosford to make the Demand could not affect the validity of the Demand as against the Bank of China. Shinetec has been clear about that. If that was what was intended by the CLS, at the very least Bank of China would have been a party.
4. However, when the CLS was filed, separate proceedings were already on foot in China against The Gosford and the Bank of China in which the Bank of China had already been restrained from making any payment pursuant to the SBLC.
5. In those separate Chinese proceedings, Shinetec’s parent was already seeking to impugn the Demand on the basis of fraud: see the Civil Complaint at Ex 1/CB 15/5265-5267. No allegation of fraud has ever been made here and it is common ground that such an allegation is required to seek to set aside a demand as against a bank.
6. The claims made in the Chinese proceedings against The Gosford and Bank of China and the injunctive relief already granted there explain why the same case was not being prosecuted by Shinetec here. It was unnecessary and, importantly, the bringing of such a parallel case here would have been inappropriate and open to claims of it being an abuse and subject to a stay: Henry v Henry (1996) 185 CLR 571 at 590–591.
66. Shinetec’s claim that the demand was “invalid” had two bases:
1. first, an allegation that there were false, but not fraudulent, statements in the demand from Gosford to the Bank of China, and
2. secondly, an allegation that the sole purpose of the standby letter of credit, as between Shinetec and Gosford, was to secure Shinetec’s obligation to advance $37,000,000 for the project, which obligation had been satisfied by Shinetec entering into the Loan Agreement for $37,000,000 (irrespective of performance under it).
67. The Commercial List Statement did not allege fraud. Shinetec’s position was made perfectly clear at the outset of the trial:
ZAHRA: …The Gosford disputes that the demand contained false statements.
HIS HONOUR: You just said “falsely made”, but you don’t allege fraud.
ZAHRA: No, we don’t allege fraud, your Honour.
HIS HONOUR: So falsely made; what do you mean, it’s factually incorrect?
ZAHRA: Correct, that’s right, and we’ve explained, your Honour, in paragraphs 68 to 81 of our opening written submissions that there are at least 13 reasons why the demand was invalid, and I’ll return to that shortly.
68. Gosford’s response was that: (a) even if false statements were made in the demand, provided they were not fraudulent, they could not invalidate the demand as between Gosford and the Bank of China; (b) even if, which was denied, Shinetec had fully satisfied the sole obligation which the standby letter of credit was to secure as between Shinetec and Gosford, that could not have any impact on the validity of the demand between Gosford and Bank of China.
69. Shinetec unsuccessfully attempted to amend its Commercial List Statement at the commencement of the trial to expand its case to allege the existence and breach of an implied negative stipulation of the construction contract. This was the subject of ground 5 of the appeal, and it is convenient to defer for the moment an account of what was said in support of and in opposition to that application.
70. Shinetec confirmed on 2 November 2023, following the close of oral submissions, that it had not brought a case of breach of contract. Its written submissions, signed by senior and junior counsel, included:
Shinetec did not bring a breach of contract case and it did not allege a breach of a negative stipulation in the Construction Contract. It was prevented from amending to plead and bring such a case. The Court will find no such case being advanced in any written or oral submissions made on behalf of Shinetec.
71. Shinetec’s position in its closing submissions was that it would obtain relief if it could establish either (a) that the demand was invalid as between Shinetec and Gosford, or (b) that Gosford was “not entitled” under the Construction Contract to make the demand which it did on the Bank of China.
Shinetec’s belated claim for injunctions
72. Extraordinarily, Shinetec submitted at the close of trial that the interim injunctions made by Lindsay J should remain in force until a final determination of the rights and obligations of the parties under the Construction Contract which, save for the demand, were not the subject of the proceedings. This was done in paragraphs 23 and 25 of its written submissions after the conclusion of evidence as follows:
23. Shinetec seeks the following relief:
(a) Declarations as set out in paragraphs 19, 20(a) and 20(b), above;
(b) An order for the return of the original SBLC (prayer 2 of the final relief claimed in the Further Amended Summons);
(c) Additionally, Shinetec submits that there should be no orders made disturbing or discharging the injunctions granted by Lindsay J on 2 August 2021 and extended (by consent) by Lindsay J on 13 August 2021 until further order – in particular orders 8, 9, 10, 11 and 14 made on 2 August 2021.
…
25. In relation to the injunctions granted by Lindsay J, those orders, inter alia, restrain The Gosford from transferring or dealing with any sum of money transferred to it by the Bank of China (see order 14 made on 2 August 2021). The injunctions were extended, with the consent of the Defendants, until further order of the Court. The Defendants have not foreshadowed any application to discharge or vary those orders and there would be no proper basis for doing so, particularly noting that there has been no final determination of the substantive rights and obligations, claims and counterclaims between the parties under the Construction Contract and there will be no such determination in these proceedings (other than in relation to the question of any entitlement to make the Demand).
73. There is no way of describing this other than to say that it was misconceived. To be sure, we did not understand that any attempt was made by counsel now retained by the appellants to defend this aspect of the case advanced by their predecessors. The fact that such a submission could be made at all warrants our making the following points.
74. The purpose of interlocutory relief is to maintain an appropriate position pending the final resolution of the parties’ rights at trial. There is never any occasion for a defendant to “foreshadow” an application to vary interlocutory relief at the conclusion of a final trial on all issues. If a plaintiff loses at trial, then it will ordinarily follow that it should never have been entitled to the interlocutory relief. It will also follow that the plaintiff may be exposed to a claim by the defendant or a third party on the usual undertaking as to damages.
75. Further, the course sought to be advanced by Shinetec was procedurally unfair. Its Commercial List Summons had, consistently with the standard form of that document, identified the relief it sought on an interlocutory basis and the relief it sought on a final basis. In the latter category was the declaration and order for the return of the standby letter of credit, but no other injunctive relief. (Also included in the final relief was a claim for damages, but that was abandoned in advance of trial.) The defendants were entitled to proceed on the basis articulated in Shinetec’s Commercial List Summons.
76. The notion that because interlocutory relief is expressed to be “until further order” means that it will survive a final hearing on all issues is simply wrong. The position was clearly explained by Parker J in Shun Sheng Pty Ltd v Lei (No 2) [2023] NSWSC 1623 at [25] and [28] in terms with which we respectfully agree:
If an injunction is obtained ex parte, it is made only on an interim basis. The onus remains on the plaintiff to justify the continuation of the injunction on the return date, when the defendant has been formally notified of the application and can appear to resist it. But once the defendant has had that opportunity, any continued injunction is usually granted on an interlocutory basis, that is, on the basis that it will apply until the court has given judgment following the trial. The “more usual” (Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [16]) form of order is to grant the injunction “until the hearing of the action or further order”. But sometimes only the words “until further order” are used.
…
After final orders are made, any interlocutory orders come to an end. If the plaintiff obtains final relief, an interlocutory injunction will be displaced by, or subsumed within, that final relief. If final relief is refused, an interlocutory injunction necessarily falls away.
77. As his Honour further observed, there are exceptions to the general rule set out above. But what was proposed on behalf of Shinetec at trial was squarely contrary to the general rule and ordinary practice of this Court.
78. Shinetec’s submissions proceeded to explain that there might be other litigation as between it and Gosford on the Construction Contract. But that litigation was not part of the claims which went to a final hearing between those parties, and had not been commenced more than two years after Shinetec had commenced proceedings.
79. Senior counsel then appearing for Shinetec elaborated the position at the conclusion of oral addresses on 30 October 2023.
ZAHRA: Can I then, your Honour, briefly address the injunctions, the injunctions being the orders that were made by Lindsay J.
HIS HONOUR: Yes.
ZAHRA: Your Honour, we say that, as I’ve indicated, those were matters which were not made until the determination of the proceedings, but by consent until further order. They remain operative, and we say that it is appropriate that they continue, and ought not be discharged. In relation to the question of payments, that’s relevant for the financial reasons that I’ve indicated, but in relation to, and this was perhaps addressed in the exchange between your Honour and Mr Owens, the inability to further progress matters by providing information, and the like, we say if your Honour finds that there was no entitlement by these defendants to make the demand, having regard to the construction contract and the like, then it is entirely appropriate that that injunction also be preserved, which would prevent further steps being taken, as it were, to draw down the money, as between the contractual entitlement between the parties, and that’s one of the orders that was made by Lindsay J. That’s a very reason to the funds disappearing, as it were, if paid in. By way of reply, those are the matters that I wished to raise.
HIS HONOUR: But you don’t ask for that in the summons.
ZAHRA: I don’t, your Honour, because those orders are until further order. They have been made; they continue to operate, with good reason.
HIS HONOUR: All orders made in proceedings at interlocutory stage are expressed that way. Are you pointing to the fact that the orders are not until the final hearing of this matter?
ZAHRA: Yes. They’re not until the determination of the proceedings which is often the case. These are until further order, and that makes sense, your Honour, because, as Mr McHugh referred to in their closing submissions on two occasions, if the money is paid down by the Bank of China that doesn’t involve any substantive determination of the rights between the parties. That contest will come in the future if the money is advanced and that's why, of course, it ought to be preserved.
HIS HONOUR: What, indefinitely?
ZAHRA: Until there has been any final determination, particularly in circumstances where we know the secured creditor is owed virtually the entirety of the $37 million, and it will disappear.
HIS HONOUR: Decided in what? In China or in some other proceedings yet to be started here?
ZAHRA: Wherever the final rights between the parties are determined, remembering The Gosford is a company in receivership. The property has been sold. It’s not conducting anymore development. It seeks this money only, presumably to pay—
HIS HONOUR: Do I know the property has been sold?
ZAHRA: Yes, and I’ve given your Honour the reference for that in the closing submissions.
HIS HONOUR: Obviously you’re telling me, but is there evidence the property has been sold?
ZAHRA: Yes, your Honour. We’ve given your Honour the reference to the contract for sale in the closing submissions. I can give it to your Honour now. It’s para 26(f) of our closing submissions. The property was sold in April 2021 and the reference is volume 16 p 5401 is the contract for sale; the front page of it, at least.
MCHUGH: There’s something I think I need to make clear, which is I’ve been proceeding on the footing that the dismissal of the proceeding would involve the end of the interlocutory orders that had been made for the purpose only of preserving the subject matter of the proceeding until the final disposition of it. My friend hasn’t moved for final orders on that basis. My submission is, in accordance with the usual practice, those orders would go.
HIS HONOUR: I’ll leave it on this basis. If I am persuaded after pondering this to even look at continuing the orders, I’ll give everyone a chance to be heard.
80. The primary judge was treating courteously a submission which was palpably bad in law.
81. Mr Assaf SC, who had not appeared at trial but who appeared for Shinetec and Shanxi on appeal, at one stage submitted that, if the implied negative stipulation for which he now sought to contend was made out, a final injunction should issue, relying on the claim that had been made by his predecessor for such relief:
ASSAF … What we say is, once there’s – if your Honours were to find an implied negative stipulation which has been breached, the relevant remedy is a permanent injunction restraining The Gosford from taking any further steps to give effect to what we say is an invalid call. That’s how it’s put.
GLEESON: I have to object to that, your Honour. There was no claim for permanent injunction made below or in the current notice of appeal.
LEEMING JA: No, and there’s no way, speaking for myself, that this Court is going to grant such an injunction, it not having been sought at any stage. Am I wrong about the procedural history, which is complicated?
82. After an attempt to rely upon the interlocutory relief in the summons, counsel continued:
I accept, your Honour, that we should’ve been more precise in the relief that we seek, but we seek that relief, and we say it is encompassed by the such further or other order, claim for relief which is found in the summons …
83. It suffices to say that it would have been procedurally unfair, even if Shinetec were otherwise entitled to relief, for a final injunction to issue following a trial during which until final addresses Shinetec had abandoned damages and sought merely declaratory relief and an order that the standby letter of credit be returned to it. Moreover, as will be explained below, the submission does not attend to the new rights and liabilities which arise, as between issuing bank and beneficiary, upon the service of a compliant demand under a standby letter of credit. As Mr Gleeson submitted, after addressing the way in which Shinetec had advanced its claim for injunctive relief:
I’m not just making this as the pleading prejudice point, although I’m making that point, what this actually illustrates in terms of the substantive issue is Mr Zahra’s conception of the implied negative stipulation is designed to entirely reverse the ordinary purpose of the letter of credit. Instead of Gosford being able to call on the credit, get the 37 million, pay contractors or alternative contractors, and then have the dispute later. This is a claim that the contract should be understood to operate in the reverse manner that Gosford can never claim under the letter of credit, unless and until it’s established an entitlement to do so under the building contract, which destroys the whole purpose of the standby.
You could politely call it a cheeky application, saying an interlocutory injunction should just be left on the books and don’t strike it out, but its procedural consequences are mischievous and its substantive thinking underneath it involves a concept of the implied negative stipulation, which had never been litigated and a concept which, on its face, would turn the standby on its head.
84. We shall return to this in the course of addressing ground 4.
The reasons of the primary judge
85. It is not necessary to summarise the reasons of the primary judge in great detail, principally because Shinetec (now joined by Shanxi) in large measure does not seek to reagitate on appeal the submissions it made without success at trial. It suffices to note that the primary judge dealt with the substance of the two grounds relied upon by Shinetec as follows.
86. First, even if the demand contained false statements, as they were not alleged to be fraudulent, his Honour concluded that they could not affect the validity of the demand. The primary judge recorded the various matters which Shinetec contended made the demand false at [141], saying that it falsely asserted that the conditions precedent had been satisfied, Shinetec had failed to perform its obligations, Shinetec had ceased construction work at the site in or about October 2020 and had unlawfully suspended all activity on the site and abandoned the work, and had committed various breaches, including fundamental breaches, of the Construction Contract, and that Gosford had suffered loss and damage of at least $67,000,000 as a result of Shinetec’s alleged breaches.
87. The primary judge recorded at [142] that, by alleging that those matters were “false”, Shinetec was not alleging fraud:
Shinetec contends these statements are false in the sense of being “factually incorrect”. As I have said, Shinetec does not contend that the statements were made knowingly falsely. That is, it is not alleged the statements were made fraudulently.
88. Further, the primary judge recorded with some precision what Shinetec meant by its claim that the demand was invalid. It is important to bear in mind that Shinetec was not proceeding against Bank of China. The primary judge said at [143]-[146]:
In its Commercial List Summons, Shinetec seeks a declaration that the Demand “is invalid and of no effect”. That may have suggested that Shinetec’s contention was that the Demand was invalid for all purposes, and not only as between Shinetec and Gosford. Indeed, at one point, Mr Zahra submitted that “our case is that the Demand was invalid full stop”.
However, Mr Zahra and Mr Galvin made clear that Shinetec’s “case did not seek to impugn the validity of the Demand as against the Bank of China”.
Thus, in closing written submissions, Mr Zahra and Mr Galvin said:
“It should be noted at the outset that Shinetec does not cavil with the propositions that (1) a bank in the position of the Bank of China, which is presented with an apparently compliant demand on a standby letter of credit, is required to pay; and (2) on the face of it, subject to the identity point involving the Receivers & Managers, the Demand was (as between [Gosford] and Bank of China) sufficient to engage the [Standby Letter of Credit]. That was made clear in opening and Shinetec does not resile from that position.”
This concession was correctly made. As between an issuer and a beneficiary, the existence of “factually incorrect” statements in a demand under a Letter of Credit are, absent fraud, immaterial.
89. The primary judge thereafter gave reasons which were not challenged on appeal and are, with respect, impeccable. A false but not fraudulent statement made by Gosford in its demand does not disentitle it from making the demand or from the Bank of China from paying in accordance with the standby letter of credit. As the primary judge noted at [147], that is confirmed by r 1.06 of ISP 98, which provides that “an issuer’s obligations [under a standby letter of credit] depends on the presentation of documents and an examination of required documents on their face”. The primary judge concluded on this aspect of Shinetec’s case at [151]-[152]:
I have not accepted Shinetec’s “pleaded” case as articulated in its Commercial List Statement, that for the reasons there contended Gosford and the Receivers “had no entitlement under the Construction Contract to make the Demand”.
I am unable to see how any false, but not fraudulent, statements made in the Demand can take Shinetec’s case any further.
90. On the second basis on which Shinetec advanced its claim at trial, the primary judge rejected Shinetec’s contention that by entering into the Loan Agreement, and without more, it had “provided” the $37,000,000 finance. His Honour did so at [126]-[137], and no challenge was made to any aspect of that reasoning.
91. The primary judge attended to Gosford’s cross-claim at [154]ff. Most of the issues there addressed arise in connection with grounds 6 and 7 of the appeal, and a more detailed summary is best deferred until we reach those grounds. By way of summary, his Honour summarised the standby letter of credit and the demand and the relevant provisions in ISP 98, before proceeding as follows:
1. at [165]-[175], his Honour concluded that the proper law of the standby letter of credit was the law of China;
2. at [187]-[201] his Honour addressed the debate as to the principles to be applied when construing ISP 98, and at [202]-[213] noted the debate concerning how if at all regard may be had to the Official Commentary, concluding that it was not necessary for him to express any final view on that issue;
3. at [214]-[239], his Honour rejected the submission that the receivers were transferors to which r 6.11 of ISP 98 applied – this reasoning is challenged in ground 6;
4. at [240]-[257] his Honour considered the effect of the order of the Taiyuan Intermediate People’s Court, concluding at [257] that “the mere entry of judgment in favour of Gosford against the Bank would not, itself, cause the Bank to contravene the Civil Ruling”, after noting at [256] that Bank of China did not dispute that entry of judgment did not impose an obligation upon it do something, and
5. finally, at [259]-[260] his Honour expressed an inclination to enter judgment against Bank of China but to stay that judgment pending a further approach to the Taiyuan Intermediate People’s Court.
92. Following the receipt of written and oral submissions after publication of that judgment, the primary judge published a further judgment on 15 December 2023, which made orders according to the intention expressed above: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 3) [2023] NSWSC 1596. Relevantly, his Honour stated at [31]:
I respectfully invite the Taiyuan Intermediate People’s Court of Shanxi Province and, if appropriate, the Shanxi Higher People’s Court, to consider this Court’s reasoning for concluding that Gosford is entitled to judgment against the Bank arising from the Letter of Credit, and to consider whether the Civil Ruling should be discharged, now that the parties’ competing contentions concerning the Letter of Credit have been dealt with and determined by this Court.
93. That occurred. The response appears to be that the Civil Ruling was extended, and Shanxi’s case has been set down for hearing in September 2024. As will be seen, subsequently Gosford took steps to respond to Bank of China Shanxi Branch’s request for information concerning the demand on the standby letter of credit.
The appeal to this Court
94. Appeals lie from judgments and orders, not reasons. Orders were made on 15 December 2023 following delivery of the second reasons for judgment. Shinetec lodged a notice of intention to appeal, extending the time within which it could appeal for three months. On 14 March 2024 it filed a notice of appeal. That document went through various iterations, but ultimately grounds 1, 4, 5, 6 and 7 of a further amended notice of appeal were pressed. In further answer to ground 6, Gosford and the receivers sought, by notice of contention, to rely upon an attempt to present documents in around April 2024, in belated answer to Bank of China’s request for information concerning the identity and status of Gosford.
95. Grounds 6 and 7 reiterate points made by the Bank of China at first instance in response to Gosford’s cross-claim, and which were not made by Shinetec, which withdrew its claim against Bank of China. It was common ground that the appellants needed leave to advance grounds 6 and 7.
96. Well in advance of the hearing of this appeal, in written submissions dated 24 May 2024, Gosford and the receivers made their position abundantly clear:
[Shanxi] had submitted to the jurisdiction and has been joined as a party to these proceedings. The first to third respondents consent to Shinetec and [Shanxi] being granted leave to advance Appeal Grounds 6 and 7 (i.e. prayers 2 to 5 on the motion), only on the condition that [Shanxi] discontinue, and undertake to this Court not to reinstitute, its parallel proceedings in the Taiyuan Court.
This is not a situation in which a party has invoked the exercise of the Court’s jurisdiction as of right; it is instead seeking the exercise of a discretion in its favour. There are overwhelming considerations against the exercise of that discretion. [Shanxi] should not be given leave in order to maintain parallel proceedings in two jurisdictions: an appeal from a final judgment after a trial in New South Wales and proceedings at first instance in China in which no trial has yet been held. This gives rise to the very real risk of inconsistent judgments, particularly where [Shanxi’s] whole purpose in pursuing the Chinese proceedings must be to obtain a judgment which will conflict with the judgment already given below and any judgment contrary to its interests in this Court. That would bring the administration of justice into disrepute. It also has the undesirable consequence of wasting the parties’ and judicial resources. In those circumstances, unless [Shanxi] discontinues its proceedings in the Taiyuan Court, and undertakes to this Court not to reinstitute those proceedings, leave to advance Appeal Grounds 6 and 7 should be refused.
97. Shinetec and Shanxi resisted those submissions, saying in written submissions dated 31 May 2024 there could be no suggestion that the maintenance of proceedings could be vexatious or oppressive when Shanxi does not advance any claim for relief in Australia, but rather “[Shanxi] is merely seeking to seeking to stand in the shoes of the Bank of China by seeking leave to continue to resist the active respondents’ cross-claim in circumstances where the Bank of China has chosen not to appeal”.
98. We shall return to those submissions.
Ground 5 – error in refusing leave to amend?
99. The logical starting point is ground 5 of the appeal, which challenged the primary judge’s refusal, at the outset of the trial, to permit Shinetec to amend its Commercial List Statement so as to advance a case based upon an implied term of the Construction Contract.
100. Importantly, in its written submissions dated 20 October, five days before the trial commenced, Shinetec had confirmed that it sought a declaration that the demand was invalid and the return of the standby letter of credit, and costs, adding that “The claim for damages is not pressed”.
101. The proposed amended document (MFI-1) seems to have been supplied in the late afternoon of 24 October, the day before the trial was to commence. It alleged, for the first time, that “[i]t was an implied term of the Construction Contract that The Gosford was only entitled to make a demand pursuant to the standby letter of credit when there was a contractual entitlement to do so under the Construction Contract”. It was then alleged that there was a new precondition to the making of a valid demand on the standby letter of credit. As sought to be amended, paragraph 23 provided:
The Gosford was only able to make a valid demand on the Letter of Credit in circumstances where:
(a) Shinetec had failed to secure finance as required by Item 6A of Part A of the Construction Contract and as reflected in the Loan Agreement;
(b) the demand was made on or prior to 31 July 2021;
(c) the demand was in writing to the counter of the Bank of China, Shanxi Branch; and
(d) There was a contractual entitlement to do so under the Construction Contract.
102. The amendment was raised at the outset of the trial. Senior counsel explained why the amendment was sought:
[I]n the event that your Honour finds firstly that the demand was invalid, and makes the declaration that’s sought by my client, but then goes on to find – and this is the part that we suggest is unlikely – that the Bank of China is nevertheless liable to The Gosford; that would create a situation where the Bank of China would presumably pay out to The Gosford. The Bank of China would then claim on the plaintiff’s parent, Shinetec Corporation, a Shanxi corporation in China … then the parent will claim against my client, and my client will be left out of pocket for $37 million, and so the reason for the amendment is in that unlikely, we say, contingency. We don’t wish that to occur and so we then rely – we don’t want it to be said that there is no cause of action – so we then rely on the implied negative term.
103. His Honour responded:
That explains why you’d like it, but to argue for an implied term for the first time the day before the hearing is a bit late, isn’t it? Unless I’m told it can be met.
104. Counsel for Shinetec submitted that the amendment “doesn’t give rise to any new evidence, or any additional submission beyond really a legal submission”.
105. There were two aspects to the opposition to the amendment from senior counsel who then appeared for the Gosford and the receivers, who stated that the proposed amended Commercial List Statement was served at around 5.30pm the previous day. The first turned on the explanation for the amendment which had been provided by Shinetec:
MCHUGH: Your Honour, there is prejudice, and it comes from the way in which my friend has only just now explained, of how he wants to use this. His proposed case relies on the idea that his client might have a liability to its parent, which would complete the circle he described, and then he wants to recover that as damages against my client. We haven’t investigated any of those matters about that relationship. My friend's submissions that were filed in Friday, with respect, correctly, expressly abandoned any claim for damages. We haven’t looked into that at all, and there’s no pleading. If your Honour looks at the proposed amendment itself it doesn’t really have any content. The implied term pleaded at para 18 is circular. There was an implied term that The Gosford was only entitled to make the demand pursuant to a stand-by letter of credit, where there was a contractual entitlement to do so under the contract.
106. Secondly, in answer to his Honour’s question whether the term was said to be implied by law or fact, counsel responded:
MCHUGH: Or anything else, but it doesn’t tell you anything about when in fact there would be such an entitlement, and then it doesn’t go anywhere in terms of the actual fundamental issue of validity. If your Honour comes through to para 27, 27 begins with the demand, “Was and remains invalid”. That must mean as against the bank. Then it goes on to say, “and there was no entitlement for a demand under the construction contract”, which is supposedly foreshadowing some claim for breach of contract, which one then finds at 27(a), that The Gosford was in breach; but that allegation of breach doesn’t sound in anything. It doesn’t go anywhere on the current state of the evidence or as we've understood the case to be. What my friend is really saying is he wants to open up a whole different case that he’s never made before about damages that haven’t even been incurred, even.
107. The totality of the response from Shinetec was as follows:
ZAHRA: Your Honour, responding really to the first two matters that my learned friend Mr McHugh raised. Firstly, in terms of the evidence of the plaintiff being liable through the claim that's made by the plaintiff, there are two documents already in evidence that have been in evidence for a long time. I’ll take your Honour to them in opening, propose to. They’re part of the application documents for the stand-by letter of credit, which were presented to the Bank of China. It includes a power of attorney document within that, which provides that my client would bear ultimate liability. There’s no further evidence that I propose to rely upon. That’s material that’s been in play for many months.
In terms of damages, it’s correct that as we said in our written submissions we don’t seek any damages at this stage, and we don’t have any evidence of damage, but in the event of the contingency that I’ve identified, your Honour, we say that that would then put for the first time the plaintiff in a position of having some loss and damage, by reason of the indemnity provisions.
108. It will be seen that counsel for Shinetec, far from disavowing an absence of reliance upon a claim for damages, confirmed that in the contingency he had identified, there was being advanced a claim for loss and damage, contrary to what had been said expressly in the written submissions supplied prior to the trial.
109. Further, counsel for Shinetec identified “two documents already in evidence” which were relied upon in support of the alleged implied term. He added “there’s no further evidence that I propose to rely upon”. At no stage did he disavow that the submission was going to draw upon documents other than the Construction Contract itself, nor did he refute the submission that in order to respond to it, Gosford would have to prepare evidence.
110. The primary judge ruled immediately saying:
I decline to grant the plaintiff leave to amend. It’s a commercial list statement. I mark the proposed amended commercial list statement as MFI 1, and I’ll give reasons for that conclusion in a judgment in due course.
111. His Honour’s statement that “It’s a Commercial List Statement” was a reference to the expeditious approach taken to all issues of case management in litigation in that list.
112. It may also be noted that the amendment was not accompanied by any evidence, including evidence explaining why notice of it had only been supplied on the afternoon of the day before the trial commenced, or why Shinetec now sought to depart from its abandonment of any claim for damages.
113. In his reasons for judgment, delivered with characteristic promptness a fortnight after the conclusion of written submissions, the primary judge referred to the amendment application, counsel’s statement that he would be prejudiced if the amendment was allowed and that he was not in a position to meet it, and added that he “refused leave on that basis”: at [105].
114. There is nothing in this ground of appeal. The appellant’s submission was that the primary judge erred in failing to have regard to the mandatory requirements of s 58 of the Civil Procedure Act 2005 (NSW). The only points identified in oral submissions in support of this ground were that the trial had been set down for seven days, that there was no particularisation of the claimed prejudice, and that the implied negative stipulation involved a mere question of law.
115. None of those points was made by senior counsel’s predecessor before the primary judge. The decision was discretionary, reviewable on the grounds identified in House v The King (1936) 55 CLR 499; [1936] HCA 40. It is difficult in the extreme to find reviewable error in the refusal to allow a late amendment unaccompanied by any explanation for the delay on the first day of the trial based on submissions which were not made to the primary judge.
116. But in any event, we would not accept the submissions. The most important matter is that counsel then appearing for Shinetec said both in support of the amendment and in response to Gosford’s opposition that a claim for damages was being put forward, albeit contingently. It was not necessary for anything more to have been said by counsel for Gosford concerning prejudice or inability to meet the claim. What was sought to be advanced was an elaborate alternative position, to which Gosford was entitled to more notice than it was given.
117. It was plain from what was said immediately thereafter that Gosford had served witness statements, including from its sole director Mr Walker, but had indicated that it was unlikely that they would be read as evidence. Senior counsel then appearing for Gosford said that that would depend upon Shinetec’s opening. It is plain that the claim for damages might give rise to a need to adduce evidence. Aside from anything else, it is perfectly clear that there was at least an argument that if the conditions precedent had not been satisfied, they had been waived (or, alternatively, the parties were estopped from insisting that they had not been satisfied), for it is perfectly clear that Shinetec caused demolition and other preparatory work to be undertaken on the site. As much is obvious from photographs of the cleared site in evidence, and the two progress claims for millions of dollars of such work served by Shinetec. It is also obvious that some of that work preceded the execution of the Loan Agreement (which was dated 26 November 2021, only a fortnight before the first progress claim was served). Thus, Shinetec’s submission at trial that the Construction Contract was suspended sits ill with what actually happened in the performance of work pursuant to the Contract. Mr Walker had served witness statements and had been required for cross-examination and was the obvious person to give evidence about the circumstances in which that construction occurred, as one aspect of a response to a claim for damages.
118. There is with respect some small force in the proposition that the reasons given by the primary judge were brief, especially bearing in mind that they would have been read representatives of a Chinese corporation, not likely to be familiar with practices in the Supreme Court of New South Wales. However, for the reasons given above, which would be familiar to any practitioner in the Commercial list, the decision was self-evidently correct. This ground is not made out.
119. In any event, nothing turns upon this ground because, for the reasons which follow, the point is bad in law.
Grounds 1 and 4 – was the demand invalid because of breach of some provision of the Construction Contract?
120. These grounds may conveniently be addressed together. They have the same form: both maintain that by reason of a promise made by Gosford to Shinetec in the Construction Contract, Gosford’s demand is “invalid” (or void or of no effect). In the case of ground 1, the point is said to be that the non-satisfaction of the conditions precedent has the result that the parties’ rights and obligations were suspended. In the case of ground 4, the point is said to be that the demand was issued contrary to an implied negative stipulation. But in both cases, the express or implied provisions of the Construction Contract are said by the appellants to render the demand on the standby letter of credit invalid (or void or of no effect).
121. Ground 1 maintains that because the conditions precedent of the Construction Contract were not satisfied, the parties’ rights and obligations under it were suspended, such that neither Gosford nor its receivers had power to make the demand upon the standby letter of credit. The consequence is said to be that the demand was “invalid and/or void and of no effect, for all purposes”. This ground says that the primary judge erred in finding that the Commercial List Statement did not assert any link between the conditions precedent of the Construction Contract and Shinetec’s contention that the demand was invalid, and erred in failing to determine whether the conditions precedent had been satisfied.
122. Gosford says that this ground was not advanced at trial, that it could have been met by evidence, and that in any event is it misconceived.
123. Ground 4 seeks leave to advance the ground which was the subject of the amendment rejected at the outset of the trial, namely, that there was an implied negative stipulation to which Gosford was subject, such that a valid demand could not be made unless Shinetec had failed to perform its obligation to lend $37,000,000. The appellants say that in making the demand, Gosford was in breach of the implied negative stipulation, and that the demand was consequently “invalid and/or void and of no effect”.
124. Gosford says that this ground is not available unless ground 5 succeeds, and in any event it is misconceived.
Discretionary reasons relating to grounds 1 and 4
125. We have concluded that ground 5 should fail, and we agree that it would not be appropriate to grant leave in respect of ground 4, so as to permit the appellants to advance a ground which was correctly rejected at trial. It is to be borne in mind that Shanxi and Shinetec’s application was far from an ordinary case of an appellant wishing to raise a new point on appeal. Shinetec’s case at trial was diametrically opposed to the case now sought to be presented in this Court. This was not merely a case where the implied negative stipulation was outside the issues framed in the pleadings. As the primary judge recorded at [106], significantly, after the conclusion of the trial:
In a note delivered following closing submissions at my invitation, Mr Zahra and Mr Galvin said:
“Shinetec did not bring a breach of contract case and did not allege a breach of the negative stipulation in the Construction Contract. It was prevented from amending to plead and bring such a case. The Court will find no such case being advanced in any written or oral submission made on behalf of Shinetec.”
126. Of course, subsequent to the trial Shinetec has appointed new solicitors and new counsel to conduct this appeal. But where a litigant consciously chooses not to advance a case at trial, it is no small thing to permit the same point to be advanced on appeal.
127. We also note that ground 1, at least as drafted, maintained that the demand was “invalid and/or void and of no effect, for all purposes”. That seems to amount to an application to determine this appeal in a way that binds the Bank of China, which is antithetical to the limited way in which Shinetec’s challenge was cast at trial, explicitly not so as to bind the Bank of China (against which Shinetec did not proceed). The divergence between how the argument was advanced at trial and how it was sought to be advanced on appeal was emphasised by Mr Gleeson:
Whatever one makes of Mr Zahra’s legal conceptions, he did seem to think he was not invalidating the demand as between us and [Bank of China], even if he proved his points. He did seem to think he could get an invalidating order as between Gosford and Shinetec, even though the demand was not issued between those parties. He never identified how that could happen in law.
128. Still further in relation to ground 1, the appellants contend that the primary judge was bound to resolve the question whether the conditions precedent were or were not satisfied. Their submissions characterise this as “error in the judicial reasoning process – the learned primary judge failed to determine all relevant factual and legal issues, thereby failing to make all appropriate factual findings material to the disposition of the case”. This puts the position too high.
129. Shinetec cites this Court’s decision in Wolfenden v International Theme Park Pty Ltd (trading as Wonderland) [2008] NSWCA 78 at [6], but the passage cited discloses the basic fact that a court need not decide every point presented by the parties for determination. Giles JA said:
It is appropriate to remind that it is in the interests of the parties, in avoiding expense and delay in establishing their rights and obligations, and in the interests of the administration of justice, in efficient use of the public resource of court time and judicial decision-making, that trial judges should generally make all appropriate findings material to liability and proceed to assessment of damages, even if finding against the plaintiff on a limited basis. That is not, of course, something which should invariably be done. It must depend on the circumstances, but having well in mind the description of a new trial as “an evil and a deplorable result, to be avoided wherever possible”: per Kirby P in Palmer v Clarke (1989) 19 NSWLR 158 at 164 and cases cited. (Emphasis added.)
130. It is true that, as the appellants point out, there is at least one occasion on which a trial court has expressed the obligation to determine all relevant factual and legal issues as unqualified: Collier v Country Women's Association of NSW [2017] NSWSC 1573 at [308]. But that is to go further than was stated in Wolfenden. More recently than either of those decisions, in PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 at [15] this Court confirmed that a litigant is not entitled to insist that a trial court determine non-dispositive issues and give reasons for doing so.
131. Generally a court at first instance should determine non-dispositive issues, and generally if it chooses not to do so it should explain why it is taking that course. There are litigants who raise a panoply of points, all of them hopeless, where no useful purpose is served by disposing of all of them (often but not invariably such litigants are unrepresented). It will be a question of judgment in every case, bearing in mind the desirability of minimising the risk of the need for a new trial if an appeal succeeds. We also note that an appellate court is likewise under no obligation to address all issues raised by the parties: see Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 at [36]-[41].
132. As will be seen, the primary judge rightly regarded the legal submission advanced by Shinetec, one element of which was non-satisfaction of the conditions precedent, as misconceived, and on that basis resolved the case expeditiously. We see no error in his having taken that course.
Substantive reasons for dismissing grounds 1 and 4
133. But the most fundamental reason why these grounds must fail is that they misconceive how the standby letter of credit operates.
134. First, contrary to the premise of ground 1, the Construction Contract is not the source of the power to issue a demand under the standby letter of credit. If as Shanxi and Shinetec contend, the conditions precedent were not satisfied, and the parties’ rights and obligations under the Construction Contract were suspended, that did not mean that Gosford could not make a demand on the standby letter of credit. Making a demand involved presenting particular documents upon the Bank of China Shanxi Branch. Gosford’s entitlement to do so did not depend on the Construction Contract. It was independent of the Construction Contract.
135. Shanxi and Shinetec sought to escape that proposition by relying on a variety of decisions in other areas of the law. Thus they submitted that their contention was “consistent with authorities to the effect that where essential conditions precedent to the exercise of a contractual right to renew or exercise an option have not been fulfilled, the purported exercise of a contractual right is ‘ineffectual’”, citing BS Stillwell & Co Pty Ltd v Budget Rent-A-Car System Pty Ltd [1990] VR 589 at 599. They submitted that “an analogy may be drawn to cases where a company passes a resolution where a condition precedent for that resolution (such as quorum) has not been satisfied. In such circumstances, the resolution will be void and of no effect for all purposes”, citing (among others) Eastone Mining Pty Ltd v Eastone Holding Pty Ltd [2019] NSWSC 1850; 142 ACSR 38 at [43]. And they submitted that “[a] further analogy may be drawn to conditions precedent in insurance contracts: where a condition precedent has not been satisfied, any claim for indemnity pursuant to an insured’s rights under the contract is ineffective for all purposes”. But none of this is to the point. The standby letter of credit gave rights to Gosford as against the Bank of China, independently of the Construction Contract.
136. Secondly, Shanxi and Shinetec submitted that a demand on the standby letter of credit by Gosford which was in breach of the negative implied stipulation was itself “void and/or invalid and/or of no effect”. That is not the law. The question for the Bank was whether the demand was made prior to 31 July 2021 and presented to the Bank of China Shanxi Branch by formal document on behalf of Gosford. There were certain circumstances which permitted the Bank to make enquiries (these are addressed below). But it is no element of the validity of the demand that Gosford be not in breach of any of the terms of the Construction Contract.
137. The standby letter of credit explicitly incorporated ISP 98. Clauses 1.06 and 1.07 of the ISP 98 warrant reproduction, in light of Shanxi’s and Shinetec’s submissions. They describe the nature of a standby letter of credit:
1.06 Nature of Standbys
(a) A standby is an irrevocable, independent, documentary, and binding undertaking when issued and need not so state.
(b) Because a standby is irrevocable, an issuer’s obligations under a standby cannot be amended or cancelled by the issuer except as provided in the standby or as consented to by the person against whom the amendment or cancellation is asserted.
(c) Because a standby is independent, the enforceability of an issuer’s obligations under a standby does not depend on:
(i) the issuer’s right or ability to obtain reimbursement from the applicant;
(ii) the beneficiary’s right to obtain payment from the applicant;
(iii) a reference in the standby to any reimbursement agreement or underlying transaction; or
(iv) the issuer’s knowledge of performance or breach of any reimbursement agreement or underlying transaction.
(d) Because a standby is documentary, an issuer’s obligations depend on the presentation of documents and an examination of required documents on their face.
…
1.07 Independence of the Issuer-Beneficiary Relationship
An issuer’s obligations toward the beneficiary are not affected by the issuer’s rights and obligations toward the applicant under any applicable agreement, practice, or law.
138. Repeatedly throughout his address in chief and in reply, Mr Assaf insisted that he did not challenge the “independence principle”. But the point of that principle is that save in the case of fraud or unconscionability, an issuer must honour its standby letter of credit after being presented with documents which on their face are valid. These grounds fly in the face of the nature of a standby letter of credit as an independent documentary undertaking.
139. In United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 at 183, Lord Diplock said:
If, on their face, the documents presented to the confirming bank by the seller conform with the requirements of the credit … that bank is under a contractual obligation to the seller to honour the credit, notwithstanding that the bank has knowledge that the seller at the time of presentation of the conforming documents is alleged by the buyer to have, and in fact has already, committed a breach of his contract with the buyer for the sale of the good to which the documents appear on their face to relate, that would have entitled the buyer to treat the contract of sale as rescinded and to reject the goods and refuse to pay the seller the purchase price.
140. Thus one leading text which endorses that passage, states that the “doctrine of autonomy is a key principle in letter of credit transactions”, and notes that the “bank’s obligation to pay the beneficiary under the credit is independent of the underlying contract between the beneficiary and the applicant”: P Elligner and D Neo, The Law and Practice of Documentary Letters of Credit (Hart Publishing, 2010) at 138.
141. True it is, as was submitted during the hearing of the appeal in an attempt to explain why the appellants’ submissions were not inconsistent with the independence principle, that there are circumstances when a beneficiary may, expressly or by implication, bind itself not to make a demand on a letter of credit or other security, and in such cases injunctive relief will be available, including on a quia timet basis, against that party. The Court was taken at length to Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443; [1979] HCA 21, Dedert Corporation v United Dalby Bio-Refinery Pty Ltd (2017) 59 VR 607; [2017] VSCA 368, Kawasaki Heavy Industries Ltd v Laing O’Rourke Australia Construction Pty Ltd (2017) 96 NSWLR 329; [2017] NSWCA 291 and Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021 at [13]-[14]. Relevantly for present purposes, all are to the same effect. The position was explained in Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; 249 ALR 458 at [77]:
Nevertheless, the authorities have recognised three principal exceptions to the rule that a court will not enjoin the issuer of a performance guarantee, or bond, from performing its unconditional obligation to make payment. The exceptions were succinctly stated, with references to relevant authorities, by Austin J in Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158 at 164-165:
First – the Court will enjoin the party in whose favour the performance guarantee has been given from acting fraudulently: see eg Wood Hall Ltd 141 CLR per Gibbs J (at 451). …
Second – the party in whose favour the performance bank guarantee has been given may be enjoined from acting unconscionably in contravention of s 51AA of the TPA: Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380. …
Third – the most important exception for present purposes, is that, whilst the Court will not restrain the issuer of a performance guarantee from acting on an unqualified promise to pay:
“ … if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.
Reed Construction Services 15 BCL at 164 (Austin J)”
It may be preferable not to describe this as an exception but rather as an over-riding rule because it emphasises that the “primary focus” will always be the proper construction of the contract: Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493 per Owen J at [30]. Stephen J recognised this in Wood Hall Ltd 141 CLR at 459 by observing that the provisions of the contract may qualify the right to call on the undertaking contained in a performance guarantee.
142. The first and second exceptions, fraud and unconscionability, were not asserted. (For completeness, at one stage in the appeal, Shinetec sought in this Court, for the first time, to advance by proposed ground 5A a submission that the making of the demand was unconscionable, but this was withdrawn a few days prior to the appeal being heard.) The third “exception” is noted in Dedert at [102] and in Universal Publishers at [14].
143. We respectfully agree with the point made by French, Jacobson and Graham JJ in Clough Engineering that the third “exception” is not so much an exception as an over-riding rule. Normally a party can bind itself not to exercise a private right. That includes the right to make a demand on a standby letter of credit. The consequence of a beneficiary making a demand on a standby letter of credit contrary to its promise not to do so is that the beneficiary will be in breach of contract, and liable to its contracting party for damages for any loss caused by the breach. That is not all. An injunction may also be available to prevent a beneficiary who threatens to make a demand contrary to the beneficiary’s promise, if it can be shown that damages will not be an adequate remedy.
144. The cases do show that, albeit rarely, mandatory injunctive relief may lie against the beneficiary who has made a demand requiring it to withdraw it. One example may be seen in Kawasaki Heavy Industries at [26]-[28]. It seems that on 15 March 2017, an ex parte injunction was sought to restrain the beneficiary Kawasaki from calling on security bonds, contrary to a (claimed) contractual provision. The reasons do not make it clear, but it seems that it was at least possible that a call had been made prior to service of the ex parte injunction. The Court’s judgment records at [28]:
On 15 March 2017, upon the giving of the usual undertaking as to damages by Laing O’Rourke, Ball J granted Laing O’Rourke an ex parte injunction preventing Kawasaki from calling on the bonds. Later the same day, Kawasaki informed Laing O’Rourke that it already had made a call on the surety bonds. Ball J thereupon made further ex parte orders requiring Kawasaki to withdraw the call. Later that day, Kawasaki withdrew the call on the bonds.
145. A similar instance may be seen in Kell & Rigby Holdings Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777 at [17]. We accept that, in principle, such relief is possible. Gosford acknowledged as much. But there is a world of difference between obtaining injunctive relief against the beneficiary of a letter of credit who has promised not to call upon it except in certain circumstances, and obtaining injunctive relief against a bank following the presentation of a valid demand.
146. Interlocutory mandatory injunctions are only available in “limited” or “unusual” circumstances, to use the language in Merton v Bank of Queensland Ltd [2013] NSWCA 68 at [4] and Tavcol v Valbeet [2014] NSWSC 1563 at [30]. One problem was indicated by McDougall J in the latter decision at [11], because there may be circumstances where the granting of a mandatory injunction – especially as here imminently before the expiry of the standby letter of credit – would have the effect in a practical sense of determining the substance of the matter. Putting the difficulty in obtaining such relief to one side, the dispositive point is that despite the variety of ways in which Shinetec advanced claims for relief throughout the litigation, it has never sought orders requiring Gosford to withdraw or countermand its demand.
147. The appellants were given full opportunity to respond to this basal difficulty in their case. Before the luncheon adjournment on the first day of the appeal, there was the following exchange:
LEEMING JA: Perhaps I should just ask you this. Do you say that if a person who calls upon a letter of credit is in breach of contract, inevitably the result is that the call is invalid or void or of no effect; that is in breach of an obligation that’s ultimately found to make the call?
ASSAF: It depends upon the contract.
LEEMING JA: I see. There’s something special about this one.
ASSAF: Obviously, it’s case specific.
LEEMING JA: If the call is made in breach of promise, which is what you say is this case, does it inevitably follow? Does it matter, in other words, if the breach is deliberate or inadvertent or operates on advice?
ASSAF: We say the remedy would be the same. The precise legal consequences may differ. I accept that distinction. Yes.
LEEMING JA: I want to know what the precise legal consequences are because you want us to say that the call is invalid and/or void and/or of no effect.
ASSAF: Yes.
LEEMING JA: They may be different things, and I don't know what they are as yet.
ASSAF: Yes.
LEEMING JA: I think all you say is that that because it’s in breach of this implied negative promise, and I want to know whether you say this is a general proposition of contract law.
ASSAF: It’s certainly specific to this case. I don’t want to put it as highly as it’s a general proposition. That’s putting it too highly.
LEEMING JA: What are the facts and circumstances of this particular case that mean the proposition is good? I’m raising it now really for you to give consideration. I suspect we’re not going to finish your submissions by lunch time.
ASSAF: Yes. Correct. I’ll be more precise in due course.
148. Counsel did not return to the point, save to note that in Kell & Rigby Holdings, Hammerschlag J had held that the defendant was not entitled to call on certain Advance Payment Bonds and was entitled to declaratory and injunctive relief against the beneficiary. That is, with respect, no answer to the question, which was directed to the validity (or “voidness” or lack of efficacy) of the demand as between Gosford and Bank of China.
149. The claim that a demand is “invalid” (or “void” or “of no effect”) because there is a breach of the Construction Contract is bad in law. It is inconsistent with the nature of a standby letter of credit. These grounds should be dismissed.
Ground 6 – the operation of ISP 98 rr 6.11 – 6.13 following the appointment of receivers
Overview
150. This ground reflects an aspect of Bank of China’s defence of the cross-claim at trial, and is not maintained by that bank on appeal. The ground turns on rr 6.11-6.13 of ISP 98 and the receivers’ signatures on Gosford’s demand. The short point is that the appellants seek leave to contend that because the demand was signed by the receivers, Bank of China was entitled to request further information, which was not supplied, and in the meantime it was entitled neither to honour nor to dishonour the demand. The respondents seek to uphold the reasons of the primary judge, to the effect that ISP 98 rr 6.11-6.13 are not engaged by the appointment of receivers. They further say, by way of fallback, that it was the interlocutory relief obtained by Shinetec which prevented a response being given, and that when that relief was discharged after final judgment was given, they provided an amply sufficient response to Bank of China’s request.
Reasons of the primary judge and relevant provisions of ISP 98
151. This ground challenges the reasoning of the primary judge at [235]-[239]:
First, it may be that a purpose of the requirement in the Letter of Credit that Gosford’s bank confirm that the signatures on any demand were “authentic” was to confirm to the Bank, as the issuer of the Letter of Credit, that the signatures on any demand were “not fraudulently applied”. But it was also “for the purpose of identification”.
Second, the Macquarie Bank 30 July 2021 SWIFT communication went further, and confirmed that the signatures on the Demand were the authentic signatures of “officers” of Gosford. That may not have been called for by the Letter of Credit. But it was a vital part of the documentary material placed before the Bank. It confirmed that the Receivers were not claiming to be successors to Gosford.
It follows from this that r 6.11 was not enlivened. The Bank was not entitled to make a request for further documents under r 6.13, as it purported to do in its 3 August 2021 SWIFT communication to Macquarie Bank. The Bank’s obligations to honour or give notice of dishonour were, for those reasons, not suspended.
Rule 6.12 takes the matter no further, as it is only relevant if the presenting party is a “claimed successor” for the purpose of r 6.11.
As the Bank accepts that the Demand was otherwise compliant, and subject to the matters to which I will now turn concerning the effect of the Civil Ruling in the Chinese Court, it follows that Gosford is entitled to judgment against the Bank. (Footnote omitted.)
152. Rules 6.11-6.13 of ISP 98 relevantly provide:
Transfer by Operation of Law
6.11 Transferee by Operation of Law
Where an heir, personal representative, liquidator, trustee, receiver, successor corporation, or similar person who claims to be designated by law to succeed to the interests of a beneficiary presents documents in its own name as if it were the authorised transferee of the beneficiary, these Rules on transfer by operation of law shall apply.
6.12 Additional Document in Event of Drawing in Successor’s Name
A claimed successor may be treated as if it were an authorised transferee of a beneficiary’s drawing rights in their entirety if it presents an additional document or documents which appear to be issued by a public official or representative (including a judicial officer) and indicate:
(a) that the claimed successor is the survivor of a merger, consolidation, or similar action of a corporation, limited liability company, or other similar organization;
(b) that the claimed successor is authorised or appointed to act on behalf of the named beneficiary or its estate because of an insolvency proceeding;
(c) that the claimed successor is authorised or appointed to act on behalf of the named beneficiary because of death or incapacity; or
(d) that the name of the named beneficiary has been changed to that of the claimed successor.
6.13 Suspension of Obligations upon Presentation by Successor
An issuer or nominated person which receives a presentation from a claimed successor which complies in all respects except for the name of the beneficiary:
(a) may request in a manner satisfactory as to form and substance:
(i) a legal opinion;
(ii) an additional document … from a public official;
(iii) statements … regarding the status of the claimed successor as successor by operation of law;
….
(b) Until the issuer or nominated person receives the requested documentation, its obligation to honour or give notice of dishonour is suspended, but any deadline for presentation of required documents is not thereby extended.
Submissions
153. Shinetec and Shanxi said that the primary judge was wrong to find that the second and third respondents, the receivers Messrs Hurst and Sampson, were not claiming to be successors to Gosford for the purposes of r 6.11, including by reference to the principle of “strict compliance” to be derived from ISP 98 rr 1.03 and 1.11. They said that the rule was engaged, and that the Bank of China’s obligation to pay was suspended pending a response to its request to Macquarie Bank dated 3 August 2021:
Whereas:
The demand letter dated July 28, 2021 is signed by “The Gosford Pty Ltd (Receivers and Managers Appointed)”, but the beneficiary of the standby letter of credit issued by our bank is “The Gosford Pty Limited (ACN630253557)”, there are significantly [sic] differences in the form of the two names.
Therefore, in accordance with the provisions of Article 6.13A [sic] of ISP 98, you are now required to submit the following documents in original paper form:
I. Legal Opinion:
II. Additional documents issued by public officials mentioned in Article 6.12 of ISP 98,
III. The statement, agreement and indemnity regarding the status of the claimed successor as successor by operation of law,
The above-mentioned documents must be submitted to our bank within 7 working days.
Until we receive the above-mentioned documents, our obligation to honour or give notice of dishonor is suspended.
154. Gosford and the receivers said that neither Shinetec nor Shanxi should be permitted to run arguments which Shinetec had not run at trial. They said that if the appellants were permitted to run the arguments, they wished to adduce fresh evidence of what occurred, which was to the effect that:
1. Macquarie Bank had been prevented, by the orders obtained by Shinetec on 2 August 2021, from passing on the SWIFT message to Gosford until those orders were discharged on 14 December 2023.
2. Following Shinetec filing a notice of appeal on 14 March 2024, a Chinese law firm was engaged to provide a belated response to Bank of China’s request for documents.
3. On 11 April 2024 an attempt was made to deliver a legal opinion confirming that “The Gosford Pty Ltd (Receivers and Managers Appointed)” was the same legal entity as “The Gosford Pty Limited (ACN630253557)” and was not a successor, an ASIC search of the company and the General Security Deed and Deed of Appointment by which the receivers were appointed. However, apparently on the basis that the documents were not transactional, delivery could not be effected and the solicitor was told to deliver them to Bank of China’s lawyers.
4. On 15 April 2024, the documents were supplied to Bank of China’s (Australian) solicitors, King & Wood Mallesons.
155. Gosford said that if Shinetec and Shanxi were permitted to run the argument, and if ISP 98 was engaged such that Bank of China was entitled to request documents, then the documents supplied in April 2024 satisfied that request, as a result of which the time for honouring or dishonouring the demand had elapsed.
156. Shinetec and Shanxi say that Gosford should not be permitted to rely on the fresh evidence. They say that although it post-dated the trial, in fact it was open to Gosford to take precisely those steps in advance of the trial, either because the orders did not prevent those steps being taken or, if they did, that it was open to Gosford to apply to have the injunction varied.
Consideration
157. Subject to one point, we would permit Shanxi and Shinetec to argue this ground. Shanxi and Shinetec assert, and we accept, that they will ultimately be liable for any sum paid by Bank of China. There is no evidence of that, but there is no reason to doubt that Bank of China will look to Shanxi to meet the payment made pursuant to a letter of credit issued at its request, and to the extent that the payment discharges indebtedness of Shinetec, Shanxi will be entitled to an indemnity from its subsidiary. Accordingly, both are “aggrieved” or “sufficiently interested” in the judgment against Bank of China to entitle them to seek leave to appeal, within the meaning of the authorities collected in Talifero v Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107; [2018] NSWCA 227 at [19].
158. The point was live before the primary judge, although Shinetec did not argue it at trial. However, telling against the grant of leave is the fact that, at trial, Shinetec chose not to sue Bank of China (it had originally been joined but was removed when on 31 March 2023 a Further Amended Summons was filed which did not include the Bank). Mr Gleeson SC characterised this as “a deliberate decision not to make claims which would determine the rights between them, us and Bank of China” (transcript, 12 July 2024, p 63), to which the appellants made no response. Accordingly, he maintained that if Shinetec of Shanxi were permitted to run these points, it would be an abuse of process. It was said on the first day of the appeal at the outset of its submissions:
They’re trying now to run Bank of China’s points, which, for reasons unexplained, they never ran at trial. If they were to win them, presumably they say, “We love the New South Wales Courts,” and they try and use that to say Bank of China doesn’t have to pay. If they lose the points, they wish to continue in China to reach the same conclusion by alleging the fraud which they’ve disavowed in Australia. The dual proceedings are vexatious because of the refusal to accept that an adverse result here will be binding upon them in China. That’s the vice in terms of CSR v Cigna.
159. We will return to the alleged abuse of process, because there are other aspects to the abuse relied on in connection with the orders obtained from the Taiyuan Intermediate People’s Court which arise in connection with ground 7. Save for the submissions concerning abuse of process, we would be minded to grant leave to the appellants which are directly affected by the judgment against Bank of China to run the points the Bank ran at trial.
160. However, the points were rightly rejected by the primary judge.
161. The standby letter of credit issued by the Bank of China was “only personal to you and is not assignable or transferable”. Nonetheless, it was expressed to be “subject to the International Standby Practices ISP 98”. It was common ground that that language was sufficient, for the purposes of Chinese law, to incorporate ISP 98.
162. Rule 6.11 mentions receivers, but the rule is only engaged if the person “claims to be designated by law to succeed to the interests of a beneficiary”. In that case, if the person “presents documents in its own name as if it were the authorised transferee of the beneficiary”, the rules on which the appellants rely will apply. The heading of r 6.11 “Transferee by Operation of Law” is apt: the rule applies where the entitlement to call on the letter of credit has been transferred to another legal person.
163. The short point is that there is no successor to which Gosford’s property has been transferred by operation of law. The receivers did not issue the demand in their own name. They did not seek payment to themselves. They made the demand in their capacity as receivers of Gosford, and the funds were to be paid into Gosford’s bank account.
164. Messrs Hurst and Sampson were appointed receivers pursuant to a “Deed of Appointment of Receivers and Managers by Secured Party” dated 26 July 2021. Clause 2.3 of the deed provided that, save in circumstances when Gosford was sought to be wound up, “to the extent permitted by law, the Receivers are and acts as the agent of the Grantor”. The Grantor was Gosford, which had pursuant to cl 22.3 of a General Security Deed with its creditor Gemi 149 Pty Ltd agreed that the creditor might appoint a receiver as Gosford’s agent.
165. The position that a privately appointed receiver is the agent of the grantor until such time as it is wound up reflects the distinction drawn in Gosling v Gaskell [1897] AC 575 and as stated by Dixon J (with whom Gavan Duffy CJ and McTiernan J agreed) in Australian Mutual Provident Society v George Myers & Co Ltd (in liq) (1931) 47 CLR 65 at 82; [1931] HCA 31, holding that despite the receiver being in control of the company’s premises, the company remained in occupation. Dixon J said that:
It is enough to say that, in my opinion, the true effect of the deed in this case was to render the receiver the agent of the Company and to leave its occupation or possession of its property in point of law undisturbed by his entry and by his assumption of control.
166. The agency is said to be “special” because the receivers are not subject to Gosford’s control. That was the point of Rigby LJ’s dissenting judgment in Gaskell v Gosling [1896] 1 QB 669 which was affirmed by the House of Lords (“Of course the mortgagor cannot of his own will revoke the appointment of a receiver, or that appointment would be useless. For valuable consideration he has committed the management of his property to an attorney whose appointment he cannot interfere with”). The judgment of Dawson, Gaudron and Gummow JJ in Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 432-433; [1997] HCA 37 confirmed that the receiver is in law the agent of the mortgagor. And in any event, the point is put beyond argument by s 420(2)(k) of the Corporations Act 2001 (Cth), which confirmed that in addition to any powers conferred by the instrument under which they were appointed, Messrs Hurst and Sampson had power “to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation”.
167. Mr Assaf advanced this submission in his address in chief:
What we say is r 6.11 is engaged, contrary, with respect, to what his Honour found. We say the receivers in this case claim to be designated by law to succeed to the interest of Gosford. That’s the critical concept, “Presents documents in its own name as if it were the authorised transferee of the beneficiary”. These rules on transfer by operation of law apply. We say that that was invoked in this case by virtue of the fact that what was presented to the bank in the letter of demand was presentation made by not The Gosford not the named beneficiary, but, in fact, it was, in substance, presented by the receivers, as contemplated by this rule.
168. We agree that the “critical concept” in the rule is the presentation of documents by a person other than the named beneficiary as if it were the beneficiary’s authorised transferee. There was then the following exchange:
LEEMING JA: Do you say it was presented by the receivers in their own name?
ASSAF: Yes.
WARD P: It’s signed by them as joint receiver and manager and then underneath that are the words, “The Gosford Pty Ltd receivers and managers appointed”.
ASSAF: Yes, but we say they claim to be designated by law to succeed to the interests of Gosford.
169. However, that point was answered by Gosford’s submission:
With a receiver the point is beyond doubt, because under s 420, the receiver is an agent of the company. The receiver does not receive title in its own name, and the only reason the receiver has disclosed its name is because of s 428, which requires the addition of those words. In short, if it is merely a change in control but the [standby letter of credit] is owned by the same person, there is no scope for 6.12 and 6.13.
170. One way of appreciating the force of the obstacles confronting the appellants’ submissions was to consider the position where there is a change in the composition of a company’s board of directors after the standby letter of credit has been issued, and the new directors, acting in that capacity, issue a demand. Mr Assaf said that if new directors had been appointed to Gosford, and acting as directors they issued the demand in the name of their company, then r 6.11 would not apply. That concession was rightly made. He was then asked how his submission concerning a receiver was any different:
ASSAF: It’s because of the different characteristics of the nature of the position of a receiver. That’s what I say. That’s fortified by Professor Gao’s opinion.
LEEMING JA: Do you accept the receiver is the agent of the company?
ASSAF: Yes, however, again, one has to contextualise this agency in the context of r 6.11, and according to Chinese law, the receivership is a situation which involves the transfer of the type contemplated by r 6.11. That’s the distinction. It’s the nature of the receivership in Chinese law.
171. Parts of this submission were advanced inadvertently, because Professor Gao’s opinion on this point had been rejected at trial. As soon as that was pointed out, counsel withdrew the submission. Nothing else was said in response to Gosford’s oral submissions.
172. That leaves only Mr Assaf’s point that receivers are “specifically mentioned by r 6.11”. But that goes nowhere. It is not sufficient in order to engage r 6.11 that the status of the person making a demand be listed in the rule. What engages the rule is not that persons are appointed as receivers, but instead that they present documents in their own name on the basis that they are an authorised transferee of the beneficiary. In response, the appellants said that the receivers “specifically mention their names on the letter of demand”. So they do. It would have been a criminal offence for their status not to have been disclosed. Australian law requires that Gosford set out in every public document after its name a statement that receivers and managers have been appointed: Corporations Act, s 428(1). Failing to do so is an offence. But the obligation to include the words “(receivers and managers appointed)” confirms that it is not the receivers personally, but rather the company, albeit a company to which receivers and managers have been appointed, that was making the demand.
173. In order to reach that conclusion, it has not been necessary for us to have regard to the Official Commentary on the International Standby Practices by Professor Byrne, as to which there was an unresolved dispute as to whether, in accordance with Chinese law, regard might be had. But we heard full submissions on the passages on which the appellants sought to place reliance, and they do not alter our conclusion. Nor is it necessary to address the notice of contention, and it is inappropriate to do so, in circumstances where the Court was told that there were issues (including whether documents could be presented years after a request had been made) as to the efficacy of what had occurred. It follows that the fresh evidence is not relevant, and the notice of motion will be dismissed, but with its costs being the parties’ costs in the appeal.
Ground 7 – the effect of the order of the Taiyuan Intermediate People’s Court
174. This ground maintained that the primary judge erred in entering judgment against Bank of China, and ought to have found that “no right to payment ever from [the Bank of China] ever accrued to [Gosford] under the Letter of Credit” and accordingly dismissed the cross-claim. The appellants said that this was because:
1. the Bank of China’s “obligations to honour or give notice of dishonour were suspended from 3 August 2021 until the requested documentation under r 6.13 of ISP 98 was provided”; and/or
2. “the Shanxi branch of the [Bank of China] was prevented, by no later than 4 August 2021, from making any payment under the Letter of Credit pursuant to the Civil Ruling of the Taiyuan Intermediate People’s Court dated 3 August 2021 and Enforcement Assistance Notice dated 4 August 2021.”
175. The first half of this ground takes the matter no further than ground 6. For the reasons given above, rr 6.11-6.13 of ISP 98 were not engaged when the receivers acting as agents of Gosford called on the standby letter of credit for funds to be paid to Gosford.
176. The second half of this ground involves a question of construing the effect of the order of the Taiyuan Intermediate People’s Court dated 3 August 2021.
177. The primary judge addressed this at [248]-[260]. His Honour noted at [248] that there was a dispute between the experts about whether the Bank of China was bound, or merely the Shanxi Branch, and a dispute whether the effect of a judgment of the Supreme Court of New South Wales would cause the Civil Ruling to be suspended or terminated. His Honour did not resolve the dispute between them. However, his Honour noted at [250] that the experts were agreed that the Civil Ruling was binding, at least, on the Shanxi Branch of the Bank of China, and that the ruling was under Chinese law in the nature of an interim and not a final ruling.
178. The primary judge said that the Bank of China did not dispute Gosford’s submission that entry of judgment does not in terms impose an obligation upon the defendant to do something: at [256]. The result was that:
Thus, the mere entry of judgment in favour of Gosford against the Bank would not, itself, cause the Bank to contravene the Civil Ruling.
179. His Honour entered judgment in favour of Gosford but stayed it pending further approach by Gosford or the Bank to the Chinese Court.
180. Shinetec and Shanxi submitted that the Civil Ruling and Enforcement Assistance Notice should have been found to have had the effect “that no right in debt ever accrued”. They relied on the propositions that a debt only becomes payable if the time for payment has arrived and an action to recover it can be maintained by the creditor. Because of the orders made by the Taiyuan Intermediate People’s Court, the amount was not payable. They said that the Civil Ruling and the Enforcement Assistance Notice should have been found to produce the effect “that no right in debt ever accrued”. It is best to reproduce the submissions advanced verbatim:
The Shanxi Branch was the Guarantor under the Letter of Credit. The payment obligation under the Letter of Credit therefore rested with the Shanxi Branch, being treated as a separate legal person from the Bank of China and other branches under the Letter of Credit. Gosford and the Receivers appeared to accept as much in their closing oral submissions. This position is also consistent with: (1) Professor Gao’s evidence that under Chinese law, the “bank branch from which a standby letter of credit emanates is the issuer, rather than the incorporated bank itself”; and (2) the separate legal personality of bank branches reflected in r 2.02 of ISP98.
As noted above, Gosford accepted that the time by which the Shanxi Branch was required to honour or dishonour payment under the Letter of Credit was 10 August 2021. However, before that time for payment arose, the Civil Ruling on 3 August 2021 and EAN served on 4 August 2021 suspended the Shanxi Branch from making any payment under the Letter of Credit: J[250]. The Shanxi Branch has therefore never been able to “honour” the Receivers’ purported presentation under the Letter of Credit. To do so would require it do the very thing prohibited by the Civil Ruling, namely “paying the amount demanded of it”: r 2.01(b) of ISP98. Any payment obligation it could have under the Letter of Credit remains contingent upon the Civil Ruling being discharged, and therefore the Shanxi Branch has never had a “unqualified and unfettered obligation” to make payment to Gosford in response to the Demand which could give rise to an accrued right in debt.
Gosford, advancing a claim in debt, bore the onus of demonstrating that, in its own words, it “had a substantive accrued right”. For these reasons outlined above, it has failed to do so. No payment obligation from the Bank of China to Gosford (or the Receivers) ever arose, both because of the operation of r 6.13(b) of ISP98 and the Civil Ruling, and therefore judgment should not have been entered for the claim in debt. (Footnotes omitted.)
181. We cannot accept these submissions. The errors in them may be seen in a number of ways.
182. First, to take a commonplace matter of Australian law, a judgment is regularly stayed pending appeal. The existence of the stay – which carries with it the entitlement of the judgment debtor not to pay, and a denial of the rights of the judgment creditor to execute the judgment – does not mean that there is no debt. The appellants do not point to anything in the Civil Ruling which might bring about a different result.
183. Secondly, the Civil Ruling is not a final ruling. It remains in place for a period of time (in fact it has been continued until 24 July 2024). That is inconsistent with it having substantive effect to deny the debtor creditor-relationship brought about by the presentation of an erstwhile valid demand upon the bank. Another way of putting this is that it is inherent in the ruling that once the suspension expires, the bank will no longer have a basis for declining to make the payment. A third way of making the point is that if the ruling had the force of extinguishing the indebtedness, as opposed to the obligation to make payment, then there would be no need for the suspension to operate over a period of time.
184. Thirdly, the Civil Ruling is obviously to be read together with the Enforcement Assistance Notice. Both were issued on the same day, and both were sealed by the Court. The translation of the Enforcement Assistance Notice is:
Please suspend the payment for 12 months from 4 August 2021 to 4 August 2022.
Where the suspension ls expired or the freezing is revoked, the payment may resume.
185. It is thus not merely the presence of the verb “suspend” which carries with it an absence of finality, but also the fact that the Bank of China Shanxi Branch was told that payment may resume after the suspension had come to an end. This is inconsistent with the order bringing the debt to an end.
186. Fourthly, the ruling applies only to the payment of money. It does not purport to prevent the Shanxi Branch of the Bank of China issuing a notice of dishonour. That is a powerful illustration of how the parties’ underlying rights are unaffected by the interim suspension of payment.
187. Fifthly, there is confusion between the primary rights and obligations as between the parties, and the interlocutory orders made by courts. The Bank of China was obliged to make payment following presentation of the demand. It was excused, for the time being, from doing so following the granting of injunctions. But that did not mean that the $37,000,000 was not due and payable for the purposes of determining whether there was a debt. Instead, it meant that, for the time being, the Bank was unable to pay.
188. Once again, the position may be contrasted with the relief which had not been sought. If an injunction had issued in advance of the presentation of the demand, there would be no debt. Further, if an injunction had issued required Gosford to withdraw or countermand its demand, then there would be no debt. But that did not occur.
189. Sixthly, this submission well illustrates the problems brought about by the parallel proceedings commenced by Shanxi and Shinetec. Shinetec deliberately did not sue Bank of China in Australia. The issue as to whether the order obtained by Shanxi from the Taiyuan Intermediate People’s Court affected the debtor-creditor relationship between the Bank as guarantor and Gosford as beneficiary was therefore an issue raised only on Gosford’s cross-claim against Bank of China. It is no small thing for Shanxi or Shinetec to be permitted to reagitate that issue on appeal when Shinetec had not sought to run that argument at trial, when Shinetec chose not to continue proceedings against Bank of China, and when the person most directly affected, the Bank of China itself, does not challenge the order against it.
190. We agree with Gosford’s submission:
There is no merit in the submission that the effect of the Taiyuan Orders, which are and were interim in nature, was to alter the parties’ underlying substantive rights rather than preventing payment while those substantive rights were subject to determination in the Taiyuan Court.
Abuse of process
191. The arguments advanced in support of ground 7 acutely illustrate the parallel litigation which has been commenced by Shanxi and Shinetec. Shanxi and Shinetec seek to say that the primary judge erred in entering judgment against Bank of China because of an interim order Shanxi obtained in China, based on an allegation of fraud, when in the proceedings brought by Shanxi and Shinetec in this Court, fraud has been expressly disavowed.
192. Not all parallel proceedings are vexatious or oppressive. The joint judgment of the High Court of Australia in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 393-394; [1997] HCA 33 distinguished cases of parallel proceedings which were vexatious or oppressive from those which are not:
One well established category of case in which an injunction may be granted in the exercise of equitable jurisdiction is that involving proceedings in another court, including in a foreign court, which are, according to the principles of equity, vexatious or oppressive. Thus, it was said in Carron Iron Company v Maclaren that “[w]here [there is] ... pending a litigation here, in which complete relief may be had, [and] a party to the suit institutes proceedings abroad, the Court of Chancery in general considers that act as a vexatious harassing of the opposite party, and restrains the foreign proceedings.”
In Société Aerospatiale, the Privy Council emphasised that the various cases decided in the nineteenth century with respect to vexation and oppression, including Peruvian Guano Company v Bockwoldt, have continuing significance for the grant of anti-suit injunctions. Those cases establish that the mere co-existence of proceedings in different countries does not constitute vexation or oppression. In particular, Peruvian Guano establishes that “double litigation [which] has no other element of oppression than this, that an action is going on simultaneously abroad, which will give other or additional remedies beyond those attainable in [the domestic forum]” does not amount to vexation or oppression.
More recently, in Bank of Tokyo Ltd v Karoon, Robert Goff LJ pointed out, correctly, in our view, although without specific reference to underlying equitable principle, that foreign proceedings are to be viewed as vexatious or oppressive only if there is nothing which can be gained by them over and above what may be gained in local proceedings. On the other hand, they are vexatious or oppressive if there is a complete correspondence between the proceedings or, in terms used in Carron Iron Company, if “complete relief” is available in the local proceedings. (Footnotes omitted.)
193. What then is the additional remedy that could not be obtained from the New South Wales courts so as to prevent there being “complete correspondence” in the parallel proceedings commenced by the appellants? Mr Assaf correctly appreciated that this was a matter of importance and commenced his address in reply with the topic. It warrants extensive reproduction.
ASSAF: Yes. Can I just say this at the outset. We, obviously, reject any assertion that there is an abuse of process as suggested by Mr Gleeson or at all, and in that regard, I articulated the reasons yesterday, basically, we rely upon CSR, which my learned friend, Mr Gleeson relied upon, specifically at p 393 and, specifically, the discussion there in relation to the circumstances in which multiple proceedings will be – the expression “abuse of process” is not used, but there is a reference to vexatious or oppressive proceedings.
WARD P: Can you tell me this, there’s no reason that the fraud allegations couldn’t have been made in these proceedings
ASSAF: With respect, your Honour
WARD P: or is there, in which case, tell me why? Is there a different definition of fraud that applies in China?
ASSAF: Can I say this, in my submission, if I was running the matter – there was, obviously, a forensic decision made down below, which I was not involved with, obviously, to not press a claim for fraud. There may have been good reasons for that. With respect, that diverts attention, in my respectful submission, that is not the proper approach. What the proper approach is is what the High Court has indicated at p 393, and that is there are – there is some guidance there, “Where an action is going” this is from Peruvian Guano, which my learned friend, Mr Gleeson, relied upon, “Where an action is going on simultaneously abroad which will give other or additional remedies beyond those of the domestic court does not amount”
WARD P: What are the other or additional remedies beyond those attainable in the domestic forum in this case?
ASSAF: Can I take your Honour to blue 4, p 1461, and specifically line R, but before that, your Honour will notice that the third party is at line K, and the third party is Bank of China Limited Shanxi, which, in my respectful submission, is significant. The remedy that is being sought is an order. It’s framed in this awkward language, “Terminate the payment of $37 million under the stand by.” Your Honours obviously know what the issue in this appeal and the remedy that is being sought. The remedy that is being sought is that really the cross claim be dismissed. That’s it. Nothing further.
WARD P: But there would have been nothing to stop a relief akin to this being sought in these proceedings, would there? It’s all very well to say it’s framed awkwardly or in different terms in this document, but there are parallel proceedings, and they do have the effect of fracturing the litigation, and they do give rise to the risk of inconsistent remedies. You’ve heard that not just from Mr Gleeson but also the bank’s concern. You’ve heard that from Mr Kay Hoyle. You say to me this falls within what's put at p 393 in CSR v Cigna, and I say what are the other or additional remedies that you could not have obtained in this jurisdiction?
ASSAF: It’s that remedy there, your Honour.
WARD P: That one.
ASSAF: Yes, precisely.
WARD P: 2.
ASSAF: It’s the remedy against the Shanxi branch.
WARD P: The Shanxi branch couldn’t have been joined in these proceedings?
ASSAF: Not in my respectful submission.
WARD P: I don’t understand why.
KIRK JA: Aren’t they here already?
ASSAF: No, that’s not the Shanxi branch.
KIRK JA: Then I’m not quite sure what Mr Kay Hoyle is doing here.
WARD P: He’s Bank of China.
KIRK JA: But that’s Shanxi branch, Bank of China, isn’t it? He is here representing the Shanxi branch Bank of China, and if he’s not doing that, I hope he’s not charging anyone. Who is he here for?
ASSAF: Your Honour, obviously in this appeal, in respect of the cross claim, of course, we are seeking to engage with quite limited issues. The issues are different. They are, with respect, fundamentally different.
WARD P: Can I just put this proposition to you: I don’t understand the test to be whether the issues are different. You can separate out the issues. You could choose to run issues 1 to 3 here and say, “Well, we don’t want to run the issue of fraud here. We want to run the issue of fraud in China.” That is not the question as to whether they’re separate issues on the page of CSR v Cigna that you’ve taken us to at least twice.
ASSAF: In my respectful submission, that’s part of the inquiry.
WARD P: Then I come back to why couldn’t you allege fraud in these proceedings if you had wanted to? I thought you started to tell me that, had you been instructed in it, you might well have done so.
ASSAF: I may have done something different.
WARD P: Then that really answers my point. You could have done it.
ASSAF: It doesn’t necessarily lead to the conclusion, with respect, that this is an abuse of process. The alleged fraud is at p 1462, line Q.
WARD P: I see. Making those statements in the letter of demand, knowing them to be false, is an allegation that could quite easily have been pleaded here, and it was one that was disavowed.
ASSAF: I’ve made the submission.
WARD P: I understand the submission.
194. No adequate answer was given to the matters raised by the Court in those exchanges, for the good reason that there is no answer to them. There is no reason that a claim for fraud could not have been made in the proceedings in New South Wales, assuming there is a proper basis for one. There is no reason why any of the relief sought by Shanxi in the Taiyuan Intermediate People’s Court could not have been sought in the Supreme Court for New South Wales, assuming there was a proper basis to do so.
195. We have indicated above Shinetec’s candid submission at trial that it did not join the Bank of China in order to prevent there being an abuse of process. But the course adopted on appeal has made the abuse quite clear. There is one process in this Court: the amended notice of appeal. Bank of China is a respondent, and Shanxi sought to be, and was permitted to be, joined as a second appellant. Shinetec and Shanxi together seek to argue points so as to obtain a binding decision in their favour against both Gosford and Bank of China. Yet they insist that Shanxi is entitled to litigate in China the fraud case which was consciously eschewed in New South Wales. That is the clearest possible case of Gosford being vexed twice in different jurisdictions by the same party in circumstances where, to use the language in Carron Iron Company v Maclaren (1955) 5 HL Cas 416; 10 ER 961 and as adopted by the High Court of Australia in CSR v Cigna, “complete relief” is available in the local proceedings.
196. We are conscious that our conclusion that arguing grounds 6 and 7 amounts to an abuse of process is a serious one, to which s 140 of the Evidence Act 1995 (NSW) applies. But we think this is a very clear case. We also note that Shanxi and Shinetec have had ample knowledge that it was a conclusion which this Court might reach. It was explicitly sought in Gosford’s written submissions filed in May 2024.
197. We have also reproduced above Shinetec’s submission made at first instance explaining that it did not sue Bank of China because it would have exposed it to claims of it being an abuse. Much of what Shinetec contended at trial was wrong, but that submission was correct. Yet in this Court, Shanxi is a party, and the Bank of China has been joined as a respondent, and Shinetec and Shanxi wish to advance claims against the Bank, and have the Bank bound by the outcome, but refuse to undertake to discontinue the proceedings pending in China on the same demand under the same letter of credit involving the same parties, or to abide by this Court’s decision. We agree with Gosford that to permit Shanxi and Shinetec to advance grounds 6 and 7 would be an abuse of process.
Conclusion and orders
198. In summary, the substantive grounds raised by Shanxi and Shinetec based on the Construction Contract somehow rendering Gosford’s demand invalid or void or of no effect (grounds 1 and 4) are bad in law, because they misapprehend the nature of a standby letter of credit. Further, the primary judge was correct to refuse to permit Shinetec to advance the ground based on an “implied negative stipulation” on the first day of the trial (ground 5), and as a matter of discretion, those grounds should not be permitted to be run.
199. Grounds 6 and 7 are arguments which were made by Bank of China in defence of the cross-claim. At trial, Shinetec had not proceeded against the Bank, which was present only as a respondent to Gosford’s cross-claim. Bank of China accepts the correctness of the rejection of those grounds. However, in this Court, Shanxi has been joined, and both Shanxi and Shinetec wish to advance those grounds, in circumstances where they refuse to undertake to be bound by the outcome of this Court’s decision in the pending proceedings between Shanxi, Gosford and Bank of China in China. The grounds are wrong as a matter of law, because they misapprehend the nature of the appointment of receivers and of interlocutory orders. And further, we have accepted Gosford’s submission that it would be an abuse of process to permit Shanxi and Shinetec to advance these grounds.
200. During the hearing of the appeal, Mr Gleeson at one stage suggested that other orders should be made if this Court accepted his submission that there was an abuse of process. However, as was indicated at the time, in the absence of any formal application, we regard it as inappropriate to accede to that request. As we understand it, the stay of the judgment against the Bank of China ordered by the primary judge on 14 December 2023 remains in place, and application may be made to his Honour consequent upon the dismissal of this appeal.
201. For those reasons, the entirety of the appeal (save for those grounds which were dismissed on 11 July 2024 when they were abandoned by the appellants) must be dismissed. Because we have addressed the grounds substantively, in addition to dealing with the submissions pertaining to the grant of leave, and since the appellants have already filed a notice of appeal, it is not necessary for us separately to address the grant of leave. We have not determined the notice of contention, but that needs no separate order dealing with it. It has been unnecessary to resolve Gosford’s notice of motion to adduce fresh evidence, which should be dismissed (but with its costs being costs in the appeal). No party sought to be heard against an order that costs of the appeal followed the event.
202. The Court’s orders are:
1. Dismiss the notice of motion seeking to adduce fresh evidence filed 19 April 2024.
2. Appeal dismissed with costs.
**********
ANNEXURES
Letter of Credit (592853, pdf)
Demand (1012731, pdf)
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 July 2024 | 27,243 |
nsw_caselaw:190ddf76ffa6a96580d2fd28 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-24 00:00:00 | Application by the Commissioner of the Australian Federal Police v Sun [2024] NSWSC 890 | https://www.caselaw.nsw.gov.au/decision/190ddf76ffa6a96580d2fd28 | 2024-07-26T22:26:00.849247+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Application by the Commissioner of the Australian Federal Police v Sun [2024] NSWSC 890
Hearing dates: 14-18 November 2022, 9 February 2023
Date of orders: 24 July 2024
Decision date: 24 July 2024
Jurisdiction: Common Law
Before: Rothman J
Decision: (1) The Court refuses the application by the Commissioner of the Australian Federal Police for a forfeiture order pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth).
(2) Any parties seeking costs under s 323 of the Proceeds of Crime Act 2002 (Cth) shall, within 14 days of the date of the delivery of this judgment, file submissions of no more than five pages, together with any documents upon which reliance is placed for that purpose and any party opposing such order shall, within a further 14 days, file submissions of no more than five pages together with any documents upon which the opponent relies. The matter will be listed for short argument before the Court at a convenient time to the parties.
Catchwords: CRIME – proceeds of crime – Proceeds of Crime Act 2002 (Cth) – application for a forfeiture order – whether real property and monies in bank accounts is proceeds of crime – chose in action – whether chose in action is proceeds of crime or instrument of serious offence
Legislation Cited: Commonwealth Constitution, s 51(xxxi)
Crimes Act 1900 (NSW), ss 4B, 192E, 192G
Proceeds of Crime Act 2002 (Cth), ss 17, 18, 49, Pt 2-2 Div 5 Subdivs B-C, 73, 77, 78, 180, 318A, 318B, 329, 330, 338,
Criminal Code 1995 (Cth), ss 135.2, 400.9(1)
Cases Cited: Anning v Anning (1907) 4 CLR 1049; [1907] HCA 13
Blackadder v Ramsey Butchering (2005) 221 CLR 539; [2005] HCA 22
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Collier v Sunday Referee Publishing Co Ltd [1940] 2 KB 647; [1940] 4 All ER 234
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165; [2022] HCA 1
Herald and Weekly Times Ltd v Commonwealth (1966) 115 CLR 418; [1966] HCA 78
Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39
Paull v Munday (1975) 11 SASR 346
R v Neil; Ex parte Cinema International Corporation Pty Ltd (1976) 134 CLR 2; [1976] HCA 11
R v Watson; Ex parte Australian Workers’ Union (1972) 128 CLR 77; [1972] HCA 72
Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393; [1987] HCA 27
State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412; [1966] HCA 56
Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24
Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45; [1989] HCA 24
Category: Principal judgment
Parties: Commissioner of the Australian Federal Police (Plaintiff)
Jieying Sun (Defendant)
Representation: Counsel:
G O’Mahoney / D Tang (Plaintiff)
G A Sirtes SC / P Reynolds (Defendant)
Solicitors:
Criminal Assets Litigation, Australian Federal Police (Plaintiff)
MLH Lawyers (Defendant)
File Number(s): 2015/308779
JUDGMENT
1. The Commissioner of the Australian Federal Police (hereinafter “the Commissioner”) seeks a forfeiture order under s 49 of the Proceeds of Crime Act 2002 (Cth) (hereinafter “the Act”) in relation to property of which the defendant, Ms Jieying Sun, is the registered proprietor or in whose name funds are deposited.
2. The property in question is real property at 304/118 Joynton Avenue, Zetland NSW 2017 of which, as earlier stated, the defendant, Jieying Sun is the registered proprietor, and funds standing to the credit of the defendant in ANZ being account ending in numbers #592, which account is also in the name of the defendant. The account will hereafter be referred to as the “ANZ Account” and the property as the “Zetland Property”.
3. The order is opposed by the defendant.
4. Further, if the Court were minded to issue forfeiture orders then the defendant seeks compensation orders under s 78(1) of the Act in respect of all or any of the property to be forfeited.
Background
5. The defendant is a citizen of the People’s Republic of China (hereinafter “PRC” or “China”) who has lived and lives in Australia on a student visa. Her father, Mr Liwu Sun, resides in China and is a well-resourced businessperson with significant business interests operating in the PRC and who, on the evidence before the Court, has been extremely successful.
6. On or about 11 or 12 August 2014, an amount of $517,241 was transferred to the defendant’s account with the Commonwealth Bank (hereinafter the “CBA Account”). The funds deposited originated from either the father’s accounts or from one of his companies. The method of transfer is a matter which has occasioned the restraining orders sought and obtained by the Commissioner.
7. In or around December 2014 (according to the defendant on 28 November 2014), the defendant entered into a contract for the purchase of the Zetland Property. The financing of the property involved the defendant obtaining a bank cheque from one or two of her CBA Accounts for a deposit of $95,500; and, obtaining a loan from ANZ Bank for the purchase of the property (in the amount of $640,000). The ANZ account was opened as an offset account on that loan.
8. In January 2015, $430,000 was transferred from the CBA Account to the ANZ account.
9. Settlement of the Zetland Property occurred on 20 January 2015. The purchase price, seemingly over and above the deposit already mentioned, was $857,055.71. Further, the defendant was required to pay $38,485 in stamp duty and $2,146.11 in legal fees.
10. It is necessary to briefly describe the process by which the moneys were transferred from the PRC to Australia. In or about 2014, the Australian Federal Police (hereinafter “AFP”) commenced an investigation into suspected money laundering syndicates and one, in particular, comprised some Chinese students who had been observed depositing large sums of cash into various Australian financial institutions and then transferring the funds overseas.
11. As part of the investigation in November 2014, the AFP commenced an investigation into Mr Yei Feng. In 2015, Mr Feng was charged with an offence being one contrary to s 400.9(1) of the Criminal Code Act 1995 (Cth) (hereinafter the “Criminal Code”). The charge was that between 23 July 2014 and 8 December 2014, in Sydney and elsewhere, Mr Feng dealt with money, reasonably suspected to be the proceeds of crime, and, at the time of dealing with the money, its value was $100,000 or more.
12. Mr Feng pleaded guilty. The conviction was recorded on 9 December 2016 at which time Mr Feng was sentenced to 8 months imprisonment.
13. It is appropriate to describe the criminal enterprise that occurred. The process is not uncommon and is one to which the authorities are now alert.
14. Money that is sought to be transferred internationally is, from time to time, transferred through unscrupulous money exchange agents who, on account of profits being earned elsewhere, offer a slightly better exchange rate and lower service fees to effect the exchange. The money is then transferred to the exchange agent who deposits it in an account of a person unknown to the transferor of the money.
15. The account to which it is transferred usually belongs to, or is associated with, a person engaged in criminal activity, who then pays others to deposit cash in amounts less than the reportable amount, which total the amount to be transferred, into the account of the transferee. In that way, the criminal enterprise “launders” cash obtained from criminal activity; the exchange agent obtains a commission on the laundered money greater than a market transfer commission; and the transferor transfers the money at a lower cost than otherwise would be required. Other than as a result of noticing multiple deposits, compared to one deposit, the transferee may be wholly unaware of the process that has been undertaken.
16. The foregoing process is illegal; launders money from criminal activities; and renders the money and anything purchased with the money an instrument of criminal activity. The process described may involve no knowledge of the process or of any illegality or criminal activity on the part of the original transferor or the ultimate transferee. In these proceedings, there is no suggestion that the defendant or her father (or his companies) were aware of the process being undertaken or the illegality of the process.
17. Relevant to the current proceedings, on 11 and 12 August 2014, three persons, including Mr Feng, deposited cash in Ms Sun’s CBA account totalling $437,291. This was deposited in seven different deposits of which Mr Feng made five deposits totalling $357,241. The other two deposits were by Lin Su and Lin Shau, each of whom was a student, and each deposited on 12 August 2014 amounts of $30,000 and $50,050 respectively. Ms Sun also deposited, in her own account, an amount of $70,000 on 20 August 2014.
18. On 17 December 2014, Ms Sun obtained a bank cheque for $95,500 from the Bank utilising the moneys deposited in the account in the aforesaid manner. This bank cheque was used for the exchange of the contracts for the purchase of the Zetland Property, which occurred on 19 December 2014. The contract price was $955,000.
19. In December 2014, Ms Sun applied for a loan with the ANZ Bank. While the authorship of all of the information contained in each of the documents is a matter of some contention, it is sufficient for the present purposes to note that the document was based upon a completed home loan application form; an employment certificate dated 27 November 2014 issued by Ms Sun’s father’s company (or one of them), Beijing Xingpeng Construction Engineering Co Ltd, certifying that Ms Sun was employed with the company since November 2011 as a full-time office manager; three payslips from the company for September, October and November 2014; a bank statement showing salary credit; and statements of Financial Position dated 11 December 2014, 29 December 2014 and 30 December 2014, each purportedly signed by Ms Sun.
20. Leaving aside the circumstances pertaining to the obtaining of the loan by the defendant, Ms Sun, the factual matrix upon which the Commissioner relies in relation to the money transfer is not unusual. The issue in the proceedings is that the Commissioner asserts that the ANZ loan was obtained by Ms Sun by misrepresenting her circumstances in that, at the time of the loan application, Ms Sun was neither employed by her father or his companies nor receiving income as alleged.
21. There is no allegation that ANZ has suffered damage as a consequence of the alleged fraud, but the circumstance that ANZ has suffered no damage does not, in and of itself, overcome the reasonable suspicion that, by the misrepresentation, Ms Sun dishonestly obtained a benefit by deception. A person who, by deception, dishonestly obtains a financial advantage is guilty of the offence of fraud, pursuant to the terms of s 192E of the Crimes Act 1900 (NSW).
22. If the person from whom the financial advantage is obtained is the Commonwealth then there is an equivalent Commonwealth offence under s 135.2 of the Criminal Code. The latter offence is irrelevant to the current proceedings and conduct because ANZ is not the Commonwealth, nor a Commonwealth entity.
23. Further, the provisions of s 192G of the Crimes Act render it an offence for a person, acting dishonestly, to make or to publish or to concur in making or publishing, any statement (written or oral) that is false or misleading with the intention of, relevantly, obtaining a financial advantage. The term “dishonest” or “dishonestly”, where used in the Crimes Act, signifies “dishonest according to the standards of ordinary people and known by the defendant to be dishonest according to the standards of ordinary people”. [1]
24. The Commissioner alleges that Ms Sun obtained the advantage, being the loan funds from the ANZ, by making statements to the Bank contained within:
1. the ANZ home loan application form;
2. the employment certificate provided to ANZ;
3. the payslips, to which earlier reference has been made;
4. the bank statements from SPD Bank showing salary credits; and
5. the three Statements of Financial Position, to which earlier reference has been made, being those dated 11 December 2014, 29 December 2014 and 30 December 2014.
25. The Commissioner alleges that each of the documents were false or misleading in a material particular, contrary to s 192G of the Crimes Act.
26. Whether the Commissioner has satisfied the Court that the ANZ loan funds were proceeds of crime is a matter of fundamental controversy in the proceedings before the Court. On the other hand, the deposit, being moneys in the account derived from the transfer arrangements orchestrated by Mr Feng and for which he has been convicted, is relatively uncontroversial.
27. Mr Feng was convicted of an offence, being dealing with money suspected of being proceeds of crime contrary to s 400.9(1) of the Criminal Code. The moneys were transferred by Mr Feng and others into the defendant’s CBA account and, pursuant to the terms of s 329(2) of the Act, the moneys in that account became an instrument of a serious offence.
28. It is appropriate to recite s ss 329 and 330 of the Act:
“329. Meaning of proceeds and instrument
(1) Property is proceeds of an offence if:
(a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or
(b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence;
whether the property is situated within or outside Australia.
(2) Property is an instrument of an offence if:
(a) the property is used in, or in connection with, the commission of an offence; or
(b) the property is intended to be used in, or in connection with, the commission of an offence;
whether the property is situated within or outside Australia.
(3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.
(4) Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.
330. When property becomes, remains and ceases to be proceeds or an instrument
(1) Property becomes proceeds of an offence if:
(a) the property is wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or
(b) the property is wholly or partly acquired using proceeds of the offence; or
(c) an encumbrance or a security on, or a liability incurred to acquire, retain, maintain or make improvements to, the property is wholly or partly discharged using proceeds of the offence; or
(d) the costs of retaining, maintaining or making improvements to the property are wholly or partly met using proceeds of the offence; or
(e) the property is improved using proceeds of the offence;
including because of one or more previous applications of this section.
(2) Property becomes an instrument of an offence if:
(a) the property is wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or
(b) the property is wholly or partly acquired using an instrument of the offence; or
(c) an encumbrance or a security on, or a liability incurred to acquire, retain, maintain or make improvements to, the property is wholly or partly discharged using an instrument of the offence; or
(d) the costs of retaining, maintaining or making improvements to the property are wholly or partly met using an instrument of the offence; or
(e) the property is improved using an instrument of the offence;
including because of one or more previous applications of this section.
(3) Property remains proceeds of an offence or an instrument of an offence even if:
(a) it is credited to an account; or
(b) it is disposed of or otherwise dealt with.
(4) Property only ceases to be proceeds of an offence or an instrument of an offence:
(a) if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires); or
(b) if the property vests in a person from the distribution of the estate of a deceased person, having been previously vested in a person from the distribution of the estate of another deceased person while the property was still proceeds of an offence or an instrument of an offence (as the case requires); or
(ba) if the property has been distributed in accordance with:
(i) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a marriage or either of them; or
(ia) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a de facto relationship (within the meaning of that Act) or either of them; or
(ii) a financial agreement, or Part VIIIAB financial agreement, within the meaning of that Act or a superannuation agreement within the meaning of Part VIIIC of that Act;
and 6 years have elapsed since that distribution; or
(c) if the property is acquired by a person as payment for reasonable legal expenses incurred in connection with an application under this Act or defending a criminal charge; or
(d) if a forfeiture order in respect of the property is satisfied; or
(e) if the property is forfeited, confiscated or otherwise disposed of under a corresponding law (whether or not because of an order made under that law); or
(f) if the property is otherwise sold or disposed of under this Act; or
(g) in any other circumstances specified in the regulations.
(5) However, if:
(a) a person once owned property that was proceeds of an offence or an instrument of an offence; and
(b) the person ceased to be the owner of the property and (at that time or a later time) the property stopped being proceeds of an offence or an instrument of the offence under subsection (4) (other than under paragraph (4)(d)); and
(c) the person acquires the property again;
then the property becomes proceeds of an offence or an instrument of the offence again (as the case requires).
(5A) Paragraph (4)(ba) does not apply if, despite the distribution referred to in that paragraph, the property is still subject to the effective control of a person who:
(a) has been convicted of; or
(b) has been charged with, or who is proposed to be charged with; or
(c) has committed, or is suspected of having committed;
the offence in question.
(6) Property becomes, remains or ceases to be proceeds of an unlawful activity, or an instrument of an unlawful activity, if the property becomes, remains or ceases to be proceeds of the offence, or an instrument of the offence, constituted by the act or omission that constitutes the unlawful activity.
(7) Paragraphs (1)(a) to (e) and (2)(a) to (e) do not limit each other.
(8) This section does not limit section 329.”
29. Once, in accordance with the foregoing, it is clear that the money given by the defendant’s father to the money exchanger to transfer to his daughter was diverted and utilised to launder money, the money (being the cash deposited by Mr Feng and others into the account of the defendant) becomes, pursuant to the terms of ss 329 and 330 of the Act, either the proceeds of crime or an instrument of crime (possibly both).
30. As earlier stated, the Commissioner applies for forfeiture orders under s 49 of the Act. It is necessary to recite the provisions of s 49:
“49. Forfeiture orders - property suspected of being proceeds of indictable offences etc.
(1) A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:
(a) the responsible authority for a restraining order under section 19 that covers the property applies for an order under this subsection; and
(b) the restraining order has been in force for at least 6 months; and
(c) the court is satisfied that one or more of the following applies:
(i) the property is proceeds of one or more indictable offences;
(ii) the property is proceeds of one or more foreign indictable offences;
(iii) the property is proceeds of one or more indictable offences of Commonwealth concern;
(iv) the property is an instrument of one or more serious offences; and
(e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.
(2) A finding of the court for the purposes of paragraph (1)(c):
(a) need not be based on a finding that a particular person committed any offence; and
(b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed.
(3) Paragraph (1)(c) does not apply if the court is satisfied that:
(a) no application has been made under Division 3 of Part 2 - 1 for the property to be excluded from the restraining order; or
(b) any such application that has been made has been withdrawn.
Refusal to make a forfeiture order
(4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:
(a) is an instrument of a serious offence other than a terrorism offence; and
(b) is not proceeds of an offence;
if the court is satisfied that it is not in the public interest to make the order.
31. There are a few aspects of the foregoing provision which require expansion. First, the provisions of s 49(1) of the Act, by using the word “must”, requires a court to make an order if the conditions in the subsection have been satisfied.
32. In regard to the provisions of s 49(1) of the Act, it should be noted that the Court is a court with proceeds jurisdiction; the Commissioner is a relevant responsible authority described in s 49(1)(a) and has applied for an order under s 49(1) of the Act; a restraining order was issued by the Court on 21 October 2015, which, to state the obvious, is more than six months before today and before the motion for the forfeiture order was agitated, and, therefore, satisfies s 49(1)(b); and, the Commissioner has taken reasonable steps to identify and notify persons with an interest in the property. The foregoing is uncontentious.
33. By virtue of the proceeds of crime, the cash deposited in the account of the defendant was realised from the commission of an offence, being the offence with which Mr Feng was charged and which was committed by him and others. Further, the chose in action, or moneys contained in the account, was probably used in connection with the commission of an offence and, perhaps more importantly, the money provided to the exchange agent was money used in connection with the commission of an offence and was, as a consequence, an instrument of an offence pursuant to the terms of s 329(2) of the Act.
34. Further again, by operation of s 330(1) of the Act, the moneys contained in the bank account or the chose in action of the defendant is property wholly or partly derived or realised from the disposal or other dealing with proceeds of the offence, being the money laundered as a result of the offending of Mr Feng and others. It is also property wholly or partly acquired using proceeds of the laundering offence.
35. Over and above the foregoing, pursuant to the terms of s 330(2) of the Act, the property is an instrument because it is property wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence, being the laundered moneys and/or is property wholly or partly acquired using an instrument of the offence. Similarly, if the deposit moneys are an instrument of the offence and or proceeds of an offence, then the Zetland Property is, by virtue of s 330(2)(b) property wholly or partly acquired using an instrument of the offences committed by Mr Feng and his cohorts.
36. Thirdly, the property only ceases to be proceeds of an offence or an instrument of an offence pursuant to the terms of s 330(4) of the Act. For that purpose, we can, without more, simply disregard the provisions of pars (b), (ba), (c), (d), (e), (f) and (g) of subsection 330(4) of the Act. In other words, the only possible relevant provision that would have the effect of the property ceasing to be proceeds of an offence or an instrument of an offence is the circumstance described in subsection 330(4)(a) of the Act. The paragraph is extracted above.
37. The dictionary to the Act, s 338, defines “sufficient consideration” as “consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations”. Thus, considerations that are not commercial in nature, as may sometimes represent consideration for some contracts, are not to be factored into the determination of whether sufficient consideration has been provided.
38. The construction of the foregoing provisions and the term “sufficient consideration” was the subject of extensive discussion by the High Court in Lordianto. [2]
39. In Lordianto, the High Court clarified that, essentially, for property to cease to be proceeds, pursuant to the terms of s 330(4) of the Act, there needs to be the equivalent of a bona fide purchaser for value without notice. The High Court provided the example of a drug dealer gifting cash to a relative who then purchases a motor vehicle. [3] The motor vehicle would still be the proceeds of crime and it is only when a subsequent purchaser buys the motor vehicle for value without knowledge of the criminally tainted antecedents that the property ceases to be the proceeds of crime.
40. Further, the High Court rejected the proposition that the third party referred to in s 330(4)(a) of the Act needs to be a third party to the transaction by which the property first became the proceeds of crime. [4]
41. Further again, and most relevantly for the current discussion, the High Court made clear that reliance on a “temporal” connection is a mistake. Such a temporal approach does not take account of the operation of s 330(1) and (2) of the Act. The High Court said at [100]:
“[100] Third, the reliance in some judgments below on a “temporal” issue – property “becoming” proceeds or an instrument of an offence under s 330(1) or (2) at the same time as it “ceased” to be proceeds or an instrument under s 330(4)(a) – is inconsistent with the POCA. It does not take account of the operation of s 330(1) and (2), to which reference has just been made. Further, it does not take account of the fact that the inquiry under s 330(4)(a) is objective. Necessarily, there can be no detailed exposition in the abstract.” [5]
42. The reference to the operation of s 330(1) and s 330(2) is a reference to the explanation given by the High Court at [96] that it may not be possible to identify the transaction by which the property first became proceeds of an offence or an instrument of an offence and it is not consistent with the text of the Act to limit the “third party” to which s 330(4) refers to a person with no involvement in the transaction by which property first became proceeds of an offence or an instrument of an offence. Rather, the High Court took the view that the term “third party” is no more than a descriptor of a person who satisfies s 330(4)(a) of the Act.
43. The Court, as presently constituted, is bound by the determination of the High Court and by its considered obiter. Yet, the reference to the absence of a temporal connection does create some tension.
44. The terms of s 330(4) deal with the “cessation” of property as proceeds of an offence or an instrument of an offence. Without more, this would suggest that s 330(4) of the Act operates only after property has become the proceeds or instrument of an offence.
45. The High Court was not dealing with that situation. Yet one can readily foresee the circumstances where the consideration is provided prior to the property becoming the proceeds or instrument of an offence. An example will suffice.
46. Let us assume, perhaps in a manner not totally foreign to the arrangements in this case, that an employee works for an employer whose head office is overseas. Leaving aside for present purposes whether the employee may be compensated at a rate that is above market rates, let us further assume that the employment contract is terminated and the employee, in calculating her or his entitlements, realises that there has been an underpayment of salary of, say, $100,000.
47. The underpayment is raised with the employer in Australia who immediately accepts the correctness of the claim and refers it to the head office overseas. The head office transfers the $100,000 to the employee’s bank account and Mr Feng (or persons operating in the same manner) undertakes the same money laundering process as occurred in these proceedings.
48. The employee receives the $100,000 in a bank account but the consideration, being the services provided under the contract of employment, was provided before the offence took place and before the chose in action (being the bank account of the employee) was debited with the amount that is, in accordance with the analysis in these proceedings, the proceeds or instrument of an offence.
49. When the consideration was provided, assuming for present purposes it is “sufficient consideration” and assuming the provision of services under a contract of employment is a “commercial consideration”, it was well before the money became the proceeds or instrument of an offence and at a time when there were no proceeds or instrument of an offence in any relevant sense. Does the High Court comment that there need be no “temporal connection” mean that consideration for the amount that was provided well before it became the proceeds or instrument of an offence may be sufficient consideration and, notwithstanding the inelegance of the phrase, consideration that allows the proceeds or instrument to cease to be such?
50. The foregoing difficulty is one that is, or may be, relevant to the current circumstances with which the Court must deal. It is further complicated by the terms of Subdivisions B and C of Division 5 of Part 2-2 of the Act, which dealt with exclusion orders and compensation orders. Exclusion orders depend upon property not being the proceeds of unlawful activity or the proceeds or instrument of an offence and merely reiterate the difficulty.
51. A court that has issued or is to issue a forfeiture order may make a compensation order under s 77 of the Act. There are some obvious technical requirements. An applicant must make the application for the compensation orders; the Court must be satisfied that the applicant has an interest in the specified property described in the forfeiture order or in the application for the forfeiture order; and the Court has issued, or is to make, the forfeiture order.
52. The non-technical requirements for a compensation order to be made require the Court to be satisfied that a proportion of the value of the applicant’s interest in the property was not derived or realised, directly or indirectly, from the commission of any offence and that the applicant’s interest is not an instrument of any offence.
53. Given the conclusions already reached, it could never be said that, in the foregoing hypothetical, an employee’s chose in action (or so much of it as was transferred from overseas) was not the instrument of an offence.
54. It cannot have been the intention of the legislature to confiscate property of persons who are innocently exposed to their property being the instruments or proceeds of crime. The clear purpose of the provisions of s 330(4) and the capacity to issue exclusion and compensation orders is to ensure that persons, who have an interest in property, which, for reasons that do not involve their knowledge or criminality, can be classified as the instrument or proceeds of crime, should not be prejudiced.
55. While the federal government plainly has the power to confiscate property derived from criminal activity, if the property confiscated were property of an innocent third party, there may be interesting issues associated with the provisions of s 51(xxxi) of the Constitution.
56. While it is important not to read comments in any judgment beyond that with which the judgment is dealing, the High Court was expressly dealing with a submission that considered and sought to rely upon the use of the word “ceased” or “ceases” in the Act. As a consequence, the Court is not inclined to depart from the generality of the comments of the plurality and “sufficient consideration”, even when provided before the property becomes the instrument or proceeds of crime, may be taken into account in determining whether the provisions of s 330(4) of the Act have been satisfied.
57. The High Court dealt expressly with international transfers of the kind here impugned because that was an issue in the Lordianto appeal. The High Court said at [75]-[81]:
“[75] The essential initiating event is an instruction by a payer (or the originator of a payment) to their bank to reduce the value of their bank balance in an account and to increase, correspondingly, the bank balance of an account held by a named recipient (also known as the beneficiary). The form of the instruction is not fixed. The originator’s title to “money” is not transferred. The transfer operates by adjusting the total amount of the debts owed by the participants, the banks, to each other by a process which the banks commercially describe as “netting”. It is a process whereby a series of obligations between two participants is replaced with a single obligation which is calculated by adding all of the obligations owed by each participant to the other and deducting the smaller from the larger. On any one day, the netting involves multiple participants in the industry, often using clearing houses, which operate as multilateral contracts. The process of netting determines the net sum which each bank owes to each other in the clearing system, which is then settled.
[76] There are a number of consequences. First, when an originator instructs a bank to make a transfer from their account, the chose in action representing that credit balance is extinguished or reduced by the amount of the transfer. Second, a fresh chose in action is created, or the value of an existing chose in action is increased, for the beneficiary which entitles them to withdraw an equivalent amount from their bank, subject always to the terms of their contract with their bank. Third, the property the beneficiary acquires is wholly distinct from the property which the originator had before the transfer. Indeed, the POCA recognises the change in the nature of property held by a bank by providing that “property” remains proceeds, or an instrument, of an offence even if credited to an account.
[77] These processes raise significant commercial considerations and, thus, consequences for the proper construction of s 330(4)(a). As stated earlier, different forms of property will necessarily raise different questions about the form, amount, nature and source of the consideration.
[78] Once the property in a bank account is properly identified and it is recognised that the value credited to another account is not the property that was deposited, many of the submissions about what was necessary in order for an applicant for an exclusion order to demonstrate that they have provided “sufficient consideration” for the acquisition of an interest in connection with their chose in action in a bank account must be rejected.
[79] First, contrary to the AFP’s submissions, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the “funds” deposited into the appellants’ respective Australian bank accounts, which they sought to exclude from the restraining order, were “their own funds”. As just seen, the funds deposited with the banks were not the property the appellants held and sought to exclude.
[80] Second, contrary to the approach adopted by some of the courts below, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the appellants had a direct connection, contractual or otherwise, with the persons who “made the deposits” into their Australian bank accounts or that there was any contractual relationship, whether as agents or otherwise, between the remitters in the foreign country and the depositors in Australia.
[81] Third, a construction that focuses attention away from whether consideration has been paid and instead towards whether the relevant relationships are direct or indirect diverts attention from the fact that a purpose of the provision is to exclude those who have not paid sufficient consideration, including volunteers, from being able to keep proceeds, or an instrument, of an offence.” [6]
58. The foregoing analysis must be applied in dealing with the applications that are now before the Court. It is necessary to bear in mind that, as earlier stated, the jurisdiction relies on the initial formation of a reasonable suspicion and depends upon the criminal conduct of the person whose conduct forms the basis of the original restraining order, not the person whose property is being forfeited. In this case, there can be no doubt that Mr Feng whose conduct (and the conduct of his co-offenders) formed the basis of the restraining order engaged in the conduct that constituted one or more serious offences and is the basis upon which the property in issue in these proceedings is the proceeds or instrument of an offence. However, the Court is entitled not to make a forfeiture order if the Court is satisfied that property is an instrument of a serious offence other than a terrorism offence, but is not the proceeds of an offence, and should not be forfeited “in the public interest”. [7]
The evidence
59. As is obvious from the foregoing, a significant proportion of the primary facts are uncontentious. These reasons have already recounted that the defendant, Jieying Sun, is a citizen of the PRC, who has been employed by her father, Mr Liwu Sun, in one of his companies. Her residence in Australia, since 2008, has been pursuant to a study visa during which time she has undertaken a number of tertiary courses.
60. The father, Liwu Sun, resides in China. Further, the reasons have also already recounted the transfer of moneys from one of the father’s companies to the defendant, through an exchange agent and the transfer was the process by which serious criminal offending occurred, because the amount transferred was used to launder money. The persons involved, or some of them, have been the subject of criminal proceedings and conviction.
61. Also uncontentious is the fact that the moneys standing to the credit of the defendant were used as part of the deposit for the purchase of the property in Zetland and that the defendant obtained a loan from ANZ for the difference between the deposit and the purchase price of the property in Zetland (less certain other cash deposits).
62. As earlier stated, none of the foregoing is contentious.
63. Notwithstanding the short compass of the factual dispute between the parties, significant evidence was adduced and there was lengthy cross-examination on affidavits. The Commissioner relied upon the affidavits of Glyn Evan Roberts sworn 20 October 2015 and the exhibit thereto (Exhibit GER-1); the affidavit of Scott Michael Mathews, affirmed 1 November 2016 and the exhibit thereto (Exhibit SM-1) (the “First Mathews Affidavit”); an affidavit of John Vuceric affirmed 7 May 2020 and the exhibit thereto; a second affidavit of Scott Michael Mathews sworn 2 July 2020 (the “Second Mathews Affidavit”); an affidavit of Craig Jerkavits, affirmed 14 July 2020; an affidavit of Scott Michael Mathews, affirmed 23 November 2021 (the “Third Mathews Affidavit”) and the exhibit thereto; an affidavit of Jacqueline Mary Smythe sworn 3 December 2021 and the exhibit thereto; and the affidavit of Leanne Eileen Jackson sworn 9 December 2021 and the exhibit thereto.
64. Two further affidavits of Scott Michael Mathews affirmed 10 November 2022 and 14 November 2022 respectively are relied upon together with the entire transcript of the examination of Mr Yi Feng on 18 March 2016 and Mr Sean Huang of 18 August 2016 and Mr Guanyu Lai of 21 September 2021. Notice was given pursuant to the provisions of s 318B(1) of the Act. The transcript of Mr Huang and Mr Lai were admitted into evidence and the application for leave to admit the evidence of Mr Yi Feng was the subject of an application for leave under the relevant section.
65. Leaving aside the affidavits of interpreters, which were sworn in relation to translations of Chinese language exhibits and which translation was uncontentious, the defendant relied upon the affidavits of the defendant herself, Ms Jieying Sun, of 4 April 2017, two affidavits of the father, Liwu Sun of 20 January 2016 and 21 April 2016 and an affidavit of David Leamy of 13 March 2016. There are a large number of exhibits to the affidavits.
66. The defendant sought leave to rely upon additional evidence being the affidavit of Mr Shing Lam of 11 November 2021 which was sought to be relied upon in response to the Commissioner’s further affidavits.
67. The affidavits of Scott Michael Mathews related essentially to procedural matters, mostly being attempts to contact witnesses, including Tom Jin and Mr Yi Feng and otherwise were formal in that they exhibited a raft of documents. A further affidavit of Jayne Alice Qorraj also related to attempts to contact Mr Yi Feng. Similarly, the affidavit of David Leamy concerned essentially the provenance of documents. It is unnecessary to summarise the formal affidavits.
Leanne Jackson
68. As already stated, Ms Jackson swore an affidavit on 9 December 2021 and gave evidence on 14 November 2022. At the time of swearing the affidavit, Ms Jackson was a Commercial Home and Investment Lending Manager at ANZ; a position she had held since February 2009.
69. Her main role was assessing home loan applications. If the application were to involve foreign income, then the application would be submitted by her to the ANZ Credit Assessment Team.
70. Her usual practice, in assessing a loan, was to conduct an interview with the applicant and, in that interview, confirm the details of the application; provide the applicant with details of the financial products that may meet the applicant’s needs; compile the documents needed to progress the application; and request source documents from the applicant.
71. The source documents needed were payslips and bank records evidencing income over the last three months. If there were foreign income, an employment letter or contract would also be required. It was her ordinary practice to provide applicants with a blank home loan document for them to complete. If she were ever to help an applicant complete the form, it would only be on the basis of the information provided by the applicant. Further, she would always confirm the contents of the application with the applicant.
72. It was also her practice to obtain source documents directly from the applicant, rather than from the employer, for example. Ms Jackson is unaware of any situation where a person fulfilling her role at the branch level would contact an employer directly to receive from that employer the financial document or documents. If a third party, such as an accountant, were to provide a source document, then Ms Jackson would show it to the applicant for verification.
73. Part of the application is an authority for ANZ to obtain documents from accountants, financial advisers or employers. Despite this, Ms Jackson confirmed it was not the usual practice to obtain the documents in that manner. As part of the application process, Ms Jackson would obtain a Statement of Financial Position from the applicant, usually directly, which she would then cross-reference to source documents otherwise provided.
74. Ms Jackson would then submit the application with a recommendation as to whether it should be approved. There existed “Mortgage Credit Requirements”, which were exhibited to the affidavit, and which governed the process internally.
75. In the role described, Ms Jackson did not deal with mortgage brokers. Mortgage brokers had a separate section established by ANZ for them to submit loans for assessment. If a broker were involved, the assessment would not be dealt with at the branch level.
76. Apart from brokers, in the relevant period of the application for loan that was subject to these proceedings, ANZ had a programme that paid third parties 0.5% for referring a customer for home loan services. The system, in the understanding of Ms Jackson, was that third parties were not to complete application forms for customers and did not usually provide source documents to the Bank. If an introducer, whose function was merely to introduce applicants to the Bank were to provide a source document, it had to be shown to the applicant for verification. That was the system operated by Ms Jackson. Her usual practice was not to accept source documents from introducers, but only from the applicant.
77. Ms Jackson had no connection with the application by the defendant, Ms Sun. Nevertheless, Ms Jackson reviewed the documents relevant to the loan in question in these proceedings and made comments on them. Her view was that the documents would only have been used for an application with the knowledge and consent of the applicant. She also expressed the view that, in her experience, ANZ would not have approved a loan for 100% of the purchase price without the presence of collateral security.
78. In cross-examination, Ms Jackson clarified and/or confirmed that the Mortgage Credit Requirements policy relates to:
* the assessment of application of people approaching the Bank for a secured loan;
* the “non-permanent resident credit policy” is for assessing applicants who are not permanent Australian residents;
* she was not aware of a category under the policy for applicants who live in Australia but work overseas;
* an assessor, at a level outside the branch level, will always assess foreign applications;
* the person in the branch who dealt with the application of Ms Sun was Mr Jin;
* Ms Jackson’s role was the same as that filled by Mr Jin, but in a different branch;
* the role does not have the same level of discretion as the foreign income assessor role;
* the “Mortgage Credit Requirements” policy is applied assiduously by people in that role;
* applicants were able to verify foreign income in three ways, a letter from an employer, an employment contract, or the last three months of payslips;
* any one of the three available means of verifying foreign income could be provided but the credit assessor may want more on a full assessment and may gather as much information as possible;
* if foreign income were involved, when preparing the Statement of Financial Position, ANZ would deduct 20% to allow for the exchange rate risk;
* Ms Jackson had never encountered an applicant who was living in Australia and being paid in foreign currency;
* while it was not common for Ms Jackson to undertake contact with employers, accountants or the like, such a process could be undertaken but was not common when the documents provided seemed acceptable; and
* if a credit assessor needed to review an application, for when foreign income was involved, Ms Jackson’s expectation would be that it would taken between 2 and 10 days.
79. Ms Jackson was examined about the documents in the defendant’s loan application and confirmed the following issues:
* there was an agent authority on the file for Alwyn Maher as agent for the defendant, which means he had access to her accounts;
* the fact that the PAYG box was ticked on the Mortgagor’s Application Guide by Tom Jin does not mean that foreign income was not considered or the subject of reference, even though PAYG was an Australian system. It could, on Ms Jackson’s view, be a reference to the circumstance that payslips were used;
* the Mortgagor’s Application Guide had no indication that foreign income was in play;
* Ms Jackson could not work out from the Mortgagor’s Application Guide why the file had been flagged for review by a credit assessor;
* Ms Jackson did not consider it unusual for Ms Sun to have an Australian address as a number of expats were in that position;
* no documents were found that were created by the credit assessor; and
* a commission was paid to Ling Lin as an introducer on the loan, which meant that Ling Lin introduced the defendant to ANZ.
80. Ms Jackson confirmed, in re-examination, that introducers did not provide documents to the Bank and that their role was limited to introducing the customer who then signed a form to say they were willing to be linked to the introducer.
Jacqueline Mary Smythe
81. As already stated, Ms Smythe swore an affidavit on 3 December 2021. Ms Smythe was employed as a Senior Assessor in the Foreign Income Assessments Team at ANZ as at the date of her affidavit. She had worked at ANZ since 2006 and been in the current role since October 2017. Ms Smythe gave evidence about the loan assessment process.
82. For new applications that were made at a branch, Ms Smythe testified that the lending officer in the branch would make an initial assessment of the serviceability of the loan, before sending it to an assessor. It was sent to an assessor only if it did not meet the criteria for automatic approval. Those criteria included a situation where the serviceability of the loan depended upon foreign income stream.
83. If there were a foreign income stream, the application was referred to the Foreign Income Assessments Team. Ms Smythe would review the loan documents as well as the source documents to assess the serviceability of the loan. If the declared income did not match the source documents, the loan would not be approved.
84. Ms Smythe assessed the defendant’s loan application in 2014. By reference to the loan documents, Ms Smythe testified that the loan had been referred to her on 12 December 2014 by Tom Jin.
85. Ms Smythe conditionally approved the loan on the basis that certain documents and information were provided. Those documents included a property valuation, approval from the Foreign Investment Review Board, a non-resident acknowledgment form, and the date of the contract of sale. She understood that the requirements for those matters were conveyed to the branch by email.
86. On 31 December 2014, Mr Jin resubmitted the loan application with the requested documents as well as a transfer for the land subject of the loan. Ms Smythe then unconditionally approved the loan. She deposed that she approved the loan on the basis that the information provided was a correct representation of the defendant’s assets and liabilities as well as income.
87. Ms Smythe advised that the loan would not have been approved if the defendant were to have resided in Australia for residency purposes; did not reside with her parents; intended to purchase the property for residential purposes; was not employed in any capacity or receiving salary or income in any capacity, or any other income. Those circumstances would still apply as at the time that the evidence was adduced and, at that time, Ms Smythe was still employed at ANZ.
88. If the loan application had been submitted by someone who was residing in Australia, but a foreign applicant, it would not have been assessed by Ms Smythe.
89. In the course of cross-examination, Ms Smythe accepted that she had assumed that the applicant was a foreign resident because of the way in which the documents were presented to her and by the circumstance that it was sent through to the department that dealt with the assessment of foreign income. Notwithstanding her comment that she had stated that she would have communicated the conditional approval of the loan to Mr Jin, ANZ could not find the email granting conditional approval. Ms Smythe was unaware of commissions, if any, based on the amount of loans written. Ms Smythe was not paid a commission based upon the number or amount of loans approved.
90. Ms Smythe, and the department, would only receive the documents required for the manual assessment from the lending officer and would confer with the lending officers by email. While Ms Smythe had no separate recollection of the dates referred to in her affidavit, she had reviewed the ANZ systems to check the dates to which she had referred.
91. Further, Ms Smythe did not have a direct recollection of imposing the conditions on the conditional approval of the defendant’s loan and attested to that conditional approval after reviewing her notes. Ms Smythe is wholly unaware of the communications between Mr Jin and the defendant, which would be and is completely outside her knowledge. Ms Smythe did not contact employers or make any enquiries when assessing income.
Glyn Evan Roberts
92. Mr Roberts swore an affidavit on 20 October 2015 and was employed as a federal agent. It is generally unnecessary to summarise the evidence of Mr Roberts which generally went to the offending by Mr Feng. That offending is not in issue in the proceedings before the Court now. Nevertheless, Mr Roberts detailed the investigations which caused him to form the belief that Mr Feng had deposited money into accounts and it is clear that the belief was reasonable and based upon facts which were either proved or reasonably based.
93. During the course of cross-examination, Mr Roberts was asked about a person called Shaun Huang of Auschain Investment Group, but did not, initially, recall the person. He did recollect the person when shown orders issued by the Court in 2016 and, while not able to recollect the issues, did accept that there were a number of matters involving Mr Feng and he most likely deposited funds into the account of Auschain Investment Group.
Guanyu Lai
94. On 21 September 2021, Guanyu Lai attended a compulsory examination conducted under the Act. He confirmed, in examination-in-chief, that he had told the truth during that examination.
95. During his cross-examination, he was asked questions relating to his role in the defendant’s loan application. He did not have a good recollection because of the passage of time but accepted that he may have met the defendant and that they communicated via WeChat in 2014.
96. Mr Lai was also operating a company called Well Finance Pty Ltd and confirmed that he had a business card (Exhibit 1 in the proceedings) that had the word “broker” written on it in handwriting, but the word was not part of the card and was not his handwriting, as best he could tell.
97. The business card described Mr Lai as a “lending manager” and he understood that term to mean that he was a person in a company providing financial services as a mortgage broker. Mr Lai did not recall receiving an email dated 24 December from Apex Lawyers but accepted that he was the addressee (or that was his email address).
98. As best he could say at this time, the email may have related to the preliminary part of the transaction for the loan, but he did not believe that he was the defendant’s broker as he could not find any file on her. In response to a subpoena for documents relating to the defendant, he could not find any material.
99. Mr Lai also checked his settlement record, which is a document that records every customer for whom he settled, but he did not check his other communications. If a customer did not settle a loan, it would be treated as an enquiry, and he would not record it.
100. When shown Exhibit 3 (a further email from Chris Sun of 30 September 2014), he could not recall receiving it and when shown a significant number of messages on WeChat (Exhibit 4), the witness was unwilling to commit to whether it was his WeChat account and whether he received them or recorded them.
101. Mr Lai accepted the content of messages which related to him telling the defendant that her loan had not been approved but did not agree that the message meant he was involved in the transaction. In his system, if that be an appropriate description, if a loan were not approved by the lender, then the applicant would not become Mr Lai’s customer.
102. He was asked questions about Multicredit Mortgage in 2014 and testified that he did not work for that company but had worked for them a long time ago, from approximately 2005 to 2011. He did not recall meeting the defendant or the defendant’s father in 2014.
103. In 2014, he was in a relationship with Ling Lin, who acted as an introducer to ANZ. He thought he was familiar with Mr Jin of ANZ Burwood, but, when shown transcripts of his examination in which there was a reference to the fact that he knew Mr Jin and dealt with him, Mr Lai maintained he could not recall referring loans to Mr Jin.
104. Notwithstanding his evidence in examination, he had no independent recollection of searching WeChat records for Ms Sun and, more generally, had no recollection of Ms Sun at all or the events that were said to have taken place in 2014.
105. During re-examination, Mr Lai clarified that the front page of a contract for sale was a document he would usually obtain at the beginning of the process in seeking to act as a mortgage broker. His role as a broker involved him providing documents to the Bank as an intermediary and collecting information and documents. When shown Exhibit 3 again, which was, as earlier described, a communication from a solicitor, Chris Sun, referring to FRIB approval, he stated that his understanding was that the customer required FRIB approval because she was not a permanent resident and did not have citizenship.
Scott Michael Mathews
106. Mr Mathews is also an AFP agent who gave evidence via affidavit, being affidavits of 1 November 2016, 2 July 2020, 23 November 2021, 10 November 2022 (relating to procedural matters relating to the contact of witnesses, Tom Jin and Yi Feng) and 14 November 2022. Apart from the search for witnesses, and annexing the certificate of conviction for Mr Feng to the affidavit of 2 July 2020, the affidavit annexed examinations that had been conducted of the defendant, of Li Feng and of Guanyu Lai. Not all of the questions and answers were relied upon in the course of these proceedings.
107. Insofar as it related to the testimony at the examination of the defendant, Ms Jieying Sun, this evidence was given on 27 March 2016 and is to the following effect. Ms Sun was expecting to receive money in her bank account from her father for the purchase of a property. On the morning of 11 August 2014, she had a discussion with Shaun Huang on WeChat to the effect that someone would transfer the money into her account for the purchase of the property.
108. Mr Huang did not tell her who would be transferring the money to her, nor how much would be transferred. Further, she was not informed that the amount would be deposited into her account in cash. When she enquired why money had been deposited into her account from many different branches, Mr Huang told her it was “good for her” because she would not need to lodge or report some matter, the details of which Ms Sun did not recall.
109. Further, again, when reviewing the record of a $70,000 transfer, made on 11 August 2014, Ms Sun confirmed that she did not make that deposit. She does not know why she was listed as an agent for that transaction.
110. On the question of the home loan, Ms Sun testified that she needed an ANZ home loan to purchase the Zetland Property and the loan was obtained in or about December 2014, prior to the settlement in January 2015. Ms Sun was vague about the details of her assets and income which were provided with the loan application. Ms Sun could not identify whether she had bonds or shares in her father’s company and could not separate the two or did not understand the difference.
111. On the issue of her income received from her father and whether that was salary or a gift or a payment for studying, Ms Sun did not accept that it could not be income but accepted that she was not working.
112. Ms Sun asserted that the broker had verified the loan application and obtained the records directly from the company in China, including payslips. Ms Sun agreed that the three payslips annexed to the loan were the only three payslips that existed and that these had been created for the purpose of the loan application to show that she had a full-time job, despite the fact that she was not working.
113. Questions were asked and answers given relating to the existence of money “held for her” in China by her father. Ms Sun testified that it was her income but it was held for her in China and that her father did not have access to it and, for that reason, had not disclosed it on her application for reasonable living expenses from the restrained property.
114. Ms Sun agreed that in 2014, she had travelled on holiday to Korea and in 2014 she did not do any work for her father’s company in China. She testified that her study in Australia was work, which provided her a salary of $120,000 per annum which was disclosed to ANZ that year. Ms Sun also testified that there were restrictions on the transfer of money in China and that Mr Huang had informed her that more than $50,000 per year per person could not be transferred to Australia. Ms Sun said that Mr Huang told her to get her father to transfer money into a Chinese account, which would then be transferred through to her in Australia and would avoid that restriction.
Other evidence
115. Li Feng was the subject of examination on 18 March 2016. Mr Feng said that he did not know the defendant. He testified that when making the various cash deposits, including those into the account of Ms Sun, he was instructed by a man called Shiyu Cong who drove him around and gave him cash to deposit and gave him instructions on how to deposit it.
116. Mr Huang was also the subject of examination by the AFP on 18 August 2016. Mr Huang confirmed that Chinese banks have restrictions on overseas transfers and clients use currency transfer companies to effect large payments of money overseas. Such companies, on Mr Huang’s knowledge, transfer the money to an account in Australia and then use that to transfer it to the nominated account.
117. Mr Huang said that Ms Sun, the defendant, came to see him to discuss how to transfer money for the purchase of an apartment and said that he could either transfer it to many different recipients in tranches of $50,000 or use a transfer company. This was to be done, on his understanding, by electronic funds transfer.
118. Mr Huang noticed that the amounts were put into the defendant’s account in cash and considered that it was just a different way of this particular company operating. Mr Huang and the defendant exchanged messages on 11 August 2014. Apparently, Mr Huang asked a person by the name of Wang or Wong about the cash transactions and was informed that the cash deposit was normal and not to worry about it.
119. In the affidavit of 2 July 2020, Mr Mathews referred to the examinations on oath of Guanyu Lai and exhibited a copy of the transcript. A summary of the evidence obtained from that part of the transcript that was read into evidence in the proceeding follows.
120. Mr Lai was a mortgage broker and worked for a company called Multicredit Mortgage until early 2011 following which he worked at World Finance. His general practice was to collect information from clients so that he could assist them with a loan. He invariably had the client fill out the application form which he would then verify and check.
121. The client would provide him documents in support of the application and it was not his practice to obtain those documents directly from third parties, including employers. Before signing the application and sending it to the Bank, Mr Lai would go through the application with the customer. He would keep a file for each client and, if the client were to proceed with the application, the file would be kept for seven years. If, on the other hand, no application was made within three months, he would discard it.
122. He would not inform a client to deal directly with the Bank as that would exclude him from the transaction and jeopardise his commission.
123. He did not know the defendant or her father. He did not recall meeting them, nor did he have any files or records relating to either of them. He did recall being contacted by a solicitor with some questions that related to them.
124. Apart from the procedural matters to which he testified in the 14 November 2022 affidavit, Mr Mathews annexed a valuation report from Core Logic RP Data, dated 13 November 2022, for the Zetland Property, which valued the property at $920,000.
125. Mr Mathews became the case officer, which is the lead investigating officer, in relation to these matters in around 2016. The cross-examination concerned Mr Mathews’ attempt to contact Tom Jin.
John Vuceric
126. John Vuceric swore an affidavit on 7 May 2020. He is an Information Disclosure Officer at the Australian Taxation Office (hereinafter the “ATO”). He received a request for information relating to the defendant. The request came from the AFP and sought documents from 1 July 2008 to 30 June 2014, which documents were provided. Further documents were provided after a request from the ATO on 27 March 2020. The documents provided are exhibited to his affidavit.
127. Other formal evidence was given by Craig Jerkavits who is an Australian Border Force (hereinafter the “ABF”) supervisor. After receiving a request by email from Mr Mathews of the AFP, he provided records relating to the overseas movements of the defendant which were attached.
Liwu Sun
128. The defendant’s father provided affidavits of 20 December 2015 and 17 March 2016.
129. The affidavit of 17 March 2016 corrects some minor aspects of the earlier affidavit, the only aspect of which that is relevant to note, being an addendum to par [81] of the first affidavit. Including the addendum, which is in italics below, par [81] of the affidavit would now testify to the following effect:
“My daughter was employed and still is by Construction Co while she was on study leave in Australia. Her payrate was averaged out to be AUD$10,880 per month gross for the purposes of the ANZ loan. She accrued salary and bonuses and the restriction of remitting no more than RMB 1,000,000 per person per annum. She has funds still owing to her despite the large amount already paid to her. It would be fair to consider most of my daughter’s payments she received from Building Co to be a gift from me via Building Co. When she was an Office Manager I agreed for her to Study in Sydney and for Building Co to pay her an education allowance for that purpose.”
130. Otherwise, much of the evidence given by Mr Sun was uncontroversial. For reasons already explained that which was controversial was the issue of the employment of his daughter. Mr Sun gave evidence of his relationship with his daughter as her father and of his ownership of companies and, in particular, the Beijing Xingpeng Construction Engineering Company Limited, variously, in these proceedings, called the Building Company or the Construction Company and Beijing Cai Yu Water Supply Company Limited (hereinafter “the Water Company”). He owns substantial stakes in each company.
131. The Building Company constructed single houses, villas, offices, factories and other building compounds. The Water Company was involved in extracting water, treating it and selling it.
132. Mr Sun testified, which fact is uncontroversial in these proceedings, to owning assets well in excess of $50 million Australian dollars. His evidence was given by audio visual link and through an interpreter.
133. In late July/early August 2014, Mr Sun was in Sydney with his second wife. While in Sydney, Mr Sun saw his daughter and spoke to her about purchasing a property.
134. Initially, a property in Kent Road, Mascot was sought to be purchased. On or about 7 August 2014, Mr Sun met with the agent and discussed purchasing the Mascot Property off the plan. His daughter was in attendance.
135. The agent who is referred to as Sean Huang (and I take this to be a reference to Shaun Huang) informed them that he could get a good exchange rate on the money transfer and provided details of a transfer company to Jieying (the defendant). The account details were in the name of Teng Jingsheng.
136. On 11 August 2014, by this time having returned to China, Mr Sun transferred the funds in the manner suggested by Mr Shaun Huang. Mr Sun exhibited receipts for those transfers.
137. The money was transferred, first, by way of a 3.5 million RMB transfer from the Water Company to the Building Company. Then, 15 lots of 200,000 RMB (equivalent to about 3 million RMB) were transferred from the Building Company to Teng Jingsheng. Mr Sun understood that this would then be remitted immediately to his daughter. Mr Sun testified that the purchase of the Mascot property did not take place due to the price being increased.
138. In November 2014, Mr Sun returned to Australia with his wife and found another property being the Zetland Property. He testified that the Zetland Property was purchased in January 2015 using a loan from ANZ and other moneys provided by him.
139. Mr Sun testified that, since 2007, when his daughter graduated from college, she had been working for the Building Company. He said that the Building Company agreed to send her to Australia to study and improve her English.
140. He said that his intention is for his daughter to succeed him in the business with her two step-brothers and he would rely on her English skills as he did not speak English. On this basis, he said he agreed to pay her $10,880 per month while she was on “study leave” in Australia. He said that she had further amounts owing to her due to the restriction on paying more than 1 million RMB to any one person overseas in any one year. All of the foregoing was contained in the affidavit.
141. In cross-examination, Mr Sun confirmed that he had wanted his daughter to study overseas and that the defendant had come here on a student visa to pursue different educational qualifications between 2009 and 2017. He wanted to support her and pay for her tuition fees and living expenses.
142. When his daughter needed money for living expenses, he would give her that, but he also said that she had a salary source of income. He did not expect that the money he sent her would be paid back. He said that it was support and not an investment.
143. Mr Sun accepted that the money he sent for the benefit of his daughter was in the nature of a gift and agreed that par [81], extracted above and as amended, testified to the average pay of his daughter. He did not recall correcting the paragraph in his later affidavit to describe the funds as a gift from him through the Building Company.
144. He said that the majority of the payments received by the defendant were given as a gift, but maintained there was a salary income as well. He made such payments to his daughter through the finance department of his company or his assistant. His daughter would contact him to request it. When taken to the Chinese banking records attached to his affidavit, Mr Sun confirmed that the reason recorded for the transfer to his daughter on the banking records was “self-funded study abroad”. [8] The same reason was given in other statements.
145. When questioned as to whether these payments had nothing to do with income and were in fact a loving father supporting his daughter, Mr Sun said that some of it was like that, but part of it was the salary. He thought there was unpaid salary so part of that was for that purpose.
146. Mr Sun agreed that the documents did not mention income but stated that his understanding at the time was that part of the funds were salary and the rest was a gift as the payments were out of his own pocket. Mr Sun testified that the unpaid salary was salary owed to his daughter to work, which was work she did before she came to Australia.
147. Mr Sun gave evidence that he is the chair of the Construction Company and now owns over 98% of the shares of that company. The company had no offices in Australia. He also agreed that there was an office manager role based in China which oversees administrative matters. When his daughter came to Australia, she was not discharged from her duty or role as office manager. He found a temporary replacement.
148. The temporary person needed help from his daughter and he did not agree that such assistance could not be performed from Australia or in Australia. Mr Sun was taken to a transcript of evidence he gave in August 2017 where he had agreed that it was impossible for his daughter to perform her role as office manager from Sydney. Mr Sun denied that such was the case. While he was correct in providing the answer at the time that he did, his daughter, the defendant, in the relevant period, was acting as a tutor to the temporary replacement.
149. Mr Sun denied the suggestion put to him that he was giving answers to assist his daughter or that she was not actually working for his company during the period leading up to 2014. He did not agree that during that time she was studying in Australia while being supported by a loving father. He did accept that he was a successful businessman with decades of experience and that he had purchased a large parcel of land in China with no mortgage.
150. When taken to par [25] of his earlier affidavit, which stated there was a mortgage over the office building, he explained that this was a result of needing to transfer assets from a previous company to the current company. He agreed that in late 2014, he was aware that his daughter was in discussions with a Bank about a loan application and that she needed documents to evidence her income. He was cross-examined on text message exchanges with his daughter in which he suggested that the defendant find out whether the Bank would accept evidence of backpay. [9]
151. However, Mr Sun disagreed that this enquiry was as a result of the fact that the defendant was not receiving a regular salary. Mr Sun elaborated and explained that her payments had been informal, given that it was his company and his child, but because the Bank needed documents, he had realised there were no payslips and asked whether he could generate the payslips retrospectively. He did not accept that he was being dishonest about that to assist his daughter. He also denied that he was keen to provide backpay to his daughter to support her loan application, notwithstanding messages relating to the Bank accepting retroactive payments in particular months.
152. When pressed, Mr Sun reiterated that these discussions were not about back payments but about generating payslips retroactively for payments that had already been made or credited to the accounts of the defendant.
153. Mr Sun was then questioned about records of SPD Bank. Those records were in the name of the defendant.
154. Mr Sun denied that documents were given to his daughter to support her loan application and that he made the payments to his daughter in September, October and November 2014 in order to support her loan application. He did agree that, directly or indirectly, he took steps to provide the SPD document to her to assist her with the application. He initially denied receiving messages from his daughter about obtaining payslips but, when taken to the messages, indicated that he did not recall them.
155. Mr Sun agreed that he provided his daughter with a certificate of employment which was provided to ANZ. It was put to Mr Sun that it was “nonsense” for the defendant to have commenced a full-time role as office manager in Beijing while studying full-time in Australia in 2011, which Mr Sun refuted.
156. Further, Mr Sun denied that the payments made were a gift or a study allowance or that at no time between late 2011 and late 2014 was the defendant ever working as a full-time office manager for the company. He confirmed that his daughter was working full-time for his company from November 2011 until the present time and he knew that his daughter had declared a monthly gross income of $10,880 to the ANZ in relation to her loan application.
157. As to the reason that there were no documents evidencing employment prior to September 2014, Mr Sun explained that corporate procedures and paperwork were not as strict in China as they were in the West. He denied that he provided the payslips to help his daughter obtain a loan.
158. When examined on a list of transfers he made to his daughter over the last five years and the changing amounts and irregular periods during which payments were made, Mr Sun accepted that there might be times when his daughter’s salary was not paid on time, but that did not mean she would not get it in the fullness of time. While he agreed that, in 2013, the payments added up to $40,500 and that, as a matter of arithmetic, this was a lot less than $10,880 per month, he explained that the examiner did not know enough about how private businesses operated in China. The sums, he said, did not include all due payments and reserved payments.
159. When examined about the differential between $51,000 and $10,000 per month, Mr Sun continued to refer to “overdue payments” which he said accounted for the shortfall between the money received by Ms Sun and her stated income to ANZ. He denied that the amount of $10,880 per month was fabricated to help his daughter obtain a loan.
160. He was aware that his daughter used an ANZ loan of $640,000 to purchase the Zetland Property and that the balance of the stamp duty and purchase price were paid by him. He explained that one could say that he provided those funds to help her purchase the property but he did not agree that they were a gift and maintained that some of it was her salary.
161. He did not agree that his daughter had not worked for the money provided to her and accepted that he provided her financial assistance after the purchase of the Zetland Property. Because she was his daughter, he never calculated in detail the money he had given the defendant.
The defendant, Jieying Sun
162. As earlier indicated, the defendant, Jieying Sun, relied on three of her own affidavits, being affidavits of 29 November 2015, 14 March 2016 and 4 April 2017. The first affidavit was sworn in support of an application for reasonable living expenses to be excluded from the restraining orders initially made by the Court in relation to her assets.
163. In this affidavit, the defendant deposed that she did not know Li Feng and that she purchased the Zetland Property using funds provided by her father which were sent from his Chinese company through a third party, who had arranged a good exchange rate. The remainder of the funds, after the purchase of the property, were for her living expenses and, at least in part, to service the loan from ANZ.
164. Her plan was to remain in Australia after completing her studies and to open a small business. The funds remaining were to help her open the small business and they were a gift from her father.
165. Her only income otherwise was $350 per week from renting out the spare room in the Zetland Property. She requested, in the affidavit, reasonable living expenses from the restrained assets as she suggested that she could not ask her father for more money. She set out, in her affidavit, the expenses at that time.
166. The next affidavit of 14 March 2016 was only read in relation to pars [32]-[34]. Those three paragraphs annexed:
1. The employment certificate dated 27 November 2014 showing a net income of CNY624,660 (roughly AUD$131,399);
2. Three payslips (together with a comment that the defendant had never received any other payslips); and
3. Documents showing her employment contract with the Building Company.
167. The third affidavit, of 4 April 2017, was said to have been sworn in substitution for earlier affidavits so that, as a matter of convenience, all her evidence was in one document for the purposes of a motion to exclude her property from the orders made on 21 October 2015.
168. The affidavit testified to her education, which included:
1. the completion of a degree in Architecture Design at Beijing City University in late 2007;
2. the studying of English in Australia for about 12 months from May 2008;
3. the commencement of an accounting degree at Central Queensland University in February 2009; and
4. the continuation of an accounting degree in Sydney from approximately March 2010.
169. The defendant maintains that, in or about mid-2011, she graduated in her accounting degree and returned to China. Around this time, she and her father discussed the defendant doing more study in Australia and her father agreed to pay her salary, so she could study more and develop for her future.
170. After that discussion, the defendant decided to return to Australia to study and to become a certified accountant. The defendant commenced her course for the purposes of registration as a certified accountant in or about August 2011 and continued the course until about 2014. At that time, the defendant ceased the course without completing it.
171. The defendant returned to Sydney in 2017 and continued her studies to become a certified practising accountant.
172. The defendant worked at her father’s construction company since 2007 and, in this affidavit, exhibited an Employment Certificate and some payslips relating to that employment. When the defendant is in China, according to her affidavit, the defendant works for the company and when she is in Australia, she gets paid a study allowance. The defendant exhibited copies of documents evidencing other transfers made by the building company to her from time to time. The defendant described the payments as in part study allowance, salary, and gift. The defendant said that the amounts exceed her salary and that, in China, employees are not required to lodge tax returns.
173. Dealing with the purchase of property, the defendant testified that in July/August of 2014, she and her father were looking to purchase property in Sydney. On 7 August 2014 they met with real estate agent, Shaun Huang, for the purpose of purchasing four apartments “off the plan”. These were in Mascot.
174. The defendant said that Mr Huang told her that they needed to pay deposits. There was a discussion about transferring money from China to Australia and Mr Huang expressed the view that he could arrange the transfer for them through a person whom he knew, assuring them that it was a process used by 80% of his clients.
175. On 9 August 2014, Ms Sun procured counter cheques for the deposits for the four units. The money for that bank cheque was described as having been transferred by her father to her account and the defendant exhibited messages from Mr Huang which gave the account details into which the money was to be transferred.
176. On 11 and 12 August 2014, the money sent from her father was deposited into her CBA account to the sum of $517,241. Ms Sun was unaware of anything illegal about the process. She assumed that her father had legitimately earnt the money and was sending it to her in a way that had been recommended by a real estate agent. She did not deposit the cash into her accounts. Ultimately, the purchase of the Mascot property did not proceed because the price increased.
177. On 28 November 2014, the defendant’s father returned to Australia and after discussion they decided to purchase the Zetland Property. Mr Huang was not involved in this purchase.
178. On 17 December 2014, Ms Sun procured a bank cheque for the deposit of $95,500 and she signed the contract on 19 December 2014. The ANZ loan was procured by a broker, Mr Guanyu Lai of Multicredit Mortgage Pty Ltd. Notwithstanding her attempts, the defendant has been unable to obtain any documents relating to her loan from Mr Lai since 2015. According to the defendant, Mr Lai arranged the loan for her. He told her and her father what information they were required to provide (passport, front page of the contract, address, company name and details) and they provided those documents to him.
179. On 10 December 2014, the defendant attended ANZ in Burwood and met with Tom Jin, an employee of ANZ. Mr Jin gave her documents to sign which she executed. The documents, according to Ms Sun, had financial information already completed on them which she had assumed had been provided by Mr Lai. She did not check them carefully.
180. The loan was one available means by which the property could be bought but she testified that her father would have been able to provide her the full purchase price if she needed it. According to her affidavit, the defendant did not provide the employment documents that ANZ used to assess her loan. The defendant provided them neither to the ANZ nor to the broker. She first saw them when the AFP showed them to her during her examination. She assumed that the broker had obtained them from the building company. She also made clear that the handwriting and signature on the non-resident home loan applicant acknowledgment form were not her handwriting, nor her signature.
181. On 7 January 2015, Ms Sun transferred $430,000 from her CBA account to her ANZ account for the purpose of purchasing the Zetland Property. A sum of $258,000 was then deducted from that account for that purpose on 20 January 2015. The only other matters to which the defendant testified in her affidavits were the attempts made by her or on her behalf to procure Shaun Huang as a witness. She denied having discussions with Mr Huang that he testified took place during the examination (see transcript of the examination).
182. Lastly, in the affidavit of 16 November 2022, the defendant annexed copies of translated WeChat messages from Guanyu Lai, Mr Lai’s business card, and emails between APEX Lawyers and Mr Lai. She also deposed in that last affidavit that she had only met Tom Jin once, on 6 January 2015.
183. In cross-examination, the defendant agreed that she came to Australia in 2009 to pursue study and was on a student visa. When she was taken to her tax returns, the defendant confirmed that she did not lodge an income tax return between 2009 and 2014 and also confirmed that by June 2013, the defendant had never declared any income in Australia.
184. Between 2009 and 2014, the defendant was living in Australia and would return to China sometimes for a few months. The defendant said that she did not declare income from 2009 to 2013 because she was not working in Australia. The defendant was referred to answers she gave under cross-examination in August 2017 and specifically to an answer in which she said that she did not lodge income tax returns in those years because she did not have a job and just studied. [10]
185. The defendant confirmed that she was a full-time student between 2009 and 2013. She confirmed that the first time the defendant lodged a tax return was 2014 and that was because she obtained a job in that year with Ausworld Trading Pty Ltd. Ausworld had no connection with her father. The defendant finished employment with Ausworld in August or September 2014. She was taken to an answer in August 2017 that, when the defendant was studying, the defendant was studying full-time and not working. The defendant maintained that the answer given in August 2017 was truthful at the time that it was given.
186. The defendant also accepted that in the three or four years leading up to the ANZ loan, the defendant was studying full-time in Australia for the most part. She also accepted that she left Australia for about one month a year during that time.
187. The defendant did not agree that the income declared in 2014 was the only income she earned at all in that year. The defendant maintained that it was her only income in Australia. She also reiterated that a tax return would be lodged in a financial year, which I take to mean income in Australia, but it may be broader.
188. The cross-examination went through the discussions with her father as to the purchase of the Zetland Property and the inspection of the property by her father and the defendant. It also confirmed testimony, otherwise given, that her father caused the money to be transferred into her CBA account. It was that money that formed the basis for the moneys used to purchase the Zetland Property.
189. The defendant reiterated that her broker, Guanyu Lai, arranged a loan for her and that she had submitted an application to ANZ in December 2014 for the loan.
190. The defendant denied that she knew, at that stage, that she needed to prove income to obtain a loan, notwithstanding that she had been studying business and finance. She also denied knowing, as at December 2014, that the lender would be interested in her ability to repay the loan. Notwithstanding that it was put to her that those answers were untrue, the defendant maintained the truthful nature of the answers given to the subject matter of the last two issues summarised.
191. As at December 2014, the defendant did not know that she needed to provide payslips to the bank and asserted that she only knew that documents generally needed to be submitted. She only made enquiries about payslips with her father, or her father’s staff, because Guanyu Lai requested it. Further, she denied knowing that the payslips were required because the bank was interested in her income.
192. The defendant was taken to a contrary answer given in August 2017, which she explained as a mistake and the reason for the mistake. The defendant said that she submitted those documents that were required by the bank but did not know, at the time, the purpose of the documents.
193. In relation to a contrary answer given in August 2017, the defendant maintained that she had not properly understood the question as she was without an interpreter. On further questioning, the defendant accepted that she did have an interpreter at the time but maintained that the interpreter was not good. Yet she was taken to parts of the transcript of August 2017 when the defendant had requested the interpreter to repeat a question when she had not properly understood the question and contrasted that conduct with the question and answer in relation to the payslips.
194. The defendant, when shown the payslips, maintained the first time she had seen them, was when she had been shown them by the cross-examiner in August 2017. While initially vague about the performance of work during the months covered by the payslips, the defendant ultimately accepted that she was not working in Sydney for her father’s company during that period and that she was in Sydney during the period. The defendant reiterated and re-confirmed that she did not do any work in September, October, or November 2014.
195. The defendant continued to maintain that she had worked for her father’s company since 2011 but that she had not received any payslips other than those for September, October or November 2014. Further, she did not know whether the payslips were generated for the purpose of the loan application but did not agree that they gave a false impression that she was working when she was not.
196. The defendant was taken to an affidavit sworn in March 2016 which attached the payslips to them and which was sworn at a time prior to the examination in which she said she had seen the payslips for the first time. The defendant said that she did not remember seeing them at the time that she attached them to her affidavit.
197. There were a series of WeChat messages communicating between the defendant, her father and an aunt about the provision of payslips. [11] The messages indicated that the Aunt sent the payslips to the defendant, but the defendant maintained that she did not receive them. Yet, she agreed that she did not follow up with her father about the payslips thereafter.
198. It was put to her, relying upon the examination transcript, that she had agreed that she only needed three payslips to give to the bank and that the payslips were created to support the home loan. Further, the defendant had agreed that the payslips were to give the impression that she had a full-time job at a time when she was not working at all. The defendant denied that she knew the payslips were created to give a dishonest state of her employment and income to the bank.
199. Further, again, the defendant denied giving the bank the employment certificate in support of the loan application and maintained that she was first aware of it when examined by the AFP. The defendant was then taken to her affidavit of 14 March 2016 which annexed the employment certificate but still denied providing the document to the bank.
200. The defendant was then cross-examined about her dealings or recollection of them with Guanyu Lai. There was no evidence that the broker obtained the documents directly from the father’s company and the defendant accepted that she had also informally spoken to another broker who told her that documents were needed for the loan.
201. The defendant denied providing the SPC Bank Statement to ANZ in support of her loan application and after the discussion with her father whether the bank would accept back-pay payslips, she contacted Mr Guanyu Lai and not the bank. The defendant denied that she was dealing directly with the bank for the purpose of the loan application. The SPC Bank Statement had been given to her by Guanyu Lai.
202. The defendant was then taken to various Statements of Financial Position that she had completed. In relation to the first one, dated 29 December 2014, the defendant said that she signed the document but had not looked at its content. She was then taken to an answer that she gave during the course of examination to the effect that she ensured that the form was correct when signing it.
203. Nevertheless, the defendant asserted that, in fact, she did not look at the documents carefully and just flipped through them. The defendant maintained that the broker had completed the statements using information that the broker obtained from her father’s company. While the document contained other information related to other accounts and assets relevant to the defendant, the defendant denied that she had provided the information to ANZ.
204. Further, she continued to deny that she was not earning the $10,880 monthly income disclosed to the ANZ in the document. Money was received from her father’s company into Australian bank accounts while she was staying in Australia and the money received was not divided or specified as to what parts were income and what parts were other than income. Her understanding was that she needed to declare to the ATO income that was earned in Australia and she was not sure how much exactly there was.
205. Chinese income was said to be already taxed at the employer level, but the defendant accepted that no evidence going to this had been put forward other than her statement.
206. The defendant agreed that the income declared to ANZ was greater than the amounts listed in the transfers from her father but maintained that there may be other transfers that were not listed. She denied that, when signing the Statements of Financial Position, she was knowingly providing false information to ANZ. The defendant maintained that, since coming to Australia, her father had provided financial support to her.
207. Questions were asked about the conversations with Shaun Huang relating to the transfer of the money for the Mascot properties. The defendant only discussed the arrangements to transfer money with Mr Huang once and the discussion took place at his office.
208. The defendant was unaware of exactly how much would be transferred, the identity of the money remitted or whether a commission would be charged. The defendant had never before been involved in a large money transfer such as this. After the first meeting with Mr Huang, all subsequent communication was through WeChat or by phone. All of the moneys were deposited into a new CBA account that she established as a consequence of being directed to set it up by Mr Huang.
209. The defendant accepted that she received the money (or more accurately, the account increased by amounts) over two days through a number of deposits that were recorded as cash deposits. She denied being suspicious that something unlawful might be occurring and, although she was referred to messages with Mr Huang about receiving the funds from multiple sources, the defendant denied that she was worried or suspicious. Further, she denied that her finance background or education gave her cause for concern over what was happening.
210. When referred to evidence that was given on 30 August 2017 in which the defendant maintained that the process seemed “weird”, the defendant confirmed that she did not make any further enquiries with Mr Huang, because the full balance was paid to her on 12 August 2014. She continued to maintain that she did not know Yi Feng or that he was depositing money into her account at the request of Cong Shiyu. There were a number of persons, the names of whom were put to her and whom the defendant denied knowing. She continued to deny that the defendant deposited the $70,000 in cash on 11 or 12 August 2014.
211. The defendant has an offset account associated with the ANZ loan and, in January 2015, the defendant drew a cheque for $430,000 from the CBA account and put it into the ANZ account. That money was used to pay the balance of the purchase price on the Zetland Property. The remainder was for the purpose of servicing the loan and was a gift from her father.
212. Her father gave the defendant money so she could focus on her studies and have a stable place to live and not worry about finances. She confirmed that, in her view, the balance amount remaining was a gift.
213. The defendant accepted that she had never worked in Australia as an office manager for her father’s company, maintaining, instead, that her only job in Sydney was to study. However, the defendant did not accept that it was false to suggest that she had been employed in that role.
214. Once more, the defendant denied that she gave the SPC Bank Statement to ANZ to give the impression that she had income that she did not have. She reiterated that her father was sufficiently wealthy to give her the money to buy the unit outright and when asked why then she took out a loan, the defendant maintained that there was a Government incentive at the time so to do. The Government to which she was referring was the Australian Government. Further, there were Chinese Government restrictions on transferring money out of China.
215. The defendant borrowed $640,000. At the time of giving evidence, the defendant was paying $1,100 or $1,200 per month in interest payments. There was no re-examination.
216. Because the finalisation of these matters will be delayed considerably, it is necessary, while summarising the evidence, to outline, at this stage, some comments on the evidence that was given. It is unnecessary to say more than the Court accepts the evidence of Ms Jackson and Ms Smythe.
217. While Ms Jackson’s evidence did not deal directly with the circumstances of the loan application by the defendant, it gave evidence of a system which, in the absence of evidence to the contrary, renders more probable than not that the application by the defendant was dealt with in the manner described by Ms Jackson.
218. I accept the evidence of the AFP officers, but that does not include evidence given on examination and attached to affidavits of the officers.
219. As to the evidence adduced from Yi Feng, the Court does not accept anything controversial from Mr Feng and unless that to which he testified is uncontentious or independently verified, the evidence is not accepted.
220. Further, in relation to Mr Guanyu Lai, the Court has serious doubt as to the reliability of this evidence. The evidence given by Mr Lai seems inconsistent with the circumstances before the Court that are otherwise accepted. Plainly, for example, the word “Broker” which Mr Lai said he did not “think” was his handwriting is, on the balance of probability, a word that Mr Lai wrote. It is inconceivable that he did not recognise his own handwriting or identify that it was not his writing.
221. The evidence that he gave relating to his relationship with Mr Jin of ANZ is, frankly, fanciful and is not accepted.
222. Necessarily implied in the foregoing comments is that the Court accepts into evidence the AFP examination of Yei Feng as evidence before the Court. Apart from any other factor, Mr Yei Feng was unavailable and his statement in examination would be admissible under the ordinary rules.
223. The major issues related to the evidence of Mr Liwu Sun and the defendant, Jeiying Sun. While Mr Sun was not fully aware of the formalities of the evidence to be given by him, I considered his evidence both reliable and truthful. That is not only based upon demeanour but demeanour plays a significant part in the assessment. What conclusions are then drawn from that assessment is a different issue.
224. Further, I consider the defendant largely truthful, although in some areas I consider that some of the testimony was unreliable, even though the defendant attempted to be truthful. There was significant confusion in the defendant; it showed in her demeanour, as well as her answers. To the extent that there was inconsistency, the Court takes the view that the inconsistency arises from confusion and not from an attempt to dissemble.
225. While the conclusions of fact will be dealt with more fully and the effect of them will become clear when the judgment is finalised, it was necessary to deal with those aspects and one further aspect. That further aspect is the conclusion of facts that seem to be most in dispute.
226. First, the Court accepts that the defendant was employed by the Building Company from at least 2011 until 2017 and beyond. The Commissioner’s questioning was based upon a premise that there is an inconsistency between being employed and not working.
227. While the Court will deal with that issue in its conclusions, there is no such inconsistency. The premise is wrong. There is no obligation on an employer to require an employee to work, even though there may, in most circumstances or at least in some circumstances, be an obligation to make work available when an employee so desires.
228. Where an employer and an employee each agree that there is a contract of employment, and the contract is before the Court, in order for the Court to determine that an employment relationship does not exist, it would need to determine that the contract of employment was either a sham or wholly fraudulent. The evidence does not allow either finding.
229. Secondly, I find that the defendant was entitled to be paid an amount, the full extent of which is not absolutely clear, during the time of her employment and was paid an amount equivalent to the three payslips in September, October and November 2014.
230. Whether amounts were paid into a Chinese account or were held by the employer to the credit of the employee and paid on return to China is, for the purposes of these proceedings, mostly irrelevant.
231. Thirdly, as a consequence of the foregoing, I do not consider that the defendant was being knowingly dishonest in the application to ANZ for a loan.
Initial Consideration
232. There are, as earlier stated, two applications with which the Court is required to deal. First, the Commissioner seeks orders under s 49 of the Act that the Zetland Property and the funds standing to the credit of the defendant in a nominated ANZ bank account be forfeited. The order is opposed by the defendant.
233. Secondly, the defendant applies, if any or all of the forfeiture orders were to be made by the Court, for a compensation order under s 78(1) of the Act in respect of all or any of the property to be forfeited.
234. The Court has already recited the terms of s 49 of the Act. It is necessary to extract the terms of s 78 of the Act, which is required to be understood in the context of the Court’s jurisdiction, granted under s 77 of the Act. The relevant provisions are in the following terms:
“77. Making compensation orders
(1) A court that made a forfeiture order, or that is hearing, or is to hear, an application for a forfeiture order, must make an order under subsection (2) (a compensation order) if:
(a) a person (the applicant) has applied for a compensation order; and
(b) the court is satisfied that the applicant has an interest in property specified in the forfeiture order or in the application for the forfeiture order; and
(c) the court is satisfied that a proportion of the value of the applicant’s interest was not derived or realised, directly or indirectly, from the commission of any offence; and
(d) the court is satisfied that the applicant’s interest is not an instrument of any offence; and
(e) in the case of a court that is hearing or is to hear an application for a forfeiture order--the court makes the forfeiture order.
(2) A compensation order must:
(a) specify the proportion found by the court under paragraph (1)(c); and
(b) direct the Commonwealth, once the property has vested absolutely in it, to:
(i) if the property has not been disposed of--dispose of the property; and
(ii) pay the applicant an amount equal to that proportion of the difference between the amount received from disposing of the property and the sum of any payments of the kind referred to in paragraph 70(1)(b) in connection with the forfeiture order.
78. Application for compensation orders
Before a forfeiture order has been made
(1) A person may apply to a court for a compensation order if an application for a forfeiture order that could specify property in which the person claims an interest has been made to the court, but the forfeiture order is yet to be made.
After a forfeiture order has been made
(2) A person who claims an interest in property specified in a forfeiture order may, at any time after the forfeiture order is made, apply to the court that made the forfeiture order for a compensation order.
(3) However, unless the court gives leave, the person cannot apply under subsection (2) if he or she:
(a) was notified of the application for the forfeiture order, but did not make an application under subsection (1) before the forfeiture order was made; or
(b) appeared at the hearing of the application for the forfeiture order.
(4) The court may give the person leave to apply under subsection (2) if the court is satisfied that:
(a) if paragraph (3)(a) applies--the person had a good reason for not making an application under subsection (1) before the forfeiture order was made; or
(b) in either case:
(i) the person now has evidence relevant to the making of the compensation order that was not available to the person at the time the forfeiture order was made; or
(ii) there are other special grounds for granting the leave.”
235. Further to the foregoing, it is necessary to extract definitions from s 338 of the Act, the Dictionary, including:
““account” means any facility or arrangement through which a financial institution accepts deposits or allows withdrawals and includes:
(a) a facility or arrangement for:
(i) a fixed term deposit; or
(ii) a safety deposit box; and
(b) a credit card account; and
(c) a loan account (other than a credit card account); and
(d) an account held in the form of units in:
(i) a cash management trust; or
(ii) a trust of a kind prescribed by the regulations; and
(e) a closed account.
To avoid doubt, it is immaterial whether:
(f) an account has a nil balance; or
(g) any transactions have been allowed in relation to an account.
“interest”, in relation to property or a thing, means:
(a) a legal or equitable estate or interest in the property or thing; or
(b) a right, power or privilege in connection with the property or thing;
whether present or future and whether vested or contingent.
Note: For references to an interest in property of a person who has died, see subsection 325(2).
“property” means real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property.”
236. There is a degree of artificiality and tension associated with treating a bank account as “property”. The bank account is a chose in action being a right, by the customer of the Bank, to draw an amount equal to the amount standing to the customer’s credit in the account. As already explained, by reference to the description by the High Court in Lordianto, no money changes hands when a transfer occurs. In those circumstances, the “instrument” is the process by which the netting occurs. As a consequence, it would seem that the overseas chose in action from which a transfer is sought to be made is an instrument.
237. As already described, the money laundering process is relatively simple. Assuming for present purposes that the transferor and the ultimate transferee are both innocent third parties, the transferor transfers the “money” to the money exchanger who, in turn, transfers money to a criminal or an agent or recipient of money from the criminal (hereinafter “the Criminal”).
238. As a consequence of that transfer, the Criminal has money in a bank account, which is traceable and “clean” as distinct from the proceeds of another criminal offence, probably the sale of drugs or other such offences but, also including money upon which tax is payable that has not been declared. The Criminal then provides cash to one or more persons which cash is equivalent to the amount sought to be transferred. The cash is then deposited in the bank account of the innocent transferee.
239. The effect of the foregoing is that the Criminal has money that is, on its face, not the product of the criminal activity that the Criminal has undertaken; the transferor would be wholly unaware of that which has occurred; and the transferee receives the amount which was intended to be transferred, being the cash equivalent of the transferred amount, the cash having been derived from the earlier criminal activity. In that way, subject to the operations of the AFP or other law enforcement agencies, the proceeds of crime has been “laundered”. It is a “money-laundering” offence.
240. The foregoing simplified account reiterates an earlier description but omits the complications associated with the operations of the financial institutions and the circumstance that the transferor and the transferee are dealing with choses in action, which is the right to withdraw moneys standing to their credit in the respective bank.
241. Further, the foregoing analysis discloses that the transferor’s chose in action is not the proceeds of crime. Nor, it would seem, is the transferor’s chose in action itself the instrument of crime. The transferor’s chose in action remains unaffected by any criminal activity and is not part of any criminal process.
242. The instrument of the criminal process is the transferring netting process. The property of the transferor, being the interest in and/or the right to withdraw an amount which is property is neither impacted by the criminal offence nor part of the process by which the criminal offence is committed.
243. In the foregoing sense, the transferor’s “property”, being the chose in action, is not wholly or partly derived or realised, directly or indirectly, from the commission of the offence. It is therefore not proceeds of an offence. [12] The property or interest on which the transfer operates is not in the foregoing sense proceeds of crime.
244. Further, the chose in action of the transferor has not directly been used in the commission of the offence. However, it may be said that the chose in action of the transferor has been used “in connection with” the commission of the offence.
245. The term “in connection with” is of wide import. The words involve a relationship between one thing and another. They are words that are wider than the term “in” and wider than the term “incidental to”. [13]
246. The term “in connection with” merely requires some connection or relationship between the chose in action of the transferor and the criminal offence and are words that connote the widest possible meaning used to convey some connection or relationship between two subject matters. They are used similarly to the term “with respect to” or “in respect of”. [14]
247. If the term “in connection with” in the context of determining whether property is an instrument of an offence, although “somewhat vague”, [15] requires only that there be a relationship between the property and the commission of an offence, then the transferor’s chose in action is an instrument of an offence. It is an instrument of an offence because it is property used in connection with the commission of the offence.
248. It is property because it is “an interest in any real or personal property”. It is an interest in the property because it is, at least, “a right, power or privilege in connection with” the chose in action.
249. But the Commissioner does not seek an order forfeiting the transferor’s chose in action or any interest in it. Were that to be the case, it would be the property and/or funds and/or interest in the chose in action, being the bank account of Mr Sun, not the defendant, which would be sought to be the subject of orders and would be required to be the subject of a restraining order. Neither of those circumstances exists.
250. I turn then to the interest in the chose in action of the transferee. Clearly, there is a restraining order that restrains dealings with the Zetland Property and with funds in the accounts of the defendant. The Court, in these reasons, has earlier referred to the orders issued by the Court already restraining the property in question and those orders are a foundational basis which allows the Court to make forfeiture orders in relation to such property.
251. The analysis previously provided in relation to the chose in action of the transferor, the father, Mr Sun, applies, the necessary changes being made, equally to the transferee, the defendant. Thus, given the nature of the money laundering offence that has been committed by Mr Feng and others, each of the choses in action of the transferor and the transferee is, under the definitions in the Act, property used in connection with the commission of the offence.
252. In short, the defendant has a “right, power or privilege in connection with” the chose in action, which means that the defendant has an interest in the chose in action. Because the defendant has an “interest” in the chose in action, the defendant has “property”, which includes an interest in real or personal property, whether tangible or intangible.
253. Further, in the same way as applied to the transferor, the property became an instrument of the money-laundering offence because it was property used “in connection with” the commission of the money-laundering offence.
254. The foregoing analysis satisfies the Court that the chose in action of the defendant is an instrument of the money-laundering offence, which is a serious offence as defined, and, in relation to the chose in action which is the bank account that has been restrained, the provisions of s 49(1)(c) of the Act have been satisfied in relation to that bank account. It is an instrument of the money-laundering offence.
255. The question still arises as to whether the transferee’s bank account, being the chose in action, is also the proceeds of the money-laundering offence. The terms are not mutually exclusive as is obvious from the terms of s 49(4) of the Act, amongst other provisions.
256. As the chose in action of the defendant is an instrument of an offence, then the Zetland Property is also an instrument of the offence, because it is property “wholly or partly acquired using an instrument of the offence” (the chose in action). [16]
257. If, as is alleged by the Commissioner, the loan was obtained by fraud, then the Zetland Property would, for another reason, be the instrument of an offence. In the latter case, the offence would be the fraud by which the loan was obtained.
258. Further, if the loan were obtained by fraud, then the loan would have been realised or derived from the criminal fraud offence and, therefore, proceeds of the offence. [17] Further again, if the loan were to have been proceeds of crime, then the Zetland Property would be proceeds of crime. [18]
259. Moreover, if the defendant’s interest in the chose in action, which, in this context is confined to that part of the interest in the chose in action that relates to the purported transfer from her father, is the proceeds of crime, as well as an instrument of crime, then the Zetland Property would be proceeds of crime, whether or not the loan was obtained by fraud. The defendant’s impugned interest in the chose in action is proceeds of crime if, relevantly, it is wholly or partly derived or realised, directly or indirectly from the money-laundering offence.
260. Stating the obvious, if the impugned interest in the chose in action is the proceeds of crime, then the Zetland Property has been wholly or partly acquired using proceeds of the offence, assuming for this purpose, but not yet deciding, the impugned interest is the proceeds of the money-laundering offence. Similarly, if the loan were obtained by fraud, and the moneys from the loan were used to acquire the Zetland Property, which they were, then for a different reason the loan moneys would have been the proceeds of an offence and the Zetland Property would be proceeds of an offence.
261. It is necessary, then, to examine the allegation of fraud in the obtaining of the loan from ANZ and, in that context, to look at the existence of the contract of employment and whether the defendant committed the offence alleged by dishonestly obtaining a financial advantage (the loan) by deception. It matters not, in the context of the determinations necessary under the Act, whether the defendant has been charged with the alleged offence or acquitted of it.
262. The onus in proving that the loan moneys were the proceeds of an offence rests upon the Commissioner. The burden of proof is civil and the Commissioner is required to prove the offence only on the balance of probabilities. It is unnecessary to determine whether, because of the seriousness of the allegation, the principles associated with Briginshaw apply to that civil onus. [19]
263. While the Court issues restraining orders on the basis of a reasonable suspicion when, inter alia, there are reasonable grounds to suspect that the property is, relevantly, the instrument or proceeds of an offence, reasonable grounds, in and of themselves, are not sufficient to ground the making of forfeiture orders. The Court is required to be satisfied that the property is proceeds or an instrument, as the case may be, of an offence, and while it is irrelevant that a person has not been convicted of the offence in question, or any offence, the Court is required to be satisfied that the property is wholly or partly derived or realised from, or wholly or partly used in or in connection with, the commission of an offence.
264. The Court has been provided with a contract of employment between Beijing Xing Peng Construction Engineering Co Ltd and the defendant, Jieying Sun, although, in accordance with Chinese custom, she is described as Sun Jieying. The Court necessarily has been provided with a translation of the contract. The translation occurred on 18 April 2016. The contract itself is dated 10 July 2011. The translation suffers for the circumstance that it has been translated. The foregoing is not a criticism of the interpreter, but the numbering is the most confusing aspect of the translation.
265. Although the Court as presently constituted does not read Chinese, it seems that the headings have been numbered separately from the numbers of each paragraph (referred to as Article). Apart from the confusion seemingly caused by that process and the necessary flexibility that is required of any translated document, the contract is in not unusual terms.
266. The contract purports to commence on 10 July 2011, which is the date of its execution. It is described as “open-ended” in the phrase “open-ended work contract” and I take the term “open-ended” to mean indefinite. The contract is a contract of permanent employment.
267. Notwithstanding the indefinite nature of the contract, each party has, in certain circumstances, the right to terminate the contract. First, as is a given, all contracts may be terminated by agreement. However, if an issue arises, the agreement to terminate will be “binding” or “enforceable” only if there is consideration, i.e. it is itself a contract. It is unnecessary here to deal with accrued benefits or rights.
268. In the case of employment contracts, contracts are at least in part executory requiring availability and readiness to work as directed and an obligation to pay. Secondly, the employer is, implicitly, given the right to lend out the employee to an overseas subordinate business and to an overseas non-subordinate business if each party agrees and, in the case of a non-subordinate business, the employer and the non-subordinate business must also agree.
269. Thirdly, the employer may terminate on several bases including:
* Poor performance;
* Inability to meet the criteria for the position;
* The employee’s fraud or deception in signing the agreement;
* Serious breaches of labour discipline or damage to the employer’s interests;
* Serious negligence or malpractice causing great damage to the employer’s interests;
* Breach of the confidentiality provisions (which are elsewhere in the document);
* Criminal responsibility;
* Incompetence;
* Incapacity through illness or non-work-related injury; and
* An alteration to the objective circumstances upon which the agreement has been based. [20]
270. The employer may also terminate if, because it is suffering financial difficulties or on the verge of bankruptcy, it notifies the Union and all the employees and consults with them and reports to the Labour Administration Department. There are qualifications on termination for incompetence, illness or change in circumstances which ameliorate the effect on the employee.
271. There is also a process if there is an employment dispute, which process includes a dispute mediation through a committee established, seemingly under the Labour Law, and if the mediation is unsuccessful by arbitration in the People’s Court in China. Otherwise, Party B (the employer) may terminate on 30 days’ notice in writing. [21]
272. The contract of employment or “Employment Agreement” seems to be a pro-forma agreement and includes a clause allowing the parties to extend the contract and for the culmination of the contract at its expiry date, even though the contract is expressed as being unending and no expiry date is prescribed. Lastly, the contract stipulates that the agreement is made and enforceable under the Labour Law of China.
273. One other provision should be mentioned. The employee has the capacity under the contract (Article 30) to request backpay and financial compensation if the employee is underpaid or the employer delays the payment of salary; the employer refuses to pay for overtime; the employer pays lower than the “lowest salary standard”; and the employer does not pay compensation pursuant to Article 30 of the Agreement after termination of the Employment Agreement.
274. For obvious reasons, the translated document is not signed, but the original document in Chinese is completed in the space that, according to the translation, would be for the signature and is said to contain the signature. There is no evidence that the employment agreement has been concocted. There is no evidence that the Employment Agreement is fraudulent or a forgery. There is no evidentiary basis for a suggestion that the defendant, Jieying Sun, was not employed in her father’s company as an office manager from 2011. Further, there is no evidence that the contract of employment was ever terminated.
275. The Employment Agreement is binding on Mr Sun’s company and the defendant. Mr Sun, on his own behalf and on behalf of his company, testifies that the defendant is employed, as does the defendant.
276. Here, the parties’ business relationship is comprehensively committed to a written contract and the validity of that agreement is not in dispute between the parties to the contract. In the absence of evidence in or to the effect that there has been a termination of the employment, or the contractual document is a sham, the working relationship between Mr Sun and the defendant is that which is contained in the document. [22]
277. As earlier stated, the premise upon which the plaintiff examined both Mr Sun and the defendant was that there was an inconsistency between being employed (and, consequently, being paid) and not performing work. Unfortunately, the questions often referred to whether the defendant was “working” for her father. Of necessity, such a term involves a degree of ambiguity.
278. One may refer to a person “working for an employer”, even though, at a particular time, no work is being performed. At the same time, the term may be used to refer to the performance of work as distinct from the status of being employed. In my view, some of the questions and answers reflect that confusion, which is even more prevalent in a person for whom English is not their first language.
279. Essentially, and the full submissions will be dealt with later in these reasons, the plaintiff Commissioner seeks to rely upon an inference that is said to arise because the defendant was residing in Australia and not performing work for Mr Sun and, consequently, could not have been employed by Mr Sun at the relevant time and could not have been receiving income. Such an inference is supported by the failure to lodge income tax returns in Australia and not possessing records disclosing the regular receipt of income in or to the amount of that which was said to be payable.
280. Mr Sun attached to his affidavit of 17 March an employment certificate, which was supplied to ANZ or a copy of it was so supplied. The certificate is signed and sealed and on the letterhead of the Construction Engineering Co Ltd and signed by a director, other than Mr Sun.
281. The certificate, as earlier indicated, refers to the defendant’s salary as being CNY 624,660. That amount equates, also as earlier stated, to approximately AUD$131,399, which is approximately $10,900 per month. The exchange rates have altered since the application to ANZ, but the amount stated on the loan application of $10,880 per month is, clearly, a reference to the salary of CNY 624,660.
282. The employment certificate is dated 27 November 2014. Somewhat unusually, the Employment Agreement does not specify a salary. Nevertheless, there were letters of employment, which apparently accompanied the Employment Agreement, and which specified the salary. While there has been, in examination, a suggestion that this certificate has been concocted for the purpose of supporting the ANZ loan, there is no evidence to suggest such a circumstance and there is evidence from both Mr Sun and the defendant to the contrary.
283. The inference upon which the Commissioner relies, namely that because the defendant resided in Australia and did not perform work for Mr Sun in China, she could not have been employed is not consistent with the law. There is, as earlier stated, no obligation on an employer, except in very limited circumstances, to provide work. [23]
284. The circumstances in which there would be an obligation to require work of the employee, leaving aside circumstances where an employee is paid piecework or on results, do not extend to circumstances where the employer and employee agree that work should not be performed.
285. While it is becoming less common, many positions used to involve a sabbatical or extended leave requirements, during employment. In this situation, as was the evidence of Mr Sun, his succession plans involved his children succeeding him in the running of his business for which purpose he desired to ensure that the defendant could converse fluently in English. It suited Mr Sun’s long-term plans for his daughter to study in an English-speaking country. Nothing in that arrangement is inconsistent with the continued employment of the defendant by her father, even though she was residing in a country which precluded her from performing the detailed duties of an office manager.
286. Mr Sun, quite openly, referred to the significantly different strictures associated with employment in the PRC from that required in Australia. The pro forma contract applicable to the employment of the defendant referred to the capacity to claim non-payment of salary, delay in the payment of salary, underpayment or if there be backpay owing. Given that the employment required the payment of salary or wages and the non-payment (either at all or at the appropriate time) would give rise to the capacity to claim such amount, for the contract to specify such circumstances seems to indicate that the regularity of payment in the PRC was not that which we would expect in Australia.
287. Mr Sun and the defendant each continued to refer to salary still owing, as if it were a matter of course. The most probable explanation for the reference by each of them and the explanations given in relation to the payment of salary is that it is paid inconsistently and accrues to the credit of the employee, when not paid. Such an explanation is one that accords with the evidence of Mr Sun and the defendant and accommodates all the issues raised during the proceedings as to the salary.
288. The defendant was, for tax purposes, an Australian resident and required to lodge income tax returns in each year in which income was received. Because the defendant is an employee, she is required to complete tax returns on a cash basis.
289. This would entail the circumstance that to the extent the defendant was paid a salary, she would be liable to lodge a tax return in relation to that amount. To the extent that the overseas employer retained the entitlement which accrued to the defendant, it would not have been received and would not have involved the filing of an income tax return in Australia.
290. Apparently, income tax, if there be an income tax, in the PRC is levied at the employer level, not on the employee. To some extent, the same circumstance applies in Australia and, generally, an employee income tax return would result in an income tax refund or no tax being payable. The foregoing is a consequence of the PAYG system and assumes the employee has no untaxed income, extraneous to the wages or salary.
291. If, as I consider most likely, and as is consistent with the evidence of Mr Sun and the defendant, Mr Sun’s company paid as much salary as was necessary to provide the defendant with her living expenses and accrued the remainder, then all the material becomes consistent, and all of the evidence becomes consistent. Some of the amounts transferred from Mr Sun to his daughter, the defendant, were gifts, to which circumstance I will return. But, to the extent that it was the payment or back-payment of salary, it was paid only to the extent necessary to provide for living expenses and the remainder of the salary that was payable accrued to the credit of the defendant in China and in the employer’s books.
292. The foregoing conclusion is consistent, wholly, with the evidence of Mr Sun who testified that his daughter was employed; his daughter, the defendant, was due salary; there was still, in China, salary owing; and that the money transferred to his daughter consisted in part of salary and in part of gifts. The foregoing summary is also consistent with all the evidence of the defendant.
293. Further, the defendant, in order to progress the long-term aim of Mr Sun, had been sent on study leave in Australia and was not terminated in employment. There is no evidence, as earlier stated, to suggest a termination or an abandonment.
294. The fact that the study leave was as extended as it was, may reflect the generous approach of Mr Sun to his daughter, but it also reflects the long-term corporate plans of Mr Sun. The defendant’s residence in Australia, even without any formal study program, was still consistent with the purpose of ensuring that his daughter was sufficiently fluent in English to enable her to fulfill the role Mr Sun saw in his succession planning.
295. The foregoing also accounts for the absence of an Australian tax return and the irregularity in the deposits in the defendant’s bank accounts, together with the variation in the amounts credited.
296. Further, as earlier stated, the interest payments on the ANZ loan were between $1,100 and $1,200 per month and there is no suggestion that the defendant has defaulted on the loan to ANZ.
297. On the foregoing analysis, even on the balance of probabilities and disregarding the seriousness of the allegation that has been made, the Court is not satisfied that the defendant deceived ANZ when she represented (either personally or through an agent) that she was employed by her father’s company and was entitled to receive an amount of $10,880 per month, and did receive it for the three months for which a payslip was provided, or was entitled to receive $10,880 per month on average. Further, the Court is not satisfied that in representing those facts, the defendant either knew or was reckless about being dishonest, within the ordinary meaning of that term.
298. Therefore, the Court is not satisfied that the defendant committed an offence (even on the civil standard) in applying for the loan of $640,000 from ANZ. It is necessary to deal with the deposit and the transfer of money from Mr Sun to the defendant.
299. The issue, whether the balance in the defendant’s bank was “the proceeds of crime”, is, at one level, relatively uncontroversial. The cash deposited by Mr Feng and his co-offenders was the implementation of, and part of the process of, the money-laundering offence.
300. On one view, the money-laundering offence could have been completed at the time that the money-exchanger transferred the amount obtained from Mr Sun. The deposit of the cash was more in the nature of conduct with two purposes, at least, being an attempt at concealment from law enforcement agencies, the innocent transferor and the innocent transferee of the transfer process to the third party criminal; and, secondly, ensuring that, subject to the operation of law enforcement agencies, the money-exchanger remains in business and can continue to obtain transfers from other innocent transferors.
301. Unlike the circumstance to which the High Court referred in the earlier extract, cash was used in depositing the amounts into the defendant’s account. The account, insofar as it reflects the deposit of the cash, is the product of the criminal offence. It is, consequently, derived or realised, directly or indirectly, from the commission of the offence and is the proceeds of the offence. [24]
302. Given the foregoing analysis, the property being the amount deposited into the credit of the defendant is the proceeds of crime. The Court, subject to the other provisions of the Act, is required by the terms of s 49(1) of the Act, to issue a forfeiture order.
303. The provisions of s 49(4) of the Act are unusual. A court that is granted jurisdiction to issue orders upon the satisfaction of certain criteria is rarely given the discretion not to exercise the jurisdiction based on “the public interest”.
304. Such a criterion is more often associated with tribunals which create rights rather than those which declare and enforce rights. Even then the power to refuse to exercise a jurisdiction conferred is rare. In Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia, [25] Deane J said at 399:
“The right to invoke the jurisdiction of the courts and other public tribunals of the land carries with it a prima facie right to insist upon the exercise of the jurisdiction invoked. That prima facie right to insist upon the exercise of jurisdiction is a concomitant of a basic element of the rule of law, namely, that every person and organization, regardless of rank, condition or official standing, is “amenable to the jurisdiction” of the courts and other public tribunals (cf. Dicey, An Introduction to the Study of the Law of the Constitution, 10th ed. (1959), p.193). In the rare instances where a particular court or tribunal is given a broad discretionary power to refuse to exercise its jurisdiction on public interest grounds, the necessary starting point of a consideration whether such a refusal would be warranted in the circumstances of a particular case in which its jurisdiction has been duly invoked by a party must ordinarily be the prima facie right of the party who has invoked the jurisdiction to insist upon its exercise (cf. per Higgins J., Merchant Service Guild of Australasia v. Commonwealth Steamship Owners' Association (No. 1) (1920) 28 CLR 278, at p 281). That position is a fortiori in a case where no other court or tribunal, Commonwealth or State, possesses jurisdiction fully to deal with the particular dispute. Were it otherwise, effective access to the courts and other public tribunals would be not a right which could be denied in an exceptional case on the grounds of extraordinary considerations of public policy but an uncertain privilege which could be withheld at any time on unconfined and largely unexaminable discretionary grounds (see, generally, Friedman, "Access to Justice: Social and Historical Context" in Cappelletti and Weisner (eds.) Access to Justice, vol.II, book 1 (1978) pp.5ff.; Raz, The Authority of Law, (1979), at p.217).” [26]
305. The foregoing is the principle that should be applied to the exercise of the discretion conferred by s 49(4) of the Act. The requirement on a court with this jurisdiction to issue forfeiture orders is to exercise the jurisdiction conferred except where such a prima facie right is overcome by an exceptional set of circumstances or extraordinary considerations.
306. Prima facie, the Commissioner is entitled to the forfeiture orders sought. Further, because, on the above analysis, the property sought to be forfeited is the “proceeds of crime”, the provisions of s 49(4) of the Act do not permit the Court to refuse to make the orders sought.
307. I turn then to the provisions of s 73 of the Act, extracted above. There is a seemingly deliberate alteration in the subject of the orders in this provision.
308. Whereas ss 49 and 329 refer to “property” which is the instrument or proceeds of any offence, s 73 of the Act refers to “the interests in property” of the applicant for orders thereunder, which either is or would be the subject of forfeiture orders.
309. As earlier stated, the definition of “property” includes “any interest in any” personal property, whether tangible or intangible. [27] Taken literally, this would involve the result that s 73 of the Act refers, inter alia, to the defendant’s interest in an interest in personal property.
310. Often where a circularity in definition exists by the repetition of a particular word, one of the occasions where the term is used is given its ordinary or undefined meaning. Here there seems to be a clear alteration in focus by which the legislature has moved from a focus on the general to the particular role of the applicant for an exclusion.
311. Where, in dealing with forfeiture orders (and restraining orders), the Act requires the Court to examine the source and use of the “property”, in s 73 of the Act, when dealing with compensation orders, the legislature directs attention to the interests of the defendant. The interests of the defendant are the interests in the Zetland Property and the chose in action (the bank account).
312. The amount, transferred into the defendant’s bank account indirectly from her father, no longer remains as part of the amount available for withdrawal – it has been utilised for the deposit on the Zetland Property. Consequently, the defendant’s current interest, in the least complex sense being the sum available to be withdrawn from the account after the payment of the deposit on the Zetland Property, in the current chose in action is neither the instrument nor the product of a criminal offence. This comment relates to the general overview,; there are sums in the offset account that may fall within the term.
313. If one were to take a strict view of the “interest”, being the chose in action, which, in banking terms, is the right to withdraw or deal with money held and which, technically, may be the subject of a suit for recovery, if necessary, the defendant’s chose in action existed before the money-laundering offence occurred and continued to exist during and after the offending. The “only” difference that occurred was that the right to recovery applied to a greater (and subsequently lesser) amount.
314. On the immediately preceding view, an innocent defendant’s interest, being a bank account, if it were to have existed before the relevant offence, could never be the proceeds of the offence, but could be an instrument of an offence. Little turns on such a circumstance, because the definition of property is sufficiently broad to encompass choses in action, regardless of the identity of the “owner of the account” or its existence before, during or after the relevant offence (or the existence of the reasonable suspicion thereof).
315. Thus, if the assets represented by the bank account were the property of the Bank, it could still be the instrument or proceeds of the money-laundering and subject to applications for restraining orders made, for example, with Mr Feng and the other persons who deposited cash as the defendants. [28]
316. The definitions in the Act of “interest” and “property” do not easily provide for the increasing or decreasing amount in a defendant’s bank account. The bank account is a chose in action which is within the definition of property under the Act because it is an interest in intangible personal property, [29] being a “right, power or privilege in connection with” [30] the amount held in the bank account. But the chose of action does not alter depending on the amount in the account.
317. It is only if one reads the definitions in a way that elides the definitions or ignores the technicalities associated with “ownership” of a bank account that one can treat the balance in the account as “property”. In other words, if one treated the balance in an account as the account-holder’s money (thereby ignoring the circumstance that the accountholder only has a chose in action) then the “amounts” in the account represent property.
318. The alternative is to construe “property” to include the chose in action (which it does) and then to construe “interest” to mean the “interest in the chose in action” in a manner that, in the last-mentioned phrase, gives interest a meaning that includes the amount of entitlement to recovery under the chose in action.
319. Either of the foregoing constructions gives, in my view, effect to the obvious purpose of the Act and avoids any disharmony in its operations. Such a construction would allow for forfeiture orders relating to so much of the balance in the bank account as is the proceeds of crime and leave any remaining amount untouched.
320. Applying such a construction, the amount transferred by Mr Sun to the defendant, which was the subject of the money laundering process, is available for a forfeiture order, but any other amounts in the account would not be available. In the current proceedings, it is accepted that Mr Sun sought to transfer AUD$517,241 (originally not in Australian dollars) and this amount was deposited in the defendant’s CBA account. No forfeiture orders are sought in relation to amounts, if any, in any of the defendant’s CBA accounts.
321. The defendant then transferred this amount to another CBA account. In October 2014, the defendant obtained a bank cheque of $95,500 from the CBA, which was then used as the deposit on the Zetland Property, which was purchased for $955,000. The contract for sale was executed on 24 December 2014.
322. On 7 January 2015, Ms Sun transferred $430,000 from her CBA account to her ANZ account, of which $258,020.22 was used by ANZ as the balance owing on the purchase of the Zetland Property, after the loan from ANZ of $640,000. The circumstance that the CBA accounts were interposed between the transfer and the payment of the deposit and/or the payment of the balance owing on the purchase after the loan amount was credited, makes no difference to the status of the property either as an instrument of the offence or as proceeds of the offence. [31]
323. Before dealing with the effect of the foregoing, it is necessary to summarise, as briefly as possible, the submissions of the parties.
Submissions of the Commissioner
324. The Commissioner seeks forfeiture of the Zetland Property and the balance in the ANZ account. It does so because the deposit was the proceeds of crime. As earlier stated, the deposit was the proceeds of crime because of the money laundering offence which resulted in the deposit in the CBA account, which, in turn, was utilised for the deposit. Secondly, the Commissioner seeks the Zetland Property because it was the product of the use of the deposit and the defendant obtained the loan from the ANZ in circumstances where it is reasonable to suspect that the quantum of the loan funds advanced, is the proceeds of crime as a consequence of the suspected breach of s 400.9(1) of the Criminal Code.
325. Further, the Commissioner submits that it is reasonable to suspect that the ANZ loan funds were “proceeds of crime” as they were wholly derived, directly or indirectly, from the commission of an offence against NSW law, being s 192G of the Crimes Act.
326. The Commissioner relies upon the terms of the loan application form to which reference has already been made; the employment certificate of 27 November 2014 to which reference has also been made; the three payslips for September, October and November 2014; the bank statement from SPD Bank showing salary credits; and three statements of Financial Position dated 11 December 2014, 29 December 2014 and 30 December 2014, each signed by the defendant.
327. The Commissioner submits that the documents were “false or misleading in a material particular”. The Commissioner submits that as at December 2014, the defendant was not employed by the Building Company, which was represented in the loan application; her salary from the Building Company was not as stated in the application form; and, her average gross monthly income was not, as represented, $7,641.00. The Commissioner also relies upon the representation that the defendant received payslips from the Building Company in September, October and November. While it was suggested to the defendant (and Mr Sun) that the payslips were concocted for the purpose of supporting the loan application, I do not understand that there was any suggestion that the defendant did not receive the payslips (except to the extent they may have been sent to an agent or broker).
328. As earlier indicated, the Commissioner submits that Ms Sun was not employed by her father’s company in 2014, she did not receive a salary or income from the Building Company and the payslips provided were created solely for the purpose of securing the loan.
329. In support of the proposition that the defendant was not an employee of the Building Company in 2014, the Commissioner submits that the defendant was studying in Australia and was not “working for” the Company. Between 2008 and at least 2015, the defendant was for most of the time in Australia on a student visa. The Commissioner relies upon the defendant’s own evidence that she came to Australia to study.
330. In support of the visit to Australia being to study, the Commissioner relies upon the incoming passenger cards provided to the ABF which identified the defendant’s occupation as “Student”. The Commissioner also relies upon the fact that the defendant agreed, during the examination under the Act, that during the whole time she had been in Australia, the defendant had been there as a student.
331. In support of the submission that the defendant did not receive income or salary from the Building Company in 2014, the Commissioner relies upon the proposition that the payments were not “dependant” upon her doing work for the Company. The submission was that they were a “gift from her father to support her study”. They rely on the statement in evidence of the defendant’s father who, albeit without context, gave evidence that “it would be fair to consider most of my daughter’s payments received from the Building Company to be a gift from me via Building Company” and the defendant’s comment that the Building Company has “since at least 2008 transferred money to me. I have not had to differentiate which payments are for salary, study allowance or gift”.
332. The Commissioner also relies upon the statement by the defendant that the money she received from China was more like a gift than a salary and that she, the defendant, did not “need to work for the money because of my father’s support”.
333. The Commissioner submits that the defendant did not receive any income for work done for the Building Company and such a circumstance is consistent with the tax records. Without being overly critical, it is not absolutely clear whether this differentiates between the receipt of income and the receipt of income for work done. It seems that the Commissioner does not differentiate between the two circumstances, which is consistent with the analysis earlier in these reasons, as to the aligning by the Commissioner of the term “employment” and “working”. The Commissioner submits that the non-filing of income tax returns for the financial year 2014 is consistent with her not being employed. It is certainly consistent with her not receiving income in Australia.
334. Next, the Commissioner relies upon the payslips being concocted and relies in particular on a question and answer as to the receipt of only three payslips. The defendant testified, in the examination under the Act, that she only needed three in order for the broker to get the home loan.
335. The extract of the transcript from the s 180 examination confirms the elision and confusion between the notion of working full-time and the status of employment.
336. The Commissioner submits that the false or misleading statements were made with the intention of obtaining a financial advantage. If the statements were false or misleading, then they would have been made with the intention of obtaining the loan, which is a financial advantage. It is unnecessary to rehearse that submission.
337. Next, the Commissioner attacks the credit of the defendant. These reasons have already summarised the evidence of the ANZ witnesses and the evidence of Mr Lai. I have, earlier in these reasons, dealt with the reliability of Mr Lai’s evidence. Nothing in the submission has caused me to alter that assessment.
Submissions of the Defendant
338. The defendant spent some significant time on the admissibility of the examination under s 180 of the Act of Yi Feng’s evidence. I have already dealt with the admissibility of that evidence. I take the view that reasonable steps have been taken to procure Mr Feng. He is overseas and while I do not condone some of the last-minute steps taken by the Commissioner, it does not impact upon the view I take that the material is admissible under s 318A of the Act. The witness is absent outside of the State and, on the evidence before the Court, I have formed the view that it is not reasonably practicable to secure the witness’s attendance. Further, as earlier indicated, the witness is unavailable and the document, being the transcript of the questions and answers under s 180 of the Act, contains the representation. Notice had been given of the reliance by the Commissioner on the evidence.
339. Further again, the Court draws no inference that the evidence of Yi Feng would not otherwise assist the Commissioner.
340. As to the loan amount, the Court has already made clear that the obtaining of a loan is the obtaining of a financial advantage, even though the Commissioner has shown no likelihood or probability that the loan would be the subject of default and accepting that ANZ, in all likelihood, would profit from the transaction.
341. The defendant submits that the Commissioner has failed to prove that the defendant made or published the document. It is fair to say that the evidence as to who published the document or completed it, is unclear.
342. The Court has already dealt with whether the statement is false or misleading in a material particular. Further, those comments relate to whether, in the ordinary use of the term, the statements were made “dishonestly”, which is a further factor relied upon by the defendant.
343. The defendant relies upon the imprecision in the Commissioner’s allegations. Notwithstanding that submission, it seems to the Court that there is sufficient particularity to allow the defendant to understand the allegation made against her. The defendant, however, relies upon the proposition that the Commissioner alleges only that there is “a statement in a signed loan application” which is inaccurate and fails to prove that it is “false”, ie. not believed to be true by the person who completed it and/or the defendant.
344. Further, the defendant relies upon the proposition that the loan application that is in evidence does not bear any signature. Since the Commissioner relies upon a statement in a “signed loan application”, it should not be permitted, on the submission of the defendant, to depart from the allegation upon which the parties are on notice.
345. Next, the defendant relies upon the lack of clarity as to the receipt of supporting documents by the defendant and the provision by the defendant of the documents to the ANZ. The Court has drawn the inference that, whoever received the supporting documents, did so because the supporting documents were requested by the defendant. Ultimately, because of the findings the Court has made, nothing turns on that inference.
346. However, the evidence is vague. There were significant other factors, as submitted by the defendant, in the process. The defendant’s father met with Mr Lai in October and received a “shopping list” of documents that Mr Lai required. The defendant’s stepmother was also involved in the process and was identified in the ANZ documents as the defendant’s agent.
347. Next, Mr Tom Jin was the subject of significant evidence; was a branch lending officer of ANZ who dealt with the defendant; and was not called by the Commissioner. Over and above the foregoing, Ms Lin, who was paid a commission for the loan and was described as a “third party introducer” for ANZ, was Mr Lai’s partner.
348. The defendant submits that she, on the evidence, played a peripheral role in the application itself. Any one of the other parties could have supplied the documents upon which the Commissioner relies to show that the defendant has committed an offence. The defendant denied providing the documents to the ANZ and there is no evidence to suggest otherwise.
349. The defendant submits, as a consequence, the Commissioner cannot establish, at any level, that the defendant actually or even circumstantially provided the documents to ANZ. There is much force in this submission.
350. The defendant also relies upon the relationship between Mr Lai and Ling Lin. That relationship includes the fact that the evidence of Mr Lai was that he was, at the relevant time, running a company known as “Ling Financial”. A company search, in evidence, shows that the shareholder and director of that company was Mr Lai’s partner, Ling Lin and that Mr Lai later became a director in 2017.
351. If, as was conceded by Mr Lai, he was running the business of Ling Financial, in circumstances where Ling Lin received the commission for the loan referral, then Mr Lai was involved in the loan transaction. The relationship between Ling Lin and Mr Lai included that the two of them were co-habiting.
352. The defendant also relies upon the WeChat messages between the defendant and Mr Lai in which the defendant seeks updates on her loan application, all of which, according to the submissions of the defendant, are consistent with Mr Lai being involved in the application and most probably in a position to provide the documents to the Bank. Mr Lai accepted that, from time to time, he contacted a customer’s employer to obtain information for loan applications.
353. Overall, there is no evidence in the Bank files as to how the Bank came into possession of the documents upon which the Commissioner relies.
354. Assuming for present purposes that the statements given to the Bank were for the benefit of the defendant, in order for the defendant to be held liable, on the submission of the defendant, for the false or misleading statements in them (without, on the submission, accepting that the statements were either false or misleading) the Commissioner was required to prove that the defendant was aware of the contents of the document. The Commissioner has failed to prove that fact and the Commissioner has failed to prove that the defendant concurred in the publication of the false documents and, otherwise, failed to prove that the defendant provided the documents. Such lack of proof does not take into account the seriousness of the allegation, albeit in the context of the civil onus.
355. I accept that the Commissioner has not proved, on the balance of probability, and taking into account the seriousness of the allegation, that the defendant provided the documents or was aware of the contents of the documents when they were provided. I also take the view that the failure of the Commissioner to provide a signed copy of the loan application, allows the Court to infer that no such signed application exists. The circumstance that the system utilised by the ANZ requires the application to be signed, and it is not, confirms that approach.
356. While it is not, directly, submitted by the defendant, the Court, as may be clear from the earlier comments on the evidence itself, considers that it is far more likely that the relationship between Mr Lai and Ms Ling allowed for the cutting of corners and that the material was just as probable to have been produced to ANZ by any one of Mr Jin, Mr Lai, or Ms Ling.
357. The defendant also relies upon a submission that the Commissioner has not satisfactorily identified, or proved, the nature of the falsity in a material particular. In that submission, the defendant relies upon the existence of the employment agreement; the employment certificate; the payslips; and the uncontentious nature of the circumstance that the defendant received the money from the Building Company. The defendant relies upon the proposition that, even if the defendant were in breach of her employment contract, or if the company were acting irregularly by continuing the defendant on their books, it does not go to whether the defendant was entitled to the income.
358. This argument has been dealt with already in the foregoing reasons and relates, although in this sense it was not put by the defendant, to the different nature of the existence of an employment relationship, a contract of employment and “working for” the company or employer.
359. The defendant submits that the bank statements are neither false nor misleading. They are bank statements and accurate. Similarly, the Statements of Financial Position, which comprise figures that could only have been calculated and inserted by someone at ANZ or with knowledge of their processes, are neither misleading nor deceptive.
360. The defendant submits that the Court would not find and ought be slow to find, and should reject any finding that the defendant has acted dishonestly, within the meaning of that term.
361. Moreover, the defendant submits that the ANZ must have known that the defendant was not working full-time for the Beijing Building Company. Her address was given as a Sydney address; her New South Wales driver’s licence was provided as documentation and identification; she attended on the Bank to sign documentation on 6 January 2015; and the Bank addressed correspondence to her in Sydney. In those circumstances, it cannot be suggested that the defendant was representing that she was a full-time office worker in Beijing. The most likely explanation, on the submission of the defendant, is that ANZ asked for documentation in relation to her employment with her father’s company and her father facilitated that information being received by the Bank.
362. The Court accepts the submissions made by the defendant in relation to the failure of the Commissioner to approve an offence under s 192G of the Crimes Act, in addition to the analysis already outlined in these reasons for judgment. The Court does not accept the submission of the defendant that the Commissioner if there were a breach of s 192G of the Crimes Act, has failed to satisfy the provisions of s 400.9(1) of the Criminal Code.
363. The defendant’s submissions in this latter regard depend upon the subjective knowledge of the defendant as to that which is illegal and s 400.9(1) of the Criminal Code does not depend upon the subjective knowledge of the person, there described, of the law. Rather, it depends upon a knowledge of the facts giving rise to a reasonable suspicion.
364. The defendant also submits that the Court should draw an adverse inference based upon the failure of the Commissioner to call Mr Jin. [32]
365. There is no suggestion that Mr Jin was unavailable. Mr Jin was the employee at ANZ who handled the loan application for the defendant.
366. Given that the Commissioner bore the onus of proof on the commission of the offence by the defendant in applying for the loan and in that regard, the onus of proof that it was the defendant who submitted the documents and/or completed them; had knowledge of their contents; and the other matters to which reference has already been made, an inference is available that the evidence of Mr Jin does not assist the Commissioner and, more readily, allows the Court to draw the affirmative inference arising from the evidence of the defendant that she did not submit the document and/or was unaware of their contents.
367. The affidavit of Mr Matthews testifies that the AFP could not locate Mr Jin. However, the affidavit does not testify as to what, if any, steps were taken and the affidavit of Shing Hei Lam testifies as to where, after 2021 when Mr Jin left ANZ, he worked. This was obtained in a Google search.
368. Lastly, the defendant relies upon the provisions of s 330(4)(a) of the Act and the comments of the High Court in Lordianto, supra, to submit that the defendant is a third party for which sufficient consideration has been paid.
Conclusion
369. Many of the factual determinations have already been outlined. As has been expressed earlier, I do not find that the Commissioner has proved, even on the balance of probabilities, that the defendant has breached s 192G of the Crimes Act. In those circumstances, the Commissioner has failed to prove that the defendant has contravened s 400.9 of the Criminal Code.
370. The Commissioner has failed the burden placed upon him to establish that the loan was the proceeds of crime or an instrument of crime and the Commissioner is not entitled to a forfeiture order in relation to the property, at least over and above the deposit, with which the Court will now deal.
371. The evidence before the Court does not establish that either Mr Sun or the defendant had any knowledge of the criminal activity of the money changers and/or Yei Feng. The evidence does establish that each of them is wholly innocent and caught up in a money-laundering operation conducted for the benefit of others.
372. The money-laundering operation utilised the transfer by Mr Sun or his company to the defendant to “launder” money, which the Court assumes was otherwise tainted. There is no suggestion that the money held by the Building Company or Mr Sun was, at that time, tainted.
373. As discussed earlier, in terms of the analysis of the High Court in Lordianto, supra, each of Mr Sun and the defendant are “third parties” to the transaction by which the property first became the proceeds of crime. In that sense, the defendant is “a bona fide receiver of property without notice”.
374. Yet, the issue is not quite as the defendant puts it. The Court is still required to determine whether the property has been “acquired” “for sufficient consideration”.
375. As can be seen from the earlier comments, I accept that the defendant would not, even at the point in time when the defendant received the transferred monies into her account, have aroused a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence. Thus, the Court is required to determine whether the property has ceased to be the proceeds of an offence or an instrument of the offence committed by the money exchanger, Yei Feng, and the others associated with the offence.
376. The term “acquired” is not a narrow term and not confined to a purchase. In the context of s 330(4)(a) of the Act, it means to obtain. If it were confined to a purchase, the need for “consideration” and its use in the provision would be otiose. There would still need to be an issue relating to sufficiency but that would be achieved by utilising the well-known term “for value”. There is no reason, in the context of the Act and this provision, to read down the term “acquired” to mean anything other than “obtained”.
377. The next issue is whether the property was acquired “for sufficient consideration”. There is no suggestion or contest that suggests that the salary paid for the full-time position was exorbitant. There was a degree of leniency and generosity associated with the capacity of the defendant to take study leave and enjoy it, no doubt, as a result of the fact that there is a relationship between the defendant and the principal of the company which is employing her. But if the consideration were wages or salary, there is no suggestion that it is other than a salary that “reflects the value of the services to be provided under the contract having regard solely to commercial considerations”. [33]
378. In a contract of employment, the consideration is, on the one hand, the remuneration, being the amount paid or to be paid (and other benefits) and, on the other hand, the requirement to be ready, willing and able to work in accordance with the contract. The contract of employment, even in the current circumstances, would have required, if the employer so directed, the defendant to return to China and fulfil duties, whether, in an emergency situation, for a short time or indefinitely. The only recourse the defendant would have to such a direction would be to terminate the contract, in accordance with the contract. It is unnecessary to discuss how that could occur.
379. At the time of the transfer of money, if it were salary or back pay, the employee was obliged to be ready, willing and able to perform work as directed. If the money transferred were salary, payable under the contract of employment, then the defendant “acquired” it “for sufficient consideration”.
380. If, as is one of the possibilities, the transfer were a “gift”, then no consideration was given for the transfer. Whether the transfer was a gift or salary, the question arises as to when the transfer was effective.
381. Leaving aside for present purposes the complication associated with the property being a chose in action, for personal property to be transferred and the gift effective, there must be a transfer of the property. In particular, a gift is complete when it is delivered to the donee. This is not the first time the courts have been required to deal with property that may not be “delivered” in the physical sense. Going to first principles, the High Court has said:
“The whole law on the subject is contained in the judgment of Turner LJ in Milroy v Lord: ‘I take the view of this Court to be well settled that, in order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purpose of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or either of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be effectual by being converted into a perfect trust.’
… I think that the words ‘necessary to be done’ … mean necessary to be done by the donor. Thus, in the case of shares in a company which are only transferable by an instrument of transfer lodged with a company, I think that the donor has done all that is necessary on his part as soon as he has executed the transfer. So, in the case of a gift of land held under the Acts regulating the transfer of land, I think that a gift would be complete on execution of the instrument of transfer and delivery of it to the donee. If, however, anything remains to be done by the donor, in the absence of which the donee cannot establish his title to the property as against a third person, the gift is imperfect, and in the absence of consideration the Court will not aid the donor as against the donor. But, if all that remains to be done can be done by the donee himself, so that he does not need the assistance of the Court, the gift is, I think, complete.” [34]
382. If the transfer by the Building Company were a gift, then the donor, the Building Company, has done all within its power to effect that gift at the time that the transfer is lodged with the money exchanger. No further act of the Building Company is required or possible.
383. In those circumstances, the defendant is the “owner” of the gifted sum at the point that the Building Company completes and lodges the transfer request. It is, in my view, no different if the amount provided is salary. Whether the amount transferred, and ultimately received by the defendant and utilised for the deposit or credited in the offset account, was salary or a gift, it was the property of the defendant when the Building Company executed and lodged the transfer request.
384. In those circumstances, the property received by the money exchanger was the property of the defendant and the defendant has provided “sufficient consideration” for the property received in her accounts in Sydney. The amounts standing to the credit of the defendant in Sydney (being the amount recoverable under the chose in action) has been acquired by the provision by the defendant of the equivalent amount to the money exchanger. Or provided by the money exchanger fraudulently and illegally dealing with the property of the defendant by transferring it to an account other than an account of the defendant. In either case, “sufficient consideration” has been provided by the defendant.
385. The amounts standing to the credit of the defendant in each of the offset accounts and which was paid by way of deposit for the Zetland Property, ceased to be the proceeds or instrument of crime pursuant to the terms of s 330(4)(a) of the Act.
386. To the extent that it is necessary for the Court to determine whether the monies transferred were a gift or salary, I determine that the monies were, more probably than not, salary payable in part and from time to time in accordance with the needs of the defendant and otherwise accruing in the accounts of the employer and payable on application by the defendant. But, in my view, whether it is salary or a gift does not alter the conclusion that the monies in the accounts (and the money used for the deposit for the Zetland Property) ceased to be the proceeds of or an instrument of crime or an offence.
387. As already indicated for the reasons outlined by the Court, the Commissioner has not proved that the obtaining of the loan from ANZ was an offence under s 192G of the Crimes Act and the loan was not the proceeds or an instrument of crime. The reasons already given, include the additional reasons provided by the defendant and summarised above.
388. The Court is not required in relation either to the accounts or the Zetland Property to make a forfeiture order under s 49 of the Act because the Court is not satisfied that in any of the cases the property is either the proceeds of or an instrument of a serious indictable or foreign indictable offence. Pursuant to the terms of s 45(3), the effect of the refusal of the Commissioner’s application for a forfeiture order is that the restraining order initially issued by the Court ceases to be in force after the time for an appeal has expired or, if there were an appeal, it has lapsed or been dismissed and finalised.
389. For the foregoing reasons, the Court makes the following Orders:
1. The Court refuses the application by the Commissioner of the Australian Federal Police for a forfeiture order pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth);
2. Any parties seeking costs under s 323 of the Proceeds of Crime Act 2002 (Cth) shall, within 14 days of the date of the delivery of this judgment, file submissions of no more than five pages, together with any documents upon which reliance is placed for that purpose and any party opposing such order shall, within a further 14 days, file submissions of no more than five pages together with any documents upon which the opponent relies. The matter will be listed for short argument before the Court at a convenient time to the parties.
**********
Endnotes
1. Crimes Act 1900 (NSW), s 4B.
2. Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39.
3. Lordianto, supra, at [86], [103] (Kiefel CJ, Bell, Keane and Gordon JJ).
4. Lordianto, supra, at [99] (Kiefel CJ, Bell, Keane and Gordon JJ).
5. Lordianto, supra, at [100] (Kiefel CJ, Bell, Keane and Gordon JJ) (footnotes omitted).
6. Lordianto, supra, at [75]-[81] (Kiefel CJ, Bell, Keane and Gordon JJ) (footnotes omitted).
7. Proceeds of Crime Act 2002 (Cth), s 49(4).
8. See PCB, p. 1083.
9. PCB, p.1718.
10. See transcript p. 27
11. PCB Volume 3, p 1726.
12. Proceeds of Crime Act 2002 (Cth), s 329(1).
13. R v Watson; Ex parte Australian Workers’ Union (1972) 128 CLR 77 at 95 (Gibbs J); [1972] HCA 72; R v Neil; Ex parte Cinema International Corporation Pty Ltd (1976) 134 CLR 27 at 31 (Gibbs J); [1976] HCA 11.
14. See State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 at 416 (Taylor J); [1966] HCA 56; Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47 (Brennan, Deane and Gaudron JJ), 51 (Dawson J); [1989] HCA 24; Herald and Weekly Times Ltd v Commonwealth (1966) 115 CLR 418 at 436 (Kitto J); [1966] HCA 78; Paull v Munday (1975) 11 SASR 346 at 348-349 (Bray CJ), 352, 353-355 (Wells J).
15. R v Watson, supra, at 95 (Gibbs J).
16. Proceeds of Crime Act 2002 (Cth), s 330(2)(b).
17. Ibid, ss 329(1)(a), (b).
18. Ibid, s 330(1)(b).
19. Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 (Dixon J); [1938] HCA 34.
20. Contract of Employment, Exhibit PCB3, p 1507.
21. Article 24, PCB3, p 1508.
22. Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165; [2022] HCA 1.
23. Collier v Sunday Referee Publishing Co Ltd [1940] 2 KB 647 at 650 (Asquith J); [1940] 4 All ER 234. As for one exception, see Blackadder v Ramsey Butchering (2005) 221 CLR 539; [2005] HCA 22 at [80] (Callinan and Heydon JJ).
24. Proceeds of Crime Act 2002 (Cth), s 329(1).
25. (1987) 61 ALJR 393; [1987] HCA 27.
26. Re Queensland Electricity Commission, supra, at 399 (Deane J) (while Deane J was in dissent as to the result, such dissent does not detract from the principles here expressed).
27. Proceeds of Crime Act 2002 (Cth), s 338 definition of “property”.
28. Ibid, ss 17(2)(d), 18(2)(d).
29. Ibid, s 338 definition of “property”.
30. Ibid, s 338 definition of “interest”.
31. Ibid, s 330(3).
32. Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24 at [136]-[137] (Bathurst CJ, Beazley P and Macfarlan JA).
33. Proceeds of Crime Act, s 338 definition of “sufficient consideration”.
34. Anning v Anning (1907) 4 CLR 1049 at 1056-1057 (Griffith CJ); [1907] HCA 13 (footnotes omitted).
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 25 July 2024 | 30,525 |
nsw_caselaw:18e53bd371a2c4815d061b46 | decision | new_south_wales | nsw_caselaw | text/html | 2024-03-21 00:00:00 | R v Parkes [2024] NSWSC 269 | https://www.caselaw.nsw.gov.au/decision/18e53bd371a2c4815d061b46 | 2024-08-04T23:48:32.054234+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: R v Parkes [2024] NSWSC 269
Hearing dates: 8 March 2024; 14 March 2024
Date of orders: 14 March 2024
Decision date: 21 March 2024
Jurisdiction: Common Law
Before: N Adams J
Decision: (1) The application to exclude portions of the ERISP and listening device material under s 90 of the Evidence Act 1995 (NSW) is refused.
(2) The application to exclude a portion of the listening device material under s 137 of the Evidence Act 1995 (NSW) is allowed.
Catchwords: EVIDENCE — murder trial — joint criminal enterprise – explanation for accused’s presence at scene – where cellmate concocted story with the accused – Defence application to exclude on s 90 unfairness – cellmate acting individually not as agent of the state – no trickery involved in ERISP – evidence admitted.
EVIDENCE — murder trial —joint criminal enterprise – explanation for accused’s presence at scene – where cellmate concocted story with the accused – Defence application to exclude statement for s 137 unfair prejudice – complexity of required lies direction to the jury – unique circumstances of cellmate involvement in lies – risk of jury misuse of impugned statement – lack of credibility of cellmate – impugned statement excluded.
Legislation Cited: Evidence Act 1995 (NSW), ss 90, 137
Surveillance Devices Act 2007 (NSW)
Cases Cited: Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63
Em v The Queen (2007) 232 CLR 67; [2007] HCA 46
IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14
Papakosmas v The Queen (1999) 196 CLR 297; [1999] HCA 37
R v Burton (2013) 237 A Crim R 238; [2013] NSWCCA 335
R v Chase (a pseudonym) [2018] NSWCCA 71
R v Officer A [2023] NSWSC 1265
R v Rice & Ors (No 4) [2014] NSWSC 1525
R v Rogerson; R v McNamara (No 26) [2016] NSWSC 141
R v Swaffield; Pavic v The Queen (1998) 192 CLR 159; [1998] HCA 1
R v Tortell (No 5) [2019] NSWSC 1665 at [33].
Regina v Cook [2004] NSWCCA 52
The Queen v Bauer (2018) 92 ALJR 846; [2018] HCA 40
Zoneff v The Queen (2000) 200 CLR 234; [2000] HCA 28
Category: Procedural rulings
Parties: Rex (Crown)
Benjamin Troy Parkes (Accused)
Representation: Counsel:
D Robinson (Crown)
N Steel (Accused)
Solicitors:
Office of the Director of Public Prosecutions (Crown)
SANS Law (Accused)
File Number(s): 2021/95786
Publication restriction: Nil.
JUDGMENT
Introduction
1. On 6 April 2020, Benjamin Troy Parkes was charged with the murder of Najma Carroll on 14 July 2020. A co-offender, Robert Sloan was also charged with Ms Carroll’s murder. The Crown case is that the two men formed an agreement that Ms Carroll should be killed, and she was killed by one or both of them pursuant to that agreement.
2. Although both men initially pleaded not guilty on the basis of “cut throat” defences, on 29 January 2024, Mr Sloan pleaded guilty to Ms Carroll’s murder on a joint criminal enterprise basis. He is awaiting sentence. On 19 February 2024, Mr Parkes’ trial commenced before me (and a jury of 15) on the sole count of murder. Mr Sloan denies being part of any agreement to kill the deceased and asserts that Mr Sloan acted alone in killing her.
3. On 7 March 2024, (day 13 of the trial), counsel for Mr Parkes sought the exclusion of portions of surveillance device recordings of conversations between Mr Parkes and his cellmate and portions of Mr Parkes’ subsequent electronically recorded interview (ERISP) under ss 90 and 137 of the Evidence Act 1995 (NSW). Although the recordings were made subject to a valid warrant issued under the Surveillance Devices Act 2007 (NSW), I propose to refer to the material as “listening device” material.
4. A voir dire was conducted at 2:00pm on Friday 8 March 2024. The argument for exclusion was put in the alternative:
1. Exclusion under s 90 of the Evidence Act of portions of the listening device material where Mr Parkes and his cellmate (Witness I) can be heard concocting a false story to tell police and exclusion of the related portions of the ERISP when that false story is repeated by Mr Parkes to police; or
2. In the alternative, exclusion under s 137 of the Evidence Act of a discrete portion of the listening device material on 10 December 2020 (“The impugned statement”).
1. At the time of the legal argument on 8 March, counsel had still not agreed upon which portions of the listening device material would be tendered (putting to one side the portions the subject of these objections). Police had obtained nearly three months of conversations between Mr Parkes and Witness I between 1 October and 10 December 2020 and it was proposed that that could be reduced to one or two days. I was provided with an unedited portion of the recording for 10 December 2020 which included the impugned statement but not the full context in which those words were said. I formed the view at that time this would not preclude me from determining the objections. At the end of the hearing, I indicated that I would not be excluding any portions of the ERISP/recordings under s 90 and I reserved my decision regarding the s 137 application until 10:00am on Monday 11 March.
2. On 11 March, I indicated to the parties that, having reflected on the matter over the weekend, I had formed the view that I did need to know the context of the impugned statement on 10 December 2020 in order to rule on the s 137 argument. I was informed that negotiations were still underway and it was unlikely they would be finalised until Wednesday 13 March. Given that the impugned statement was in the last recording to be (chronologically) played, I suggested that a way forward would be for me to rule on it after all but that recording was played to the jury as an exhibit. The parties agreed that I could give my ruling after the agreed upon recordings were played to the jury.
3. The listening device material was tendered on Wednesday 13 March and played (except for the last recording on 10 December 2020) until just before lunchtime on Thursday 14 March. I made my ruling at that time that I would exclude the impugned statement and I reserved my reasons. These are my reasons for admitting the material the subject of the first objection and excluding the material the subject of the second objection.
Facts
1. At the time of her death, Ms Carroll was residing at the Hunts Hotel in Casula. Mr Parkes and Mr Sloan were also residing there. They all met due to their shared interest in illegal drugs; both the use and supply thereof. It seems that the three of them only met each other a few weeks or so before Ms Carroll’s death.
2. The events the subject of the trial took place in the early months of the COVID-19 pandemic at which time Government policy permitted persons to access their superannuation. Ms Carroll accessed her superannuation and gave $8,000 to either Mr Sloan or Mr Parkes (the recipient of the funds is a fact in issue at the trial) to invest in, on the Crown case, Mr Parkes’ drug business in which Mr Sloan was also involved (or on the defence case, Mr Sloan’s drug business).
3. The Crown case is that the two accused subsequently agreed to kill the deceased for two reasons: because they did not wish to pay her back the money and because they had concerns that she would go to police about their drug dealing (given that she had recently reported a stolen hire car to police). Ms Carroll was killed in remote bushland near Menai (known as “White Rock”) in the early hours of 14 July 2020. Her body was not found until 28 July 2020. Her body was burned as was her motor vehicle located nearby. The post-mortem report revealed head injuries.
4. Mr Parkes’ case is that Mr Sloan acted alone when he killed Ms Carroll. The factual dispute is narrow but significant. It is common ground that the only two people present at Ms Carroll’s death at White Rock were Mr Sloan and Mr Parkes. The area of dispute concerns the reason why Mr Parkes met with Mr Sloan in remote bushland at that time.
5. The Crown case comprises evidence from witnesses who spoke to Mr Parkes in the days before and after the murder, including his upline supplier Witness H, Witness H’s flatmate (Witness K), and a young man present in Mr Sloan’s room at the Hunts Hotel in the morning of 14 July 2020 (Witness A). The Crown case also comprises CCTV footage, telephone records, GPS evidence, bank records, photographs, the ERISP and the listening device material. (I note that although there are non-publication orders on the names of some of the civilian witnesses, they have been referred to by their real names before the jury by the witnesses at trial; the somewhat unoriginal pseudonyms are only for publication purposes).
6. The evidence in support of the Crown case that Mr Parkes was present at the scene as part of a pre-arrangement to kill Ms Carroll includes CCTV footage of Mr Parkes hurriedly escorting Ms Carroll from the Hunts Hotel on 11 July 2020 with an overnight bag and evidence from Witness H and Witness K that Mr Parkes took her to stay in the garage at Witness H’s place instead. Witness H and Witness K have given evidence that she stayed in the garage (which was set up as a living room) until the early hours of 14 July at which time Mr Sloan collected her and drove her away.
7. There is further evidence (from Witness H, Witness K, CCTV, GPS and telephone records) that Mr Parkes was in Kings Cross with Witness H on the night of the murder. Witness K has given evidence that Mr Parkes called him and asked him to make sure Ms Carroll did not leave Witness H’s house. Mr Sloan collected her shortly thereafter in her Mercedes. Mr Parkes left Kings Cross after that and drove to White Rock. He was recorded by CCTV stopping at the Moorebank 7-Eleven petrol station at which time he purchased some items including $12 worth of unleaded petrol (his Hilux took diesel). He arrived at White Rock at 3:57:44 am. The GPS evidence puts him in that area from 3:41:39 am to 4:38:18am. CCTV footage from the Hunts Hotel records him arriving back there shortly thereafter in his Hilux with Mr Sloan back. Witness A gave evidence that the following day he arranged for his car and some clothing to be washed and other clothing worn that night to be thrown away.
8. Other evidence relevant to establishing that Mr Parkes was part of the agreement to kill Ms Carroll is that he can be seen on the CCTV footage at the Hunts Hotel on 12 July 2020 (after he had already taken Ms Carroll from the Hunts Hotel to stay at Witness H’s) entering Ms Carroll’s room with a swipe card with his ex-wife and, inferentially, giving his ex-wife a pink speaker from that room as she is seen to leave the room with it shortly thereafter.
9. The Crown case is that it does not have to prove which of the two men physically killed the deceased; both had agreed to do so beforehand, and both were present at the scene doing acts in furtherance of the joint criminal enterprise.
10. Mr Parkes’ version of events to police in his ERISP is that he did not know that Ms Carroll would be at White Rock that night and he only went there to burn her car. He told police that when he got there, he remained in his vehicle and saw Ms Sloan kill Ms Carroll with a baseball bat and burn her body from where he was seated in his car. The two men then drove their respective cars a short distance away where Ms Sloan burned Ms Carroll’s car and then Mr Parkes drove Mr Sloan home (back to the Hunts Hotel). On Mr Parkes’ account he did not get out of the car except to ignite Ms Carroll’s car.
11. Mr Parkes provided an explanation to police in his ERISP as to why he needed to burn Ms Carroll’s car in bushland at 3:40am that morning as follows. He told police that a few days earlier (10 July 2020) Mr Parkes and Witness H set out to drive to Perth to conduct a significant drug deal. Mr Parkes borrowed Ms Carroll’s blue Mercedes SUV to do so. They were stopped by police at the South Australian border due to travel restrictions. Although police did not locate the concealed drugs, they seized over $17,000. This aspect of the account given by Mr Parkes in his ERISP is confirmed by Witness H and the Crown has tendered stills from police body worn cameras confirming that this aspect is truthful. Witness H disputes the rest of Mr Parkes’ explanation to police which is that he and Witness H agreed that the deceased’s car had to be burned because they were in it when pulled over by police.
Involvement of Witness I
1. Mr Parkes was arrested on an unrelated matter on 14 August 2020. He started speaking to his cellmate about the murder, suggesting that he was a witness to it. His cellmate (Witness I) contacted police and offered to assist them. He spoke to them on 29 September 2020. Police did not take Witness I up on this offer as they were not satisfied of his credibility but, unbeknownst to Witness I, after they spoke with him police obtained a warrant to place surveillance devices in the cell. The conversations which subsequently took place between Mr Parkes and Witness I were recorded from 1 October 2020 until at least 10 December 2020. Neither man knew they were being recorded.
2. I pause to note that by the time Witness I approached police Mr Parkes and Mr Sloan were already suspects in Ms Carroll’s murder. Police were intercepting their phones, going through the Hunts Hotel CCTV footage and making other inquiries based on material they had already uncovered.
3. I further note that Witness I was not called as a witness in this trial. After Mr Parkes was arrested, police obtained a statement from Witness I and he agreed to give evidence at the trial of Mr Parkes and Mr Sloan. He pleaded guilty to his fraud charges and received a 25% discount for his assistance to authorities past and future.
4. After that time, police learned that Witness I had in fact tendered false medical certificates at his sentence proceedings. The subsequent decision by the Crown not to call Witness I at trial was based on his credibility issues. Defence counsel agreed that he did not need to be called. Thus, the “evidence” of Witness I is confined to the recorded conversations between the two men in the cell.
5. Although the Crown relies upon discrete portions of the recordings as admissions and others as lies, for the purposes of these reasons, the relevant portions of the recordings are as follows (although I have summarised them as far as possible, I have extracted some in full).
6. From early on in the recordings it is apparent that Witness I and Mr Parkes have concocted a story to tell police to help both of them. The concocted story is that Witness I and Mr Parkes had known each other for a while and that Witness I was staying at the Hunts Hotel at the time of the murder. (By sheer coincidence the two men, who had never met before but had mutual friends, realised that Witness I had in fact been staying at the Hunts Hotel at around that time. Unfortunately for the two men, CCTV footage and hotel records show that that was for one night on 11 July 2020 and the murder took place on 14 July 2020).
7. The concocted story is that when Mr Parkes drove Mr Sloan back to the hotel after the murder in the early hours of 14 July 2020, Witness I was in the carpark. Mr Parkes waved him away when he tried to approach him, and he heard Mr Sloan threaten Mr Parkes and his family if he told anyone about what happened. Mr Parkes then took Witness I to near the scene and told him what Mr Sloan had done. It is now accepted by Mr Parkes that this account is untruthful. It is completely contradicted by the CCTV footage at the Hunts Hotel.
8. As I understand it, the perceived benefit to Witness I of this fabricated story was that the value of Witness I’s assistance (implicating Mr Sloan) was greater if he was present and saw Mr Sloan’s reaction and Mr Parkes’ contemporaneous account than if Mr Parkes had just told him about it in the cell. The perceived benefit to Mr Parkes was corroboration of his own exculpatory account that Mr Sloan acted alone in killing the deceased.
9. At some stage prior to the commencement of the recordings, Witness I told Mr Parkes that he had spoken with police, provided them with the concocted story involving him and told them they should speak with Mr Parkes about the assistance he could give. Despite the fact that police did not contact Witness I again until well after the recordings had concluded, Witness I repeatedly lied to Mr Parkes and pretended that he was in regular contact with police through his solicitor and a (non-existent) relative of Witness I in the police force. When police did not immediately speak to Mr Parkes, he and Witness I mused at length over the next few months about why this was the case including whether it was because police had evidence inconsistent with the concocted account.
10. On 22 October 2020, Mr Parkes’ mother telephoned him (the recorded call has been played to the jury) to tell him that police had seized the blue Hilux he was driving at the time. This is the vehicle Parkes drove to and from White Rock. It was registered to his mother. There is a brief discussion between them as to whether the deceased was ever in that car whereupon his mother informs him that the police have questioned her regarding sightings of the car at the 7-Eleven in Moorebank at some time in July. That leads Mr Parkes to discuss at length what other CCTV evidence police might have which might implicate him.
11. Throughout all of the recordings a consistent theme discussed between the two men is whether police will consider Mr Parkes to be a witness or a suspect. On occasions, Witness I reassures Mr Parkes that he is not a suspect. As time passes, Witness I becomes increasingly worried that Mr Parkes is not going to tell police the concocted story involving him. Some examples are as follows:
1. On 22 October 2020:
“GM: …IND the pressure on you, is she gonna stick solid and back me up, or cut it.. on your own. I’ll be straight with ya, cos of what’s happened the other day I need to, and you can’t blame me for it, like I’m not, like I said to ya, And that’s no disrespect for you like I said, I hope it works out for both of us and more so for you more than me.
BP: I wasn’t going to change the story
GM: Nah, I’m just saying to you, if you did IND
BP: I’m not going to change the story.
…
GM: I’m trying to protect you more than anyone else, yeah and protect myself too. Cause the last thing IND to her, she says oh fuck this cunt’s being a dog IND it gets to the wrong people we’re both fucked. Not going to cop that shit. IND I’ve never done this, I’m helping you bro, and it looks like I started it which from my point of view is IND brushed under the carpet IND.
BP: By me?
GM: IND
BP: Not going to be by me IND
BP: Not going to change the story mate, the story is IND The truth is what the truth is and it’s what we spoke about.” [1]
1. On 25 October 2020:
“BP: I’m not gonna change the story.
GM: Why not?
BP: I don’t know why you keep thinking I am
GM: I’m just saying” [2]
1. On 29 October 2020:
“GM: If you think that I haven’t been sold out well then write me back into it. I’ve been told I’ve been sold out bro.
BP: I don’t know how mate, I’m the only one that could sell you out. Not some prostitute I’ve known for five minutes as you’ve said. So maybe they need to speak to me mate.” [3]
1. On 19 November 2020:
“GM: …According to the paperwork I’m gonna get fucking probably charged for it, for obstructing fucking police investigation.
…
BP: I don’t think they can charge you with pervert the course of justice, you didn’t pervert the course of justice neither did I.
GM: I’m, I’m, what do you call it? Interfering with a police investigation.
BP: What, so it’s gone past the point I can’t even put you there?
GM: I don’t know mate.” [4]
1. On 24 November 2020:
“GM: As I said to ya, the only one that can try and save me is you, and at the end of the day it’s got to be you. And I’ll defend ya but IND… then they’ll determine, which I know you’re not, that will determine how true your word is. I know you won’t back down.
BP: Nup
GM: That’s something you and between you and god…IND brother. Does that make sense?
…
GM: I look at you in the eye and I say this. If you’re a brother, and a mate. And I’ve done whatever I can for ya…IND…
BP: I know you have.
GM: And you don’t wanna put me there, I have all respect if you tell me I can’t do it brother for ya.
BP: Yeah.
GM: And say, yes, then come to the crunch, and I’m gunna be left with my dick in my hands.
BP: Yeah, I know
GM: Cos I just, I just, there’ll be no us. That make sense?” [5]
1. On 7 December 2020, police interviewed Mr Parkes. In that ERISP, Mr Parkes indicates that he knows that they have spoken with Witness I and repeats the concocted story concerning Witness I. He provides his version of events, including that he went to White Rock to burn the deceased’s car as that had been pre-arranged with Mr Sloan having been suggested by Witness H. He describes witnessing the murder whilst seated in his vehicle and being shocked. He tells police he did not know the deceased would be there. He tells police that Mr Sloan took the petrol from him and used some of it to burn the deceased’s body and then they drove the car away and used the rest of the petrol to burn it and then they drove home in his blue Hilux.
2. After he returns to his cell from the ERISP, there is a discussion with Witness I about what Mr Parkes told police:
“GM: Was it good or bad?
BP: I put you there but might be better for me, I dunno, I don’t know what to tell you yet
…
GM: Well what did you say?
BP: I didn’t say much, IND
…
BP: … I’m a suspect 100 per cent. He told me that.
…
BP: …He said, “I know you were there. Now I’m giving you your chance to offer your version of events before I put certain things to you, certain allegations.”
GM: So, IND what did you say?
BP: I told him pretty much what we’ve chatted about. IND
…
BP: …But I put you there as I said I would.
GM: I thought you weren’t going to IND
BP: But, you do know, I just told you. What you calling me a liar?
GM: Just saying saying, stop assuming bra
BP: I’m telling you. I put you there. Exactly like I said I would. Exactly the way I said I would. I said you were in the car park I said wait, wait, wait. Pockets got out and stormed off with the shits you got in the car, I took you for a drive and I told you everything.
…
GM: Did you say anything about our relationship?
BP: IND I just said mate, I know him through truck driving and shit like that… I put you there exactly as I said I would put you there. Nothing else, I don’t want you getting charged with fucking IND but I put you there
BP: IND but I put you there
GM: Nah I appreciate it thank you. I take your word for it
BP: Like I said. Absolutely solid
GM: IND
BP: My balls on the line, and I’ve given you my word that I put you there. But I get the impression, he had a lot of, he was going to try and poke holes in my story bro. You know what I mean? That’s the impression I got.” [6]
(Emphasis added.)
1. On 10 December 2020, Mr Parkes is again taken to speak with police but on this occasion, he receives legal advice and declines to be electronically interviewed a second time. On his return to the cell, he is again grilled by Witness I about whether he stuck to the concocted story about him. Finally, the following exchange occurs:
“GM: No, I’m just saying to you. Fucking if you were in my boat you would be pissed off that you put yourself out there and they say A, B, C, 1, 2, 3.
BP: I didn’t say anything to them
GM: Alright. But you don’t give up, when a person does it you don’t give up straight away. As I said to you from the start straight away brother you can’t just give them IND evidence. I’m not saying you didn’t get bamboozled you still IND it thanks, appreciate it.
BP: I lied through my teeth and they fucking know it. Well, they’re saying they know it. And I didn’t say ‘yeah you’re right I lied’, I didn’t say that. I didn’t even talk much so they said to me today. I just told you, I IND like I should know this stuff.
GM: No if you don’t tell me I’ll find out anyway, I don’t give a fuck. You know I mean, I’ll find out, I’ll put my hand in my pocket and I’ll find out brother. IND.” [7]
(Emphasis added.)
1. The italicised portion above is the subject of the application for exclusion under s 137 of the Evidence Act.
Lies
1. In both the ERISP and listening device recordings Mr Parkes says a number of things which the Crown relies upon as lies, some more significant than others. The Crown tendered a document during the legal argument indicating which lies are relied upon as consciousness of guilt (Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63) and which are relied upon as going to his credibility (Zoneff v The Queen (2000) 200 CLR 234; [2000] HCA 28). That document remains subject to legal argument prior to closing addresses.
2. It is not necessary to set out the alleged lies in these reasons. Although Mr Parkes now accepts that the concocted story with Witness I is a lie, he does not accept that other aspects of his account to police are lies, including the reason why he went to White Rock with Mr Sloan on the morning of 14 July 2020. In that regard, I note that during the listening device recordings, Mr Parkes discussed what he should tell police as to how he knew to be at White Rock that night. Some examples are:
1. On 29 October 2020:
“As far as they know, as far as I tell them, I was fucking going there to torch a fucking car mate, to get rid of some evidence for some trafficking.” [8]
1. On 29 October 2020:
“I been sitting here thinking, how do I explain...” [9]
1. On 29 October 2020:
“For me to come up with an explanation as to what the whole thing was about…” [10]
1. On 29 October 2020:
“I can say he wanted to scare her but we got rid of the car, He told me to pick him up from there. So I was in the city and he goes, you see this doesn’t jive I’ve got a bad, bad feeling. So, I told T [Ho], fuck it you get an Uber home I’m going out to the quarry [White Rock]. I flew out there and I was shocked to find her there. I didn’t think she was gonna be there. At the actual quarry. I thought we were just burning the car mate…” [11]
1. On 30 October 2020:
“I’ll pretend I’m not full of shit and hopefully I’ll hear from you in the near future with some kind of fucking assistance mate, with sentencing for my current charges, bail or some shit…” [12]
1. On 31 October 2020:
“BP: Yeah. Yeah Well being involved is not getting involved like I thought we were gonna torch the car and teach her a lesson, I told you this. But I had a sinking suspicion, that…
Witness I: Not you thought you were gonna teach her a lesson, that he was gonna teach her a lesson
BP: Nah, what, not me personally…” [13]
(Emphasis added.)
1. Other alleged lies relied upon by the Crown in the ERISP include matters not discussed with Witness I, including the nature of the drug supply business, that Mr Parkes never paid for the deceased’s hotel room, that the deceased was still residing at the Hunts Hotel at the time of her death and that he did not know where the deceased was collected from by Mr Sloan that morning.
Defence submissions
Section 90 argument
1. As in any trial, the admissibility argument was somewhat organic.
2. On 29 February 2024, Mr Steel foreshadowed that he would be seeking the exclusion of admissions (recently relayed to police) said to have been made by another witness (Witness J) under s 90 of the Evidence Act. After a brief discussion of the relevant principles concerning s 90, the argument was re-framed in reliance upon s 137 of the Evidence Act and deferred until that witness was to be called as a witness.
3. That application was renewed on 4 March 2024. At that time, I drew counsels’ attention to the following four decisions: R v Rice & Ors (No 4) [2014] NSWSC 1525; R v Rogerson; R v McNamara (No 26) [2016] NSWSC 141; R v Officer A [2023] NSWSC 1265; and R v Chase (a pseudonym) [2018] NSWCCA 71. Later that day, the Crown indicated that it would not be adducing the evidence the subject of the objection.
4. On 5 March 2024, Mr Steel foreshadowed a s 90 application with respect to Witness I. A short legal discussion ensued in which I inquired whether it was contended that Witness I was acting as an agent of the State at the time and directed attention to the observations of the High Court in R v Swaffield; Pavic v The Queen (1998) 192 CLR 159; [1998] HCA 1 and Em v The Queen (2007) 232 CLR 67; [2007] HCA 46.
5. On 7 March 2024, Mr Steel indicated that it “would be hard to engage section 90” in the circumstances where Witness I was not acting as a police agent but “as a double agent in his own mind”. Later that day, Mr Steel submitted that he did feel obliged to press the objection, particularly given the reference in the recordings to Mr Parkes admitting that he had lied “through his teeth”. The argument was stood over until the afternoon of Friday 8 March after I had sent the jury home.
6. In written submissions filed on behalf of Mr Parkes dated 8 March 2024 there was no reference to any authorities concerning s 90 of the Evidence Act but reliance upon that section was not disavowed.
7. It was submitted that police took advantage of the listening device material and delayed interviewing Mr Parkes even though they knew that he was waiting to speak to them. By the time they interviewed him, Mr Parkes had been sharing a cell for some months. It was submitted that the accused’s right to choose to speak to police and give his account was not afforded to him for investigative purposes.
8. Although it was initially submitted that police may have deliberately sought to elicit lies from Mr Parkes because of knowledge they had of the listening device material (ERISP Q101), it was accepted during oral argument that it was in fact Mr Parkes who introduced the topic of Witness I first.
9. Reliance was placed on the fact that although Witness I was not engaged by police to adduce any admissions from Mr Parkes, they did ultimately take a statement from him after the fact which makes him “a kind of agent for police”. Further, Witness I pretended to be an agent of police.
10. It was submitted that the appropriate remedy would be for any reference to Witness I to be excluded from the ERISP pursuant to s 90 of the Evidence Act in conjunction with all aspects of the listening device material where the false story concerning Witness I is discussed.
Section 137 argument
1. The alternate position was that the comment in the listening device material that Mr Parkes lied through his teeth be excluded under s 137 of the Evidence Act on the basis that its probative value is outweighed by the danger of its unfair prejudice.
2. It was submitted that Witness I urged Mr Parkes to lie to police to benefit himself. When Mr Parkes finally says to him on 10 December 2020 that “I lied through my teeth and they fucking know it”, he says this in the context of having previously said to him “I tried to put you there right up until the end of the day”. The difficulty with this, it was submitted, is that the reference to Mr Parkes telling lies in his ERISP may only relate to the lies Witness I concocted with him whilst acting as a “double agent”.
3. It was submitted that the impugned statement is ambiguous, with the only safe inference being that the accused lied about the presence of Witness I during his ERISP. Counsel for the accused submitted that there was a significant degree of prejudice attendant to the statement on the basis that the jury may interpret the language as suggesting that the whole of the accused’s ERISP is comprised of lies. It was submitted that the probative value of the evidence regarding his lies about Witness I arises not from its truthfulness, but rather from the fact that the ERISP contains lies, which may be relied upon by the Crown as going to the accused’s credit or as consciousness of guilt or both.
4. It was submitted that the statement was ambiguous, in reliance on R v Rogerson; R v McNamara (No 26).. It was submitted that the ambiguity of the impugned statement arises because it could lead the jury to reject the entirety of the ERISP where the statement is in fact ambiguous as to which statements are lies.
5. It was also submitted that the conduct of Witness I renders the impugned statement unfairly prejudicial by procedural unfairness in the circumstance that Witness I will not be called as a witness in the trial: R v Rice & Ors (No 4). Counsel for the accused submitted that it was likely at Witness I’s suggestion that the accused gave an account to the police placing Witness I at the Hunts Hotel at the relevant time. It was submitted that Witness I’s criminal history demonstrates that he is a “confidence man” capable of persuading people to unknowingly act to their detriment and to his benefit.
6. Although the accused consented to the Crown’s proposed course of not calling Witness I as a witness, it was submitted that he suffered some forensic disadvantage from not being able to cross-examine him.
Crown submissions
1. The Crown focussed its submissions on s 137 rather than s 90 of the Evidence Act. It was submitted that the probative value of the references in the ERISP to Witness I were high and relevant to the assessment of the credibility of the accused. The Crown further submitted that the probative value of the admission made by the accused that he lied in his ERISP is high. It was submitted that, consistent with my decision in R v Officer A, I would not have regard to the existence of competing inferences in my assessment of the probative value of the impugned statement for the purposes of s 137.
2. The Crown submitted that no unfair prejudice arises in the impugned statement as the accused himself made the decision to lie to the police likely with the belief that it would increase the credibility of his version of events.
3. It was also submitted that no unfair prejudice arises from the involvement of Witness I given that he was not acting under any instruction by police nor informed of the existence of the listening device in the cell.
Consideration
1. This application concerns the application of ss 90 and 137 of the Evidence Act to a fabricated exculpatory story provided to police by the accused in his ERISP, concocted in his prison cell at a time he was unknowingly being recorded pursuant to a valid warrant.
2. Section 90 of the Evidence Act reflects the common law unfairness discretion and is in these terms:
90 Discretion to exclude admissions.
In a criminal proceeding, the court may refuse to admit evidence of an admission, or refuse to admit the evidence to prove a particular fact, if—
(a) the evidence is adduced by the prosecution, and
(b) having regard to the circumstances in which the admission was made, it would be unfair to a defendant to use the evidence.
1. An “admission” is defined in the Dictionary to the Evidence Act as a previous representation that is:
(a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding), and
(b) adverse to the person’s interest in the outcome of the proceeding.
1. Although the material the subject of the primary objection is, on its face, exculpatory, the Crown relies upon it as a lie. In this way it is a previous representation adverse to Mr Parkes’ interest. The onus is on the accused to establish that it would be unfair to admit the evidence. The focus is on the circumstances in which the admission has been made and on ensuring that the accused has a fair trial. The relevant principles concerning s 90 most pertinent to this application are derived from two High Court decisions.
2. In R v Swaffield; Pavic v The Queen, the High Court considered the unfairness discretion in two separate appeals heard together, one from Queensland and the other from Victoria, neither of which jurisdictions had enacted s 90. In Mr Pavic’s case, police had interviewed a friend of his (Clancy) who provided a statement implicating Pavic. They considered they had enough to charge Mr Pavic but they asked Clancy to speak to Mr Pavic wearing a listening device. He consented and admissions were made. In that context Brennan CJ observed the following at [35] (footnote omitted):
“There was no impropriety in the police obtaining Clancy's consent to the recording by Clancy of his intended conversation with Pavic. A serious crime had been committed and the means adopted for its solution and for the securing of evidence against the prime suspect were quite legitimate. The investigation of crime is not a game governed by a sportsman's code of fair play. Fairness to those suspected of crime is not the giving of a sporting opportunity to escape the consequences of any legitimate and proper investigation or the giving of a sufficient opportunity ‘to invent plausible falsehoods’.”
1. Similarly, Kirby J observed the following at [155]:
“Subterfuge, ruses and tricks may be lawfully employed by police, acting in the public interest. There is nothing improper in these tactics where they are lawfully deployed in an endeavour to investigate crime so as to bring the guilty to justice. Nor is there anything wrong in the use of technology, such as telephonic interception and listening devices although this will commonly require statutory authority. Such facilities must be employed by any modern police service. The critical question is not whether the accused has been tricked and secretly recorded. It is not even whether the trick has resulted in self-incrimination, electronically preserved to do great damage to the accused at the trial. It is whether the trick may be thought to involve such unfairness to the accused … that a court should exercise its discretion to exclude the evidence notwithstanding its high probative value. In the case of covertly obtained confessions, the line of forbidden conduct will be crossed if the confession may be said to have been elicited by police … in unfair derogation of the suspect's right to exercise a free choice to speak or to be silent'.”
(Emphasis added.)
1. Toohey, Gaudron and Gummow J observed at [67] that the concept of unfairness has been expressed in the widest possible form in s 90 and at [69] that a court’s consideration of s 90 should concentrate on the following matters:
“… [T]urning first on the question of voluntariness, next on exclusion based on considerations of reliability and finally on an overall discretion which might take account of all the circumstances of the case to determine whether the admission of the evidence or the obtaining of a conviction on the basis of the evidence is bought at a price which is unacceptable, having regard to contemporary community standards.”
1. Their Honours observed the following at [91]:
“… [T]he notion of compulsion is not an integral part of the fairness discretion and it plays no part in the policy discretion. In the light of recent decisions of this Court, it is no great step to recognise, as the Canadian Supreme Court has done, an approach which looks to the accused's freedom to choose to speak to the police and the extent to which that freedom has been impugned. Where the freedom has been impugned the court has a discretion to reject the evidence. In deciding whether to exercise that discretion, which is a discretion to exclude not to admit, the court will look at all the circumstances. Those circumstances may point to unfairness to the accused if the confession is admitted. There may be no unfairness involved but the court may consider that, having regard to the means by which the confession was elicited, the evidence has been obtained at a price which is unacceptable having regard to prevailing community standards. This invests a broad discretion in the court but it does not prevent the development of rules to meet particular situations.”
1. Section 90 of the Evidence Act was considered by the High Court in Em v The Queen. In that case, the question of unfairness arose when police implied to a suspect that he was not being recorded when he was, knowing that he would not speak to them if he knew that he was being recorded. At various times, the police assured the accused that they were not “tricking” him.
2. The High Court held that there is no relevant unfairness in police recording a conversation covertly in circumstances where an accused person has otherwise exercised their right not to be subject to an electronically recorded interview or to provide a version of events “on the record”: at [78] (Gleeson CJ and Heydon J) and [107]-[116] (Gummow and Hayne JJ).
3. In Em v The Queen Gleeson CJ and Heydon J observed that the operation of s 90 cannot be described exhaustively (at [56]). Their Honours went on at [67]-[69] to consider the unfairness of secretly recording a suspect and concluded that if courts adopted a rule that a covert recording is unfair per se that would substitute their rule about the merits of statutory schemes such as the Surveillance Devices Act for that which the legislature has adopted. Gummow and Hayne JJ further confirmed at [107] that:
“… the focus of s 90 falls upon the fairness of using the evidence at trial, not directly upon characterising the circumstances in which the admissions were made, including the means by which the admissions were elicited, as ‘fair’ or ‘unfair’.”
1. Their Honours went on at [116] to observe:
“The appellant's argument, shorn of expressions like ‘trick’ and ‘trickery’, amounted to the propositions that what the police did, by interviewing the appellant as they did, was to be condemned, and that he had been misled into saying something that could be used in evidence against him. Neither of these propositions, whether taken separately or together, established that use at his trial of the evidence of what he said to police would be unfair.”
1. Having regard to the principles in these decisions as well as the assistance afforded by the factual scenarios upon which they are based, I am not satisfied that the accused has established that it would be unfair to admit into evidence the portions of the ERISP where Mr Parkes repeats the concocted account concerning Witness I (and the corresponding portions of the listening device recordings).
2. Witness I was acting alone and not as an agent of the State. The listening devices were lawfully obtained and installed. Police monitored them whilst investigating the murder further. When they interviewed Mr Parkes, they cautioned him. Mr Parkes did nearly all of the talking. Early on, he told police that he was aware that they had already spoken with Witness I (which they had). No answer in the ERISP was elicited by the use of any trickery. Mr Parkes spoke freely. It could not be said that his right to exercise a free choice to speak or to be silent was unfairly derogated in any way. Although the facts are somewhat unusual, they do not render the admission of this evidence unfair.
3. It was for these reasons that I admitted the evidence the subject of the objection under s 90 of the Evidence Act.
4. Turning to the argument under s 137 of the Evidence Act, it was confined to the exclusion of the following comment by Mr Parkes in the extract of the recording on 10 December 2020:
“I lied through my teeth and they fucking know it. Well, they’re saying they know it.”
1. Section 137 of the Evidence Act is in these terms:
137 Exclusion of prejudicial evidence in criminal proceedings
In a criminal proceeding, the court must refuse to admit evidence adduced by the prosecutor if its probative value is outweighed by the danger of unfair prejudice to the defendant.
1. “Probative value” is defined in the Dictionary to the Evidence Act as “[t]he extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue”. In IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14, the majority held that the assessment of probative value for the purposes of s 137 of the Evidence Act requires that the evidence be taken at its highest, without considering credibility or reliability (at [44], [52]). Nor can the existence of available competing inferences from the evidence play any part in the assessment of probative value for the purpose of s 137: R v Burton (2013) 237 A Crim R 238; [2013] NSWCCA 335 at [196]; R v Tortell (No 5) [2019] NSWSC 1665 at [33].
2. Although the term “unfair prejudice” is not defined in the Dictionary, it has been held that the danger is of prejudice that is unfair in the context of an accused person’s right to a fair trial, meaning the risk that the evidence would be misused by the jury in some unfair way: Papakosmas v The Queen (1999) 196 CLR 297; [1999] HCA 37 at [91]; The Queen v Bauer (2018) 92 ALJR 846; [2018] HCA 40 at [73].
3. In R v Rogerson; R v McNamara (No 26) Bellew J upheld an objection to an admission by the accused that he had been “a goose” on the basis that the equivocal and ambiguous terms of the impugned evidence engendered a level of danger of misuse or improper attribution of weight by the jury that outweighed its probative value. His Honour held that it was not a matter of weight but of the possible attribution of an adverse meaning where they are open to a number of interpretations. Although the notion of “unfair prejudice” in the Evidence Act has generally been taken to mean the risk that the jury will misuse the evidence in some way, there is authority for the proposition that it is not confined to that risk. In R v Rice & ors (No 4), Bellew J observed the following at [31]-[32]:
“It would be fair to say that in many, if not the majority, of cases where s.137 is engaged, the danger of unfair prejudice stems from the nature of the evidence and its possible misuse by a jury. In the present case the situation is slightly different. Here, the danger of unfair prejudice is said to arise, to a large extent, from what be described as procedural unfairness.
I am satisfied that unfair prejudice for the purposes of s137 can be constituted by unfairness of that kind. In Haoui v R (2008), 188 A Crim R 331; (2008) NSW CCA 209, the Court of Criminal Appeal ordered a re-trial in which late service of the evidence of an expert had been given by the Crown. Although that case did not deal with the provisions of s 137, the approach taken by the Court, and the conclusion reached, provides some support for the proposition that procedural considerations of the kind which arise in the present case are capable, in a given set of circumstances, of giving rise to the kind of unfairness to which s 137 is directed.”
1. Similarly, in R v Chase (a pseudonym) at [32], Basten JA (with whom Johnson and Campbell JJ agreed) observed the following with respect to the meaning of “unfair prejudice” in s 101 of the Evidence Act (footnotes omitted):
“The Director submitted that the Court should not entertain this point because the ‘prejudicial effect’ referred to in s 101(2) was limited to the possible misuse of evidence in the trial in which it was proposed to be tendered, unfairly to the accused. Reliance was placed on statements in DAO v The Queen and R v MM. However, those authorities do not purport to limit relevant prejudice, but rather describe common forms of prejudice. A common prejudicial effect arises where the evidence is of a kind likely to inflame the jury, who may, consciously or subconsciously, determine the case adversely to the accused on the basis of extraneous factors. While that is certainly the most common circumstance, it is not to be assumed as a matter of principle that no other form of forensic unfairness can be taken into account under s 101(2). For example, there may be a concern that tendency evidence will distract the jury by placing overwhelming emphasis upon, and devoting much of the trial time to, matters other than the conduct charged.”
1. It has long been held that in considering whether there is a risk that the jury may misuse the evidence in some way, the court should consider whether the prejudice could be cured by directions: Regina v Cook [2004] NSWCCA 52 at [37] per Simpson J.
2. On the face of it, the probative value of the comment by Mr Parkes to Witness I is high in that it is an admission by Mr Parkes that he has lied to police. It loses some of its probative value in the context of the other evidence at trial in that Mr Parkes accepts that he has lied to police, particularly in the concocted story involving Witness I. To put this another way, the Crown is in a position to prove by other evidence that Mr Parkes has told lies to police. Questions of whether the jury accepts that the words were said do not arise as they were recorded.
3. Turning to the question of unfair prejudice, I am satisfied that there is a risk that the jury will use the evidence in an unfair way for the following reasons.
4. First, I have considered the impugned statement in the context of all of the conversations that preceded it, and I am satisfied that the accused’s response to Witness I (that he had lied to police) was to reassure him that he had maintained the concocted story to assist Witness I. Although that is ultimately a question for the jury, the issue has to be considered in the context of how lies will be relied upon by the Crown in his closing address.
5. Secondly, I am satisfied that the lack of credibility of Witness I (such that it was agreed he should not be called at trial) has resulted in some procedural unfairness in this matter to the accused relevant to the consideration of the impugned statement under s 137.
6. Thirdly, the Crown relies upon a large number of alleged lies by the accused in his ERISP. As stated above, some are relied upon as consciousness of guilt and others as relevant to credibility. Some of the lies are admitted by Mr Parkes whilst others are not. The Crown foreshadowed that it proposes to rely on the impugned statement as relevant to every lie in the ERISP. The problem with that position is that some of the lies relied upon in the ERISP were not matters discussed between Witness I and Mr Parkes and would thus not be capable of extending to them. There would be a real risk that the jury would use the impugned comment to extend to such matters in a way that is not open on the evidence.
7. For these reasons I am satisfied there is a risk of unfair prejudice but that is not the end of the matter.
8. The final question is whether I am satisfied that the danger of unfair prejudice can be cured by direction. The lies direction in this trial will already be somewhat complex given the number of lies and different ways in which they will be relied upon by the Crown. The Crown relies on lies in the ERISP and the listening device material (and in his evidence in court). Although it may be possible to craft a direction to avoid the potential for unfair prejudice in this matter, I am satisfied that it would add another layer of complexity to an already complex direction. It was on that basis that I excluded the impugned statement. Caution is always required in this area. I was not ultimately satisfied that the unfair prejudice could be cured by direction. But for the complexity of the issue of lies in this matter I may have reached a different conclusion.
******
Endnotes
1. SD Transcription pp 32-33.
2. SD Transcription p 54.
3. SD Transcription p 72.
4. SD Transcription pp 128-132.
5. SD Transcription pp 137-138.
6. SD Transcription pp 158-161.
7. SD Transcription pp 177-178.
8. SD Transcription p 76.
9. SD Transcription p 80.
10. SD Transcription p 82.
11. SD Transcription p 82.
12. SD Transcription p 92.
13. SD Transcription p 108.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 9,496 |
nsw_caselaw:190fb8a697da9e3204eae822 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-29 00:00:00 | Xero Linear Lighting Systems NSW Pty Ltd v Benson [2024] NSWSC 916 | https://www.caselaw.nsw.gov.au/decision/190fb8a697da9e3204eae822 | 2024-08-04T23:48:57.416615+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Xero Linear Lighting Systems NSW Pty Ltd v Benson [2024] NSWSC 916
Hearing dates: 31 May 2024
Date of orders: 29 July 2024
Decision date: 29 July 2024
Jurisdiction: Equity
Before: Kunc J
Decision: No order as to costs
Catchwords: COSTS — Party/Party — General rule that costs follow the event — Proceedings resolved by consent — No issue of principle — Observations concerning treatment of costs in settlement negotiations
Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302
Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84
ONE.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270
Re Minister for Immigration and Ethnic affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Category: Costs
Parties: Xero Linear Lighting Systems NSW Pty Ltd (Plaintiff)
Patrick James Benson (Defendant)
Representation: Counsel:
D Ratnam (Plaintiff)
A Ahmad (Defendant)
Solicitors:
Coleman Grieg Lawyers (Plaintiff)
Bateman Battersby Lawyers (Defendant)
File Number(s): 2020/229514
JUDGMENT
Summary
1. Judicial experience, and perennial community concern about the costs and delays of litigation, suggest that it cannot be repeated too often that parties, and their lawyers, should always have under consideration whether and how their dispute may be able to be resolved without going to a final hearing. That admonition is not merely aspirational, but is embodied in the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). UCPR Pt 42, Division 3 gives binding force to the same policy which informs the principles outlined in Calderbank v Calderbank [1975] 3 All ER 333 that adverse costs consequences may follow if a party unreasonably fails to accept a settlement offer. It is also consistent with parties’ obligations to facilitate the overriding purpose of case management in s 56 of the Civil Procedure Act 2005 (NSW) (CPA).
2. Where parties are able to settle proceedings without a final hearing on the merits of the dispute, and both parties have acted reasonably in commencing and defending a proceeding, and their conduct continued to be reasonable until the proceeding was settled or further prosecution became futile, the Court will generally exercise its broad discretion as to costs by not making any order for the costs of the proceedings (Re Minister for Immigration and Ethnic affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6). Even where the Court may have concerns as to the reasonableness of the actions of the parties, the Court should avoid traversing the merits of the dispute to come to a determination as to the costs of the proceedings and any finding can only be made by reference to circumstances not in contention between the parties (Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84).
3. The plaintiff, Xero Linear Lighting Systems NSW Pty Ltd and the defendant, Patrick James Benson (Mr Benson) agreed to consent orders on 15 March 2024 (amended by orders made on 20 March 2024). The consent orders resolved the matter prior to its hearing fixed before me for 18 to 20 March 2024. Therefore, this is a matter where prima facie the principles in Lai Qin would apply and there would be no order as to costs.
4. In summary, the underlying dispute concerned allegations by Xero that Mr Benson (a former employee of Xero) had impermissibly downloaded Xero’s confidential information to personal devices. Xero commenced these proceedings in 2020 (initially by way of summons filed on 6 August 2020) seeking, among other orders, that Mr Benson be permanently restrained from using, disclosing and reproducing any confidential information and intellectual property belonging to Xero.
5. The dispute resolved in substance at a directions hearing on 12 March 2024, in the days before the final hearing, after my Associate was emailed on 7 March 2024 by Mr Benson’s solicitors with a request that a directions hearing occur to narrow the issues in dispute. Attached to that email was an open letter to Xero’s solicitor which included an offer by Mr Benson to be permanently restrained from using or disclosing any confidential information, intellectual property, written materials and information acquired during or after his employment with Xero and an offer to delete an agreed set of documents from his personal device. In circumstances where the parties accepted at the 12 March 2024 directions hearing that only 32 documents were in dispute and Mr Benson was willing to provide the aforementioned undertakings, the parties accepted my suggestion that they should attempt to devise a consent arrangement to destroy the 32 documents which formed the basis of the consent orders.
6. Before the Court are two notices of motion, one from each party, where each seeks to displace what might be referred to as the prima facie outcome suggested by Lai Qin. Xero’s notice of motion dated 9 April 2024 sought these orders:
1. Mr Benson pay Xero's costs of the proceedings as agreed or assessed:
1. On the ordinary basis up until 1 September 2023;
2. On the indemnity basis on and from 2 September 2023.
1. In the alternative to order 1, Mr Benson pay Xero's costs of the proceedings as agreed or assessed:
1. On the ordinary basis up until 20 October 2023;
2. On the indemnity basis on and from 21 October 2023.
1. In the alternative to orders 1 and 2, Mr Benson pay Xero’s costs of the proceedings as agreed or assessed:
1. On the ordinary basis up until 1 February 2024;
2. On the indemnity basis on and from 2 February 2024.
1. In the alternative to orders 1, 2 and 3, Mr Benson pay Xero’s costs of the proceedings on the ordinary basis as agreed or assessed.
2. Such further or other order as the Court deems fit.
1. Mr Benson’s amended notice of motion filed in Court on 31 May 2024 sought these orders:
1. Xero pay Mr Benson’s costs on the ordinary basis as agreed or assessed up to and including 8 December 2020 and on the indemnity basis as agreed or assessed from 9 December 2020.
2. In the alternative to Order 1, that Xero pay his costs on the ordinary basis up to and including 12 February 2022 and indemnity costs thereafter.
3. In the alternative to Order 1 and 2, Xero pay Mr Benson’s costs of the proceedings on the ordinary basis as agreed or assessed.
4. (3A) [added by leave at the hearing on 31 May 2024] In the alternative to 3, that the plaintiff pay the defendant’s costs of the proceedings on the ordinary basis until the filing of the statement of claim on 7 July 2022 and thereafter each party pay their own costs of the proceedings.
5. In the alternative to Order 1, 2 and 3 each party pay their own costs of the proceedings.
1. The motions were heard together on 31 May 2024. Mr D Ratnam of Counsel appeared for Xero and Mr A Ahmad of Counsel appeared for Mr Benson. The Court received extensive written submissions which were supplemented by two hours of oral submissions, a 469 page court book containing several affidavits as well as an expert report and a 206 page exhibit. Without any disrespect intended, the parties’ detailed submissions can be distilled to two propositions in support of their respective motions for the other party to pay their costs:
1. The consent orders reflected a capitulation by the other party of their initial position in the litigation; and
2. The other party acted unreasonably by failing to accept earlier settlement offers.
1. For the reasons which follow, the Court does not accede to either proposition in relation to either party. The Court will dismiss both notices of motion and make no orders as to the costs of these proceedings (including the motions and not overlooking that this is the fifth and final alternative alternative advanced by Mr Benson). In summary, this is a paradigm case for the rule in Lai Qin to apply. Consent orders were agreed over four years after the dispute commenced. Again without disrespect and putting it somewhat colloquially, the proceedings might be described as having become a “zombie action” since a mediation occurred on 26 July 2023: a dispute ultimately concerning only 32 documents which had begun in August 2020 and never progressed to a final hearing. By the time it came before me, the passage of time and events had rendered any substantive hearing of the proceedings futile. In my view it had always been, and certainly after the mediation, a case which was a very obvious candidate for resolution in accordance with the matters discussed in [1] above.
2. Without traversing the merits of the dispute the Court cannot satisfy itself that there has been a capitulation by a party agreeing to the consent orders in the sense that one party was almost certain to have succeeded if the matter had been fully tried or that the parties acted unreasonably by not accepting settlement offers. The volume of material before the Court demonstrates that it was inevitable the Court would have had to undertake an impermissible, hypothetical assessment of the merits to be satisfied that any costs order should be made.
Procedural history
1. To demonstrate that neither party acted unreasonably throughout the course of the litigation and that it is not possible to determine if there has been a capitulation by a party without traversing the merits, an overview of the factual and procedural history is required.
2. Mr Benson is a former employee of Xero, which is the NSW arm of the Xero Lighting Group. Mr Benson’s role at Xero was to be the Project Manager for Xero’s work in the Sydney Metro project. During the course of Mr Benson’s employment, Xero operated a Google Drive Folder as their document repository system. After Mr Benson resigned from Xero on 3 September 2018 it is alleged that Mr Jan Edwin Sargeant (who had taken over Mr Benson’s role) found that certain files relating to the project had been deleted. Mr Benson denied deleting the files but Xero claims that a search of the Google Drive data indicated that ‘administrator’ permissions were afforded to Mr Benson’s personal email address, and this enabled him to access the documents. A dispute subsequently arose as to whether Mr Benson had any of the documents on his personal drive and whether those documents were indeed confidential.
3. These proceedings were commenced by Xero on an ex parte basis by summons filed before Hallen J as Equity Duty Judge on 6 August 2020. Mr Benson was the first defendant. The second defendant was Austube Schreder Pty Ltd, a competitor company by which Xero alleged Mr Benson was employed after he had left Xero. His Honour made orders for short service of the summons, which sought, among other orders:
1. Interlocutory orders that Mr Benson be restrained from using, accessing, disclosing and reproducing any confidential information, intellectual property or documents and other written materials concerning Xero.
2. Interlocutory orders that Mr Benson deliver up to Xero all documents, files or written materials which were accessed from Xero’s Google Drive during and/or after his employment with Xero and which contained information about Xero’s business or customers.
3. Interlocutory orders that Mr Benson deliver up to court all personal computers and other electronic devices for inspection by Xero’s forensic analyst.
4. Various final orders, including:
1. That Mr Benson be permanently restrained from using, disclosing, reproducing any confidential information and intellectual property belonging to Xero;
2. A declaration that Mr Benson contravened s 183 of the Corporations Act 2001 (Cth) (CA) by improperly using information he obtained as an employee of Xero, and to gain advantage for himself and/or Xero’s competitor or to cause detriment to Xero.
3. A penalty against Mr Benson pursuant to CA s 1317E of the Corporations Act for contravention of CA s 183.
4. Leave for Xero to seek appropriate orders upon the giving of judgment for the disposal of any evidence which comprises Confidential Information and/or Intellectual Property belonging to Xero.
5. Damages, interest and costs.
1. On 13 August 2020, Williams J made an order that the summons was deemed served on Mr Benson on 7 August 2020 and listed the matter for directions on 14 August 2020 to prepare for a hearing of certain paragraphs of the summons.
2. On 14 August 2020, a directions hearing took place before Robb J where his Honour made consent orders on a without admissions basis:
1. Restraining Mr Benson from using, accessing, disclosing or reproducing Xero’s confidential information and intellectual property until further order of the Court;
2. Ordering Mr Benson to deliver up certain documents, files and written materials to Xero;
3. Ordering Mr Benson to file and serve an affidavit identifying certain matters as to Xero’s confidential information and intellectual property. This affidavit was to include whether he had used, accessed or disclosed to any party Xero’s confidential information, if he had transferred this information to any storage device or party and the names of the individuals or corporations to whom he had disclosed those matters.
1. Subsequently, a dispute arose as to whether Mr Benson had provided adequate disclosure in his affidavit of the matters listed in [15(c)] above. On 3 September 2020, Registrar Walton made timetabling orders requiring Xero to serve evidence in support of the interlocutory orders it sought for the delivery up of documents and devices and for its expert to inspect the devices and documents to determine to what confidential information Mr Benson had access. Orders were also made for Mr Benson to file and serve evidence in reply. Those orders note that there was a dispute between the parties as to whether Mr Benson had provided adequate disclosure in accordance with Robb J’s 14 August 2020 orders, but the parties were attempting to resolve any outstanding interlocutory issues between themselves.
2. On 24 September 2020, Registrar Walton made orders timetabling the serving of the parties’ expert evidence. These orders were amended by consent on 28 October 2020.
3. On 9 December 2020, Xero filed a notice of discontinuance against Austube.
4. On 15 December 2020, Ward CJ in Eq (as her Honour then was) listed those paragraphs of the summons concerning the delivery up of devices and inspection of that material by Xero’s expert before Rees J for a one day hearing on 1 April 2021.
5. Following that hearing on 1 April 2021, Rees J made orders requiring the parties’ legal representatives to confer and provide a proposed short minute to give effect to those paragraphs of the summons. Mr Benson was ordered to pay Xero’s costs in respect of those paragraphs (Rees J Costs Order).
6. On 14 April 2021, Rees J made these orders:
1. Upon Counsel for Xero giving the usual undertaking as to damages, order that, by 12pm on 19 April 2021, Mr Benson deliver up to Court for collection by Nigel Carson of Korda Mentha, Level 5 Chifley Tower, 2 Chifley Square, Sydney NSW 2000 (Xero’s Expert):
a. all computers (whether desktop hard-drive and/or laptop) and other electronic devices, mobile phones, hard drives, external hard drives, USBs and other electronic storage devices in his possession, custody or control for inspection by Xero’s Expert (Produced Electronic Devices).
b. a list to be encrypted or in some form protected that comprises details of all addresses, accounts, login details, passwords and access credentials, in respect of each and every (Access Details):
(i) device delivered up;
(ii) email account held, controlled or otherwise accessible by Mr Benson;
(iii) electronic storage account (such as a “cloud” account or any like facility) held, controlled or otherwise accessible by Mr Benson, for inspection by Xero’s Expert.
2. Upon Counsel for Xero giving the usual undertaking as to damages, order that access be granted to Xero’s Expert to inspect any documents, computers, mobile phones and/or devices produced by Mr Benson in answer to order 1 above, for the purpose of that expert preparing a report for Xero as to Mr Benson’s use, disclosure of, or access to Confidential Information, Intellectual Property or information of Xero.
3. The parties are to comply with the Electronic Devices Regime comprising Annexure A to these orders, noting that Mr Benson’s new employers, Austube Schreder Pty Ltd and Schreder Australia Pty Ltd, also claim to be entitled to commercially sensitive and confidential information data and documents located on the Produced Electronic Devices including OneDrive for Business, the Outlook account mailbox, calendar or associated files:
a. for the email addresses [email protected], [email protected] and [email protected], and
b.Autodesk AutoCAD software files.
…..
1. The Electronic Devices Regime referred to in those orders was further amended by orders made on 14 May 2021.
2. On 24 August 2021, Registrar Walton made orders extending the time for Xero to serve its expert report in accordance with cl 15 of the annexure to the orders made on 14 April 2021. Further extensions of time for Xero to serve its expert report were granted by Registrar Walton on 28 September 2021 and 26 October 2021.
3. The matter was then stood over until 2 March 2022, when Registrar Walton ordered the proceedings to continue on pleadings and made timetabling orders for Xero to file and serve its statement of claim and for Mr Benson to serve his defence.
4. Xero’s statement of claim was filed on 6 July 2022. It sought relief including what follows, but not damages:
1. A declaration that Mr Benson has contravened clauses 16 and 19 of the Employment Agreement executed between Xero and Mr Benson on 15 January 2018.
2. An order that Mr Benson be permanently restrained from using, disclosing and/or reproducing any confidential information and intellectual property belonging to Xero.
3. An order for the disposal of any evidence or material that comprises confidential information and/or intellectual property belonging to Xero.
4. Costs on the indemnity basis, otherwise on the ordinary basis.
1. On 17 August 2022, Mr Benson filed his defence.
2. Orders were then made on 22 August 2022 for Xero to serve its reply, for the parties to serve further evidence in chief and for Xero to serve reply evidence. A series of further case management orders requiring the parties to provide further reply and expert evidence were made on 22 August 2022, 5 December 2022, 28 February 2023 and 11 April 2023.
3. On 19 April 2023, the parties were required to attend a court-annexed mediation by 31 July 2023, and the matter was fixed for hearing before me on 18 March 2024 for three days. A mediation took place between the parties on 26 July 2023. The mediation did not resolve the proceedings.
4. From the Court’s point of view, nothing further happened in this matter until Mr Benson’s solicitors sent my Associate an email on 7 March 2024, less than two weeks before the scheduled final hearing, including the following:
Mr Benson wishes to relist the matter at the earliest convenient time for [sic] his honour for the purposes of identifying and potentially narrowing the scope of the litigation that is presently listed on 18th of March 2024 for three days.
We attach an open letter dated 26 February 2024 for his Honour’s perusal as context to the foreshadowed issue sought to be agitated by Mr Benson which is namely whether the Court considers there is utility in dealing with prayer 1 of the relief of the statement of claim in circumstances where Mr Benson is willing to consent to the consequential relief by way of undertaking or court order.
Xero has not accepted the offer in time.
In order to save cost and further expense Mr Benson seeks to raise this issue with the Court, if the Court was minded to list it, in the first instance.
1. The matter was listed for directions on 12 March 2024. It was during that hearing that I was informed that only 32 documents remained in dispute and Mr Benson was willing to provide undertakings not to use any of Xero’s confidential information which he may have in his possession and delete any remaining documents from his personal device. I strongly encouraged the parties to consider how they might come to an agreed position in the light of what I had been told, including how the destruction of those documents from any device of Mr Benson might be verified.
2. The consent orders were made on 15 March 2024:
1. The hearing dates allocated on 18 and 19 March 2024 be vacated.
2. The hearing date allocated on 20 March 2024 be reserved with an estimate of 30 minutes to:
(a) permit Mr Benson to give evidence in relation to the destruction of documents as set out in order 4 to 6 below; and
(b) allocate a hearing date for the parties’ various costs applications as referred to in order 7 below.
3. Mr Benson be permanently restrained from using, disclosing, and/or reproducing any:
(a) Confidential information and intellectual property belonging to Xero;
(b) Documents, files or written materials, whether in hard copy or electronic form, in his possession, custody or control concerning the business or financial affairs of Xero (including Xero’s clients, employees, trade secrets, information technology, resources, protocols, customer lists, databases and interfaces, system path words to access any software, and systems or encryptions used to operate or licensed by Xero) and any information obtained, accessed or acquired by Mr Benson during or after his employment with Xero.
4. In accordance with the email from Mr Benson’s solicitor to Xero’s solicitor sent on 13 March 2024 at 10:31am, Mr Benson undertakes to the Court to reformat the hard drive on his personal device for the purpose of deleting the documents identified in the “Final Production List” which is located at Appendix C to the Report of Nigel Carson dated 10 December 2024 from his personal devices.
5. Mr Benson undertakes to the Court to delete any documents (including any confidential information and intellectual property) belonging to Xero from any cloud-based system accessible to Mr Benson by which he retains any document identified in the “Final Production List” which is located at Appendix C to the Report of Nigel Carson dated 10 December 2024.
6. Mr Benson undertakes to the Court to delete any documents (including any confidential information and intellectual property) belonging to Xero from his personal devices and any cloud-based system that may become later known to him.
7. Permit the parties to bring applications asserting their various rights as to costs.
8. In respect of order 7:
(a) Xero to file and serve an application claiming a gross sum costs order together with any affidavit evidence in support of such application pursuant to section 98(3)(c) of the Civil Procedure Act 2005 (NSW) by 4pm on Tuesday, 9 April 2024.
(b) Mr Benson to file and serve any competing application for costs, including any potential gross sum application and evidence in support and any evidence in opposition to the application brought by Xero by 24 April 2024.
9. Xero serve any reply evidence in opposition to Mr Benson’s application referred to in order 8(b) above by 1 May 2024.
10. The parties to file and serve any written submissions with respect to costs by 4pm on 10 May 2024.
11. The matter be listed for argument on the question of costs on Friday, 31 May 2024 at 2pm for 1 hour.
1. On 20 March 2024, Mr Benson provided the undertakings referred to in the consent orders in the witness box under oath. Orders were then made on 20 March 2024 timetabling the costs dispute the subject of this judgment and adjusting the orders made on 15 March 2024 under the slip rule:
1 Orders pursuant to the Slip Rule that in orders 4 and 5 made on 15 March 2024 the reference to 2024 be amended in each order to refer to 2021.
2 Direct the parties to file and serve any submissions in reply by 22 May 2024.
3 Vacate order 8 made on 15 March 24 and substitute:
8A Xero to file and serve an application by notice of motion for costs together with any affidavit evidence in support by 4pm 9 April 2024.
B Mr Benson to file and serve by notice of motion any competing application for costs together with affidavit evidence in support of such application by 24 April 2024.
4 Vacate order 9 made on 15 March 2024 and substitute
9 The parties to file and serve any reply evidence in opposition to others application by 1 May 2024
1. Having recited the procedural history, these observations can be made in overview:
1. Over three and a half years, this matter has clearly taken up a considerable amount of the parties’ and the Court’s time.
2. By the time the proceedings came before me, the dispute seemed to have no utility, with the parties effectively already in a position between themselves to resolve it. In other words, there was nothing on the merits which the Court was required to determine given the position they had reached just short of a final agreement.
3. Throughout the dispute’s extensive history, the parties had worked hard to comply with procedural orders, often working together to provide consent short minutes to the Court. That conduct is consistent with what the Court expects of parties, including Mr Benson’s solicitors’ approach to the Court prior to the hearing fixed before me when it became apparent that any remaining dispute between the parties had in substance, if not form, fallen away.
Xero’s submissions - reasonableness
1. As noted at [8] above, Xero put forward two contentions as to why Mr Benson should pay their costs:
1. Mr Benson’s conduct during the proceedings was not reasonable.
2. Mr Benson’s agreement to the orders and undertaking provided in court amounted to a capitulation.
1. Xero submits that the conduct of Mr Benson was not reasonable on the basis that the offers Mr Benson put forward could never have been accepted by Xero. As appears between [41] and [44] below, the overriding concern of Xero towards all of the restraints and undertakings that Mr Benson offered was that they always relied on Mr Benson’s subjective view of which documents were confidential and that any undertaking was only offered inter partes rather than to the Court.
2. The Court’s attention was drawn to various pieces of evidence to demonstrate the basis of the parties’ mutual distrust. This includes:
1. The affidavit of Mr Sargeant dated 6 August 2020 where Mr Sargeant deposes that Mr Benson informed him that he had ‘returned everything belong [sic] to Xero when I left and destroyed any copies that were on my personal devices;”
2. The affidavit of Mr Benson dated 24 August 2020 where he deposed that he only became aware of files relating to Xero on his device after he received Mr Sargeant’s 6 August 2020 affidavit and that the documents were only orphan files as the sharing privileges associated with those documents was changed once Mr Benson’s access to the Xero Google Drive was terminated. In that affidavit he also deposed that he had shared material relating to Xero to his personal Google Drive account.
3. The affidavit of Mr Sargeant dated 9 September 2020 where he deposes that he noted Mr Benson had accessed documents in the Xero Google Drive on or around 10 May 2019 (Mr Benson having resigned some months earlier).
4. In Xero’s written submissions the Court’s attention was also drawn to various aspects of Mr Benson’s 15 September 2020 affidavit which was not read at the hearing of the Motions where he denied accessing any of Xero’s documents after he ceased employment, had determined that the orphan documents still on his personal drive contained no sensitive or current project or pricing information and therefore were not confidential, and he said he could not recall accessing the tender documents.
5. Correspondence from Mr Benson to Mr Sargent dated 9 November 2018 where he informed Xero that he had deleted documents upon his termination of employment and provided a copy of the employment contract at cl 19.3.
6. The defence filed by Mr Benson where he denied retaining confidential information.
1. Xero says that this evidence justifies the distrust between the parties as there was no policy allowing Mr Benson to share documents to his personal drive and Mr Benson gave no evidence as to the steps he had taken to remove the documents from his devices and did not unequivocally deny that he accessed the tender documents.
2. Xero also contends that their position and suspicions were validated after the Carson Report, Xero’s expert report which was produced following Rees J’s orders on 14 April 2021, because that report noted that Mr Benson did retain access to Xero’s documents and 32 of the documents that Mr Benson had retained were confidential. During the hearing Mr Ratnam took me to a letter from Mr Benson’s solicitors dated 28 January 2022 where Mr Benson continued to challenge the relevance of the report to Xero’s claim for damages and challenged whether 23 of the 32 documents identified were actually confidential.
3. Xero contends that the evidence demonstrates that there was no certainty that Mr Benson did not retain access to Xero’s documents because the evidence Mr Benson provided was speculative and also showed that Mr Benson may not be objective in his evaluation of what comprised confidential information. On this basis Xero submits it could never have accepted the offers put forward by Mr Benson and therefore those offers were unreasonable.
4. An analysis of the complaints put forward by Xero concerning each offer demonstrate Xero’s persistent concern that Mr Benson’s offers relied on his own subjective view of whether the documents were confidential and failed to enable Xero to verify if the documents would be deleted
5. It is contended that an offer made by Mr Benson on 24 November 2022 could not have been accepted and can have no relevance to costs because:
1. The offer was issued at a time when Xero’s statement of claim had not been filed and evidence had not yet closed. It is also submitted that the list of documents which formed the basis of the orders, being the Annexure C documents to Mr Carson’s second report was not yet even created. Therefore, this offer cannot be considered.
2. Mr Carson had not yet inspected Mr Benson’s devices.
3. A hearing had not taken place to obtain delivery up and access orders to Mr Benson’s devices – the extent of Mr Benson’s access to Xero files remained unknown.
4. Mr Benson was dictating access to his computer device which did not accord with the Employment Agreement.
5. Mr Benson was offering a limited access regime which would not entitle Xero to verify which documents Mr Benson had retained.
6. Mr Benson was offering an access regime which offered no certainty of capturing all documents he had access to.
7. Mr Benson was contending that Xero should pay for the access regime which Xero would have minimal participation in.
8. Mr Benson offered no undertakings to the Court.
9. No appropriate destruction procedure was offered.
1. Offers made on 28 January 2022 and 28 July 2022 could not be accepted because:
1. No undertaking offered would be directly provided to the Court.
2. The restraints offered placed a subjective interpretation of what Mr Benson considered were confidential documents or Xero’s intellectual property.
3. Mr Benson had not yet served expert evidence to determine which documents were confidential.
4. No appropriate destruction procedure was offered.
5. Mr Benson conditioned the offer on the parties executing a deed of settlement and release.
1. The 26 February 2024 offer referred to at [29] above could never have been accepted because:
1. The offer did not provide provision for any of Xero’s costs other than the Rees J Costs Order.
2. The agreement by Mr Benson to be permanently restrained and delete documents relied on his own subjective determination of what he deemed to be confidential and did not allow for an independent party to participate in the process of document deletion.
3. The offer for the parties to enter into a Deed of Settlement and Release did not specify which claims would be the subject of that release.
1. In response, Mr Benson rejected that the offer was unreasonable, drawing attention to the fact that Xero appeared to make an offer for an inter partes undertaking on 4 August 2023. He also submitted that the basis for the rejections appeared to be Xero’s desire to pursue their costs and damages claim, a claim which it later abandoned.
Xero’s submissions - capitulation
1. Xero submits that the consent orders amounted to a capitulation on behalf of Mr Benson for two reasons:
1. Mr Benson never offered to provide an undertaking to the Court and any offer made by Mr Benson to delete the documents relied on Mr Benson making a subjective determination as to which documents were confidential or were the intellectual property of Xero. However, the orders Mr Benson subsequently agreed to required him to provide an undertaking to the Court and delete all documents on his computer.
2. The relief obtained in the consent orders was essentially the relief sought in the statement of claim.
1. The first reason is essentially a restatement of the concerns Xero had about whether Mr Benson had been reasonable with the offers he put forward during the proceedings (see [41] to [43] above). This same conduct was now relied upon to support an argument that Mr Benson capitulated in the sense that the undertakings and restraints he was previously not willing to give now formed part of the undertakings he provided pursuant to the consent orders.
2. Second, Xero in reply referred to Mr Benson’s defence filled 17 August 2022. Paragraph [57] of that defence stated:
[57] Save as hereinbefore expressly admitted, Mr Benson denies each and every allegation set out in the Statement of Claim as if the same had been set forth separately and traversed seriatim. In the premises, it is denied that Xero is entitled to the relief claimed, or any part thereof, for the reasons alleged or at all.
Xero submits that the consent orders reflect such a significant change of Mr Benson’s position that it amounts to a capitulation.
1. Third, Xero put forward seven reasons why the consent orders were better than any offer it put or that Mr Benson otherwise offered:
1. First, the ‘reformatting’ procedure Mr Benson agreed to undertake had the effect of wiping his hard drive. This eliminated the possibility of Mr Benson retaining any further documents or giving Mr Benson any discretion to decide which documents were confidential.
2. Second the reformatting procedure obviated the need for Xero’s expert or a third party to confirm if the confidential documents outlined in the Carson report had actually been destroyed.
3. Third, the oral undertaking provided by Mr Benson to the Court on 20 March 2024 and confirming that he had undertaken the reformatting procedure gave confirmation to Xero that he acknowledged the importance of Xero maintaining the documents were confidential.
4. Fourth, Xero was provided with comfort that the restraints offered by Mr Benson had certainty and effect.
5. Fifth, the undertakings made to the Court have the effect that the undertakings are enforceable by contempt of court.
6. Sixth, Xero was never required to enter into a deed of settlement and release.
7. Seventh, Xero retained the Rees J Costs Order and was able to advocate for its costs in these proceedings.
1. In support of its second submission that Mr Benson in essence capitulated because Xero obtained the relief it sought in its Statement of Claim, Xero acknowledged that had the mater proceeded to hearing, Xero would have had to satisfy the Court (i) of the various contraventions of the Employment Agreement as contended, (ii) the documents Xero contended were confidential and/or the intellectual property of Xero attract those attributes and character and (iii) the destruction orders sought were appropriate in the circumstances.
2. Xero submits the declarations were necessary to support the restraints sought because Mr Benson was challenging whether the documents were confidential. The fact that they were not made is submitted to be irrelevant because it is contended Xero has achieved the relief it ultimately sought through the consent orders and Mr Benson’s undertaking to the Court on 20 March 2024.
Xero’s submissions – an alternative costs order
1. Xero also provided extensive written submissions as to why the Court should order Mr Benson to pay Xero’s costs on several different bases. These submissions rely on the Court’s discretion to order indemnity costs where a party fails to accept an offer better than what they achieved at the conclusion of the proceedings.
2. In light of the conclusion drawn at [84] below, the Court should not and will not embark on such a comparison of different offers put forward by Xero.
Xero’s submissions - abandonment of part of its case
1. Xero conceded in its written submissions that it had abandoned that part of its case where it alleged it had suffered losses as a result of Mr Benson deleting documents relating to the project.
2. Xero contends that no consequences follow from this abandonment for two reasons:
1. Xero’s case had always put Mr Benson’s breaches of the Employment Agreement in issue and the project damages claim overlapped with the Employment Agreement contraventions claim.
2. Mr Benson initially put in issue his authority at Xero and the material relating to the project claim was relevant not just to the issue of document deletion but also to Mr Benson’s role in Xero and the level of trust Xero placed in Mr Benson to deal with sensitive documentation.
1. For these reasons Xero contends that the evidence concerning the project could never be characterised as being of no utility to Mr Benson when regard is hard to the broader issues in the proceedings. However, Xero accepts it is not entitled to costs specifically relating to its claims of destruction of the project documents.
Mr Benson’s submissions – Xero’s conduct
1. In his written submissions Mr Benson also put forward two alternative bases for the Court to order Xero to pay his costs:
1. Xero’s conduct justifies the imposition of a costs order against it.
2. The abandonment of the project damages claim (referred to at [53] above) amounts to a capitulation.
1. In the alternative to these possibilities, Mr Benson contended there should be no order as to costs from the filing of the statement of claim, or at all.
2. Mr Benson sought to impugn Xero’s conduct of the proceedings as being unreasonable by providing an extensive overview of their history. Mr Benson submitted that in circumstances where the consent orders only provided for undertakings and did not account for any of the other declaratory relief or damages that Xero had persistently contended for, and which formed the basis of their rejections to several offers throughout the proceedings, their conduct was unreasonable.
3. For example, Mr Benson drew attention to a letter from Xero’s solicitors to Mr Benson dated 13 November 2018 where Xero contended that Mr Benson was instrumental in the “wilful destruction of certain company documents,” requested he provide all electronic devices used in the conduct of the business and company and noted that Xero held Mr Benson responsible for any losses it may suffer.
4. Mr Benson also submits that Xero engaged their expert Mr Carson despite Mr Benson’s affidavits of 24 August 2020 and 15 December 2020 which purported to show that he had no knowledge of the files on his computer, that there was no restriction on him using his personal My Drive and in any event Mr Carson’s report vindicated Mr Benson’s position that there was a reasonable possibility that Mr Benson may have been able to have had access to documents “whether knowingly or not.”
5. Mr Benson contends Xero unreasonably rejected his offer of 24 November 2020 which suggested that Mr Carson have access to Mr Benson’s devices and remove relevant documents because they were determined to press their ultimately abandoned claim for damages. Mr Benson points out that Xero repeated this complaint in a letter to Mr Benson on 9 September 2021.
6. Mr Benson then points to his 28 January 2022 offer in which Mr Benson agreed to delete any documents from the final confidential production list, as well as agreed to provide undertakings in a variety of forms. Mr Benson acknowledges he did seek the discharge of the Rees J Costs Order but says that is irrelevant given he was willing to give up his ability to pursue his costs of the substantive proceedings. Mr Benson pointed out that Xero responded to that offer on 24 February 2022 by reasserting its claim for damages.
7. Mr Benson also submits that Xero’s statement of claim filed on 7 July 2020, which sought to summarise the nature of the competing contentions, failed to plead any allegation as to the wrongful use of confidential information or otherwise any allegation that Mr Benson had deleted any project documentation. At this point Mr Benson submits that the statement of claim only sought declarations that certain clauses of the Employment Agreement had been breached, that Mr Benson be permanently restrained from using or disclosing any confidential information and that Mr Benson dispose of any evidence that comprised of confidential information. The confidential information in dispute at this time only related to the 32 items identified in Appendix C to the Carson Report of December 2021. Therefore, Mr Benson submits that Xero had abandoned any damages claim or any other claim under the CA.
8. Mr Benson submits that he again offered on 28 July 2022 to delete the files in the production list and offered other undertakings. Xero rejected this offer on 28 July 2022. Mr Benson submits that the reference to discharging the Rees J Costs Order in the offer was fair in circumstances where Mr Benson contends that he would have obtained costs thrown away from the claims abandoned by Xero.
9. Mr Benson finally made reference to offers made by Xero on 4 August 2023 and 24 January 2024 where Xero offered to resolve the proceedings on the basis that Mr Benson provide the permanent restraints and delete the documents identified in the Carson Report but also, in his view, sought excessive costs.
10. Mr Benson describes Xero’s claim at the time of the hearing before me to be a “speculative effort to restrain the use and order the deletion of up to thirty-four documents, of which 13 were conceded not to be confidential…” in circumstances where there was neither any evidence adduced nor claim advanced in the substantive proceedings to suggest that Mr Benson had caused loss, engaged in any positive conduct to delete documents, or provided access to the documents to third parties.
11. In summary, his extensive submissions sought to show that Xero acted unreasonably by failing to accept his offers on the basis that it was pressing other aspects of its claim in circumstances where those ancillary claims were ultimately not part of the consent orders.
12. Finally, Mr Benson rejects Xero’s submissions that the consent orders reflect a victory for Xero by characterising the undertakings provided as nominal success. Mr Benson referred the Court to several authorities where a party such as Xero had been ordered to pay the other sides’ costs in circumstances where Xero had obtained relief no more substantial than that already offered by Mr Benson. He also relied on New South Wales v Stevens (2012) 82 NSWLR 106; [2012] NSWCA 415 as authority for when costs may be awarded against a party which achieves nominal damages in circumstances where they were seeking a much larger sum. No reasons were provided as to why these cases applied in these circumstances. Mr Benson alternatively submitted that Xero had only achieved what it has been offered since the commencement of this litigation and therefore Mr Benson must be seen as the successful party and therefore entitled to his costs.
Mr Benson’s submissions - capitulation
1. Mr Benson also contended that Xero’s acceptance of the consent orders amounted to a capitulation because they did not provide for any damages when Xero had persistently sought damages for losses it alleged arose from Mr Benson deleting confidential documents relating to the project in circumstances where Xero says those documents could have been used to resist claims that were brought against Xero in relation to the project.
2. Mr Benson submits that the rejection of his offers by Xero up until February 2022 based on the fact those offers did not account for Xero’s damages claim shows that the damages claim was an essential part of their case. For example, Mr Benson drew attention to Xero’s response on 2 December 2020 to Mr Benson’s 24 November 2020 offer which emphasised that “our client’s final claims for relief relate to damages suffered by our client as a result of your client deleting documentation from the Google Drive prior to his resignation.” The high point of the resistance according to Mr Benson is Xero’s response to the 28 January 2022 offer on 24 February 2022 that “our client’s claim for damages in its various forms has been articulated ad nauseum yet you blindly ignore our correspondence to the detriment of your client.” Mr Benson says that Xero’s failure to plead their damages case in their Statement of Claim filed on 6 July 2022 is a form of capitulation.
3. Mr Benson also contended that that Xero’s submissions concerning the damages claim were persuasive to Rees J when making her interlocutory orders on 14 April 2021. On this basis Mr Benson says he suffered an injustice by this part of the case being withdrawn, especially since a costs order was made against him.
Mr Benson’s submissions – no order as to costs
1. In support of his alternative submissions that there should be no order as to costs (either after the filing of the statement of claim or at all), Mr Benson rejected Xero’s submissions that entering into the consent orders represented a capitulation from Mr Benson’s initial position. Mr Benson cited Lai Qin and Nichols to show that a costs order will only be made in matters which do not proceed to final hearing where the conduct of a party is manifestly unreasonable and such a determination can be made on the facts. In entering into the consent orders, he submitted that he was acting acting consistently with his obligations under s 56 CPA and cannot be treated as having engaged in unreasonable conduct or a capitulation.
Lai Qin
1. The general principles as to costs where there has been no determination of the merits are outlined at pages 624-625 of McHugh J’s seminal judgment in Lai Qin (citations omitted):
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs (l). Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order (2). When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties (3). To do so would burden the parties with the costs of a litigated action which by settlement or extra curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action (4). In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd (5), the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission (6) where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
1. In short, it is only in circumstances where a judge is confident that one party was almost certain to succeed or that another party acted so unreasonably that a party may be able to obtain their costs even though the case settled before a final determination of the merits. Critically, the court would not embark upon making a prediction as to the outcome of a hypothetical case.
2. There are sound public policy reasons for this position. To emphasise a point made by McHugh J in Lai Qin (see page 624), to recreate a hypothetical action would “burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided”.
3. The NSW Court of Appeal also restated and relied on the principles in Lai Qin in Nichols, a case very similar to the case at bar. In Nichols, a company brought proceedings against a former employee and his associate after alleging the employee had taken its confidential information. The defendant’s devices were inspected by the company’s representative and any information found on them was destroyed. The company subsequently abandoned its claim for compensation and the remainder of the proceedings was resolved by consent, with the court never determining whether the information was in fact confidential. The primary judge awarded the company the costs of the principal proceedings and the costs argument. However, that outcome was overturned on appeal.
4. The judgment of Payne JA summarised Lai Qin:
[30] If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
1. His Honour at paragraphs [27]-[30] also outlined several other appellate authorities which had considered Lai Qin. These included Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 in which Davies AJA, with whom Mason P and Meagher JA agreed, observed:
[5] When proceedings are brought to an end without a determination after a trial, the judge may find it difficult, even impossible, to make an award of costs. If the judge does make an award, it will generally be because the judge is satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in costs
1. Basten JA in Nichols at paragraphs [8]-[10] outlined how the Court should approach the question of whether a party has acted unreasonably:
[8] Secondly, although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon.
[9] ….. Further, once there is a real dispute as to a significant fact in issue in the proceedings, it is inappropriate to determine that matter, other than in making an interlocutory ruling, by accepting one party's case without permitting the other party an opportunity to challenge the opposing party's witnesses.
[10] Once it becomes apparent that such a course is required, the hypothesis on which the examination was undertaken is negated and the inquiry should stop.
1. The issue of when the Court may determine whether one party has capitulated was also considered in ONE.TEL v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [6] by Burchett J who said:
[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.
1. His Honour’s judgment has been cited with approval in several NSW Court of Appeal judgments cases including Nichols, Edwards and Shellharbour City Council v Minister for Local Government [2017] NSWCA 256.
2. Finally, the approach to the question of costs which is derived from Lai Qin is both fortified, and independently required, by the Court’s obligation to exercise its discretion in accordance with the overriding purpose. It is completely antithetical to the overriding purpose to allow arguments over costs to become substantial satellite hearings which require the Court to traverse contested matters that have otherwise been resolved by settlement.
Consideration
1. The parties’ motions provided the Court with nine different bases to award costs, the last of which was an order that each party bear their own costs of the proceedings. While in form that is not an order which the Court would make, its purport was clearly that expressed in the conclusion that there should be “no order as to costs with the intention that each party should bear their own costs”. In my respectful view, that result is properly and sufficiently given effect by a notation that the Court makes no order as to costs.
2. The Court concludes that this last option – that there be no order as to costs – should be the outcome in accordance with the principles set out in [72] to [81] above. There are three reasons for this conclusion:
1. The Court cannot decide whether the parties acted reasonably in commencing and defending this litigation without traversing the merits of the dispute.
2. The Court cannot be satisfied based on incontrovertible facts that the consent orders reflect a capitulation by one of the parties.
3. The Court is otherwise not able to order costs on the ordinary basis as there has been no ‘event’ enabling the court to make such order.
1. In reaching this conclusion, I should record that I have deliberately refrained from reproducing the various offers and other documents relied upon by the parties. To have done so would have turned what has become a moderately lengthy judgment into a tome. In my respectful opinion, it is sufficient to have recorded what the parties said about the documents to demonstrate the vice in the approach that each party submitted that the Court should take.
Consideration - the Court cannot make a costs order without considering the dispute’s merits
1. The parties’ motions effectively required the Court to investigate different offers made during the proceedings and determine whether it was reasonable for them to have been made or rejected at that point in time. The Court cannot conduct such an investigation as it would require the Court to enter into the merits of the dispute and the parties’ respective positions over the course of the dispute.
2. Notwithstanding both parties’ assurances during written and oral submissions that their submissions would not traverse the dispute’s merits, the Court’s inability to avoid considering the merits is aptly demonstrated by the way the parties’ submissions considered the merits in seeking the orders they sought.
3. For example, the evidence referred to at [36] which Xero used to show that it was unreasonable for Mr Benson to only provide inter partes undertakings was all evidence which referred to facts in issue in the proceedings. The Court would have had to examine whether and when Mr Benson had documents relating to Xero on his computer and whether they were confidential. Confidentiality of the remaining documents was never finally determined.
4. Additionally, the fact that Mr Benson eventually agreed to restraints and undertakings to the Court provides an insufficient basis in and of itself for the Court now to conclude that Mr Benson acted unreasonably by only ever offering to provide inter partes undertakings. While the willingness of a party to subject itself (or not subject itself) to punishment by contempt is undoubtedly a factor in assessing the reasonableness of an offer or its rejection, it will rarely be determinative of the assessment. This is not a case where it is determinative because of, as it turned out, the relatively small number of documents where confidentiality was still in dispute.
5. Nichols is directly analogous on this issue. Order 1 of the consent orders in that case provided that “The defendant be permanently restrained from using in any way any of the plaintiff’s Confidential Information as defined in the orders made on 28 April 2017.” As Justice Payne noted in that case (see also Basten JA at [63]), the fact that the defendant acquiesced in that order provides no basis for determining the reasonableness of its conduct in the proceedings:
[41] At the risk of repetition, in the absence of any hearing on the merits and in circumstances where it was and remained controversial whether there was any “Confidential Information” as defined, transferring documents and agreeing to order 1 made on 29 May 2017 provide no basis to conclude that the applicants, after litigating for some time, had effectively surrendered to the respondent or that the respondent had acted reasonably in prosecuting the action and the applicants had acted unreasonably in defending the action.
1. As for Mr Benson’s case, the submission that Xero acted unreasonably by failing to accept the offers on the basis that they continued to seek other declaratory relief and pursue their damages case would also require the Court to consider the merits of the case. As Mr Ahmad noted, the issue the Court would need to consider would be the significance of the project damages case to the proceeding and whether it was reasonable for Xero not to accept earlier offers on the basis that they were continuing to pursue their damages claim.
2. That would raise facts in issue relevant to some of the issues about which Mr Ratnam conceded Xero would need to satisfy the Court if the matter proceeded to the merits (see [49] above). The Court also notes Mr Ratnam’s submission that the project damages claim relied on facts which were relevant to the confidential documents case. Assuming that to be the case, the Court could not accept that Xero had been unreasonable by pursuing this claim based on facts which are manifestly present on the record and indisputable (see Basten JA in Nichols at [78] above).
3. Similarly, the fact that the consent orders did not include the declaratory relief Xero initially sought provides no basis for the Court to determine the reasonableness of Xero’s conduct throughout the proceedings. For the avoidance of doubt, the Court also does not accept the submission that Xero should have been satisfied with the inter partes undertakings offered by Mr Benson, first, for the reasons set out in [89] above and, second, because that would again require the Court to assess the facts in issue referred to in [49] above.
4. It is also convenient at this point to record that at the start of the hearing of the motions I rejected an application by Mr Ahmad to cross-examine Mr Sargeant about a 30-page Google report which he said established that Xero brought a case that Mr Benson illegitimately deleted the documents at the same time as they had records of the documents as part of that report. He submitted that went to whether the case was properly brought. However, to have permitted that issue to be opened up in cross-examination would have invited an examination of whether the documents were deleted and, if so, if that had occurred properly in accordance with Mr Benson’s contractual obligations. In other words, hypothesizing about the merits would have been inevitable.
5. In summary, the parties’ submissions that the other acted unreasonably by not accepting offers at different times throughout the proceeding cannot be accepted because the Court would inevitably be required impermissibly to consider facts in issue in the proceedings, contrary to the principles in Lai Qin. Therefore, there is no basis for the Court to say that either party in the dispute has acted unreasonably either in its prosecution of the proceedings or as to how settlement offers were treated.
Consideration – no capitulation
1. I reject Xero’s submission that Mr Benson effectively capitulated by entering into orders which required him to provide undertakings to the Court for two reasons.
2. First, I rely on my reasons set out in [89] above.
3. Second, I reject the submission that this was an example of Mr Benson effectively surrendering the litigation. I accept the submission of Mr Ahmad that the open offer which gave rise to the consent orders was an example of Mr Benson trying to do everything he could rid himself of the litigation in circumstances where the dispute had narrowed to a dispute about the confidentiality of 13 documents. As the 12 March 2024 directions hearing demonstrated, Mr Benson brought to my attention his solicitors’ 26 February 2024 letter to show that the utility of the proceedings had in effect been exhausted by events leaving nothing further for the Court to consider, and to bring about a resolution consistently with the overriding purpose. It was not an act of capitulation, but rather one of common sense and adherence to the overriding purpose.
4. It is regrettable that the parties have been embroiled in a protracted dispute which they both clearly believe could have been resolved earlier and which has generated a large amount of costs that each still believes the other should meet. However, the parties have clearly been constantly engaging with each other and did eventually resolve the matter in accordance with the overriding purpose. It is antithetical to that purpose and the principles in Lai Qin for the Court to relitigate (or perhaps more accurately to permit the litigation for the first time) when a party should have accepted an offer except in the clearest of cases where contested facts do not need to be explored. As McHugh J noted in Lai Qin, to do otherwise would fundamentally undermine the purpose of settlements and the public policy in favour of them.
5. Equally I reject Mr Benson’s submission that Xero’s removal of the project damages claim is an example of capitulation on behalf of Xero. Its discontinuance on this aspect of the proceeding by not including reference to it in its statement of claim is a ‘supervening event’ which modified the subject matter of the dispute. It was not an example of a ‘surrender’ for the purposes of the costs of the proceedings because it had not been the subject of more than interlocutory assertion. I rely on my reasoning at [91] above for the conclusion that the absence of an order addressing the damages or any other interlocutory claim initially sought by Xero cannot form the basis for the Court to hold that Mr Benson would obviously have been the successful party in this case to warrant the ordering of costs.
6. Even if it be the case that the project dispute influenced the reasoning of Rees J when her Honour ordered made the Rees J Costs Order, that was an interlocutory hearing which only required her Honour to determine whether there was a triable issue to warrant the interlocutory relief ordered. Mr Ahmad accepted that I had no power to adjust that costs order.
7. Furthermore, Mr Ratnam’s submissions that parts of the project damages case may have been relevant to the confidentiality issues in dispute and the inherent difficulty of determining whether costs were thrown away by the damages claim not being pressed also support the conclusion that the Court cannot, without delving much more deeply into areas of contest, safely conclude that there was a capitulation that should sound in costs.
8. In summary, the Court cannot definitively say, without entering contested factual areas, that either parties’ actions reflect a capitulation. It is clear that the form and focus of this dispute has changed significantly over the course of the matter, so much so that by the time the matter came before me it had became a confidentiality dispute about 13 documents. A number of supervening events led to this state of affairs and at no point can the Court comfortably say that there has been a capitulation by either side or that it can be so sure that one party would have succeeded so as to obtain its costs.
Consideration - no basis for costs on the ordinary basis
1. As one of their alternatives, each party sought an order that the other pay their costs on the ordinary basis as agreed or assessed. This ignores the general rule pursuant to UCPR r 42.1 that costs follow the ‘event’. In circumstances where the matter never went to final hearing, it is not possible to say that there has been an ‘event’.
2. In this respect I respectfully adopt what Basten JA said in Nichols:
[2] Where the parties resolve their differences, except as to the costs already incurred in litigation, they should usually expect that the court will not award costs. That is because the general rule applicable in civil litigation in superior courts Civil Procedure Act 2005 (NSW), s 98 and Uniform Civil Procedure Rules 2005 (NSW), r 42.1. is that costs will “follow the event”. That rule is frequently paraphrased by reference to its purpose, namely that the successful party should generally recover its costs from the unsuccessful party. But where there has been no trial there is no “event” because, except in unusual cases, it is not possible to say that one party has been successful and the other unsuccessful. The orders made by consent may or may not demonstrate capitulation by the “unsuccessful” party.
To the extent each sought such an order on the basis of an exception to the general principle expressed in Lai Qin, the reasons set out in [83] to [103] apply to explain why the Court will not make such an order in favour of either party.
Some final observations
1. The situation of parties being able, often after intense and protracted negotiations, to agree on the settlement of litigation other than as to costs is familiar to courts and litigation lawyers. While in order to settle their dispute the parties have been able to overcome the obstacle constituted by the (often) large amount of costs each has spent, the obstacle is too great in relation to settling the question of costs itself. Resolution of costs is also generally the last thing to which parties turn their minds, and by that point negotiation fatigue has set in, so that leaving costs to the Court becomes the easiest default option. To paraphrase the exhausted Macbeth, each party feels that it is stepped in so far in costs, and leaves that question to the Court so as not to risk the agreement reached on the substantive issues.
2. Two observations flow from the experience described in the preceding paragraph, while not overlooking that each case turns on its own facts and there can be no universal rules.
3. First, in general, to displace the outcome of there being no order as to costs the issues of unreasonable conduct or capitulation need to be demonstrable clearly and concisely by reference to uncontroversial facts. If complex submissions and large amounts of evidence are required, these are likely to be signs that the Court is being invited to descend into disputed facts and subjective analyses of parties’ positions over the course of the litigation which Lai Qin and the overriding purpose in the CPA make clear the Court should not embark upon.
4. Second, when negotiating a settlement parties will often be well advised to consider whether they should factor in their respective expended legal costs at an early stage of their settlement calculus as something they are likely to have to bear, rather than leaving the question of costs until after all other issues have been agreed.
5. The Court’s orders are:
1. The plaintiff’s motion filed 9 April 2024 is dismissed;
2. The defendant’s motion filed 31 May 2024 is dismissed;
3. Note that the Court makes no order as to the parties’ costs of the proceedings not already the subject of a costs order (including as to their costs of the motions referred to in the preceding two orders).
**********
Amendments
30 July 2024 - Correction to spelling of name in paragraphs 91 and 94
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 11,996 |
nsw_caselaw:1910216dee9d972f35456ac1 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Gemi Nominees Pty Ltd v Chamoun [2024] NSWSC 926 | https://www.caselaw.nsw.gov.au/decision/1910216dee9d972f35456ac1 | 2024-08-04T23:49:22.216563+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Gemi Nominees Pty Ltd v Chamoun [2024] NSWSC 926
Hearing dates: 24, 27 May 2024 and 23 July 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Common Law
Before: Faulkner J
Decision: (1) The First Defendant’s Notice of Motion filed on 26 June 2024 be dismissed.
(2) Judgment for the Plaintiff for possession of the land described in folio identifier 2/865637 being the land situated at and known as 72-78 Parramatta Road, Croydon NSW 2132 and folio identifier Auto C consol 12585-132 being the land situated at and known as 31 Phillip Street, Cabarita NSW 2137.
(3) The Cross-Claim filed on 4 December 2023 be dismissed.
(4) The Defendants pay the Plaintiff’s costs of the proceedings including the Cross-Claim and the Notice of Motion filed on 26 June 2024.
Catchwords: CIVIL PROCEDURE — conduct of proceedings — application for adjournment — evidence does not prove that the applicants are unable to attend Court and participate effectively in the proceedings — adjournment refused
PRACTICE AND PROCEDURE – application to reopen – no basis for reopening
REAL PROPERTY — mortgages — possession of land — judgment sought for possession — order for possession admitted subject to claimed set off.
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56(2) and (3), 57(1), 66 and 98
Contracts Review Act 1980 (NSW)
Evidence Act 1995 (NSW), ss 66A and 75
Real Property Act 1900 (NSW), s 60
Uniform Civil Procedure Rules 2005 (NSW), rr 7.29(2), 14.15(d)
Cases Cited: Bobalas v Waverley Council [2016] NSWCA 139
Commonwealth Bank of Australia v MLD Financial Services Asset Management Pty Ltd [2015] NSWSC 1476
Magjarraj v Asteron Life Limited [2009] NSWSC 1433
Ohn v Walton (1995) 36 NSWLR 77
Category: Principal judgment
Parties: Gemi Nominees Pty Ltd (Plaintiff)
Caroline Chamoun (First Defendant)
Jack Chamoun (Second Defendant)
Representation: Counsel:
H W Somerville, M McGirr (Plaintiff)
F Maghami, C Honnery (First Defendant) on 24 and 27 May 2024
No Appearance (Second Defendant)
Solicitors:
Summer Lawyers (Plaintiff)
Longton Legal (First Defendant) on 24 and 27 May 2024
Zed Law (First Defendant) on 23 July 2024
No Appearance (Second Defendant)
File Number(s): 2022/280017
JUDGMENT
Introduction
1. These proceedings are brought by Gemi Nominees Pty Ltd (the Plaintiff) against Caroline Chamoun (the First Defendant) and Jack Chamoun (the Second Defendant). Ms Chamoun and Mr Chamoun have been married for 25 years.
2. On 29 March 2021, the Plaintiff entered into an agreement with the Defendants and a company associated with them called Croydon Automotive Repairs Pty Ltd (the Borrower). I will refer to the agreement as the Facility Agreement. Under the Facility Agreement the Plaintiff lent money to the Borrower. The Facility Agreement also contained a guarantee and indemnity from each of the Defendants for the repayment to the Plaintiff of the Secured Money and the performance of, and compliance by, the Borrower with all its obligations (the Guarantee).
3. To secure their obligations under the Guarantee, the Defendants granted to the Plaintiff a registered mortgage over two properties of which they are registered proprietors as joint tenants (the Mortgage). One of the properties is located at Cabarita, which is the residence of the Defendants. The other property is located in Croydon, and is a workshop from which the Borrower conducts its business.
4. Money advanced by the Plaintiff under the Facility Agreement was due to be repaid by 24 December 2021. It was not paid by that date. It has still not been paid. With the accrual of interest at the default rate specified in the Facility Agreement, the Plaintiff claims that, as at 24 May 2024, the amount originally lent (being the principal, pre-paid interest and fees) has increased to more than $2.6 million.
5. By these proceedings the Plaintiff seeks an order for possession of the properties at Cabarita and Croydon. The Plaintiff does not seek a judgment for the debt claimed under the personal covenant of either of the Defendants or the Borrower.
6. This judgment addresses three matters. First, it sets out the reasons for my decision on 27 May 2024 to dismiss the First Defendant’s application for an adjournment. Second, it sets out the reasons for my decision to dismiss a subsequent application by the First Defendant to re-open the case. Third, it sets out the reasons for the orders which I make in final disposition of the case.
Background
1. The proceedings were commenced by a Statement of Claim filed on 19 September 2022.
2. On 19 January 2023, the Defendants, who were at that time represented by a firm of solicitors called Madison Marcus, filed a Defence. On 7 February 2024, the Plaintiff filed a Reply to the Defence.
3. On 4 December 2023, the Defendants filed a Cross-Claim against the Plaintiff.
4. The pleadings closed on 21 February 2024 when the Plaintiff filed a Defence to the Cross-Claim.
Issues in the case
1. The best way to outline the real issues to be resolved in the proceedings is not by reference to the allegations in the Statement of Claim but by reference to the admissions in the Defence. The admissions were repeated in the written outline of submissions lodged on behalf of the First Defendant on 23 May 2024.
2. All of the following matters are admitted by the Defendants:
1. on or about 29 March 2021, the Borrower entered into a Facility Agreement with the Plaintiff;
2. in performance of the Facility Agreement, on or about 30 and 31 March 2021, the Plaintiff advanced $400,000.00 to the Borrower;
3. the Borrower did not repay the money to the Plaintiff by 24 December 2021 “or at all”;
4. on or about 29 March 2021, the Defendants entered into the guarantee and indemnity “guaranteeing and indemnifying [the Plaintiff] against all obligations of [the Borrower] under the Facility Agreement” – as set out above, the guarantee and indemnity were contained in the Facility Agreement to which the Defendants were also parties; and
5. the Defendants’ liability for the Secured Money was secured over the Cabarita property and the Croydon property.
1. As set out below, on 22 July 2024 the First Defendant served a proposed Amended Defence. None of the admissions were withdrawn.
2. For the purposes of the relief claimed by the Plaintiff in these proceedings (an order for possession), it does not matter what amount was actually advanced or how much is actually due so long as it is more than zero. The Defendants admit that $400,000.00 was advanced. In fact, the Facility Agreement provided for an initial advance of $609,398.50 which was made up of the $400,000.00 plus $209,398.50 retained by the Plaintiff as pre-paid interest and fees.
3. The Defendants further admit that the documents relied upon by the Plaintiff as the necessary default notices and demands under the Facility Agreement (including the Guarantee) have been issued, as alleged by the Plaintiff. In their Defence, the Defendants positively contend that the documents were “not issued in accordance with the Agreement”, but paragraphs 9 and 10 of the particulars provided in the letter dated 29 March 2023 from Madison Marcus to the Plaintiff’s solicitors make clear that that contention does not add to the substantive allegations made elsewhere in the Defence, namely that the Borrower’s failure to repay the borrowed money did not enliven the Plaintiff’s right to issue default notices and demands because it was not a breach of the Facility Agreement. If there has been an operative breach of the Facility Agreement, there is no dispute that the necessary notices and demands have been issued.
4. The Defence includes an allegation to the effect that, in addition to the money lent on or about 30 and 31 March 2021, the Plaintiff had a contractual obligation to advance Tranche 2 of another $400,000.00, which the Plaintiff failed to do. This allegation is set out in paragraphs 9 and 10 of the Defence in terms which lack specificity. The essential argument appears to be that the failure to advance Tranche 2 was an anterior breach of the Facility Agreement by the Plaintiff, which relieved the Borrower of its obligation to repay the money which had already been lent. As pleaded, the legal basis for that is unclear. In any event, it is pleaded that the Borrower’s (continuing) failure to repay the borrowed money is not a breach of the Facility Agreement.
5. When counsel for the First Defendant opened his client’s case on the first day of the hearing on 24 May 2024, he properly accepted that, even if the Plaintiff did breach the Facility Agreement by failing to advance Tranche 2, the Borrower was still liable to repay the money which it had already received. As a result, the relevance of any such breach by the Plaintiff is limited to the loss alleged to have been suffered by the Borrower being kept out of the further funds. Absent a claim for damages (there is none), any such loss is in turn relevant only to the set off defence.
6. It follows that there is only one matter which may be described as a real issue in the proceedings, namely the further contention by the Defendants that the Borrower has a set off for a total amount which exceeds the amount claimed by the Plaintiff. As stated above, the Defendants filed a Cross-Claim in which the allegations made and the relief sought are limited to establishing the set off.
7. Turning then to the set off defence, the First Defendant contends that there are four amounts which the Plaintiff owes, and which should be aggregated in reduction (and hoped for extinguishment) of the amount which the Borrower owes the Plaintiff. The precise entity to which the Plaintiff is said to owe each amount is unclear (whether it be the Borrower, the Defendants personally or another company to which the First Defendant is related), but that important (and probably fatal) difficulty can be put to one side for now.
8. The four sums are pleaded in the Defence filed on 19 January 2023 and are expanded upon in the Cross-Claim filed on 4 December 2023. As summarised in paragraph 26 of the Cross-Claim, and as articulated in opening, the four sums are:
1. $180,000.00, which was paid by the Defendants to the Plaintiff in order to have caveats removed from a property at Lidcombe which another company associated with the Defendants planned to sell under a different transaction;
2. $90,845.87, which is half the prepaid interest claimed by the Plaintiff under the Facility Agreement up until 24 December 2021;
3. $287,076.30, which was paid to the Plaintiff as surplus proceeds from the sale of the Defendants’ property at Double Bay; and
4. $490,000.00, which is said to have been lost by a related company when it forfeited the deposit it had paid for a property at Auburn because it was unable to complete once the Plaintiff failed to advance Tranche 2 - this appears to be loss referred to in [17] above.
1. The total of the four amounts is $1,047,922.17.
2. Mathematically, even if the Borrower is entitled to a set off (which the Plaintiff disputes) it is unclear how the total amount owed by the Borrower will be extinguished. Apart from that which may be implicit in [20(2)] above, until 23 July 2024 the Defendants did not raise any dispute about the quantum claimed by the Plaintiff. As stated above, the Plaintiff claims that the amount due under the Facility Agreement has increased to more than $2.6 million. As was her right, the First Defendant wanted to put the Plaintiff to proof of the amount it claims, notwithstanding the provision in the Facility Agreement which permits certain officers of the Plaintiff to give a lender’s certificate. Even so, at the trial on 24 and 27 May 2024 the First Defendant accepted that the Plaintiff will be entitled to an order for possession unless the amount owed by the Borrower is completely extinguished. A reduction, even a substantial reduction, will not suffice for the Defendants’ purpose in these proceedings.
3. It is further unclear how the Defendants’ say that a set off might be claimed in circumstances where cl 3.4 of the registered Memorandum provides:
“All money payable by any Obliger under this Mortgage must be paid… In cleared funds without set-off or counterclaim and free of all deductions…”.
Such a clause presents a significant obstacle to the Defendants where (as here) the Plaintiff seeks an order for possession: see Commonwealth Bank of Australia v MLD Financial Services Asset Management Pty Ltd [2015] NSWSC 1476 at [50]-[53] (Davies J).
1. In any event, by virtue of the admissions made by the Defendants and the nature of the set off defence, the Defendants were in substance the moving parties on the real issue which was to be determined at the hearing. The Defendants bear the onus of establishing each of the four sums they claim constitute the set off. By introducing the set off as an issue in the proceedings, the Defendants were under a duty to assist the Court to further the just, quick and cheap resolution of that issue by participating in the processes of the Court: s 56(3) of the Civil Procedure Act 2005 (NSW). To that end, the Court Book prepared in accordance with the relevant Practice Note, PN SC CL 6, included an Affidavit dated 27 October 2023 sworn by the First Defendant and an Affidavit dated 27 October 2023 sworn by the Second Defendant which addressed the factual basis for these claims.
Conduct of the trial
1. On 6 February 2024, the case was fixed for hearing for two days to commence on 24 May 2024.
2. On 9 February 2024, the case was listed for directions, on which occasion the Usual Order for Hearing was made.
3. On 19 March 2024, Madison Marcus, the solicitors which hitherto had acted for the Defendants, filed a Notice of Intention to File a Notice of Ceasing to Act. On 17 April 2024, Madison Marcus filed a Notice of Ceasing to Act.
4. The case was listed for further directions on 23 April 2024. The Defendants did not appear. Shortly before the time listed for the directions hearing, the First Defendant sent an email to the associate to the Judge before whom the case was listed and copied to the solicitors acting for the Plaintiff. The email stated:
“Dear All,
I am writing to inform the court that my husband, Jack, and I regretfully cannot attend the directions hearing scheduled for today at 2:00 pm.
We are currently in the process of organising funds to engage a legal representation, which is necessary for our case.
We understand the importance of this hearing and apologise for any inconvenience our absence may cause.
We kindly request the court’s understanding and would appreciate any guidance on how to proceed given our circumstances.
Thank you for your attention to this matter.
Many Thanks,
Jack & Caroline Chamoun”
1. No orders were made at the directions hearing on 23 April 2024 other than to confirm the hearing date, reserve the costs and to grant liberty to apply on two days’ notice.
2. On 20 May 2024, a Notice of Appointment of Solicitor was filed by a firm called Longton Legal by which a member of that firm announced his appearance for the First Defendant. He did not appear for the Second Defendant. The Second Defendant has thus been unrepresented since 17 April 2024. As will be seen, the Second Defendant has not taken an active part in the proceedings since that date.
3. As contemplated by the Usual Order of Hearing (albeit late), on 23 May 2024 a written outline of submissions was received from each of counsel for the Plaintiff and counsel for the First Defendant. No written submissions were received from the Second Defendant.
4. When the case was called for hearing at 10:00am on 24 May 2024, counsel appeared for the Plaintiff and counsel appeared for the First Defendant. The case was called outside the courtroom, but there was no appearance for the Second Defendant.
5. From the bar table, counsel for the First Defendant informed the Court that the First Defendant was in hospital. It was not known how long she would be there nor was it known what her condition would be in the following days, including on Monday, 27 May 2024. Counsel for the First Defendant had been briefed only days before. Without sufficient instructions, counsel could not conduct the cross-examination of the witness to be called by the Plaintiff. The First Defendant was also required for cross-examination on her Affidavit, for which an estimate of 30 minutes was given. The First Defendant’s absence was therefore a looming obstacle to the conduct of the hearing.
6. Counsel for the First Defendant further informed the Court that his instructing solicitor was in contact with the Second Defendant, albeit through the Second Defendant using the First Defendant’s mobile telephone, from which it may be inferred that the Second Defendant was co-located with the First Defendant.
7. At this early point, a short adjournment was granted so that the parties’ legal representatives could discuss the recent developments and consider their respective positions. Upon resumption, the hearing commenced. Subpoenas for production were called upon and answered and access orders made. Each of the Plaintiff and the First Defendant opened their respective cases and all the objections to the Affidavits were heard and decided. Apart from foreshadowed objections to the relevance of some unidentified parts of the Plaintiff’s Affidavits, counsel for the First Defendant took no objections. By approximately 2:30pm, the hearing had progressed to the point where the Plaintiff wished to call its witness. The First Defendant was still not present in Court. Counsel for the First Defendant applied for an adjournment until 10:00am on Monday, 27 May 2024. The application was neither opposed nor consented to by the Plaintiff. The adjournment was granted.
8. Shortly before the adjournment was granted, the following exchange occurred between counsel for the Plaintiff and the Bench:
“SOMERVILLE: There is perhaps another issue that arises when one considers what happens on Monday and the quality of the medical evidence that might then be required to justify if any adjournment application or anything of that nature.
HIS HONOUR: I think we need something pretty solid by Monday.
SOMERVILLE: So do I, with respect.
HIS HONOUR: Yes.”
Adjournment application
1. At 10.00am on Monday, 27 May 2024 the hearing resumed. The First Defendant was again absent from court although she was again represented by counsel. There was no appearance for the Second Defendant.
2. Counsel for the First Defendant made an oral application for an adjournment. Although it was not expressly stated, the intent of the application was that the hearing be adjourned part heard to a date in the future.
3. In support of the application the First Defendant relied on the following evidence:
1. a short Affidavit from her solicitor dated 27 May 2024, all of which was admitted into evidence over the Plaintiff’s objection;
2. an email to her solicitor from Dr Elizabeth Zhang which was sent on 27 May 2024 at 7:13am; and
3. fourteen pages of sequential text messages and attached photographs which had been sent between the First Defendant’s telephone and the telephone of her solicitor; the text messages commenced early on the morning of Friday, 24 May 2024 and ended at 9:29am on Monday, 27 May 2024.
1. Before summarising the facts established by this material, it is important to bear in mind the relevant provisions of PN SC CL 6, namely paragraphs 43 to 45:
“Adjournment
43. To ensure efficient use of Court time, proceedings fixed for trial will not normally be adjourned unless special circumstances have arisen which could not have been foreseen.
44. An application for adjournment requires supporting Affidavits.
45. An application for adjournment will not usually be granted unless the party on whose behalf the application is made is present at the time the application is made or has sworn an Affidavit verifying that that party is aware of the reasons for the application and identifying those reasons.”
1. In this respect, PN SC CL 6 reads harmoniously with s 56(2) of the Civil Procedure Act which requires the Court to give effect to the overriding purpose when it exercises any power given to it by the statute, including the power under s 66 to grant an adjournment. In particular, paragraph 43 of PN SC CL 6 reflects the requirement in s 57(1) that regard be had to the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources and the timely disposal of all proceedings in the Court, not just the present proceedings. Whilst paragraph 45 of the practice note has not been complied with in this case, I was satisfied that the First Defendant was aware that the application was being made and the reasons for it. The adjournment should not be refused for want of compliance with paragraph 45.
2. The First Defendant’s evidence itemised in [39] above established the following facts:
1. at about 7:00am on Friday, 24 May 2024, the First Defendant was taken to Concord Hospital in an ambulance where she was admitted;
2. at about 7:00am, the Second Defendant stated in a text to the First Defendant’s solicitor that the First Defendant had a “cardiac issue”;
3. at 9:13am, the Second Defendant stated in a text to the First Defendant’s solicitor that “[i]t’s more likely it’s blood clotting…” and “…her blood pressure still very high…”;
4. at that time, the First Defendant’s solicitor made the first of five requests that a “report” or similar be obtained from a doctor;
5. at 12:05pm on 24 May 2024, a document entitled “SLHD Inpatient Front Sheet” was generated which included the text “Pres Problem/Reason for Visit: Pain, chest”, which it may be inferred is a record of the information which the First Defendant gave to the hospital staff when she was admitted;
6. at 2:45pm on 24 May 2024, the Second Defendant stated in a text that he expected the “specialist” would come around between 3:00pm and 4:00pm;
7. at an unspecified time on 24 May 2024, a registered nurse completed an “Attendance Certificate” which stated that the First Defendant attended the Emergency Department on 24 May 2024;
8. at an unknown time before 3:43pm on Sunday, 26 May 2024, the First Defendant was admitted to the Emergency Department of Westmead Hospital;
9. at 3:43pm on Sunday, 26 May 2024, the First Defendant’s solicitor sent her a text and made his third request for “…a report from a doctor to give the judge to try and seek an adjournment.”;
10. at 6:00am on Monday 27 May 2024, the First Defendant’s solicitor sent her a text and made his fourth request for “…a letter or report from Doctor or hospital confirming that you are still there”;
11. at 6:25am, the solicitor for the First Defendant had a telephone conversation with the First Defendant and “a female who identified themselves as ‘Rien’ a nurse in the employee of Westmead Hospital”, during which both stated that the First Defendant had suffered a “mini stroke” and that the First Defendant “is under the care of a vascular specialist and neurologist.”;
12. at 7:13am on 27 May 2024, Dr Elizabeth Zhang sent an email to the solicitor acting for the First Defendant to which was attached a document entitled “Emergency Department Summary” which was apparently prepared by Dr Zhang, and stated:
“Attendance Certificate
This is the certify that CAROLINE CHAMOUN of [xxx] Street, Cabarita has attended Westmead Hospital as an Inpatient on 26-05-2024 and remains in hospital on 27-05-2024 for ongoing management of her medical issues.
Name
Dr Elizabeth Zhang
Designation
ED Registrar
Contact
8890555
Patient Location
WESTMEAD HOSP WE W.K1 ESSU”
1. at 9:29am on 27 May 2024, the First Defendant sent a text to her solicitor in which she stated, “…I’ve sent what I can! they wouldn’t allow me to send anything before discharge. I will try aging (sic) with another dr” and “Let me know if you need more and I will get Jack to demand it.”; and
2. the First Defendant’s solicitor replied to this text and made his fifth and final request: “We do need more. Please get a report from a doctor saying what is wrong and how long you will be there”.
1. The core factual issue thrown up by the adjournment application was whether the First Defendant was unable to attend court to provide instructions and to be cross-examined on 27 May 2024. As the applicant for the adjournment, the First Defendant’s inability to attend was a matter which she had to prove. By virtue of s 75 of the Evidence Act 1995 (NSW), the hearsay rule did not apply to her evidence so long as she also adduced evidence of the source. By virtue of s 66A, the hearsay rule did not apply to evidence of a previous contemporaneous representation made by the First Defendant about her own health.
2. Nonetheless, there remained a question of what weight was to be given to the evidence and what inferences were to be drawn from the evidence as a whole.
3. The following matters are to be observed. First, none of the evidence explicitly addressed the core factual issue. In Bobalas v Waverley Council [2016] NSWCA 139 at [221], McColl JA, (Simpson JA and Sackville AJA agreeing), said:
“A medical certificate relied upon to demonstrate a litigant is unable to attend court must address the ‘critical question whether, and if so why, the medical condition would prevent the [litigant] from travelling to the Court and participating effectively in a court hearing.’”
1. There was no statement from the First Defendant, the Second Defendant, the “specialist”, the registered nurse who signed the Attendance Certificate on 24 May 2024, “Rien”, the vascular specialist, the neurologist or Dr Zhang that the First Defendant could not attend court. The First Defendant left the proof of the “critical question” to inferences to be drawn from the other matters which were referred to in her evidence.
2. Second, the basis for the statements about the First Defendant’s condition which were made by the Second Defendant on the morning of 24 May 2024 was not revealed. There is no suggestion that the Second Defendant has any medical training. The Court Book contains an Affidavit sworn by the Second Defendant on 27 October 2023 in which he specified his occupation as “mechanic”, which occupation appeared to be common ground between the Plaintiff and the First Defendant when the case was opened. There is evidence that the Second Defendant expected the “specialist” to come around between 3:00pm and 4:00pm on 24 May 2024, from which it may be inferred that the Second Defendant was privy to some medical input from that time onwards. There is no evidence of the Second Defendant making any statements about the medical condition of the First Defendant after that input. Counsel for the Plaintiff submitted that no weight could be given to statements by the Second Defendant in circumstances where no Affidavit from the Second Defendant was read in support of the adjournment application and no explanation was given for that omission. I accept that submission.
3. Third, no evidence was adduced to explain the fact that the First Defendant was in Concord Hospital on 24 May 2024 but was then admitted to the Emergency Department of Westmead Hospital at some time on 26 May 2024. Although unclear, it would appear that the First Defendant was discharged from Concord Hospital on 24 or 25 May 2024, from which it may be inferred that there was nothing in her medical condition which required her to remain in hospital at that time. None of the paperwork which was generated at any such discharge (see below) was adduced into evidence on 27 May 2024.
4. Fourth, there is no evidence that the First Defendant was in hospital on Saturday, 25 May 2024.
5. Fifth, the basis for the statements made by “Rien” on the morning of 27 May 2024 was not revealed. Whilst “Rien” identified herself as a nurse, it was still necessary for the basis of her statements to be identified before any material weight could be given to them. This is especially so when the only evidence of her statements was the Affidavit affirmed by the solicitor for the First Defendant. The evidence was the deponent’s understanding and/or analysis of what was said by “Rien”. In any event, the evidence was so lacking in detail as to deprive “Rien’s” statements of any meaning. Whilst it may be accepted that the words “mini stroke” were uttered, nothing was revealed about the time or nature of that episode or the implications of it other than the statement that it “affected” the “use” of the First Defendant’s hand in some unspecified way. Counsel for the First Defendant fairly accepted that the statement by “Rien” about the First Defendant’s medical condition did not prove the fact. The statement that the First Defendant was under the care of a vascular specialist and neurologist said nothing about the First Defendant’s ability to attend court and give evidence on 27 May 2024.
6. As stated above, whilst s 66A of the Evidence Act provides that the hearsay rule does not apply to the First Defendant’s statements about her own health, consideration still needed to be given to the weight to be attributed to those statements, and what inference could be drawn from those statement about her ability to attend court.
7. Sixth, the statement by Dr Elizabeth Zhang that the First Defendant remained in hospital “for ongoing management of her medical issues” was so lacking in detail as not to have material probative value on the question whether the First Defendant was able to attend court and give evidence on 27 May 2024: see Magjarraj v Asteron Life Limited [2009] NSWSC 1433 at [20],[22] (Barrett J).
8. Seventh, and importantly, regard had to be had to the absence of any report from a doctor or other health professional about the medical condition of the First Defendant. The solicitor for the First Defendant made five requests for such a report. The first request was made as early as 9:13am on 24 May 2024. The First Defendant’s evidence demonstrates that there was opportunity for some kind of report or statement to be obtained from a doctor familiar with her medical condition. In this regard:
1. The First Defendant attended Concord Hospital on 24 May 2024 where it may be inferred she received some attention from doctors (tests were ordered), including the “specialist” who the Second Defendant expected to come around between 3:00pm and 4:00pm.
2. The First Defendant did obtain an “Attendance Certificate” from a registered nurse on 24 May 2024. The Attendance Certificate was prepared on a pro-forma document which contemplated that an alternative certificate might have been issued, namely a “Medical Certificate”. A Medical Certificate would have addressed the “fitness” of the First Defendant and identified the condition for which the First Defendant was “treated”. Whilst a Medical Certificate had to be completed by “registered health service providers, including Medical Officers”, the availability of a pro forma document suggests that, even for a busy doctor, it would have been a simple matter for such a certificate to be issued if it had been medically accurate to do so. A Medical Certificate which did no more than address the First Defendant’s fitness for work would have had little probative value for the critical question of whether, and if so why, her medical condition prevented her from attending court, but it may have been better than nothing.
3. As stated above, there was no evidence that the First Defendant was in hospital on Saturday, 25 May 2024 and there is no evidence as to why the First Defendant did not attend a GP in order to obtain, at the very least, a Medical Certificate, especially given the urging from her solicitor.
4. The First Defendant attended Westmead Hospital on 26 May 2024 and was still there on 27 May 2024. It may be inferred that she received some attention from doctors, including the vascular specialist and neurologist referred to by the First Defendant and “Rien” in their telephone conversation with the First Defendant’s solicitor on 27 May 2024. It may also be inferred that she was seen by Dr Zhang. No report or certificate was produced from any of these doctors, other than Dr Zhang’s “Attendance Certificate” referred to above at [41(12)].
1. No explanation was given as to why a report from a doctor was not adduced into evidence in support of the adjournment application. The text sent by the First Defendant at 9:29am on 27 May 2024 did not provide an explanation. It raised more questions than it answered. An explanation was warranted, especially given the requirements of PN SC CL 6, the events in court on Friday, 24 May 2024 as set out at [31]-[36] above, and the First Defendant’s solicitor’s early and repeated requests that a report be obtained. The report did not have to be extensive. The failure of the First Defendant to adduce any report into evidence gives rise to an inference that she was unable to obtain a report which demonstrated an inability on her part to attend court and give evidence on 27 May 2024.
2. As to the objective facts, there was evidence that tests were carried out on the First Defendant at Concord Hospital but no evidence about the results of the tests. There was no evidence of any diagnosis, let alone any prognosis. There was no evidence that she received any treatment either at Concord Hospital or Westmead Hospital. Other than for sleep, there was no evidence that the First Defendant was prescribed any medication. There was no explanation why no evidence was adduced about any of these matters.
3. In view of the evidence as a whole, I was not satisfied on the balance of probabilities that the First Defendant was unable to attend court and give evidence on 27 May 2024. In reaching that conclusion, I have had regard to the gravity of the matters raised by the application, including a failure by the First Defendant to attend court and the consequences for the First Defendant if the adjournment application did not succeed.
4. In those circumstances, the basis for the adjournment put forward by the First Defendant was not made out. In the language of paragraph 43 of PN SC CL 6, the First Defendant did not prove that special circumstances had arisen which could not have been foreseen.
5. Also relevant to the adjournment application was the prejudice which would be caused to the Plaintiff if the hearing did not proceed. The Plaintiff has been kept out of the lent money since 24 December 2021. Although the Plaintiff has a contractual entitlement to default interest on that money calculated at the then unchallenged rate of 48% per annum, an accumulation of unpaid interest will only protect the Plaintiff from the prejudice from delay if the Plaintiff is able to recover the full amount of its entitlement. Whilst the Plaintiff is secured by the Mortgage over the Cabarita property and the Croydon property, the LRS searches for those properties showed that there are other secured lenders with priority over the Plaintiff. There was no evidence about the Defendants’ equity position. The evidence did not reveal whether the Plaintiff will be able to recover and, if so, to what extent.
6. As far as the allocation of the Court’s scarce resources is concerned, the case was listed for a final hearing on 24 and 27 May 2024. An adjournment of the hearing to an unspecified and as yet unknowable date would mean that the two days have been largely wasted. A further hearing date will have to be allocated which would otherwise be available to hear another case before the Court. This is undesirable in circumstances where the current case would otherwise be concluded in the allotted time.
7. Having regard to all these matters and the overriding purpose by which the power to grant an adjournment is to be exercised, I dismissed the First Defendant’s application for an adjournment.
Conclusion of the trial
1. Upon the dismissal of the adjournment application, counsel for the First Defendant sought a short adjournment to seek further instructions. An adjournment of 30 minutes was granted, following which counsel for the First Defendant informed the Court that his retainer had been terminated. He then withdrew. The solicitor for the First Defendant informed the Court that his retainer had also been terminated and he sought leave under Uniform Civil Procedure Rules 2005 (NSW) r 7.29(2) to withdraw. The solicitor for the First Defendant had been in direct contact with his client. A primary purpose of UCPR 7.29(2) is to provide protection for a solicitor’s client, which protection is unlikely to be necessary where the client has expressly terminated the solicitor’s retainer. In the circumstances of this case, I granted leave and the solicitor for the First Defendant withdrew.
2. Whilst the First Defendant’s legal representatives were present in the court, I adjourned the hearing until 2:00pm to permit the Plaintiff to consider the recent development.
3. Upon resumption of the hearing at 2:00pm, there was no appearance for the First Defendant. As was the case on all previous occasions, there was no appearance for the Second Defendant. Counsel for the Plaintiff stated, and subsequently read an Affidavit by his instructing solicitor to prove, that steps had been taken at or about 1.30pm to inform the absent Defendants by both text and email about the continuation of the hearing. No response had been received from the Defendants. In any event, the further notification was unnecessary because the evidence tendered on the adjournment application made it clear that both Defendants were aware that the hearing was listed and proceeding. The prompt termination of the retainers of her legal representatives made clear that the First Defendant was aware the adjournment application had failed.
4. The hearing therefore proceeded in the absence of the Defendants. The Plaintiff moved on the Statement of Claim filed on 19 September 2022 and read three Affidavits by Michael Cooper dated 8 August 2023, 7 February 2024 and 14 May 2024. The Plaintiff also tendered a lender’s certificate issued under cl 24.1 of the Mortgage Memorandum. The certificate certified that the amount payable to the Plaintiff under the relevant Mortgage was $2,639,532.79 as at 24 May 2024.
5. The evidence establishes that on 29 March 2021, the Plaintiff and the Borrower entered into a Facility Agreement pursuant to which the Plaintiff promised to advance money to the Borrower in accordance with the terms of the Facility Agreement. Each of the Defendants was also a party to the Facility Agreement as a guarantor and as a mortgagor of the properties at Cabarita and Croydon.
6. The terms of the Facility Agreement were contained in a number of documents including Registered Mortgage AR785151 which incorporated the provisions of Registered Memorandum AQ889375. By cl 3.1(a) of the Memorandum, each Obligor (which included the Borrower and each Defendant) promised to pay the Secured Money to the Plaintiff by the end of the Term, which concluded on the Final Payment Date, namely 24 December 2021. The Secured Money was made up of a number of elements, including the Principal Amount as specified in Schedule A. The Principal Amount specified in Schedule A was $1,009,398.50 to be advanced in two tranches, Tranche 1 being $609,398.50 on the Commencement Date. Tranche 2 was to be advanced in the Plaintiff’s “sole discretion”.
7. Pursuant to cl 28.5 of the Memorandum, each of the Defendants guaranteed to the Plaintiff the performance of the Borrower’s obligations. Under cl 28.7, it was agreed that if the Borrower failed to pay the Secured Money, the Plaintiff could demand that the guarantors pay the amount which the Borrower had failed to pay. Pursuant to cl 28.14 the liability of the guarantors was joint and several.
8. On 30 and 31 March 2021, the Plaintiff advanced Tranche 1 by way of a payment of $400,000.00 to the Borrower and applied other money by way of prepaid interest and fees.
9. The Borrower did not repay any money by 24 December 2021, or at any time thereafter. Neither of the Defendants has made any payment to the Borrower.
10. Pursuant to cll 18.1 and 18.2 of the Memorandum, the parties agreed that an event of default would occur if the Borrower failed to pay the Secured Money in accordance with the Facility Agreement. It follows that on 24 December 2021 an event of default occurred.
11. Pursuant to cl 18.3, the parties agreed that if an event of default occurred, the Plaintiff could demand the immediate payment of the Secured Money and the Borrower and each guarantor indemnifier would be obliged to repay the Secured Money to the Plaintiff in accordance with that demand. Further, the Plaintiff would be entitled to exercise any right, power or privilege conferred on it by the mortgage, whether under legislation or at common law or in equity and take possession of and eject any occupants from the mortgaged property.
12. On 20 July 2022, the Plaintiff issued notices by which it notified each of the Borrower and the Defendants of the breach and demanded payment of the Secured Money.
13. As set out above, none of these demands has been met.
14. In the circumstances, the Plaintiff made good its entitlement to an order for possession of the Cabarita property and the Croydon property under cl 18.3 of the Registered Memorandum and s 60(c) of the Real Property Act 1900 (NSW).
Cross-Claim
1. On 24 May 2024, counsel for the First Defendant accepted that the Plaintiff was entitled to the claimed relief unless the First Defendant succeeded on her set off defence. As set out above, on 4 December 2023 the Defendants filed a Cross-Claim in which they sought declarations as to their entitlement to certain sums said to constitute a set off. Given the Defendants’ ultimate failure to appear at the hearing, no evidence was adduced to make good the alleged set off.
Events subsequent to the trial
1. At the conclusion of the trial on 27 May 2024, judgment was reserved.
2. On 5 June 2024 my chambers received an email directly from the First Defendant. It read:
“To The Honourable Associate Justice Faulkner.
For completeness, I have copied in the Plaintiff to the proceedings. I hope this email finds you well. Attached to this email, you will find all relevant documents that substantiate proving my claim of Perjury. This evidence is integral to ensuring a fair and just resolution of the case. I respectfully request that Your Honor consider allowing this evidence to be admitted in the interests of justice and to uphold procedural fairness.
Many Thanks,
Caroline Chamoun”
1. There was some material attached to the email, the contents of which have not been accessed.
2. In response to the email, the case was listed for directions on 7 June 2024. On that occasion the First Defendant appeared in person. There was no appearance for the Second Defendant.
3. After hearing from the parties, the following orders were made:
“1. Any notice of motion for leave to reopen the case and/or for any other procedural orders which the First Defendant and/or the Second Defendant seek, together with any Affidavit relied upon by the First Defendant and/ or the Second Defendant to demonstrate why she/he or they contend that leave should be granted and/or the orders ought to be made, must be filed and served by 4pm on Friday, 21 June 2024.
2. The matter is listed for further directions at 9.30am on 27 June 2024 before Faulkner J.
3. Costs reserved.
4. First Defendant to provide the Second Defendant with a copy of these orders.”
1. The First Defendant did not comply with Order 1. On 21 June 2024 my chambers received another email sent directly from the First Defendant. It read:
“Dear All,
I am writing to respectfully request an extension of the deadline for filing a notice for leave to reopen the case in the above-referenced matter until 5:00 PM on Tuesday, 25 June 2024.
This extension is necessary as I only recently engaged legal counsel, and they require time to properly review my case and prepare the necessary documents.
The additional time will ensure that all pertinent information is accurately and thoroughly presented to the court without prejudicing the other party, as the matter is listed for a Directions Hearing on 27 June 2024.
We believe that granting this extension will serve the interests of justice by allowing a complete and fair consideration of all relevant materials and circumstances that we intend to file in the upcoming days.
Thank you for your consideration of this matter. We appreciate your understanding and assistance in ensuring that this case proceeds with all necessary information before the court.
Many Thanks,
Caroline Chamoun”
1. It appeared that a new solicitor was retained by the First Defendant about this time.
2. On 26 June 2024 a Notice of Motion was filed by the First Defendant in which her solicitor was identified as Adwar Alkhamesi. The following orders were sought in the Notice of Motion:
“Orders Sought:
1. That the First Defendant be granted leave for the case to be reopened.
2. That the First Defendant be granted leave to present new evidence as per the Affidavit of Caroline Chamoun sworn on 26 June 2024.
3. That the First Defendant be granted an opportunity to plead and run the case.
4. That the First Defendant be given an opportunity to amend their pleadings.
5. That the costs of this motion be reserved.
6. Such further or other orders as the Court deems appropriate.”
1. The Notice of Motion was accompanied by an Affidavit sworn by the First Defendant on 26 June 2024. At a high level, the Affidavit addressed the First Defendant's health.
2. The First Defendant says in her Affidavit that there are “two doctors who are familiar with [her] medical history” but one is no longer working at her local medical centre and the other was unavailable until July. The First Defendant says that these are the only two doctors who can provide a report regarding her medical condition.
3. The Affidavit stated that the First Defendant was unable to attend court on 24 and 27 May 2024 “due to health reasons”. The First Defendant is on medication for depression, high cholesterol and high blood pressure. In the morning on 24 May 2024, the First Defendant was very nervous and stressed, started to vomit and could not breath afterwards. She went to Concord Hospital where tests were carried out after which she was kept overnight to monitor blood pressure. She was discharged on Saturday 25 May 2024 and advised to get an MRI the following week. She was advised to call an ambulance if her symptoms returned.
4. Annexed to the Affidavit is a five page document from Concord Hospital which is headed “Final Report”. The author is Farnaz Omidi who is described as a “Consultant”. The document was printed at 8:41am on 25 May 2024 which suggests that the First Defendant was discharged from Concord Hospital first thing on Saturday 25 May 2024. The document contains a lot of medical terms and abbreviations. It appears that tests were undertaken. The admission summary is set out on page one of five as follows:
“patient presented with sudden onset chest discomfort with shortness of breath on a background of having numbness, cramping in her lower limb for 2/7 days. More details as below. Patient was given aspirin by the ambulance members that have improved the pressure in her chest. On examination, patient did not have any obvious swelling, redness or tenderness in her left calve or thigh region. Her bloods were unremarkable with a normal serial trop and negative D-dimer. Serial ECG and CXR was also normal. Patient has been advised to take simple analgesia for the discomfort in her leg. GP to refer to cardiology if ongoing symptoms of chest discomfort. Patient to represent to ED if worsening of symptoms.”
1. According to the Affidavit, on Sunday 26 May 2024 the First Defendant’s heart rate increased and she could not feel the left side of her body. She went to Westmead Hospital “where they wouldn’t let [her] leave”. They suspected a “mini-stroke” which required further investigation. The First Defendant also required an MRI and a specialist appointment with the first available date being in mid-late July 2024.
2. Also annexed to the Affidavit is a five page document from Westmead Hospital which is headed “Discharge Summary” prepared by Phillip Adrian Smith who is described as a “Medical Officer”. On page one of five, the document is dated “26 May 2024 23:20 AEST” which suggests that it was prepared just before midnight on Sunday 26 May 2024. The print date for the copy of the document attached to the First Defendant’s Affidavit is 27 May 2024 at 7:07pm. The discharge plan is as follows:
“Plan
1. Aspirin 100mg daily - can be purchased without script from chemist.
2. Rapid access neurology clinic follow up - please attend this appointment. The clinic will call you within the next 1 week with appointment times. If you do not hear form them within the week, please contact the clinic’s secretary Lynn on (02) 9845 6792. E
3. MRI brain - forms provided. Please attend this before your clinic appointment
4. Please return to ED if you have a return of your symptoms or if you are otherwise very concerned.”
1. The First Defendant’s Affidavit also sets out her perceived difficulty with previous solicitors. There was nothing in the Affidavit which demonstrated that the various solicitors who have previously been retained by the First Defendant acted in anything other than a professional and competent manner. At a high level, the Affidavit refers to efforts made and difficulties encountered by the First Defendant in obtaining legal advice about the case.
2. The First Defendant's Affidavit also contained statements about "signature authenticity". The statements are fairly described as imprecise. As best as can be said, they do not relate to any issue in the proceedings as currently defined by the pleadings.
3. When the case came before the Court on 27 June 2024, counsel appeared for the First Defendant, apparently instructed by a solicitor. It was not the same counsel who had appeared for the First Defendant at the trial on 24 and 27 May 2024. The First Defendant was present in court. There was no appearance for the Second Defendant.
4. Counsel for the First Defendant informed the Court that he was not briefed in the substantive proceedings. Despite Order 4 in the Notice of Motion, he was not able to inform the Court what amendments the First Defendant wanted to make to her pleadings. The following orders were made:
“1. The First Defendant to serve a draft amended defence and a draft amended cross-claim on the Plaintiff, and provide copies to chambers by email, by 4pm on 15 July 2024.
2. Matter listed for further directions on 17 July 2024 at 9.30am before
Faulkner J.
3. Costs of today are to be reserved.”
1. The First Defendant did not comply with Order 1.
2. On 15 July 2024 the First Defendant sent an email directly to my chambers. It read:
“Dear All,
Since our last court appearance, I have unfortunately discovered that my bank accounts with CBA Bank have been frozen by court order, which I was not aware of.
This has prevented me from securing legal representation.
Since then, I have been actively seeking solicitors to assist me. Late on Friday night and over the weekend, I made initial contact with a law firm associated with LawPath. They are willing to take on my case. However, due to the limited time frame, we have not yet had the opportunity to confer in detail or brief Counsel.
They have suggested that I request a one or two-week adjournment to allow sufficient time to instruct them properly.
I understand that the Plaintiff may oppose this request. However, it is in the court's best interest to have my documents reviewed by both solicitors and Counsel. These proceedings concern the Plaintiff's attempt to take possession of my family home.
The delay caused by an adjournment is significantly less than the potential cost and delay of an appeal, which would result in my family losing our home.
Once I have instructed my solicitors, they will formally go on record and communicate directly with the Court and Summer Lawyers.
Thank you for your consideration and I appreciate your understanding.
Many Thanks,
Caroline Chamoun”
1. From the email it may be inferred that Adwar Alkhamesi no longer acted for the First Defendant. The Court file includes a Notice of Appointment of Solicitor dated 16 July 2024 in which a solicitor at Zed Law announced his appearance for the First Defendant.
2. On 16 July 2024 my chambers received an email from John Plumidis at Zed Law. It read:
“Dear [Associate] & Colleagues
Please note that an appearance will be via online court on behalf of Zed Law. We presently have instructions to assist the Court in respect of tomorrow’s directions only.
We will seek either an adjournment, or suitable directions, that will permit time for us to become fully instructed in the substantive matters before the court.
I can be contacted in the interim via [email protected] or 0448 214 000.
Kind regards,
JXP.”
1. On 17 June 2024 the case was again before the Court on which occasion Mr Plumidis appeared for the First Defendant. There was no appearance for the Second Defendant.
2. Mr Plumidis informed the Court that he had only just been retained and had not yet obtained full instructions. The burden of Mr Plumidis’ submissions was that the Orders made by the Court since 27 May 2024 were not complied with because the First Defendant lacked funds for solicitors. On the other hand, Mr Plumidis said that it was his understanding that the value of the Cabarita home exceeds $10 million. After submissions from both parties, I said:
“I will list the matter for judgment on the 25th of July, which is eight days, and I will indicate that if amended pleadings and an Affidavit explaining the delay are brought forward, and I won't make an order for them, it will be entirely a matter for the First Defendant, if they are brought forward then I will hear submissions on the 25th of July when the matter is listed for judgment and before I hand it down as to whether or not I should defer judgment.”
1. Ultimately the Plaintiff's counsel and solicitors had conflicting court commitments on 25 July 2024 and the case was listed for judgment on 23 July 2024.
2. At 3:00pm on 22 July 2024 my chambers received an email from Zed Law to which was attached a further Affidavit from the First Defendant dated 22 July 2024 together with a draft Amended Defence. There was also a short-written submission.
3. The Affidavit sets out further difficulties which the First Defendant has had with legal representation, including the departure of Adwar Alkhamesi on 28 June 2024 and the retainer of Zed Law on 15 July 2024. In relation to the First Defendant’s health, Annexure A to the Affidavit is page one of seven of a “Discharge Plan” for a discharge from Westmead Hospital on 19 July 2024. The summary is as follows:
“Caroline Chamoun is a 46-year-old woman who as admitted to Westmead Hospital under the care of Matthew Silsby (Neurologist). She initially presented to Westmead Emergency Department on 18/07/2024 with right sided facial weakness. A CT scan was performed showing no acute intracranial pathology. The likely cause of her presentation is Bell’s palsy, however an outpatient MRI must be performed to rule out any other pathologies. She was deemed safe for discharge with outpatient follow up as outlined below:
1. GP follow up in 1-3 days please to discuss your admission and review your medications. A plan for your GP is written below. Please bring this letter with you
GP to kindly:
- Review admission and patient progress
- Provide scripts for medications
- Please organise an outpatient MRI
- Please refer patient to their regular neurologist for follow up
2. Neurology
- Acquire a referral to your regular neurologist from your GP
- Please perform an outpatient MRI prior to the appointment
3. Medications
Prednisone 70mg daily for 5 days
A script has been provided”
1. Pages two to six were not attached to the Affidavit. Also annexed to the Affidavit is a printout from a generic website about Bell’s palsy. There is also a letter dated 27 May 2024 from “Nurse Manager, Outpatients, Westmead Hospital” in which the First Defendant was informed of an appointment for her to attend the Rapid Assessment Neurology Clinic on 23 July 2024.
2. The First Defendant states in her Affidavit that she is not able to “eat properly or see properly as the right side of [her] face is completely paralysed”. The Affidavit contains the First Defendant’s acceptance that the Court may require formal evidence from an independent medical expert about her health.
3. The Affidavit also contains some statements about the Plaintiff’s treatment of the First Defendant, which includes references to the amount certified as owning (more than $2.5m) and the interest rate of 48%.
Application for leave to re-open
1. The draft Amended Defence which was produced on 22 July 2024 is the same as the current pleading except that four new paragraphs have been added.
2. Those paragraphs read as follows:
"Additional Pleadings 23 July 2024
What is the balance of the debt?
36 In answer to the whole of the claim, the First Defendant pleads:
a. The relief claimed by the Plaintiff is discretionary;
b. The Plaintiff is required to quantify and itemise the debt that it claims, and the manner of calculation;
Particulars
Uniform Civil Procedure Rules 2005 regs 14.15(2)(b) & 14.15(2)(d) (vis requirements of pleadings; orders for possession of land)
c. [The Borrower] and its assets are now subject to administration or receivership;
d. The administrators and/or receivers were appointed by the Plaintiff;
e. The court does not presently have evidence of the amounts recovered by the administrators or receivers, and the calculation of interest based on those amounts;
f. The circumstances do not permit the Defendants a reasonable opportunity to satisfy the debt or negotiate repayment; and
g. The court’s discretion to provide the relief sought by the Defendant ought not be exercised until balance of the debt claimed by the Plaintiff and the method of its calculation are provided to the court.
Particulars
Uniform Civil Procedure Rules 2005 regs 36.15 to 36.17 (Slip Rule, etc)
Contracts Review Act 1980
37 In answer to the whole of the claim, the First Defendant additionally pleads the application of the Contracts Review Act 1980 (NSW) and equivalent federal legislation applicable to money lending and financial services.
Particulars
Uniform Civil Procedure Rules 2005 regs 14.15(3)(c)
38 It is unjust in the circumstances to enforce mortgages made a personal guarantee, for the sale of the guarantor’s family home and the Second Defendant’s principal place of business.
Particulars
1. The Plaintiff has recourse against the debtor company CAMR and against the Defendants in their personal capacities.
2. The Plaintiff is a second mortgagee, and the first mortgagee is not a party to the proceedings.
3. The Defendants’ 17 year old child lives at the family home, as do two other adult children.
4. Pleadings and other material provided by the Plaintiffs indicating that from approximately $400,000 advanced, a debt of $2.5 million accrued.
5. The Statement of Claim does not identify whether interest on the principal was charged compounding or simple.
6. It is unclear whether the debt claimed by the Plaintiff has been calculated at 24% p.a. compounded quarterly, or 48% compounded monthly.
7. A proper calculation of the extant debt will permit the parties to negotiate a settlement that does not require the sale of either or both properties.
8. The course of conduct undertaken by the Plaintiffs and articulated in the first crossclaim.
9. To be further particularised.
39 The First Defendant seeks a variation of the relevant land instruments, personal guarantees, and contract(s) between the Plaintiff and [the Borrower] so that that they are not unjust in the circumstances.
Particulars
1. The instruments and guarantees are amended so that the Plaintiff many not assert the debts against the Defendant’s home or place of business.
2. To be further partiularised [sic].”
1. No draft Amended Cross-Claim has been served.
2. When the matter was listed on 23 July 2024, Mr Plumidis appeared for the First Defendant. There was no appearance for the Second Defendant.
3. Mr Plumidis moved on the Notice of Motion dated 26 June 2024 and sought leave to file the Amended Defence.
4. Mr Plumidis’ measured but tenacious submissions may be summarised as follows:
1. the further material attached to the First Defendant’s Affidavit dated 22 July 2024 shows that the First Defendant was “unlikely to have been malingering” when she failed to attend court in May 2024 and there is “a real chance” that better medical evidence will become available that will explain her absence;
2. the changes in solicitor and the problems in obtaining legal advice may have contributed to the First Defendant’s failure to comply with the Court’s orders since 27 May 2024;
3. the First Defendant accepts that money is owing but she wants the case re-opened so she can cross-examine the Plaintiff’s witness about the amount which is owing; she is unable to ascertain the amount owed, particularly because the Plaintiff has appointed receivers to the Borrower who are realising assets in reduction of the amount due; the First Defendant needs an “accurate assessment” of the amount owing so that she can put forward an offer of settlement;
4. it is in the interests of justice that the First Defendant be able to defend the case by relying on the Contracts Review Act 1980 (NSW);
5. it is not clear from the submissions the extent to which the Contracts Review Act will be relied upon; it will be relied upon to challenge the Guarantee from the First Defendant but it may also be relied upon to challenge the amount of the debt;
6. one of the properties is the family home where the Defendants live with their three offspring, the youngest of which is 17; it was asserted that the offspring have standing to oppose the application for possession;
7. the second property secured by the Mortgage is the location of the principal place of business and the First Defendant ought not be deprived of the property because she needs income to repay the debt; and
8. there is no prejudice to the Plaintiff because it is a well-resourced financial firm and it continues to accumulate interest.
1. For a claim under the Contracts Review Act the First Defendant relies on the case of Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd [2023] NSWSC 1079. In that case a couple granted a guarantee and a mortgage to secure repayment of a short term loan which had been made to their company. The interest rate was 72% once the default had occurred. Under the loan contract unpaid interest was compounded monthly. At first instance, Davies J held that there would be no basis for relief under the Contract Review Act merely because the interest rate was 72% per annum: Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd at [64]-[69]. However, Davies J held that the combination of the high interest rate and the monthly compounding of interest made the contract unjust. At the interest rate charged in the Ledinh case, monthly compounding interest was not reasonably necessary for the protection of the legitimate interests of the lender. Davies J accepted monthly compounding interest may not be unjust at lower rates: Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd at [76]-[77]. However, Davies J rejected the argument that as a result of the unjustness the Court ought to set aside the loan, the guarantee or the mortgage. His Honour permitted the lender to enforce the mortgage. Davies J made an order for possession in favour of the lender and gave judgment for the lender for the amount claimed under the loan, subject to the interest being calculated on a simple basis, not a compound basis. These orders were upheld on an appeal brought by the guarantors/mortgagors: Huynh v Ledinh Sovereign Super Pty Ltd [2024] NSWCA 78.
2. The Plaintiff opposes the grant of leave to file the Amended Defence, submitting that the proposed amendments are futile. The Plaintiff opposes the hearing being re-opened.
3. The evidence adduced since 27 May 2024 about the First Defendant’s medical condition does not demonstrate a basis to permit the First Defendant to re-open the hearing. In her favour, it may be assumed that the First Defendant suffers from a medical condition which hopefully will be diagnosed in the near future. It may also be assumed that from time to time over recent months the First Defendant has been debilitated by her medical condition.
4. The evidence upon which the adjournment application was made on 27 May 2024 is set out in the first half of this judgement. The additional evidence adduced in support of the application to re-open the case is also set out above. On the key issue, I am not persuaded by the evidence that the First Defendant was unable to attend court and give evidence on 27 May 2024. The additional evidence attached to the First Defendant’s Affidavits dated 26 June 2024 and 22 July 2024 does not take the matter any further than the evidence upon which the adjournment application was rejected on 27 May 2024. It remains the case that there is no evidence from a doctor which addresses the First Defendants ability to attend court on 27 May 2024. Nor is there any reasonable explanation why no such evidence has been obtained, despite the two months which have passed. The “Final Report” from Concord Hospital was printed on 25 May 2024 at 8:41am. This suggests that it existed or was readily obtainable on 27 May 2024. There is no explanation why it was not adduced in evidence in support of the adjournment application on 27 May 2024. In any event, the “Final Report” does not appear to assist the First Defendant’s position. It shows that there were reported symptoms and tests, but nothing which required the First Defendant to remain in hospital on 25 May 2024. It is not even obvious from the “Final Report” that the First Defendant was unable to attend court on 24 May 2024.
5. The “Discharge Summary” from Westmead Hospital reveals that the First Defendant was discharged just before midnight on 26 May 2024. It may be accepted that she was still physically located at the hospital on the morning of 27 May 2024 and there may have been an administrative reason why, but the “Discharge Summary” does not contain evidence that there was a medical reason. Apart from a prescription of aspirin to be purchased over the counter and a future MRI scan, the only action item in the discharge plan was to obtain a follow up appointment at the “Rapid Access Neurology Clinic”. Despite a name suggestive of urgency, on 27 May 2024 the Clinic notified the First Defendant that an appointment had been made for her two months in the future (23 July 2024). Evidently there was no urgent or even pressing need for the First Defendant to go to the neurology clinic on 27 May 2024. There was nothing in her condition which necessitated immediate attention.
Application for leave to amend
1. Ultimately, the question whether the First Defendant ought now to be permitted to re-open the case is to be decided by reference to the real issues in dispute and the just, quick and cheap resolution of those issues. For the purposes of the “just” resolution of the real issues, an important consideration is the substance of the claims made by each of the parties, including the claim which the First Defendant wishes to introduce into the case by amending her Defence.
2. As set out above, the only relief claimed by the Plaintiff is an order for possession. The evidence is set out above which establishes that the Plaintiff is entitled to an order for possession.
3. At the trial, the First Defendant accepted that the Plaintiff is entitled to an order for possession, subject only to her establishing a right to set off in a quantum greater than the amount owed to the Plaintiff. However, on the more recent application to re-open her case the First Defendant accepts that money is owed. The purpose of re-opening the case identified by Mr Plumidis is to permit cross examination of the Plaintiff’s witness in order to challenge the amount said to be owed. The First Defendant also wants to amend her Defence to challenge the amount owed under the Contracts Review Act. More broadly, the evident purpose of re-opening and amending is to facilitate a settlement negotiation.
4. The terms of the proposed amendments to the Defence are set out above at paragraph [106]. Section 64 of the Civil Procedure Act relevantly provides:
64 Amendment of documents generally
(1) At any stage of proceedings, the court may order—
(a) that any document in the proceedings be amended, or
(b) that leave be granted to a party to amend any document in the proceedings.
(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings
1. Section 58 provides:
58 Court to follow dictates of justice
(1) In deciding—
(a) whether to make any order or direction for the management of proceedings, including—
(i) any order for the amendment of a document, and
(ii) any order granting an adjournment or stay of proceedings, and
(iii) any other order of a procedural nature, and
(iv) any direction under Division 2, and
(b) the terms in which any such order or direction is to be made,
the court must seek to act in accordance with the dictates of justice.
(2) For the purpose of determining what are the dictates of justice in a particular case, the court—
(a) must have regard to the provisions of sections 56 and 57, and
(b) may have regard to the following matters to the extent to which it considers them relevant—
(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,
(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,
(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,
(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),
(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,
(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,
(vii) such other matters as the court considers relevant in the circumstances of the case.
1. Whilst I will approach the application for leave to amend having regard to the substance of the amendments, the First Defendant’s extended history of failing to comply with the Court’s order is not irrelevant: s 58(2)(b)(ii).
2. Leave to amend ought not to be granted where the proposed amendment is futile in the General Steel sense: Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [10-11] (Barrett J).
3. Having regard to the limited relief claimed by the Plaintiff (an order for possession) the proposed new pleading in paragraph 36 of the draft Amended Defence is futile. Paragraph 36 puts forward a three step argument:
1. the relief sought by the Plaintiff is discretionary (paragraph 36(a));
2. the First Defendant is unable to determine the quantum of the debt, including by virtue of the failure of the Statement of Claim to comply with UCPR 14.15(d), which deprives the Defendants of a reasonable opportunity to satisfy the debt or negotiate repayment (paragraphs 36(b)-(f)); and
3. for these reasons the Court ought to exercise its discretion not to grant relief (paragraph 36(g)).
1. As registered mortgagee, the Plaintiff seeks an order for possession following an admitted event of default. The Plaintiff’s right to that relief arises under cl 18.3(c) of the Memorandum of Common Provisions and s 60(c) of the Real Property Act 1900. In no relevant sense does the Court have a discretion whether to make an order for possession. In any event, once it is accepted that money is owed to the Plaintiff an order for possession ought to be made upon the Plaintiff pressing for that relief (as it does).
2. Paragraphs 37-39 of the proposed Amended Defence seek to add a claim under the Contracts Review Act. There is a reference to the “equivalent federal legislation applicable to money lending and financial services” but nothing has been said about that and there is no allegation of any federal statute being contravened. The reference can be put to one side at this late stage.
3. Section 7 of the Contracts Review Act provides:
Principal relief
(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following—
(a) it may decide to refuse to enforce any or all of the provisions of the contract,
(b) it may make an order declaring the contract void, in whole or in part,
(c) it may make an order varying, in whole or in part, any provision of the contract,
(d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that—
(i) varies, or has the effect of varying, the provisions of the land instrument, or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.
(2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.
(3) The operation of this section is subject to the provisions of section 19.
1. Section 9 provides:
Matters to be considered by Court
(1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of—
(a) compliance with any or all of the provisions of the contract, or
(b) non-compliance with, or contravention of, any or all of the provisions of the contract.
(2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following—
(a) whether or not there was any material inequality in bargaining power between the parties to the contract,
(b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation,
(c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract,
(d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,
(e) whether or not—
(i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or
(ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented,
because of his or her age or the state of his or her physical or mental capacity,
(f) the relative economic circumstances, educational background and literacy of—
(i) the parties to the contract (other than a corporation), and
(ii) any person who represented any of the parties to the contract,
(g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,
(h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,
(i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect,
(j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act—
(i) by any other party to the contract,
(ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or
(iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,
(k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and
(l) the commercial or other setting, purpose and effect of the contract.
(3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made.
(4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made.
(5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.
1. The allegation in paragraph 38 of the proposed Amended Defence is worded in terms of unjustness arising from the “enforcement” of the Mortgage (and the Guarantee). The focus on enforcement is confirmed by the particulars which are generally directed to conduct since the contracts were entered into. There is no allegation that the terms of the Facility Agreement, the Guarantee or the Mortgage were unjust in the circumstances relating to them when they were entered into in March 2021.
2. Section 7 of the Contracts Review Act empowers the Court to act where it finds “a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made”. Even if all the matters alleged or particularised in paragraph 38 of the proposed Amended Defence are assumed to be true, the Court’s power under s 7 is not enlivened.
3. Further, s 9(2) Contracts Review Act sets out twelve circumstances to which the Court must have regard when considering whether a contract is unjust. None of those twelve circumstances are pleaded or particularised in the proposed Amended Defence. For example, there is no allegation about the procedure by which the contracts were entered into in March 2021. There is no allegation that there was a material inequality of bargaining power, or an inability to negotiate the terms, or a want of physical or mental capacity. Nor is there any allegation about the substantive terms of the contracts, such as the existence of terms which are unreasonably difficult to comply with or are not reasonably necessary to protect the legitimate interests of a party.
4. The question of unjustness is to be determined having regard to all the circumstances of the case. The circumstances listed in s 9(2) are not an exhaustive list of the circumstances to be taken into account: Amcor Ltd t/as Australian Paper Manufacturers v Watson [2000] NSWCA 21 at [31] (Sheller JA, with whom Meagher and Heydon JJA agreed). However, the specified circumstances are indicative of an inadequacy of one party to protect her or his interests when the contract was entered into, which is at the heart of the concept of unjustness under the Contracts Review Act: Provident Capital Ltd v Papa (2013) 84 NSWLR 231 at 233; [2013] NSWCA 36 at [7] (Allsop P). The absence of any allegation of the kind specified in s 9(2) is an indication that the First Defendant’s complaint is not the sort which the Contracts Review Act is intended to address.
5. This is confirmed when the proposed particulars of paragraph 38 are considered in detail. Apart from the statement that further particulars are to be provided in the future, eight matters are to be relied upon for the allegation that it is unjust to enforce the Guarantee given by the First Defendant. None of the eight matters discloses relevant unjustness for the purposes of s 7 of the Contracts Review Act:
1. The fact that the Plaintiff has alternative rights against the Borrower does not make it unjust for the Plaintiff to seek to enforce its security over the First Defendant’s properties, even though the properties are the family home and the principal place of business. Apart from the commercial reality of secured lending, the First Defendant agreed in cl 18.3(c) of the Memorandum of Common Provisions that the Plaintiff could enforce the First Defendant’s mortgage before enforcing any other rights or remedies against any other person, and that the Plaintiff could enforce its securities “in any order”. In any event it is doubtful that the receivership is a circumstance which existed when the Guarantee was entered into but rather an incidence the enforcement subsequently taken by the receivers;
2. The fact that the Plaintiff is the second mortgagee, and the first mortgagee had not been made a party to the proceedings does not make the enforcement of the Plaintiff’s mortgage unjust, let alone the provisions of the Guarantee when it was entered into;
3. The fact that one of the secured properties is the family home in which a 17 year old child and two other offspring reside does not make the enforcement of the Guarantee or the Mortgage unjust. Were it otherwise, all New South Wales home lending would likely cease immediately, a matter to which the Court is to have regard under s 9(1) to the extent that the wider public interest is concerned;
4. The fact that the original loan of $400,000 (not including prepaid interest and fees) which was advanced on 31 March 2021 has now grown to a debt of $2.5 million does not make the Guarantee or the Mortgage unjust. There is no doubt that the interest rate is high and that the default rate is higher, but that does not by itself mean the Facility Agreement, the Guarantee or the Mortgage was unjust when entered into. If it be the case that the specified interest rate in combination with the frequency of compounding was not reasonably necessary for the protection of the legitimate interests of the Plaintiff, there would be a kind of circumstance referred to in s 9(2)(d) of the Contracts Review Act. If pleaded, the Court would have to take that into account. However, whether or not that circumstance would render the Facility Agreement, the Guarantee or the Mortgage unjust would depend upon all the circumstances of the case. In similar circumstances (albeit at a much higher interest rate), the Court found in the Ledinh Sovereign Super case (see above at [111]) that the loan agreement was unjust but not so as to deprive the lender of its entitlement to an order for possession;
5. The fact that the Statement of Claim does not expressly state whether the interest is charged as simple or compound interest does not make any of the contracts unjust within the terms of s 7. The Plaintiff sues on a registered mortgage and a registered memorandum of common provisions which are publicly available documents. In any event, the First Defendant signed the contracts in March 2021. The fact that the Statement of Claim does not plead this particular term does not make it unjust for the Plaintiff now to enforce its right to possession;
6. The same applies to the term as to the higher rate of interest and the lower rate of interest;
7. The fact that the First Defendant now wishes to negotiate a settlement with the Plaintiff does not make enforcement of the right to possession unjust, let alone the provisions of the contracts which were entered into in March 2021; and
8. The First Defendant also relies upon the “course of conduct” by the Plaintiff as articulated in the Cross-Claim, which appears to be a reference to the allegations that caveats were lodged on various properties (not the properties the subject of these proceedings) in which the First Defendant had an interest (sometimes through a company called JC Chamoun Investments Pty Ltd) which caused extra expense and/or loss in transactions involving those properties and those parties. These are the same matters which are relied upon for the Cross-Claim. It is not possible to discern from the proposed amendments how these matters are said to make the Guarantee or the Mortgage unjust for the purposes of s 7 of the Contracts Review Act.
1. The Contracts Review Act pleading is fatally defective. Had it appeared in the original Defence it would have been liable to be struck out because it does not disclose a reasonable cause of action. It is not simply a question of form which might be cured by more time and redrafting. The focus of the complaint which the First Defendant evidently wishes to make is the great difficulty which the Plaintiff’s finance has caused her in the events which have happened. That complaint is not directed to the provisions of the Facility Agreement, the Mortgage or the Guarantee in the circumstances relating to them when they were entered into in March 2021.
2. The proposed amendment in paragraphs 37 to 39 of the draft Amended Statement of Claim is also futile.
3. A further reason why leave to amend ought not be granted is that the amendments are too late, especially having regard to their substantive deficiency. The proceedings were commenced in September 2022. The First Defendant had solicitors continuously acting for her when her Defence and Cross-Claim were filed in 2023. There is no explanation as to why the Contracts Review Act claim was not brought forward at that time, or at any other time prior to the trial in May 2024. Nothing was said about a Contracts Review Act claim at the trial. Since the conclusion of the trial, two more months passed before the First Defendant put forward these amendments. It may be accepted that she has struggled with obtaining legal advice, but her current solicitor has been acting since 15 July 2022. It is not submitted that the most recent solicitors require further time to investigate.
4. There is nothing to suggest that a grant of further time will produce anything of substance in defence of the Plaintiff’s claim.
5. The application to amend is to be dismissed, as is the application to re-open the case.
6. I have not overlooked the fact that a combination of the First Defendant’s current Defence and Cross-Claim raise the constituent elements of the claimed set-off. Some difficulties with the set-off are set out above including the First Defendants promise in cl 3.4 of the registered Memorandum to pay without set off. In the circumstances described above the set off was not pursued at the trial in May 2024. Even without the difficulties and the chronic procedural default, the First Defendant’s acceptance that money is owed means that the set-off defence is incapable of disentitling the Plaintiff to an order for possession.
7. However, the First Defendant (and/or another proper party, as the case may be) should not be shut out from pursuing any of the claims currently made in the Cross-Claim, such as the claim that JC Chamoun Investments Pty Ltd suffered loss or damage by the unlawful lodgement of caveats. In those circumstances, the Cross-Claim is to be dismissed on the basis that the First Defendant (and/or another proper party) is not prevented from bringing fresh proceedings in the future, if so advised: s 91 Civil Procedure Act.
Costs
1. There is no reason why costs should not follow the event, for the Plaintiff’s claim, the Defendants’ Cross-Claim and the First Defendant’s application to amend and to re-open.
2. The Plaintiff submitted that the costs of the trial ought to be ordered on an indemnity basis. In support of that submission, three matters were relied upon. First, the failure of the First Defendant ultimately to appear at the hearing and of the Second Defendant ever to appear. Secondly, the less than diligent manner in which the Defendants were said to have conducted the litigation from the outset. Thirdly, the lack of merit in the defence, especially the set off. These matters, whether taken alone or together, do not provide adequate reasons to depart from the usual basis upon which costs are ordered. Without more, it cannot be inferred from the Defendant’s failure to appear and the paucity of the pleading that they never intended to defend the case. Further specificity would be required before an indemnity costs order could be based upon the Defendants’ overall conduct of the litigation, including details of any costs orders which have already been made. Whilst the Defendants’ Defence and Cross-Claim was fairly described by counsel for the Plaintiff as “challenging”, without a further hearing it cannot be said that it was so lacking in merit as to warrant an indemnity costs order.
3. An order for costs does not have a penal purpose but is made solely for the purpose of ensuring that the successful party is indemnified for the costs, or part of the costs, it has incurred: Ohn v Walton (1995) 36 NSWLR 77 at 79 (Gleeson CJ). In this case, the Plaintiff does not appear to be at risk of being left unindemnified. Another element of the Secured Money payable under the Mortgage is “Costs and Expenses”, which includes all legal fees “on a full indemnity or solicitor-and-own-client basis, whichever basis yields the higher amount”. Of course, the Plaintiff’s ability to recover costs under the mortgage is only as good as the Defendants equity in the secured property, but the Plaintiff will be in a no better position under an indemnity costs order.
4. In those circumstances, I am not persuaded that it is appropriate for the Court to make an order for costs under s 98 of the Civil Procedure Act other than on the usual basis.
Orders
1. For these reasons, I make the following orders:
1. The First Defendant’s Notice of Motion filed on 26 June 2024 be dismissed.
2. Judgment for the Plaintiff for possession of the land described in folio identifier 2/865637 being the land situated at and known as 72-78 Parramatta Road, Croydon NSW 2132 and folio identifier Auto C consol 12585-132 being the land situated at and known as 31 Phillip Street, Cabarita NSW 2137.
3. The Cross-Claim filed on 4 December 2023 be dismissed.
4. The Defendants pay the Plaintiff’s costs of the proceedings including the Cross-Claim and the Notice of Motion filed on 26 June 2024.
*********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 15,663 |
nsw_caselaw:191011dc2d82359ecec9612d | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | GCN v Children’s Guardian [2024] NSWCATAD 213 | https://www.caselaw.nsw.gov.au/decision/191011dc2d82359ecec9612d | 2024-08-04T23:49:22.270886+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: GCN v Children’s Guardian [2024] NSWCATAD 213
Hearing dates: 10 July 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Administrative and Equal Opportunity Division
Before: R Bailey, Senior Member
E Hayes, General Member
Decision: (1) The Applicant's application for an enabling order made 14 October 2023 pursuant to s 28 of the Child Protection (Working with Children) Act 2012 is refused.
(2) The Tribunal orders under s 64 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) that publication of information that will identify the applicant, any victims, witnesses or evidence given and received in the Tribunal hearing or in relation to the proceedings which is likely to identify those persons is restricted.
Catchwords: ADMINISTRATIVE LAW - application for enabling order pursuant to s 28 of the Child Protection (Working with Children) Act 2012 – applicant was convicted of a disqualifying offence – conduct of applicant in period since offences occurred – failure to discharge onus – whether the applicant poses a risk to the safety of children
Legislation Cited: Child Protection (Working with Children) Act 2012
Civil and Administrative Tribunal Act 2013
Crimes Act 1900
Cases Cited: CYY v Children’s Guardian (no.2) [2017] NSWCATAD 262
CHB v Children’s Guardian [2016] NSWCATAD 214
Commissioner for Children and Young People v V [2002] NSWSC 949; NSWLR 476
Commissioner for Children and Young People v FZ [2011] NSWCA 111
Smith v Commissioner of Police [2014] NSWCATAD 184
ZZ v Secretary of the Department of Justice [2013] VSC 267
Category: Principal judgment
Parties: GCN (Applicant)
Children’s Guardian (Respondent)
Representation: Solicitor:
Crown Solicitors (Respondent)
File Number(s): 2023/00432139
Publication restriction: The Tribunal orders under s 64 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) that publication of information that will identify the applicant, any victims, witnesses or evidence given and received in the Tribunal hearing or in relation to the proceedings which is likely to identify those persons is restricted.
REASONS FOR decision
Introduction
1. This matter concerns an application for an enabling order by an applicant, who has been refused a Working with Children Check (WWCC) Clearance.
2. The applicant in these proceedings is referred to as "GCN". GCN is the applicant's pseudonym used in these proceedings in conformity with the order pursuant to s 64(1)(a) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act).
3. The application was filed on 29 November 2023, following a decision of the respondent to refuse to grant the applicant a WWCC, because he is a disqualified person. That decision was made on 6 November 2023.
4. There is a presumption that the applicant is a risk to children, because he was convicted (as an adult) of an offence specified in Schedule 2 of the Child Protection (Working with Children) Act 2012 (the Act). He now seeks a finding that he does not pose a risk to children.
5. The applicant was convicted of sexual assault without consent in company, and robbery, on 4 June 1992. The former is the disqualifying offence.
6. On 19 June 1992, the applicant was sentenced to a minimum term of three years imprisonment, with a further 12 months, during which he would be eligible for parole. The sentence was upheld on appeal, but the commencement date was brought forward by three months.
7. The applicant had also been previously convicted of sexual intercourse without consent, and robbery with striking, on 9 December 1985. The offence occurred on 9 May 1985.
8. The applicant does not deny that he has an extensive criminal record. His most recent conviction, for a violent offence, was in 2007.
9. The applicant seeks an enabling order so that he may continue to work as a volunteer and distribute Gideons Bibles in schools and hospitals.
10. The respondent opposes the application.
11. On the basis of the evidence before us, we have decided to affirm the refusal of the WWCC. Our reasons follow.
Non-disclosure
1. The Tribunal orders under s 64 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) that publication of information that will identify the applicant, any victims, witnesses or evidence given and received in the Tribunal hearing or in relation to the proceedings which is likely to identify those persons is restricted.
Factual background
1. The applicant applied for a WWCC Clearance on 14 October 2023. Whilst considering his application, the respondent became aware of the applicant’s history, which included a conviction of a criminal offence.
2. This matter was a ‘disqualifying offence’, as defined in Sch 2 Cl 1 (1) (h) (i) of the Act. The disqualifying offence was:
1. Sexual assault in company (s 61D (1B) (now repealed) Crimes Act 1900 (NSW))
1. The applicant pleaded not guilty. He was convicted and sentenced to three years imprisonment.
2. Consequently, on 6 November 2023, the Children's Guardian issued the applicant with a Notice to Disqualified Person pursuant to s 18 of the Act.
3. On 29 November, the applicant applied to the Tribunal for an enabling order and clearance. In his application, the applicant stated that wishes to volunteer, as a distributor of Gideon’s bibles, in hospitals and schools. In his evidence he said that he may also wish to work in prisons, to help offenders reform, and to drive buses.
4. The Tribunal must decide whether the applicant should be granted an enabling order under s 28 of the Act. The Tribunal is required to determine whether he has rebutted the presumption that he poses a risk to the safety and well-being of children. We must also consider the matters set out in sections 30(1) and (1A). We are mindful of the Superior Court guidance that the risk must be both real and appreciable.
The working with children legislative scheme
1. Section 8(1) of the Act prohibits a person from engaging in child-related work, unless the person holds the relevant clearance or there is a current application by the person to the Children's Guardian for the relevant clearance. A breach of s 8(1) is an offence.
2. The object of the Act is to protect children, by preventing disqualified persons, or persons without clearances, from engaging in child-related work, and by requiring persons engaged in child-related work to have working with children check clearances (s 3 of the Act).
3. The safety, welfare and well-being of children and, in particular, protecting them from abuse, are the paramount considerations in the operation of the Act (s 4).
4. The definition of "child related work" includes a "worker engaged in work in a child related role referred to in subsection (3)" (s 6(1) (b)). A child related role is set out in s 6(3).
5. Section 18 of the Act mandates that the Children’s Guardian must not grant a clearance to disqualified persons.
18 Determination of applications for clearances
(1) The Children’s Guardian must not grant a working with children check clearance to the following persons (disqualified persons):
(a) a person convicted before, on or after the commencement of this section of an offence specified in Schedule 2, if the offence was committed as an adult,
(b) a person against whom proceedings for any such offence have been commenced, if the offence was committed as an adult, pending determination of the proceedings for the offence.
1. It is the Tribunal that must conduct an assessment of a disqualified person’s risk, if an application for an enabling order is made to the Tribunal.
Jurisdiction
1. There is no dispute that the Tribunal has jurisdiction to hear the matter. Section 28 of the Act gives power to the Tribunal to make enabling orders.
2. The jurisdiction of the Tribunal under Part 4 of the Act is protective and not punitive in nature: Commissioner for Children and Young People v FZ [2011] NSWCA 111, per Young JA at [61]. The purpose underlying the analysis of the evidence is to achieve the protective goal, set out in ss 3 and 4 of the Act.
3. As a preliminary finding, we note that the Children’s Guardian has refused the applicant’s request for a clearance and the conditions of s 28(3)(a) are satisfied.
4. Section 30 sets out the factors that the Tribunal must consider in determining an application. We will address each of the matters under s 30(1) later in these reasons.
Burden of Proof
1. In this case, there is a presumption that the applicant poses a risk to children, because he is a disqualified person. He hHe bears the onus of rebutting that presumption.
Meaning of Risk
1. The meaning of the word 'risk' was considered by Young CJ (in Equity) in Commission for Children and Young People v V [2002] NSWSC 949; 56 NSWLR 476, at [42]. That consideration was made in the context of s 9(4) of the former Child Protection (Prohibited Employment) Act 1998 (the Repealed Act).
2. At [42], His Honour said:
'42 One does not define risk as meaning minimal risk. One would …exclude fanciful or theoretical risk but what one is looking for is whether, in all the circumstances, there is a real and appreciable risk in the sense of a risk that is greater than the risk of any adult preying on a child. One, however, must link the word "risk" with the words that follow, namely, "to the safety of children". ...'
The Hearing
1. The applicant attended in person. He was not legally represented.
2. The respondent was represented by Ms G Bromwich and Mr A Stavro, who attended in person.
Written evidence
1. The applicant asked the Tribunal to consider his Affidavit sworn on 28 March 2024 (five pages); a personal references from Pastor Steven Kasambalis, dated 28 March 2024 (with earlier reference dated 29 May 2007); Pastor George Sidiropoulos, dated 12 April 2024 (with earlier reference letter dated 29 May 2007); Dr Warren Ling, dated 31 March 2024; and from Takis Manetas, dated 1 April 2024. This bundle totalled 13 pages and was admitted, without objection, as Exhibit 1.
2. The applicant also relied on a document titled “Summary of Legal Arguments and Position”, dated 2 April 2024, drafted by Suzanne Martinez, Solicitor for the applicant at that time. However, she did not represent him at the hearing.
3. The respondent tendered three bundles of documents, without objection. They are described as follows:
* Exhibit A – a bundle of documents received by the Tribunal on 8 February 2024 (131 pages);
* Exhibit B – respondent’s further evidence submitted on 19 April 2024 (74 pages);
* Exhibit C – third bundle of evidence submitted on 20 June 2024 (74 tabs).
Applicant’s submissions
Summary
1. The applicant accepted that the disqualifying offence means that the statutory presumption must be displaced. He does not dispute that he engaged in “concerning behaviour in the past”. However, he maintains that he does not present any risk to children.
2. The applicant’s evidence was provided in his Affidavit, dated 28 March 2024, and in his oral testimony. In his Affidavit, he said that he requires an enabling order so that he can, together with other Gideon members, hand out free Bibles to schools, hospitals, nursing homes, prisons, the armed forces, police, and all emergency services.
3. At about the age of four years, the applicant’s father died, and he was abandoned, in his country of origin, by his mother, who moved from that country to Australia, and left him there with his brother. He was raised for many years in an orphanage.
4. The applicant stated that he moved to Australia when he was 9½ years old with his eldest brother, to be reunited with his mother, who was living here with her new partner, and the applicant’s younger brother and older sister. He described a troubled childhood and conceded that, from the age of 13, he made “a lot of foolish decisions”. He was admitted to Daruk Boys Training Centre when he was 14 years old.
5. He conceded that he had been convicted of an offence in 1992. However, he emphasised that the victim was not a child. He said: “I have made a lot of bad decisions in my life and I am sorry for my past crimes. I acknowledge ongoing trauma occasioned to victims of sexual offending”.
6. He asked the Tribunal to consider that, since 2007, he has not had any further interaction with the criminal justice system.
7. In his oral testimony, he said: “I accept everything I’ve done”. He asked the Tribunal to accept that his past does not define him. He submitted that his offences occurred in the “distant past” and that he is now “a changed man”. The applicant gave evidence that whilst on bail in 1991, awaiting trial for the disqualifying offence, he became a born-again Christian. He testified that he has maintained his Christian faith ever since. He stated that his faith and his family have helped him to become a ‘new person’.
8. He reiterated that his association with his Christian community has had a transforming effect on his behaviour. He said that he has been married for 23 years and has two adult children. He is a godfather and uncle to other children with whom he has regular contact. He also gave evidence that he has had very strong and positive involvement with his wider community.
9. He also said that he is embarrassed and ashamed about his past conduct. The applicant said that, in his younger years, he suffered a sense of abandonment, which he believes may have been a contributing factor to his offending behaviour.
10. The applicant said he sought counselling and therapy, and that he is now a changed man.
11. He conceded that he committed a further offence in 2007, in a road rage incident, which he regrets. He has been a professional driver for over 20 years, without any other incident. He submitted that the 2007 offence was out of character. He asked the Tribunal to consider the fact that in the intervening 17 years, he has not committed any criminal offence.
The disqualifying offence
1. The applicant’s evidence about what occurred on the night he committed the disqualifying offence is vague. In summary, he said he was in the company of his brother and a friend when he encountered the victim, someone with whom he was acquainted. He gave evidence that she agreed to get in the car with him and the other two men in order to obtain drugs.
2. This is inconsistent with the victim’s statement to the Police, dated 24 December 1989. The victim stated that she had been drinking with her flatmate on Saturday, 23 December 1989, at a local pub. She said she had consumed four bourbon and cokes and was evicted at approximately 11:30 pm by two bouncers. She was then driven home by her flatmate. Although her details were also vague, she believed she became involved in an argument with her flatmate and left the house at approximately 3:00 am. She said she walked to a medical centre in Blacktown. It was at the medical centre that she encountered the applicant. She said she had met him four or five times previously. He was with two people that she did not know.
3. The victim was two years older than the applicant.
4. The victim said that the applicant offered her a lift home and she got into the back seat with the applicant. The victim stated that one of the men then said that they were going to buy drugs and she asked them to drop her off at the nearest station. They kept driving. At approximately 3:30 am, they drove into a reserve. As soon as the car stopped, she pushed the door open and tried to get out of the car. One of the men, who was not the applicant, began molesting her and she told him to stop. She said the applicant and the driver got out of the car and came to her door. The applicant then grabbed her arm and pulled her out of the car and “flung her” across the boot with her face down. Someone held her wrists and the applicant had sexual intercourse with her. She said she was struggling, which irritated the applicant, and he stopped.
5. She then stated that the other men tried to engage her in sexual activity but she resisted. She gave evidence that the men verbally abused her and degraded her. She noticed the applicant going through her bag. She said they pulled her into the car and drove her to the local station. Her flatmate then collected her and the incident was reported to the Police.
6. The applicant said that the victim was lying. The applicant set out his recollection of the disqualifying offence in 1989. In his Affidavit (at paragraph 16) he wrote:
“Despite me being found guilty at trial, my account and truth is that I knew the girl and we had consensual sex; when I was 22 years and she was 24 years old. I showed and promised her some drugs if she had sex with me and she agreed if it was me only. She didn’t want to go with the three of us”.
1. The applicant explained that he was in the presence of his late brother and friend. He wrote:
“They wanted to get with her after I finished. She said no, but I withheld my drug offer unless she got with my brother also and she agreed.”
1. The applicant conceded that, during this period, he rifled through the victim’s handbag and stole some coins. He said that she berated him and he did not give her the drugs that he had promised. He wrote: “I also returned the verbal abuse she was giving me”. He said he then dropped her at the local railway station.
2. The applicant said he did not divulge information to the police when he was arrested. He said that the victim lied in Court, and he was found guilty.
3. He said he now acknowledges that his actions were wrong. Despite this, he steadfastly maintained that the sexual intercourse was consensual.
4. When cross-examined, the applicant said that he was “stoned” and possibly drunk at the time. He said that he had known the victim previously. She was someone with whom he used to “catch up for casual sex”. He maintained that he had sex with her on that night but that he “had a bad attitude, got into an argument and kicked her out of the car”.
5. He said that the sexual intercourse occurred in his car, and that there were two other men present. He believes that the victim was under the influence of drugs. He agreed that he offered to give her drugs in exchange for sex.
6. The respondent’s representative asked whether it is still the applicant’s position that the victim had consensual sex with him. The applicant responded: “100%”. When the respondent asked the applicant whether he also maintained his position that the victim had lied in Court, he again answered “100%”.
7. He repeated the evidence in his affidavit that, after he offered the victim drugs to have sex with his brother, she did so.
8. Despite maintaining that the interaction was consensual, the applicant said that he would never again engage in conduct of that nature, because it was not appropriate, because he had drugs, which he had withheld. He agreed that he stole from the victim, abused her, and withheld the drugs. He said: “It was wrong to coerce her to have sex with my brother”.
9. The applicant also agreed, in cross examination, that he had lied to the police. He said: “it wouldn’t have been the first time”.
10. On 17 April 1990, when the applicant was questioned and shown the victim’s statement, he said: “It’s a bullshit job. She let the other blokes fuck her and she gave me a head job”. However, he refused to give the names of the other men present.
11. The respondent submitted that whilst there is no sentencing judgment available, the Tribunal can be satisfied that, at a minimum, there were findings of fact essential for the offence to be proven beyond reasonable doubt. At the time the offence was a breach of s 61D(i)(b) of the Crimes Act 1990:
“any person who, in the company of others, has sexual intercourse with another person without the consent of the other person and who knows that the other person does not consent to the sexual intercourse shall be liable to penal servitude for 10 years or, if the other person is under the age of 16 years, to penal servitude for 12 years”.
1. The Tribunal may not make findings of fact which are inconsistent with the findings of facts of the Superior Court. In this instance, it was proven, beyond reasonable doubt, that the applicant had sexual intercourse with the victim without her consent. We note that the applicant pleaded not guilty, which resulted in the victim having to give evidence and no doubt added to her distress.
The 1985 Offence
1. The applicant conceded that he was convicted of sexual intercourse without consent and robbery with striking on 9 December 1985. The offences occurred on 9 May 1985, when the applicant was 17 years old.
2. The applicant said that he was in an apartment building when the victim opened her door, presumably to see who was knocking on a neighbour’s door. He said he later knocked on the victim’s door and asked her for a drink of water. The applicant said he does not remember much about the incident but he is not proud of what occurred. He said he was “stoned” at the time and “I stuffed up”. He agreed that he stole from the victim again.
3. The victim of this offence was a 25 year old woman, not previously known to the applicant. Her account of events is that the applicant knocked on her door and asked her for water. He then carried her over his shoulder into her bedroom and put her on the bed. He put a pillow over her head to stop her screaming and then said words to the effect: “If you don’t stop screaming, I’ll kill you” and “spread your legs”. He removed her underwear, forced her legs open, groped her breasts, and engaged in vaginal intercourse. He then left the premises, after stealing some money from her.
4. The victim’s statement is that she had a shower and then started screaming. She was found by neighbours who contacted the Police.
5. The applicant pleaded not guilty to that offence. However, he was convicted. During the trial, he admitted to theft but not sexual assault.
6. The respondent’s solicitor asked the applicant why he had not included any mention of his earlier conviction for sexual intercourse without consent in his affidavit, dated 28 March 2024. He said that he did not think he had to do so. He said "I thought it was common knowledge. It was referred to in the second trial”.
7. The applicant conceded that, at the time, he denied committing the offence because “I was trying to worm my way out of it”.
8. The Tribunal also asked the applicant about the omission of any mention of this event in his 28 March 2024 affidavit. We note that the applicant has an obligation to provide all necessary information to the Tribunal.
9. The applicant responded that, when the affidavit was drafted, he was legally represented by Ms Suzanne Martinez, solicitor. He said she was aware of the 1985 offence. She assisted him to draft the affidavit and he relied on her advice. He conceded that the information is relevant to his application but maintained that he acted in accordance with legal advice.
10. Miss Martinez did not represent the applicant at the hearing, and we were unable to seek her response to this evidence.
The 2007 Offence
1. The applicant admitted that he struck an elderly victim who, together with his wife, had been a pedestrian in the vicinity of a vehicle driven by the applicant. The applicant told the Tribunal that he has been a professional driver for 20 years and that this is the only incident of road rage on his record.
2. In relation to the 2007 event, the applicant agreed that he struck and injured an elderly man but said that the victim struck him first. He pleaded guilty because he accepted what he did was wrong, but maintained that his actions were retaliatory. The trial judge did not accept that to be the case.
Drug and Alcohol Use
1. According to the applicant’s evidence, drug or alcohol use played a role in each of his sexual offences.
2. The applicant conceded, in cross examination, that he had a history of drug and alcohol use. However, he said that he had abstained from illegal drugs for many years, since 1991, until the 2007 offence, when he relapsed. He sought counselling and has again been abstinent for many years.
3. We had the benefit of a report of Mr Peter Ashkar, Psychologist, dated 9 May 2007, which was prepared for the Court, following the 2007 offence. Mr. Ashkar wrote, at that time, that the applicant still used alcohol. He also reported that the applicant had “no history of alcohol related violence”. In view of his evidence that drugs or alcohol had played a role in both serious sexual offences, the applicant said he was unable to explain why Mr Ashkar had written that.
Counselling or therapy
1. The applicant gave evidence that he had Christian counselling in 1991 and participated in an anger management course in 1992. He still has spiritual counselling. His evidence about whether he sought therapy or counselling form a qualified professional was vague. He said that he “deals with professionals” and talks to friends who are doctors. This, he considers to be counselling. He said he sought such assistance for approximately two years after 1992. However, we note that he was incarcerated for much of that time.
2. The applicant testified that he has learnt, as a result, to be more respectful and avoid certain former associates, who may lead him into bad habits.
3. We asked the applicant whether he agreed or disagreed with Mr Ashkar’s opinion, as set out in his report of 9 May 2007, that the applicant has a conduct disorder and antisocial personality characteristics, and that anger is the main reason for his offending behaviour. He responded: “that could be right”.
4. We also asked the applicant whether he had complied with Mr Ashkar’s recommendation that he seek anger management therapy. He said he responded that he had anger management therapy following the 2007 offence. However, he did not provide relevant detail or evidence to substantiate this assertion.
5. Later, he recalled that he sought psychological intervention following a work accident in the early 2000s. However, this predated the 2007 offence.
Character referees
1. In the written submissions and his affidavit, the applicant asked us to accept the opinion of his character referees. We asked him whether he had disclosed all past offences to the character referees. He said that he had told them about the disqualifying offence and the 2007 offence. However, he did not disclose the 1985 offence. He did not provide any explanation for this omission.
Reason the applicant wants the WWCC Clearance
1. The applicant said he wishes to have his WWCC clearance, so that he can hand out Gideons Bibles in schools and prisons. Although, he has given Bibles to strangers on the street in the past, for which he does not require a WWCC clearance, he has not done so since his clearance was denied.
2. He estimated that in this voluntary role, he would have minimal exposure to children. However, he has been advised by his church group that he will require a clearance in order to engage in prison ministry.
3. Furthermore, he was a member of the Church board for many years. He has been advised that he also requires a WWCC clearance to occupy that position. Whilst this may not be legally accurate, he is concerned that he is prevented from serving his church community because of this policy. Nevertheless, he said that if his application is unsuccessful it “won’t change too much of my life”.
Respondent’s Submissions
1. The respondent’s written submissions set out the statutory framework and applicable principles in detail.
2. The respondent submitted that the disqualifying offence and the 1985 offence perpetrated by the applicant are extremely serious and that the Tribunal should take all the evidence into account, not just the circumstances of the disqualifying offence.
3. Ms Bromwich asked the Tribunal to accept that, even though the victim of the disqualifying offence was not a child, she was a young woman, affected by alcohol or other substances, alone in the company of three men in an isolated location. This means that she was a vulnerable person.
4. Ms Bromwich also asked the Tribunal to accept that the victims of the 1985 and 2007 offences were also vulnerable. The victim of the 1985 offence was a young woman, alone in her own home, and the victim of the 2007 was an elderly man, who used a walking stick to assist mobility.
5. The respondent highlighted inconsistencies in the applicant’s version of events about the disqualifying offence. It submitted that the version of events contained in his Affidavit is inconsistent with the account he gave to the Police in 1990.
6. Furthermore, the respondent asked the Tribunal to accept that a common factor in all the applicant’s accounts is that he denied or minimised his offending behaviour. In the case of the 2007 offence, he classified it as retaliatory. Despite this, the Court preferred the victim’s account of events.
7. Ms Bromwich asked the Tribunal also to consider whether the fact that the applicant conceded that he had lied to Police, called the reliability of his evidence to the Tribunal on this occasion into question.
8. Despite this, Ms Bromwich submitted that there are also significant factors that weigh in favour of rebuttal of the presumption that the applicant poses a risk to children. The last sexual offence was in 1989. Since 2007, the applicant has had a clear criminal record. Ms Bromwich conceded that there is no evidence that the applicant has ever committed a crime against children.
9. Furthermore, the respondent submitted that the Tribunal could find that the applicant’s faith and the network of support that he now enjoys, as a result of his Church community, have enabled him to turn his life around. Ms Bromwich described this, and the fact that the applicant has been married for 24 years and has two adult children, as powerful evidence that he has reformed his ways.
10. Ms Bromwich submitted that for the purpose of assessing risk, the Tribunal steps into the shoes of the Children’s Guardian, which is an institutional authority. She submitted that as the decision maker, considering objective risk, it is open to the Tribunal to find that the presumption that the applicant represents a risk to children has been rebutted.
11. However, Ms Bromwich argued that, even if the Tribunal were satisfied that the presumption had been rebutted, it should still affirm the decision of the Children’s Guardian, dated 6 November 2023, because it could not be satisfied that a reasonable person would allow the applicant to have direct access to a child or leave a child unsupervised in the applicant’s care.
12. Ms Bromwich submitted that, to determine this, the Tribunal must step into the shoes of a very different type of decision maker, namely a parent and not necessarily one who personally knows the applicant, who may encounter him in any type of child related work. The respondent asked the Tribunal to place little weight on the character references.
13. The respondent submitted that a reasonable parent would not make allowances for the applicant’s “lack of nuance in understanding of consent” and would require him to have had counselling and “done more work on himself”. She also said that the reasonable parent would take a poor view of the applicant’s failure to take full accountability for his actions, as evidenced by his persistent view that the victim had consented to have intercourse with him. Ms Bromwich submitted that, whilst the applicant may have had spiritual counselling, there is no evidence that such counselling was targeted for sex offenders, or to assist the applicant to obtain an understanding of consent, which is more consistent with community values. Insofar as the latter is concerned, she submitted that a reasonable parent might have concerns about the values the applicant would impart to young people, as a convicted sex offender.
14. Finally, the respondent submitted that the question of whether it is in the public interest to grant the applicant a WWCC Clearance is one which is finely balanced. She said that there is no evidence of significance to weigh in favour of or against such a finding.
15. The respondent did not dispute the fact that outreach work may benefit the public. However, Ms Bromwich submitted that the issues which may cause parents to have concerns about allowing the applicant to have unsupervised access to their child may also affect the public interest test.
16. She referred to the applicant’s evidence that he does not need to constrain his voluntary activities to working with children. She said that it is unlikely that the applicant requires a WWCC Clearance to engage in religious services (pursuant to s 6 and 7 of the Act) for adults. Therefore, she submitted, there are means by which the applicant could fulfil his philanthropic goals without a WWCC Clearance.
Section 30 (1) considerations
1. Section 30 of the Act sets out the following mandatory factors that the Tribunal must consider, in order to assess whether the applicant poses a risk to children and to determine such an application. We address these here.
(a) The seriousness of the offences to which the person is a disqualified person or any matters that caused a refusal of a clearance or imposition of an interim bar.
1. The legal argument submitted by the applicant’s legal representative, Ms Martinez, dated 2 April 2024, included the statement “However, it is submitted it is not the worst kind of this type of offending”.
2. We do not agree. The offence of sexual assault without consent and robbery is objectively extremely serious. The community regards such an offence as one of the most serious that can be perpetrated on a victim. This view is reflected in the heavy penalty that can be imposed by the Court (12 years in custody).
3. In this instance, we must be satisfied that the elements of the crime were proven beyond reasonable doubt, because the applicant was convicted and sentenced to three years incarceration. We infer that the Tribunal of fact on that occasion preferred the evidence of the victim. The victim described an extremely frightening and humiliating experience.
4. The applicant gave evidence that he was aware that she was affected by drugs or alcohol at the time.
5. On the best interpretation of the evidence available to him, the applicant coerced the victim to have sexual intercourse with him. The conviction suggests that the Court did not accept that version of events. In any event, we must be satisfied that the applicant sexually assaulted the victim, by having sexual intercourse with her without her consent.
6. The seriousness of the disqualifying offence is exacerbated by the fact that he had been convicted of a previous offence of sexual intercourse without consent. He was or ought to have been aware of the seriousness of his conduct and the impact of such conduct on a victim.
7. The 1985 offence is also extremely serious, although it is not the disqualifying offence. The victim on this occasion was assaulted in her own home, by a stranger. The Court accepted evidence that she was threatened with violence if she did not have sexual intercourse with the applicant. The sentencing Judge wrote that the offence was “committed in cold blood and cruelly carried out”. Furthermore, the sentencing Judge found that there was “no demonstrable remorse or contrition" on the applicant’s part. The victim of that offence gave a victim’s impact statement to the Court that described the significant impact of the offence on her psychological well-being.
8. The 2007 offence was also found by the presiding Magistrate to be “very serious indeed”. It was an act of violence. It was perpetrated against an elder member of the public and the victim experienced significant injuries. The Magistrate reflected the seriousness of the offence by imposing a custodial penalty, albeit a suspended one.
9. We find that the seriousness of the applicant’s conduct is further exacerbated by the fact that he made statements after each of the offences, which the relevant Court ultimately found to be false.
(b) The period of time since those offences or matters occurred and the conduct of the person since they occurred.
1. The disqualifying offence occurred 35 years ago. The 1985 offence occurred 39 years ago, and the 2007 offence was 17 years ago.
2. The applicant has not been charged with any offence in the last 17 years. He has never been charged with an offence against children.
(c) The age of the person at the time the offences or matters occurred.
1. At the time of the offences, the applicant was 17, 22 and 39.
(d) The age of each victim of any relevant offence or conduct at the time they occurred and any matters relating to the vulnerability of the victim.
1. The victim of the disqualifying offence was an adult who was two years older than the applicant at the time. However, she was a vulnerable woman on her own in the company of three men, in an isolated location. The applicant was aware that the victim was affected by alcohol, which exacerbated her vulnerability.
2. The victim of the 1985 offence was a young adult woman. She was also vulnerable because she was alone in her home and, as described by the sentencing Judge, of a smaller build.
3. Similarly, the victim of the 2007 offence was vulnerable, due to his advanced age.
(e) The difference in age between the victim and the person and the relationship (if any) between the victim and the person.
1. The applicant was younger than all his victims.
2. The difference in age between the applicant and the victim was two years.
(f) Whether the person knew or could reasonably have known, that the victim was a child.
1. The victim was not a child.
(g) The person’s present age
1. The applicant is 56 years old.
(h) The seriousness of the person's total criminal history and the conduct of the person since the offences occurred.
1. The applicant has an extensive and serious criminal history, leading up to and including 1992.
2. Between August 1981 and 1992, the applicant was charged with numerous offences, including, but not limited to stealing, goods in custody, robbery, possession of prohibited drugs, offensive conduct, enter enclosed lands, assault, and escape from lawful custody.
3. A hiatus in the applicant’s criminal activity between 1991 and 2007 is consistent with the applicant’s evidence that his Christian faith has enabled him to reform his behaviour.
(i) The likelihood of any repetition by the person of the offences or conduct and the impact on children of any such repetition.
1. The applicant has not committed a sexual offence since 1989. The respondent conceded that, in these circumstances, the likelihood of him committing a further sexual offence is “in the lower range”.
2. The 2007 offence was an impulsive act of violence against a vulnerable person. It occurred 18 years after his previous offence.
3. If a child were a victim or a witness to such an offence, it would have a very serious impact on the child.
(i1) Any order of a Court or Tribunal that is enforced in relation to the person
1. Not applicable.
(j) Any information given by the applicant in, or in relation to, the application.
1. The applicant gave evidence that he had a very traumatic childhood and was abandoned by his mother at an early age. We accept that it is likely that this would have significantly impacted his psychological development and was a contributing factor to his lengthy history of criminal offending.
2. However, it is of concern that, even though the applicant has significantly changed his behaviour, as a result of his Christian faith and support network, he steadfastly maintained his position that the victim of the disqualifying offence engaged consented to have sexual intercourse with him.
3. We have ongoing concern about the applicant’s attitude to women and his understanding of consent. We place little weight on the character references provided by the applicant, because, according to the applicant, they were unaware of the 1985 offence.
4. Furthermore, the character reference of Pastor George Sidiropoulos also reveals a problematic perception of the applicant’s disqualifying conduct and the meaning of consent. We infer that the Pastor came to the surprising conclusion that the applicant’s primary transgression was one of dishonesty rather than sexual assault.
5. His reference suggests that he regarded the withholding of drugs as more serious than the sexual assault. We infer from his statement that he did not regard coercion to engage in sexual intercourse (having evidently accepted the applicant’s version of the events that took place) as sexual intercourse without consent. Pastor Sidiropoulos wrote:
“He told me he promised her drugs if she had sex with him and she agreed. He however acted very foolishly in withholding the drugs unless she also had intercourse with his late brother and friend, which she then did. He acted dishonestly and foolishly…”.
1. However, to the extent that we can place any reliance on the references, they support the fact that the applicant has made valuable contributions to his community and is now highly regarded, and that, as a result of his faith, he has generally reformed his behaviour.
(j1) Any relevant information in relation to the person that was obtained in accordance with section 36A.
1. Not applicable.
(k) Any other matters that the Children's Guardian considers necessary.
1. The respondent asked the Tribunal to consider the report of Psychologist Peter Ashkar, dated 9 May 2007, prepared for the Court which heard the malicious wounding charge. In particular, the respondent referred to Mr Ashkar’s recommendation that the applicant engage in anger management intervention and individualised cognitive behaviour therapy that “should target negative thinking, aggression, destructiveness, impulsivity, poor affect, empathy and moral development”.
2. Mr Ashkar also concluded that the applicant requires a treatment program as he “does not have the skills he needs to forestall relapse”. The Magistrate at the time observed that the applicant had not “come to grips” with anger management.
3. Despite the applicant’s vague assertion that he has engaged in such therapy since that time, there is no evidence to support that assertion.
Risk to Children - our decision
1. Our substantive role is to assess whether the applicant poses a risk to the safety and well-being of children and young people.
2. We have based our consideration on all of the evidence provided by the parties in documentary form. We have also analysed the circumstances of the disqualifying offence and the applicant’s subsequent conduct.
3. Although we find that the disqualifying offence and the other conduct for which the applicant has been convicted is extremely serious, we are satisfied that none of his offending behaviour involved children.
4. We accept the applicant’s evidence that he is a father of two adult children, godfather, and uncle, because it is uncontested. We are satisfied, because the applicant’s criminal records confirm, that there has been a marked change in the applicant’s offending behaviour. He has not been charged with any offence for 17 years. We therefore accept that, as a result of his faith and his support network, he has apparently reformed his behaviour.
5. We are, therefore, satisfied that he has rebutted the presumption that he presents a risk to children.
Section 30 (1A) consideration and findings
1. Having made that finding, we are now required to consider section 30 (1A) of the Act, which requires that:
(1A) The Tribunal may not make an order under this Part which has the effect of enabling a person (the affected person) to work with children in accordance with this Act unless the Tribunal is satisfied that:
(a) a reasonable person would allow his or her child to have direct contact with the affected person that was not directly supervised by another person while the affected person was engaged in any child-related work, and
(b) it is in the public interest to make the order.
Reasonable person test
1. A reasonable person is a parent or guardian of a child. The test requires us to consider whether that person would allow his or her own child to have direct and unsupervised contact with the applicant.
2. The case of CYY v Children’s Guardian (No 2) [2017] NSWCATAD 262 dealt with the ‘reasonable person test’. At paragraph 73, the Tribunal observed the following:
73. The case of CHB v Children’s Guardian [2016] NSWCATAD 214 held that s.30(1A) assumes the reasonable person is acquainted with all the relevant facts of which the Tribunal is aware. The relevant facts would include the transcript of the 2012 criminal proceedings, the judgment of the Federal Circuit Court, the exclusion of any other complaints or allegations against CYY other than allegations made by AA and AB and the context of the ongoing acrimonious family law dispute between CYY and AA. It would also include his work record as a serving police officer from 2003 to 2013 and as a high school tutor from 2012 until recently and not being subject to any allegations or complaints of violence or inappropriate conduct. Based on the relevant facts the Tribunal is satisfied that a reasonable person would leave a child unsupervised in CYY’s care.
1. Additionally, in our view the reasonable person would approach the matter in the same manner as we have approached the section 30 (1) issues and risk. The reasonable person would consider the relevance and circumstances of the disqualifying matter, as well as the 1985 and 2007 offences, the applicant’s current attitudes to those offences, and his conduct in the intervening period.
2. In our view, a reasonable person would acquaint themselves with all of the evidence and submissions before the Tribunal. A reasonable person would not approach the matter with a closed mind but apply an objective test in consideration of all the material.
3. Regard would also be given to the applicant’s entire criminal history, his use of drugs and alcohol, and recent history. This includes the lack of any evidence of risk to children.
4. It is likely that a reasonable person would view the applicant with compassion, in view of his traumatic childhood, the fact that he was abandoned by his mother and placed in an orphanage at a tender age, and the fact that he appears to have reformed his conduct.
5. However, a reasonable person would also, in our view, have grave concerns about the applicant’s lack of insight into the concept of consent. As a matter of procedural fairness, we put to the applicant the notion that his concept of consent appeared problematic. He disagreed. He steadfastly maintained his position that he did not have non-consensual sex with the victim of the disqualifying offence, despite having conceded that he coerced her to have sexual intercourse with him.
6. Furthermore, a reasonable person would have concerns about the applicant’s history of lying to police and denying or minimising his offences. To some extent, this tendency persisted at the hearing. When recounting the circumstances of the disqualifying offence, to the extent that he did provide any detail, the applicant focussed more on the fact that he acted dishonestly by failing to provide the drugs he says he promised the victim, than the fact that, at the very least, he coerced her to have sexual intercourse with him and his brother (by his account).
7. Although he said that he takes responsibility for his past actions, we are not persuaded that this is possible, if he does not demonstrate that he understands the meaning of consent, in accordance with community standards. This is a matter which has been the subject of much public discourse in recent years. A reasonable person would, in our view, expect the applicant to be aware of this and would be concerned that he would reflect and impart attitudes inconsistent with community standards.
8. For this reason, we cannot be satisfied that a reasonable person would allow his or her child to have direct contact with the applicant that was not directly supervised by another person while the applicant was engaged in any child-related work.
Public Interest test
1. Were the Tribunal to be satisfied that the presumption of risk is rebutted, and the reasonable person test is satisfied, we would need to consider section 30 (1A) (b) that it is in the public interest to make the order. CYY also addressed this issue at paragraphs 74-75.
74. The second part of the test of s.30(1A) is the public interest test. The Tribunal must consider the public interest in the context of s.4 of the Act, which provides that the safety, welfare and well-being of children and in particular, protecting them from child abuse, being the paramount considerations.
75. The concept of public interest has been determined on the basis of giving priority to the broader interests of the community over private interests; see Smith v Commissioner of Police [2014] NSWCATAD 184. The Tribunal also refers to ZZ v Secretary of the Department of Justice [2013] VSC 267 where Justice Bell reviewed the authorities in relation to the public interest test and adopted the analysis that included consideration of factors such as the right of a person to engage in work and in the community affairs, and people with appropriate skills and experience having contact with children.
1. Because we have found that the application does not satisfy the “reasonable person test”, the application must fail. It follows that we do not need to make any findings in relation to this issue.
Conclusion
1. For the reasons set out above, we conclude that the application must fail.
Orders
1. The Applicant's application for an enabling order made 14 October 2023 pursuant to s 28 of the Child Protection (Working with Children) Act 2012 is refused.
2. The Tribunal orders under s 64 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) that publication of information that will identify the applicant, any victims, witnesses or evidence given and received in the Tribunal hearing or in relation to the proceedings which is likely to identify those persons is restricted.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Amendments
02 August 2024 - Corrected Order 1 to refer to the correct section of the Child Protection (Working with Children) Act.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 02 August 2024 | 8,690 |
nsw_caselaw:190fb64282e6d65e36cefd10 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Medical Council of New South Wales v Mooney [2024] NSWCA 180 | https://www.caselaw.nsw.gov.au/decision/190fb64282e6d65e36cefd10 | 2024-08-04T23:49:22.443396+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Medical Council of New South Wales v Mooney [2024] NSWCA 180
Hearing dates: 28 June 2024
Decision date: 30 July 2024
Before: Leeming JA at [1];
Kirk JA at [141];
Price AJA [142]
Decision: 1. To the extent necessary, grant leave to appeal in respect of grounds 1, 2, 3, 4 and 6 of the further amended notice of appeal, and refuse leave in respect of ground 5 except insofar as it raises a question of law.
2. Appeal dismissed, with costs.
3. Note that the effect of orders 1 and 2 is to discharge the stay extended by this Court on 28 June 2024, such that the remaining matters in the application before NCAT can now be determined.
Catchwords: PROFESSIONS AND TRADES – medical practitioners – application for reinstatement – deregistered medical practitioner applied for reinstatement order – NCAT made order – Medical Council appealed, purportedly as of right – appeal as of right confined to questions of law – notice of appeal failed to identify any questions of law – belated application for leave to appeal on other grounds – whether error of law in NCAT’s decision – whether any other error disclosed – appeal dismissed
Legislation Cited: Australian Consumer Law, s 18
Civil and Administrative Tribunal Act 2013 (NSW), s 4, cl 29 of Sch 5
Health Practitioner Regulation (Adoption of National Law) Act 2009 (NSW)
Health Practitioner Regulation National Law (NSW), ss 3B, 55, 149E, 163, 163A, 163B, 163C, Div 8 of Pt 8
Supreme Court Act 1970 (NSW), s 48
Uniform Civil Procedure Rules 2005 (NSW), r 51.18
Cases Cited: Callan v Medical Board of Australia [2024] NSWSC 336
Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378
Fisher v Nonconformist Pty Ltd [2024] NSWCA 32
Health Care Complaints Commission v Mooney [2021] NSWCATOD 206
Health Care Complaints Commission v Mooney [2022] NSWCATOD 44
Health Care Complaints Commission v Robinson [2022] NSWCA 164
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; [1978] HCA 11
Jan v Health Care Complaints Commission [2021] NSWSC 350
Kudrynski v Orange City Council [2024] NSWCA 33
Minister for Aboriginal Affairs v Peko-Wallsend Pty Ltd (1986) 162 CLR 24; [1986] HCA 40
Mooney v Medical Council of NSW [2024] NSWCATOD 24
Osland v Secretary to the Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24
Qasim v Medical Council of New South Wales [2021] NSWCA 173
Reimers v Medical Board of Australia [2024] NSWCA 164
Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223
Stoltenberg v Bolton; Loder v Bolton [2020] NSWCA 45; 380 ALR 145
Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40
Trinh v Medical Council of New South Wales [2024] NSWCA 58
Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties: Medical Council of New South Wales (Appellant)
William Mooney (Respondent)
Representation: Counsel:
K Richardson SC and I Fraser (Appellant)
M Hutchings and C Coventry (Respondent)
Solicitors:
Health Professional Councils Authority (Appellant)
Unsworth Legal (Respondent)
File Number(s): 2024/000123098
Publication restriction: Nil
Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal
Jurisdiction: Occupational Division
Citation: [2024] NSWCATOD 24
Date of Decision: 11 March 2024
Before: Hennessy ADCJ, Deputy President
Dr H North, Senior Member
Dr A Eyers, Senior Member
D Telford, General Member
File Number(s): 2023/00130761
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
JUDGMENT
1. LEEMING JA: The ultimate issue in this appeal is whether the appellant Council has established error in the Tribunal’s decision earlier this year to make a reinstatement order in favour of a respondent, who had practised as a surgeon until his registration was cancelled for professional misconduct in 2022. That substantially turns on whether error has been shown in the evaluation of the evidence bearing on the respondent’s far-from-unblemished fitness, although it is complicated by the procedural history. For the reasons that follow, I propose that the appeal be dismissed.
Procedural background of this appeal
1. The Medical Council of New South Wales purports to appeal as of right from the decision of the Occupational Division of New South Wales Civil and Administrative Tribunal (“NCAT”): Mooney v Medical Council of NSW [2024] NSWCATOD 24. NCAT was constituted by an acting judge, two medical practitioners and a lay member. After a hearing occupying two days, it made a “reinstatement order” in March 2024 in favour of the respondent, Mr William Mooney, who had formerly practised as an ear, nose and throat surgeon but whose registration had been cancelled in April 2022 by the Occupational Division of NCAT, differently constituted. The 2024 decision indicated some of the conditions which were contemplated, and to which Mr Mooney agreed (including as to supervision, maximum hours worked, continuing to see his treating psychiatrist and psychologist, and not to self-medicate), but made directions for further submissions on the conditions of his registration. This bifurcated approach was not what NCAT had intended. It arose notwithstanding NCAT’s directions at the conclusion of the hearing, and despite Mr Mooney supplying submissions as to conditions in accordance with those directions. The process contemplated by NCAT’s directions was left incomplete because the Medical Council, rather than complying with the directions and supplying the conditions it proposed if a reinstatement order were made, merely opposed the making of such an order and sought a further opportunity to supply submissions in the event that an order was made. NCAT acceded to that request. Then, rather than supplying the conditions, the Medical Council brought this appeal, purporting to do so as of right. The process of identifying the conditions on Mr Mooney’s registration has been stayed, by consent, pending this appeal.
2. Clause 29 of Schedule 5 of the Civil and Administrative Tribunal Act 2013 (NSW) confers a right of appeal to a party to the Supreme Court. The appeal is allocated to the Court of Appeal by reason of Supreme Court Act 1970 (NSW), s 48(1)(a)(vii) and (2)(f). The appeal may be made as of right on any question of law, or with the leave of the court on any other grounds: cl 29(4)(b).
3. The Medical Council maintained that it enjoyed an appeal to this Court from the reinstatement order as of right, despite the bifurcation of the hearing in NCAT which has led to the conditions upon Mr Mooney’s registration not having been determined. Leave is required to appeal from interlocutory decisions (cl 29(6)), but the Medical Council pointed to what it said was the exhaustive definition of “interlocutory decision” in s 4 of the Civil and Administrative Tribunal Act and said that the reinstatement order was not in that list. That is true so far as the enumerated items in the list go, which include granting of stays, publication restrictions, issuing summons, extending time, evidential matters, disqualification, joinder and summary dismissal. However, that is not an end to the analysis, because the definition of “interlocutory decision” extends to “any other interlocutory issue before the Tribunal”.
4. True it is that this Court expressed the view in Health Care Complaints Commission v Robinson [2022] NSWCA 164 at [18], [24] and [83]-[85] that an appeal lay as of right from finding or failure to find professional misconduct or unsatisfactory professional conduct following a “Stage One” hearing. Similar reasoning would support the conclusion that the making of a reinstatement order is not an “interlocutory decision” and thus an appeal lies as of right on any question of law. However, this is far from being clear beyond argument. Health Care Complaints Commission v Robinson does not dictate the position in relation to an application for a reinstatement order which, inevitably, will be subject to conditions, where it was never intended by NCAT that it make a free-standing reinstatement order, and where the fact that it has been made without conditions is a consequence of the stance taken by the Medical Council to NCAT’s directions. It is far from desirable that either the applicant or the professional regulator be entitled to appeal as of right at every stage in a multi-stage process, thereby leading to multiple hearings and additional expense and delay; thus in a related context, this Court has referred to the merit in “keeping a tight rein” on decisions of NCAT which permit an appeal as of right: Trinh v Medical Council of New South Wales [2024] NSWCA 58 at [53]. It strikes me as decidedly odd that the Medical Council’s decision to bifurcate the process would entitle it to an appeal as of right from the reinstatement order, and if that appeal fails, a separate appeal (whether by right or with leave it is unnecessary to consider) when conditions were imposed.
5. It is unnecessary to dwell further on this point, because it is palpably clear that none of the Medical Tribunal’s proposed grounds of appeal, save for the last (which was that NCAT’s decision was Wednesbury unreasonable), is on a question of law for the purposes of cl 29. As much had been suggested in Mr Mooney’s written submissions supplied in advance of the hearing of the appeal. (The same submissions recounted the unhappy history of the Medical Council’s non-compliance with NCAT’s directions, to which in its written submissions in reply the Medical Council made no response.) Notwithstanding Mr Mooney’s submission, it was only during the hearing and following a strong indication by members of this Court that the Medical Council applied for leave in the event that its appeal was not as of right, and that in turn led to the need to supplement the appeal books and for Mr Mooney to be given an opportunity to respond to the expanded case now sought to be made.
6. Were I to have concluded that the Medical Council’s appeal was to succeed, I would have made a special costs order by reason of the matters identified above. A series of wrong decisions by the Medical Council (namely, not complying with NCAT’s directions, purporting to appeal as of right, not applying for leave until the hearing despite the need for leave being flagged in the respondent’s submissions) required Mr Mooney to take steps and incur expense after the hearing. That should not have happened.
7. The course adopted by the Medical Council of bringing this appeal and fragmenting the proceedings before NCAT is not without substantive consequences. As will be seen in what follows, the Medical Council’s submissions are essentially factual. One ground (ground 5) challenges the conditions indicated but not made by NCAT. I shall address that ground in detail in due course, but enough has been already said to expose the difficulty in the Medical Council being granted leave to be heard on indicative conditions which have not in fact been made, in circumstances where that has come about because the Medical Council did not comply with NCAT’s directions. Further, the Medical Council wishes to contend that the fact finding process miscarried, and that NCAT should not have been satisfied that it was appropriate to make a reinstatement order. The Medical Council’s appeal falls to be determined in the absence of conditions on Mr Mooney’s registration, and accordingly, the burden falls to the Medical Council to persuade this Court that NCAT should have found that no conditions could be placed on Mr Mooney’s registration to attend to any risks he might present if his registration were restored. For all of those reasons, the Medical Council’s decision to depart from the regime stated by NCAT, which would have finalised proceedings in that tribunal, carries with it consequences for its appeal in this Court.
Factual Background
1. Mr Mooney was first registered as a medical practitioner in 1990, and principally practised as an ear nose and throat surgeon. In 2006, he established a private practice where he offered facial and laser treatments and cosmetic injectables.
2. Since 2013, Mr Mooney has been the subject of various complaints which have resulted in hearings before the Medical Council and NCAT. These culminated in a finding of professional misconduct by NCAT following a “Stage One” hearing in late 2021: Health Care Complaints Commission v Mooney [2021] NSWCATOD 206. Mr Mooney’s proven misconduct fell into three categories:
1. deficiencies in the care and treatment he provided to “Patient A” and “Patient B”, resulting in their deaths;
2. forming an inappropriate personal relationship with “Patient C” from 2013 to early 2016 and unjustifiable prescribing, and
3. misleading authorities and breaching conditions.
1. NCAT found that Mr Mooney’s conduct in respect of each of these categories departed from the “proper” or “reasonably expected” standard of a practitioner of the equivalent level of experience: see (without being exhaustive) [424], [430], [435] and [444].
2. A brief summary of each category of conduct follows. It will be seen in due course that the third category is of greatest relevance for the purposes of this appeal.
Patient A
1. Mr Mooney performed an operation on Patient A, a young man aged 24, in February 2018 to fix his snoring. During the operation Mr Mooney noticed a small amount of bleeding, but thought that his repair of the artery had been successful. Two days later Patient A underwent emergency surgery for a recurrent haemorrhage, where he suffered a heart attack during the operation and later passed away.
2. NCAT found that, although he conducted post-operative phone reviews, Mr Mooney’s conduct fell below the reasonably expected standard because he failed to review Patient A personally during the two days he stayed in hospital after the operation, despite knowing that he had bled during the operation. NCAT further found that Mr Mooney performed the operation in an inappropriately short amount of time.
Patient B
1. Mr Mooney performed a “Simple limited redo FESS” surgery on Patient B, a 41 year old man, in November 2017. During the operation, Mr Mooney penetrated the bone below the brain and disrupted an artery causing bleeding into the right frontal lobe. Patient B later died as a result of this procedure.
2. NCAT found that Mr Mooney had become disorientated while he was operating, and that he did not have Patient B’s CT scans in front of him during the operation, which he should have been consulting continually during the operation to check the position of the instrument being passed through the nasal passages. It was also found that the operation was performed “with reckless haste”, and that it was an inherently difficult procedure fraught with potential serious risks which could not have been performed with the requisite level of care in 25 minutes.
Patient C
1. Patient C was referred to Mr Mooney by a general practitioner in 2009, when she was then aged 22. The referral noted that she suffered from anorexia-bulimia on and off since the age of 11 and had a rhinoplasty in 2004. Mr Mooney saw Patient C during the ensuing years in relation to a number of different procedures, including surgery for chronic tonsilitis, nasal surgery, as well as a number of cosmetic injections.
2. In October 2013, when he was 47 years old and she was around 26, Mr Mooney commenced a personal relationship with Patient C, which lasted for more than two years. The relationship included a dinner in 2014 where they consumed alcohol and ended up together in a hotel room. Records from Telstra indicated that between 4 October 2013 and 19 January 2016 there were 3,425 text messages and 807 phone calls between them.
3. A further aspect to this complaint was that Mr Mooney prescribed Duromine, a weight loss medication, to Patient C, who had a long standing eating disorder, between 2014 and 2015. The prescribing was found not to be clinically justified, in circumstances where Mr Mooney had not taken an adequate history, had not advised her about the possible side effects, and he had not taken steps to ensure that it was safe for her to take the medication.
Misleading authorities and breaching conditions
1. There were a number of different incidents which comprised Mr Mooney’s misconduct in misleading authorities and breaching conditions.
2. One strand related to withholding information concerning his relationship with Patient C. At the Stage One hearing, NCAT found that “Dr Mooney knew his relationship with patient C breached professional standards and deliberately withheld details of that relationship from the regulatory authorities which are charged with protecting the public and maintaining professional standards”: at [442]. For example, Mr Mooney misled the Medical Council by saying that his social interactions with Patient C were “limited” between 4 October 2013 and 19 January 2016, in circumstances where they had in fact exchanged hundreds of phone calls and thousands of text messages during that period.
3. Another incident concerned Mr Mooney breaching conditions on his registration to attend scheduled hair drug screening, and subsequently lying about the reason for the breach. In February 2017, the Medical Council imposed conditions on Mr Mooney’s registration, namely, that he not prescribe for self-medication, that he not self-administer drugs of addiction, and that he was to undergo thrice weekly urine drug testing. In June 2018, the Medical Council placed additional conditions on his registration including that he participate in quarterly hair drug screening. NCAT found that he had breached those conditions, including by failing to attend scheduled hair drug testing and by working as a doctor on five days that he had been certified as unfit to attend hair drug testing. NCAT further found that Mr Mooney had lied to the Medical Council to try to hide the fact that he had breached the hair testing condition.
4. It is unnecessary to summarise all other instances that contributed to this finding of misconduct, save to say that Mr Mooney did not initially admit that he misled authorities, rather he only admitted that he had done so after NCAT had made that finding.
NCAT’s findings – Stage Two hearing
1. After making findings of misconduct at the Stage One hearing, NCAT moved to consider the protective orders which should be made at the “Stage Two” hearing: Health Care Complaints Commission v Mooney [2022] NSWCATOD 44.
2. NCAT noted that Mr Mooney’s misconduct was not the case of a single departure from ethical standards, but rather Mr Mooney had “committed acts which are egregious departures from proper standards across a broad range of duties which a doctor owes to his patients and the public”, which conduct “occurred over a lengthy period”: at [59] and [64].
3. NCAT noted that his conduct in relation to Patients A and B was a result of “failing to take care during operations” and to operate “safely and effectively”: at [61]. His relationship with Patient C was “an abuse of the doctor-patient relationship” because it “undermines the trust and confidence of patients in their doctors and of the community in the medical profession”: at [62]. In relation to his conduct in breaching conditions and misleading authorities, NCAT noted that those breaches were “completely inconsistent with his duty as a medical practitioner to be honest, ethical and trustworthy”: at [63].
4. NCAT acknowledged that Mr Mooney had general insight and remorse in respect of his misconduct, and that he had taken positive steps to reform his behaviour. However, weighing against this was the fact that many of the lies were deliberate, and that he had failed to accept that his misleading was deliberate in relation to his breaches of conditions until after a finding was made: at [91].
5. NCAT concluded at [99]:
Dr Mooney has shown a commitment to addressing the issues raised by the Complaints. However, taking into account the seriousness of the conduct, the need for general deterrence, the maintenance of confidence in the medical profession and the necessity to give Dr Mooney an opportunity to complete the journey into gaining full insight we have decided to cancel, not suspend, his registration. We disqualify him from being registered in the medical profession for a period of one year from the date of these Orders.
1. Accordingly, NCAT made the following orders on 21 April 2022:
(1) Pursuant to s 149C(1)(b) of the National Law, Dr Mooney’s registration as a medical practitioner is cancelled.
(2) Pursuant to s 149C(7) of the National Law, Dr Mooney may not apply for a review of Order 1 for a period of 12 months from the date of this decision.
(3) Dr Mooney to pay the costs of the HCCC of the proceedings.
Statutory regime relating to reinstatement
1. The orders refer to the “National Law”, which is a reference to the Health Practitioner Regulation National Law (NSW). I shall use the same terminology, noting that the references are to the provisions in the schedule to a Queensland statute subject to numerous modifications, made applicable by the Health Practitioner Regulation (Adoption of National Law) Act 2009 (NSW). Despite the name “National Law”, most of the salient provisions for present purposes are modifications whose operation is confined to New South Wales. The regime is explained in Callan v Medical Board of Australia [2024] NSWSC 336 at [16]-[20] and Reimers v Medical Board of Australia [2024] NSWCA 164 at [30]-[32].
2. The effect of the orders made on 21 April 2022 was prescribed by s 149E of the National Law:
149E Effect of cancellation and disqualification decisions of Tribunal [NSW]
(1) Despite any other provision of this Law, each of the following persons cannot make an application for registration as a health practitioner unless the Tribunal has made a reinstatement order under section 163B with respect to the person—
(a) a person whose registration as such a health practitioner has been cancelled by the Tribunal under this Law;
(b) a person who has been disqualified from being registered as such a health practitioner by the Tribunal under this Law.
(2) Subsection (1) and Division 8 continue to apply in respect of a disqualified person and the disqualification order even if the period of disqualification has expired or specified conditions for the cessation of the disqualification have been complied with.
1. Mr Mooney was thus prohibited from making an application for registration as a health practitioner unless and until a “reinstatement order” was made under s 163B. That was the only route available to him if he wished to obtain re-registration as a medical practitioner.
2. Mr Mooney sought a review of NCAT’s Stage Two orders on 24 April 2023 under Div 8 of Pt 8 of the National Law, promptly after the expiry of the 12 month period.
3. Section 163A makes provision for a person’s rights of review. Under subs (1)(b), “[a] person may apply to the appropriate review body for a review of … a relevant order made in relation to the person”. By force of s 163(1)(c) NCAT was the “appropriate review body” to hear Mr Mooney’s application for review. A “relevant order” is defined by s 163A(4) to include, namely, “an order that the person’s registration be cancelled … from being registered in a particular health profession”. The effect of ss 163 and 163A is that NCAT was the appropriate body to hear Mr Mooney’s application for review of order 1 made on 21 April 2022.
4. Section 163B sets out NCAT’s powers on review. Mr Mooney sought a “reinstatement order” under s 163B(1)(c), whereas the Medical Council sought for the application for review to be dismissed under s 163B(1)(a). A “reinstatement order” is defined in subs (3) to mean:
… an order that the person may be registered in accordance with Part 7 if—
(a) the person makes an application to the National Board; and
(b) the relevant National Board decides to register the person.
1. The effect of a reinstatement order was, correctly, described by senior counsel for the Medical Council in this Court as “in effect a lifting of the bar so that Mr Mooney could make an application to the National Board, that block that would otherwise be there is removed, and then it’s a matter for the National Board whether he’s ultimately registered”.
2. Subsection (4) of s 163B also confers a power on NCAT to impose conditions on a person’s registration:
(4) The appropriate review body may also impose conditions on the person’s registration or alter the conditions to which the person’s registration is to be subject under the reinstatement order.
1. Subsection (4) extends to the power to impose conditions attaching to a reinstatement order. As explained in Jan v Health Care Complaints Commission [2021] NSWSC 350 at [64]:
True it is that when the power is exercised, the practitioner will not be registered. That will only occur when the relevant National Board makes its decision. However, the words “alter the conditions to which the person’s registration is to be subject under the reinstatement order” can bear no meaning at all unless they refer to conditions to be imposed in the future following the relevant National Board effecting the registration which has been ordered by NCAT, and there is no reason to construe the powers conferred upon the specialist “appropriate review body” narrowly.
1. Finally, s 163C sets out the standard of review that must be applied in determining an application for review. It provides, by subs (1), that NCAT is “to determine the appropriateness, at the time of the review, of the order concerned”. Subsection (2) further clarifies that NCAT “is not to review the decision to make the order, or any findings made in connection with the making of that decision”.
2. Thus, in determining the application for review, NCAT’s role was not to consider the correctness of the 21 April 2022 decision to cancel Mr Mooney’s registration, but to determine the “appropriateness” of making a reinstatement order at the time of the hearing for such an order. As Brereton JA explained in Qasim v Medical Council of New South Wales [2021] NSWCA 173 at [16], “[s]uch an application is an inquiry into present fitness, and not a review of the original decision in which the practitioner was deregistered”.
3. Although s 163C(3) identifies a number of mandatory Peko-Wallsend considerations (concerning the complaints that were made), it otherwise provides little assistance for determining the matters to which NCAT must have regard in order to determine “appropriateness”. In Qasim, Brereton JA (with whom Bell P and Emmett AJA agreed) outlined the following applicable principles at [17]-[19]:
In conformity with s 163C(1), the task of the review tribunal on a reinstatement application is therefore to determine the appropriateness of an order reinstating the applicant, as at the date of hearing the application. In performing that task, the Tribunal must have regard to the objectives and guiding principles of the National Law, which relevantly include the protection of the public by ensuring that only those practitioners who are suitably trained and qualified to practise in a competent and ethical manner are registered, the paramount consideration being the protection of the health and safety of the public.
The position of an applicant for reinstatement is disadvantaged by reason that presumptions of fitness, which might otherwise arise from an absence of contrary suggestion, do not operate for the benefit of an applicant who has been deregistered on the basis of unfitness. An applicant for reinstatement bears the onus of demonstrating that he or she can be trusted to practise in a way that conforms to the professional standards expected of a health practitioner and presents no risk to the safety of the public and their confidence in the profession.
Thus the essential task of an applicant for reinstatement is to show that he or she is no longer unfit. In this case, given that the sole basis of the appellant’s deregistration was lack of competence by reason of an impairment, what the appellant had to demonstrate was that she was no longer unfit by reason of an impairment of such a nature and degree as impaired her mental capacity to practise. On that issue, she bore the onus of proof. (Footnotes omitted.)
1. The foregoing boils down to this. The cancellation of Mr Mooney’s registration was the result of three categories of misconduct: (1) forming an inappropriate personal relationship with Patient C from 2013 to early 2016 and unjustified prescribing; (2) deficiencies in the care and treatment provided to Patient A and Patient B, and (3) misleading authorities and breaching conditions. Together, those matters resulted in Mr Mooney’s being unfit for registration. In order for a reinstatement order to be the appropriate order, Mr Mooney had to demonstrate, as at the time of the hearing for a reinstatement order, that he was no longer unfit to practise by reason of those matters. That is not to deny that other matters, especially matters post-dating his deregistration in 2022, might bear upon the application for a reinstatement order. However, in respect of the matters which had led to his deregistration, he bore the onus of proof.
NCAT’s decision on the reinstatement application
1. The Medical Council opposed Mr Mooney’s application for a reinstatement order. His application was heard by NCAT on 16 and 17 October 2023, with a decision being handed down on 11 March 2024: Mooney v Medical Council of NSW [2024] NSWCATOD 24. As noted at the outset of these reasons, it is from the decision to make a reinstatement order subject to conditions, which have not to date been finalised, that the Medical Council brings the present appeal.
2. In the period between his cancellation on 21 April 2022 and the hearing for his reinstatement, a number of significant events occurred which bore upon the “appropriateness” of NCAT making a reinstatement order. It is necessary to set out these events in some detail, alongside NCAT’s findings in relation to them.
Mr Mooney’s positive post-cancellation period conduct
1. In his written statements provided to NCAT, Mr Mooney set out in detail what positive steps he had taken since the deregistration decision.
2. Mr Mooney said that he had thoroughly reviewed NCAT’s decisions and fully accepted all aspects of the decisions. He then made a detailed plan with Professor Eisenberg (his previous supervisor) as to ways in which he could rehabilitate himself. One aspect of this was keeping a personal journal, which was in evidence before NCAT. NCAT noted that the journal “demonstrates that Mr Mooney has thought very carefully over a long period of time about what led him to behave in the way he did. It also demonstrates his determination not to make the same mistakes again”: at [93].
3. Mr Mooney continued to see psychotherapist Dr Hogan and his treating psychiatrist Dr Farago, each on a monthly basis. His sessions with Dr Farago focused on gaining full insight into his dishonesty to the Medical Council. Mr Mooney also developed a stress response plan with his psychologist.
4. Finally, Mr Mooney took steps to continue his professional development. He attended CPD meetings and maintained his CPD status, he enrolled in an undergraduate degree in Philosophy at Macquarie University, and he attended a week-long ethics course with Monash University.
Mr Mooney’s possession of cocaine in October 2022
1. The most significant event which occurred during the post-cancellation period occurred on the evening of Saturday 22 October 2022.
2. At around 10pm that evening, police observed Mr Mooney standing in the middle of a road in Bondi. A car pulled up and he got in, before exiting the car shortly thereafter. It was accepted before NCAT that Mr Mooney paid the driver $300 for 0.5g of cocaine. Suspecting that a drug transaction had occurred, Constable Constantinou, who was not in uniform, got out of an unmarked police car and ran for about 20-25m towards Mr Mooney. It was not disputed that shortly before the Constable reached him, Mr Mooney stopped on the gutter, reached behind his back and threw the cocaine away. There was a conversation between the officer and Mr Mooney to which I shall return. The officer located the bag containing cocaine, and Mr Mooney was issued with a court attendance notice for possessing a prohibited drug.
3. Mr Mooney attended the Waverley Local Court on 14 December 2022, where he pleaded guilty. A NSW Police “facts sheet” was provided to the Local Court, which was prepared by Constable Constantinou four days after the incident. A great deal of attention was given to this document during the hearings in NCAT and in this Court, and it is necessary to reproduce it in full. In what follows, the underlined words were included in the original document, but redacted from the version which was provided to the Local Court when Mr Mooney was sentenced:
FULL FACTS
The accused in the matter is William MOONEY.
On Saturday 22 October 2022, investigators attached to Region Enforcement Squad, CMR-South, were conduc[t]ing patrols of Bondi Beach and its surrounds as part of Operation MERCADOR targeting the supply of prohibited drugs, namely Cocaine by way of the commonly known “dial a dealer” methodology.
About 10:00pm Investigators observed the accused who was standing in the middle of the road, constantly texting. The accused was situated on Beach Road, Bondi Beach. After five minutes of observations, investigators observed a grey Toyota Corolla bearing South Australian registration S265CPU, park next to the accused. The accused entered the vehicle and spent appropriately [sic] one minute in the vehicle before getting out and heading towards the unit complex.
Suspecting that a drug transaction had occurred, investigators exited their vehicle to stop the accused. Whilst walking over to the accused, investigators displayed their identification badge whilst exclaiming “police”. The accused stopped on the gutter just before the footpath and was observed to reach behind his back and move his arms in a throwing motion. Investigators immediately thought he had just thrown something on the floor. The accused was directed to keep his hands in front of him and step away from the gutter and onto the footpath.
Investigators introduced themselves by way of name, warrant card, badge and place of work. Police questioned the accused as to what his interaction was in the vehicle he had just gotten in for a brief moment to which he answered with words of the effect of, “I thought it was my Uber, I was going to the bottle shop, but it wasn’t my Uber”. Police asked the accused for identification to which he could not produce as he left his wallet in his unit. The accused was also inappropriately dressed to go to the bottle shop as he was dressed in boxing drawers. At this stage investigators found his versions hard to believe due to their observations and suspected he may be in the possession of a prohibited drug.
The accused was submitted to a search with nil find. Police directed the accused not to move and went to the gutter where he was initially stopped, located right where the accused was standing was a small sealed plastic bag containing cocaine. Subsequently, the accused was arrested and cautioned in relation to the cocaine. The accused repeatedly stated that police could not prove it was his as it wasn’t found on him. Moments later, a female acquaintance of the accused, Gemma WRIGHT, appeared from the direction of the accused’s unit. When she was aware of police presence she constantly stated that the accused was getting an Uber.
Whilst, questioning the accused, WRIGHT pleaded with investigators not to go ahead with the charge. WRIGHT constantly stated words to the effect of, “Please don’t do this guys, this is going to ruin him, charged me instead. What can I do to fix this, Please guys lets me fix this, what can I do, I’ll do anything”. WRIGHT immediately backtracked and stated that it was not his fault and she was the one who made the order for the cocaine. The accused tried to silence WRIGHT at this point but she continued pleading with investigators, she went as far as showing investigators photos of the messages organising the transaction of cocaine to be delivered to the accused’s home address. The transaction was further confirmed with the messages stating the vehicle is a dark grey corolla which the accused was observed entering.
Whilst speaking with the accused, investigators who stopped the dark grey corolla confirmed that the driver of the vehicle, was found to have bags of cocaine identical to what the accused was found with. In addition the driver of the vehicle stated that she had just made a drug deal to the accused.
Based on investigators observations and evidence provided, the accused was issued with an Official Court Attendance Notice #1395987 for Posses Prohibited Drug under the Drug Misuse Trafficking Act 1985.
The cocaine was also seized and later weighed at Waverley Police station, which amounted to 0.5 grams before being placed in official drug bag XD700202173 and processed on the police system.
The matter is now before the court.
Facts Created by: CON GEORGE CONSTANTINOU Date: 26/10/2022
1. Mr Mooney gave evidence that his lawyers had asked for the redactions to be made because they did not reflect his recollection of what had happened. The police officer, Constable Constantinou, gave evidence before NCAT that he was prepared to delete those matters because they were not necessary to prove Mr Mooney’s guilt.
2. Although Mr Mooney described the redacted facts sheet as his “best recollection” of the events, it was not his own account, nor was it intended as a complete record of the events. He did not himself give evidence before the Local Court.
3. In a statement filed in NCAT, Mr Mooney expanded on his recollection of events that night:
The event occurred at night, in the dark, without my glasses, when a plain clothes person was suddenly running and yelling at me. I was confused and scared. I didn’t understand what he was saying or who he was. I do not recall seeing ID. I immediately thought I was being mugged. I threw the drugs away. I have no recollection of saying I thought the car was an uber. I deny I was wearing “boxing drawers”. I was wearing regular shorts with pockets, a shirt and sneakers. I have never owned a pair of boxing drawers. Having discarded the drugs, I did not have any drugs on me. I said that I did not have drugs on me when initially asked. Once the immediate confusion subsided, I was completely frank, honest and co-operative with the police. I remain contrite, embarrassed and ashamed of that event.
1. In a separate statement he wrote to Dr Fisher (to which I shall return), Mr Mooney added that he said “I think I said I got into the wrong car” to the police officer, and accepted that he said he did not have any drugs on him, but that he did not think this was an evasive statement.
2. NCAT noted that Mr Mooney’s account of events gave rise to three matters that were in tension with the version of events given by Constable Constantinou in the Police facts sheet, which were described as “the mugging issue”, “the wrong car issue” and “the possession issue”:
1. In his supplementary statement supplied to the Tribunal Mr Mooney wrote, “I immediately thought I was being mugged”. NCAT did not accept Mr Mooney’s version of events. Rather, it found that Mr Mooney threw the drugs away when he heard the person say “police”: at [79].
2. Although Mr Mooney admits that he told Constable Constantinou that he got into the wrong car, he maintained that this statement was not misleading, and denied that he said he thought he was getting into an Uber. NCAT found that “[w]hether Mr Mooney said he got in the wrong car, or it wasn’t his Uber, is not material. Either way he was making an excuse as to why he had got into and out of a car so quickly”: at [83].
3. According to Constable Constantinou, Mr Mooney “repeatedly stated that police could not prove it [the bag of cocaine] was his as it wasn’t found on him”. Mr Mooney denied saying words to that effect, but said that he told Constable Constantinou that he did not have any drugs on him. NCAT reasoned as follows at [85]:
Mr Mooney admits that he told Constable Constantinou that he did not have any drugs on him. Whether Mr Mooney said, “I don’t have any drugs on me” or “you can’t prove the drugs are mine”, the intended effect is similar. Mr Mooney agreed that that was an evasive answer because he had thrown the drugs away, but denied that he was being misleading or not frank. In our view, telling a police officer that you do not have any drugs on you, when you have thrown them away, is not only evasive, it is also misleading.
1. Mr Mooney said that once the bag of cocaine was retrieved, he was “completely frank, honest and co-operative with police”. However, for the reasons given on each of these three issues, NCAT found that “some of Mr Mooney’s responses were evasive and he did not tell the whole truth”: at [80]; and concluded at [86]:
Mr Mooney says that when the drugs were found he admitted that they were his. There is nothing in the COPS Event or either version of the Fact Sheet to support that assertion. Mr Mooney did not claim to have made that admission in his statement to the Tribunal and Constable Constantinou rejected it in cross-examination. While Mr Mooney did plead guilty, we are not persuaded that he admitted that the drugs were his on the night of his arrest. In these respects, Mr Mooney’s characterisation of his interactions with police as “completely frank, honest and co-operative” is not accurate.
Other conduct after deregistration
1. The Medical Council pointed to other conduct by Mr Mooney which it submitted could be characterised as “misleading”. All save one of these matters may be outlined briefly; they were, rightly, given much less attention in the submissions in this appeal. The exception is the statements made by Mr Mooney to the health professionals who were to give evidence to NCAT, which was central to the appeal and is addressed at length below after the minor matters are noted.
2. First, after NCAT’s deregistration decision in April 2022, Mr Mooney amended the homepage of his website, in a way which implied that it was his choice to step away from clinical practice for a short while. NCAT found that while this explanation was “not the whole truth”, Mr Mooney “was not obliged to tell the public on his website that his registration had been cancelled”. Thus, it concluded that he had “not behaved dishonestly or unethically in these respects”: at [54].
3. Secondly, Mr Mooney made representations to both the Local Court and NCAT that all his prior drug tests had produced negative results. Although urine tests had returned consistently negative tests, he had returned positive drug test results for his hair testing. He maintained that this arose as a result of occupational exposure as opposed to recreational use. According to Mr Mooney, his lawyer’s advice was that he did not need to disclose the positive hair drug test results because of the small “trace positive” amounts involved.
4. NCAT found that these representations were “misleading in the sense that Mr Mooney was not telling the whole truth about those test results”: at [63]. However, because the Medical Council had not taken any action in relation to those positive trace results, NCAT found that the representations “do not reflect adversely on Mr Mooney’s honesty and integrity” and did not lead them to a conclusion that “Mr Mooney cannot be trusted to practise in a way that conforms to the professional standards expected of a health practitioner or that he presents a risk to the safety of the public and their confidence in the profession”: at [63].
5. Thirdly, the Medical Council referred to representations made to the Local Court about his “attendance” at Narcotics Anonymous meetings. In a letter written by Mr Mooney and provided to the Local Court, he said “I have attended NA meetings and seen the damage and destruction that drugs cause peoples’ lives. It was shocking and saddening.” However, before NCAT he said that he “did not attend as [a] participant” but rather “viewed two meetings online for education purposes at the recommendation of my counsel”.
6. NCAT did not accept the Medical Council’s submission that this was misleading (at [66]):
Mr Mooney was guided by his lawyers in respect to the information provided to the Local Court. To say he had “attended” Narcotics Anonymous meetings, when he had attended two meetings online, was accurate but it did not paint the full picture. However, this is a minor and insignificant instance of a less than fully frank statement. We do not regard it as an instance of dishonesty or behaving unethically.
1. Fourthly, Mr Mooney was said to have given misleading accounts to his treating doctors and expert witnesses in relation to the cocaine incident. This was central to the appeal before this Court, and is outlined in some detail below.
Mr Mooney’s communications with medical practitioners and experts
1. Mr Mooney saw four medical practitioners in the post-cancellation period: Dr Hogan (his psychotherapist since 2015), Dr Farago (his treating psychiatrist since 2019), Dr Ventura (a psychiatrist engaged by the Medical Council) and Dr Fisher (a consultant psychiatrist engaged at the request of Mr Mooney’s lawyers). Reports from each professional were in evidence before NCAT.
2. Turning first to Dr Hogan, his report dated 23 April 2023 recorded the following in relation to Mr Mooney’s possession of cocaine on 22 October 2022:
William made an error of judgment in October when in an attempt to protect his partner he was apprehended for a minor drug possession. This was surprising given William’s long history of clean drug testing. William was completely up front and honest with me in all discussions about this. We discussed this mistake too over some sessions. He showed insight as to all the implications of this poor decision.
1. Dr Hogan was not available for cross-examination before NCAT, nor was anything produced in response to a summons for the clinical notes of his sessions. In light of this, NCAT admitted his report into evidence, but only to the extent it recorded that Mr Mooney had consulted with him and discussed the topics described in the report. It said that it would be “prejudicial to admit Dr Hogan’s opinions as to Mr Mooney’s character and level of insight when the summonsed material has not been produced, Dr Hogan did not provide an explanation for his inability to attend and the opinions he provided cannot be tested”: at [116]. Thus NCAT gave no weight to Dr Hogan’s opinions of Mr Mooney’s character or insight.
2. Dr Farago provided a report dated 20 July 2023, and noted the following in respect of Mr Mooney’s run-in with police:
The events in October 2022 were explored at length with Mr Mooney. He had gone to pick up cocaine for his girlfriend who was having a birthday party. He offered to do this as he was worried she may be harmed and he acted in a chivalrous manner in doing so. However this was a serious lapse of judgement and he recognises this as such. This includes his recognition of the importance of being a role model and discouraging the use of illicit drugs by others.
In regards to the comments he made to the Police on the night it must be noted that when he saw the undercover Police officer approaching him he thought this person was a mugger who was going to assault him. As such the fight or flight response set in. The flight response includes a highly raised anxiety level and this briefly clouded his judgement. However as his anxiety settled, within a few minutes his judgement returned to normal and he responded to the police with honesty. It is of note that he pleaded guilty to possession at the hearing. Further it is of note that drug tests for cocaine were negative. I am of the opinion that Mr Mooney’s description of the events was honest and also that he has been honest in stating that he does not use cocaine.
I am of the opinion that the events in October 2022 represented a lapse in Mr Mooney’s judgement, one that did not indicate a failure of his rehabilitation. His insight in to the incorrectness of his behaviour and his determination not to repeat this again is indicative of a person of good character.
1. NCAT concluded that Dr Farago’s views on this incident were to be given “little weight” because his opinion was based on accepting Mr Mooney’s account of what occurred, which NCAT had found not to be fully accurate and to be misleading in some respects: at [118].
2. Dr Ventura provided a report, dated 25 August 2023, at the request of the Medical Council. She recorded the following in respect of Mr Mooney’s account of possessing cocaine on 22 October 2022:
Mr Mooney told me that Gemma had ordered cocaine for a party with her friends. She ordered it by telephone and it was going to be delivered by a driver. She intended picking up the drugs herself.
Mr Mooney told me that he was really worried about Gemma’s safety and decided to go and get the drugs himself from the driver.
When he was outside after receiving the drugs, Mr Mooney told me that he saw a man running at him. He threw the drugs away because he thought he was going to be burgled. It was only later that he realised that it was a plainclothes police officer.
Mr Mooney informed me that he said, “yes the drugs are mine”. He emphatically denied that he ever said, “You can’t prove it.”
Mr Mooney told me that his girlfriend, Gemma came out of the apartment and told the police that the drugs were hers.
Mr Mooney told me that he later appeared in Waverley Court and received a good behaviour bond.
I mentioned to Mr Mooney that his account of the facts was different from the one provided in the police statement. Mr Mooney told me that the police amended the statement and I should have been provided with the amended statement not the original one. He told me that the Magistrate “accepted the narrative we provided.”
1. Dr Ventura then gave the following opinion in relation to the incident:
Mr Mooney’s interaction with the NSW police on Saturday, 22 October 2022 highlight two important issues: The first one is lying to the police and the second one is the act of obtaining an illegal substance for his partner.
In relation to lying to the NSW police, this appeared to have been an impulsive reaction of someone who got caught breaking the law. It is not in itself indicative of a personality pathology or lack of insight.
Mr Mooney however does not accept the content of the police statement, which was provided to me, specifically where it stated that the police have to prove that the drugs belonged to him. He told me that the Magistrate accepted his “narrative”.
1. NCAT appeared to accept Dr Ventura’s evidence in full, despite it being infected by the same misleading account which Mr Mooney had told Dr Farago.
2. Finally, there was Dr Fisher’s report. Dr Fisher provided a report dated 20 September 2023 at the request of Mr Mooney’s lawyers. However, it was revealed that Dr Fisher had provided two earlier draft versions of this report to Mr Mooney’s lawyers, who had passed them on to Mr Mooney, and to which Mr Mooney had responded in writing.
3. In an earlier version of the report, Dr Fisher wrote the following in relation to the cocaine incident:
Mr Mooney says that when he got out of the drug dealer’s car in the dark he was approached by a person in plain clothes who was shouting at him. He says he initially thought this person might have been a mugger and that this was a set up. He says he threw the plastic bag of cocaine into the gutter. Then one of the two people approaching “explained” that he was a plain clothed police officer and when he was asked whether he had any drugs in his possession he had said no as he had discarded the drugs.
One of the two Regional Enforcement Squad officers recovered the cocaine and Mr Mooney was charged with possession.
Strictly speaking, according to him, when he was asked about his possession of the drug he no longer had it on his person and so he might have been deemed not to have lied in response to that direct question. Nonetheless, he had paid for and taken possession of the cocaine and it is equally possible that he threw the bag of cocaine away suspecting the person who approached him might have been a policeman.
The worst-case interpretation of Mr Mooney’s response to the police is that he was attempting to avoid being arrested and told a lie. (Emphasis added.)
1. After seeing this draft report, Mr Mooney wrote to Dr Fisher and provided further explanation of what happened that evening. He also added the following:
You said “The worst-case interpretation of Mr Mooney’s response to the police is that he was attempting to avoid being arrested and told a lie.” This is a possible interpretation but I honestly believe it is not the case. Of course I respect your need for impartiality in your report but wonder if surmising on the worst-case interpretation is my fairest interest.
1. In Dr Fisher’s final report dated 20 September 2023, the “worst-case interpretation” sentence was omitted and replaced with the words, “I suspect that such action might be taken by many people caught in this sort of situation.”
2. It should be noted that in this Court Mr Mooney appeared by solicitor and counsel. However, in NCAT, although Mr Mooney appeared by counsel, it appears that no solicitor was involved. Instead, Mr Mooney’s then counsel (who did not appear in this Court) appears to have taken instructions directly from Mr Mooney, and appears to have retained the various experts himself. Thus it was the barrister who wrote to Dr Fisher on 6 September 2023 to commission a report, and to whom Dr Fisher’s reports were addressed.
3. NCAT found that Dr Fisher’s acceding to the revision of his report represented a “relatively minor” departure from his professional obligations. NCAT concluded that Dr Fisher “has modified one opinion in a way that is somewhat favourable to Mr Mooney and has not disclosed that change or provided a supplementary report”: at [128]. Consequently, NCAT did not give that particular opinion (namely, “I suspect that such action might be taken by many people caught in this sort of situation”) any weight, and did not rely on the balance of his report.
NCAT’s conclusions on reinstatement
1. NCAT put to one side the relatively minor matters raised by the Medical Council, concerning the statements on Mr Mooney’s website, the failure to disclose drug tests and what had been said on his behalf concerning his attendance at Narcotics Anonymous. None of the Medical Council’s grounds of appeal related to those aspects of the decision.
2. Further, NCAT identified, correctly, the paramount consideration to be whether there was a risk to the health and safety of the public if Mr Mooney returned to practice: National Law, s 3B. NCAT addressed this at [44], referring to his conduct concerning Patients A and B:
We are satisfied on the basis of the Tribunal’s findings in the stage two decision and the evidence in these proceedings, that there would be no risk to the health and safety of the public if Mr Mooney were to perform the kind of surgeries he has performed in the past. We see his commitment to operate in a less rushed manner as genuine and also accept that he will reduce his hours if he returns to practice. There is no question as to his skill and competence as a surgeon however we note that the conditions on Mr Mooney’s registration prevented him from performing the type of surgery he performed in relation to patient B (“Simple limited redo FESS”). Our preliminary view is that when determining appropriate conditions to be placed on Mr Mooney’s registration, some form of supervision of these kinds of surgeries will be appropriate. Parties have been invited to make further submissions on that issue.
1. Once again, the Medical Council made no challenge in relation to that aspect of NCAT’s reasons.
2. The Medical Council also made no challenge to NCAT’s finding in relation to Mr Mooney’s relationship with Patient C, which was addressed at [31]:
We agree with Dr Farago’s and Dr Ventura’s assessments. While there is not a high risk that Mr Mooney will engage in inappropriate relationships if re-registered, we note Dr Ventura’s opinion that “more work is needed”. In those circumstances, our preliminary view is that it would be appropriate to place a condition on Mr Mooney’s registration that he engage further psychotherapy on this issue. Parties have been directed to provide further submissions as to the need for such a condition and its precise scope.
1. In the dispositive concluding section of its reasons, NCAT focussed upon “the two categories of dishonesty we have identified as relevant”. These related to what Mr Mooney told the police and the various medical practitioners. This was the focus of the Medical Council’s appeal. It is appropriate to set out the entirety of NCAT’s conclusions at [133]-[137]:
Mr Mooney now fully appreciates why he lied to and misled authorities before his registration was cancelled. He did so because he did not want to be de-registered and lose his income. Mr Mooney has not merely articulated an understanding of his obligations; he has put a considerable amount of time and effort into addressing his past unethical behaviour. While those efforts do not guarantee that he will not lie to authorities and the Tribunal in future, they demonstrate that he is genuinely committed to not repeating that behaviour.
Mr Mooney does not have any kind of mental illness or personality disorder that would predispose him to behave dishonestly or unethically in the future.
One indication as to how a practitioner will behave in future is evidence of how he or she has actually behaved. The two categories of dishonesty we have identified as relevant are misleading police and then misleading medical practitioners and the Tribunal about the circumstances of his arrest for the possession of cocaine. In our view, there is a significant difference in the nature and seriousness of these representations compared with the deliberate and planned lies Mr Mooney told medical authorities and the Tribunal.
The term “defect in character” is not routinely used by psychologists or psychiatrists. However, even if the lies he told to the medical authorities and the Tribunal can be characterised in that way, the two categories of conduct that Mr Mooney engaged in after his registration was cancelled are not serious enough to meet that description. We agree with Dr Ventura that it is highly unlikely that Mr Mooney will repeat any of the mistakes of the past.
In our view, Mr Mooney has proven that he can be trusted to practise in an honest and ethical manner and presents no risk to the safety of the public and their confidence in the profession.
1. Accordingly, the following orders were made on 11 March 2024:
(1) The Tribunal makes a “reinstatement order” under s 163B(1)(c) of the Health Practitioner Regulation National Law in respect of Mr William Mooney.
(2) Within 21 days of the date of this decision, the Medical Council of NSW is to lodge with the Tribunal and serve on Mr Mooney written submissions on the conditions that should be imposed on Mr Mooney’s registration and as to costs.
(3) Within 21 days of being served with those submissions, Mr Mooney is to lodge and serve written submissions in reply and as to costs.
1. As noted at the beginning of these reasons, order 2 was not complied with and the Medical Council instead sought a stay of those orders and the extant proceedings before NCAT, pending this appeal.
Grounds of appeal
1. The body of the Medical Council’s “further amended notice of appeal” stretches across some seven pages. It first outlines “background matters” for some two and a half pages, before identifying six grounds of appeal, all save one of which have numerous sub-grounds. It is reproduced as an annexure to these reasons.
2. The notice of appeal is far from being a model of its kind.
3. Rule 51.18(1)(e) of the Uniform Civil Procedure Rules 2005 (NSW) requires a notice of appeal to state “briefly, but specifically, the grounds relied on in support of the appeal”. As Gleeson JA said in Stoltenberg v Bolton; Loder v Bolton [2020] NSWCA 45; 380 ALR 145 at [52]:
The importance of brevity and precision in formulating the grounds of appeal cannot be overstated. Prolixity is inconsistent with the just, quick and cheap resolution of the real issues in proceedings: Civil Procedure Act 2005 (NSW), s 56(1). It also obscures apparent merit: Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 at [70] (McHugh J).
1. The notice does not comply with that rule.
2. Moreover, the Medical Council’s appeal purported to be as of right. But it only enjoyed an appeal as of right on a question of law. Ground 1 complained of a failure to consider whether to give less or no weight to some of the evidence (paragraphs (a) and (b)), the giving of weight to other evidence (paragraph (c)), and the failing to consider one aspect of the oral evidence (paragraph (d)). Those matters could amount to errors of law if there were some mandatory relevant consideration to which NCAT was bound to have regard, or some aspect of the evidence which NCAT was bound to ignore, as explained by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Pty Ltd (1986) 162 CLR 24; [1986] HCA 40. Of course, NCAT was not under any such constraint, nor did the Medical Council contend that it was.
3. Similarly, ground 2, which concerned the use made by NCAT of Dr Ventura’s opinions, maintained that NCAT “erred in one or more of the following ways” and then identified “failing to consider whether it should afford less weight”, “failing to give either less or no weight” and “giving weight” to various aspects of Dr Ventura’s opinions. If this were an appeal by way of rehearing, those grounds would confront large difficulties in light of the fact that NCAT heard and saw Dr Ventura’s cross-examination. But as a notice of appeal which purported to be as of right because it was on a question of law, it is obvious that ground 2 discloses no such error.
4. Ground 3 complains that NCAT failed to consider various aspects of the Medical Council’s submissions, or some of the evidence, of the cumulative effect of all of the evidence. Once again, conspicuous by its absence is the identification of any question of law.
5. Ground 5 complained that either five or, more accurately, nine, factual matters were “relevant considerations” to which NCAT had failed to have regard. It is quite clear that none of the matters is a Peko-Wallsend mandatory consideration failure to have regard to which vitiates the decision (the Medical Council did not contend to the contrary), and that carries with it the result that the ground does not raise any question of law.
6. Ground 6 was that by reason of grounds 1-5 the decision was legally unreasonable. That is a question of law, but it is quite plain, for reasons that will be apparent from what follows if indeed it is not already clear, that the ground cannot succeed.
7. Ground 4 is somewhat different. It maintained that NCAT had erred in “failing to apply the correct test” and “effectively reversing the onus of proof”, as well as failing to consider various matters, thereby leading to the wrong decision. That ground is capable of giving rise to a question of law. However, it is desirable for a notice of appeal in an appeal which is limited to questions of law to identify with precision what the question of law is. As was said in a similar context, “The questions of law are not to be distilled from the grounds of appeal”: Osland v Secretary to the Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24 at [21]. It is after all the claimed existence of the question of law which founds an appellant’s entitlement to appeal as of right. Put another way, the first thing the appellate court must do is determine whether it has jurisdiction, and it will have no jurisdiction to determine the purported appeal on the merits unless it discloses a question of law.
8. This is far from the first time the restrictions upon rights of appeal have been ignored. In Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 at [71] I referred to:
the importance of those contemplating bringing an appeal which is confined to a question of law attending to the statute and identifying the question of law. That obligation is not satisfied by rolled up allegations asserting error of law, still less by grounds which merely allege “error”. It should be possible for the reader of a notice of appeal to apprehend what the question or questions of law are.
1. These points have been made, repeatedly, by this Court in relation to various regimes where appeals are confined to questions of law: see Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 at [22] (“necessary for the notice of appeal to identify precisely the particular question or questions of law”); Kudrynski v Orange City Council [2024] NSWCA 33 at [48] (“it is critical that an appellant clearly identify the question of law which is the subject of the appeal”); Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13] (“the respondent did not identify the questions of law that were the subject matter of the appeal, but rather asserted the magistrate erred in law in various ways. This was wrong”). Many other examples could readily be collected. A more general, but equally salient, point was made in Fisher v Nonconformist Pty Ltd [2024] NSWCA 32 at [30]: “The first matter for legal practitioners advising potential appellants to this Court is to consider whether there is a right of appeal – including considering whether or not leave to appeal is required – and, if so, what sort of right that is”. As noted at the outset of these reasons, where sophisticated litigants, such as the Medical Council, ignore the strictures upon the nature of the appeal they seek to invoke, they and the lawyers retained by them should expect criticism. They also run this risk, in an appropriate case, of adverse orders.
2. The Medical Council’s notice of appeal is especially egregious, because it is obviously the product of a great deal of effort – its eight pages of reasoning must have cost thousands of dollars of professional time to prepare – and yet it signally fails to identify questions of law, at least in relation to the majority of its grounds. It falls short of the standards expected by this Court.
3. This led to the following exchange early in the hearing (transcript, 28 June 2024, pp 4-5):
LEEMING JA: At some stage, I think the Court would like to hear from you on what you say about whether all of these grounds truly are within the scope of an appeal as of right.
KIRK JA: Or indeed any of them except ground 6, because currently we can’t see how any of them raise questions of law except ground 6, on which you have made very brief submissions at best.
RICHARDSON: I will [make] submissions about that.
LEEMING JA: To cut to the chase, is it the case – and it may well be – that you’re here consciously not seeking leave, and if you fail on these things being within the scope of an appeal as of right, then that’s it?
RICHARDSON: That’s correct. I'm advancing questions of law within the as of right appeal.
LEEMING JA: You don’t have a fallback application for leave. That’s what I just wanted to be absolutely clear about.
RICHARDSON: Could I take that on [notice]?
LEEMING JA: That’s why I’m raising it.
RICHARDSON: I note that the notice of contention seeks to raise factual matters.
LEEMING JA: We won’t get to the notice of contention if you lose on an appeal as of right and you don’t apply for leave.
RICHARDSON: Yes, your Honour. I just make the broad point that the respondent is seeking to put in issue merits of fact finding.
LEEMING JA: As are you, really, looking at it broadly.
RICHARDSON: Well, that’s not our contention, your Honour.
KIRK JA: Your notice of appeal is full of arguments about the weight that should be given to evidence, first. Secondly, you make no real attempt to articulate any question of law. It currently seems to me, subject to what you say, that grounds 1 to 5 don’t come within cooee of raising a question of law.
RICHARDSON: Certainly, I’ll be making submissions that they do raise questions of law. For example, and I’ll come to it in turn, ground 4 is an allegation that the tribunal has applied the wrong test; that it has misunderstood its statutory task; and that it has positively applied an erroneous test, so ground 4 is a very clear example of misunderstanding of the nature of the task that the tribunal was required to undertake under the statute. It’s a very clear question of law, in my submission.
LEEMING JA: I would agree with you that ground 4 is a less improbable case than grounds 1, 2 or 3.
RICHARDSON: Could I address each of them in turn?
KIRK JA: All of this might fall away, of course, were your client to seek leave.
1. Immediately thereafter, the Medical Council sought leave to expand its appeal beyond questions of law. The Court acceded that application subject to making directions to accommodate the prejudice sustained by Mr Mooney. The balance of the hearing proceeded on the basis that this Court would hear the Medical Council’s application for leave concurrently with its submissions on the appeal if leave were granted.
2. In light of the expansion of the appeal, and the full submissions that were heard from both sides on the broader appeal, no useful purpose is served analysing any further whether and if so the extent to which an appeal as of right may be extracted from ground 4. Instead, I turn to the substantive submissions advanced by the Medical Council and deal with them on their merits.
Consideration
1. There were essentially three strands to the submissions made on appeal by the Medical Council. All concerned the aftermath of Mr Mooney’s purchase of cocaine on 22 October 2022. None was based on the crime he committed per se, although plainly it was a matter open to be considered by it. One matter relevant to an application for registration in the medical profession is the applicant’s criminal history. Section 55(1)(b) of the National Law entitles a National Board to determine that an individual is not a suitable person to hold general registration within a health profession if “having regard to the individual’s criminal history to the extent that is relevant to the individual’s practice of the profession” the Board is of the opinion that the individual is not an appropriate person to practise the profession or it is not in the public interest for the individual to practise the profession. However, there is no occasion in this appeal, in light of the stance adopted by the Medical Council, to consider whether, and if so in what way, the conduct of buying illicit drugs for the purpose of supplying them to his partner falls within s 55(1)(b) in its application to the medical profession.
2. Instead, the Medical Council relied on Mr Mooney’s immediate and longer term responses after his criminality was uncovered. The Medical Council relied on (a) the immediate responses made to the arresting police officer, (b) the account permitted to be given on his behalf in the Local Court in December 2022 (including the matters which were redacted in the facts sheet), (c) the accounts he gave to various medical practitioners whose opinions were to be provided to NCAT, and (d) his cross-examination in NCAT on those matters. The general line was that Mr Mooney’s conduct manifested the same character vice – misleading authorities – as had led to his removal from the register.
3. As has been seen from the extracts of its reasons summarised above, NCAT concluded, with respect correctly, that Mr Mooney had not behaved transparently with the police. Instead, he had attempted to mislead the police, saying he had got into the wrong car and saying that he had no drugs in his possession (after he had, moments before, thrown the cocaine away). In his accounts to various medical professionals, Mr Mooney maintained that he had thought he was being mugged when Constable Constantinou (who was not in uniform) approached him, an account which NCAT did not accept.
4. NCAT found that Mr Mooney had been evasive, misleading and not “completely frank, honest and co-operative with police”.
5. The Medical Council submitted that Mr Mooney had misled the various experts, and that that led to two distinct vices. The first was that it devalued the opinions each expert provided (grounds 1 and 2). The second is that it was further evidence that Mr Mooney had not discharged the onus upon him to establish that he was no longer unfit to be registered (grounds 3 and 4). I shall address each in turn. Nothing turns on the evidence of Drs Hogan and Fisher, because NCAT did not rely on their opinions. The reliance of NCAT upon the evidence of Drs Farago and Ventura underlay grounds 1 and 2 respectively.
Ground 1
1. NCAT found that Mr Mooney misled Dr Farago. It explicitly addressed the effect of his misleading him, stating the following at [117]-[118]:
Dr Farago, Mr Mooney’s treating psychiatrist since March 2019, has explored issues around honesty, ethics and trust in detail with Mr Mooney. In Dr Farago’s view, Mr Mooney has accepted that he made serious errors of judgment by providing misleading information and there was no excuse for doing so. He has expressed true remorse and full insight. Dr Farago does not consider the deliberate lies Mr Mooney told to be a defect in his character. Rather, he behaved in that way because he feared that he would lose his medical career.
As to Mr Mooney’s interactions with police when being arrested for possession of cocaine, Dr Farago expressed the view that those events were a “lapse in Mr Mooney’s judgment” and “did not indicate a failure of his rehabilitation”. That opinion is based, in part, on accepting Mr Mooney’s account which we have found to be misleading in some respects. Because Dr Farago’s opinions were not based on a fully accurate account of Mr Mooney’s behaviour on that night, we give his views on that issue little weight.
1. The Medical Council complains that NCAT should have given “less or no weight” to the entirety of Dr Farago’s views, in light of his being misled. At no stage in the dispositive section of NCAT’s reasons are Dr Farago’s name or opinions mentioned. That is consistent with what NCAT said it was doing, giving little weight to the critical aspect of his evidence, concerning Mr Mooney’s rehabilitation and judgment in 2022 and 2023. As it happens, that approach accorded with the submissions made by the Medical Council in NCAT, where it submitted “that the Tribunal would afford Dr Farago’s opinions little or no weight”.
2. It is necessary to bear in mind that NCAT is comprised of two medical practitioners and one lay member, as well as a judicial member, all of whom were well placed to evaluate the entirety of the evidence. Addressing this ground on its merits, unconstrained by the requirement to expose any question of law, I am unpersuaded that the Medical Council has established that there is any error. It was open to NCAT to discount Dr Farago’s view but nonetheless attribute some slight weight to it.
Ground 2
1. Ground 2 concerns Dr Ventura’s evidence. Once again, NCAT found, in accordance with the Medical Council’s submission, that Mr Mooney misled her. Unlike Dr Farago, Dr Ventura’s evidence made an important contribution to NCAT’s overall assessment. Indeed, Dr Ventura was the only expert mentioned by name in the dispositive section of NCAT’s reasons.
2. It is appropriate to reproduce the entirety of NCAT’s summary of Dr Ventura’s evidence, which was [129]-[132]:
Dr Ventura’s evidence
Dr Ventura, a psychiatrist, provided a report at the request of the Medical Council. In her view, Dr Mooney does not have any kind of mental illness or personality disorder that would predispose him to behave incompetently or unethically. She does not have any specific objection from a psychiatric perspective to Mr Mooney’s registration being reinstated.
Dr Ventura expressed the opinion that Mr Mooney was very candid as to why he had misled medical authorities before his registration was cancelled. He did so because he did not want to be de-registered and lose his income. In her view, he had good insight into that behaviour. However, she added that while insight is a popular concept in medico legal settings, gaining insight does not necessarily cause behaviour to change a great deal.
In her report, Dr Ventura wrote that it would be highly unlikely for Mr Mooney to repeat any of his past mistakes. In oral evidence, when asked whether Mr Mooney would lie to authorities to get out of a troublesome situation in the future, Dr Ventura said that it was possible, but that opinion is not based on her expertise as a psychiatrist. Lying to police is not indicative of a personality disorder. The research suggests that if a person copes with stress in a certain way, for example by lying, they are more likely to behave in that way in the future.
Dr Ventura expressed the view that Mr Mooney’s “psychological vulnerabilities may predispose him to become impaired in times of crisis.” Those vulnerabilities include a need to please and a sense of shame. She considered that if a person such as Mr Mooney develops maladaptive behaviours to deal with stress, they can still be taught not to behave in that way by accessing appropriate psychotherapy. Dr Ventura recommends that if Mr Mooney is reinstated to practice, he participate in regular psychotherapy from an appropriately trained and qualified professional. That is also our preliminary view, subject to further submissions as to appropriate conditions.
1. The notion of a patient misleading a psychologist or a psychiatrist is familiar and fundamental. Practitioners are trained to evaluate histories given by patients critically. They also well understand the phenomenon (which is equally familiar to a judge) that a witness’ memory is distorted by repeated retelling of an account. Memory is fallible, and “the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said”: Watson v Foxman (1995) 49 NSWLR 315 at 319.
2. Dr Ventura’s evidence makes it quite plain that she accepted that it was possible that Mr Mooney would lie to authorities to get out of a troublesome situation. It was to that end that she suggested regular psychotherapy. NCAT agreed, and proposed to impose a condition to that effect.
3. In the dispositive passage of its reasons, NCAT relied upon Dr Ventura’s opinion that it was “highly unlikely that Mr Mooney will repeat any of the mistakes of the past”. The Medical Council says that that reliance was inapt. However, it is important to note that NCAT had immediately beforehand differentiated the lies told by Mr Mooney in relation to his purchase of cocaine from the lies which led to his being deregistered. The Medical Council complains about this too, and I shall return to it. But it is tolerably clear that the lies told more recently are qualitatively different from his concealing his relationship with Patient C or failing to submit to drug testing.
4. In short, Dr Ventura regarded Mr Mooney as presenting a risk that he would lie to protect himself, including to professional authorities, but nonetheless that his predisposition could be addressed by conditions, and that it was most unlikely that he would repeat the much more serious mistakes of the past.
5. Dr Ventura may or may not have suspected or believed that Mr Mooney was embellishing his account of the evening of 22 October 2022 – or to put the matter more bluntly, lying about his account – when the two spoke about the events. She was after all the chosen expert of the Medical Council, and there is no basis whatsoever to think that her approach was unduly credulous or unsuspecting. She referred to the risk that Mr Mooney might be dishonest in the future, and formed the view that that risk could be addressed by conditions.
6. Given the limited way in which NCAT deployed her opinions, I am unpersuaded that, to the extent if any they were affected by Mr Mooney misleading her, it made any difference to the outcome.
Grounds 3 and 4
1. These grounds challenge the dispositive reasoning at [133]-[137], which is reproduced above. The focus of ground 3 is the misleading conduct of Mr Mooney. Grounds 3(a1), (a2) and (a3) complain that NCAT failed to consider submissions it had made. Grounds 3(a), (b) and (c) complain that NCAT failed to take into account aspects of Mr Mooney’s misleading conduct. Ground 4 complains that the approach taken by NCAT, in contrasting the more recent conduct with the earlier conduct, involved legal error (including a shifting of onus and applying the wrong legal test), and led to the result that it failed to attend to whether in light of the most recent conduct Mr Mooney should be registered.
2. I do not accept an important premise of ground 3. Mr Mooney was cross-examined at length as to whether he had “misled” the police, the Local Court, and the various medical practitioners who examined him. A theme of this cross-examination was that Mr Mooney denied he had misled anyone, but accepted that he had been evasive and not told the whole truth. The Medical Council said that this failure to acknowledge that he had misled anyone demonstrated a lack of insight into one of the very matters which had led to his deregistration in the first place.
3. By way of examples, the Court was taken to the following exchanges during Mr Mooney’s cross-examination:
Q. Do you agree with me that in circumstances where you told this person that, “I think I got in the wrong car”, and now he said to you:
I think you’ve been involved in a drug transaction.
And now he’s going to search you, for you to say, “I don’t have any drugs on me” is misleading?
A. It was evasive, yes. I did not have any drugs on me but I can see it was evasive.
Q. Well, it was misleading wasn’t it?
A. Well, I didn’t have any drugs on me and it was evasive and, yes, I concur.
Q. Do you agree it’s misleading?
A. Evasive.
Q. Well, I’m asking you a question --
A. It’s not misleading because it’s the truth. I did not have any drugs on me. I think misleading is when you tell a non-truth.
1. Shortly thereafter, was the following exchange:
Q. You say to him:
I do not have any drugs on me.
A. Yes, correct.
Q. I want to suggest to you that is not evasive conduct, it’s misleading conduct. Do you agree with that?
A. No, ‘cause it’s the truth. That’s exactly – at that time, I had no drugs on me.
Q. So it’s technically true but it’s misleading, isn’t it?
A. No. How can you have the same thing. They’re mutually exclusive.
Q. Oh?
A. How can be something technically be true and misleading simultaneously?
1. Lawyers are familiar with the proposition that a representation which is true can nonetheless be misleading and deceptive, contrary to s 18 of the Australian Consumer Law, and that no mental element is involved; cf Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228; [1978] HCA 11.
2. That is far from self-evident to a lay person, who may naturally consider that a person’s statements are misleading if and only if he or she intends to mislead. It is quite plain that, right or wrong, Mr Mooney distinguished between statements which were evasive and statements which were misleading. It was open to NCAT who saw his cross-examination which occupied 97 pages of transcript to discount it on the basis that the cross-examiner and witness were at cross-purposes. Indeed, unless NCAT were of the view that Mr Mooney was dissembling when answering those questions, discounting it was the proper course to take. The Medical Council’s submission that the answers revealed a lack of insight in sub-grounds 3(a1) and (a2) falls away accordingly.
3. The remainder of ground 3 complains of a failure to have regard to all of the occasions when Mr Mooney misled various people, and the cumulative effect of those occasions, and the Medical Council’s submission that that conduct was an instance of his propensity to engage in misleading conduct to advance his interests.
4. I do not accept these sub-grounds. In relation to the failure to have regard to evidence, there is nothing to suggest that NCAT did not have regard to all of the evidence before it. It referred in terms to his misleading police and misleading medical practitioners. It did not underplay that conduct, but treated it as “dishonesty”: at [135].
5. By a notice of contention, Mr Mooney challenges the findings of NCAT that he was dishonest. It is not necessary to deal with this at any length, because Mr Mooney accepted that the was dishonest in his dealings with police. His written submissions stated:
Mr Mooney does not challenge the finding [that] the excuse he provided to the police was dishonest however, as outlined in his primary submissions, it occurred in the agony of the moment of an arrest and is of a different nature and character to his prior dishonest conduct. (Original emphasis.)
1. In relation to the failure to consider one of the Medical Council’s submissions, NCAT did have regard to the possibility that he might continue to lie to authorities to “get out of a troublesome situation”. It recorded Dr Ventura’s opinion to that effect at [131]. It also noted her opinion that his predisposition to that behaviour warranted regular psychotherapy, and contemplated conditions to that end. It was not necessary for NCAT in those circumstances separately to address Mr Mooney’s capacity to mislead authorities, after it had explicitly addressed his lying to authorities. The greater includes the lesser.
2. Ground 4 challenged the basic approach adopted by NCAT, which was to characterise the more recent dishonest and misleading behaviour as significantly different from, and less blameworthy than, the earlier conduct which led to his deregistration.
3. That approach was well open to NCAT.
4. Mr Mooney’s responses to the officer who arrested him were the opposite of candid and honest. He told lies. He likely did so in the hope that he might avoid arrest. On the other hand, he did so in the seconds after being apprehended buying illicit drugs. There is no element of premeditation. And there was a high level of co-operation with authorities thereafter. Mr Mooney was dishonest, but his dishonesty was nothing like the sustained lies he told about his relationship with Patient C while regulators were investigating that relationship.
5. Mr Mooney’s efforts to provide medical practitioners with a history which would paint him in a less unpleasant light are also reprehensible, and disclose a lack of insight. But many patients do exactly the same thing, and the practitioners will regularly assess a history critically bearing in mind the limitations of human memory and the predisposition to see one’s past conduct in a favourable light. It is especially reprehensible that Mr Mooney did so knowing that the practitioners were to provide opinions to NCAT, and it is not greatly to the point that that may have occurred, and Dr Fisher may have acceded to his client’s request, because there was no solicitor to emphasise the importance of the expert code of conduct. But once again, it was not only open for NCAT to regard that conduct as significantly less reprehensible than his earlier conduct which led to his deregistration, but in my view it was also correct to do so.
6. I am unpersuaded that the reasons at [133]-[137] disclose an erroneous evaluation of the evidence, or an erroneous conclusion that, subject to conditions, Mr Mooney’s registration might be reinstated. Another way of putting this is to conclude that the Medical Council has not persuaded me that there are no conditions which could be imposed on Mr Mooney’s registration which would render him an appropriate person to practise the medical profession.
Ground 5
1. This ground complains that NCAT failed to take into account “relevant considerations” when determining whether to make a reinstatement order subject to conditions, and then identifies nine relevant considerations. None is a relevant consideration in a Peko-Wallsend sense except, perhaps, the last, which is that “the Tribunal failed to consider whether the granting of a reinstatement order subject to conditions was consistent with the ‘paramount consideration’ in s 3B of the National Law, particularly in light of the circumstances sub-paragraphs (a)-(d) above”. This ground is without foundation, because s 3B makes the protection of the health and safety of the public the paramount consideration, and NCAT addressed that in terms in [137], concluding that he presented “no risk to the safety of the public and their confidence in the profession”.
2. The fact that the other sub-grounds are not mandatory relevant considerations does not mean that they may not give rise to appellable error which is not an error of law. But I am unpersuaded by any of them.
3. The most important consideration is that NCAT has not imposed any conditions at all so far. That is because of the unilateral conduct of the Medical Council in choosing not to abide by NCAT’s directions. By reason of that conduct, none of the submissions now sought to be advanced by the Medical Council were made to NCAT. It is, with respect, quite wrong for the Medical Council to decline to make submissions on conditions in accordance with NCAT’s directions, and then to complain before any conditions are made about NCAT’s in principle consideration of conditions. I agree with Mooney’s submission, supplied on 4 July 2024 in accordance with this Court’s directions, that “the alleged error that is the subject of appeal ground 5 concerns matters that were not put to the Tribunal at first instance, despite the Medical Council being directed to make submissions as to the imposition of conditions”.
4. For that reason alone, I would not grant leave to advance sub-grounds 5(a)-(d). It is necessary in any event for there to be a further decision of NCAT on conditions. The Medical Council may advance those submissions to NCAT (as indeed it should have done last year). It will be a matter for NCAT to regulate its own procedure, but I should make it quite clear that nothing in these reasons is intended to convey that there is a need for an oral hearing, as opposed to the exchange of written submissions on appropriate conditions.
Ground 6
1. Ground 6 was that NCAT’s decision was unreasonable in light of the matters in grounds 1-5. For the reasons already stated, this ground is not made out.
Conclusion and orders
1. For those reasons, I would refuse leave to appeal on ground 5 save to the extent that it, in ground 5(e), advances a question of law. I would grant leave to appeal, to the extent necessary, in relation to grounds 1-4 and 6. None of the grounds is made out. No error has been shown in the conclusion reached by NCAT that Mr Mooney is, subject to the imposition of appropriate conditions, able to be reinstated to practice in the medical profession. It is not necessary to deal fully with the notice of contention, a course which was flagged during the hearing of the appeal, and in respect of which Mr Mooney made no submission to the contrary.
2. Mr Mooney is not a perfect individual, far from it. He continues to suffer from the flaws identified in the hearing before NCAT, and in particular, there is a chance he may continue to mislead professional authorities. But there was ample evidence to conclude, as NCAT did, that he can be trusted to practise in an honest and ethical manner, that he presents no risk to safety, and that his predilection to mislead may be addressed by appropriate treatment. As already noted, the absence of a risk to safety was found by NCAT and was not the subject of any challenge in this Court, while the conditions proposed (Category C supervision for Specialist Otolaryngological practice, mentor supervision for all other non-operating theatre practice, and, especially, to work no more than 35 hours a week while under supervision) appear to go far to address the remaining risks.
3. I propose the following orders:
1. To the extent necessary, grant leave to appeal in respect of grounds 1, 2, 3, 4 and 6 of the further amended notice of appeal, and refuse leave in respect of ground 5 except insofar as it raises a question of law.
2. Appeal dismissed, with costs.
3. Note that the effect of orders 1 and 2 is to discharge the stay extended by this Court on 28 June 2024, such that the remaining matters in the application before NCAT can now be determined.
1. KIRK JA: I agree with Leeming JA.
2. PRICE AJA: I agree with Leeming JA.
**********
Annexure
Further amended notice of appeal (5803265, pdf)
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 16,001 |
nsw_caselaw:1910b8b73fce2f87d7730df7 | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-02 00:00:00 | Ilhan v Easy Automatic Gate Pty Ltd [2024] NSWCATAP 150 | https://www.caselaw.nsw.gov.au/decision/1910b8b73fce2f87d7730df7 | 2024-08-04T23:49:47.579139+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Ilhan v Easy Automatic Gate Pty Ltd [2024] NSWCATAP 150
Hearing dates: 01 July 2024
Date of orders: 02 August 2024
Decision date: 02 August 2024
Jurisdiction: Appeal Panel
Before: M Harrowell, Deputy President
G Blake AM SC, Senior Member
Decision: (1) Leave to appeal is refused and the appeal is dismissed.
(2) Subject to order (3), there is no order as to the costs of the appeal.
(3) If any party wishes to make an application to vary order (2) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, within 14 days from the date of this decision, whereupon order (2) will cease to have effect.
(4) The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in opposition within 28 days from the date of this decision.
(5) The costs applicant is to file any submissions in reply limited to two pages within 35 days from the date of this decision.
Catchwords: APPEALS - Constructive failure to exercise jurisdiction - No material error of law - Appeal dismissed
APPEALS - Leave to appeal - Principles governing - Leave to appeal refused
APPEALS - Procedural fairness - Failure of the builder to strictly comply with procedural orders - Appeal dismissed
BUILDING AND CONSTRUCTION - Home Building Act 1989 (NSW) - Building dispute - Where breach of statutory warranties by the builder not established
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 36, 80, 81, Sch 4, cl 12
Civil and Administrative Tribunal Rules 2014, rr 25, 38A
Home Building Act 1989 (NSW), ss 4, 7AAA, 10, 18B
Cases Cited: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111
Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165
Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25
Baas v JB Hi Fi Group Pty Ltd [2021] NSWCATAP 10
Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734
Collins v Urban [2014] NSWCATAP 17
Cominos v Di Rico [2016] NSWCATAP 5
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Fisher v Nonconformist Pty Ltd [2024] NSWCA 32
Goode v Angland (2017) 96 NSWLR 503 [2017] NSWCA 311
Inventbuild Pty Ltd v Tulemis [2024] NSWCATAP 49
Italiano v Carbone & Ors [2005] NSWCA 177
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
Naish aka Khosroabadi v NSW Land and Housing Corporation [2023] NSWCATAP 99
Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33
Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39
Sinha v NSW Land and Housing Corporation [2024] NSWCATAP 130
Steelbond Australia Pty Ltd v Wein [2024] NSWCATAP 20
X-Build Construction Services Pty Ltd v O’Rourke [2020] NSWCATAP 181
Yuen v Thom [2016] NSWCATAP 243
Texts Cited: None cited
Category: Principal judgment
Parties: Jerene Ilhan (Appellant)
Easy Automatic Gate Pty Ltd (Respondent)
Representation: Appellant (self-represented)
Solicitors:
ANB Lawyers (Respondent)
File Number(s): 2024/00157793
Publication restriction: Nil
Decision under appeal Court or tribunal: Civil and Administrative Tribunal
Jurisdiction: Consumer and Commercial Division
Date of Decision: 20 March 2024
Before: S Smith, General Member
File Number(s): 2023/00382537 (previously HB 23/35055)
REASONS FOR DECISION
Overview
1. This is an internal appeal from the decision of the Consumer and Commercial Division of the Tribunal made on 20 March 2024 in proceedings under the Home Building Act 1989 (NSW) (HB Act) concerning a dispute between the appellant, Jerene Ilhan (the owner), who is the owner of a property at Roseville in New South Wales (the property), and the respondent, Easy Automatic Gate Pty Ltd (the builder), which is the builder that carried out residential building works at the property (the works) under the building contract between them (the building contract). In the decision the Tribunal dismissed the application of the owner.
2. The works involved the installation of an automatic gate at the front of the property and the erection of a fence on part of the boundary on one side of the property.
3. The principal issues in the appeal were whether the Tribunal failed to afford procedural fairness to the owner, constructively failed to exercise its jurisdiction of the Tribunal and was in error in finding that the owner had not established that the works were defective.
4. As we are not satisfied that the Tribunal made any error, we have refused leave to appeal, dismissed the appeal, made no order as to the costs of the appeal, and made procedural orders in respect of any application for a different costs order.
The factual background
1. When facing the property from the street:
1. the front southern boundary slopes downwards from the right-hand side to the left-hand side and downwards towards the dwelling on the property and adjacent pergola on the right-hand side;
2. there is a fence on the front boundary which was erected prior to entry into the building contract comprising four rendered pillars at a height of approximately one metre. Three pillars are on the left-hand side, then a driveway and one on the right-hand side. There is a black metal fence between each of the three pillars on the left-hand side constructed with horizontal top and bottom rails and vertical rails with a twist or knuckle at the half way point at intervals of approximately 10 cm to 15 cm;
3. the driveway is constructed of uneven cobblestones and provides pedestrian access to the dwelling;
4. the first part of the right-hand side boundary runs between the front pillar to a rendered pillar approximately two metres high which is part of the pergola.
1. On or shortly after 14 June 2022, the builder and the owner entered into the building contract which was in the form of Quote # QT1731 of “Easy Automatic Gates” dated 14 June 2022 addressed to “Jerene (Roseville)” in the amount of $8,720.00 exclusive of GST for the construction of the works which relevantly included the following information (the EAG quote):
Product ID Description Qty UM Amount
01 Aluminium sliding gate (approx.4m x 790) in tubular design with knuckle matching similar with handrail+ hardware + powder coating + supply install $4,000.00
02 Italian brand sliding gate motor kit+ x2 remotes + supply install $1,350.00
03 Aluminium fence in same design as gate (approx.9.5 x 650) & (aprox. 2.7 x 650)+ powder coating + supply install 2 $2,670.00
04 Customised umbrella post $400.00
05 Steel runoff & motor pad $300.00
1. On 29 July 2022, the builder carried out the works which included installing a fabricated rectangular gate, affixing a metal track to the cobblestone driveway on which the wheels of the gate travelled, and a stepped rectangular side fence on the first part of the right-hand side boundary.
2. On 31 August 2022, following discussions between the owner and the representative of the builder, Alliksan (known as Ali) Alca (Mr Alca), the builder carried out modifications to the works in varying the configuration of the gate so that the bottom rails were closer to the surface of the ground.
3. Thereafter, there was a dispute between the owner and the builder as to the quality of the works.
4. On or about 24 August 2023, Bayside Automatic Gates (Bayside) carried out rectification works which involved the re-installation of the side fence to follow the contour of the surface of the ground and the replacement of the front gate at a cost of $5,098.50 inclusive of GST.
The history of the proceedings between the parties in the Tribunal
1. On 31 August 2022, the owner, as the applicant, commenced proceedings HB 23/35055 (which were subsequently renumbered 2023/00382537) against Easy Automatic Gate and Mr Alca, as the respondents, by filing an application relevantly claiming a money order for $2,500.00 being the amount which she alleged the builder had agreed to refund.
2. On 6 September 2023, the Tribunal made orders amending the name of the builder, removing Mr Alca as a respondent, and providing for the lodgment and service of the documents on which the parties intended to rely at the hearing including the builder was to provide any documents by 18 October 2023 (the 6 September 2023 orders).
3. On 20 October 2023, the builder lodged its documents.
4. On 29 November 2023, the first hearing took place.
5. On 29 January 2024, the Tribunal made orders amending the owner’s claim to a claim for $4,950.00, and providing for the service of the documents on which the parties intended to rely at the hearing including the builder was to provide any additional documents on or before 22 February 2024 (the 29 January 2024 orders), and published reasons for its decision.
6. On 18 March 2024, the builder lodged its additional documents.
7. On 20 March 2024, the second hearing took place.
8. On 21 March 2024, the Tribunal made an order dismissing the application (the dismissal order), and published reasons for its decision (the reasons):
The reasons
1. In the reasons, the Tribunal set out its reasons for the dismissal order under a series of headings:
1. under the heading “Application”, it recorded that the application was a claim by a consumer for compensation for defective workmanship in the installation of a fence and automatic gate at residential premises in Sydney;
2. under the heading “Parties”, it provided details of the parties and their representation at the hearing;
3. under the heading “Procedural History”, it set out details of the history of the proceedings including the hearing at which the owner claimed costs for an expert report;
4. under the heading “Evidence”, it set out details of the nature of the evidence relied by the parties including “several narrative statements” of the owner;
5. under the heading “Background Facts”, it recorded the facts of the entry into the building contract, the carrying out of the works by the builder, the dispute between the parties and the carrying out of the rectification works by Bayside including:
“…
… On completion the applicant paid without demur and according to the respondent’s evidence which I accept, expressed satisfaction with the job.
…”
1. under the heading “Analysis”, it stated that the two aspects of the claim were the side fence and the automatic sliding gate and observed:
“For the applicant to succeed she is going to have to show some kind of defect. This could be a failure of the works to comply with the quote, agreed scope of works or similar. Or it could be that the works as executed do not measure up to the Building Code of Australia, relevant Australian Standards or possibly even some stablished usages in the trade.”
1. under the heading “The side fence”, it relevantly found:
“… There are two ways to deal with the slope: by stepping the fence and by building an inclined fence following the contour. One sees both types of fences all over Sydney.
… The quote is silent on the method to be used. There is no evidence of any standard on the question …
But I cannot find that it is defective in any sense that would provide the applicant with a remedy. She now prefers the contour style. It was open to her to specify it to Mr Alca but she did not. She could have sought more detail from him before work started but did not.”
1. under the heading “The Gate”, it relevantly found:
“… The gate at all times functioned as a gate. The motor drive mechanism worked and it separated the Illhan property from the street. The materials were as ordered with vertical round bars.
According to Mr Alca various methods of affixing the gate and the track upon which it moved were discussed. …
The quote is silent on the installation of the track and initially it was laid by Easy Automatic gates on top of the cobblestones. In discussion with the applicant it was noted that the track could be set into the cobblestones if they were cut with a saw or angle grinder but that would have to be done by a specialised contractor.
I also note that the expert report commissioned by Ms Illhan mentions that the track itself is a “trip hazard”. As since installed the track is partly set into the cobblestones but not entirely. So the “trip hazard” has not been eliminated.
I further observe that it has not been effectively put to me that a gate track affixed to a driveway is in breach of any building regulation or not fit for purpose rendering it fatal to acceptance as a sliding gate.”
1. under the heading “Conclusion”, it found that it was not satisfied on the evidence that the works done were in any sense defective, and as a result made the dismissal order.
The Notice of Appeal and history of the appeal
1. On 15 April 2024, the owner filed a Notice of Appeal (to which some documents were attached) in which she relevantly:
1. in section 5A challenges the dismissal order;
2. in section 5B sets out the following grounds of appeal:
“1. My application to the NCAT was about incorrect manufacture and poor installation of the gate and fence I ordered and the decision made did not give weight to the evidence I provided that the gate and fence were not manufactured or installed as ordered.
2. The Tribunal did not examine the veracity, facts or truth of the evidence provided by the respondent.
3. I provided extensive evidence in my Affidavit dated 15 September 2023, of the defective workmanship, which was not considered in the decision.
4. The Tribunal gave significant weight to its decision on evidence provided by the respondent which was not submitted within the rules of servicing submissions, including most recently, statements submitted 2 days prior to the Hearing held on 20 March 2024, served by email.
5. As requested by the Tribunal, I provided an expert witness report, prepared in accordance with NCAT procedural Direction 3: Expert Witness Code of Conduct dated 28 February 2018, with the duty of the provider of the expert report being to the Tribunal, not to myself, and with the reliance on the relevant experience of the expert witness as a qualified builder and this evidence was not given sufficient weight in the decision made.
6. The respondent’s contract was non-compliant with the Home Building Act (NSW).
7. The Tribunal gave significant weight to the supply and installation of the gate track which was to be installed property as part of the hardware as agreed in the contract. The rough cobblestones of the driveway were in place at the time of initial quote.
8. The Tribunal gave no weight to the contract requiring the gate to match existing fence (also manufactured and installed by the respondent). The gate did not match the line of the existing fence.
9. The tribunal gave no weight to the evidence provided Of the incorrect installation of the side fence which was specifically manufactured to be installed in one continuous line and not unevenly stepped down the slope of the property.
10. The Tribunal did not give consideration or weight to the fact that the respondent abandoned the job and the gate was left inoperable from August 2022, tied to the front fence with rubber ties for approximately 1 year without any progress on repair being made.”
1. in section 5C seeks an the following orders:
“1. Cost of work done to repair the gate and fence
(Annexure Z of my Affidavit 15 September 2023) $4949.50
2. Cost of Expert Witness Report 1,320.00
3. Cost of Notice of Appeal Application Fee 486.00
4. Any further costs incurred for expert witness evidence
and legal advice and representation if taken”
1. in section 6A ticks the box “Yes” in answer to the question “Are you asking for leave (to appeal)?”;
2. in section 6B ticks the box “Yes” in answer to the question “Are you asking for leave (to appeal)?”;
3. in section 6Bi attaches 4 pages sets out why the decision of the Tribunal was not fair and equitable relevantly including:
“…
I believe the decision was unfair and not equitable as the evidence provided In my Affidavit dated 15 September 2023 and Expert Witness Report dated 6 February 2024 by MKO Consulting Pty Ltd … was not fully considered in the decision making process, while statements emailed to me 2 days before the Hearing on 20 March 2024, were significantly relied upon by the Tribunal without any obvious scrutiny that I was aware of.
… However, the reasons given for the decision did not rely on the evidence and went against the weight of the evidence of the Expert Witness Report. There was limited anecdotal evidence only regarding the proper manufacture and installation provided by the respondent and only in the form of witness statements which provide conflicting statements …
In the “Evidence section of the Order provided by the Tribunal issued 21 March 2024, the Tribunal referred to the evidence contained in my Affidavit as several narrative statements and I believe my sworn Affidavit and the total evidence of the defective and non-workmanlike supply and installation of the products contained in the Affidavit, may not have been considered.
In the “Background Facts section of the Order, the Tribunal readily accepted the various respondents statements claiming I was happy with the products and installation and paid “without demur”, whereas I gave evidence of why I paid, which was because of the promise given by Mr Alca and the longstanding business relationship we had. The Tribunal gave considerable weight to these statements, which were not even submitted within the rules of service of documents and submissions to the Tribunal.”
1. in section 6Biii attaches 9 pages set out why the decision of the Tribunal was against the weight of evidence including:
“…
I believe the Tribunal should have given more weight to the evidence of the work not complying with my quote and various breaches of the Home Building Act NSW 1989 and defective and non-workmanlike supply and installation of the gate and fence as described in my Affidavit and the Expert Witness Report.
…”
1. in section 6Biv sets out what she contends is significant new evidence that is now available that was not reasonably available at the time of the hearing and provides an explanation for its non-availability;
2. in section 7 ticks the box “No” in answer to the question “Do you require an extension of time?”
1. Following directions of the Appeal Panel, each party filed documents and submissions in support of their respective positions. This included new evidence, not provided in the proceedings at first instance. As necessary, we will refer to this material below.
2. On 1 July 2024, we heard the appeal. The owner represented herself. The builder was represented by Mr N Ajaje, a solicitor.
3. At the commencement the owner provided enlarged copies of the Call/SMS activity report from TPG/Vodafone-Kogan (the activity report) of which three pages were attached to the notice of appeal and which we marked for identification MFI 1.
4. Each party made oral submissions
5. In his oral submissions, the solicitor of the builder indicated that the builder did not seek to rely on the 24 June 2024 Alca statement.
6. At the conclusion of the hearing, we made procedural directions for the provision of the transcript of the hearing on 20 March 2024 with the owner to provide her version by 8 July 2024 and the builder to provide its response including any amended transcript by 12 July 2024, and reserved our decision.
7. A transcipt was provided by each party, with no significant differences between the versions.
The scope and nature of internal appeals
1. There is a right of appeal on a question of law, otherwise leave to appeal is required: s 80(1) and (2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are where it is satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision of the Tribunal under appeal was not fair and equitable, or the decision of the Tribunal under appeal was against the weight of evidence, or significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with): cl 12(1)(a), (b) and (c) of Sch 4 of the NCAT Act.
3. In Cominos v Di Rico [2016] NSWCATAP 5 (Cominos) at [13], the Appeal Panel stated that it may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle to facilitate the just, quick and cheap resolution of the real issues in the appeal in s 36(1) of the NCAT Act, it is appropriate for the Appeal Panel to review an appellant’s stated grounds of appeal, the material provided and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal.
4. In Collins v Urban [2014] NSWCATAP 17 sets out the principles applicable when considering whether leave should be granted.
5. The test of whether evidence is reasonably available for the purpose of cl 12(1)(c) of Sch 4 of the NCAT Act is not to be considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained the evidence: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23].
6. An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances specified in s 80(2)(b) of the NCAT Act: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
The preliminary matters
1. We are satisfied that the notice of appeal was lodged within the time of 28 days prescribed under r 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW).
2. In the owner’s appeal submissions, the owner has raised the following “points of law”:
1. the builder did not have a builders licence when the building contract was formed or at any time during the works undertaken;
2. Mr Sevkat Alca’s Builders Licence number was not on the building contract;
3. the builder was not registered as a trained installer of FAAC gate motors at the time of the building contract;
4. the builder failed to comply with the following procedural orders which was to her disadvantage:
1. the 6 September 2023 orders: the builder’s documents were received by post on 25 October 2023 and the builder’s further submission was received by email on 24 November 2023 at 4.48pm;
2. the 29 January 2024 orders: the builder’s documents were received on 18 March 2024;
3. the 29 April 2024 notice and the 15 May 2024 orders: the builder’s reply to appeal was filed on 27 May 2024.
1. We infer that the builder lodged the following evidence on the following dates:
1. on 20 October 2023: the 18 October 2023 Alca statement;
2. on 28 November 2023: the 24 November 2023 Alca statement;
3. on 18 March 2024: the 15 March 2024 Alca statement, the 15 March 2024 Tieu statement and the 15 March 2024 Erciyas statement.
1. In the O’Donnell report, Mr O’Donnell expressed the opinions that the builder did not comply with the HB Act because it did not hold a contractor’s licence and the building contract did not comply with s 7AAA of the HB Act because it did not include the names of the parties and the contractor’s licence number.
2. The following preliminary matters arise for determination in this appeal:
1. the failure of the builder to file its reply to appeal within the time specified in the 29 April 2024 notice and the 15 May 2024 orders;
2. whether the owner can raise new arguments on appeal;
3. whether the notice of appeal raises questions of law.
The failure of the builder to file its reply to appeal within the time specified in the 29 April 2024 notice and the 15 May 2024 orders
1. The builder did not comply with the directions of the Appeal Panel by filing its reply to appeal within the time specified in the 29 April 2024 notice and the 15 May 2024 orders. The delay was short as the builder filed its reply to appeal on 27 May 2024.
2. We do not accept the owner’s submissions that this delay constituted unfairness to her, and she thereby suffered disadvantage. She had the reply to appeal five weeks before the appeal hearing at which she fully participated and presented her submissions.
3. As the owner did not make any application to the Appeal Panel, we are taking no action arising out of this failure of the builder.
Whether the owner can raise new arguments on appeal
1. We are satisfied from reviewing the transcript that the following issues were not raised by the owner as issues for determination at the hearing:
1. the builder abandoned the job;
2. the builder was not registered as a trained installer of FAAC gate motors at the time of the building contract.
1. It is an established principle that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so: Coulton v Holcombe (1986) 162 CLR 1 at 8; [1986] HCA 33 (Coulton) (Gibbs CJ, Wilson, Brennan and Dawson JJ). This principle has been applied by the Appeal Panel on many occasions: see, for example, Naish aka Khosroabadi v NSW Land and Housing Corporation [2023] NSWCATAP 99 at [21].
2. Having regard to the principle in Coulton at 8, we are satisfied that the owner should not be allowed to raise these issues in this appeal. It follows that we have given no consideration to these issues.
Whether the notice of appeal raises questions of law
Introduction
1. Having regard to the principles in Cominos at [13], we have given consideration to the reasons, the notice of appeal and the owner’s appeal documents as to whether it is possible to discern grounds that raise a question of law.
2. We have also had regard to the following legal principles:
1. the question of whether the Tribunal has failed to afford procedural fairness to a party by conducting the hearing in accordance with the proper procedure raises a question of law: Italiano v Carbone & Ors [2005] NSWCA 177 at [85]-[87] (Basten JA); Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 (Resource Pacific) at [9] (Basten JA with Beazley P at [1] agreeing); Fisher v Nonconformist Pty Ltd [2024] NSWCA 32 (Fisher) at [39] (Kirk JA with Meagher JA at [1] and Simpson AJA at [149] agreeing). This principle has been applied by the Appeal Panel: see, for example, Inventbuild Pty Ltd v Tulemis [2024] NSWCATAP 49 at [18];
2. where a ground asserting an infringement of the rules of natural justice is raised, it is appropriate for the court to consider it first and in advance of other grounds because if established the ground may necessitate a remittal for rehearing in any event: Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 at [116]-[117] (Gummow ACJ). This principle has been applied by the Appeal Panel: see, for example, Baas v JB Hi Fi Group Pty Ltd [2021] NSWCATAP 10 at [32].
3. the term ‘constructive failure to exercise jurisdiction’ is used to describe a situation where the court has purported to resolve the parties’ dispute but has not in fact done so. Thus, particularly with a court or tribunal required to provide reasons for its decision, it may become apparent from those reasons that a material issue has simply not been addressed or that material evidence has been overlooked: Resource Pacific at [9] (Basten JA with Beazley P at [1] agreeing). If there has been a constructive failure to exercise jurisdiction there will have been error of law which can be addressed on an appeal limited to a question of law: Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 at [22] (Basten JA); see also Fisher at [39] (Kirk JA with Meagher JA at [1] and Simpson AJA at [149] agreeing). This principle has been applied by the Appeal Panel: see, for example, Steelbond Australia Pty Ltd v Wein [2024] NSWCATAP 20 at [59]-[60].
Conclusion
1. We are satisfied that the owner has raised questions of law and accordingly she has an appeal as of right under s 80(2)(b) of the NCAT Act in respect of the following questions:
1. whether the Tribunal failed to afford procedural fairness to the owner by reason of permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024;
2. whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the question of whether the builder by being unlicensed and the building contract failed to comply with the HB Act;
3. whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the question of whether the builder breached the building contract by reason of the top rail of the gate not being aligned with the top rail of the front fence.
1. Otherwise, the issues raised require leave or relate to the question of costs.
The issues for determination in the appeal
1. We will deal with issues for determination in the appeal under five headings:
1. issue 1: whether the Tribunal failed to afford procedural fairness to the owner by reason of permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024;
2. issue 2: whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the questions of whether the builder by being unlicensed and whether the building contract complied with the HB Act;
3. issue 3: whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the question of whether the builder breached the building contract by reason of the top rail of the gate not being aligned with the top rail of the front fence;
4. issue 4: whether the owner should be granted leave to appeal against the dismissal order;
5. issue 5: the costs of the appeal.
1. Before turning to these issues, we have set out the evidence of the parties which is relevant to one or more of them.
The evidence of the parties
1. The documentary evidence before the Tribunal comprised the following documents:
1. for the owner: the 15 September 2023 Ilhan affidavit and the O’Donnell report;
2. for the builder: the 18 October 2023 Alca statement, the 24 November 2023 Alca statement, the 15 March 2024 Alca statement, the 15 March 2024 Tieu statement and the 15 March 2024 Erciyas statement.
1. In the 15 September 2023 Ilhan affidavit, the owner relevantly gave the following evidence:
“3. On Friday 29 July 2022 the gate and fence were installed. I advised supplier I was not happy with the gate as it was not graded to fit to the slope of the driveway. The supplier told me that I had wanted it that way, which meant there was a large gap at the bottom of the gate and the top rail was not in line with the existing front fence. In addition, the track the gate ran along was sitting on top of uneven cobblestone causing a very dangerous trip hazard. I attach photos as Annexures C.1, C.2 and C.3 to show the installed gate and track.
4. The fence had been measured and quoted to be installed in a continuous piece (one section between the pillars of existing gazebo). Instead, it had been stepped down the slope in sections, the steps were all uneven and the fixing to the pillars was irregular and caused major damage to the brickwork on most of the pillars. I attach photos as Annexures D.1 and D.2.”
1. In the O’Donnell report, Mr O’Donnell, who was provided with photographs of the works carried out by the building identified with the letters “OP” expressed the following opinions:
1. as to the side fence:
“OP P01. This photo depicts the first two sections of the East side fence supplied and installed by the Contractor and are typical of the remainder of the fence. The vertical members in the fence panels are not vertical and the bottom and top rails are not in a single line being almost parallel to the ground. In my opinion the Contractor has not complied with the HBA because the work has not been completed in a workmanlike manner. In my opinion the top and bottom rails, if they are going to be stepped should be level or if they are running parallel with the ground, they should be in one line.”
“OP P03. The photo shows the fence panel beyond the brick column not fixed to the column. In my opinion the Contractor has not complied with the HBA because they work has not been completed in a workmanlike manner as the fence panel should be fitted to the brick column.”
1. as to the side gate:
“OP P05 This photo depicts how the gate was finished by the Contractor. The gate has not been pre-fabricated to suit the location. The top rail of the gate is not in line with the top rail of the existing front fence and the end of the gate is not vertical or plumb and in line with the letter box pillar. In my opinion the work and the materials used in doing the work are not reasonably fit for the specified purpose or result and the work has not been completed in a workmanlike manner as required by the HBA.”
“OP P06 This photo depicts the Contractors attempt to line up the top rail of the gate with the existing front fence through fixing a solid triangular piece of metal to the bottom rail of the gate. In my opinion the materials used in doing the work are not reasonably fit for the specified purpose or result and the Contractor has not complied with the HBA because their work has not been completed in a workmanlike manner.”
“OP P09 I am instructed the Contractor fitted the sliding gate track directly to the surface of the Owners rough cobblestone driveway. In my opinion the track as fitted is defective as it presents as a safety and trip hazard and the Contractor has not complied with the HBA because the work has not been completed in a workmanlike manner.”
1. In the 18 October 2023 Alca statement, Mr Alca relevantly gave the following evidence:
“6. On or about June 2022, I attended the Site and completed measurements. The Applicant was present at the Site during such preliminary works. We used a laser pointer gun to assist with measurements.
7. The Applicant confirmed and was satisfied with the proposed gates and fencing systems.”
1. In the 24 November 2023 Alca statement, Mr Alca relevantly gave the following evidence:
“4. The Works were completed as per the Quote on or about 29 July 2022.
5. The Applicant indicated dissatisfaction in relation to the gap between the gate and the ground floor.
6. The Applicant changed her mind to extend the gate to the fence height. On the earlier site visit when measurements were made and discussed with the Applicant such concerns were not made. During such measurement discussions, a laser measurement instrument was used to note the markings.”
1. In the 15 March 2024 Tieu statement, Mr Tieu relevantly gave the following evidence:
“4. On or about June 2022, Erkan and I attended the Site and completed measurements regarding a gate and fence with the assistance of a laser pointer measurement gun (Laser pointer).
5. Whilst pointing the Laser pointer, the Applicant, Ms ILHAN was also present.
6. The laser point was shown to the applicant on both walls; showing the slope of the gate between the brick pillars, and the clearance bet een the gate and the cobalt stone ground (Measurements).
7. During the Measurements taking place, a conversation between the Applicant and I took place, words to the effects of:
I: “Because of the slope of the land, the fence will be installed like steps, going down the hill”
Ms Ilhan: “Yes, that is fine”
8. The Applicant agreed to the measurements proposed.
1. In the 15 March 2024 Erciyas statement, Mr Erciyas relevantly gave the following evidence:
“4. On or about June 2022, Will and I attended the Site and completed measurements with the assistance of a laser pointer measurement gun (Laser pointer).
5. Will and I took measurements together at the Site regarding the fencing and the gate.
6. Whilst pointing the Laser pointer, the Applicant, Ms Ilhan was present.
7. The laser dot point was indicated to the Applicant on both walls, showing the height of the gate, where it will reach across and the gap and clearance between the bottom half and the cobblestone ground (Measurements).
8. Upon discussing the Measurements with the Applicant, Ms ILHAN agreed to the installation, and stated words to the effect: "this is fine, / want it like this."
9. Will and I also drew a sketch of the measurements and showed the Applicant in which she accepted. This made it easier to understand as it was a visual of the proposed Gate.
10. In accordance with the Measurements, in late July 2022, our team attended the Site for the installation of the gate and fence.
11. In relation to the fence between the Site and the neighbouring property, east side, the neighbour also came by and observed the location and the approximate 8 metre long fence line.
12. It was indicated to the Applicant with sloping land, it is common to install the fence posts in a step and step manner. The Applicant indicated that she was satisfied with the design of the fence line, as proposed above.
13. Accordingly, the fence was installed in the appropriate place that Jerene surveyed.”
1. At the hearing on 20 March 2024, the owner explained her evidence, and answered questions asked and addressed comments made by the Tribunal. Mr Alca then explained the evidence of the builder, and answered questions asked and addressed comments made by the Tribunal.
Issue 1: whether the Tribunal failed to afford procedural fairness to the owner by reason of permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024
1. The builder did not comply with:
1. the 6 September 2023 orders by reason of its:
1. lodgment and service of the 18 October 2023 Alca statement on 20 October 2023 and 25 October 2023 respectively;
2. lodgment and service of the 24 November 2023 Alca statement on 28 November and 24 November 2023 respectively;
1. the 29 January 2024 orders by reason of its lodgment and service of the 15 March 2024 Alca statement, the 15 March 2024 Tieu statement and the 15 March 2024 Erciyas statement on 18 March 2024.
1. We do not accept the owner’s submissions that this delay constituted unfairness to her, and she thereby suffered disadvantage. She had the 18 October 2023 Alca statement five months before the hearing. She had the 24 November 2023 Alca statement four months before the hearing. She had the 15 March 2024 Alca statement, the 15 March 2024 Tieu statement and the 15 March 2024 Erciyas statement two days before the hearing. Finally, she had an opportunity to respond to this material at the hearing on 20 March 2024.
2. In order to establish an entitlement to have the orders that aside on this ground, there must be a practical injustice and an error that is material: see, for example, Sinha v NSW Land and Housing Corporation [2024] NSWCATAP 130 (Sinha) at [64]-[67], and the cases referred to therein.
3. This necessity of the materiality of a denial of procedural fairness referred to in Sinha at [67] applies equally to other errors of law: Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 at [40]-[41] (Beech-Jones J).
4. We are not satisfied that the owner has established that she suffered any practical injustice or that the Tribunal failed to afford procedural fairness to her by reason of permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024. Even if the owner had established that the Tribunal made an error of law in permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024, then we would not have been satisfied that she had demonstrated that there exists a realistic possibility that the outcome of the proceedings could have been different had this error not been made.
5. For these reasons, we reject the owner’s ground of appeal that the Tribunal made an error of law by permitting the builder to rely on the evidence which it lodged on 20 October 2023, 28 November 2023 and 18 March 2024.
Issue 2: whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the questions of whether the builder by being unlicensed and whether the building contract complied with the HB Act
1. Neither the owner nor the builder made any oral submissions on this issue.
2. We accept that the owner through the opinions of Mr O’Donnell expressed in the O’Donnell report raised the questions of whether the builder and the building contract failed to comply with the HB Act and that the Tribunal did not address these issues.
3. The HB Act relevantly includes the following provisions:
1. a person must not contract to do any residential building work except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work: s 4(1)(a);
2. where the contract price is between $5,000 and $20,000, the contract must be in writing and be dated and signed by or on behalf of each of the parties to it, and must contain specified details including the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and the number of the contractor licence: s 7AAA(2), (3)(a) and (b);
3. a person who contracts to do any residential building work and who so contracts in contravention of s 4 or in contravention of any other provision of the HB Act is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person: s 10(1)(a) and (c);
4. warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: s 18B(1).
1. We are satisfied that the builder failed to comply with ss 4 of the HB Act by reason of being an unlicensed contractor. We are also satisfied that the builder failed to comply with s 7AAA(2), (3)(a) and (b) of the HB Act in relation to the absence of the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and the number of the contractor licence on the building contract.
2. However, these matters were not relevant to the real issues in dispute, namely whether the works had been properly carried out in accordance with the building contract and relevant statutory warranties and whether the owner was entitled to a remedy because the works did not meet these requirements.
3. For these reasons, we reject the owner’s ground of appeal that the Tribunal made an error of law by constructively failing to exercise its jurisdiction by not addressing the questions of whether the builder by being unlicensed and the building contract failed to comply with the HB Act.
Issue 3: whether the Tribunal constructively failed to exercise its jurisdiction by not addressing the question of whether the builder breached the building contract by reason of the top rail of the gate not being aligned with the top rail of the front fence
1. Neither the owner nor the builder made any oral submissions on this issue.
2. We accept that the owner through her own evidence and the opinions of Mr O’Donnell expressed in the O’Donnell report raised the question of whether the builder breached the building contract by reason of the top rail of the gate not being aligned with the top rail of the front fence and the Tribunal constructively failed to exercise its jurisdiction by not addressing this question.
3. The Tribunal found the “materials were as ordered”. It did not expressly deal with whether it was a term of the contract that the top of the gate be installed at the same level and parallel to the adjacent front fence.
4. We are not satisfied any failure to deal with this issue was material to the decision made as the owner has failed to demonstrate that that there exists a realistic possibility that the outcome of the proceedings could have been different had this error not been made for the following reasons:
1. the words “matching similar” in the building contract immediately follow the words “in tubular design with knuckle” and so on their proper interpretation indicate the gate was to have a similar design and shape as the front fence, and do not convey the meaning that the top rail of the gate was to align with the top rail of the front fence. As noted above, the Tribunal found it did;
2. the unchallenged evidence of Mr Erciyas in the 15 March 2024 Erciyas statement is that the owner agreed with the measurements for the gate including its height.
1. For these reasons, we reject the owner’s ground of appeal that the Tribunal made an error of law by constructively failing to exercise its jurisdiction by not addressing the question of whether the builder breached the building contract by reason of the top rail of the gate not being aligned with the top rail of the front fence.
Issue 4: whether the owner should be granted leave to appeal against the dismissal order
Introduction
1. Having regard to the principles in Cominos at [13], we have given consideration to the reasons, the notice of appeal and the owner’s appeal documents as to whether it is possible to discern grounds that raise a basis for leave to appeal.
2. The substantive complaint of the owner is that the Tribunal failed to properly evaluate her evidence in making its central findings that:
1. there was no defect in the side fence by reason of its stepped installation;
2. there was no defect in the gate by reason the gate track being affixed to the cobblestone driveway.
1. We have discerned that the first basis for leave to appeal raised by the owner is that this failure to properly evaluate the evidence resulted in the dismissal order being not fair and equitable and these central findings being against the weight of evidence.
2. We have discerned that the second basis for leave to appeal raised by the owner is that there is significant new evidence.
3. In considering whether the owner has established a basis for leave to appeal we have had regard to the following legal principles:
1. photographs can be deceptive, particularly in relation to perspective and distance. Great care must be taken in interpreting photographic evidence. This is particularly the case where there is no evidence as to the precise position of the camera when the photographs were taken: Goode v Angland (2017) 96 NSWLR 503 [2017] NSWCA 311 at [93]-[96] (Beazley P with Meagher JA at [179] and Leeming JA at [212] agreeing). These principles are applied in the Tribunal: X-Build Construction Services Pty Ltd v O’Rourke [2020] NSWCATAP 181 at [64].
2. a court is not obliged to take the opinion of an expert as conclusive even though no other expert is called to contradict it: Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [87] (Heydon JA). We are satisfied that this principle applies equally to proceedings in the Tribunal.
Whether the decision of the Tribunal was not fair and equitable was not fair and equitable
Whether the findings of the Tribunal were against the weight of evidence
1. Contrary to the evidence of the owner, the building contract does not specify that the side fence was to be installed in a continuous piece. The evidence of Mr Tieu and Mr Erciyas is that the owner approved the side fence to be stepped. Mr O’Donnell in his commentary on photograph OP P01 accepts that the side fence could be stepped or in one line. His criticism of the side fence as depicted in photograph OP P01 is that the vertical members in the fence panels are not vertical, apparently that the top and bottom rails are not level and the end of the fence is not fixed to the pergola column.
2. We have inspected photograph OP P01 and are not satisfied that it depicts that the vertical members in the fence panels are not vertical and that the top and bottom rails are not level. We have inspected photograph OP P03 and are satisfied that it depicts that the end of the fence is not fixed to the pergola column.
3. As to the finding of the Tribunal that there was no defect in the side fence by reason of its stepped installation, we are not satisfied that the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable Tribunal member could reach for the following reasons:
1. the building contract did not specify the method of installation;
2. there is no evidence other than the equivocal photograph OP P01 that it was installed with the vertical members in the fence panels not being vertical and that the top and bottom rails not being level.
1. The only evidence as to the alleged defect of the gate track being affixed to the cobblestone driveway was the evidence of the owner and Mr O’Donnell. We have inspected photograph OP P09 and are satisfied that it depicts that the gate track has been affixed to the surface of the cobblestone driveway.
2. As to the finding of the Tribunal that there was no defect in the gate by reason the track being affixed to the cobblestone driveway, we are not satisfied that the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable Tribunal member could reach for the following reasons:
1. the building contract did not specify the method of installation of the gate track;
2. there was no evidence of any applicable building standard or industry practice as to the method of installation of the gate track.
1. Even if this finding is against the weight of evidence and the Tribunal should have found that the installation of the gate track was defective by reason of being a trip hazard, then the Tribunal made the further finding that the rectification works by Bayside had not eliminated the trip hazard. It follows that the owner could not have established that she had suffered any loss by reason of defective installation of the gate track.
2. It follows that we are not satisfied that the owner may have suffered a substantial miscarriage of justice because the decision of the Tribunal was not fair and equitable within cl 12(1)(a) of Sch 4 of the NCAT Act and against the weight of evidence within cl 12(1)(b) of Sch 4 of the NCAT Act. Therefore, we refuse leave to appeal on these grounds.
Whether there is significant new evidence
1. The owner is seeking to rely on the following documents as constituting significant new evidence:
1. her email to the builder sent on 23 February 2024 (the 23 February 2024 Ilhan email);
2. a line tracing of the gate installed by the builder;
3. photographs of the existing front fence in relation to slope of land for the gate and the side fence;
4. photographs of significant gate hardware and its installation to the existing retaining wall;
5. a photograph of the inoperable gate;
6. photographs of the existing side fence site showing the slope in relation to the pergola pillar levels;
7. a line tracing of the side fence installed by the builder;
8. photographs of the gate and fence work by the builder including digital time/date details;
9. the activity report.
1. The owner submitted that she should be permitted to rely on these documents as they clarified the existing evidence.
2. The builder opposed the owner being permitted to rely on these documents.
3. We are not satisfied that these documents were not reasonably available at the time of the hearing on 20 March 2024 for the following reasons:
1. the 23 February 2024 Ilhan email was already in existence prior to the hearing;
2. as to the other documents, there is no evidence that they could not have been obtained prior to the hearing.
1. It follows that we are not satisfied that the owner may have suffered a substantial miscarriage of justice because there is significant new evidence which was not reasonably available at the time of the hearing within cl 12(1)(c) of Sch 4 of the NCAT Act. Therefore, we refuse leave to appeal on this ground.
Issue 5: the costs of the appeal
1. The owner applied for the costs of the appeal.
2. Rule 38A deals with costs in internal appeals, and relevantly provides:
38A Costs in internal appeals
…
(2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
1. For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].
2. Consequently, it appears that r 38A(2) of the NCAT Rules is not applicable to this appeal because the amount in dispute in the appeal is not more than $30,000. If so, the position of each party paying their own costs specified in s 60(1) of the NCAT Act is applicable to the appeal unless there are special circumstances warranting an award of costs in favour of the owner within s 60(2) of the NCAT Act.
3. Prima facie, there should be no order as to costs. We will make this order.
4. However, as the parties may wish to consider their position having regard to our decision in this appeal, we have decided to make procedural orders in respect of the costs of the appeal.
Orders
1. We make the following orders:
1. Leave to appeal is refused and the appeal is dismissed.
2. Subject to order (3), there is no order as to the costs of the appeal.
3. If any party wishes to make an application to vary order (2) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, within 14 days from the date of this decision, whereupon order (2) will cease to have effect.
4. The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in opposition within 28 days from the date of this decision.
5. The costs applicant is to file any submissions in reply limited to two pages within 35 days from the date of this decision.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 02 August 2024 | 9,691 |
nsw_caselaw:190fba15095ebab85f89ed26 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Value Constructions Pty Ltd v Badra [2024] NSWCA 181 | https://www.caselaw.nsw.gov.au/decision/190fba15095ebab85f89ed26 | 2024-08-04T23:50:12.531525+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Value Constructions Pty Ltd v Badra [2024] NSWCA 181
Hearing dates: 24 April 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Before: Leeming JA at [1];
Kirk JA at [2];
Griffiths AJA at [79]
Decision: (1) Appeal upheld in part.
(2) The orders made by Cavanagh J on 12 December 2023 are varied as follows:
(a) In order 1, the judgment sum is $839,869.04;
(b) In order 2, the judgment sum is $619,925.00;
(c) In order 3, the judgment sum is $309,562.50.
(3) If the parties do not agree on appropriate orders as to costs then:
(a) The appellant may file and serve written submissions of up to 3 pages on the issue, along with any evidence relied on, by 5pm on 7 August 2024.
(b) The respondents may file and serve written submissions of up to 3 pages on the issue, along with any evidence relied on, by 5pm on 13 August 2024.
(c) The appellant may file and serve any reply submissions, of no more than 2 pages, by 5pm on 16 August 2024.
Catchwords: NEGLIGENCE — Workplace injury — Where worker fell in a stormwater drain on construction site — Whether accident occurred as alleged — Competing testimony of witnesses — Whether director of appellant knew or ought to have know that the drain was uncovered — Director knew the drain was uncovered
NEGLIGENCE — Duty of care — Duty of occupier to employee of subcontractor — Whether it was reasonable for occupier to assume that that a competent contractor would have addressed the risk — Occupier owes a duty to use reasonable care to avoid physical injury to individuals on site — Occupier was negligent
NEGLIGENCE — CLA s 5D — Whether the negligence was a necessary condition of the occurrence of the harm — Proximate cause irrelevant
WORKERS COMPENSATION — Common law remedies — Workers Compensation Act 1987 (NSW) ss 151A and 151Z — Damages payable by a non-employer — Proper operation of s 151Z(2) — Consensual adjustment of figures
Legislation Cited: Civil Liability Act 2002 (NSW), s 5D
Workers Compensation Act 1987 (NSW) ss 151A, 151Z
Workers Compensation Regulation 2016 (NSW), Sch 7
Cases Cited: A V Jennings Ltd v Thomas [2004] NSWCA 309
Amaca Pty Ltd v Booth [2011] HCA 53; (2011) 246 CLR 36
Archer v Hall [1967] 1 NSWR 107
Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987) 162 CLR 479
Badra v Value Constructions Pty Ltd [2023] NSWSC 1307
Badra v Value Constructions Pty Ltd (No 2) [2023] NSWSC 1655
Christmas v General Cleaning Contractors Ltd [1952] 1 KB 141
Felk Industries Pty Limited v Mallet [2005] NSWCA 111
General Cleaning Contractors Ltd v Christmas [1953] AC 180
Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613
Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1
Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406
Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7
Roads and Traffic Authority v Dederer [2007] HCA 42; (2007) 234 CLR 330
Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16
Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182
Sydney Water Corporation v Abramovic [2007] NSWCA 248
Synergy Scaffolding Services Proprietary Limited v Alelaimat [2023] NSWCA 213; (2023) 326 IR 289
Synergy Scaffolding Services Pty Ltd v Alelaimat (No 2) [2024] NSWCA 11
Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375
Category: Principal judgment
Parties: Value Constructions Pty Ltd (Appellant)
Mohamad Badra (First Respondent)
MMM Cement Rendering 1 Pty Ltd (Second Respondent)
Workers Compensation Nominal Insurer (Third Respondent)
Representation: Counsel:
J Sexton SC with J Sleight (Appellant)
I Roberts SC with R Foord (First Respondent)
A Combe (Second and Third Respondents)
Solicitors:
McMahons Lawyers (Appellant)
Withstand Lawyers (First Respondent)
Hicksons Lawyers (Second and Third Respondents)
File Number(s): 2023 / 364755
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Common Law
Citation: [2023] NSWSC 1307 and [2023] NSWSC 1655
Date of Decision: 3 November 2023 and 12 December 2023
Before: Cavanagh J
File Number(s): 2021/213328
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The first respondent, Mohamad Badra, was injured whilst working at a residential construction site. He had fallen when he walked over some black plastic placed over a large open drainage hole in the floor of the garage at the site. He brought proceedings in the Supreme Court against three defendants. The first defendant – the appellant in this matter – was Value Constructions Pty Ltd, which had the management and control of the site as the builder. The second defendant was his employer, MMM Cement Rendering 1 Pty Ltd. MMM did not have the required employer’s liability insurance so the Workers Compensation Nominal Insurer was joined in the proceedings below as the third defendant, and represented the second defendant in all respects. It was MMM which had covered the drainage hole with black plastic.
The primary judge found that both MMM and Value were liable in negligence. On appeal by Value three issues arose:
1. whether the concealment of the hole was something of which Value knew or ought to have known such as to be in breach of its duty as occupier;
2. whether any breach by Value rendered it liable given an argument that MMM’s actions, rather than Value’s, were the proximate cause of the harm;
3. whether the orders made by the primary judge correctly gave effect to ss 151A and 151Z of the Workers Compensation Act 1987 (NSW) (WCA) (as to which error was conceded).
As to breach
1. The first strand of Value’s argument was that it was not did not breach its duty because the evidence did not that establish Mr Mourad, director of Value, knew in fact that the drainage hole was not covered by a steel grill under the black plastic. However, in the trial below Value accepted that the case came down to accepting either Mr Badra’s or Mr Mourad’s version of events. No plausible intermediate possibility was suggested. In this context it is apparent that his Honour did conclude that Mr Mourad knew that the drain was not covered by the grill on the morning of the accident, whether above or below the black plastic, and that he had sound reasons for so concluding: at [29]-[41].
2. The second strand of Value’s argument was that regardless of whether Mr Mourad in fact knew (or ought to have known) that the drain was uncovered on the morning of the accident, it was reasonable for him to assume that a competent contractor would have addressed the risk, and Value’s duty of care as occupier did not extend to ensuring that this had been done. Value, as occupier, and MMM, as employer, did not owe the same duty of care to Mr Badra. An occupier does not, in general, have a duty to employees of an independent contractor to ensure that the contractor has a safe system of work in carrying out its activities at the site. But it is not the case that Value owed no duty of care to Mr Badra simply because he was an employee of a contractor retained by Value. An occupier owes a duty to persons coming onto the site to use reasonable care to avoid physical injury to them: [45]-[60].
Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7; Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16; Archer v Hall [1967] 1 NSWR 107; Felk Industries Pty Limited v Mallet [2005] NSWCA 111; A V Jennings Ltd v Thomas [2004] NSWCA 309; Sydney Water Corporation v Abramovic [2007] NSWCA 248; Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406; Christmas v General Cleaning Contractors Ltd [1952] 1 KB 141, considered.
Leighton Contractors Pty Limited v Fox [2009] HCA 35; (2009) 240 CLR 1, applied.
3. The risk in this case involved the drainage hole being inadequately covered. Value admitted in its defence that it owed a duty of care to take reasonable precautions not to expose Mr Badra and others accessing the premises to a foreseeable risk of suffering not insignificant harm, which harm included falling through an inadequately covered stormwater drain/void, and against which risk a reasonable person could and would have taken precautions: [61]-[65]. The primary judge found that that risk existed, prior to and independently of the drain hole being covered by black plastic by MMM. In these circumstances Value breached its general duty of care as occupier: [66]-[68].
As to causation
4. Value argued that it was the actions taken on behalf of MMM, rather than the actions of Value, which were “the proximate cause of the harm”. That is not the relevant legal test for causation in negligence. The issue under s 5D of the Civil Liability Act 2002 (NSW) (CLA) is relevantly whether the negligence was a necessary condition of the occurrence of the harm. That notion has been taken to include where the tortfeasor’s negligence materially contributed to the harm even if there were other conjunctive causes, just as under the previous common law. That test was satisfied: [6].
Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215; Amaca Pty Ltd v Booth [2011] HCA 53; (2011) 246 CLR 36; Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182; Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613; Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375, followed.
As to ss 151A and 151Z
5. The primary judge addressed the specific amounts owing in a second judgment which sought to address the complexities of ss 151A and 151Z of the WCA. His Honour determined the issue prior to this Court’s decision in Synergy Scaffolding Services Pty Ltd v Alelaimat (No 2) [2024] NSWCA 11. The parties agreed that in light of that subsequent decision his Honour erred in giving effect to the sections, and agreed to new calculations on this point: [69]-[76].
Synergy Scaffolding Services Proprietary Limited v Alelaimat [2023] NSWCA 213; (2023) 326 IR 289; Synergy Scaffolding Services Pty Ltd v Alelaimat (No 2) [2024] NSWCA 11, applied.
JUDGMENT
1. LEEMING JA: I agree with Kirk JA.
2. KIRK JA: On 19 June 2020 the first respondent, Mohamad Badra, was injured whilst working at a residential construction site in Peakhurst, Sydney. He was injured from a fall which occurred when he walked over some black plastic placed over a large open drainage hole in the floor of the garage at the site. He brought proceedings in the Supreme Court against three defendants. The first defendant – the appellant in this matter – was Value Constructions Pty Ltd, which had the management and control of the site as the builder. The second defendant was his employer, MMM Cement Rendering 1 Pty Ltd. MMM did not have the required employer’s liability insurance so the Workers Compensation Nominal Insurer (WCNI) was joined in the proceedings below as the third defendant, and represented the second defendant in all respects. These two parties are the second and third respondents in this appeal, and it is convenient simply to refer to them together as MMM.
3. The primary judge, Cavanagh J, noted that the case was not legally complex and was fought on the facts: Badra v Value Constructions Pty Ltd [2023] NSWSC 1307 (J) at [4] and [5]. There were substantially different versions of events given by the two key witnesses, being Mr Badra on the one hand and on the other Mr Mohamed Mourad, the principal of Value. Cavanagh J accepted Mr Badra’s version. He found both MMM and Value liable in negligence, the latter on the basis that it (through Mr Mourad) knew or ought to have known of the danger that resulted in Mr Badra’s accident. His Honour apportioned liability between Value and MMM on an equal (50%) basis. He rejected an argument of contributory negligence.
4. In a subsequent judgment which sought to take account of the complexities of ss 151A and 151Z of the Workers Compensation Act 1987 (NSW) (WCA), his Honour gave judgment for Mr Badra against Value in the sum of $806,562.50 together with costs, and judgment for Mr Badra against MMM in the sum of $440,864.29 together with costs in accordance with Sch 7 of the Workers Compensation Regulation 2016 (NSW): Badra v Value Constructions Pty Ltd (No 2) [2023] NSWSC 1655 (J2). His Honour also ordered that MMM pay half the judgment amount it owed to Mr Badra to Value on Value’s cross-claim (reflecting the equal apportionment), being an amount of $220,432.14.
5. Value now appeals. It has made clear it does not challenge any finding of fact made by the primary judge. It initially had five grounds of appeal. In the end two were abandoned, one was only faintly pressed, and one was agreed between the parties. The three matters in issue were as follows:
1. The primary judge erred in finding that the appellant breached its duty to Mr Badra since the concealment of the hole was not something of which it knew or ought to have known and thus the harm was not reasonably foreseeable (ground 1).
2. The primary judge ought to have found that the conduct of MMM, and not the appellant, caused the risk of harm to eventuate. This ground was barely pressed during the hearing but not formally abandoned (ground 3).
3. The primary judge erred in applying ss 151A and 151Z of the WCA. This ground was conceded and the Court was provided with replacement orders, agreed by all the parties, to be made if the other grounds were dismissed (ground 4).
1. Ground 3 can be dispatched immediately. The nub of the point was captured in Value’s written submissions in reply where it was argued that it was the actions taken on behalf of MMM, rather than the actions of Value, which were “the proximate cause of the harm”. That is not the relevant legal test for causation in negligence. The issue under s 5D of the Civil Liability Act 2002 (NSW) (CLA) is relevantly whether the negligence was a necessary condition of the occurrence of the harm. That notion has been taken to include where the tortfeasor’s negligence materially contributed to the harm even if there were other conjunctive causes, just as under the previous common law: Amaca Pty Ltd v Booth [2011] HCA 53; (2011) 246 CLR 36 at [70]; Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 at [20]-[30]. It is necessary only that the relevant act or omission play some part in contributing to the loss, even if minor: Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 at [45]; Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215 at 236. It does not require that the cause be characterised as “proximate”: note eg Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 at [11]. Here, if Value was negligent in the manner found by the primary judge then there can be no doubt that its negligence was a materially contributing cause of Mr Badra’s injuries. Value made a vague suggestion in its written submissions that an issue “perhaps” arose as to scope of liability under s 5D(1)(b), but the argument was not developed and has no apparent merit.
2. The real matter in dispute on appeal was raised by ground 1, which itself involves two overlapping issues: whether Mr Mourad did know that the hole was uncovered underneath the black plastic; and whether Value should be held liable whether or not he did know. Before addressing those matters it is appropriate to outline the context in which they arise.
Background
1. Numerous issues were in dispute below. The primary judge noted “a lack of agreement on almost everything” (J [8]). There was, for example, a substantial contest as to where and how the accident occurred, along with the extent of the harm Mr Badra had suffered. The issues on appeal are much more limited. The context of the dispute can therefore be summarised briefly (much of it taken from J [14]-[36]).
2. Mr Badra was 36 years old at the time of the accident. He was born in Lebanon, arriving in Australia in 2014. He speaks little English. He had been working for MMM, on and off, since 2018. He was employed to do cement rendering and to assist in the rendering process.
3. The construction site was comprised of two residential buildings: one facing Forest Road in Peakhurst and the other facing Iraga Avenue. Mr Mourad was building the houses for his children. At some point before the accident, MMM was engaged by Value to undertake rendering of the Iraga Avenue house.
4. Mr Badra had been working on the site since May 2020. He commonly worked with three others doing the rendering work, and these three had been present at the site on the day of the accident: Imadeddine “Emad” Zod (the owner of MMM), Osman Badour and Khedr Kamal.
5. The accident occurred on 19 June 2020. Sometime before that Value had arranged for the floor of the garage at the Iraga Avenue house to be tiled.
6. The drain in question was close to the left front corner of the garage. It was a square with sides of about 600mm. Prior to the tiling being done Mr Mourad had covered the hole with a piece of plywood which had been fastened to the floor. The tiler had not finished work around the drain. Some tiles still had to be cut to be flush with the edges of the hole so as to enable a steel collar to be placed into the drainage hole, into which in turn would be placed a steel grill which would cover the drain whilst allowing drainage. The collar and grill had been purchased by Mr Mourad before 19 June 2020 and were onsite. Mr Mourad gave evidence that he had put the grill on top of the hole, sitting on the tiles, before the date of the accident, and said that he did not remove it before the accident.
7. Mr Badra said that he had noticed the drain prior to 19 June 2020, and that it had been covered on a temporary basis by a piece of gyprock. He said that the drain was not covered completely, as he witnessed rubbish being removed from it during the construction process (as explained further below).
8. It was not in dispute that on the morning of the accident one or more of the employees of MMM (other than Mr Badra) placed black plastic sheeting over the tiles closest to the entrance to the garage in order to protect them from falling render. The black plastic covered the drain. Mr Badra said that it was Mr Zod who instructed Mr Kamal to lay the plastic sheeting. Mr Badra did not witness the plastic being put down.
9. Mr Mourad’s evidence was that he had arrived on site that morning around 6:30 or 7:00am. At some stage that morning he observed the metal grill was placed on top of the black plastic above the drain. He left the Iraga Avenue site before about 11am. He was not there when the accident occurred. Even so, Mr Mourad disputed that Mr Badra had in fact fallen into the drain, based on what he claimed he had been told after the event. He claimed that if Mr Badra had fallen at all – which he disputed – it was into another hole in the dirt outside the garage. Mr Mourad claimed to know this based on what he said he heard Mr Badra telling others at the scene, what Mr Badra said to him later that day after leaving the hospital, and in light of what was recorded in various documents. Mr Mourad’s version of events in that regard was rejected by the primary judge.
10. Sometime between 11:15 and 11:30am Mr Badra walked through the garage over the black plastic, stepped on the drain hole, fell and injured himself. The steel grill was not covering the hole. Mr Zod called Mr Mourad to tell him of the accident at 11:26am. Mr Zod then called an ambulance at 11:29am. Police also attended the scene around 12pm, taking some photos. Mr Mourad claimed to have returned to the site soon after the accident.
11. Two of the police photographs taken later that day show the metal grill sitting on top of the black plastic, covering the drain hole. Someone must have moved the grill into that position after the accident and before the police arrived. Mr Mourad’s evidence was that when he returned to the site after the accident he saw the grill in the same position as when he had left the site that morning.
12. Mr Badra gave evidence that after the accident and before any police or ambulance officers arrived he saw Mr Zod talking on the phone to (he believed) Mr Mourad about where the steel grill was. Mr Badra then saw Mr Zod bring the grate from somewhere and place it over the plastic on top of the drain hole.
13. Mr Badra did not assert that even if the steel grill had been in place on top of the drain hole, as asserted by Mr Mourad, such loose placement would have been negligent. Rather, the fulcrum of the dispute on liability was summarised by the primary judge as follows:
[31] The case put by [Value] is that the accident could not have occurred as alleged because the drain cover [ie the steel grill] was in place before the accident. The plaintiff accepts that, having regard to the case he has pursued, he cannot win if the cover was in place at the time of his accident. This is the central issue in the case.
1. None of MMM’s employees were called to give evidence. Nor was any other witness called who could give evidence in relation to the state of the drainage hole and the placement of the steel grill on the day in question. In substance, the factual issue as to the placement of the grill turned on whether Mr Badra’s or Mr Mourad’s evidence on the point was believed.
The decision of the primary judge
1. The primary judge stated that he had “considerable doubt about Mr Mourad’s evidence”, giving a list of reasons for why that was so (J [87]). His Honour noted that although there had been inconsistencies in the evidence of Mr Badra, two significant contemporaneous documents – a certificate of incapacity and an injury claim form – belatedly emerged at the end of the hearing which tended to support Mr Badra’s version of events (J [73] and [88]-[90]).
2. His Honour relevantly made the following findings:
[99] I accept the plaintiff’s evidence. He walked across the garage floor, which was covered with black plastic and fell into a drain which had been covered by the plastic. There was no metal grate covering the drain at the time. One of the workers on site covered the drain with the metal grate before the police arrived and inspected the site.
[100] He did not fall outside the garage either on the scaffolding or the dirt. He did not fall from the garage onto the dirt. He did not slip on the plastic.
[101] The second defendant placed the plastic on the tiles on the morning of the accident. This was observed by Mr Mourad when he attended. Mr Mourad must not be telling the truth about observing the grate on top of the plastic over the drain, even assuming the accuracy of his evidence as to when he was there.
[102] The first defendant’s case on liability is not based on any evidence from the second defendant’s employees (as they were not called) or anything observed by Mr Mourad (as he acknowledged that he was not there at the time of the accident), but on what Mr Mourad said he heard and Mr Mourad’s own insistence that this is not a genuine case and he was, in effect, told that by the plaintiff when the plaintiff left the hospital. This seems like a flimsy basis to accuse the plaintiff of fabricating a story to claim compensation.
[103] In the circumstances, I accept that the accident occurred as alleged.
…
[106] In this matter, I accept (as agreed by Mr Mourad) that the first defendant:
(1) was in control of the site;
(2) was generally responsible for safety on the site; and
(3) was required to undertake safety checks to ensure that the condition of the site was safe for all workers, including employees of any sub-contractors.
[107] As I have accepted the plaintiff’s version of events, I am unable to accept that Mr Mourad is telling the truth about his observations as to the presence of the grate over the drain when he left the site (or his suggestion that everyone else had also left the site). Indeed, having regard to the lack of the usual safety documents which Mr Mourad should have kept and my general reservations about his evidence, I am unable to accept his evidence generally and particularly about his observations and practices and procedures.
1. As regards the legal liability of Value, the primary judge referred to the necessity to apply s 5B of the CLA, and reminded himself that all duties of care may be discharged by the exercise of reasonable care (at J [104]-[105]). At J [108] his Honour stated that Value was not vicariously liable for the conduct of MMM, nor was the duty of care owed by Value discharged simply by relying on MMM to ensure the safety of the work site, citing Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1 at [20] and [28], along with Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16.
2. His Honour then held Value liable for the following reasons:
[109] The first defendant was both the occupier of the site and the builder which organised the work. As accepted by Mr Mourad, the first defendant was responsible for the safety on site and was required to inspect the site to ensure that it was safe for all workers coming onto the site. This necessarily included the garage. To the extent that Mr Mourad knew or ought to have known that there was a risk of injury arising out of something on the site, then he owed a duty to take reasonable steps to reduce the risk. The first defendant could not discharge that duty by merely relying on its independent contractor to do something to ensure the safety of its employees.
[110] The key question is, thus, whether Mr Mourad knew or ought to have known of the risk of injury to the plaintiff at such a time when he could have reasonably done something to eliminate or reduce that risk. The simple answer is that, having regard to Mr Mourad’s own evidence, he must be taken to have known that the drain should have been covered by the grate. He was in a position to see whether the drain was covered by the grate. I do not accept his evidence that when he was onsite that morning before the accident, the grate was on the drain.
[111] Applying the principles set out in s 5B of the CLA, it follows that:
(1) the risk of harm was the risk of the plaintiff stepping into the hole created by the drain, in circumstances in which the hole was obscured by the plastic;
(2) that risk was both reasonably foreseeable on the part of the first defendant and not insignificant; and
(3) there were reasonable precautions which the first defendant could have taken, including ensuring that the grate was on the drain or placing some form of barricade around the drain or making sure that the plaintiff knew that the plastic was covering the drain.
[112] The first defendant says that it is not vicariously liable for the conduct of the second defendant and that the second defendant was in a position to take steps to ensure that the grate was placed back on the plastic. I understand the submission to be that the first defendant was entitled to rely on the second defendant to make sure that the grate was on. The first defendant also says that the plaintiff fails on causation because there has been a novus actus interveniens between any failure by the first defendant and the accident, being the conduct of the second defendant in removing the grate.
[113] The fact that the second defendant was also obliged to take measures to ensure the safety of the plaintiff does not lesson the standard of care imposed on the first defendant and does not absolve the first defendant from a failure to take the simple precautions which would have prevented the accident. The negligence of the second defendant did not break the causal nexus between the first defendant’s failure and the accident.
[114] I do not know when (if at all) the grate was last on the drain prior to the accident but, at the very least, Mr Mourad knew that it should have been. The first defendant was negligent in not ensuring that the drain hole was sufficiently guarded or covered so that workers on the site, such as the plaintiff, could not fall into the hole, whether through inadvertence or otherwise.
1. His Honour went on to also hold MMM breached its duty of care, saying:
[117] The plaintiff said [MMM’s employees were onsite at the time of the accident] and said that one of them replaced the grate immediately after the accident. Whatever the state of the drain in the garage floor prior to the accident, there is no dispute that the second defendant placed the plastic over the garage floor on the morning of the accident. Mr Mourad said that the plastic was on the garage floor when he arrived that morning. He was not challenged on that by the second or third defendants. When the grate was last covering the drain is not known but having regard to my findings, at the very least, the second defendant placed the plastic on the floor covering the hole and did not ensure that either:
(1) the grate was placed back over the hole;
(2) something was placed under the plastic (such as the grate) to ensure that no one could fall through the hole; or
(3) some sort of barrier or warning sign was put in position.
[118] A very simple step which could and should have been taken by the second defendant when placing the plastic over the garage floor and the stormwater drain, was to ensure that the grate was in position, either under or over the plastic. …
1. When dealing with apportionment between the defendants, his Honour said:
[130] In my view, [Value and MMM] are equally culpable for the plaintiff’s accident. On my findings, and despite [Value’s] denials, Mr Mourad must have known that [MMM] covered the drain hole with plastic and that there was no drain cover on top of it. [Value] was responsible for safety on the site and could have taken obvious steps to prevent the accident, such as locating the metal grate and placing it over the top of the drain.
[131] [MMM] could have taken the same simple step to prevent the accident. That is, if it was going to cover the drain hole with plastic (as it did) it needed to locate the drain cover and place it over the top to ensure that, in the event that someone was walking in the area, that person did not fall through the hole. As such, I would apportion responsibility equally.
Whether Mr Mourad knew of the risk of harm
1. Ground 1 of Value’s appeal is that, contrary to the primary judge’s finding, it did not breach its duty to Mr Badra as “the concealment of the hole was not something of which the appellant knew or ought to have known and thus the harm was not reasonably foreseeable”. In part, thus, Value’s case on this ground is that it did not in know in fact that the drain hole was concealed. As developed in oral submissions, this argument seemed to boil down to asserting that “the evidence doesn’t establish that Mourad knew in fact that the hole was not covered under the black plastic”. It was argued that the fact his Honour rejected Mr Mourad’s claim that he saw the grill on top of the black plastic prior to leaving the site that morning did not, of itself, establish that Mr Mourad was aware the hole was uncovered underneath the plastic.
2. Value placed some significance on the point that even allowing for the primary judge’s preference of Mr Badra’s version of events over Mr Mourad’s – which it did not seek to challenge – Mr Mourad had given evidence in his first witness statement that from “the time of its installation, I did not remove the steel grill from the top of the stormwater drain”, and this evidence was not challenged in cross-examination. Implicit in this argument was the possibility that it was the employees of MMM who, for some reason, had removed the grill prior to putting down the black plastic sheet on the day in question, and they had not put it back in place either above or below the sheet.
3. His Honour did not state in terms that Mr Mourad in fact knew on the morning of 19 June 2020 that the drain hole was not covered by the grill, whether above or below the plastic. However, reading his Honour’s judgment as a whole and in context it is apparent that he was making such a finding. It seems his Honour did not consider it necessary to state that point in terms given the way Value had put its case.
4. At J [21] the judge referred to Mr Badra’s evidence that he witnessed rubbish being removed from the drain. That evidence was that the day prior to his accident he saw a Tongan labourer cleaning the drain of rubbish, building material and general debris which had fallen into the drain from the tiling process. He said that the labourer was acting under the direction of Mr Mourad. Mr Mourad denied that he had employed a Tongan labourer or that any labourer had been cleaning the drain or working inside the garage the day before the accident.
5. The primary judge referred to Mr Mourad’s evidence about not removing the grill after installation at J [44], noting that Mr Mourad indicated he did not believe there was ever any need to remove the grill, including because of a need to remove rubbish or debris from the drain. His Honour then noted that if that evidence was accepted then it must have been MMM that removed the grill to place the plastic underneath it (a point reiterated at J [47]). But he then expressed some scepticism about why MMM would have removed the grill, although noting that there had been a suggestion that it was used to keep the plastic in place (at J [45]).
6. That scepticism about MMM moving the grill was then echoed at J [87]. In listing reasons for doubting Mr Mourad’s evidence, his Honour gave this as his twelfth reason:
Mr Mourad said that he installed the metal grate some time before the day of the accident and could think of no reason why anyone would move it. Yet, on his evidence, not only did the second defendant lay plastic without him knowing about it until shortly before the accident, but someone thought it was necessary to lift up the heavy grate and put the plastic underneath the grate, rather than laying the plastic over it. No explanation has been offered as to why that would have occurred.
1. It is evident from this subparagraph itself, from its inclusion in the list of reasons to doubt Mr Mourad, and from what had earlier been said at J [44]-[47], that his Honour did not accept that someone would have removed the steel grill (which was heavy) without reason and without Mr Mourad’s knowledge. Although his Honour did not express any conclusion about Mr Badra’s evidence about the labourer cleaning the drain, it may be implicit in the rejection of Mr Mourad’s account that he accepted this version of events, although it is not necessary to decide that point.
2. Next, his Honour comes close to making a finding that Mr Mourad knew the drain was uncovered at J [110]. He said there that Mr Mourad “must be taken to have known that the drain should have been covered by the grate”, adding that he “was in a position to see whether the drain was covered by the grate”, and concluding that “I do not accept his evidence that when he was onsite that morning before the accident, the grate was on the drain”. And at J [114] his Honour said that “I do not know when (if at all) the grate was last on the drain prior to the accident but, at the very least, Mr Mourad knew that it should have been”.
3. At J [117], when addressing the liability of MMM, the primary judge said that “[w]hen the grate was last covering the drain is not known but … at the very least, [MMM] placed the plastic on the floor covering the hole and did not ensure that … the grate was placed back over the hole” (emphasis added). It is implicit in this passage that the hole was in fact uncovered prior to MMM putting down the black plastic. Senior counsel accepted in argument that that “may very well be the case”. This passage, taken together with his Honour’s earlier scepticism about why anyone from MMM would have moved the grill (at [45] and [87]), suggests that he concluded that MMM had not removed it from on top of the drain.
4. At J [130] his Honour said that “[o]n my findings … Mr Mourad must have known that [MMM] covered the drain hole with plastic and that there was no drain cover on top of it”, and he “could have taken obvious steps to prevent the accident, such as locating the metal grate and placing it over the top of the drain” (emphasis added). Again, implicit in the finding that it was necessary to locate the metal grate was a conclusion that the grate was not covering the hole prior to and separately from MMM putting the black plastic down.
5. The absence of an express finding that Mr Mourad knew the drain was uncovered can be explained by a key exchange between counsel for Value and the primary judge in closing submissions:
SLEIGHT: Your Honour understand what I mean. It's just a void disguised or concealed by the black plastic. And that was created by MMM.
HIS HONOUR: It's just going back to what your case is, so I understand it, it is that there’s really only two alternatives. Either the grate was never there and was put there after the event, that’s the plaintiff’s case, or MMM lifted up the grate from its position when they're putting down the plastic and put the grate on top of the plastic to anchor it. But, are there any other alternatives here?
SLEIGHT: Well, only one, which I discount. And that's that after MMM did that, some third party came along and just removed the grate.
HIS HONOUR: Well there's only three MMM workers on site, and your client said he'd left.
SLEIGHT: I don't suggest that's - no, I accept what your Honour says, yes. There is another version, but I think it's too incredible. And your Honour, I will - …
1. Submissions then moved on to another topic. What the exchange indicates is that Value accepted that the case came down to accepting either Mr Badra’s or Mr Mourad’s versions. No plausible intermediate possibility was suggested. In particular, Value did not argue that there was a reasonable case that even if Mr Mourad’s evidence about seeing the grill on top of the black plastic on the morning of the accident was rejected, it was still open to find that he had reason to understand the grill was covering the drain underneath the plastic. Mr Badra had said that the grill was not there from at least the day before. Mr Mourad said that he had seen the grill on top of the black plastic that morning, although little plausible explanation had been offered for why it should have been moved to that position. His Honour accepted Mr Badra’s version and rejected Mr Mourad’s. As he said at J [99], “I accept the plaintiff’s evidence”.
2. In this context it is apparent that his Honour did conclude that Mr Mourad knew that the drain was not covered by the grill on the morning of the accident, whether above or below the black plastic, and that he had sound reasons for so concluding. He no doubt considered he did not have to spell that out in express terms given that Value had accepted that the factual case came down to accepting one version or the other, and he gave ample reasons for accepting Mr Badra’s evidence over Mr Mourad’s. As noted, it is implicit in his Honour’s findings that it was not MMM which was responsible for moving the grill. And there is no evidence to suggest that anyone other than Mr Mourad would have caused that to occur. Mr Mourad was the builder and in control of the site. There is no suggestion the tiler – the only other plausible candidate – had returned. It seems unlikely that the tiler would have done so, as if it had been the tiler clearing the drain then that would presumably have been in order to finish cutting the tiles around the drain to enable the collar and grill to be inserted. Yet that had not occurred by the time of the accident.
3. Insofar as ground 1 asserts that the primary judge erred in finding that Value in fact knew of the risk of harm, the ground is not made out.
Whether Value is liable in negligence
1. The second strand of Value’s argument on ground 1 is that regardless of whether Mr Mourad in fact knew (or ought to have known) that the drain was uncovered on the morning of the accident, it was reasonable for him to assume that that a competent contractor would have addressed the risk, and Value’s duty of care as occupier did not extend to ensuring that this had been done.
2. The nub of Value’s argument was put pithily by its senior counsel as follows:
The critical point I'm making is that it was not incumbent on Mr Mourad to go and lift up the black plastic to ensure that a competent independent contractor had put something under the black plastic, over a hole that everybody knew was there. That's what this case boils down to down to. …
You would assume, as the plaintiff did, that when Mr Khedr put the black plastic that there was something underneath it. Everybody on the site knew there was a hole there. Why do you assume that somebody would be so stupid as to lay black plastic over a void without anything supporting it? …
[T]he independent contractor is not some sort of failsafe insurer for acts or omissions of independent contractors on a site. Even if the principal knows that there’s something wrong with what an independent contractor has done in relation to the safety of his employees, it doesn't follow that the principal is liable any more than somebody walking past in the street might be liable. …
It would be different if Mr Mourad had been asked questions and had accepted that he should have looked under the black plastic – assuming the grate was not there – or something along those lines, if there was some admission, but there wasn’t.
1. Senior counsel made clear that the complaint about Mr Mourad not being asked questions was not a Browne v Dunn argument. Rather, it was that “the evidence didn’t go far enough, it wasn’t teased out – there was no suggestion that, applying the principles that I've identified … Mr Mourad should have … picked up the plastic to see what was under it”.
2. Value noted that the duty owed by a head contractor to employees of subcontractors was considered in Leighton, where the following was said:
[21] It is common in the construction industry for the principal contractor to arrange for the works to be carried out by subcontractors rather than by employing its own labour force. Among the advantages that accrue to the principal contractor in adopting this model for its undertaking is that it does not incur the obligations that the law imposes on employers. An employer owes a personal, non-delegable, duty of care to its employees requiring that reasonable care is taken. This is a more stringent obligation than a duty to take reasonable care to avoid foreseeable risk of injury to a person to whom the duty is owed.
1. Consistently with the latter statement, the Court went on to say that “Leighton, as the occupier of the site, owed a duty to persons coming onto it to use reasonable care to avoid physical injury to them” (at [48]). The Court approved (at [49]) the statement of Gummow J in Roads and Traffic Authority v Dederer [2007] HCA 42; (2007) 234 CLR 330 at [43] that “whatever their scope, all duties of care are to be discharged by the exercise of reasonable care”. In the context of claims subject to the CLA, that involves the taking of reasonable care in the sense of taking reasonable precautions to avoid a risk of harm identified pursuant to s 5B of that Act.
2. Thus Value and MMM did not owe the same duty of care to Mr Badra. But it is not the case that Value owed no duty of care to Mr Badra simply because he was an employee of a contractor retained by Value.
3. In Leighton the plaintiff had been injured on building site controlled by Leighton in the course of a concrete pumping operation in which that company had no direct role. It was not the employer of the plaintiff. The injury occurred when the plaintiff and others (also not employed by Leighton) were cleaning concrete pumping pipes. The case is not like this one, where the injury occurred from a risk which already existed.
4. In Leighton the Court (at [20]) quoted approvingly the following statement of principle by Brennan J in Stevens (at 47-48):
An entrepreneur who organises an activity involving a risk of injury to those engaged in it is under a duty to use reasonable care in organising the activity to avoid or minimise that risk, and that duty is imposed whether or not the entrepreneur is under a further duty of care to servants employed by him to carry out that activity. The entrepreneur's duty arises simply because he is creating the risk and his duty is more limited than the duty owed by an employer to an employee. The duty to use reasonable care in organising an activity does not import a duty to avoid any risk of injury; it imports a duty to use reasonable care to avoid unnecessary risks of injury and to minimise other risks of injury. It does not import a duty to retain control of working systems if it is reasonable to engage the services of independent contractors who are competent themselves to control their system of work without supervision by the entrepreneur. The circumstances may make it necessary for the entrepreneur to retain and exercise a supervisory power or to prescribe the respective areas of responsibility of independent contractors if confusion about those areas involves a risk of injury. But once the activity has been organised and its operation is in the hands of independent contractors, liability for negligence by them within the area of their responsibility is not borne vicariously by the entrepreneur.
1. The injury in Stevens occurred during the loading of logs by one contractor retained by the company onto the truck of another contractor retained by the company. The company had organised the activities of felling and moving the logs, including loading them onto the trucks. The High Court accepted that the company owed some general duty of care in relation to the organisation of the activities (see eg Mason J at 31). That acceptance was the context of the discussion by Brennan J, as manifested in the first sentence quoted above. His Honour went on to state (at 48):
If there is no failure to take reasonable care in the employment of independent contractors competent to control their own systems of work, or in not retaining a supervisory power or in leaving undefined the contractors’ respective areas of responsibility, the entrepreneur is not liable for damage caused merely by a negligent failure of an independent contractor to adopt or follow a safe system of work either within his area of responsibility or in an area of shared responsibility.
1. The word “merely” in this sentence is significant. It illustrates that his Honour was addressing situations where the cause of the injury was something done or not done by the independent contractor, responding to an argument that, even so, the occupier bore some liability for ensuring that the contractor adopted and followed a safe system of work. Brennan J was not addressing where the risk of injury arose from a state of affairs which pre-existed the involvement of the contractor or the contractor carrying out its activity. That was not the context, nor the type of duty, being considered in Stevens.
2. More directed to that issue was another statement Value invoked, being that of Brennan and Dawson JJ in Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7 at 30:
where an independent contractor carrying on a particular trade is engaged by an occupier to work on his premises, the occupier is not under a duty to give warning of a defect in the premises if tradesmen of that class are accustomed to meeting and safeguarding themselves against defects of that kind.
1. This statement has subsequently been approved and applied by this Court: eg Felk Industries Pty Limited v Mallet [2005] NSWCA 111 at [18]. Their Honours were addressing specific defects or risks of a kind to which tradespeople “are accustomed to meeting and safeguarding themselves”, not general or unusual risks. Consistently with that understanding, one of the cases their Honours cited in support of the principle was a decision of the English Court of Appeal in Christmas v General Cleaning Contractors Ltd [1952] 1 KB 141. The Court there held an occupier was not liable for injury to a window cleaner caused by the movement of a sash window the cleaner was working on. The window was “ill-balanced” but “was safe enough for all ordinary purposes” (at 147 per Denning LJ). The defect in the window was, for a window cleaner, one of the “common recognizable dangers of everyday experience and cannot be classed as ‘unusual’” (ibid at 148). The case was not one in which there was already a general risk of harm to persons other than window cleaners. The Court of Appeal did uphold the liability of the employer, a conclusion which was in turn upheld in the House of Lords: General Cleaning Contractors Ltd v Christmas [1953] AC 180.
2. Another of the cases referred to by Brennan and Dawson JJ was Archer v Hall [1967] 1 NSWR 107, in which an independent contractor sued a builder-occupier. The contractor had been working on the roof of the building in question. He threw a steel rod down to the ground for collection, and in so doing came into contact with an electrical wire next to the building, electrocuting himself. This Court held the builder was not liable. Herron CJ noted that the builder had not created the danger from the electrical wires, which were part of the ordinary services of the local council (at 111). Again, there was no general duty which had been breached by the builder. Both Christmas and Archer were decided in the then common law context where occupier’s liability varied depending on the category of entrant, an approach rejected in 1987 in Australia in Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987) 162 CLR 479. However, the cases are distinguishable from the current matter in any event.
3. A more analogous case to the present is this Court’s decision in A V Jennings Ltd v Thomas [2004] NSWCA 309, a decision referred to in Felk. The plaintiff there succeeded in his claim. He was a carpet cleaner who slipped on the first of some muddy steps, landing in a hole dug for a footing below the steps. Bryson JA explained that although the plaintiff “was a skilled tradesman, his skill had no particular relation to the use of the means of access, as he was in no different position to another ordinary person” (at [32]).
4. The subsequent decision in Felk concerned circumstances in which the plaintiff had come to the occupier’s premises to service fire extinguishers. Access to one extinguisher was impeded by a work bench and a heavy bin full of metal offcuts. The plaintiff hurt his back in lifting that extinguisher off the wall. The Court held that the occupier was not liable as it “was entitled to assume that the plaintiff would be able to safeguard himself” with respect to the metal bin (at [19]). Hunt AJA distinguished A V Jennings as follows:
[21] The injury in that case arose in an entirely different context to that which obtains in the present case. The independent contractor in that case was on his way to the place where he was to carry out his specialised work. He was not involved in that specialised work at the time he was attempting to gain access to the premises in accordance with the instructions the occupier had given him.
1. Thus the injury was seen to occur because of the way in which the employee of the independent contractor was carrying out his specialist responsibilities, as opposed to where the risk that came home was a general one.
2. Value referred in its list of authorities to Sydney Water Corporation v Abramovic [2007] NSWCA 248. A majority of this Court overturned a finding that an occupier owed a duty to employees of an independent contractor to ensure that the contractor’s work was carried out in a particular way. That is not the type of duty at issue here. Further, Basten JA (speaking for the majority) noted that in some circumstances “a general duty may arise because elements of control and knowledge of risk remain with the principal and, in relative terms, the worker is vulnerable” (at [71]).
3. Value also referred to Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406. That was another case in which this Court rejected the suggestion that an occupier-builder owed a duty to supervise work being undertaken by the employee of an independent contractor.
4. The cases cited by Value do not establish that a builder-occupier owes no duty of care to the employee of a competent independent contractor that it has retained to work on the site. On the contrary, the High Court made clear in Leighton that such an occupier does owe a duty to persons coming onto the site “to use reasonable care to avoid physical injury to them” (at [48]). This Court’s earlier decision in A V Jennings, and Basten JA’s statement in Sydney Water at [71], are consistent with that understanding. The statement by Brennan and Dawson JJ in Papatonakis, approved and applied in Felk, addresses situations where the risk in question is not one that the occupier had a general duty to take reasonable care to avoid, but rather is a risk that arises from the carrying out of the particular work that the independent contractor is retained to undertake. For such risks, cases such as Christmas, Archer, Sydney Water and Pacific Steel illustrate that, in general, the occupier does not have a duty to employees of an independent contractor to ensure that the contractor has a safe system of work in carrying out its activities at the site (subject always to all of the circumstances, including where for example there is a need for coordination, as arose in Stevens).
5. Here, Mr Badra’s injury occurred simply when he “walked across the garage floor” (J [99]). It is not entirely clear why he was walking into the garage. The primary judge recorded that immediately prior to the accident Mr Badra had been “assisting with the rendering process” by “wiping down the wall beside the garage door opening, which was close to the stormwater drain” (at [23]). There is no suggestion, however, that he was injured when undertaking the rendering process itself. He was simply doing what any worker on the site may have done, that is, walking across part of the site.
6. As noted, the primary judge stated that “the risk of harm was the risk of the plaintiff stepping into the hole created by the drain, in circumstances in which the hole was obscured by the plastic” (J [111(1)]). In its written submissions Value treated this statement as though the hole being obscured by the plastic was part of the relevant risk of harm. But it is not clear that the reference to the circumstance of the hole being obscured by the plastic is part of his Honour’s identification of risk. As shall be shown in a moment, the risk of harm identified and admitted in the pleadings did not involve the drainage hole being obscured by black plastic, but rather the fact that the hole was inadequately covered. When the disparity of the wording between the pleadings and J [111(1)] was raised in the course of argument, senior counsel for Value said that “it doesn't really matter whether one approaches it in the way pleaded, or one approaches it in the way that his Honour identified the risk of harm”. In the circumstances, it is the pleaded and admitted risk which is the appropriate focus of analysis.
7. What was in issue in the proceedings was, of course, determined by the pleadings. In its further amended defence Value denied the allegation that as the builder it owed a duty to institute and maintain a safe system of work. It did not admit that it owed a duty adequately to assess safety hazards to which the plaintiff and other lawful entrants to the premises who had to work there might be subjected to in the course of their employment duties. But it did admit the following propositions:
1. At all material times Value owed a duty of care to the plaintiff and others accessing the premises to take reasonable precautions not to expose such persons to a foreseeable risk of suffering not insignificant harm.
2. Such risk of harm included the risk resulting from stepping onto an inadequately covered stormwater drain/void and falling through it.
3. The risk of harm of in not covering the stormwater drain/void adequately and leaving it with no adequate covering to prevent workers from falling through it was not insignificant.
4. A reasonable person in the defendant’s position would have taken precautions against the aforementioned risk of harm.
5. The probability of harm in not covering the stormwater drain/void adequately was likely to occur if care and precautions were not taken, although Value denied that care and precautions were not taken.
6. The burden of taking such precautions was not incommensurate to the risk of harm as they were relatively inexpensive and not inconvenient.
7. The social utility of the activity that created the risk of harm did not outweigh the taking of precautions.
1. Value denied that Mr Badra’s injury and damage was caused by a breach of duty by it. The gravamen of its pleaded case relevantly lay in its allegations that “the stormwater drain was completely covered by a grate over a black plastic sheet”; that Mr Badra had not injured himself falling into the drain but rather by falling into a trench outside the garage; and in any event it denied that he was injured because a covering over the drainage hole gave way. This pleaded case reflected the version of events maintained by Mr Mourad, which the primary judge rejected.
2. Otherwise, Value admitted that it owed a duty of care to take reasonable precautions not to expose Mr Badra and others accessing the premises to a foreseeable risk of suffering not insignificant harm, which harm included falling through an inadequately covered stormwater drain/void, and which risk a reasonable person could and would have taken precautions against. The primary judge found that that risk had existed. The risk existed prior to and independently of the drain hole being covered by black plastic by MMM. And, as explained above, it is implicit in his Honour’s findings that Mr Mourad was aware of that risk of harm before the accident.
3. In these circumstances Value has no cause for complaint about being found liable in negligence. As noted above, Value’s core argument was that “it was not incumbent on Mr Mourad to go and lift up the black plastic to ensure that a competent independent contractor had put something under the black plastic, over a hole that everybody knew was there”. That argument ignores the fact that the pleaded and admitted risk was the existence of an inadequately covered stormwater drain, which was a risk for anyone entering the site and which pre-existed the drain being covered over by black plastic. It was a risk which Value had created and was aware of prior to the hole being covered. The same answer applies to Value’s argument that it should not be a failsafe insurer for the acts or omissions of an independent contractor which does not take care of the safety of its employees. Value argued that it “would be different … if there was some admission”. There was some admission, in the pleadings.
4. Value asked why it should have assumed “that somebody would be so stupid as to lay black plastic over a void without anything supporting it”. Again, that argument implicitly mistakes the risk at issue. The argument also hints at Value not bearing primary causal responsibility, being the argument rejected above with respect to ground 3 (and there was no challenge per se to the 50:50 apportionment). The argument may also hint at Mr Badra bearing some responsibility for his own injury, but there was no challenge to the primary judge’s rejection of the allegation of contributory negligence.
5. This is a case where Value breached its general duty of care to entrants to the site which it occupied. Once Mr Mourad’s version of events was rejected and Mr Badra’s version accepted, and given the way that Value had pleaded and argued its case, Value was bound to fail in its claim that it had not breached that duty of care. Ground 1 is not made out.
Ground 4 and appropriate orders
1. As noted above at [4], his Honour addressed the specific amounts owing in a second judgment which sought to address the complexities of ss 151A and 151Z of the WCA. The parties now agree that his Honour erred in giving effect to these sections, taking account of this Court’s judgments in Synergy Scaffolding Services Proprietary Limited v Alelaimat [2023] NSWCA 213; (2023) 326 IR 289 (Synergy No 1) and Synergy Scaffolding Services Pty Ltd v Alelaimat (No 2) [2024] NSWCA 11 (Synergy No 2). Significantly, his Honour’s judgment on point was delivered prior to Synergy No 2 being handed down.
2. In Synergy No 1 Simpson AJA, speaking for the Court, explained the effect of s 151Z(2) of the WCA in calculating the damages payable by a third party (ie non-employer) tortfeasor as follows (at [140], paraphrasing slightly):
D = T – (C – X), where:
D = the sum of damages ultimately recoverable by the plaintiff worker from the third party tortfeasor;
T = the sum of damages which would be recoverable by the plaintiff worker from the third party tortfeasor but for the operation of s 151Z(2);
C = the sum that the third party tortfeasor would be entitled to recover from the employer tortfeasor as contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the 1946 Act) but for the operation of s 151Z(2)(d); and
X = the amount of contribution that is actually recoverable under s 5 of the 1946 Act once s 151Z(2)(d) is taken into account.
1. Here, Value is the third party tortfeasor, MMM is the employer, and the primary judge apportioned responsibility between them on a 50:50 basis for the purposes of the 1946 Act. The parties now agree that the relevant integers here are as follows:
T = $1,059,813.07.
C = 50% x $1,059,813.07 = $529,906.53
X = 50% x $619,925 = $309,962.50
Therefore D = $1,059,813.07 – ($529,906.53 – $309,962.50) = $839,869.04
To explain further that last step:
$529,906.53 – $309,962.50 = $219,944.03.
$1,059,813.07 – $219,944.03 = $839,869.04.
1. The figure for T is higher than the amount allowed for by the primary judge by $66,613.07 (cf J2 [20(1)]). That is an amount which has previously been paid by MMM to Mr Badra under the WCA for out of pocket expenses. In light of the decision in Synergy No 2 (see at [18]-[29]), the parties accept that that amount would not be deducted from the amount Value is liable to pay Mr Badra. The third party tortfeasor is liable in damages for such an amount, even though in due course Mr Badra will be liable to repay it to MMM. The adjustment in turn affects the C figure.
2. The X figure, being the amount actually recoverable by Value from MMM, has not changed (see J2 [20(2) and (4)]). That figure is $309,962.50, being half the damages payable by MMM to Mr Badra (ie $619,925). The amount payable to Mr Badra by MMM is lower than the amount payable by Value to Mr Badra because of the limits imposed under the WCA regime on claims against employers (as noted at J2 [7], and see Synergy No 2 at [16]).
3. However, the primary judge ordered judgment for Mr Badra against MMM in the sum of $440,864.29 rather than $619,925. That was so because his Honour reduced the latter amount by an amount of $179,060.71 representing workers compensation payments made by MMM (J2 [31]). The parties now agree in light of Synergy No 2 that this deduction would not be made in the order, as Mr Badra’s liability to repay those amounts under the WCA only arises if and when he sought to enforce a judgment against MMM (which in practical terms he is unlikely to do, given the higher award of damages made against Value). If and when that did occur, MMM (through WCNI) could make the deduction at that stage.
4. Given that the judgment sum against MMM should increase to $619,925, and Value is entitled to succeed as to half that amount on its cross-claim against MMM, that has a knock-on effect on the judgment sum on the cross-claim, which will now be $309,962.50.
5. As MMM noted in its helpful submissions on this issue, if and when Mr Badra accepts payment of the judgment sum against Value (as he will likely do) then he will become liable to repay to MMM relevant workers compensation amounts he has received. One point should be made in this regard. It would have been open to Mr Badra to agree to orders requiring him in form or effect to make that repayment, in the interests of simplicity. The Court indicated as much in Synergy No 2 at [59]. The Court will not make such an order absent agreement of the claimant, but that does not preclude parties seeking, sensibly, to cut to the chase.
6. Finally, in relation to costs, the only ground on which Value has succeeded is ground 4, which involved consensual adjustment of figures. It was MMM which filed the written submissions which led to the outbreak of consensus. The appropriate provision for costs would thus appear to be that Value should pay the costs of all respondents on the appeal. However, little was said in the course of the hearing about costs, although the Court noted that there were various possible outcomes of the appeal. In the circumstances the parties should have the opportunity to address on costs if they cannot agree on the appropriate order. The issue will then be determined on the papers unless any party establishes good reason to the contrary.
7. The orders of the Court should be as follows:
1. Appeal upheld in part.
2. The orders made by Cavanagh J on 12 December 2023 are varied as follows:
1. In order 1, the judgment sum is $839,869.04;
2. In order 2, the judgment sum is $619,925.00;
3. In order 3, the judgment sum is $309,562.50.
1. If the parties do not agree on appropriate orders as to costs then:
1. The appellant may file and serve written submissions of up to 3 pages on the issue, along with any evidence relied on, by 5pm on 7 August 2024.
2. The respondents may file and serve written submissions of up to 3 pages on the issue, along with any evidence relied on, by 5pm on 13 August 2024.
3. The appellant may file and serve any reply submissions, of no more than 2 pages, by 5pm on 16 August 2024.
1. GRIFFITHS AJA: I agree with Kirk JA.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 11,936 |
nsw_caselaw:191075a45eb6566eec612e2d | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Coca-Cola Europacific Partners API Pty Ltd v Pombinho [2024] NSWCA 191 | https://www.caselaw.nsw.gov.au/decision/191075a45eb6566eec612e2d | 2024-08-04T23:50:12.552525+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Coca-Cola Europacific Partners API Pty Ltd v Pombinho [2024] NSWCA 191
Hearing dates: 25 June 2024
Date of orders: 1 August 2024
Decision date: 01 August 2024
Before: Ward P at [1]; White JA at [90]; Stern JA at [91]
Decision: 1. The appeal be allowed.
2. Set aside the orders made by Rothman J on 12 December 2023.
3. In lieu thereof, dismiss the Amended Summons filed on 11 May 2023.
Catchwords: ADMINISTRATIVE LAW – Judicial review – Whether primary judge erred in finding jurisdictional error and error of law – Failure of medical assessor to assess relevant material and make deduction based on previous injury – Whether Medical Appeal Panel of the Personal Injury Commission exceeded scope of grounds of appeal – Whether assessment de novo within grounds of appeal
Legislation Cited: Workers Compensation Act 1987 (NSW), ss 32A, 38, 52, 59A, 65A, 66, 151H
Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 322, 323, 324, 327, 328, 376
Cases Cited: Allianz Australia Insurance Ltd v Rutland (2015) 73 MVR 211; [2015] NSWCA 328
Marks v Secretary, Department of Communities and Justice (No 2) [2021] NSWSC 616
New South Wales Police Force v Registrar of the Workers Compensation Commission of New South Wales [2013] NSWSC 1792
Oertel v Crocker (1947) 75 CLR 261; [1947] HCA 40
Pitsonis v Registrar of the Workers Compensation Commission (2008) 73 NSWLR 366; [2008] NSWCA 88
Pombinho v Coca-Cola Europacific Partners API Pty Ltd [2023] NSWSC 1536
Queanbeyan Racing Club Ltd v Burton [2021] NSWCA 304
Texts Cited: Explanatory Note to the Workers Compensation Legislation Amendment Bill 2010 (NSW)
NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, Fourth Edition, 1 April 2016 (reissued 1 March 2021)
Category: Principal judgment
Parties: Coca-Cola Europacific Partners API Pty Ltd (Appellant)
Luis Pombinho (First Respondent)
The President of the Personal Injury Commission of New South Wales (Second Respondent)
Carolyn Rimmer, Michael Hong and Nicholas Glozier as an Appeal Panel constituted under s 328 of the Workplace Injury Management (Third Respondent)
Representation: Counsel:
P Herzfeld SC with L Robison (Appellant)
B McManamey (First Respondent)
Solicitors:
HWL Ebsworth Lawyers (Appellant)
Law Partners (First Respondent)
The Crown Solicitor for NSW (Second Respondent)
File Number(s): 2024/00001601
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Common Law Division
Citation: [2023] NSWSC 1536
Date of Decision: 12 December 2023
Before: Rothman J
File Number(s): 2023/00127112
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The respondent, Mr Pombinho, brought a claim in the Personal Injury Commission for permanent impairment arising from psychological injuries said to have been incurred between 11 December 2017 and 30 November 2020 during the course of his employment with the appellant, Coca-Cola Europacific Partners API Pty Ltd (Coca Cola).
A medical assessor, to whom Mr Pombinho had been referred by the President of the Personal Injury Commission by consent orders, assessed Mr Pombinho’s whole person impairment to be 24%. No deduction was made pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (Workplace Injury Management and Workers Compensation Act), which requires a deduction for any proportion of the claimed impairment which is attributable to a pre-existing injury. On 26 October 2022, a corresponding medical assessment certificate was issued.
Coca Cola initiated an appeal against the assessment of the medical assessor through the filing of a “Form 10 – Appeal Against a Decision of Medical Assessor” (Form 10), which identified four grounds of appeal. Those grounds alleged that the assessment was made on the basis of incorrect criteria, and that the medical assessment certificate contained a demonstrable error. Specifically:
* Ground 1 alleged that the medical assessor failed to consider the notation in the consent orders (that the medical assessor was to make such deduction as was appropriate in respect of a secondary psychological injury);
* Ground 2 alleged that the medical assessor failed to consider the material annexed to the Form 10, which included reports by Dr Bisht and Dr Akkerman, and clinical records and notes from Hassall Grove Medical Centre;
* Ground 3 alleged, in combination with Grounds 1 and 2, that the medical assessor failed to consider the impact of Mr Pombinho’s physical injuries, including any medication he may be taking, as well as the impact of COVID-19 on the Psychiatric Impairment Scale (PIRS); and,
* Ground 4 addressed the fact that no deduction had been made pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act, despite evidence that Mr Pombinho was suffering from a pre-existing psychological injury when he incurred the injuries in question.
The parties accepted that the submissions attached to the Form 10 defined the ambit of the appeal before the Medical Appeal Panel of the Personal Injury Commission (the Appeal Panel). The Appeal Panel upheld the appeal, and considered it necessary to conduct its own medical assessment in order to re-assess the PIRS categories on which the impugned assessment was based. The Appeal Panel then adopted the medical assessment of Dr Glozier, which recorded a whole person impairment of 7%, and then reduced that assessment by 10% pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act.
Mr Pombinho sought judicial review of the decision of the Appeal Panel. The primary judge concluded that, in embarking upon a reassessment of the whole person impairment, the Appeal Panel did not limit its review “to the grounds of appeal on which the appeal was made” and thus exceeded the jurisdiction permitted by s 328(2) of the Workplace Injury Management and Workers Compensation Act. Hence, his Honour concluded that there was jurisdictional error and error of law and quashed the Appeal Panel’s determination.
The sole ground of appeal concerned the finding that the Appeal Panel had exceeded its jurisdiction by not limiting itself to the grounds of appeal before it. The substance of that dispute turned on whether the finding of error in relation to the medical assessor not considering the material referred to in Ground 2 permitted the Appeal Panel to review the original assessment for the purpose of determining what deduction, if any, should be made.
The Court held (Ward P, White and Stern JJA agreeing), allowing the appeal, setting aside the order quashing the Appeal Panel’s decision:
* To the extent Ground 2 alleged a failure to consider all the material submitted by Coca Cola, it followed that the Appeal Panel was required to take into consideration all that material; this material being relevant to all of the PIRS categories that were to be taken into consideration in relation to the assessment of Mr Pombinho’s whole person impairment: [84]-[85] (Ward P); [90] (White JA); [91] (Stern JA).
* In any event, Ground 4, on its own, sufficed to bring the assessment of Mr Pombinho’s current whole person impairment within the scope of the grounds of appeal, and hence within the jurisdiction of the Appeal Panel. In order to determine the impact of pre-existing injury on current whole person impairment, a comparative exercise was necessary, and it would be logically incoherent simply to begin the exercise from the fixed starting point as set by the original medical assessor, and then separately consider the extent to which pre-existing injury contributed to that whole person impairment. It would be artificial if, having been required to consider all of the material that the medical assessor failed to consider, the Appeal Panel could not then revisit the starting point of the assessment: [86] (Ward P); [90] (White JA); [91] (Stern JA).
JUDGMENT
1. WARD P: In this matter, the appellant (Coca-Cola Europacific Partners API Pty Ltd) appeals from the decision of Rothman J in the Common Law Division (Pombinho v Coca-Cola Europacific Partners API Pty Ltd [2023] NSWSC 1536) (the primary judgment) in respect of a judicial review application by the first respondent (Luis Pombinho).
2. The judicial review application concerned a decision of the third respondent, a Medical Appeal Panel of the Personal Injury Commission (the Appeal Panel), comprised of Ms Carolyn Rimmer, Dr Michael Hong and Prof Nicholas Glozier (Medical Assessor Glozier), in relation to the assessment of Mr Pombinho’s whole person impairment following a work injury that occurred during his employment by the appellant. The second respondent is the President of the Personal Injury Commission of New South Wales (President). The Appeal Panel had upheld an appeal lodged by the appellant (Mr Pombinho’s employer) in relation to the President’s findings as to Mr Pombinho’s whole person impairment (which were based upon an assessment conducted by a Medical Assessor to whom the President had referred Mr Pombinho).
3. The primary judge found that the Appeal Panel had exceeded its jurisdiction by dealing afresh with the Medical Assessment of Mr Pombinho, rather than dealing only with the issue raised on appeal before it (see at [83] of the primary judgment); and that this error was material and related to the ultimate determination of the Appeal Panel ([84]). His Honour quashed the determination of the Appeal Panel and the Medical Assessment Certificate issued in the appeal that had been brought by Mr Pombinho’s employer and remitted the appeal to the President to be determined in accordance with law.
4. The appellant appeals against this decision, the sole ground of appeal being that:
The primary judge erred in concluding that the third respondent had exceeded its jurisdiction by not limiting itself to the grounds of appeal on which the appeal to it had been made.
Background
1. Mr Pombinho brought a claim in the Personal Injury Commission for permanent impairment arising from injuries said to have been caused by events at work between 11 December 2017 and 30 November 2020 during the course of his employment with the appellant. It was alleged that the injuries suffered were psychological injuries giving rise to a 23% whole person impairment (see primary judgment at [8]-[9]).
2. Mr Pombinho had also suffered injury to his left knee on 30 April 2018 and a consequential injury to his right knee as a result of the left knee injury; as well as a right arm injury on 9 September 2019. The primary judge also noted that there was reference to a pre-existing injury relevant to the claimed impairment ([12]).
3. On 19 August 2022, consent orders were made, referring the question of assessment of whole person impairment resulting from a primary psychological injury sustained in the course of Mr Pombinho’s employment with the appellant to a Medical Assessor. A notation to those orders recorded that “[t]he Medical Assessor is to make such deduction as the Medical Assessor sees fit in respect of secondary psychological injury (if any)”. The primary judge noted that the consent orders reflected agreement that there was a primary psychological injury with a deemed injury date of 31 May 2021 (see at [10]).
4. The appellant says that the notation had its origin in the fact that Mr Pombinho had suffered physical injuries which the appellant asserted caused a secondary psychological injury. The appellant notes that s 65A(1) of the Workers Compensation Act 1987 (NSW) (Workers Compensation Act) precluded any compensation being payable for any such secondary psychological injury; and that s 65A(2) provided that, in assessing the degree of permanent impairment that results from a physical injury or primary psychological injury, no regard is to be had to any impairment or symptoms resulting from a secondary psychological injury.
Medical Assessor’s determination
1. After examining Mr Pombinho on 21 September 2022, Dr Surabhi Verma (a Medical Assessor appointed by the Personal Injury Commission) assessed Mr Pombinho’s whole person impairment to be 24% as a result of a psychiatric injury, issuing a Medical Assessment Certificate on 26 October 2022. The Medical Assessor made no deduction pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (Workplace Injury Management and Workers Compensation Act), which requires deduction for any proportion of the claimed impairment which is due to a pre-existing injury (see primary judgment at [13]).
Appeal from Medical Assessor’s determination
1. In November 2022, the appellant brought an appeal against the Medical Assessor’s assessment pursuant to s 327 of the Workplace Injury Management and Workers Compensation Act.
2. The appeal was initiated by the filing of a “Form 10 – Appeal Against a Decision of Medical Assessor” in the Personal Injury Commission on 8 November 2022 (Form 10). On that form, the appellant identified the grounds of appeal relied upon as being: that the assessment was made on the basis of incorrect criteria (corresponding to s 327(3)(c)); and that the Medical Assessment Certificate contains a demonstrable error (corresponding to s 327(3)(d)).
3. Form 10 makes provision for submissions to be attached detailing the grounds of appeal. It is accepted by the appellant that those submissions define the ambit of the appeal before the Appeal Panel, both as to whether there was error and as to the reassessment if error be found (see AT 1.42-1.48). The submissions attached to the Form 10 in the present case set out four grounds of appeal.
4. Ground 1 was that the Medical Assessor failed to consider the notation to the consent orders ([9]) (that the Medical Assessor was to make such deduction as the Medical Assessor saw fit in respect of secondary psychological injury); i.e., the appellant says, whether there was a secondary psychological injury resulting from the physical injuries and, if so, whether there was any whole person impairment resulting from that secondary psychological injury (see at [10] of the Form 10 submissions). The appellant submitted (at [12]) that this was a failure by the Medical Assessor to take relevant evidence or relevant considerations relating to a potential secondary psychological injury into account. At [14], the appellant submitted that the failure to consider the notation represented a demonstrable error and that, even if the Medical Assessor had considered the notation, she failed to provide any reasons or express an opinion on the issue (that also constituting a demonstrable error – [13]).
5. Ground 2 was that the Medical Assessor had failed to consider the material in the appellant’s “Reply to the Application to Resolve a Dispute” (Reply) or the appellant’s “Application to Admit Late Documents” (AALD) ([15]). At [16], it was noted that the list of documents in the Medical Assessment Certificate did not “reference” the Reply or the material contained therein with the exception of the report of Dr Bisht. At [17], it was said that:
The MAC [Medical Assessment Certificate] makes no reference to the evidence submitted on behalf of the appellant, including the clinical records from Hassall Grove Medical Centre, and while there is a cursory reference to the reports of Dr Bisht and Dr Akkerman at page 1 of the MAC, there is no further reference or consideration of these reports thereafter, including Dr Bisht’s opinion in relation to a secondary psychological condition.
1. At [24], the appellant submitted:
…there is a demonstrable error in that the MA [Medical Assessor] failed to consider the contents of the Reply and AALD and while the MA is not required to refer to all the evidence … she is required to consider the significant material that includes the reports of Dr Bisht and Dr Akkerman (which she evidently had access to) as well as the material contained in the Reply, in particular the clinical records from Hassall Grove Medical Centre.
1. At [25], the appellant submitted that, even if the Medical Assessor did consider the appellant’s evidence, there had again been a failure to provide any or any adequate reasons as to why her opinion differed “to that of Dr Bisht in particular”.
2. Ground 3 was that “[i]n combination with Grounds 1 and 2”, the Medical Assessor failed appropriately to consider the impact of the respondent’s physical injuries, including any medication he may be taking for those conditions, as well as the impact of COVID-19 on the Psychiatric Impairment Scale (PIRS).
3. After noting the record by the Medical Assessor of the respondent’s social activities and activities of daily living (at [27]), at [28] the appellant submitted that the Medical Assessor’s failure to consider the presence of a secondary psychological injury (Ground 1) and to consider the appellant’s evidence (Ground 2) had further resulted in a failure to consider the impact of any secondary psychological condition and the respondent’s concurrent workers compensation claims relating to his physical injuries in addressing the impact on the PIRS.
4. At [29], the appellant further submitted that the Medical Assessor’s assessment of moderate impairment for “travel” omitted the possibility that the respondent had been unable to travel in the past two years before the assessment as a result of the restrictions on travel resulting from the COVID-19 pandemic as well as his various concurrent physical injuries.
5. In summarising Ground 3, the appellant submitted at [30] that there was a demonstrable error in the failure to consider the impact of any secondary psychological condition, the concurrent physical injuries and COVID-19 on the PIRS; and/or otherwise in failing to provide any or any adequate reasons as to why those matters would not have an impact on the PIRS.
6. Finally, Ground 4 addressed the fact that no deduction was applied by the Medical Assessor for the purposes of s 323 of the Workplace Injury Management and Workers Compensation Act. Reference was made to the inconsistency between the clinical records from Hassall Grove Medical Centre and report dated 10 April 2013 of Dr Akkerman (both of which demonstrated a previous psychiatric history), and the Medical Assessor’s conclusion that the worker was mentally fit and well prior to commencing work with the appellant and that he was asymptomatic at the time of the alleged injury ([31], [36], [38]). The appellant submitted (at [39]) that consideration ought to have been given to the contribution of a pre-existing psychological condition to the degree of impairment, whether or not it was symptomatic, and a deduction applied under s 323 of the Workplace Injury Management and Workers Compensation Act. It was submitted that this would also need to take into account any adjustment for the effects of treatment for the pre-existing condition.
Appeal Panel’s determination
1. The Appeal Panel published its reasons on 20 March 2023. The Appeal Panel recorded the four appeal grounds contained in the appellant’s submissions and set out Mr Pombinho’s submissions on those grounds. The Appeal Panel noted its understanding that the appeal was limited to the grounds on which the appeal was made; and that this meant that the appeal was confined to those particular demonstrable errors identified by a party in its submissions (see at [24] of the Appeal Panel’s reasons).
2. Having referred to the contents of the Medical Assessment Certificate, the Appeal Panel addressed each of the four grounds.
3. As to Ground 1, the Appeal Panel agreed with the appellant that there was no consideration by the Medical Assessor as to whether Mr Pombinho had a secondary psychological injury resulting from the concurrent physical injuries to the knees and right arm and, if so, whether any whole person impairment resulted from such injury. The Appeal Panel concluded that the Medical Assessor erred in not considering, or adequately considering, the issue of secondary injury and, if there was a secondary injury, whether any whole person impairment resulted from it ([38]).
4. As to Ground 2, the Appeal Panel accepted that the Medical Assessor was not required to refer to all the evidence; however, the Appeal Panel said that she was required to consider the significant material. The Appeal Panel said that, although the Medical Assessor referred to the reports of Dr Bisht and Dr Akkerman, there was no reference to the clinical notes and records from Hassall Grove Medical Centre (which clinical records and notes the Appeal Panel considered were relevant and significant ([40])). The Appeal Panel concluded ([41]) that the Medical Assessor made a demonstrable error in that she failed to consider the contents of the Reply and the AALD.
5. As to Ground 3, the Appeal Panel concluded that the Medical Assessor had failed to consider whether Mr Pombinho had a secondary psychological injury resulting from his concurrent physical injuries, and if so, whether there was any whole body impairment from such an injury, and also the impact of COVID-19 on the PIRS (see [43], [47]). The Appeal Panel added at the conclusion of [47] that “[i]n particular, the restrictions in place for travel because of the COVID-19 pandemic had not been considered”.
6. As to Ground 4, the Appeal Panel noted at [60] that the Medical Assessor made no reference to the various entries in clinical records of Hassall Grove Medical Centre; in particular, no reference was made to the entries in 2017 before Mr Pombinho commenced work with the appellant in December 2017. These entries, the Appeal Panel said, evidenced a pre-existing condition requiring treatment. The Appeal Panel considered that these clinical notes were evidence of Mr Pombinho’s psychological state in 2017 and that, at the stage when he commenced employment with the appellant, he was suffering psychiatric symptomatology.
7. At [61], the Appeal Panel said that, in failing to review the clinical notes of the treating doctors, the Medical Assessor did not actually properly address whether a proportion of the permanent impairment was due to a previous injury or a pre-existing condition. The Appeal Panel was of the view that the Medical Assessor failed to provide adequate reasons for not making a deduction pursuant to s 323 in view of the evidence of the treating doctors; and considered that the Medical Assessor erred in not giving appropriate weight to the clinical notes and records of the Hassall Grove Medical Centre and in finding that the pre-existing condition affecting Mr Pombinho was asymptomatic at the time of the subject injury ([61]).
8. The Appeal Panel concluded that it was necessary for Mr Pombinho to undergo a further medical examination because there was insufficient evidence on which to make a determination ([62]), and went on to say that “[h]aving found error, the Appeal Panel considered it necessary to re-assess the PIRS categories as this could be relevant to the assessment of any deduction”.
9. At [63]ff, the Appeal Panel recorded the findings of Medical Assessor Glozier, who re-examined Mr Pombinho on 1 March 2023. The Appeal Panel expressly adopted his report and findings.
10. The Appeal Panel, in adopting the report and findings of Medical Assessor Glozier, concluded that there was clearly a pre-existing condition that was symptomatic that would require a s 323 deduction. However, because of the inconsistency in the history taken from Mr Pombinho (compared to the contemporaneous notes), Medical Assessor Glozier (and thereby the Appeal Panel) said that it was impossible to determine accurately a specific percentage for the purposes of s 323, and so it was appropriate to apply a 10% deduction (as the legislation provided) (although noting that the contribution to his current impairment was likely much greater given how symptomatic he was). The suggestion of a secondary psychological injury from the previous physical injuries was rejected.
11. On that re-examination, Mr Pombinho’s whole person impairment was assessed to be significantly lower than that assessed by the original Medical Assessor. This was as a result of lower assessments for social and recreational activities (class 2 rather than class 3), travel (class 1 rather than class 3), social functioning (class 2 rather than class 3) and adaptation/employability (class 3 rather than class 5), together with a deduction for pre-existing injury.
12. The Appeal Panel thus determined that each of the grounds of appeal had been established and that the Medical Assessment Certificate issued by the original Medical Assessor should be revoked. The Appeal Panel issued a new certificate assessing whole person impairment of 6% (having concluded that there was an assessment of 7% and reducing that assessment by 10% pursuant to s 323 of the Workplace Injury Management and Workers Compensation Act).
Primary judgment
1. The grounds for judicial review of the Appeal Panel’s decision (as set out at [2] of the primary judgment) asserted error of law and jurisdictional error in four respects: first, in reassessing all categories of PIRS when those assessments were not the subject of the grounds of appeal; second, in considering that the PIRS categories had been appealed generally when the grounds of appeal were limited to a challenge that the Medical Assessor had failed to consider the effects of a possible secondary psychological injury; third, in considering that the category of travel had been alleged generally to be in error when the only ground was that the Medical Assessor had not adequately considered the effects of COVID-19 on travel; and, fourth, in failing to give reasons for accepting the findings of Medical Assessor Glozier in preference to the findings of the Medical Assessor and the other medical practitioners.
2. The primary judge, having noted that the legislation confined the Appeal Panel to the grounds of appeal on which the appeal was made (which the appellant accepts is correct), went on to say (at [55]) that there was no appeal ground relating to the classification of the activities of Mr Pombinho and no complaint as to the failure to examine or any error in the clinical examination of Mr Pombinho. The appellant takes issue with both those propositions.
3. As to the statement that “[t]here is no appeal ground relating to the classification of the activities of the plaintiff”, the appellant points to Ground 3, which it says was in terms directed to that issue (albeit by reference to the worker’s physical injuries and secondary psychological injury, as well as COVID-19). As I explain when outlining the appellant’s submissions on appeal, the appellant argues that “disentanglement” of Mr Pombinho’s physical and psychiatric disability was something that had to touch on all tables of the PIRS; and that, if the Medical Assessor had failed to undertake that disentangling exercise, then it was necessary for the Appeal Panel to do so.
4. As to the statement that “[t]here is no complaint as to the failure to examine or any error in the clinical examination of the plaintiff”, while the appellant accepts that there was no complaint as to the failure to examine Mr Pombinho, the appellant says that the grounds asserted error in the clinical examination of the worker by the Medical Assessor (and argues that it was not necessary to frame the error as a failure to examine Mr Pombinho in order to justify his re-examination by the Appeal Panel).
5. His Honour noted that the Appeal Panel found that there was no secondary psychological injury nor any injury arising from the physical injuries suffered by Mr Pombinho as a result of any such work injury ([56]), and said (at [57]) that, in relation to that ground, the consequence of the failure, “if there were a failure”, to have regard to “all” of the material attached was that the pre-existing injury was “underestimated” and not deducted in accordance with s 323 of the Workplace Injury Management and Workers Compensation Act. The primary judge went on at [57] to say that:
In other words, Ground 2 is a particular of the reasons why Ground 4 should be successful and Grounds 1 and 2 are particulars of the impairment arising from an injury other than the relevant injury, which is to be or was assessed under the claim.
1. As I address in due course, the appellant takes issue with the characterisation of Ground 2 as a “particular” of Ground 4.
2. At [58], his Honour said that “[n]otwithstanding the confined nature of the grounds of appeal”, the Appeal Panel embarked upon a clinical examination. As to this, at [59], his Honour said that a decision to undertake (or a failure to undertake) such an examination would not ordinarily be an error of law and (assuming there exists authority in the Workplace Injury Management and Workers Compensation Act to do so) would certainly not be jurisdictional error. However, his Honour went on to say at [60] that the Appeal Panel had also embarked on a process by which each of the activities was reassessed anew and that it had calculated for itself the whole person impairment arising from the injury or currently suffered.
3. The primary judge concluded at [71] that, in embarking upon a re-assessment of the whole person impairment, the Appeal Panel did not limit the review “to the grounds of appeal on which the appeal was made” and thus exceeded the jurisdiction permitted by s 328(2) of the Workplace Injury Management and Workers Compensation Act. Hence, his Honour concluded that there was jurisdictional error and error of law ([71]) and quashed the Appeal Panel’s determination for the reasons at [83]-[84] which have been noted above.
Leave
1. In his submissions, Mr Pombinho contended that leave was required for the bringing of this appeal on the basis that the amount in issue was less than $100,000, noting that the assessment of the Medical Assessor was 24% whole person impairment which would entitle him to a payment of $65,050; and he submitted that leave should be refused.
2. The appellant, on the other hand, maintained that leave is not required because the issue as to whether or not the Appeal Panel’s decision (assessing 6% whole person impairment) is set aside will affect whether Mr Pombinho is barred from bringing common law proceedings by reason of the 15% permanent impairment threshold imposed by s 151H of the Workers Compensation Act (citing Oertel v Crocker (1947) 75 CLR 261 at 265-267; [1947] HCA 40; Allianz Australia Insurance Ltd v Rutland (2015) 73 MVR 211 at [3], [5]; [2015] NSWCA 328).
3. In that regard, maintenance of the 6% whole person impairment assessment would mean that: first, Mr Pombinho would have no entitlement to lump sum compensation under s 66 of the Workers Compensation Act (cf the sum of $66,310 to which he would be entitled on the Medical Assessor’s 24% assessment); second, as adverted to above, Mr Pombinho would be precluded by s 151H(1) of the Workers Compensation Act from bringing a common law damages claim (the value of which, together with the lump sum compensation, would exceed $100,000, as explained in the appellant’s reply submissions at [7]); and, third, Mr Pombinho would not be characterised as a “worker with high needs” as defined by s 32A of the Workers Compensation Act (whereas a 24% whole person impairment would expose the appellant to liabilities for weekly benefits until age 68 (ss 38 and 52) and medical treatment for life (s 59A) if he remained in the workers compensation scheme, the value of which, together with the lump sum compensation, would exceed $100,000).
4. Although Counsel for Mr Pombinho did not abandon the contention that leave was necessary, he was content to proceed to argument on the substantive issues (AT 6.34-36). For the reasons articulated by the appellant, leave to appeal is not necessary.
Statutory provisions
1. It is convenient at this stage to set out the relevant statutory provisions.
2. Section 327 of the Workplace Injury Management and Workers Compensation Act relevantly provides:
(1) A party to a medical dispute may appeal against a medical assessment under this Part, but only in respect of a matter that is appealable under this section and only on the grounds for appeal under this section.
(2) A matter is appealable under this section if it is a matter as to which the assessment of a medical assessor certified in a medical assessment certificate under this Part is conclusively presumed to be correct in proceedings before a court or the Commission.
(3) The grounds for appeal under this section are any of the following grounds—
(a) deterioration of the worker’s condition that results in an increase in the degree of permanent impairment,
(b) availability of additional relevant information (but only if the additional information was not available to, and could not reasonably have been obtained by, the appellant before the medical assessment appealed against),
(c) the assessment was made on the basis of incorrect criteria,
(d) the medical assessment certificate contains a demonstrable error.
(4) An appeal is to be made by application to the President. The appeal is not to proceed unless the President is satisfied that, on the face of the application and any submissions made to the President, at least one of the grounds for appeal specified in subsection (3) has been made out.
…
1. By reference to s 327(4), the President (or a delegate) effectively acts as what has been described as a “gatekeeper” in deciding whether to permit the appeal to proceed (see Pitsonis v Registrar of the Workers Compensation Commission (2008) 73 NSWLR 366; [2008] NSWCA 88 at [20]).
2. Section 328(2) provides that:
The appeal is to be by way of review of the original medical assessment but the review is limited to the grounds of appeal on which the appeal is made.
1. As adverted to above, the appellant accepts that the effect of s 328(2) is that a medical appeal must be limited to the grounds relied upon by an appellant in such an appeal (pointing in this regard to Queanbeyan Racing Club Ltd v Burton [2021] NSWCA 304 at [26]; New South Wales Police Force v Registrar of the Workers Compensation Commission of New South Wales [2013] NSWSC 1792 at [49] per Davies J). There is, therefore, no issue as to the proper ambit of an appeal to the Appeal Panel.
2. An appeal is to be heard by an Appeal Panel constituted by three persons chosen by the President, two of whom must be medical assessors (s 328(1)). A worker may be required to submit himself or herself for examination by one of the medical assessors (s 324(1)(c), (3), (4)). The examination need not be conducted by all the members of the Appeal Panel if they agree for it to be conducted by only some (s 328(2A)).
3. The assessment of the degree of permanent impairment is to be made in accordance with the guidelines as in force at the time the assessment is made pursuant to s 376 (s 322(1)).
4. The relevant guidelines in the present case were the NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment, Fourth Edition (Guidelines), pursuant to which psychiatric injuries are assessed, in terms of calculating whole person impairment, pursuant to the PIRS (see tables 11.1 to 11.6 of the Guidelines). Those tables deal with different aspects of a person’s functioning from a psychiatric perspective: 11.1 – self care and personal hygiene; 11.2 – social and recreational activities; 11.3 – travel; 11.4 – social functioning; 11.5 – concentration, persistence and pace; and 11.6 – employability.
5. Section 323(1) provides that, in assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury.
6. In relation to pre-existing psychiatric injury, the Guidelines provide at 11.10 that “[p]re-existing impairment is calculated using the same method for calculating current impairment level [i.e., by reference to the PIRS]” and it is stated that “[t]he assessing psychiatrist uses all available information to rate the injured worker’s pre-injury level of functioning in each of the areas of function”. Section 323(2) provides that, if the extent of a deduction will be difficult or costly to determine, it is to be assumed that the deduction is 10% unless that assumption is at odds with the available evidence.
Appellant’s submissions
1. The error identified by the appellant in the primary judge’s reasoning is that the appellant says that his Honour failed to recognise the breadth of the grounds of appeal, namely that they encompassed the whole of the Appeal Panel’s assessment; and hence his Honour was wrong to conclude that the re-assessment undertaken by the Appeal Panel was “well beyond the grounds of appeal raised by the appellant” ([71]).
2. The appellant complains that the primary judge took an unduly narrow view of Ground 2. The appellant argues that, while its submissions raised specific matters going to various of the PIRS criteria, the structure of the appeal was such that all of those PIRS criteria were in issue because Ground 2 contended that the Medical Assessor had failed to take into account the material referred to in the submissions, which touched upon all of the tables of PIRS (and, most directly, the “radically different” assessment by Dr Bisht of the PIRS criteria) (see AT 12.43ff). The appellant submits that it sufficed that it identified a demonstrable error in the Medical Assessor’s reasoning by failing to have regard to that material in the application of the PIRS; and that, given the failure by the Medical Assessor to deal properly with Dr Bisht’s opinion, it was appropriate that the Appeal Panel re-assess whole person impairment on the merits.
3. In other words, it is said that Ground 2 alleged a wholesale failure by the Medical Assessor meaningfully to consider large slabs of material in undertaking the PIRS assessment; and that, if that ground was established, it was necessary for the Appeal Panel to undertake that assessment in light of the material the Medical Assessor had overlooked (one way of so doing being to conduct its own examination of Mr Pombinho).
4. Thus, it is submitted that the primary judge’s description (at [57]) of Ground 2 as a “particular” of the reasons why Ground 4 should succeed artificially confined the breadth of Ground 2; and that his Honour’s description at [58] of the grounds of appeal as being “confined” was incorrect.
5. The appellant also submits that reassessment of the PIRS was required in order to consider the necessity for any deduction for pre-existing injury, which was the subject of Ground 4; and hence that Ground 4 alone justified reassessment of the PIRS by the Appeal Panel.
6. In that regard, the appellant submits that the process of determining what, if any, deduction was required for pre-existing injury (put in issue both by Ground 1 and Ground 4) required a comparison between the present impairment and pre-existing impairment (i.e., a disentanglement between the impairment suffered due to the pre-existing injury and that due to the injury giving rise to the present claim), which the Medical Assessor had not assessed. The appellant argues that there is a risk of incoherence in assessment if the Appeal Panel is required to start with the assessment of the PIRS undertaken by the Medical Assessor in relation to the worker’s current condition and then only to reconsider that assessment for the purpose of determining any deduction for pre-existing injury. The appellant says that the deduction required for pre-existing impairment necessarily requires a comparison between the worker’s current and pre-existing condition.
7. By way of an example of the incoherence that would arise if the Appeal Panel were precluded from considering the worker’s present functioning (i.e., on the respondent’s argument that the Appeal Panel must start by adopting the whole person impairment assessed by the Medical Assessor and apply any deduction for pre-existing impairment only to that amount), in oral submissions Senior Counsel for the appellant postulated the following situation. Assuming that, in the course of carrying out a comparison between the worker’s functioning before and after the current injuries, the Appeal Panel considered that the worker had 5% whole person impairment due to the pre-existing injuries and that the present whole person impairment was 6%, then on that state of affairs only 1% of the current whole person impairment would be due to the current injuries. However, the appellant says that, on the primary judge’s view, the Appeal Panel on appeal could not disturb the original assessment of 24% whole person impairment and therefore, notwithstanding that the vast bulk of the worker’s impairment is due to the current injuries, the deduction of 5% would apply to the 24% (i.e., resulting in a 19% whole person impairment assessment), not the 6% that the Appeal Panel had assessed was the current impairment (pre-deduction for the pre-existing injury) (see AT 14.29ff).
8. The appellant argues that one cannot perform the disentangling exercise required by s 65A and s 323 by keeping fixed the Medical Assessor’s original whole person impairment assessment because the whole purpose of the Appeal Panel’s assessment is to ‘factor out’ any pre-existing impairment, which it may do by conducting its own assessment. In other words, the appellant submits that the challenge here made to the deduction for pre-existing injury necessarily requires a comparative exercise in an assessment of the impairment before and after the current injury (see the discussion at AT 15.14ff).
First Respondent’s submissions
1. Mr Pombinho emphasises the point that has been conceded upfront by the appellant: that an appeal pursuant to s 327 of the Workplace Injury Management and Workers Compensation Act is by way of review of the original medical assessment but the review is limited to the grounds of appeal on which the appeal is made (s 328(2)), pointing to the Explanatory Note at the time the relevant amendment was made in 2010 to the effect that an appeal from a medical assessment is not a full review of the medical assessment.
2. Hence, Mr Pombinho says that there was no power to conduct a general reassessment and no jurisdiction to reassess any matter that had not been the subject of the appeal and in respect of which it had not found error. As to the reliance placed by the appellant on the Guidelines for calculation of a s 323 deduction in respect of a psychological injury, counsel for Mr Pombinho referred to the decision of Marks v Secretary, Department of Communities and Justice (No 2) [2021] NSWSC 616 (Marks) per Simpson AJA, for the submission that the correct enquiry where there is an asymptomatic pre-existing condition is how the pre-existing contribution contributes to the current impairment, and that the Guideline is inconsistent with the settled law in relation to s 323 (to the extent that it excludes consideration of any contribution made to the current impairment by a pre-existing, but asymptomatic condition, from that enquiry) (see AT 18).
3. In reply submissions, the appellant says that what was held in Marks was that, because the Guidelines were premised on the pre-existing injury causing impairment which is symptomatic, they did not deal with asymptomatic pre-existing injuries, and they were to that extent inconsistent with the legislation. However, the appellant says that there was no broader view there expressed and no suggestion here (in any notice of contention) that the process in the Guidelines (described by the appellant as a subtractive process) was inconsistent with s 323 (see AT 34.41).
4. As to the four grounds of appeal that were before the Appeal Panel, Mr Pombinho says that: Ground 1 was limited to a question whether there should be a deduction for impairment resulting from a secondary psychological injury; Ground 2 was a complaint that the Medical Assessor had failed to consider the reports of Drs Akkerman and Bisht and the clinical notes from Hassall Grove Medical Centre (but there was no submission that the material would result in any change to the assessments of the PIRS categories); Ground 3 recorded some matters relating to social activities and daily living but did not relate those to any category within the PIRS; and Ground 4 related to an alleged error in failing to consider a pre-existing psychological condition in assessing the degree of whole person impairment and failing to deduct existing impairment assessments.
5. Insofar as the primary judge referred to Ground 2 as a particular of the reasons why Ground 4 should be successful, counsel for Mr Pombinho submits that, read with Ground 4 (which relates to the s 323 deduction), Ground 2 is identifying the material to which it is said the Medical Assessor did not refer (being the clinical records from the Hassall Grove Medical Centre) (see AT 23.13ff).
6. As to Ground 1, it is noted that the Appeal Panel determined that there was no secondary psychological injury.
7. As to Ground 2, Mr Pombinho submits that the Appeal Panel did not consider that there was any error in the alleged failure to consider the reports of Drs Akkerman and Bisht (on the basis that those reports had been referred to by the Medical Assessor – though I note that the only reference to them was in the list of documents that were before the Medical Assessor). While Mr Pombinho accepts that the Appeal Panel did consider that there had been a failure to consider the Hassall Grove Medical Centre reports and clinical notes (and considered those notes to be significant), Mr Pombinho argues that the balance of the Appeal Panel’s reasons discloses that the significance of that material was not in respect of any aspect of the assessment of the PIRS categories as made by the Medical Assessor; rather the significance of the clinical notes went to the question of any s 323 deduction (the subject matter of Ground 4). Mr Pombinho argues that Dr Akkerman’s report was equally only relevant to a s 323 deduction, whereas Dr Bisht’s report was the basis for considering whether there was a secondary psychological injury. Mr Pombinho argues that the Appeal Panel did not find that the failure to refer to the reports of Drs Akkerman and Bisht was relevant to the assessment of the PIRS categories (noting that the appellant did not seek to have him re-examined nor was there a submission that there should be a re-examination to allow a reassessment of the PIRS categories).
8. As to the appellant’s submission that a re-examination was authorised because the Appeal Panel was of the view that it was necessary to re-assess the PIRS categories as this could be relevant to the assessment of any deduction, Mr Pombinho complains that this ignores the fact that the Appeal Panel was limited to the grounds of appeal. Mr Pombinho argues that an assessment of the s 323 deduction does not involve a reassessment of the overall impairment; rather, the deduction only involves a determination of the extent to which the overall impairment is due to a previous injury; and that there is no logical incoherence in such a conclusion (as the appellant contends) (AT 19.19).
9. The contention by Mr Pombinho is that the challenge made that the Medical Assessor has not assessed the s 323 deduction is not inherently a challenge to the finding as to the overall impairment and that no comparative analysis is required. Rather, it is submitted that if there has been (as was here found to have occurred) a failure to consider a 323 deduction, one does not reconsider the overall whole person assessment. Rather, one simply asks what proportion of that figure is due to a pre-existing condition (if any) and makes a deduction based on that finding from the whole person impairment figure. It is submitted that there is no inconsistency or absurdity arising from the hypothetical example postulated by the appellant; what is required is an assessment of the proportionate deduction (and that the same thing follows in the application of s 65A, thought that did not here arise as there was not found to be a secondary psychological injury) (see AT 19).
10. Mr Pombinho submits that the relevant question is whether the appellant in its submissions (setting out the grounds of appeal before the Appeal Panel) raised the question of the individual PIRS categories (and if so, did the Appeal Panel find that there was an error in that respect, and did that justify the reassessment). Mr Pombinho submits that the appellant did not raise such a challenge (and hence the reassessment of whole person impairment was beyond power of the Appeal Panel) (AT 19.47-50).
11. I note that, in reply submissions, the appellant cavils with the proposition that it was necessary in the Form 10 submission to make specific reference to the PIRS categories or any matters relevant to that assessment in relation to Ground 2; rather, the appellant says that it was sufficient to raise the error in relation to the failure by the Medical Assessor to take into account the material adverted to above (which the appellant notes touched upon all of the PIRS criteria). The appellant emphasises that it specifically pointed out that the Medical Assessor failed to explain why her reasoning differed from Dr Bisht, who gave a radically different PIRS assessment. The appellant says that, even assuming it to be correct that the material not considered by the Medical Assessor was only relevant to a s 323 deduction, consideration of that matter justified reassessment of the PIRS by the Appeal Panel.
12. As to Ground 3 of the grounds of appeal before the Appeal Panel, and the submission that this required an exercise of disentangling the physical and psychiatric disabilities, Mr Pombinho says that no submission was made as to how the physical injury had impacted on any of the PIRS categories or had affected the matters of evidence to which reference is made; and that the only submission that mentioned a PIRS category was the submission that the assessment of travel omitted the possibility that he had been unable to travel as a result of restrictions resulting from COVID-19 (a matter that he says had not previously been raised).
13. Mr Pombinho accepts that the finding by the Appeal Panel of error in this respect arguably allowed the Appeal Panel to consider the proper assessment of travel considering any restrictions that arose from COVID-19 or the physical injury, but he says that the Appeal Panel did not do this. Mr Pombinho says that the history taken by Medical Assessor Glozier as to his ability to, or any restrictions on, travel did not attribute any restrictions on travel either to the physical injury or the restrictions due to COVID-19. Mr Pombinho argues that if the error was a failure to consider the effects of those matters, then the correction of the error would be to consider those matters, but that the Appeal Panel did not engage in that process; rather that it simply accepted (without giving reasons) the view of Medical Assessor Glozier as to what the assessment should be as at 20 March 2023. Again, Mr Pombinho emphasises that the Appeal Panel was only entitled to consider the grounds before it; and he submits that this means that the Appeal Panel was required to accept the findings and conclusions of the Medical Assessor in respect of the matters that were not the subject of the grounds of appeal regardless of the view it had as to the correctness of those findings and conclusions.
14. In reply submissions, the appellant complains that Mr Pombinho’s submissions involve an attempt to re-litigate the merits of the medical evidence. As to the above submission in relation to Ground 3, the appellant points to the detail of Ground 3 provided in the annexure to Form 10, which referred generally to the impact of Mr Pombinho’s physical injuries on the PIRS and referred specifically to instances of social activities and activities of daily living and travel, which the appellant says are plainly referrable to a number of aspects of the PIRS (referring to tables 11.2, 11.3 and 11.6 of the Guidelines). The appellant says that Ground 3 was not limited simply to a complaint about the proper assessment of travel considering any restrictions that arose from COVID-19 or physical injury.
15. As to the fourth ground of review before the primary judge (numbered as ground 5 in the summons but in substance ground 4), Mr Pombinho says that the primary judge did not make a determination in respect of this ground of review (which asserted a failure of the Appeal Panel to give reasons for accepting the findings of Medical Assessor Glozier in preference to the findings of the Medical Assessor and the other medical practitioners) as it was not necessary for his Honour to do so given his Honour’s conclusion with respect to the first three grounds of review. Mr Pombinho argues that, if the appeal is successful, it does not follow that there would be orders dismissing the summons; rather, the fourth ground of review would need to be determined (relying on his submissions before the primary judge in respect of this ground of review). The appellant takes issue with this submission on the basis that, to the extent that Mr Pombinho appears to complain about the Appeal Panel accepting, without reasons, the re-examination of one of its members, this goes beyond a complaint about the Appeal Panel exceeding its jurisdiction by considering matters not within the scope of the appeal. The appellant points out that this is not the subject of any notice of contention. In debate, it was suggested that in fact a notice of cross-appeal may have been the appropriate course. (Although directions were made at the end of the hearing permitting the filing by Mr Pombinho of a notice of contention or a notice of cross-appeal, none appears to have been filed.)
16. In reply submissions, the appellant says that, in any event, the complaint raised by the fourth ground of review is without substance: that the Appeal Panel was expressly permitted, by s 328(2A) of the Workplace Injury Management and Workers Compensation Act, to rely on an examination conducted by only one of its members; and that it was under no obligation to give further reasons for adopting the findings of that re-examination, assuming that conducting it was within the scope of the appeal. The appellant submits that the reasoning of the member who conducted the re-examination became the reasoning of the Appeal Panel (by adoption of his report and findings).
Determination
1. The sole ground of appeal, as noted earlier, goes to the finding that the Appeal Panel had exceeded its jurisdiction by not limiting itself to the grounds of appeal before it.
2. The substance of the dispute between the parties on this issue is as to whether (as the appellant contends) the finding of error in relation to the Medical Assessor not considering the material referred to in Ground 2 (the reports of Drs Bisht and Akkerman and the clinical records and notes of the Hassall Grove Medical Centre) permitted the Appeal Panel to review the Medical Assessor’s original assessment of whole person impairment (including by reference to the PIRS categories) for the purpose of determining what deduction should be made, if any, by reference (relevantly) to the pre-existing physical or psychiatric injuries (there being no finding as to a secondary psychiatric injury consequent upon an earlier physical injury). The appellant argues that this issue is within the scope of the grounds of appeal that were before the Appeal Panel and that disentanglement of the contribution of the pre-existing injuries to the current impairment required (at least in the present case) a re-assessment of the current whole person impairment.
3. In essence, Mr Pombinho maintains that the grounds of appeal before the Appeal Panel only related to matters involving deductions from the overall assessment of whole person impairment; and that the Appeal Panel was required to proceed from the starting point of the Medical Assessor’s original assessment of whole person impairment (to which any deductions would be applied).
4. In my opinion, Ground 2 of the grounds of appeal before the Appeal Panel was not confined (as Mr Pombinho submits) to a failure of the Medical Assessor to consider the clinical records and notes from the Hassall Grove Medical Centre. The complaint raised by this ground, as noted above, was that the Medical Assessor had failed to consider the material raised in the appellant’s Reply and the AALD. That material was not limited to the Hassall Grove Medical Centre records. It included (as the submissions as to Ground 2 made clear) the reports of Dr Bisht and Dr Akkerman. As conceded in this Court, the only specific reference to those reports in the Medical Assessment Certificate was the notation that they had been before the Medical Assessor (see AT 26.29) (other than under the heading “facts on which the assessment is based” – see AT 26.47).
5. The complaint was clearly made by Ground 2 that there was no “reference [to] or consideration” of either the opinion of Dr Bisht in relation to a secondary psychological condition, or the report of Dr Akkerman, both of which were of course relevant to the Ground 4 complaint as to failure to consider or make a s 323 deduction. However, Ground 2 was not limited to that error.
6. To correct the error as to the failure to consider all the material submitted by the appellant, it follows that the Appeal Panel would be required to take into consideration all that material (to the extent that it considered it significant and relevant). That material related to (or in the appellant’s words, “touched upon”) all of the PIRS categories that were to be taken into consideration in relation to the assessment of Mr Pombinho’s whole person impairment by reason of his psychiatric injury. I do not accept that Ground 2 is confined to being no more than a particular of Ground 4 (i.e., that it was no more than a reason that there was error as contended for by Ground 4).
7. In any event, Ground 4 in my opinion suffices to bring the assessment of Mr Pombinho’s current whole person impairment within the scope of the grounds of appeal and hence within the jurisdiction of the Appeal Panel. That is because I accept the appellant’s submission that, in order to determine the impact of pre-existing injury on current whole person impairment, a comparative exercise was necessary and that it would be logically incoherent simply to begin the exercise from a fixed starting point (i.e., the 24% whole person assessment made by the Medical Assessor) and then separately to consider the extent to which pre-existing injury contributed to that whole person impairment (and then to apply that amount to the fixed starting point) without considering the starting point itself. The approach required by the Guidelines is a subtractive approach, requiring a deduction from the starting point of whole person impairment but it would make the exercise artificial if, having been required to consider all of the material that the Medical Assessor had failed to consider, the Appeal Panel could not then revisit the starting point of the assessment.
8. Accordingly, I would uphold the appeal and set aside the order quashing the Appeal Panel’s decision. I note that, during the appeal, the appellant indicated that it did not press the order sought in the notice of appeal for costs of the appeal, nor did it seek an order for costs of the proceedings at first instance.
9. For completeness, as to the issue which the primary judge did not determine (relating to the adoption by the Appeal Panel of Medical Assessor Glozier’s report and findings), I do not consider that this issue warrants remittal to the primary judge for determination (since the complaint is in essence as to the adequacy of reasons for adopting that report). The statutory provisions assume power on the part of a medical member of the Appeal Panel to carry out a re-examination and assessment of the worker. It may be inferred that the Appeal Panel, in adopting the report and findings, was endorsing the reasoning in that report since that is where the reasons are to be found. I do not accept that the Appeal Panel was required to deliver separate or distinct reasons as to why the Appeal Panel (or two of the three members of it, perhaps) accepted Medical Assessor Glozier’s assessment in preference to the assessment of, say, the Medical Assessor. In my opinion, it was sufficient for the Appeal Panel to adopt Medical Assessor Glozier’s assessment (for the reasons contained therein).
10. Therefore, I would make the following orders:
1. The appeal be allowed.
2. Set aside the orders made by Rothman J on 12 December 2023.
3. In lieu thereof, dismiss the Amended Summons filed on 11 May 2023
1. WHITE JA: I agree with the orders proposed by Ward P and with her Honour’s reasons.
2. STERN JA: I agree with the orders proposed by Ward P and with her Honour’s reasons for proposing those orders.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 10,239 |
nsw_caselaw:191024260d3dff446fe96c68 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Bugeja v Bugeja [2024] NSWSC 927 | https://www.caselaw.nsw.gov.au/decision/191024260d3dff446fe96c68 | 2024-08-04T23:50:12.619546+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Bugeja v Bugeja [2024] NSWSC 927
Hearing dates: 18, 19, 20, 21, 22, 25 & 26 September, 20 November 2023
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Equity
Before: Slattery J
Decision: Defendants are found to have executed the counterpart of the deed that bears their signatures. A decree of specific performance of the deed is granted upon terms. Directions made for the resolution of costs issues and other consequential relief.
Catchwords: CONTRACT – execution – the plaintiffs executed one counterpart of a deed and contend that the defendants executed the other counterpart of the deed – the form of deed records an agreement between the plaintiffs and the defendants that the plaintiffs would not bid at a forthcoming auction of a farming property – the expressed consideration for the agreement of the plaintiffs not bidding at the auction was that if the defendants were successful at the auction that they would transfer another property to the plaintiffs that was adjacent to the plaintiffs’ existing farming property – defendants successfully bid at the auction of the farming property and acquired the auctioned property – defendants refuse to transfer the other farming property adjacent to the plaintiff’s property – defendants deny executing the counterpart of the deed – whether or not the defendants executed the counterpart of the deed that apparently bears their signatures – no issue that if the defendants executed the counterpart of the deed that bears their signatures that the deed is specifically enforceable.
Legislation Cited: Civil Procedure Act 2005 s 56
Cases Cited: Gawne v Gawne (1979) 2 NSWLR 449
Jones v Dunkel [1959] HCA 8; 101 CLR 298; 32 ALJR 395
Kevin John Lewis v Peggy Lillian Mayhew as executor of the estate of the late Peter William Stewart [2020] NSWSC 1215
Lady Naas v Westminster Bank Ltd (1940) AC 366
Payne v Parker [1976] 1 NSWLR 191
Sumner v Booth (1974) 2 NSWLR 174
Texts Cited: JD Heydon, Cross on Evidence, 5th Edition, Butterworths
Meagher Gummow and Lehane’s Equity Doctrines and Remedies, 5th Editon LexisNexis Butterworths Australia 2015
Category: Principal judgment
Parties: Plaintiffs: Johnathon and Rebecca Bugeja
Defendants: Frank and Elizabeth Bugeja
Representation: Counsel:
Plaintiffs: S. Jacobs
Defendants: A. Moutasallem
Solicitors:
Plaintiffs: Christopher Edwards, Christopher Edwards Lawyers
Defendants: Hasan Aziz, Dot Legal Lawyers
File Number(s): 2021/75630
Publication restriction: No
Judgment
1. Two brothers, Johnathon and Frank Bugeja farm turf and vegetables on the Hawkesbury River plain at Agnes Banks. They now dispute whether Frank executed a deed. Johnathon says that on 30 October 2020 both he and his wife Rebecca signed duplicate counterparts of a deed and that Frank, and his wife Elizabeth, also both signed. Elizabeth admits, but Frank denies, signing the counterparts of the deed.
2. If executed, the counterpart deeds would oblige Johnathon and Rebecca to abstain from bidding at an auction to be held the following day for a nearby farming property known as “Stewart’s Farm”. Johnathon and Rebecca had expressed an intention to bid for Stewart’s Farm. The rationale for the deeds was to avoid competition between the two couples that would drive up the price of Stewart’s Farm to the disadvantage of one of them.
3. The incentive provided in the deeds for Johnathon and Rebecca not to bid was that if Frank and Elizabeth secured Stewart’s Farm at the auction, they would be obliged to sell another parcel of productive land they owned to Johnathon and Rebecca. This other parcel of land (which is referred to in these proceedings as “No. 96”) had special advantages for Johnathon and Rebecca: it was improved with a house and a shed and lay immediately adjacent to other Agnes Banks land they already owned.
4. Four signatures appear on the two counterpart deeds, one for each of the four parties. All the signatures are witnessed. On Johnathon and Rebecca’s case, Frank, and Elizabeth both signed the deed at their home on 30 October 2020. On Frank and Elizabeth’s case, Frank never signed the deed. The principal contest in the proceeding is whether Frank signed the deed.
5. Johnathon did not bid at the auction; he says he abstained from bidding relying upon Frank’s and Elizabeth’s execution of the deed. Frank was the highest bidder and secured Stewart’s Farm. But after the auction, Frank denied he had signed the deed. He and Elizabeth refused to transfer No. 96 to Johnathon and Rebecca.
6. Johnathon and Rebecca now seek a declaration that they are entitled to purchase No. 96 from Frank and Elizabeth in accordance with the deed and seek specific performance of the deed. Alternatively, they seek to enforce an equitable estoppel holding Frank and Elizabeth to an alleged representation that if Johnathon and Rebecca did not bid at the auction for Stewart’s Farm, that Frank and Elizabeth would transfer No. 96 to them, or alternatively that Frank and Elizabeth engaged in misleading and deceptive conduct within of the Australian Consumer Law (‘ACL’) s 18 to substantially the same effect as the pleaded estoppel.
7. These proceedings were heard over eight days between 18 – 26 September and then 20 November 2023. Mr S. Jacobs of counsel instructed by Christopher Edwards Lawyers appeared for the plaintiffs, Johnathon, and Rebecca. Mr A. Moutasallem of counsel instructed by Dot Legal appeared for the defendants, Frank, and Elizabeth.
8. Several members of the Bugeja family gave evidence in the proceedings. During their evidence they referred to one another by their first names. Without intending any disrespect to any party, it is convenient for the Court to do the same in these reasons.
9. The following is a narrative of the relevant history. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded in the narrative. For reasons of economy this narrative does not always include reference to versions of the facts that have not been accepted. But before commencing that narrative some observations are made about the credibility of the principal witnesses in the proceedings.
Credibility of Parties and Witnesses
1. Joseph Bugeja. Frank and Johnathon’s father, Joseph, was deeply anguished by having to give evidence in these proceedings. Within minutes of entering the witness box, he broke down and the Court needed to adjourn to allow him to compose himself. His whole presentation was spontaneous, emotional, and confronting and ultimately incompatible with propounding a calculated and fraudulent scheme against his son Frank. He seemed impartial between his two warring sons but deeply distressed by their bitter conflict. He was overoptimistic about the possibility for their reconciliation but ever hopeful it might occur. Although he had long separated from and divorced their mother, Lilly, in what appears to have been acrimonious circumstances, they both shared this hopeful attitude about their son’s relationship.
2. Joseph was a generally credible witness. He presented as generally reliable in giving his account of what he could remember but he was very vague at times, perhaps because of his age, on some matters of detail. Cross examination upon the wording of his affidavit revealed he had limited capacity to deal with abstract ideas, but this did not demonstrate lack of credibility in his evidence about what he observed. When it came to straightforward oral descriptions of the story of events that he witnessed his evidence came alive.
3. Joseph was sure that both counterparts of the deed were signed on the tray of the utility vehicle on the afternoon of 30 October 2020. His account of those events was sufficiently detailed to show that he was drawing upon genuine recollection in giving his account of what happened. Joseph successfully resisted all the attacks upon his credibility.
4. Frank’s case challenged whether Joseph really understood what he had sworn his affidavits. There was some justification for this attack and his evidence was not wholly reliable. For example, he apparently signed his affidavits without an interpreter, although they were probably interpreted to him. He had difficulty in answering some simple questions. And he confused his affidavits with the deeds in the shed. He denied some of what was said in his own affidavit. But on the essentials of being at No. 25 and witnessing the signing of the deeds his first-hand eyewitness testimony was reliable.
5. Lilly Bugeja. Frank and Johnathon’s mother, Lilly, came across to the Court as a strong, practical, and down-to-earth person who gave firm evidence about events to which she was committed by genuine memory. Like her former husband Joseph, she was plainly discomforted by having to give evidence in a dispute between her two sons. Like her former husband, she would do anything to restore peace within her family.
6. But she had clear memories of the conversations and events in which she was involved and stuck to her version of what happened in a manner which did not lead to any marked inconsistency or improbability. She was able to make concessions against her interests and explain the events in which she had been involved. She was able to draw upon detail to flesh out her recollections and give clear assent to or dissent from propositions put to her in cross examination.
7. Johnathon Bugeja. Although clearly angry with his brother Frank, the first plaintiff, Johnathon, came across as an honest and generally reliable witness. But his bias against his brother meant the Court approached all his evidence with caution. Despite this, the Court accepted Johnathon’s account of events over that of his brother Frank and his sister-in-law, Elizabeth. Johnathon was able to give consistently detailed evidence of the context and background of various events in which he had been involved. He was prepared to make concessions about aspects of events he could not remember and did not try to exaggerate the quality of his memory. Mr Moutasallem pointed to some alleged inconsistencies between Johnathon’s affidavit and oral evidence that these were the kind of minor differences that one might expect from a witness giving testimony from actual recollection.
8. Rebecca Bugeja. The second plaintiff, Rebecca, was an honest and reliable witness who was attempting to give as accurate an account that she could of the events in which she was involved. She was not a witness to the main events of the signing of the counterpart deeds. But her account of her subsidiary role is important in the Court’s overall findings. The detail of her account was not damaged in cross examination. The Court generally accepts her evidence.
9. Jason Bugeja. Jason, Frank and Johnathon’s brother, was very much in his brother Johnathon’s camp, both financially and in family loyalty in this dispute. His evidence was therefore assessed cautiously. But his evidence was generally reliable, internally consistent and gave a probable and good pictorial account of the events in which he was involved.
10. Frank Bugeja. The first defendant, Frank came across as a slightly bored witness with an attitude of dismissive condescension of his brother Johnathon and the proceedings generally. His attitude to Johnathon was relentlessly negative. He seemed to hold the view that nothing bad that Johnathon might do would surprise him. He did nothing to disguise his disdain for his brother who was, he asserted, making false allegations against him. The Court approached with great caution anything that Frank said about his brother Johnathon.
11. But Frank had limited recollection on matters of contentious interest. He had little capacity to confront and explain apparent inconsistencies or anomalies in his own case. He either could not, or would not, draw upon a detailed recollection of events to assist the Court with an account of what happened on the various contested occasions. He was ready to denounce his brother at every opportunity. He was prepared to adhere unreasonably to improbable versions of the facts. The Court approached its assessment of his evidence with great caution.
12. Elizabeth Bugeja. The second defendant, Elizabeth, was not a witness upon whom the Court could rely. She was strongly committed to her husband’s version of events in framing her own. She was hostile in her approach to anything said in Johnathon’s case and defensive of any attacks made upon her husband. But to reject her evidence the Court needed to infer that she was giving an account that must be false. Despite the heavy burden of reaching this conclusion, the Court is confident that that is the correct inference about her evidence.
13. Elizabeth could not explain the inconsistencies within her own and her husband’s version of events. She was prepared to deny the obvious and adhered to improbabilities. She could not elaborate with spontaneous detail her account of events or satisfactorily explain her reasoning during events, to persuade the Court that she was giving reliable evidence from her genuine recollection of those events. She gave the impression that her primary objective was to support her husband’s account of disputed events.
14. Mr John Maait. Mr Maait was the solicitor who drafted the subject deeds. Despite his limited involvement in the events in contest he was able to give a reasonably reliable account based upon genuine memory. His account of a critical conversation on the afternoon of 29 October 2020 is more reliable and detailed than either of the accounts of Frank or Johnathon of those events. He could explain not only what he did but the logic behind it. He maintained a professional and ethical position throughout the events. He was conscious that Frank was his principal client and Frank’s instructions therefore have a degree of dominance in his account of events. This is quite significant when the documents that he produced are evaluated.
15. Ms Jazzani Calalang. Ms Calalang is an agribusiness manager at the National Australia Bank (NAB). She gave wholly reliable evidence about Johnathon’s dealings with the bank and his finance approval to allow him to bid at the auction.
16. Ms Melanie Holt. Ms Holt was called as an expert handwriting witness. Her report and oral evidence were thorough and professional. But the Court has reached the view that it cannot accept her conclusions in this case in light of (1) uncertainties in her report and (2) the weight of contravening non-expert evidence.
The Bugeja Family Farms at Agnes Banks.
The Early Years
1. For several generations members of the Bugeja family have lived and farmed in Agnes Banks, a district almost 70 km northwest of Sydney’s Central Business District. Agnes Banks, so named after the mother of an early settler, Andrew Thompson, straddles a fertile floodplain just below the confluence of the Nepean and Grose Rivers, where the Hawkesbury River commences. The Bugeja family properties lie on Yarramundi Lane on the southeastern bank of the Hawkesbury River not far from Richmond.
2. Lilly and Joseph Bugeja are the parents of Frank and Johnathon. They had a total of eight children. Frank is their fourth child and Johnathon their sixth. Another sibling, Jason, witnessed some of the events in dispute and gave evidence in the proceedings.
3. Frank conducts a vegetable farming business with his wife Elizabeth. Johnathon and Rebecca conduct a turf growing enterprise, known as “Always Greener Turf”, in partnership with Jason. Both Frank and Johnathon are successful farmers and agribusiness entrepreneurs although their personal relationship has long been brittle.
The Bugeja Lots and Surrounding Land
1. The diagram in the Appendix to these reasons (taken from Exhibit A), shows the locations and relative positions of the parcels of land owned by the parties and relevant to the issues in these proceedings. The Bugeja family own two clusters of agricultural allotments situated a short distance from one another along Yarramundi Lane, which runs approximately parallel to the Hawkesbury River, which at that point flows generally from the south-west to the north-east. But for the property on which Frank and Elizabeth live, all the Bugeja properties lie on the Hawkesbury River side – the north-western side – of Yarramundi Lane between Yarramundi Lane and the Hawkesbury River.
2. The southern cluster of Bugeja properties lie close to the intersection of Yarramundi Lane and Crowley’s Lane. This cluster comprises three properties. The first is 214A and 214B Yarramundi Lane, better known as “Stewart’s Farm”, which is the closest of this southern cluster of properties to the Hawkesbury River. Since the October 2020 auction, Stewart’s Farm has been owned by Frank and Elizabeth. The next property in this cluster is 216 Yarramundi Lane (“No. 216”), which has long been the Bugeja family homestead and which Frank and Johnathon’s mother, Lilly, now owns. The homestead area around No. 216 is large enough to permit profitable agricultural cultivation. The third property in the southern cluster is 25 Crowley’s Lane, Agnes Banks (“No. 25”), a property owned and occupied by Frank and Elizabeth. This property is both their residence and the base for their farming operations. It is also the place that Johnathon says that Frank signed the disputed deed.
3. Stewart’s Farm and No. 216 lie immediately adjacent to one another between Yarramundi Lane and the Hawkesbury River. No. 25 lies on the other side of Yarramundi Lane away from the Hawkesbury River but with an address in Crowley’s Lane. As earlier indicated, Stewart’s Farm is the closest to the river of the three properties in the southern cluster.
4. The northern cluster of Bugeja properties, 86, 96 and 106 Yarramundi Lane lie adjacent to one another a little over 1 km along Yarramundi Lane to the north-east from the southern cluster. Johnathon and Rebecca own No. 86. Frank and Elizabeth own No. 96. And Jason owns No. 106. All these properties are used for Bugeja family agricultural enterprises. Erected on No. 96 is a residence and a shed. In 2020, Johnathon, Rebecca and Jason ran and operated Always Greener Turf from No. 86 and No. 106. At the same time Frank and Elizabeth operated their vegetable farming enterprise from No. 96.
5. Several crossover arrangements complicate this picture. Together, Johnathon and Jason rented the homestead area around the house on No. 216 from their mother, Lilly, to use as part of Always Greener Turf. For many years various Bugeja family members had also leased 5 acres of Stewart’s Farm from its then owner.
6. The layout of these two clusters of properties demonstrates the logic of the 30 October deed. Although Johnathon and Rebecca wanted to expand Always Greener Turf on Stewart's Farm, Frank and Elizabeth wanted a working property which was much closer to their home on No. 25 than was No. 96. It also made economic sense for Johnathon and Rebecca to acquire No. 96, so that they could reap cost efficiencies from conducting all their turf growing operations on the three adjacent properties in the northern cluster.
The Bugeja Family at Agnes Banks
1. Lilly is very attached to No. 216. She purchased the property with her then husband, Joseph, as approximately 16 acres of vacant land in about 1974. They built a main residence and a storage shed on the property. She raised all her children there. She and Joseph separated due to unhappy matrimonial differences in 2007 and were divorced in 2010. She retained No. 216 in their family law property settlement. Lilly and Joseph are now barely on speaking terms.
2. From about 2010 or 2011, Lilly agreed with Jason and Johnathon to lease No. 216 to them to grow and sell turf. That arrangement included Johnathon and Jason using the storage shed on the property to house their turf farming machinery from time to time.
3. Lilly moved away from No. 216 in 2013 up to Bilpin in the lower Blue Mountains on the Bells Line of Road. After moving away, Lilly has made the house on No. 216 available to various family members for occupation as required. Johnathon and Rebecca lived there between 2013 and 2018.
4. In 2020, Lilly spent about $60,000 renovating the main house on No. 216, including electrical and plumbing works and painting. After the works were completed, Lilly allowed one of her granddaughters, Taylor, to move into the shed, whilst Lilly leased out the main house to a paying tenant.
5. Lilly herself was interested in buying Stewart's Farm in the late 1970s or early 1980s but the transaction was never completed. Stewart’s Farm acquired this name locally because prior to 2020 it belonged to a Mr William Stewart. Around 2015, Mr Stewart suffered a stroke, and his financial affairs were subsequently managed by his sister, Ms Peggy Mayhew.
6. Johnathon’s interest in purchasing Stewart's Farm is undoubted. Between about 2016 and 2020 he leased 5 acres of Stewart's Farm to grow and harvest turf. Lilly confirms his interest. William Stewart died in 2016 and Johnathon put an offer in to buy the property soon afterwards to his executor, Peggy Mayhew, which was accepted on a non-binding basis. But a claim against the late William Stewart delayed the sale by four years. Throughout this period Johnathon maintained his interest in acquiring the property. Sale was ultimately authorised in September 2020. The orders for a sale are explained in a judgment of this Court given on 8 September 2020: Kevin John Lewis v Peggy Lillian Mayhew as executor of the estate of the late Peter William Stewart [2020] NSWSC 1215.
7. When Peggy Mayhew put Stewart's Farm up for sale Lilly was upset because Lilly thought Peggy was walking away from her agreement with Johnathon. Like Lilly, Johnathon was also upset. But this Court had ordered a sale by auction unless the plaintiff in those proceedings agreed to sale by private treaty: [2020] NSWSC 1215 [53(1), (4)]. Johnathon soon learnt that Frank was also interested in bidding at the auction as word came back to him that Frank too was having discussions with Peggy. Lilly formed the view that Peggy’s real estate agent was encouraging both Frank and Johnathon to bid against one another for the property and she was uncomfortable about this.
8. Frank and Elizabeth lived in No. 96 and brought up their children there until about 2016. They then moved their family across to No. 25 and leased out the house on No. 96. But Frank continued to farm that property. At the time of the hearing, Frank and Elizabeth’s children were 18, 14 and 9. When the family moved to No. 25 the children would have been 11, 7 and 2.
The Conversations at No. 96 and Jason’s Place – Early Afternoon, 29 October 2020
1. The auction of Stewart’s Farm was scheduled for Saturday, 31 October 2020. Johnathon says, and the Court accepts, that Joseph approached him on 29 October 2020 and pushed the proposal that Johnathon would not bid against Frank at the auction in exchange for Frank selling Johnathon No. 96. Joseph had mentioned this idea from time to time when Stewart's Farm looked like it might be coming up for sale. Rebecca and Johnathon saw the sense in being able to use all three Lots in the northern cluster, No. 86, No. 96, and No. 106, for Always Greener Turf. But relations between the brothers had been so poor for so long and the sale of Stewart's Farm so uncertain that the idea had not been taken very far in the past. This time Johnathon decided to approach Frank, who happened to be working on No. 96 at that time that day.
2. There is incomplete consensus about the discussion that followed between Frank and Johnathon at No. 96 although the differences in their versions of this initial conversation are not material. Johnathon went over to No. 96 where Frank was working and put to him Joseph’s proposal in relation to the Stewart’s Farm auction. Johnathon indicated to Frank that Joseph did not want them to bid against each other and proposed Joseph’s idea.
3. As was the case when Johnathon showed interest to Frank in purchasing No. 96 previously, Frank was a reluctant seller of No. 96. Johnathon says, and the Court accepts, that Frank’s first reaction was to suggest that Johnathon sell him No. 86, Johnathon’s northern cluster farm adjacent to No. 96, and that Johnathon could bid for Stewart’s Farm. But Johnathon said to Frank that Jason (the co-owner for No. 86) did not want to sell.
4. Frank says he said in response to the whole proposal, “I don’t know how I feel about that” and that he would need to speak with Elizabeth, but he might consider it, but “only if we get mum’s [Lilly’s] property”. Johnathon does not remember Frank stipulating at this point “only if we get mum’s property” and the Court does not accept that it was said at this time. The Court prefers Johnathon’s version where the two versions of this conversation at No. 96 differ. But both brothers agree that they did separately drive back to No. 106 and met up with Joseph and Jason a short time later. Frank’s journey to No. 106, Jason’s place, at least shows that he was interested in further discussions about this proposal.
5. The conversation at Jason’s place is more contentious. Frank on the one hand and Johnathon, Jason, and Joseph on the other, give versions of this conversation at Jason’s place. Johnathon’s Jason’s and Joseph’s version substantially coincide and differ from Frank’s version in material respects. Both sides agree that the conversation was in two parts and that in the middle Frank left Jason’s place and went back to No. 25 to consult Elizabeth.
6. As to the first part of the conversation, Jason Joseph and Johnathon put the proposal again to Frank. According to Johnathon, in evidence that the Court accepts, a turning point was reached in this conversation when Frank pointed out that one of his objections to the proposal was that Jason and Johnathon would still be coming up and operating “mum’s farm”, No. 216. In response Johnathon suggested “you can take over that as well”. The “that” in the statement was the lease that Johnathon had from Lilly of the agricultural land on No. 216. Frank knew that Johnathon was leasing this agricultural land on No. 216. He and any reasonable person in his position would have clearly understood that “take over that as well” meant take over Johnathon’s lease of Lilly’s land, because that is all that Johnathon had to offer him. The Court infers that is how he did understand the statement.
7. Frank says that in this first part of the conversation he said he would only consider the proposal if “I also got mum’s [Lilly’s] property” to which Frank says that Joseph replied, “she will let you buy her property”. The Court does not accept that this was said either by Frank or by Joseph. As will be seen, a telephone conversation between Frank and Johnathon on the one hand and Lilly on the other a few hours later did not include Frank putting to Lilly a request to buy her property as a condition of the deal proceeding. And Frank knew Joseph had no colour of any authority to make such a promise, because Joseph was not on speaking terms with Lilly.
8. The brothers still both held abiding suspicions of one another. Joseph intervened and suggested that they consult a lawyer. Frank drove a hard bargain and stipulated further terms upon which he would sell No. 96 to Johnathon. He wanted additional compensation for features of No. 96 that he would be giving up by the sale, including agricultural land that was superior to Stewart’s Farm. He said, “I want $10,000 per acre difference, for whatever Stewart’s Farm sells for, plus $300,000 for the house and $100,000 for the shed.” Johnathon agreed. Frank demonstrated he was a seller of No. 96 at the right price.
9. Frank left for No. 25 to consult Elizabeth. Both Frank and Elizabeth were reluctant about this proposal. But Frank could see the advantages of taking Johnathon out of the bidding for Stewart’s Farm. Despite their reluctance and some disquiet on Elizabeth’s part about her children not having continuing access to their childhood home, they decided to proceed. So much may be inferred from Johnathon agreeing to instruct Mr Maait shortly afterwards. But Frank and Elizabeth both say that they discussed an offer to buy Lilly’s property. This again is improbable, both because the Court does not find them credible on this issue and Frank did not discuss it soon afterwards either with Lilly or with Mr Maait.
10. The second part of the conversation took place when Frank arrived back to No. 106 from No. 25 about, 30 minutes later, after speaking to Elizabeth. Frank immediately gave the go-ahead to see a lawyer. Jason telephoned Mr John Maait, a solicitor practising in the firm Norris Somers Maait at Parramatta, who had acted for members of the Bugeja family in the past. Mr Maait responded quickly and arranged for Johnathon and Frank to meet with them later that same afternoon in his office in Phillip Street, Parramatta. Jason said he contacted Mr Maait, because he knew Joseph and Frank had used his legal services before.
11. Frank’s version of this second part of the conversation at No. 96 differs from Johnathon’s. He says that he bargained for more money from Johnathon before they left for Mr Maait’s office. But the Court does not accept that he did so. Frank had a taste for brinkmanship and driving a hard bargain with his brother, so he waited until they reached the lawyer’s office to start increasing the price. In front of Mr Maait, somewhat to Mr Maait’s embarrassment, and causing Mr Maait to wonder whether the brothers had really reached agreement, Frank upped his stipulations for the purchase of No. 96 to a differential of $15,000 per acre, that is $15,000 more than the price per acre at which he might secure Stewart’s Farm at auction. Johnathon agreed in Mr Maait’s office to a higher price but only at a differential of $11,000 per acre, the figure recorded in Mr Maait’s draft deed.
12. Frank remained suspicious of his brothers, Johnathon and Jason. The Court accepts one part of his affidavit that describes his feelings at the end of this conversation at Jason’s place. Frank says that he wanted everything to be put into writing by a solicitor and signed by all relevant parties “to make sure that I was not being tricked by my brothers and that everyone would hold up their end of any deal”. Frank’s evidence is accepted that he thought that Johnathon may not be able to afford to match his (Frank’s) financial capacity in a bidding war at the auction. On the other hand, he did not want competition from Johnathon to force him to pay a higher price at auction. Frank was strongly motivated to stop Johnathon from bidding. Whatever may have been Frank’s reservations about this proposal, it was made attractive to him by a good price for No. 96, which would be pegged to the sale price per acre of Stewart's Farm, and the knowledge that he would avoid the risk of paying more to buy Stewart's Farm.
13. Frank and Johnathon set out to Mr Maait’s office in Frank’s car. Mr Maait had told Jason to have Johnathon and Frank bring some ID, a current rate notice, and the title details of Stewart’s Farm to assist him in drafting a contract. On the way to Mr Maait’s office they called in to No. 25 where Elizabeth had these items ready for them. The Court accepts Johnathon’s evidence that Elizabeth said to them “I hope you’re not tricking us”, reflecting both Frank and Elizabeth’s suspicions about Johnathon’s and Jason’s motives.
Johnathon and Frank Telephone Lilly – 3:30 PM, 29 October 2020
1. Johnathon and Frank drove to Mr Maait’s office together in Frank’s motor vehicle about mid-afternoon on 29 October. On the way they decided to telephone their mother Lilly to discuss the proposed arrangement with her before they arrived at Mr Maait’s office. In Johnathon’s account of this telephone conversation, Frank asked his mother whether he could “take over” her property, provided he is successful at the auction for Stewart’s Farm, and he sold No. 96 to Johnathon. This closely reflected the language that Johnathon had used earlier that day in the conversation with Frank on No. 106. According to Johnathon, Lilly confirmed this arrangement was suitable.
2. Johnathon’s affidavit version of the conversation has him saying over the telephone to Lilly when they were both present in the car the following,
Johnathon: “If I let Frank buy Stewart’s and he wins it at auction, can he take over your property and he will sell me his place.”
Lilly: “Yes, as long as you’re both happy.”
1. There is an ambiguity in this version, inherent in the words “take over”. In Johnathon’s account these words meant “take over” Johnathon’s present lease of Lilly’s property for some time into the future and did not mean “buy” Lilly’s property. Lilly’s version of this conversation – set out below – makes clear that this is the correct interpretation of what was Lilly was conveying to her sons. As it turns out this was the meaning that was also conveyed to Mr Maait a short time later.
2. Frank’s version of this conversation was different in material respects. Frank says that he and Johnathon were driving to Mr Maait’s office in Frank’s motor vehicle and that Johnathon initiated the call to their mother and that it proceeded as follows.
Frank: “Hi mum, me and Johnathon are driving over [to] the solicitors now. Johnathon has said that you would be willing to let me buy your property at 216 Yarramundi Lane if I sell my own farm to him. Are you okay with that?”
Lilly: “Hi boys, I would be okay with that arrangement, so long as you are both happy and not fighting. I want you to lease it for two years and then I’ll sell it to you.”
Frank: “As long as it’s all in the contract, then we can consider it. We will tell the lawyer to include that in the contract.”
Lilly: “Sure thing, Frank.”
1. Apart from the Court’s preference for Johnathon’s credibility over Frank’s, at least two matters favour Johnathon’s version being the more probable: Lilly’s more complete memory of the conversation and what happened shortly afterwards at Mr Maait’s office.
2. Lilly’s version was clear, and the Court accepts it. She was not directly involved in the initial discussions between Joseph, Jason, Frank, and Johnathon about Johnathon not bidding for Stewart’s Farm. But she was rapidly accelerated into the discussions in the telephone call that Johnathon made on the afternoon of 29 October. The Court accepts her unwavering evidence that the following conversation took place:
Johnathon: “I’ve got Frank in the car with me”
Lilly: “What’s going on?”
Johnathon: “Mum we are going to the solicitors to make an agreement that if I don’t bid on Stewart’s and Frank wins, Frank will sell me his property. Would you be happy to then lease your property to Frank if Jason and I move out?”
Lilly: “Yes”
Frank: “We are going to the solicitor”
Lilly: “So long as you boys are happy.”
Frank and Johnathon: “Yes”
Lilly: “I’m happy to lease it to Frank so long as the agreement goes ahead.”
1. This was clearly a discussion about Lilly leasing her property to Frank if he were successful at the auction. Lilly was adamant that she never said to Frank, or indeed to anybody else at this time, that she would sell No. 216. She says and the Court accepts that she had no intention of selling No. 216, as she never wanted to sell it. Moreover, she denies ever telling Joseph that she would agree to sell the property, not only because that was contrary to her intentions for the property but because she and Joseph are not on speaking terms.
2. When it was put to Frank in cross examination that Lilly did not promise him that she would sell her farm to him he strongly disagreed. When queried as to why there was “no price” for the purchase of No. 216 in the conversation with Lilly, Frank explained:
“No price that’s why we probably didn’t discuss a price because it was a lease at the beginning, and then she said she’ll sell it to me. Lease it, and then sell it to me.”
1. This evidence is difficult to accept, not least because Frank says in his version that there had already been a discussion at Jason’s place earlier that day about purchasing Lilly’s property at “market price”. Moreover, his own original affidavit evidence does not support a conversation at No. 96 or at Jason’s place about his buying Lilly’s property “at market price”.
2. Frank’s evidence about Lilly’s promise is unreliable. Despite his affidavit evidence to the effect stated above, in his oral evidence, Frank inconsistently stated that Lilly did not promise him the farm at No. 216, but that it was his brothers who told him that Lilly had agreed to sell him the property. He said that he relied upon Johnathon and Jason making statements to this effect, and that this was the reason he had sent messages to his mother after the auction on 2 November 2020 to see “if she wants to sell it or not and she couldn’t give me an answer yes or no” to confirm the agreement. This is inconsistent with his affidavit version of the conversation in the motor vehicle.
3. But later in his oral evidence Frank returned to his affidavit version of his conversation with Lilly, saying in oral evidence:
“She said she will sell it to me, and lease it at the beginning, because she didn’t want to kick Taylor out, she wanted to keep the lease for two years, and then sell it to me. That’s why there was no price, because two years down the track, market value, which was probably a year ago.”
1. Taylor is Lilly’s niece. Frank further stated under cross examination that this idea emerged from Lilly on the telephone, as she appeared to be motivated to allow Taylor to continue living in the property for a period. Lilly had explained in her oral evidence that a reason she would not have agreed with her sons over the telephone to sell the property, was that she wanted Taylor to live there longer. And she does not accept that she discussed Taylor in the conversation with her sons that afternoon. The Court accepts her evidence.
2. There are at least four problems with Frank’s version of this conversation. First, it is inherently implausible that Lilly, who struck the Court as a sensible and cautious person, would agree in a five-minute telephone conversation without prior notice of the discussion subject to sell the family home to which he was deeply attached at an unspecified price to Frank two years in the future. Secondly, Lilly does not agree that she said any such thing and the Court accepts her evidence. Thirdly if the conversation had taken place, it is expected that it would have included some discussion about how long Taylor would stay in the property before the sale took place and even on Frank’s own version such a discussion did not take place. Fourthly, in the conference with Mr Maait held under an hour later, Frank did not give instructions to Mr Maait consistent with his having made this agreement with his mother, on a subject which he says was of critical importance to him.
A Conference with Mr Maait – 4.00pm on 29 October 2020.
1. Johnathon and Frank arrived together at Mr Maait’s office. Mr Maait received them into his office at about 4.00pm and conferred with them for an hour or a little more. He made notes of the conference in the form of a preliminary handwritten agreement reflecting what he thought the brothers wanted. Mr Maait had the strong impression that the meeting was rushed. It was. Jason had only telephoned Mr Maait the same day and Johnathon and Frank wanted a binding agreement before the auction on Saturday, 31 October.
2. According to Johnathon, he and Frank both went into the conference with Mr Maait and “confirmed our instructions”. Just what those instructions were was much debated. The Court wholly accepts Mr Maait’s account of those instructions as the most reliable version of what happened in the conference, although his recollections are incomplete in some respects.
3. Both Johnathon, Frank and Mr Maait agree on one thing: that Mr Maait made clear at the beginning of the conference that he could only act for one of the two brothers and that was Frank. Mr Maait carefully sought to define his role and for whom he acted. Johnathon recalls Mr Maait explaining his reasons for this being that Frank (and Elizabeth) owned No. 96, the property that would have to be sold under the arrangement.
4. Mr Maait was reluctant to accept that he received any instructions from Johnathon, as he made it clear that he always regarded Frank, not Johnathon, as his client. Mr Maait was sure that the bulk of his instructions were given to him by Frank and the Court accepts that they were. He had little recollection of Johnathon giving him any specific instructions and was hesitant to agree to the suggestions of counsel for Frank that Johnathon played a leading role in giving instructions. This has important implications for Frank’s case: Mr Maait’s record of those instructions favours Johnathon’s version, which must have been authorised by Frank to Mr Maait.
5. Johnathon recalls that both he and Frank instructed Mr Maait that Frank was to rent No. 216 from Lilly, instead of Johnathon and Jason. Johnathon further recalls that Mr Maait said of this proposal,
“I can include something about it, but the contract needs to be between Frank and your mum to be binding. But Johnathon, you need to vacate from here.”
1. This statement accords with Mr Maait’s notes – set out below – and was appropriate advice. Johnathon who was then renting agricultural space at No. 216 readily agreed to vacate that space in Frank’s favour. Johnathon agreed in the conference to vacate No. 216.
2. Mr Maait recorded in his own handwriting the agreement that he believed the brothers had instructed him to draft, rather than take notes in a more conventional iterative manner. The handwritten draft document is dated 29 October 2020 with a file number within Mr Maait’s firm of 5279. The document commences with the words “Mr Frank Bugeja” together with his street address, mobile telephone number and email. This structure further reinforces the conclusion that Mr Maait was acting for Frank. So does the heading which followed “Re Agreement with Johnathon Bugeja (brother)”, implying that Johnathon is the brother of Maait’s primary client, Frank. The instructions also record that Johnathon “owns Lot 96”.
3. Mr Maait’s preliminary draft is not lengthy. Written in his hand blue ink it said:
“Want an agreement drawn with brother Johnathon Bugeja by tomorrow on following terms: -
He and Johnathon both interested in attending auction for sale of [Stewart’s Farm] house and land.
Want to sign agreement that he will go to an only he will bid for that property at auction.
If successful bidder at auction, he agrees to sell [Lot 96] on following terms to Johnathon:
same $ per acre as the purchase price paid for the property [Stewart’s Farm], $11,000 per acre
plus $300,000 for the house & agricultural shed on the property
together with water licence
Johnathon to agree to relinquish current use to Frank of their mother’s property [No. 216]
Frank to make own arrangements with his mother for taking over use of [No. 216]
Frank will enter into contract with Johnathon [within] 42 days of his own contract to purchase with a settlement period of 42 days from the date of the sale contract.”
1. The notes then conclude with the full name and address of Johnathon and Rebecca and their email address and mobile telephone numbers. The form and language of this document reinforces the conclusions that Mr Maait was acting for Frank, that Johnathon agreed to vacate No. 216 and that Frank agreed to negotiate with Lilly about the terms upon which he could take over the use of No. 216.
2. The file that Mr Maait opened (Exhibit 3) that day to record the taking of instructions reinforces that Frank and Elizabeth were his clients. Mr Maait produced this file during the proceedings. The surviving contents of the produced file are spare, consisting of just a few documents inside a cardboard file cover entitled “File Number 5279”. The title on the file cover is “Bugeja – Frank and Elizabeth” with their home address and mobile phone and email contact details. The file cover describes the instructions as “Contract with Johnathon and Rebecca Bugeja – proposed sale of real property”. Inside the file are the handwritten notes described above and a rates notice addressed to Frank for his property at No. 25 and a sales advice from Raine & Horne recording the auction of Stewart’s Farm setting out all the vendor and purchaser’s information known to Raine & Horne and recording the sale price as $2,501,000. Other than a Raine & Horne brochure for the auction, there was nothing else in the file Mr Maait produced.
3. Frank’s version of this meeting, set out below, is not accepted. But apart from what he says, the fact that the conference with Mr Maait took place at all reveals much about Frank’s outlook in the moment. Frank went with Johnathon to Mr Maait’s office content that he had reached a consensus with Johnathon about bidding at the auction that was sufficient for them both to jointly instruct Mr Maait to make a binding legal agreement. For example, whatever Lilly had said to them both in the car must have satisfied Frank, because he continued travelling to Mr Maait’s office with Johnathon.
4. Frank's version of the conversation with Mr Maait was as follows:
Johnathon: “In broad terms, we want to prepare a written document which sets out that my wife and I won’t bid at the auction for a property known as Stewart’s Farm. This will allow Frank and Elizabeth the best opportunity to be successful at the auction. In exchange, if Frank and Elizabeth are successful, they will agree to sell Rebecca and myself their property.”
Frank: “I also want you to include that I get the right to buy/rent my mother’s property. In terms of reimbursement, we have agreed on $15,000 difference for each acre of land, $300,000 for the house [on No. 96] and $100,000 for the shed [on No. 96], but not what is in the shed, as well. My mum will need to sign the agreement as well.”
Mr Maait: “OK, I can prepare a document called the deed for proposed sale on the terms that we have discussed today. I will prepare it this afternoon and have it to you in the next few days. Please note however that I can only act for Frank and Elizabeth, otherwise there will be a conflict.”
Johnathon: “Understood, thanks John.”
Frank: “Okay, I still want to consider whether we are to go ahead with this arrangement after I see the contract. Just to confirm, this isn’t binding until we sign in front of a witness, right?
Mr Maait: “That’s correct.”
1. Frank’s version is improbable. Mr Maait was a competent professional. Any statement by Frank that he wanted to “get the right to buy/rent my mother’s property” would have immediately caused Mr Maait to advise Frank that Lilly could not be bound by this agreement and that Frank would need to negotiate the terms of the rental or purchase of No. 216 with her. That is what Mr Maait says that he did. Any statement such as “[m]y mum will need to sign the agreement as well” sounds improbable coming from the client, rather than the solicitor, but if said would have led to a different agreement involving Lilly too.
2. Based upon the wording of the disputed deed it was put to Frank in cross examination that he knew that he had only agreed to being responsible for obtaining Lilly’s consent for “any agreement that might be required in connection with the proposed takeover and use and enjoyment of [No. 216]”. The wording of the final deed is slightly different from Mr Maait’s handwritten note but the effect is much the same. Frank stoutly denied that he had given these limited instructions to Mr Maait. But it is unlikely Mr Maait recorded something to which his own client had not agreed.
3. Frank sought to embellish his account during cross examination. He said that he had also instructed Mr Maait that because it was “mum’s [Lilly’s] farm, nobody can make decisions, she had to be there, her name had to be there, she had to sign, we had to make agreement with that, that is why when the deed come I never signed it”. In short he is saying that (1) he told Mr Maait that Lilly had to be made a party to the deed, and (2) he refused to sign because she was not a party. This led the Court to seek clarification from Frank about what he did to follow-up his instruction and resulted in the following exchange:
“The Court: Did you tell the solicitor that your mother had to be there?
Frank: I suggested it, but I don’t think he heard me.
The Court: What did you say to him?
Frank: I said, “Mum should be here”, but we were arguing, and I don’t think he heard me because really Mum should have been binding in that deal, she should have been in there. And it was too rushed, the last day before the auction. Why didn’t they come to me 2 weeks ago, so we could’ve done it properly and I could’ve edited it, I could’ve got advice from my accountant. They pushed me and rushed me too much.
The Court: All right, but you say you said that “Mum should be here”?
Frank: Yes, but I’m not sure if he heard me.
The Court. Were you sitting just across the table?
Frank: Yeah, a bit far away and arguing.
The Court: Were you sure your mother should be there?
Frank: Well, it’s her farm, that’s why I was there, because it was my farm that we were going to do the deal on, so she should’ve been there, as well, to be fair to everyone.
The Court: Well, if he didn’t hear you, did you say it again?
Frank: No, I didn’t. I said it once.”
1. The Court does not accept that Frank said to Mr Maait that his mother should be there. It is an incredible account: that if Frank was worried enough about making Lilly a party to raise that idea with Mr Maait that he would have not repeated his request if he thought Mr Maait had not heard it the first time but instead abandoned insistence on the idea; and that he would yet refuse the following day to sign the agreement because Lilly was not a party. The better view is that Frank was sufficiently convinced that he had the kind of consent from his mother, vague though it may have been, that he needed to proceed to instruct Mr Maait. This exchange badly fractured Frank’s credibility, demonstrating his capacity both to exaggerate and invent conversations that did not take place.
Johnathon and Frank Enjoy a Pizza – late afternoon, 29 October.
1. After leaving Mr Maait’s office Johnathon and Frank walked toward Frank’s car. They paused at a pizza shop and Frank bought Johnathon a pizza. This apparently unremarkable act was unusual from Johnathon’s perspective, because as he explained, “he bought me a pizza, which he never does”. Johnathon explained that “I felt my relationship with Frank was back on track”. The Court accepts that there was a consensus between Johnathon and Frank at the end of the meeting with Mr Maait.
2. This cameo moment of fraternal generosity, which startled Johnathon, is far more consistent with Johnathon’s case than Frank’s. It shows that Frank was content with what had happened in Mr Maait’s office. If Frank is to be believed, he left the office with reservations about proceeding because he was still insisting that his mother be a party to the deed but had not received any assurance from Mr Maait whether and how that would occur. His evidence gives the impression that this was the deal-breaking issue which ultimately prevented him from signing the deed. If that is indeed what happened, Frank knew there was no agreement between the brothers until Lilly became a party to and signed the deed and it is difficult to account for him being sufficiently contented at this moment to break bread with his brother.
3. Johnathon too was relaxed in the moment. He wanted a written agreement for “peace of mind” because Frank’s word was not good enough for him. And now Frank seemed prepared to sign an agreement based on the instructions that he had just given Mr Maait.
4. Frank seemed conscious of the danger of this evidence about this informal brotherly moment. In oral evidence he consciously distanced himself from any display of empathy towards Johnathon over a pizza. But to avoid displaying empathy he came up with a weirdly improbable scenario in which he purchased a pizza, because he was hungry, and then Johnathon merely took a piece of the pizza uninvited and unwelcome.
5. Frank did not again clearly raise the subject of his mother becoming a party to the deed as the basis for his reluctance to sign. It might be thought that in his discussions with Elizabeth or when he was being asked to sign the next day that he would point out the obvious that Lilly was not yet a party. The Court’s findings below show that such a conversation did not occur at or about the time of signing, on either version of what happened. Had such a conversation occurred is likely that Johnathon and Joseph would have immediately done something to try and secure Lilly’s consent to a sale transaction with No. 216 that was acceptable to Frank.
Mr Maait Perfects the Draft Deed – Early Afternoon Friday, 30 October 2020
1. Mr Maait turned his preliminary draft into a more formal document by the early afternoon of the following day. On 30 October 2020 he sent two emails to Frank and Johnathon attaching a draft deed of agreement for their approval and signature and requesting Johnathon to seek independent legal and financial advice. The first email was sent to Frank and Johnathon at 12:28pm. It attached a document entitled “Bugeja.pdf”. The email referenced “my meeting and discussions with you late yesterday afternoon” and said, “I now attach for your approval and signing the proposed deed of agreement which you instructed me to prepare on very short notice ahead of the subject auction tomorrow”. In the email Mr Maait confirmed yet again “that I’m only representing and advising Frank and Elizabeth in relation to this deed and any subsequent contract for the sale as between them and Johnathon and Rebecca”. He recorded his belief that he had “explained in detail” the reasons why he could not act for or advise Johnathon and Rebecca, namely “to avoid any potential conflict of interest either now or in the future”. He reiterated it was a matter for “Johnathon and Rebecca whether to seek independent legal, financial or other advice needed before signing the deed”.
2. The Bugeja.pdf attachment to the 12:28pm email contained an error: it omitted Rebecca’s name in the signature block on the last page. Mr Maait sent an amended version to both Frank and Johnathon at 1:54pm the same day.
3. The final deed describes Frank and Elizabeth as “vendors” and Johnathon and Rebecca as “purchasers”. The deed set out the following four recitals:
A. The Vendors are the registered proprietors as joint tenants of the whole of the farming property consisting of land and house and agricultural shed comprised in [Lot 96] (“Vendors’ property”).
B. The Vendors and the Purchasers are each interest in purchasing the farming property known as [Stewart’s Farm] (“new farmland”) which is being sold by public auction on 31 October 2020 and which the Vendors and the Purchasers intended to bid for at the auction.
C. The parties have negotiated and agreed between each other that as a mark of goodwill and in consideration of the Purchasers’ forbearance hereinafter referred to and each of the parties accepting the terms and entering into and signing this agreement, the purchaser will refrain from bidding for the purchase of the new farmland and that, as between them, only the Vendors will bid at the said forthcoming auction or otherwise seek to purchase the new farmland, to the intent that, if the vendors are the successful bidder at the auction, the vendors will purchase the new farmland beneficially for themselves to the exclusion of the purchasers.
D. The parties have agreed to the various matters hereinafter appearing.
1. Clause 1 of the operative part of the deed set out various interpretations. Clause 2 set out the rights and responsibilities of the parties as follows:
(a) The purchasers agree that they will refrain from bidding or otherwise interfering adversely in any way with the bid by the vendors to purchase and achieve ownership of the new farmland.
(b) In consideration of the purchasers' refrain and agreement referred to in (a), the vendors, if they are the successful bidders or otherwise the successful purchasers, whether through the auction or otherwise within 6 months following the auction, will prior to settlement of the purchase of the new farm land enter into a contract for and agree to sell the vendors' property referred to in recital A to the purchasers upon the following terms:
(i) The contract for sale will the in the 2019 standard form of contract for sale of Land of the Law Society of New South Wales and the Real Estate Institute of New South Wales.
(ii) The sale and purchase price for the vendors' property shall be worked out and agreed between the vendors and the purchaser to be at the same rate per acre paid by the vendors for the purchase of the new farmland, plus an additional agreed sum of eleven thousand dollars ($11,000) per each acre so as to reflect the agreed superior quality and utility of the Vendors' property.
(iii) In addition to the land valued agreed upon in 2(b)(i) the purchasers will pay the vendors a sum of three hundred thousand dollars ($300,000) as consideration for tl1e house, agricultural shed and other improvements included in the sale of the vendors' property.
(iv) The sale and purchase will include the vendors' Water Licence for and in respect of the vendors' property, and the vendors will do all things and sign all documents that may reasonably be required of them by the purchasers to facilitate the transfer to the purchasers of the said Water Licence simultaneously with or as soon as practicable following settlement of the said sale and purchase.
(v) Simultaneously with or as soon as practicable following the settlement of the sale to the purchasers of the vendors' property, the purchasers will do all things and sign all documents reasonably required of them to vacate and facilitate the taking of possession and use and enjoyment as farm land by the vendors of the farming property owned by the mother of Frank and Johnathon Bugeja and presently used by the purchasers as farming land.
(vi) The vendors shall be responsible for obtaining the consent and otherwise for any agreement that may be required in connection with the proposed takeover and use and enjoyment of the farming property referred to in the preceding subparagraph (v).
1. The terms of the deed concluded with provisions for the giving of notices (clause 3), further assurance (clause 4) and counterparts. The terms of the counterpart provision were as follows:
This deed may be executed in any number of counterparts each of which will be an original but such counterparts together will constitute one and the same instrument and the date of the deed will be the date on which it is executed by the last party.
1. Finally, the execution page is so entitled, and it declares that the document is “executed as a deed”, under which two rectangular signature boxes appear, one each for the signature and witnessing of the deed by each party. The version set out below is that of the Bugeja.pdf attached to the 12:28pm email.
1. The version of the Bugeja.pdf deed sent at 1:54pm differs from the earlier version of the deed in that the words “and Rebecca Bugeja” are added into the lower signature box after Johnathon’s name.
2. As it turned out the two counterparts of the deed that were signed by the parties were different in that one was the 1:54pm version and the other was the 12:28pm version. These differences are described in more detail later in these reasons. There were other differences in the way the two versions were printed which will also be discussed below.
The Disputed Signing – Mid-Afternoon, Friday 30 October
1. Only Johnathon and Joseph give an account of Frank and Elizabeth signing the deed counterparts about mid-afternoon on 30 October at No. 25. No one claims Jason was present at such an event. Elizabeth denies she was present when Frank or Johnathon signed any deed counterparts. Frank says that he was presented with a deed counterpart several times, but he refused to sign. Due to his age Joseph’s account is slightly less reliable than Johnathon’s, but he says he witnessed Frank, Elizabeth and Johnathon signing the deed counterparts in the Court accepts it as important corroborating evidence of Johnathon’s account. The Court does not accept Frank and Elizabeth’s version. Johnathon’s and Joseph’s account, supplemented by Rebecca’s account is the more plausible and fits with the available objective evidence. The Court starts with their account.
2. Johnathon, Rebecca’s, and Joseph’s account. According to Johnathon and Rebecca on the afternoon of 30 October 2020, Mr Maait emailed a soft copy of the deed to them. Whilst at home, Johnathon printed the deed on their home inkjet printer. Johnathon informed Rebecca the deed had to be signed by the two couples before the auction. Rebecca could not accompany Johnathon to Frank’s house at No. 25 at that time, as she had to collect their children. So, she signed the counterpart deed Johnathon had printed out in front of him in their kitchen in blue pen.
3. Johnathon says that he then drove to Joseph’s house with his counterpart copy of the deed. There he asked Joseph to accompany him to Frank’s house, so Joseph could witness both their signatures. Johnathon says that Joseph and he then drove separately to Frank’s house at No. 25. When they arrived at Frank’s house, Johnathon says that Frank and his son Michael were in the shed. Johnathon asked Frank, “you got the deed, are we going to sign it?” to which Frank replied in the affirmative and asked his son Michael to go and ask Elizabeth to come outside.
4. Johnathon further says that Elizabeth came out of the house at No. 25 a short time later with another counterpart copy of the deed which she had already printed on a laser printer. According to Johnathon the signings followed directly after this in a shed on No. 25, and took place on the rear tray of a utility motor vehicle.
5. Johnathon says that first he, Frank and Elizabeth signed the inkjet counterpart deed that he, Johnathon, had brought with him that day to Frank’s house and which already had Rebecca’s signature on it. He says he signed in a blue pen in front of Joseph, Frank, and Elizabeth. Johnathon says that he then saw Frank and Elizabeth both sign the inkjet counterpart deed that he had brought to the shed.
6. Johnathon says that he then signed the laser counterpart deed that Elizabeth had brought out from the house into the shed. Johnathon says that he then saw Frank and Elizabeth sign the laser counterpart.
7. Joseph’s evidence generally supports Johnathon’s evidence except in one respect. Joseph says that Elizabeth signed her counterpart before she came out to the shed. That is what Elizabeth says too. Although the Court rejects much of Elizabeth’s evidence it accepts that she signed the laser counterpart before leaving the house. To the extent that Johnathon says that he saw Elizabeth sign her and Frank’s counterpart in front of him, he is mistaken.
8. An important question arose on Johnathon and Joseph’s account was who took which counterpart deed away from No. 25 after the signing. Johnathon says he recalls taking one of the counterparts home with him from the No. 25 shed for Rebecca to sign, whilst the other counterpart was left with Frank and Elizabeth. He says that the deed he left with Frank and Elizabeth was the one that he had organised for Rebecca to sign before he left their house that day and that he had brought to the shed. It was logical that he would leave this inkjet counterpart with Frank and Elizabeth: it did not need to be re-signed by Rebecca, unlike the laser counterpart.
9. Later that afternoon when Johnathon returned home from No. 25, he presented to Rebecca for signature the counterpart of the deed that already bore the witnessed signatures of Johnathon, Frank, and Elizabeth. This was the laser counterpart that Elizabeth had brought from the house, not yet signed by Rebecca. When it was given to her, according to Johnathon, Rebecca also signed this laser counterpart in blue pen, as she had the inkjet counterpart earlier in the day. Johnathon signed both counterparts in blue, possibly using the same pen as Rebecca.
10. Rebecca supports her husband’s account and says, and the Court accepts, that Johnathon came home with the version of the deed signed by him, Elizabeth and Frank and said to her “we need to sign two copies of the deed, can you sign this one too”. Her evidence is also accepted that when she signed this deed at home, it had already been signed by Frank, Elizabeth and Johnathon and witnessed in two places by Joseph.
11. Frank’s Version. Frank’s version of what happened is entirely different. He says that he came in from lunch to No. 25 on 30 October and Elizabeth presented him with a counterpart deed which can be identified as the laser counterpart and she said to him, “the lawyer sent us this document; it’s called a deed for proposed sale. What do we do with it?”
12. This conversation sounds improbable from the start, as Elizabeth was generally familiar with the transaction from the discussion that Frank had had with her the previous day before going to Mr Maait’s office. Frank says he read the deed and recalled it was very different from the discussions that he had held with Johnathon, Jason, and Joseph. He says he noted that it did not mention that Lilly’s property, No. 216 was to be included in any deal and that Lilly was not a signatory. He says he declared to Elizabeth that they had “just try to trick us” and decided as he told his wife, “there is no way I’m going to sign a copy of it.”
13. According to Frank he had a very good reason not to sign: the lack of a commitment from Lilly. He then says that on many occasions on the afternoon of 30 October both Johnathon and Joseph came over to No. 96 and pressed him to sign the deed. He says on one of these occasions a conversation took place between them to the following effect:
Johnathon: “Frank, the solicitor has sent us the deed, we need you and Elizabeth to sign it now.”
Frank: “It’s not what we discussed. I’m not signing it.”
Johnathon: “Come on Frank, it would be so good for business if we had your property. That way Jason I could merge our two farms together.”
Frank: “It’s not happening. We are bidding at the auction and that’s it.”
1. The Court does not accept this conversation took place. Apart from the Court’s general preference for the reliability of Johnathon as a witness, Frank was incapable of giving the most basic explanation about obvious questions that would have arisen from the stance that he alleged he was taking. Anyone in Johnathon’s position who was keen to buy No. 96 and who believed that he had a consensus with Frank late on 29 October would have asked Frank on 30 October why the deed was “not what we discussed”. Frank could never explain whether Johnathon asked such a predictable question on his version. If in reply Frank had explained what he now claims were his reasons, that would inevitably have prompted Johnathon to make a phone call to Lilly or to Mr Maait to try and resolve any uncertainty about Lilly’s commitment to give over No. 216. It was as easy for Johnathon and Frank to make a mobile phone call to Lilly on 30 October as it had been on 29 October. Yet neither Johnathon nor Frank attempted to contact Lilly again on 30 October. The Court infers that no discussion took place of the kind that Frank describes.
2. Frank also relies upon a text message exchange between himself and Johnathon at 2:37 PM on 30 October as supporting his case that at that time he was refusing to sign the deed. But the effect of this message exchange is not clear. First, the language used in this text exchange and in many of the text messages between Johnathon and Frank and other family members is at times of baffling obscurity. The informal dialect some Bugeja family members use is difficult for an outsider to interpret. Secondly, Frank often adopts the persona of a prankster in his texted replies, sometimes sending images rather than language, but creating a puzzle for the objective interpreter of his correspondence.
3. Johnathon sent the initiating text of this exchange at 2:37 PM, saying “sign and send back” to him. It is logical that Frank would have sent this text at this time. He had encountered difficulties with his printer and Mr Maait had sent the final amended version of the deed through at 1.54pm. Frank says he understood this to be a request to sign the deed and send a copy back to Mr Maait. He replied saying “I’m pulling out”. He says that was intended to convey that he was not going to sign the deed because it did not reflect the discussions that had occurred. Johnathon then replies, “Ok”.
4. Johnathon says he did not take Frank’s text “I’m pulling out” seriously and that after the text was sent all parties signed the deed counterparts. Johnathon’s relaxed reply supports this interpretation. The Court accepts Johnathon’s explanation as the best interpretation of these text messages within the family context. Johnathon might be expected to have protested strongly if he was taking this communication as a serious threat by Frank to pull out of the arrangement agreed with Mr Maait the previous day. “I’m pulling out” was light-hearted banter, which was even repeated by Frank to Johnathon in person on the day of the auction and generated mutual mirth.
5. Moreover, Johnathon’s printer was not functioning properly. Mr Maait had to send him another soft copy of the deed after 1:54pm. The first two emails had been sent to Johnathon’s domestic email address. Mr Maait re-forwarded his 1:54pm email to Johnathon’s business email address at 2.49 pm, as a copy of Mr Maait’s supplementary email at that later time to Johnathon clearly shows.
6. This means that Frank’s text “I’m pulling out” at 2:37 pm was sent and received whilst Johnathon was waiting to receive a final printable version of the deed from Mr Maait. This exchange must have occurred before Johnathon claims he went around to No. 25 with the final printed deed. Johnathon’s matter-of-fact response is consistent with in treating Frank’s text message as a joke before proceeding to go and see him.
7. Elizabeth’s Version. Elizabeth denies being present with her husband at any joint signing of the counterpart deeds. She gives an account that does not directly confront the evidence of Johnathon and Joseph other than to infer that because she was not there the signing could not have happened the way that they say it did. Close examination of her alternative narrative on 29 and 30 October is required, to assess its probability.
8. Elizabeth’s primary affidavit account of her involvement in these events was corrected in several respects in a subsequent affidavit. In her corrected version she says that on 29 October Frank returned to No. 25, after what must have been the conversation at Jason’s place. Elizabeth says that upon his return to No. 25 Frank explained the proposed arrangement to her the following way:
Frank: “Johnathon said he won’t bid at the auction for Stewart’s Farm. This will give us the best opportunity to be successful at the auction.”
Elizabeth: “What’s in it for them?”
Frank: “They want us to sell our property [No. 96] to them. They have also said that mum would let us rent and then buy her farm.”
Elizabeth: “I don’t know Frank; I don’t feel too good about this. You don’t have a good relationship with your dad or brothers…and how can they guarantee that your mum would agree to the deal?”
Frank: “I don’t trust them either. I will only accept any deal if its prepared by a lawyer in writing and everyone signs off on it. But I think we should consider it.”
Elizabeth: “Alright Frank, whatever you think is best. The kids aren’t going to be happy about selling [No. 96].”
1. Although Elizabeth was not present at the discussions at Jason’s place on 29 October, this conversation, if it is to be accepted, gave her the essentials of the proposed arrangement discussed between Frank and Johnathon, including what according to Frank was the proposal about buying No. 216.
2. Elizabeth says that “around midday” on 30 October she was preparing lunch inside the house at No. 25 when Frank came inside, and she says that she showed him a copy of a deed which she had received from Mr Maait and printed out. This must have been soon after Mr Maait sent through the 12.28pm version of the deed. That is the version Elizabeth printed out and ultimately signed. If she ever printed out the later 1.54pm version, she did not use it.
3. She says she showed it to Frank who said “this is not what I had discussed. There is no way I’m signing it.” She says that Frank then left the house without signing the deed. This conversation contains little context in which Frank explained to Elizabeth why the deed was not “what I discussed”. She says that she asked him the predictable question why the deed was different from what had been discussed and she says that she recalls him saying that “it should have his mum’s signature on this… so he gets [reassurance] that…his mum’s following with everything”. This is certainly consistent with Frank’s story that he raised this issue with Mr Maait. But it is odd that if the printed deed did not reflect what Frank thought had been discussed with Johnathon, Frank or Elizabeth did not telephone Mr Maait to correct the deed or at least discuss that course, so it corresponded with his instructions. After all, it was still to Frank’s and Elizabeth’s advantage to bind Johnathon and Rebecca not to bid.
4. Whilst Frank was back at work Elizabeth says that Joseph visited No. 25 on several occasions and that “mostly Joseph would come near the house” while Frank was away working. She says that Joseph said to her “But have you signed the deed yet?” and “Where’s Frank, you both need to sign it [the disputed deed]”, and “You need to sign it already” and “It has to be done”. She says that Joseph’s body language and tone of voice gave her the impression that it was important for the deed to be signed urgently. She says that she said to Joseph “I’m very confused, I wasn’t at the meetings. Go and speak to Frank”.
5. According to her Joseph left the house on No. 25 four or five times and returned during the space of a few hours to put pressure on her to sign the deed. She is remarkably vague about exactly where Joseph was having these conversations pressuring her, merely saying it was “around the house”. She believed that when Joseph left he was going to look for Frank.
6. She says that finally after Joseph had left the house on the last of these occasions and because of the consistent pressure and feeling of urgency which Joseph had created she proceeded to sign the disputed deed without a witness being present. She said she was reluctant to sign a copy but felt pressured by Joseph and did so because “I always respected and continued to respect my father-in-law, Joseph and did not want to be that daughter-in-law that was a problem within the family”.
7. She says that she called Mr Maait to confirm where she was to sign the deed. She says she asked Mr Maait what the document was, does it need to be signed in Mr Maait’s office, where and how was she meant to sign it and did they need a witness. She said that her confusion was created in part because she was not at the original meeting. She did call Mr Maait. His invoice records such a call took place. She says that Mr Maait said to her words to the following effect:
“It’s best if you and Frank sign on the right-hand side of the document. It’s between you. It doesn’t have anything to do with me. You can either have a single document and have everyone sign the same one, or you and Frank can sign a separate copy to Johnathon and Rebecca and then exchange your copies.”
1. She recalls expressing confusion again “because I wasn’t at the meeting” and asking whether she should email the signed copy back to Mr Maait, who she says then said to her:
“No, it’s up to you. I’ve spoken with Johnathon and have told him what to do. He already knows what needs to happen. Maybe speak to Frank and he can sort it out with Johnathon.”
1. Elizabeth’s account of this conversation does not fit with the rest of her and Frank’s testimony about Frank’s expressed disquiet about the deed and her testimony about pressure from Joseph for her to sign the deed.
2. According to Elizabeth at lunchtime Frank had clearly told her that the form of the deed which she had printed out was not what had been discussed with Mr Maait the day before. She showed she was sufficiently self-assured to ring Mr Maait to clarify how the deed should be executed. But even though she says she was being harassed by Joseph, she makes no mention to Mr Maait (her and Frank’s own lawyer in whom she could confide) of either Frank’s disquiet about the inadequacy of the document, or about Joseph’s inappropriate pressure upon her to sign it. She says she was “confused”. Mr Maait was the ideal person to resolve any confusion.
3. Elizabeth’s version and Mr Maait’s version of their conversation coincide: they both agree that neither of these subjects was mentioned. He was not alerted to any disquiet on her part either about the document not reflecting the true agreement, or about Joseph’s pressure on her to sign, which she must have perceived as underhand, given her husband’s statement that the written document did not reflect the true agreement. It is inconceivable that if Frank was so firm that “there is no way I’m signing it”, when she subsequently spoke to Mr Maait, she would not have shared his disquiet, her confusion and Joseph’s pressure with her own lawyer.
4. Elizabeth says that after she signed the deed she walked outside the house with the signed copy of the deed and found Frank in the shed. She says that she placed the deed on the back of the utility which was parked in the shed and had a conversation with her husband in words to the following effect:
Elizabeth: “Here you go Frank, I don’t want to deal with this anymore. Your Dad has been demanding that we sign it all afternoon.”
Frank: “Why did you sign it? It’s not what I had been discussing with Dad and my brothers.”
Elizabeth: “I felt pressured by your Dad, I don’t know.”
1. She says that after leaving the disputed deed on the utility motor vehicle that she left Frank alone in the shed and went back inside the house. She says she does not know what happened to the deed after that because it was not on the utility when she returned to that area later.
2. Elizabeth’s account of leaving the deed on the utility is improbable. Her attempts to explain away that improbability were unconvincing. She could not add any detail to her account. She did not show that she was drawing upon actual recollection rather than just adhering to a narrative that she needed to maintain.
3. First, Elizabeth says that when Frank came home from lunch, he made it clear “there is no way I’m signing” the deed. She knew that her husband was the only person who had been involved in the negotiations the previous day and he seemed convinced that the deed which Mr Maait had emailed to her should not be signed. Yet when Joseph came round badgering her to sign it up to four or five times at no stage does she use the obvious defence to Joseph that was available to her: that the absent Frank had told her it was not to be signed. It is inconceivable on her account that she would have interpreted Frank’s statement as allowing her to sign the deed. It is difficult to accept that she was defending herself from Joseph’s pressure without using this most obvious of defences. Her simple answer to Joseph’s pressure would have been “Frank said that we are not signing it”. She knew that Joseph was trying to have her to do the opposite of what her husband had said and to sign something that was “not what was discussed”. But she could not give any sensible account of why she did not state the obvious to Joseph, instead she said “go and talk to Frank”, “[Joseph] wouldn’t listen” and “I didn’t know what I was going to do”.
4. Secondly, if she had any doubt about what she should do, as she claimed that she does, when Joseph applied the pressure to her, she could simply have telephoned her husband to ask him what to do. She had a mobile phone. He had a mobile phone. The Court explored with her whether she could have telephoned her husband who she agreed had a mobile phone. She became evasive saying, “I don’t tell him to keep it with him” and “he does what he wishes” and “if he’s on machinery he’s not going to pick up the phone”. But when asked why she didn’t “just try and ring him” in the end she said “I wasn’t thinking. I couldn’t think straight” because Joseph was “demanding me to hurry up and sign it”. Elizabeth struck the Court as an independent minded resourceful woman, yet all she could say unconvincing was “I didn’t think about ringing Frank”.
5. Elizabeth presented to the Court as a strong personality. She knew her own mind and would not be readily intimidated. She was confident and at times aggressive in the witness box. At one point in her cross examination, she loudly answered “bullshit” to emphasize her robust disagreement with counsel’s question. Nor was Elizabeth a submissive daughter-in-law, who did not want to be, as she said, “a problem within the family”. She understood her husband’s decision not to sign the deed was fundamental to their financial wellbeing and that had greater priority in her life than accommodating Joseph’s demands.
6. The Court does not accept that Joseph was so imposing a figure that he would have had this claimed effect upon her. Quite the contrary, the Jospeh that the Court saw, although three years after these events, was a retired farmer who understood farming but who at times was confused to the point that he could not distinguish between a counterpart deed and his own affidavit. By personality, education and life experience Elizabeth was most unlikely to have been intimidated by her far less sophisticated father-in-law. And Joseph was long past applying pressure to this daughter-in-law, against the wishes of his own tough-minded son, Frank. Moreover, Elizabeth was well able to engineer breathing space, while she tried to contact Frank.
7. Thirdly, if Elizabeth’s story were correct, she could not explain why she went outside and placed the deed she had signed on a utility tray when she did, nor could she give a sensible account of her alleged conversation with Frank at this time. She says she went outside holding a copy of the deed and happened fortuitously to find Frank in the shed on the property. Despite finding Frank and being able to talk to him, she says she placed the deed on the utility rather than just giving it to him which would appear to be the more obvious thing to do. She says that she told Frank that she had signed it and he reiterated that the deed was not what had been discussed and she says she explained that she felt pressured.
8. All Elizabeth could remember was a limited sequence of the events of going outside and placing the executed deed on the utility but without giving significant detail. If what Elizabeth says were right, it would be expected that Frank would be angry with Joseph when Elizabeth told him of Joseph’s pressure. Frank was finding out for the first time that Joseph had surreptitiously gone behind his back to urge Elizabeth to sign something that he was adamant should not be signed. But Frank’s response to Joseph’s conduct is not any part of Elizabeth’s narrative. It might also be expected that Frank would declare that he would tell Johnathon he was not going to sign the deed, so Elizabeth was not harassed any further. Instead, Elizabeth’s narrative has her just walking away into the house leaving Frank “alone in the shed”, with the counterpart of the deed Elizabeth had signed on the back of the utility.
9. Fourthly, Elizabeth could not explain why she decided to walk outside the house at this time. Puzzled by this matter, the Court asked her several questions which produced a series of evasive answers that refused to engage with the issue:
The Court: So, did you give it to Frank, or did you put it somewhere?
Elizabeth: I put it on the Ute.
The Court: Who’s Ute was that?
Elizabeth: I can’t remember because I wasn’t thinking straight.
The Court: But it was a Ute in a shed on [No.] 25?
Elizabeth: Yeah, possibly, yes.
The Court: Was there anyone else there apart from Frank and you?
Elizabeth: Just Frank was only there for a quick second, I saw him, he took off.
The Court: Why did you go out there? What made you go out there? How did you know Frank was there?
Elizabeth: I didn’t know he was there.
The Court: Well, why did you go--
Elizabeth: Because then when I got out there, I sort of seen him there, seen him.
The Court: But what caused you to go outside the house, at all, to give the deed to anybody, particularly Frank?
Elizabeth: I didn’t give it to him. I put it on the Ute.
The Court: What made you go outside the house?
Elizabeth: I don’t know. I couldn’t think straight. Joseph kept telling me, it needs to be done, it needs to be done. Rushing me.
The Court: Was Joseph there when you walked outside?
Elizabeth: No.
The Court: So, Joseph had left by then, had he?
Elizabeth: Yes.
1. On Joseph’s and Johnathon’s version there is a good reason she goes outside the house when she does: she is called outside by her son Michael, after Joseph and Johnathon arrive with their counterpart of the deed.
2. Fifthly, Elizabeth gives an account of what happened to the pen she used to sign the deed counterpart that she put on the utility. She said that she was “pretty sure I left [the pen] in the office [at No. 25]” because she could not understand why she would take a pen outside after signing the counterpart she had. She was sure that she did not give the pen and the signed counterpart to Joseph. This raises a potential conflict in Rebecca’s evidence with the form of Exhibit 1 and Exhibit 2. The inference is open that the same black pen may have been used for all signatures on both deed counterparts apart from Rebecca’s signature. This issue is discussed later in these reasons with Ms Holt’s evidence.
3. Sixthly, Elizabeth's version is oddly improbable in yet another way. Why would Johnathon not come around with Joseph to No. 25 with the deed? Johnathon was just as keen as Joseph for the deal to be done. Johnathon had driven Frank the day before from No. 96 to Jason's place to discuss the matter further and then had travelled with Frank to Mr Maait's office. If he had undertaken all these travels, why would he not also go, as he claims he did, over to No. 25 with his counterpart of the deed to complete his work? Johnathon's absence and Joseph's presence from No. 25 is not a plausible account of Johnathon's likely behaviour.
4. Finally, perhaps the greatest problem with Elizabeth’s version is that it does not explain how her signature comes to be on both the inkjet counterpart and laser counterpart of the deed. According to Elizabeth’s version she only handles one counterpart, the laser counterpart, that she prints out at home and signs and then puts on the utility in Frank’s presence. Her account never has her presented with or executing the inkjet counterpart which was brought to No. 25 by Johnathon or Joseph.
5. Moreover, the evidence points to only one counterpart being printed out by Johnathon and Rebecca and being signed by Rebecca. If Elizabeth’s version is to be accepted and both counterparts have her signature on them then this version must somehow find its way into Joseph’s hands, be brought to Elizabeth, and been signed by her. But neither Johnathon’s nor Joseph’s evidence supports Joseph carrying this inkjet counterpart with him.
6. Curiously, neither Frank nor Elizabeth would say whether at the relevant time in late October 2020 that the household at No. 25 had a laser printer. Calls were made for documents evidencing the purchase or maintenance of their family printer and none were produced. But by process of elimination, it can be inferred they must had a laser printer. Only two counterparts of the deed were created and Johnathon is clearly accounted for the inkjet counterpart and Elizabeth's signature is on both counterparts.
The Silence before the Auction – Overnight 30/31 October
1. There are no proven communications between Frank and Elizabeth on the one hand and Johnathon and Rebecca on the other hand, overnight 30/31 October and at any time before the auction. This does not sit well with Frank’s version of events.
2. If Frank’s and Elizabeth’s version is accepted, at least one of several things is likely to have occurred. First, the failure to sign the deed left an important question uncertain for Frank: was Johnathon going to bid and drive up the price for Frank? On Frank’s version of the confrontation at the failed signing, Johnathon gave Frank no assurance that he would not bid at the auction the following day. Frank had been sufficiently keen on binding Johnathon not to bid to go to Mr Maait. There are no overnight phone calls or text messages between the pair in which Frank seeks to explore with Johnathon what was going to happen the following day. For a person who knew he had just crashed what an agreement for Johnathon not to bid, Frank showed remarkably little interest in finding out whether Johnathon was now going to bid at the auction. Frank came across to the Court as having a direct and impulsive side and not comfortable playing his cards close to his chest. Yet he did not approach Johnathon that morning before the bidding started to find out what his brother was going to do when the bidding started. Their lack of communication is more consistent with Frank being confident that Johnathon would not bid.
3. Secondly, there is no evidence of Joseph continuing his campaign for the signing of the deed. This too is in tension with Frank’s and Elizabeth’s version. After all, according to Elizabeth, Joseph had harassed her to sign the deed four or five times in the space of several hours. Yet Joseph goes quiet from the afternoon of 30 October right up until the auction on 31 October. If Frank and Elizabeth’s version is accepted Joseph should still have been pushing his idea to both his sons as relentlessly as he had been harassing Elizabeth.
4. Thirdly, if Frank’s and Elizabeth’s version is to be accepted the only thing standing in the way of very convenient consensus to save the brothers bidding against one another was the absence of Lilly’s written commitment to sell No. 216 as part of the agreement. If this is what Lilly had said to Frank on the telephone on the way to Mr Maait’s office as Frank maintains, then all Frank had to do to ensure that he could win Stewart’s Farm without Johnathon bidding against him was to call Lilly to ask her to put in writing her agreement to sell No. 216 to him. This should have been perceived as a relatively easy task from Frank’s perspective, yet no such communication took place.
The Auction – Saturday, 31 October 2020
1. On 31 October 2020, the public auction for Stewart’s Farm took place. Frank attended the auction and registered to bid. So did Johnathon. Frank was ultimately successful with a bid of $2,501,000. Johnathon did not bid. There was only one other bidder. Frank says he was confused that Johnathon and Rebecca did not bid and he did not know why. He says that he thought that Johnathon was in debt and unable to raise the funds. The Court infers that Johnathon and Rebecca would have bid at the auction, if they did not believe that Frank and Elizabeth had signed the deed.
2. Lilly went to the auction on 31 October. She saw the auctioneer approaching Johnathon to encourage him to bid. She recalls Johnathon replying to the auctioneer’s invitation, “No, my brother is bidding”. This made sense to her, given the conversation she had had with them both on 29 October and is consistent with Johnathon acting on the basis that the deed was signed and operative.
3. Johnathon’s and Rebecca’s failure to bid is more significant than merely to make out the reliance element in their equitable estoppel and misleading and deceptive conduct cases. Their failure to bid needs to be assessed in the context of Johnathon’s recent rapprochement with a brother whom he had long distrusted. If Frank’s version is correct, Johnathon already knew that Frank had refused to sign the counterpart deeds and was repudiating their terms as not reflecting what had been agreed. If that is right Frank’s repudiation must have meant that from Johnathon’s perspective the temporary trust that seem to have emerged between the brothers on 29 October had disappeared.
4. But unless there was a financial reason for him not to bid, strangely Johnathon took the risk on auction day of not bidding. He missed out on the opportunity to buy Stewart's Farm, apparently calculating on Frank’s case that he would be able to rely upon forging Frank’s signature. This looks very like a reckless gamble on being able to outsmart Frank. The Court does not assess Johnathon to be either a gambler or a forger.
5. Relations between the pair were so poor that had Frank clearly communicated to Johnathon that he had changed his mind about their arrangement before the auction, the Court can confidently infer that Johnathon would have been strongly motivated by their personal rivalry to bid against him at the auction and would readily have done so. Johnathon’s failure to bid is powerful contemporaneous evidence that Frank signed the deed.
Johnathon’s Borrowing Capacity
1. Johnathon did not bid because he believed that to bid would be contrary to the deeds he had signed on 30 October and upon which he was relying in refraining from bidding. Johnathon’s failure to bid was probably to Frank’s financial advantage to an amount of approximately $300,000. Frank had told Johnathon he was prepared to bid to $2.8 million Stewart's Farm. Johnathon was prepared to pay up to about the same.
2. Frank’s case was that the reason Johnathon did not bid is he did not have the financial capacity to do so. Johnathon’s case answered this through Ms Jazzani Calalang, an agribusiness manager at the NAB, a bank. Ms Calalang and the NAB’s records confirm that on 29 October 2020 the NAB conditionally approved a loan to Johnathon to acquire Stewart’s Farm. After receiving information from Johnathon’s accountant in late September 2020 including updated financial statements in early October 2020 and information about the proposed purchase, the NAB approved the loan. The NAB’s approval was partly based upon Ms Calalang’s recommendation that Johnathon was a good moral risk, and that the proposed loan was serviceable from income from his turf business.
3. Johnathon had discussed with the NAB using the conditional finance approval to put in a bid up to $2.4 million. Johnathon had an imperfect memory of his conversations with Ms Calalang and where his and her versions differ the Court accepts her version. But there was some flexibility for him to bid more. He had access to approximately another $250,000 in cash which would have allowed him to bid to at least $2.65 million. Depending how creatively that cash were to be utilised and how he deployed his resources he may well have the capacity to bid up to about $2.8 million making any prospective contest with Frank highly competitive. Lack of finance was not the reason Johnathon did not bid.
4. But Frank’s case overlooks the more fundamental inference from Ms Calalang’s evidence that Johnathon and Rebecca’s application to the NAB supports their case that they were sufficiently interested in bidding at the auction to apply for finance. It is likely to have taken an agreement with Frank and Elizabeth, to dissuade Johnathon and Rebecca from continuing in the course represented by their successful loan application.
Family Text Messages – Early to Mid-November 2020
1. Interactions between family members after the auction also assist in unravelling what happened just before the auction. These interactions took place between Frank and Lilly, Frank and Johnathon and Frank and Jason and point to Frank changing his mind about the terms on which he had secured Johnathon’s silence at the auction.
2. The parties debated the meaning of several text messages sent between Frank and Johnathon, mainly in the month after the auction. At 6:22 pm on the evening of the auction Frank sent a message to Johnathon forwarding a copy of a text message from the agent, Raine and Horne at Richmond, to facilitate payment of the deposit of $250,100. Frank’s covering text message was, “[c]an you pay I [h]ave no money”. Frank is clearly making a joke with this message. Johnathon had interpreted Frank’s text as a request for part payment in advance on the sale of No. 96. Johnathon replies “go dig your tins up”, which Johnathon explained meant that he was not going to give Frank the deposit money.
3. What is not said in the text messages that night and the following day, 1 November, is as significant as what was said in them. The next day Frank sends a text message to Johnathon with a video attached showing a tree being removed with the text “who is pushing the tree out. Who’s got a dozer”. This was apparently a playful reference to organising heavy earthmoving equipment to clear trees on Stewart's Farm. It elicited no reply from Johnathon. But it Frank’s case is correct Frank had just secured Stewart's Farm after refusing to go through with signing the deeds. This meant that Frank would have Stewart's Farm and No. 96, contrary to the discussions the previous day. If this were right, some degree of anxious text messaging from Johnathon would be expected but there is none.
4. Lilly was under the impression from what Johnathon and Frank had said to her on the telephone on 29 October that Frank would be discussing with her a lease of No. 216. That is what happened. The next day, Sunday 1 November Lilly recalls having a conversation with Frank to the following effect to confirm that Frank wanted a formal lease:
Frank: “I want a proper lease.”
Lilly: “That’s fine.”
1. Lilly had the impression that Frank would be contacting a lawyer to prepare a lease. She was ready to sign it when it was presented to her. But Frank never arranged a written lease.
2. Instead, Frank began to surprise Lilly in abrupt text messages commencing on 2 November demanding to buy No. 216, by when intra-family discussion seems to have started about whether Frank might have to pay capital gains tax on the sale of No. 96. Lilly sent a text message to Frank:
“Frank ring the account[ant] to see about you get exception for primary [producer] for stamp duty I read something”
1. Frank then replied:
“Sell me your farm
U can have the rent
For life
From the use.”
1. Lilly is adamant that the subject of Frank buying the property, No. 216, from her was not discussed before the auction. Her behaviour at the time is quite consistent with that account and the Court accepts that evidence.
2. At the same time Lilly began to observe Frank behaving in a very entitled way in relation to No. 216, driving his vehicles across the property and using her shed on the property, all without her permission.
3. Further text messages on Sunday, 1 November 2020 or Monday, 2 November 2020 (the evidence is unclear) between Frank and Jason reveal that Frank became concerned that he may have to pay capital gains tax on the sale of No. 96, a factor he had not previously anticipated. The relevant part of the exchange between himself and Jason was as follows.
Frank: “dad just told me will be paying tax is that true [?]”
Jason: “[What] tax stamp duty”
Frank: “On the profit I make on my farm selling it to Johno”
Jason: “You’ve lived there for two years you shouldn’t have to.”
Frank: “Better not”
Jason: “Tell him cash”
Frank: “Fuck cash, I’ll ask account[ant] tomorrow [accompanied by an extract of accounting advice taken of the Internet]”
Jason: “All dad is a Fukien troublemaker no wonder mum left him”
Frank: “He keeps saying u to pay big tax. He even just ring me now”
1. This conversation continued with Jason giving his accountant’s opinion that because Frank had lived in No. 96 and was now buying another farm that there should not be any CGT liability on selling No. 96. Frank gave a more pessimistic report on Monday 2 November 2020 that his accountant, a Mr Dunn, was saying that Frank selling No. 96was “a big mistake”. Frank then made inconclusive statements consistent with him attempting to renegotiate arrangements that he had made with Johnathon.
2. These text messages indicate that Frank was surprised when he found out after the auction about the possibility of having to pay capital gains tax on the sale of No. 96. This was one of the reasons why Frank became disenchanted with honouring his obligations under the deed.
3. On Frank’s case it was beyond question on 2 November that he and Rebecca were not selling No. 96 to Johnathon and Rebecca. It is inconsistent with his case therefore how he could write about “the profit I make on my farm selling it to Johno”, a transfer he now says he well knew then was not obliged to make.
4. Elizabeth said that after the auction Frank said to her, he needed to do his research and go and see his accountant. She thought that her husband was "too rushed" to see the accountant before the auction. But according to Elizabeth, Frank was ultimately not concerned about the amount of capital gains tax that might have to be paid on the sale of No. 96 if the deal went through.
5. The deed required that a contract for the sale of No. 96 from the defendants to Johnathon and Rebecca would be provided to them before settlement of the auctioned property. But the contract never came. When Johnathon enquired with Frank about the contract for sale of No. 96, he was met with obfuscation wither than direct denial of an obligation to transfer No. 96. Frank’s response throws further light on his state of mind the time.
6. On 4 November 2020 Johnathon sent a text message to Frank with the simple question “where’s my contract”. Johnathon says, and the Court accepts, that this text message is explained by Johnathon anticipating receiving a contract for sale for No. 96 but it had not yet arrived. Johnathon clearly seems to be prompting Frank in this text, which is consistent with his belief that Frank was bound to sell him No. 96. Frank’s interpretation of this text message is as a belated request for a signed counterpart of the deed. But this is artificial and unpersuasive.
7. On 9 November in frustration at not receiving a contract for No. 96, Johnathon sent a text message to Frank saying “Give me Stuart’s [Stewart’s Farm]”. By this time Johnathon was annoyed at the lack of progress on getting a contract on No. 96 and was prepared to renegotiate the deed by taking Stewart’s Farm instead. Without addressing Johnathon’s proposition, Frank fudges, replying to Johnathon merely with videos of equipment on No. 96.
8. On 11 November in response to Johnathon writing, “I want contract” Frank sends more videos of equipment on No. 96, apparently enjoying aggravating Johnathon with opaque memes. Frank’s response here indicates that by this time he was beginning to prevaricate about honouring his and Elizabeth’s obligation to sell No. 96. It was easier for Frank take refuge in ambiguity and not to answer the texted question from Johnathon than to deny he had signed the deed. This is hardly the posture of a man who had taken a principled position on 30 October in refusing to sign the deed because it did not reflect the true agreement.
9. The same day in a different text message conversation in response to Johnathon’s question “why u no do it”, which should be translated as “why have you not given me the contract for No. 96”. Frank once more plays games and texts back, “where is my contract. What u worried about.” This “contract” is a reference to the lease that the deeds assumed Frank would negotiate with Lilly. So much is clear from a slightly earlier text message Frank sent to Johnathon, “Where’s my lease tell mum”, showing that the subject of Lilly providing a lease was on his mind.
Post Auction – Communications with Mr Maait – 5 to 7 November
1. After the auction Frank and Elizabeth gave Mr Maait instructions to complete their purchase of Stewart’s Farm. Johnathon telephoned Mr Maait on 5 November to enquire “where the matter will go from here” and whether Mr Maait was “still acting for Frank”. The best evidence of this phone call is recorded in a memorandum of fees that Mr Maait sent to Frank and Elizabeth two days later and is set out below.
2. Mr Maait met with Frank and Elizabeth on 6 November 2020, principally to discuss the purchase. Perhaps prompted by Johnathon’s telephone call, Mr Maait enquired of Frank and Elizabeth whether he was instructed to do “anything further” in relation to the deed he had prepared and the transaction it contemplated now that they were successful at the auction.
3. If Mr Maait took any written note of instructions from Frank and Elizabeth concerning the disputed deed on 6 November they were not in his file (Exhibit 3) and were not otherwise able to be located. But Mr Maait had a recollection of instructions from Frank on this occasion which the Court accepts as accurate. Mr Maait says that Frank instructed him on that day to the following effect:
“I didn’t sign the deed, and I don’t want you to do anything about it”.
1. Mr Maait has no clear recollection of Frank saying more than this to him about the disputed deed on this occasion. The lack of anything else in the file relating to the meeting on 6 November supports Mr Maait’s recollection that Frank gave instructions to Mr Maait do nothing on this occasion. Mr Maait had other snippets of memory of what Frank said to him on 6 November 2020 including that Frank said to him not to “worry” or do any work in connection with the disputed deed. He followed those instructions and took no further action in connection with the disputed deed.
2. The lack of any further discussion between Mr Maait and Frank and Elizabeth about the disputed deed on this occasion would be significant if Mr Maait definitely had a copy of the deed with Frank’s signature on it. Frank’s failure to call out at this early time that his signature on any then available deed was a forgery would tell heavily against him. But Mr Maait’s record keeping in relation to this file are not sufficiently comprehensive for the Court to be able to infer confidently whether there was a copy of the deed in his file on 6 November. There is no positive evidence that the deed was there, but equally there is no evidence that it was not. One thing which weakly suggests that one counterpart of the deed might already have been in the file is that there was no discussion about obtaining it between Frank and Mr Maait. But finding the deed may not have mattered much if Frank and Elizabeth were not going to proceed with it. But Mr Maait continued to act for Frank and Elizabeth in relation to the acquisition of Stewart’s Farm and the issue of the disputed deed was put to one side.
3. Mr Maait’s recollection of these instructions from Frank to do nothing further about the disputed deed is also supported by the email that he sent the following day to Frank entitled “Your agreement with Johnathon and Rebecca Bugeja”, the email, addressed to Frank and Elizabeth relevantly provided as follows:
I refer to previous correspondence and I note that this matter is now finalised. Accordingly, I attach my tax invoice for your earliest kind attention. I would appreciate your kind remittance at your earliest convenience by direct deposit into the account referred to in the passive voice.
…
I thank you very much for your instructions and I shall be only too happy to hear from you with any questions you might have.
1. Mr Maait sent an invoice with this email to Frank and Elizabeth dated 7 November. The invoice was addressed to Frank and Elizabeth, not to Johnathon and Rebecca. The invoice for professional fees described the events on 29 October as “meeting with client – Frank accompanied by his brother Johnathon”. It then charged for professional fees for “meeting with you and advising and acting on agreement deed with Johnathon and Rebecca Bugeja”. The invoice of professional fees refers to the email sent to the parties with the draft of the disputed deed and gives the following detailed description of the events of 30 October 2020.
“Telephone from Johnathon x 2, asked me to resend the deed which he had not received. I sent again to his Hotmail address and to business one and he acknowledged receipt. He'll get is signed now and send it back to me. I explained options for signing. Was having difficulty with printer.
Telephone from Elizabeth Bugeja - asked how best to sign the deed and where exactly. I advised her best she and Frank sign on the right side of the box when a (sic) their names appear at the bottom of the deed and that they contact Johnathon and his wife and have them signed the same document and then make copies and send me a copy in each of them retain a copy, but if all of that was not feasible, they could sign one document themselves and then Johnathon and his wife can sign the other document can exchange them. I suggested that Frank and Johnathon speak and sort out exactly how they want it done.”
1. Mr Maait's invoice suggests that in his conversation with Elizabeth he encouraged her, on at least one signing scenario he was discussing – not the one that was followed – to "make copies and send me a copy". The residue of that idea may have stayed with Frank and Elizabeth and prompted them to return it to Mr Maait.
2. The invoice then refers to the 5 November telephone call from Johnathon to Mr Maait, referred to above, as follows:
“Telephone from Johnathon B - he advised that his brother Frank was successful at the auction has bought the farm that they spoke to me about. He wanted to know where the matter will go from he[re] and whether I am still acting for Frank. I said I am but I cannot tell you what's going to happen in relation to his agreement with Frank until I meet with Frank and his wife tomorrow. He said he would consult his own solicitor and get them to write to me.”
1. Johnathon’s telephone call to Mr Maait, as recorded here, is important at several levels. There is no discussion between them about obtaining a signed deed which makes it seem more likely that Mr Maait did have a copy of the deed. But leaving aside whether the deed was in Mr Maait’s file at this time, the text of the conversation implies that Johnathon is assuming at this time that the transaction will proceed. He is seeking to know what will happen next. This appears to be generally consistent with Johnathon believing that Frank had signed the deed.
Johnathon’s Solicitors Write to Mr Maait – 17 November
1. Mr Maait heard little else concerning the disputed deed until 17 November 2020. On that day he received an email from Christopher M Edwards Solicitors in the following terms:
Dear Sirs
RE: Bugeja purchase from Bugeja – pursuant to Deed for Proposed Sale
We act for the Johnathon and Rebecca Bugeja in relation to their purchase from your clients, Frank and Elizabeth Bugeja, pursuant to the Deed for Proposed Sale dated 30 October 2020 (copy attached).
Please kindly forward a copy of the Contract for Sale for our review.
We note that pursuant to the Deed for Proposed Sale, your clients have agreed to enter into a Contract for Sale with our clients before completion of their purchase at 214A & 214B Yarramundi Lane, Agnes Banks.
We look forward to receiving the Contract for Sale at your earliest possible convenience.
Kind regards
Lisa Render
1. There is no sign in the Christopher Edwards letter of 17 November that Johnathon or Rebecca anticipated that Frank was going to say that he did not sign the deed. The letter merely maintains an agreement existed and forwards a signed copy.
2. By this time Mr Maait had sent his final invoice to Frank and Elizabeth. But he acted quickly when he received the Christopher Edwards email that arrived at 11:47am that day. At 11:55am Mr Maait forwarded the Christopher Edwards email to Frank and Elizabeth saying to them “I have just received this email and attached deed from Johnathon’s lawyer please let me know your instructions on this as soon as possible. I will not do anything on this until I have your express instructions first.” Mr Maait’s immediate response and his caution would indicate he was conscious that the Christopher Edwards email with the signed disputed deed attached might require re-evaluation of the instructions Frank and Elizabeth had given him at the conference on 6 November. What instructions Frank and Elizabeth gave Mr Maait between 17 November and 20 November 2020 is not clear, but on the latter date, Mr Maait wrote back to Ms Render at Christopher Edwards declaring “I do not hold any instructions to act in this matter”.
3. Mr Maait was not given instructions to take any active role in contesting the validity of the disputed deed including denying that Frank had signed it. This was a very timid response to the information Frank then had: on Frank’s case his brother Johnathon was propounding a version of the disputed deed with a forgery of Frank’s signature.
4. Mr Maait had little memory of Frank’s instructions at this time. But his email response to the Christopher Edwards letter of 17 November is consistent either with Frank not asserting to his own lawyers that his signature had been forged on the disputed deed, or Mr Maait advising Frank that it was better to leave the subject alone. Mr Maait had no memory of Frank asserting to him that Frank’s signature had been forged. But if the signature had been forged this is the time for Frank to deny it firmly with the benefit of Mr Maait’s experience. The dangers of not denying it early were manifest.
5. Apart from the legal wisdom of a denial, it is strange that Frank was not so offended that his brother was propounding a forged document against him, that he did not immediately expose the forgery. There was every advantage to him in revealing the forgery immediately and no credible reason for him not to do so. Instead, Frank meekly withdrew, which was consistent neither with his character nor his case.
6. Nor did Frank directly confront Johnathon or Joseph upon realising that his brother or his father had forged his signature. It is to be expected that such disgraceful conduct would warrant an immediate intra - family rebuke. The Frank that the Court saw in the witness box was not the kind of man who would hold back for a moment from criticising his brother Johnathon. His oral evidence is replete with anti- Johnathon vitriol.
7. When questioned about his silence in the face of his discovery that Johnathon or his father probably forged his signature, Frank claimed he did not raise the alleged forgery with his family members, because "I didn't talk to them anymore". But that is contradicted, for example, by the extensive text messages between them in November 2020. Frank says that he told his solicitor Mr Maait that his signature had been forged. But Mr Maait does not recall that. None of this is the natural reaction of an innocent victim of a forgery.
8. Nothing else happened on this file in Mr Maait’s office for the next eight months and on 17 June 2021 the file was archived in accordance with normal office procedures.
A Conversation at a Family Birthday Party – December 2020
1. About 5 to 6 weeks after the auction The Bugeja family gathered at the Richmond Club for a niece’s birthday party. By this time tensions were high between Johnathon and Frank, because of Frank’s refusal to issue a contract for sale for No. 96. Johnathon and Frank did not talk at this birthday party.
2. But Rebecca made a point of speaking to Elizabeth, nevertheless. Together with Jason’s wife, Seda, they conversed about many subjects. The subject of Stewart’s Farm came up. The Court accepts Rebecca’s evidence that a conversation to the following effect took place between them:
Rebecca: “How’s the [Stewart’s] farm going it looks nice, its all cleared”
Elizabeth: “Frank is stressed, cleaning. I wish we never got the farm. He will hand our farm over, but he just needs time. Oh, we put a lot of work into that house [No. 96] you know.”
Rebecca: “We’re going to pay you for it.”
1. Elizabeth here admits that she and Frank perceived some obligation to hand over No. 96. Such a statement cannot be reconciled with their other evidence that they had no obligation to hand it over because no agreement had been reached with Johnathon and Rebecca. It is also inconsistent with Elizabeth’s own account of her knowledge of her husband’s refusal to sign. It might perhaps be consistent with her changing her mind and expressing a moral obligation to hand over No. 96 after her and Frank’s success in the auction. But she did not explain it this way in her evidence.
2. Elizabeth denies saying to Rebecca that she regretted the decision to purchase Stewart’s Farm and denies signalling to Rebecca that she and Frank would sell No. 96 to Rebecca and Johnathon. But the Court prefers Rebecca’s evidence on this issue.
Frank’s Admissions – November 2021
1. Frank and Jason had several discussions after the auction about what had happened. One of these that Jason remembers occurred in November 2021 in their shared driveway between No. 96 and No. 106. The Court accepts Jason’s evidence that Frank said to him, “I can’t believe I listened to you, mum, and dad. I should never have signed the deed.” And in the same conversation Frank also said, “Oh you guys fucked me over by getting me to sign the deed.” And yet again “I don’t want this farm now. I wish I never signed the deed.”
2. In addition to these admissions by Frank that he had signed the deed, Jason says, and the Court accepts, that apart from the affidavit sworn in these proceedings Frank has never told him [Jason] that: Frank did not sign the deed; that he, Frank, did not do a deal to secure Johnathon not to bid at the Stewart’s Farm auction; or, that Jason and Joseph were lying when they said that they witnessed Frank signing the deed.
Frank Confirms His Source to Lilly – Mid 2022
1. A conversation between Lilly and Frank in about mid-2022 indicates that Joseph was one source of Frank’s information about Lilly selling No. 216 to Frank. The Court accepts Lilly’s evidence that about mid that year Elizabeth was becoming anxious about the conflict between Johnathon and Frank told Lilly that she “needed to fix this”. Mystified why she had any responsibility to fix a problem that she did not perceive was of her creation she telephoned Frank and had the following conversation with him.
Lilly: “Frank, what’s Elizabeth talking about saying I need to fix this?”
Frank: “Dad told me you would sell your property to me.”
Lilly: “He can say what he wants but it’s my property, not his.”
Frank: “He thinks it is his. He said you will sell it to me.”
1. Not only did Joseph float with Frank the idea that Lilly might sell No. 216 to him but Joseph probably also suggested that Frank might be able to buy No. 216. But like all the family, Frank was aware of the hostile relationship between Lilly and Joseph. He knew Joseph could not speak for Lilly. This was a good reason for Frank and Johnathon to make the phone call on the way to Mr Maait’s office for Frank to get some kind of direct assurance that he could use No. 216 in conjunction with Stewart’s Farm.
2. And he did get an assurance that was sufficient for him to proceed. Frank was assured that he could use No. 216. But he was not given an assurance that he could buy No. 216. He was content with what Lilly told him and gave instructions to Mr Maait that were consistent with what Lilly had told him.
The Provenance of the Counterpart Deeds, Exhibit 1 and Exhibit 2
1. These reasons now digress to gather related evidence about the provenance and features of the two counterparts of the deed that became Exhibit 1 (the inkjet counterpart) and Exhibit 2 (the laser counterpart). The distinguishing features of these two counterparts and the respective sources from which they were produced are components of the Court’s analysis of what happened on and after 30 October 2020.
2. Production of the Counterparts. The starting point for analysis is the tender of Exhibit 1 and Exhibit 2. At pre-trial directions hearings the Court asked the plaintiffs and the defendants to bring to Court for tendering at the hearing the original counterpart of the deed that each of the plaintiffs and the defendants then had in their possession. On the second day of the hearing, 19 September 2023, the Court received into evidence the two original counterparts which became Exhibit 1 and Exhibit 2 and placed them in plastic sleeves. The production of these original counterparts to the Court was accompanied by concessions about their provenance.
3. As to Exhibit 1, Mr Moutasallem produced this original counterpart on behalf of his clients, Frank and Elizabeth. He conceded that this was the counterpart deed in Frank and Elizabeth’s possession at the time the Court made its request for production of any original counterparts from the parties. The concession was qualified by the statement that one explanation for it being in their possession was that it may have come to them from Mr Maait’s office. But the concession did not include any statement as to how Exhibit 1 came to be in Mr Maait’s office. That was left for later exploration with Mr Maait.
4. Exhibit 1 may be distinguished from the other original counterpart in two obvious ways: (1) it has no cover sheet and the four pages of the document include the same page, being page 2 of 4, twice, and it omits page 3 of 4, and (2) it is printed on an inkjet printer, as is explained by the handwriting expert, Ms Melanie Holt. Exhibit 1 will continue to be referred to throughout these reasons either as the inkjet counterpart or now as Exhibit 1.
5. Exhibit 1, the inkjet counterpart, was marked by Johnathon during his evidence not long after was admitted on 19 September 2023. Johnathon marked Exhibit 1 with yellow post-it notes to highlight indentations on the paper which he said were consistent with it being signed on the tray on the back of a utility motor vehicle. To assist in confirming the identity of Exhibit 1, those post-it notes were (1) numbered 1, 2, 3 and 4 on the outside of page 4 of 4 with the words handwritten by Johnathon, “lines in different directions” on one of those post-it notes and (2) were not numbered on the inside or topside of page 4 of 4, the signature page.
6. As to Exhibit 2, Mr Jacobs produced this original counterpart of the deed, on behalf of his clients, Johnathon and Rebecca describing it as “our counterpart”. It was noted in the transcript as being the original deed produced by Johnathon and Rebecca.
7. Exhibit 2 may be distinguished from the original inkjet counterpart in two ways: (1) it consists of five pages, having a cover sheet and four subsequent pages, numbered consecutively 1 of 4, 2 of 4, 3 of 4, and 4 of 4, and (2) it is printed on a laser printer, as is explained by the handwriting expert, Ms Melanie Holt. Exhibit 2 will continue to be referred to throughout these reasons either as the laser counterpart, or now as Exhibit 2.
8. Exhibit 2 was also marked with post-it notes later in Johnathon’s evidence. Johnathon placed yellow post-it notes on the front cover sheet numbered 1 of 4 and 1, 2 and 3 and on the back of page 4 of 4, the signing page, post-it notes numbered 4, 5 and 6, are all numbered by hand to indicate dirt stains that Johnathon says are consistent with the document being placed on the back of a utility at the time of signing. On the front of Exhibit 2 was also a post-it note marked with a handwritten “!” mark, which Johnathon says is consistent with an indentation created at the time of the signing on the back of the utility.
9. Mr Maait Surrenders His Stored Counterpart – November 2021. Mr Maait is uncertain about whether, and if so when, he received and held one of the counterparts of the disputed deeds. The uncertainty as to this first emerged when he was served with a subpoena from Christopher Edwards to produce documents from his archived file. Ms Alyce Cooper of Christopher Edwards, acting for Johnathon and Rebecca, had a conversation with Mr Maait in the week commencing Monday 15 November 2021 the content of which she describes in her email to him of 22 November 2021 as follows:
I refer to our telephone conversation last week wherein you confirmed you held the Original Deed that you produced a copy to the Court.
1. Mr Maait replied to Ms Cooper’s email of 22 November 2021 on 23 November 2021 at 8:43 AM, indicating he had ordered the retrieval of the document from storage at Ms Cooper’s request but had been advised by “your opponents” that Ms Cooper did not have their consent to the retrieval, so he cancelled it. At 9:18 am Ms Cooper clarified that she was not asking for the original deed, just a copy, and that she was happy to subpoena the original deed if required.
2. Mr Maait replied to her at 9:39 am, saying “I will order the deed from storage today”. He indicates that it is up to the solicitors then acting for Frank and Elizabeth to agree with Ms Cooper about what happens to the deed when it was retrieved from storage.
3. Then on 24 November 2021 Mr Maait wrote to Ms Cooper saying “I have now retrieved the original deed from storage. I await your and your opponents’ further advices.” This is a contemporaneous document in which Mr Maait declares that he has retrieved the original deed from storage and is a reliable indicator that an original counterpart of the deed was kept by Mr Maait and was retrieved from his storage facility.
4. About two weeks later Christopher Edwards arranged for this original counterpart deed to be collected from Mr Maait’s office. On 7 December 2021 Ms Kylie Ann Esky, an employee of Christopher Edwards collected an original counterpart deed from Mr Maait’s office. Ms Esky signed an acknowledgement on a copy of the deed that was collected and left it with Mr Maait. The acknowledgement is partially legible but after Ms Esky’s name the acknowledgement reads, “hereby acknowledges collecting the original Deed” this is followed by the date 7 December 2021 and Ms Esky’s signature. The copy of the deed upon which the acknowledgement is placed is in the form of Exhibit 1, the inkjet counterpart. This a copy of the counterpart that Mr Maait had available from storage.
5. But a question arises how Mr Maait came to hold Exhibit 1 in storage. Frank denies giving it to Mr Maait. Under subpoena Mr Maait searched his security documents register, which nowhere records the receipt of the original Exhibit 1 inkjet counterpart, or indeed any counterpart, into Mr Maait’s security documents.
6. Mr Maait inferred there was little doubt that at some stage the original inkjet Exhibit 1 signed counterpart of the deed came into his possession, but he has no independent memory of how it was received or of personally receiving either the original or a copy deed from anyone.
7. That original was either given to him by Frank, or by Johnathon, or by a third party on their behalf. The evidence is scant as to exactly what happened. Despite Frank and Elizabeth’s denial, it is more probable that Frank gave it to Mr Maait. In the Court’s view for the reasons which follow it is also possible, but far less probable, that Johnathon took it in and gave it to Mr Maait.
8. Finally, Mr Maait acknowledges receiving a scanned copy of the Exhibit 2 laser counterpart deed with the Christopher Edwards email of 17 November 2020. But he never had the original of the Exhibit 2 laser counterpart.
Inferences from The Counterparts and their Production
1. On Johnathon and Rebecca’s account of events, a counterpart of the deed was left with Frank and Elizabeth, whilst a second copy was taken home to Rebecca for her signature. Johnathon and Rebecca did not see the original counterpart they left with Frank and Elizabeth again until after these proceedings commenced.
2. On Frank and Elizabeth’s version of events, their copy was left on the tray of the utility vehicle, and they did not see it again. On their version Joseph might have picked it up and taken it away. On their version they did not pick up or retain any copy of the deed on 30 October.
3. The form of the original counterparts and the source of their production to the Court fit consistently with Johnathon and Rebecca’s account of what happened on 30 October, as follows.
4. On 30 October 2020, Johnathon printed out the 1.54 pm version of the inkjet counterpart Exhibit 1. Rebecca signed it in their kitchen. Johnathon then took it and drove to Frank and Elizabeth’s house at No. 25, briefly stopping at Joseph’s house to ask Joseph to accompany him to Frank and Elizabeth’s house to witness their signatures.
5. Johnathon and Joseph arrived together at Frank and Elizabeth’s house. Johnathon saw Frank in the shed. Frank then sent his son Michael into the house to ask Elizabeth to come outside. Elizabeth came out to the shed with the laser counterpart, Exhibit 2.
6. The parties then signed both the inkjet and laser counterparts together on the utility tray, as earlier indicated in these reasons, and Joseph witnessed the signatures on both deeds. Johnathon then took home the laser counterpart, Exhibit 2, because it had not yet been signed by Rebecca. Johnathon then had her sign it.
7. Johnathon kept the laser counterpart, Exhibit 2, but by no later than mid-November he gave it, signed by Rebecca, to his own solicitors, Christopher Edwards. They kept the original and scanned it into a PDF document and attached the scanned copy to their email to Mr Maait of 17 November 2020. Christopher Edwards retained Exhibit 2 until it was produced to the Court.
8. Frank kept the inkjet counterpart, Exhibit 1, which Johnathon had brought to the meeting and which had already been signed by Rebecca. Unlike the laser counterpart Exhibit 2 which she had already signed before walking out of the house at No. 25 to greet Joseph and Johnathon, Elizabeth signed the inkjet counterpart Exhibit 1 in front of them.
9. After the signing Frank and Elizabeth kept the inkjet counterpart Exhibit 1, which was already signed by Rebecca and did not have to go back with Johnathon. Frank gave it to Mr Maait probably by no later than the time Frank conferred with Mr Maait on 6 November 2020. This conference certainly gave Frank the opportunity to give Exhibit 1 to Mr Maait, although Mr Maait did not record receipt of Exhibit 1 at that time. The original of Exhibit 1 was collected from Mr Maait in November 2021 and given by Christopher Edwards to the solicitors acting for Frank and Elizabeth, from whose possession it was produced to the Court on 19 September 2023.
10. It is possible but less likely that Johnathon kept both the executed copies and took them back home and he delivered Exhibit 1 to Mr Maait and kept Exhibit 2. But Johnathon was not Mr Maait’s client. And there is no evidence either from Johnathon or Frank that Johnathon was authorised and asked to give anything to Mr Maait on Frank’s behalf. Nor is there any evidence other than something Joseph said that this is what Johnathon did. Frank's case seeks to rely upon parts of Joseph's evidence to suggest that Johnathon delivered the inkjet counterpart of the deed to Mr Maait. But the Court is not confident Joseph was attending to and understood these questions rather than just speculating. There is thus little evidence to displace the Court’s conclusion that Frank supplied the original executed inkjet counterpart Exhibit 1 to Mr Maait in about the first week of November 2020.
11. Both Johnathon and Frank each had much to gain on the afternoon of 30 October from having executed counterpart deeds in their hands, signed by the other. Frank wanted to eliminate a bidder who might cost him an extra $300,000 to purchase Stewart’s Farm at auction. Johnathon wanted to secure No. 96. It is likely that they would have both kept an executed copy of the deed to protect their respective positions.
12. Johnathon still did not really trust Frank. Johnathon had said as much to Frank on the way to Mr Maait’s office on 29 October. The Court accepts Johnathon’s account of the following conversation in the car.
Frank: “What the hell do we need a lawyers for. Don’t you trust me?”
Johnathon: “No I don’t trust you, if you win, you get what you want, I need to make sure I get what I want.”
1. Nor did Frank trust Johnathon. Frank wanted to reduce the competition to successfully bid for Stewart’s Farm, which displaced his reluctance to sell No. 96.
2. But it seems unlikely that Frank would have delivered the inkjet counterpart Exhibit 1 to Mr Maait, if Frank then knew he was going to deny that he had signed it. This consideration raises the possibility that Johnathon may have delivered Exhibit 1 to Mr Maait. But Frank did not expressly deny that he had signed both counterparts until later. It is more likely Frank gave the counterpart to Mr Maait before he decided what position he was going to take on the deed, which he only did when he developed regrets about selling No. 96, which he described as “a very good farm”.
3. Frank and Elizabeth’s version of events has two major remaining gaps that are difficult to bridge. The first major gap on their version is that it is difficult to understand how the laser counterpart, Exhibit 2, by then signed by Elizabeth but not Rebecca, found its way back from the utility on No. 25 to Johnathon, who undoubtedly kept it and gave it to Christopher Edwards. Joseph or Johnathon picking up the deed from the utility tray is implausible. It would require Joseph or Johnathon to have come around to No. 25 and serendipitously stumbled upon the laser counterpart, or surreptitiously found the laser counterpart, even though they had not been present when Elizabeth placed it on the utility tray. And they must have improbably managed to pick it up and take it away from No. 25 either without being noticed by Frank, or without opposition from Frank, who did not see them. Then Johnathon and Joseph must have formulated some devious plan to forge Frank’s, signature. Joseph had been a farmer all his life and came across to the Court as incapable of such Machiavellian calculation.
4. It is also unclear whether Frank was out in the shed when Elizabeth alleges that she brought out the signed deed and put it on the tray of the utility. The evidence is quite contradictory at exactly the point that one might expect it to be, if it were wrong. Elizabeth says Frank was there in the shed on No. 25, and she put the deed down his presence. But he firmly asserted in cross examination when it was suggested that Johnathon and Joseph arrived at No. 25, “No. Must be invisible, because I didn’t see them.” He was quite definite that he did not see Joseph and Johnathon at any time that he saw Elizabeth on No. 25 that day. He had “no idea” if she put it on the utility. He claimed to have gone back to No. 25 only to get some tools. But either way Frank and Elizabeth’s evidence does not explain what happens to the laser counterpart of the deed and how it undoubtedly came into the possession of Johnathon. If it just disappeared it might be thought that it would worry him that a document signed by Elizabeth might be misused. There is no evidence that he ever asked Johnathon or Joseph whether they had seen it, or even that he had looked for it.
5. But even if Joseph’s or Johnathon’s presence late on 30 October at No. 25 can be explained and one of them did indeed find the laser counterpart bearing Elizabeth’s signature, it is difficult to make any sense of the events of the next 24 hours that is consistent with Frank and Elizabeth’s case. Given that he had been so persistent in seeking to have the deed signed on Frank and Elizabeth’s case, Joseph’s likely next reaction upon finding the laser counterpart unsigned by Frank would probably be to take the signed deed straight into Frank and Elizabeth’s house and ask Frank to sign it once more. Secondly, Elizabeth and Frank might be expected to be interested to see who had collected Exhibit 2 from the utility as it had disappeared. But they could not give any account of what happened to it after it was placed on the utility and never asked Joseph or Johnathon or anyone what had happened to a document that was signed by Elizabeth.
6. The second major gap on Frank and Elizabeth’s version was mentioned earlier in these reasons: how did Elizabeth’s signature came to be on the inkjet counterpart, Exhibit 1? Elizabeth's evidence evolved in relation to her whether her signature is on both counterparts of the deed. In her second affidavit, which slightly revised the order of events in her first affidavit, she looked at the inkjet counterpart produced by Mr Maait, Exhibit 1, and said that the mark purporting to be her signature "does not look like my ordinary signature" and she deposed that she did not believe it was her genuine signature. But when she was shown the originals of the counterparts Exhibit 1 and 2 she agreed that the signature on Exhibit 1 "looks like" her signature and she agreed that the signature purporting to be hers on Exhibit 2 was indeed her signature. Based on this evidence, throughout these reasons the Court has reasoned on the basis that both signatures are her genuine signatures.
7. Elizabeth says that she brought Exhibit 2 out and placed it on the utility. In her second revised affidavit she talks about her printing out a second copy of the deed because she thought she may have signed the first copy incorrectly, and she then says she placed her signature on the second copy of the deed that she had printed out. Her evidence can be interpreted as suggesting she may have brought two signed copies of the deed out to the utility. But these were counterparts printed by her. On her version she never saw Exhibit 1, which was the inkjet version printed by Johnathon. She does not admit Johnathon brought anything to her for her to sign. Nor does she say that Joseph had a document signed by Johnathon for her to sign. Frank and Elizabeth’s version is yet to explain how her signature came to be on the inkjet counterpart Exhibit 1 that ended up in Mr Maait’s office. Frank and Elizabeth could never resolve this conundrum at the heart of their case.
8. One footnote should be mentioned at this point. Elizabeth attaches an unsigned copy of the 12:28 PM deed to her first affidavit. She would have had this in soft copy form at the time she saw her affidavit. It may indicate that she had given any signed copy to Mr Maait by that time, although no clear inference can be drawn from her using this unsigned copy in the proceedings.
The Forensic Handwriting Evidence:
1. The Court heard evidence from Ms Melanie Holt, a Forensic Document, Handwriting, and Signature Examiner. Ms Holt’s testimony was thorough and generally apt to be accepted by the Court. But the difficulty in this case is that the other evidence, both direct and circumstantial, strongly points to the contrary of her expert evidence and the Court has reached the view that it should not accept her evidence in the face of the other evidence.
2. Authority makes clear that expert handwriting evidence should be evaluated together with the remaining evidence in the proceedings and should not be given a dominant role to the point where it might lead to a misapprehension of the weight of the remaining evidence, including circumstantial evidence about the genuineness or otherwise of disputed handwriting: Gawne v Gawne (1979) 2 NSWLR 449 at 453 (“Gawne”) see also JD Heydon, Cross on Evidence, 5th Edition, Butterworths, [39105]. Gawne and cases like it illustrate that it may be a departure from sound reasoning to accept expert handwriting evidence as valid and then see whether the other evidence is sufficient to enable a conclusion to be drawn which is contrary to the expert handwriting evidence.
3. Other authorities also warn that expert handwriting evidence should be approached cautiously where the expert does not know the precise physical conditions under which the signature was written: Sumner v Booth (1974) 2 NSWLR 174 (“Sumner”). Here the Court has found that Frank’s signature was probably executed on the tray of a utility. But the precise nature and strength of the backing beneath each signature and between the paper and the utility tray at the time that each signature was written, is uncertain.
4. Ms Melanie Holt gave expert handwriting evidence for Frank and Elizabeth. She provided two reports, the first dated 15 September 2021 and the second is dated 23 March 2022. The explanation for the two reports is that the first report of September 2021 was undertaken with respect to the laser counterpart (Exhibit 2) which was apparently the one that was available at that time as an original to Frank and Elizabeth. The second report of March 2022 was undertaken with respect to the inkjet counterpart (Exhibit 1), which was by then available for analysis by Ms Holt.
5. In preparation for her first report Ms Holt had specimen signatures of Frank and was asked to compare them with the questioned signature “F. Bugeja” on a document which she described as the “questioned deed” which was the five-page laser counterpart, Exhibit 2. Ms Holt concluded in her first report that noting certain limitations and assumptions her opinion was that there is “moderately strong support” for the hypothesis (described by her as “the alternative hypothesis”) that someone other than the writer of the specimen signatures signed the purported “F Bugeja” signature on the questioned deed rather than the primary hypothesis that the writer of the specimen signatures signed the questioned deed.
6. In preparation for her second report, Ms Holt was given several specimen signatures of Frank and was given what she described as the “second questioned deed” which was the four-page inkjet Exhibit 1. Ms Holt concluded in her second report that noting certain limitations and assumptions her opinion was that there is “moderately strong support” for the hypothesis (described by her as “the alternative hypothesis”) that someone other than the writer of the specimen signatures signed the purported “F Bugeja” signature on the second questioned deed rather than that the writer of the specimen signatures signed the second questioned deed.
7. In both reports Ms Holt’s logic was that there were several unaccounted-for pen strokes and re-touches in the questioned signatures that were not observed in the specimen signatures and that the writer of the questioned signatures had misinterpreted the specimen writers motor habits and movements.
8. Ms Holt was not of the opinion in either her first or second report that the writer of the "F Bugeja" signature on Exhibit 1 was attempting to disguise their signature by hiding their normal writing habits. She thought that the nature of the divergences she observed between the specimen and the question signatures on Exhibit 1 and Exhibit 2 did not fit well with the general expectations of attempted disguise. She concluded that the question signature was an overall attempt to look like the specimen signatures but was divergent in significant aspects.
9. But despite her considerable expertise in the professional presentation of her evidence, several factors lead the Court to doubt Ms Holt’s conclusions, quite apart from the strong evidence to the contrary already considered in these reasons. Ms Holt's judgment was always no more than one of "moderately strong support", indicating a degree of probability short of certainty. Parts of her report and her oral evidence tend to support Johnathon and Joseph’s account. The parts of her evidence that are used to undermine their account are attended by uncertainties of various kinds. These matters are discussed below.
10. The same pen for Frank’s Joseph’s and Elizabeth’s signatures? To the untrained eye, there appear to be noticeable similarities in the ink pattern laid down by the pen, or pens, used by the signatures for Frank, Elizabeth, and Joseph on both Exhibit 1 and Exhibit 2. The application of the ink for those signatures is consistent with a common defect in which insufficient ink being applied between two essentially parallel dark lines representing the outer boundaries of the pen’s writing surface but with no ink applied between the dark lines. And there are similar defects that evident in writing of Joseph’s name as a witness on both deeds. Ms Holt notes that Johnathon and Rebecca’s signatures are in a different ballpoint blue pen, which is consistent with their account.
11. Ms Holt said little about this in her reports but she was cross-examined about this feature of the three signatures and the writing of Joseph’s name as a witness. She agreed that they “look similar, and some of the same issues were being observed”. Beyond this she was not prepared to say that the same pen or the same ink were used but look to her to be a “similar kind of ink”. She inferred that more detailed studies would be required, for example to compare ink types, studies that she had not undertaken.
12. Ms Holt’s expert observations currently is consistent with the evidence of the untrained eye that a pen exhibiting the same ink flow defect, possibly a fibre tipped pen was used for the signatures of Frank, Elizabeth, and Joseph on both documents. This is strong circumstantial evidence that they were signed at the same time by Frank and Elizabeth and Joseph, which is consistent with Johnathon’s narrative and inconsistent with both Elizabeth’s story of a separate signing inside the house and Frank’s story of not signing at all.
13. Indentations on the Paper of Exhibit 1 and 2. Ms Holt examined the indentations on the paper, to see if she could see if one page of the deed had been signed over the top of another and left an indentation. Her examination (Exhibit 4) did not show that had occurred. All that can be said about that is that when the documents were signed on the tray of the utility that pages other than the signing pages of each counterpart do not seem to have been used as “backing” behind the page being cited above the checker plate hatching of the tray.
14. But evidence about exactly how the pages of the counterparts were configured when signing occurred is vague, as one might expect. It is one thing for the witnesses to see the signing taking place. It is another for them to take in exactly how many pages were behind the page being signed or whether some of the backing was used for the signing. The Court does not necessarily expect Johnathon or Joseph to have a good recollection of that aspect. Neither of them did but that is not a reflection upon the overall quality and credibility of their evidence. It just means there is very little evidence about this. Ms Holt’s evidence can be accepted that there were very few indentations disclosed by exhibit D. But that does not prevent acceptance of Johnathon and Joseph’s evidence about the signing.
15. Frank’s emotional equilibrium when signing. Ms Holt was not called upon to assess the broader issues in the case that are presented to the Court. But at times her cross examination took her into areas that even were at the invitation of the cross examiner, either speculative or at the very periphery of her expertise. One of these was whether the form of Frank’s signature might have been affected stress that he was under at that time.
16. The Court accepts that on the afternoon of 30 October 2020 that Frank had encountered a pump failure on his property, and he was having great difficulty in rectifying the failure and he was rushing around trying to fix that issue the same time as the deed was being discussed between he and Elizabeth. Apart from evidence such as annoyed text messages that Frank would send – for example in relation to flooding on his farm from Lilly’s place in March 2021 – the Court observed his demeanour. He was a person who could become quite overtly agitated when stressed or frustrated by events beyond his control.
17. Ms Holt agreed that signatures are dynamic and that various factors can influence the way they are written including emotional state of the writer of the signature. But Ms Holt did not seem to think that such agitation would have much effect upon his signature, and she did not think that the differences between the specimen signatures on the question signatures could be explained by the signer being in a rush. In the Court’s view whether Frank’s established state of agitation would influence his signature, must depend upon among other things the degree of agitation was under and whether in his individual case that was likely to influence of his signature, a matter which is very difficult to discern with any accuracy here. That task is especially difficult in this case, because of the uncertainty of the potentially compounding effect of signing on the checker plate tray of a utility vehicle, an uncertain writing surface of the best of times.
18. Checker plate indentations on Exhibit 1 and Exhibit 2. The Court had the benefit of both the descriptions of witnesses and photographs that clearly showed that a steel crosshatching or “checker plate” raised pattern was evident in the steels tray at the rear of the utility in question. This pattern of forging steel may assist in preventing slippage in transit during the transportation of goods. But on at least Johnathon and Joseph’s versions of events both counterparts of the deed was signed over the checker plate.
19. This was another area where Ms Holt’s cross examination invited her to the very periphery of her expertise. There was debate between the parties as to whether Exhibit 1 and Exhibit 2 showed evidence of indentations from being pressed against the checker plate on the utility tray during the signing process. Johnathon was asked to identify on each of Exhibit 1 and 2 where he said that such indentations had occurred. He marked them in support of his case and the post-it notes are still on the original exhibits. He also identified areas where he said that there was dirt on the exhibits.
20. Leaving aside Ms Holt’s evidence for a moment, to the untrained observer there appear to be some minor marks that might be consistent with being placed against checker plate. And it does appear to be some dirt or dust or impurities in places where Johnathon pointed such features out. But no scientific analysis was done comparing the placement of these marks with the known measurement of the checker plate pattern on the utility tray. Ms Holt’s evidence did not support a checker plate pattern being noticeably indented into the paper by the Exhibit 1 and Exhibit 2 such that she could say that either counterpart had been pressed against checker plate when signing occurred. She could not discern such indentations even to her touch. She offered the view that there was no support for the documents being signed on the back of a utility.
21. In the Court’s view there is too much uncertainty about how exactly the counterparts were configured at the time of signing to draw any reliable views as to whether Johnathon is correct, or about what dirt or indentations are present, or whether Ms Holt’s evidence that no indentations were found is a significant feature. So much depends upon how the counterpart was held, how many sheets were below the signing page, how heavily the signing party pressed, whether other documents were underneath the counterpart being signed signing page and similar matters. The Court concludes for these reasons that Ms Holt’s evidence about these features of the two counterparts does not provide a basis to reject Johnathon’s and Joseph’s account of the signing.
22. Elizabeth’s signature and Frank’s pen lifts. Ms Holt noted in her report that Elizabeth’s signature exhibited unusual “pen lifts” (the lifting of the pen in an unaccustomed place during writing), which were not part of Elizabeth’s normal writing habit. This observation would tend to throw a doubt upon whether Elizabeth’s signature was genuine. But the Court accepts in part from Elizabeth’s own evidence that has signatures on both counterparts were hers, as she did not in the end maintain any reservations about them. Thus, as the example of Elizabeth own signatures shows, it is possible for a genuine signature to contain “unusual pen lifts”.
23. Mr Jacobs submits with some force on behalf Johnathon and Rebecca that this considerably diminishes such support that Ms Holt seeks to obtain for her doubts about the genuineness of Frank’s signature from the unusual pen lifts in the form of his signature. The Court agrees that if unusual pen lifts can be reconciled with Elizabeth’s genuine signature, they are unlikely to be decisive in rejecting the genuineness of Frank’s signature. And the quality of the samples provided to Ms Holt are another factor that may well have made this pen lift comparison more difficult.
24. In conclusion on the issue of the expert evidence, Johnathon and Rebecca sought to retain their own handwriting expert, Mr Dubedat. He examined Exhibit 1 and Exhibit 2. But Johnathon and Rebecca did not serve or seek to rely upon rely upon any report from him in their case. The defendants asked the Court to draw a Jones v Dunkel [1959] HCA 8; 101 CLR 298; 32 ALJR 395 inference against Johnathon and Rebecca for their failure to call Mr Dubedat. The inference should be drawn. It can be accepted that Mr Dubedat’s evidence would not have assisted their case and the Court can more confidently draw other available inferences against the plaintiffs’ case by reason of his absence: Payne v Parker [1976] 1 NSWLR 191 at 201 per Glass JA. But that does not change the Court’s conclusions about the expert evidence.
Analysis
1. The Court has concluded that contrary to the position they have taken these proceedings that Frank and Elizabeth signed both counterparts of the deed on 30 October. The question now arises as to what relief they should be granted. The plaintiff’s principal claims are in contract, for misleading and deceptive conduct, in equitable estoppel, and based on other forms of relief.
2. Breach of Contract. Frank and Elizabeth are in breach of the contract represented by the deed. They were the successful bidders at the auction. They were therefore obliged by clause 2 (b) of the deed prior to settlement of the purchase of Stewart's Farm to contract with Johnathon and Rebecca to sell No. 96 under the 2019 standard form Law Society of New South Wales and the Real Estate Institute of New South Wales contract for the sale of land, on the price per acre and price for improvements provided for in clause 2(b)(ii) and (iii) together with Frank and Elizabeth's water licence for No. 96 as provided for in clause 2(b)(iv). In breach of contract, they failed to do this prior to settlement of their purchase of Stewart's Farm. The breach occurred no later than the date of settlement of Stewart's Farm. The precise date of breach may be the subject of further submissions.
3. Frank and Elizabeth’s breach of contract will sound in damages unless the Court grants the remedy of specific performance. Some special considerations relevant here to the grant of the remedy of specific performance are dealt with below.
4. Misleading and Deceptive Conduct. Both Johnathon and Rebecca say that if Frank and Elizabeth had not signed the disputed deed that they would have attended the auction and bid against Frank and Elizabeth for Stewart’s Farm. Johnathon agreed in cross examination that “the only reason [he] abstained from bidding was that [he] had a signed deed”, signed by Frank. Mr Moutasallem used this answer to ground a submission that Johnathon and Rebecca could not maintain a misleading and deceptive conduct or estoppel case, in the alternative to contending that Frank and Elizabeth had signed the disputed deed.
5. That submission was partly effective. Johnathon and Rebecca cannot rely upon some any oral representation by Frank and Elizabeth that they had signed the deed. Johnathon’s answer in cross examination precludes this so far as he is concerned. Moreover, Johnathon trusted Frank so little that he was unlikely to rely upon any statement that Frank made unless it was evidenced in writing under Frank’s signature. That answer does not bind Elizabeth.
6. But Mr Moutasallem’s point was essentially artificial. To the extent that Johnathon and Rebecca’s case relies upon misleading conduct as distinct from oral representations both Johnathon and Rebecca relied upon Frank’s and Elizabeth’s conduct in signing the deed. Their signatures on the deed perfected the contract and are also the physical residue of their conduct. The plaintiffs also relied upon and acted upon Frank and Elizabeth’s actions in signing the two counterparts of the deed.
7. But for Frank and Elizabeth’s conduct in signing the deeds in front of Frank, Johnathon and Rebecca would have bid at the auction. Johnathon and Rebecca’s decision to abstain from bidding at the auction was caused in this case by Frank and Elizabeth’s conduct in placing their signatures on a document.
8. But Frank and Elizabeth’s conduct in signing the deeds was not misleading or deceptive. The conduct represented they were prepared to be bound by the terms of the deed and the Court has found that they were so bound. It is difficult to see how their conduct was in any way misleading. Even if it were misleading, as the Court has upheld the contract made by reason of Frank and Elizabeth conduct there may be no loss attributable to any misleading conduct.
9. Equitable estoppel. Johnathon and Rebecca’s case in equitable estoppel was also put in the alternative to the primary breach of contract case and does not need to be considered now that their contract case has succeeded.
10. Other relief. Johnathon and Rebecca advanced other arguments which the Court no longer needs to consider, as they have succeeded on their primary case. At one point they argued that even if the deed only contained Elizabeth's signature that would bind both Elizabeth and Frank. But she is not signing as his agent and the Court did not have to explore the merits of this argument any further.
11. Johnathon and Rebecca argue that they could take advantage of what was described as the "doctrine of benefits and burdens", that a person to take the benefit of the deed is bound by the even though they may not have executed it especially where the solicitor has approved the form of the deed: Lady Naas v Westminster Bank Ltd (1940) AC 366, at 373. But once again was not necessary for the court to consider this alternative case.
The Terms of Specific Relief
1. Johnathon and Rebecca and Frank and Elizabeth all signed the deed upon the assumption that Frank and Elizabeth would be able to obtain a lease of No. 216 from Lilly after Johnathon gave up his lease over that property. The only part of No. 216, which was to be re-leased to Frank and Elizabeth, was the agricultural area which at the time of the agreement was being leased by Johnathon. The arrangement in the deed did not extend to leasing the residence on No. 216.
2. Two questions arise: whether any grant of specific performance should be conditional upon Lilly granting a lease of No. 216 to Frank and Elizabeth for a term, so that they can use and enjoy that property as the terms of the deed contemplated; and if so, what should be the term and covenants of that lease.
3. The applicable law may be shortly stated. If a decree of specific performance is to be made, it must operate fairly and must not occasion hardship or oppression: J.D. Heydon, M.J. Leeming and P.G. Turner, Meagher Gummow and Lehane’s Equity Doctrines and Remedies, 5th Editon LexisNexis Butterworths Australia 2015 [20-095] – [20-100]. The applicable law is concisely stated for present purposes by Meagher Gummow and Lehane in [20-095] – [20-100] (omitting case references) as follows:
Unfairness or hardship
Even if there is no fraudulent or innocent misrepresentation, or mistake, sufficient to justify rescission of the contract, the court is not bound to decree specific performance of every contract it will not rescind. It may refuse a decree of specific performance on the ground of hardship or unfairness.
A defence of unfairness does not rely upon the proposition that the contract to be enforced is, in a colloquial sense, unfair to the defendant. Thus, it is not sufficient, in order to make out the defence, for it to be established that the consideration was, from the defendant's point of view, greater or less, or the terms of the contract more onerous, than a person of reasonable prudence would have agreed to.
…
Unfairness is unfair, or unconscionable, conduct on the part of the plaintiff. Inadequate consideration or unbusinesslike terms may be evidence of, but do not necessarily constitute, unfairness. Adverse movement in the value of the land since the date of the contract is not, of itself, a material factor founding a defence of hardship. It was held not to be a bar to specific performance of a contract to buy land on which the purchaser hoped to build that he could not get a necessary third party to consent to that course. The same was true of a large increase in the value of the property sold between contract and conveyance, and of financial inability to complete in isolation. It seems that where the price has been fixed pursuant to a valuation which is erroneous (albeit there has been no fraud or collusion) this circumstance may afford a defence to a suit for specific performance.
…
Unfairness and hardship contrasted
A defence of unfairness focuses on the conduct of the plaintiff. It must follow from the nature of the defence that the unfairness which is relevant must arise from matters which occurred before or at the time when the contract was entered into. A defence of hardship, on the other hand, focuses on the effect upon the defendant of a decree of specific performance. Normally, hardship occasioned by the occurrence of commercial risks for which the plaintiff is not responsible will not suffice. But at least in exceptional circumstances, specific performance may be refused although the hardship to the defendant was not contributed to by any fault of the plaintiff. One would therefore expect the hardship which is relevant to be hardship as at the time the decree is made, and that events occurring after the contract was entered into would be relevant. Despite suggestions to the contrary, it seems reasonably clear that Spry is right in concluding that the balance of authority bears out those expectations. It is not, of course, sufficient for a defendant to show that the bargain in the circumstances has turned out to be a hard one. The relevant hardship to be identified is the hardship involved in a decree of specific performance as opposed to an order for common law damages, not the hardship flowing from the enforcement of the contract at law. The defendant must show that a decree of specific performance would impose hardship amounting to oppression outweighing the inconvenience to the plaintiff if the plaintiff is left to the remedy in damages. Specific performance must be ‘highly unreasonable’.
1. Both unfairness and hardship are relevant in considering the grant of a decree of specific performance in this case. As to questions of unfairness, which are focused upon the conduct of a plaintiff seeking the remedy of specific performance, here Johnathon overcame Frank's doubts about this transaction by encouraging him to believe that Frank and Elizabeth would be able to use No. 216 in conjunction with their purchase of Stewart's Farm. Johnathon facilitated this by offering to vacate his existing lease over No. 216 and representing that as he understood it Lilly was prepared to make No. 216 available to Frank and Elizabeth, as she had to Johnathon and Rebecca. In the Court's view it would be unfair in the sense established in authority for Johnathon and Rebecca now to have Frank and Elizabeth specifically perform to their bargain without their representation of Lilly's willingness to lease No. 216 being made good.
2. Questions of hardship are also relevant. Looking at Frank and Elizabeth's position at the time that a decree of specific performance is being contemplated, compared with an award of damages at common law, the lack of Lilly's land, No. 216, being available to Frank and Elizabeth would impose hardship amounting to oppression on Frank and Elizabeth. The flexibility that they would have had in being able to rotate crops and being able to leverage the economies of scale from combining Stewart's Farm and No. 216, justified their release of the other source of their agricultural flexibility, No. 96, to Johnathon and Rebecca.
3. As to how long the lease should be, neither the parties’ discussions nor the deed specified how long a lease Frank and Elizabeth should have from Lilly. The limited available evidence suggests that a substantial period is reasonable and was contemplated by both parties, although not discussed between them.
4. The Court asked Frank whether as a vegetable farmer he needed security of tenure to put in infrastructure and invest in fertiliser and pasture improvement on No. 216, to find out how far into the future he needed to plan to be able to use and enjoy No. 216 as an integrated part of his business. In response to this question Frank said that he would probably "want a 20-year lease". He explained he needed to rotate crops and that you can't grow the same crop on the same paddock all the time and that the need to rotate across a larger area of land meant a farmer of Stewart’s Farm and No. 216 needed over several years to have access to the larger combined area of property to obtain the benefits of crop rotation.
5. When asked why he would need a lease for 20 years rather than 10 years or 5 years, he gave an answer that was not grounded in crop rotation but he said he nominated 20 years because "that's when I'll retire". The Court corrected him and said that it was less interested in his retirement than the economics of reasonably using and enjoying the property as a vegetable farm.
6. He then explained that he liked to "do things properly", cleaning all the drains, levelling the property, investing in taps and hydrants and new pumps, and for a short-term tenure of a year or so, it is simply not worth undertaking that kind of that investment. He said that putting in a reliable new water pipeline, new taps and new pumps was necessary because even short-term spillages of water, can kill crops, so the functionality of equipment is very important. He said it is also necessary to contour the land to avoid excessive run-off and to put in a sediment pond to avoid inundating neighbouring properties. He said that the overall financial investment that he said would be required, to install a main pump, settlement pond, another pump on the dam and other ancillary items would be about $200,000, not counting his own labour and without crediting the use of existing machinery. Frank made clear that the house on No. 216 was not needed for agricultural purposes but that the area represented about 12 workable acres and about 3 acres of waste.
7. A decree of specific performance conditional upon Lilly granting Frank and Elizabeth a lease of 20 years would be too long. Frank would only justify that on the basis that it would take him to retirement. Five years seems too short to repay the substantial investment required to provide for the water and landscaping infrastructure that would be required to take full advantage of the wider combined area for crop rotation provided by a lease of No. 216. Doing the best it can on the available information, in the Court’s view making specific performance conditional upon the grant of a lease of 10 years is appropriate to satisfy the demands of fairness and the avoidance of hardship to Frank and Elizabeth in moulding relief in this case. Should there be disagreement about the other terms of such a lease the Court can settle them. But there seems no good reason to depart from ordinary commercial terms acceptable in the market for the lease.
8. But the basis of this should be clear. The Court cannot bind Lilly who was not a party to these proceedings. But if Lilly is prepared to offer a 10 year lease on suitably commercial terms then specific performance will be granted. If she is not then a further hearing will be required to see whether specific performance could be granted based upon any other adjustment of the interests of the parties, or whether the plaintiff should be left to their remedies at common law.
An Inquiry as to Damages
1. There will probably need to be an inquiry as to damages. Johnathon and Rebecca say that the house on No. 96 was tenanted, producing a rental return of approximately $450 per week at the date of the auction. Johnathon and Rebecca say that they were relying upon receiving this rental income had the property been transferred to them. Frank and Elizabeth should probably give an account of rents that they have received from No. 96 since the date they would have been required to settle on the sale of No. 96.
2. Johnathon and Rebecca seek to identify other claimable losses, which they say have resulted from Frank and Elizabeth’s refusal to perform the deed. But whether such losses are foreseeable consequences of the breach of contract which the Court has found, has not yet been argued. For example, Johnathon says that he harvested 5 acres of turf from Stewart’s Farm shortly after the auction with the intention of transplanting it to No. 96. As possession of No. 96 was not transferred, Johnathon says that the harvested turf could not be replanted on No. 96 and apparently could not be marketed, causing losses to the value of $120,000. He also says that he and Rebecca had plans to plant and harvest turf on No. 96 as part of their business. Whether these claimed losses were suffered by Johnathon alone or Johnathon with Rebecca or Johnathon with Jason is presently unclear.
3. If claimable such losses would need to be offset against interest on the money consideration payable to Frank and Elizabeth under the deed and any other transaction costs which Johnathon and Rebecca have avoided in the meantime due to lack of performance of the deed.
4. And Johnathon and Rebecca claim to have relied on the deed and in consequence to have taken decisions to their economic detriment. An inquiry as to damages will require the Court to consider whether the damages that the plaintiffs claim are caused by the defendants’ breaches of contract and within the scope of loss and damage foreseeable at the time of making this contract. These matters have not yet been considered.
5. But it is highly desirable to reduce further disputation within this family and to try and reduce further legal costs associated with assessing damages, for there to be a mediation of all remaining loss and damage issues before such an inquiry as to damages takes place. The Court will explore this at the first directions hearing after these reasons are published.
Conclusions and Orders
1. The plaintiffs have been successful. An order for costs on the ordinary basis in the plaintiffs’ favour would normally follow the event. But one or other party may wish to apply for a special costs order. Unless such an application is made returnable at the next date for directions, then the Court will order that the defendants pay the plaintiffs’ costs the proceedings up to the grant of relief today.
2. For these reasons Court makes the following declaration, orders, and directions:
1. NOTE that the parcels of land affected by these orders are described within these orders in the same manner as they are in the judgment published today with these orders;
2. DECLARE that the plaintiffs are entitled to purchase from the defendants the land, house and shed, comprised in the certificate of title for No. 96 upon the terms set out in the deed executed by the plaintiffs and the defendants on 30 October 2020 (“the Deed”);
3. ORDER that the defendants specifically perform and carry into effect the Deed by transferring No. 96 to the plaintiffs upon the terms provided for in the Deed;
4. STAY order (3) until Lilly Bugeja, the mother of the first plaintiff and the first defendant, grants a lease to the defendants of the agricultural land and improvements comprised in the certificate of title for No. 216 for a period of at least 10 years upon terms that are otherwise reasonably acceptable in the market for agricultural land in the district (“the lease terms enabling specific performance”);
5. ORDER the defendants to submit to take a lease from Lilly Bugeja upon the lease terms enabling specific performance;
6. GRANT liberty to the parties to apply in the event that the defendants and Lilly Bugeja cannot agree by 31 August 2024 upon the form of the lease terms enabling specific performance for the Court to settle the terms to which the defendant should submit, but without binding Lilly Bugeja to offer such terms;
7. ORDER that the parties settle an agreed list of issues for the holding of an inquiry as to damages on the basis either,
1. that Lilly Bugeja does not offer a lease of No. 216 to the defendants and
1. the stay in order (4) is made permanent, or
2. the stay in order (4) is lifted but compensation is paid to the defendants for the absence of a lease on terms enabling specific performance of the Deed;
1. that Lilly Bugeja agrees to a lease of No. 216 upon lease terms enabling specific performance of the Deed and specific performance of the Deed takes place;
1. GRANT liberty to apply to the parties until the making final orders in these proceedings to vary the form of these declarations and orders better to give effect to the Court’s reasons for decision published today and to incorporate matters not yet considered;
2. ADJOURN these proceedings for directions to 24 September 2024 at 9:30 AM, when the Court will consider making orders for the mediation of the balance of the issues in these proceedings before they are determined by the Court;
3. RESERVE costs but NOTE that on 24 September 2024
1. the defendants will be required to show cause why they should not pay the plaintiffs’ costs of these proceedings on the ordinary basis, and
2. either party may apply for a special costs order.
**********
appendix
Amendments
01 August 2024 - Formatting and typographical errors corrected;
Coversheet updated - Cases Cited and Texts Cited.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 30,493 |
nsw_caselaw:190fde1a222a2bcbd8f4957f | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185 | https://www.caselaw.nsw.gov.au/decision/190fde1a222a2bcbd8f4957f | 2024-08-04T23:50:12.664546+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Aidzan Pty Ltd (in liq) v K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2024] NSWCA 185
Hearing dates: 4-5 December 2023
Date of orders: 30 July 2024
Decision date: 30 July 2024
Before: Ward P at [1];
Meagher JA at [2];
Adamson JA at [132]
Decision: (1) Dismiss the appeal.
(2) Allow the cross-appeal.
(3) Set aside orders 6 and 7 made by Black J on 4 July 2023 and instead order:
(a) that Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd pay to K. & A. Laird (N.S.W.) Pty Ltd (in liq) the amount of $2,094,545 in rent paid to Aidzan Pty Ltd (in liq) in relation to the Sunnyholt Property for the period from 1 July 2005; and
(b) that Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd pay to K. & A. Laird (N.S.W.) Pty Ltd (in liq) interest, pursuant to s 100 of the Civil Procedure Act 2005 (NSW), on the sum of $2,094,545 in the sum of $1,889,254.70.
(4) Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd as appellants/cross-respondents pay K. & A. Laird (N.S.W.) Pty Ltd (in liq) as respondent/cross-appellant’s costs of the appeal and cross-appeal.
Catchwords: LIMITATION OF ACTIONS – breaches of fiduciary duty by director – claims by company for equitable relief against director and associated third parties – when company “first discovers” facts giving rise to claim for purposes of Limitation Act 1969 (NSW), s 47(1)(e) – principles applicable to attribution of director’s knowledge to company – whether those principles involve application of general rule in favour of attribution subject to “fraud exception” turning on whether company received benefit from director’s conduct – director’s knowledge of circumstances of breaches not attributed to company where attribution sought to defeat company’s claims
EQUITY – equitable remedies – where director misappropriates company funds – where director subsequently characterises payment to him of company funds as a “loan” – whether later payment by director to company should be treated as reducing amount of equitable compensation to which company entitled – not established that later payment when made was to be applied in reduction of “loan”
Legislation Cited: Civil Procedure Act 2005 (NSW), s 100
Limitation Act 1969 (NSW), ss 11, 14, 15, 47, 55
Cases Cited: All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Ltd (No 2) [2021] FCA 782
Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294
Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479; [1987] HCA 7
Barnes v Addy (1874) LR 9 Ch App 244
Beach Petroleum NL v Johnson (1993) 43 FCR 1; [1993] FCA 392
Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408
Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250
Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1
Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd [2022] NSWCA 160
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25
Canadian Dredge & Dock Co Ltd v The Queen [1985] 1 SCR 662
Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15
In re Hampshire Land Company [1896] 2 Ch 743
In the matter of K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2022] NSWSC 510
Kennedy v Green (1834) 3 My & K 699
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Moulin Global Eyecare Trading Ltd (in liq) v Commissioner of Inland Revenue (2014) 17 HKCFAR 218; [2014] HKCFA 22
Singularis Holdings Ltd (in liq) v Daiwa Capital Markets Europe Ltd [2020] AC 1189
Stone & Rolls Ltd (in liq) v Moore Stephens (a firm) [2009] 1 AC 1391
Texts Cited: P Watts, ‘Imputed Knowledge in Agency Law – Excising the Fraud Exception’ (2001) 117 LQR 300
P Watts and F Reynolds, Bowstead & Reynolds on Agency (22nd ed, 2021, Sweet & Maxwell)
Category: Principal judgment
Parties: Aidzan Pty Ltd (in liq) in its own capacity and in its capacity as trustee of the Peter Laird Trust and the Peter Alan Laird Property Trust (First Appellant/First Cross-Respondent)
Nazdia Pty Ltd in its capacity as trustee of the Aidzan Superannuation Fund (Second Appellant/Second Cross-Respondent)
Peter Alan Laird (Third Appellant/Third Cross-Respondent)
K. & A. Laird (N.S.W.) Pty Ltd (in liq) (Respondent/Cross-Appellant)
Representation: Counsel:
D Studdy SC and J Nixon (Appellants/Cross-Respondents)
A Leopold SC and J Tobin (Respondent/Cross-Appellant)
Solicitors:
Ashurst (Appellants/Cross-Respondents)
Andersen Legal and Consulting Pty Ltd (Respondent/Cross-Appellant)
File Number(s): 2023/222134
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Equity – Corporations List
Citation: [2023] NSWSC 603
Date of Decision: 7 June 2023
Before: Black J
File Number(s): 2020/351691
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The respondent, K. & A. Laird (N.S.W.) Pty Ltd (in liq) (KAL), operated a steel merchant business. It brought claims against its sole director, Peter Laird (Peter, the third appellant), for breaches of fiduciary duty and against two companies controlled by Peter, Aidzan Pty Ltd (in liq) (first appellant) and Nazdia Pty Ltd (second appellant), for knowing receipt.
The critical issue was whether KAL’s claims were statute barred. This raised a question of attribution: namely, when was KAL, a company, taken to have first discovered the facts giving rise to its claims (Limitation Act 1969 (NSW), s 47(1)(e)). Applying von Doussa J’s formulation of the “fraud exception” in Beach Petroleum NL v Johnson (1993) 43 FCR 1 at [22.34], the primary judge rejected the appellants’ limitation defence in respect of KAL’s claim to the proceeds of sale of a property (the Sunnyholt Trust claim); allowed the defence in respect of KAL’s claim for recovery of rental payments (the Sunnyholt Surplus Rent claim); and rejected a similar defence turning on the application by analogy of ss 15 and 55(1) in respect of KAL’s claim for misappropriation of funds (the Superannuation Payment claim). His Honour did so treating each claim separately and by asking whether Peter had acted “totally in fraud” of KAL so that “by design or result” it had not benefitted from his conduct. The correctness of that approach is the subject of grounds of appeal 1 to 7 and also of KAL’s cross-appeal.
A further issue arose as to the quantum of the Superannuation Payment claim. In 2007, Peter caused KAL to pay $1 million to his superannuation fund. He subsequently treated that payment as a “loan” made by KAL to him and claimed to have made payments of $100,000 and $680,000 in reduction of that “loan”. Only $100,000 was reflected in KAL’s financial statements. Although it was accepted $680,000 had been paid by Peter to KAL, the primary judge was not satisfied that it was paid in further reduction of the “loan”. That conclusion is the subject of ground of appeal 8.
The Court (Meagher JA, Ward P and Adamson JA agreeing) dismissed the appeal and allowed the cross-appeal, holding:
As to the Sunnyholt Trust claim:
(1) Where a company brings a claim against a director for fraud or breach of duty, or against companies controlled by that director in respect of their involvement in the director’s fraud or breach of duty, the knowledge of that director will not be attributed to the company as or in support of a defence to the company’s claim: [1] (Ward P); [68]-[71] (Meagher JA); [136] (Adamson JA).
Beach Petroleum NL v Johnson (1993) 43 FCR 1; [1993] FCA 392, explained.
Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408; Moulin Global Eyecare Trading Ltd (in liq) v Commissioner of Inland Revenue (2014) 17 HKCFAR 218; [2014] HKCFA 22; Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1; Singularis Holdings Ltd (in liq) v Daiwa Capital Markets Europe Ltd [2020] AC 1189; All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Ltd (No 2) [2021] FCA 782, considered.
Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd [2022] NSWCA 160, distinguished.
(2) That outcome can be explained by reference to the particular application of a “fraud exception” to a general rule as to attribution. The preferable approach is to recognise that the rules and principles as to the attribution of corporate knowledge in a given case depend on the nature of the claim and purpose for which that attribution is sought: [1] (Ward P); [70]-[72] (Meagher JA); [136] (Adamson JA).
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500; Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1; Singularis Holdings Ltd (in liq) v Daiwa Capital Markets Europe Ltd [2020] AC 1189; All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Ltd (No 2) [2021] FCA 782; Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294, considered.
(3) Separately, as a matter of construction, s 47(1)(e) of the Limitation Act could not be satisfied by the attribution of Peter’s knowledge to KAL. The fixing of the limitation period from the time when a plaintiff “first discovers” or could reasonably have discovered the relevant facts assumes that thereafter the plaintiff, in the case of a company by its officers or agents, has the opportunity to determine in its own interests whether or not to commence proceedings. Where the prospective defendant is the only director or agent of the company with actual knowledge of the relevant facts, there is no rational reason to believe that defendant would cause proceedings to be commenced against themselves: [1] (Ward P); [73]-[78] (Meagher JA); [136] (Adamson JA).
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25, referred to.
(4) Accordingly, in respect of the Sunnyholt Trust claim, time did not commence running until the appointment of KAL’s liquidator in August 2018: [1] (Ward P); [78] (Meagher JA); [136] (Adamson JA).
(5) Whether the knowledge of a director will be imputed to a company is to be answered by reference to the context, with particular regard to the identity of the plaintiff and the defendant in the proceedings and the nature of the claim. The law has a concern to prevent a party from profiting from his or her own breach. That principle is of general application and informs the authorities recognising that, in a claim such as the present, it would be wrong and illogical to attribute the director’s knowledge of the wrongdoing to the company: [1] (Ward P); [133]-[136] (Adamson JA).
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15, considered.
As to the Sunnyholt Surplus Rent claim:
(6) The success of the appeal in respect of this claim, and of the cross-appeal, depended on the outcome of the question as to attribution of Peter’s knowledge to KAL. For the above reasons, the entirety of KAL’s claim to the Sunnyholt Surplus Rent was brought within the time prescribed by s 47(1). Judgment for KAL on that claim should be increased from $1.2 million to $2,094,545: [1] (Ward P); [83]-[84], [87], [89] (Meagher JA); [136] (Adamson JA).
As to the Superannuation Payment claim:
(7) The language used in Limitation Act, s 55(1) is relevantly the same as that used in s 47(1)(e). Accordingly, for the above reasons, Peter’s knowledge as to the circumstances of the Superannuation Payment claim was not to be attributed to KAL, with the result that the claim was not barred by analogy: [1] (Ward P); [96] (Meagher JA); [136] (Adamson JA).
(8) The primary judge did not err in not being satisfied that the $680,000 payment was made in reduction of the $1 million “loan”: [1] (Ward P); [124]-[128] (Meagher JA); [136] (Adamson JA).
JUDGMENT
1. WARD P: I agree, broadly for the reasons Meagher JA has given, with the orders proposed by his Honour. I also agree with the observations of Adamson JA.
2. MEAGHER JA: The respondent company, K. & A. Laird (N.S.W.) Pty Ltd (KAL), made claims against its sole director, Peter Laird (Peter, the third appellant), and two companies controlled by him for breaches of fiduciary duty and knowing receipt of property. The principal question in the appeal is whether Peter’s knowledge of the facts giving rise to those claims was to be attributed to the company (KAL) for the purpose of determining when the company “first discovers” them (see Limitation Act 1969 (NSW), s 47(1)(e)). The primary judge held that attribution turned on the application of the “fraud exception” as formulated by von Doussa J in Beach Petroleum NL v Johnson (1993) 43 FCR 1; [1993] FCA 392 at [22.34] (which is extracted at [52] below). If that exception was not engaged, Peter’s knowledge was to be attributed to KAL and in consequence would trigger the running of that 12-year limitation period.
3. The limitation defences of Peter and his two associated companies were rejected by the primary judge (Black J) in respect of the company’s claim to the proceeds of sale of a property; allowed in respect of the company’s claim for recovery of rental payments; and rejected in relation to the company’s claim for the misappropriation of its funds (K. & A. Laird (N.S.W.) Pty Ltd (in liq) v Aidzan Pty Ltd (in liq) [2023] NSWSC 603). In relation to this last equitable claim, Peter and an associated company relied on the application by analogy of s 15 of the Limitation Act; and in reply KAL relied on the suspending provision in s 55(1).
4. In so concluding, his Honour asked in relation to each of those claims, in accordance with von Doussa J’s formulation of the “fraud exception”, whether Peter had acted “totally in fraud” of the company so that “by design or result” the company had not benefitted from his conduct. If the company had benefitted, the “fraud exception” was not engaged.
5. It is to be noted at the outset that the focus of the argument before the primary judge was whether KAL had obtained a benefit from Peter’s conduct. That argument necessarily assumed that the “fraud exception” as formulated by von Doussa J applied, notwithstanding that the purpose of the attribution sought was to provide a limitation defence to a company’s claim against its director. For the reasons which follow, and having had the benefit of argument on the English and Australian decisions in this Court, it is plain that that approach was not correct. The rules and principles of attribution to be applied depend on the nature of the claim in issue and purpose for which attribution is sought or to be made. Those rules and principles do not have as their starting point a single general rule in favour of attribution which is subject to an inflexible “fraud exception”.
The parties
1. Since the 1950s, KAL operated a family steel merchant business from premises in Blacktown, NSW. It was placed in voluntary liquidation by its members in 2018.
2. Throughout the 1980s, the managing director of KAL was Henry Alan Laird (Alan). KAL had two other directors: Alan’s wife, Dorothy Laird (Dorothy), and their son, Peter. Upon Alan’s death in 1987, Peter became managing director. Dorothy remained a director until her death in 2009, at which point Peter became KAL’s sole director. As managing director, Peter operated the business on a day-to-day basis to Dorothy’s “exclusion”, her role being limited to signing documents on an as-and-when-needed basis (J[63], [207]).
3. The ultimate holding company of KAL is Alan Laird (Holdings) Pty Ltd (ALH), the shares in which were and remain held by various members of the Laird family. A consequence of this ownership structure was that Peter could not cause an ordinary resolution to be passed at a meeting of ALH’s members without the support of at least one of his siblings.
The proceeding below
1. The underlying proceeding was commenced by KAL’s liquidator in December 2020 against Peter, Aidzan Pty Ltd (in liq) (Aidzan, the first appellant) and Nazdia Pty Ltd (Nazdia, the second appellant). Aidzan was sued in its own capacity and in its capacities as trustee of the Peter Laird Trust and the Peter Alan Laird Property Trust (PAL Property Trust). Nazdia was sued in its capacity as trustee of the Aidzan Superannuation Fund, having replaced Aidzan as trustee on 18 February 2019.
2. Three of the claims advanced remain relevant in the appeal. The first and second relate to a property on Sunnyholt Road, Blacktown (Sunnyholt Property). KAL claimed that Peter breached his fiduciary duty owed to KAL by diverting the opportunity to purchase that property from KAL to Aidzan, as trustee of the Peter Laird Trust, of which Peter was the sole beneficiary. On that basis KAL asserted beneficial ownership in the net proceeds of sale of the Sunnyholt Property (the Sunnyholt Trust claim) and also sought to recover $2.4 million in rent which had been paid by KAL to Aidzan from 1 July 2005 (the Sunnyholt Surplus Rent claim). The third claim was that Peter breached his fiduciary duty as a director of KAL in causing KAL to pay $1 million to the Aidzan Superannuation Fund in 2007, purportedly as a contribution by Peter (the Superannuation Payment claim).
Issues on appeal
1. Ground 5 of the notice of appeal was abandoned. With the exception of ground 8, which is directed to the quantum of the Superannuation Payment claim, the critical question is whether Peter’s knowledge of his own breaches of duty was to be attributed to KAL so as to commence the running of the relevant limitation period at the time those breaches occurred, thereby providing the appellants with a defence to some or all of KAL’s claims.
2. As to the Sunnyholt Trust claim, the appellants by grounds 1 to 3 contend that in applying the “fraud exception” the primary judge erred in treating Aidzan’s acquisition of the Sunnyholt Property separately from KAL’s subsequent occupation of the property and payment of rent. It is said that, in the circumstances viewed as a whole, KAL received a partial “benefit” from Peter’s conduct, with the result that the “fraud exception” did not apply to any of the claims; and with the further result that the Sunnyholt Trust claim was statute barred.
3. Ground 4 concerns the Sunnyholt Surplus Rent claim and is contingent upon the appellants’ success on grounds 1 to 3. KAL leased the Sunnyholt Property from Aidzan in June 1990 for a term of four years, with an option to renew (Sunnyholt Lease). The rent was applied in reduction of a loan facility taken to enable Aidzan to complete the acquisition of the property. That loan facility was fully repaid by 1 July 2005. The appellants contend that if KAL’s claim to a beneficial interest in the proceeds of sale is statute barred then there is no basis for recovery of the rent, KAL having had no relevant interest in the property.
4. Conversely, by ground 1 of its amended notice of cross-appeal, KAL contends in relation to the application of the limitation provisions that Peter’s knowledge was not to be attributed to it. If it was successful on that ground, KAL was entitled to recover compensation for the rent paid between 1 July 2005 and 11 December 2008, an additional $894,545.
5. As to the Superannuation Payment claim, by grounds 6 and 7, Peter and Nazdia challenge the primary judge’s finding that KAL’s entitlement to equitable compensation was not barred by the application by analogy of s 15 of the Limitation Act. Alternatively, by ground 8, they submit that the primary judge ought to have treated a sum of $680,000 paid by Peter to KAL on 29 June 2012 as paid in reduction of the amount for which equitable compensation was sought.
6. KAL has also filed a notice of contention. By ground 1, it maintains that Peter’s knowledge cannot be attributed to KAL because in entering into the relevant transactions Peter was acting in his capacity as a director of Aidzan as purchaser and borrower and not within the scope of his authority as a director of KAL. By grounds of contention 2 and 3, it says that, regardless of whether Peter’s knowledge is attributable to KAL, the relevant knowledge was not that of KAL but rather that of its liquidator, appointed in 2018. Finally, by ground of contention 4, KAL says that its claims were brought within the 12-year limitation period because the duties which Peter breached were continuing duties, the breach of which also continued beyond 12 December 2008.
Claim to proceeds of sale of Sunnyholt Property (Grounds of appeal 1 to 3)
Undisputed findings of fact
1. In 1989, Peter decided that KAL should relocate its steel operations to the Sunnyholt Property to give it access to undercover storage. Peter initially intended for KAL to acquire the Sunnyholt Property but was advised by Mr Burges, a solicitor, to acquire the property through “another structure”. To that end, Peter acquired Aidzan, a shelf company. It was not controversial that KAL had the financial capacity to purchase the Sunnyholt Property in early 1990, either in its own name or as held beneficially for it (J[97]).
2. On 16 January 1990, Peter and Dorothy were appointed as Aidzan’s directors. Peter was issued two shares and Dorothy the remaining share, which she held on trust for Peter. Peter subsequently became sole director of Aidzan (from 2009) and is sole director of Nazdia. Also on 16 January, the Peter Laird Trust was settled with Aidzan as trustee and Peter as sole beneficiary (J[96], [105]).
3. On 18 January 1990, Peter caused Aidzan as trustee of the Peter Laird Trust to exchange contracts for the acquisition of the Sunnyholt Property. The purchase price was $3.083 million. As Aidzan had never traded and had no assets of its own, Peter caused KAL to pay $1.283 million from its funds towards the purchase price. The balance was funded by Michell NBD Pty Ltd (Michell) under a credit facility dated 23 March 1990 (Michell Facility). KAL was a co-borrower with Aidzan and each guaranteed the repayment of the liability of the other.
4. So that Aidzan could repay the Michell Facility, Peter caused KAL to enter into the Sunnyholt Lease. Although the lease was not executed until 19 June 1990, it took effect from 24 March 1990 for a term of four years with an option to renew. Rent was $420,000 per annum. On 23 March 1990, Peter caused KAL to enter a Deed of Assignment of Rentals with Michell and Aidzan. Aidzan assigned its right to receive rental payments under the lease to Michell, with those payments to be applied in reduction of the Michell Facility (J[10]).
5. The effect of Peter’s conduct was that the entirety of the funds used to purchase the Sunnyholt Property came from KAL. Despite that, upon repayment of the Michell Facility and discharge of the corresponding mortgage, the title to the property vested in Aidzan as trustee of the PAL Property Trust. That trust had acquired the Sunnyholt Property, subject to the mortgage, from Aidzan as trustee of the Peter Laird Trust on 26 May 1993. The sole unitholder in the PAL Property Trust was Aidzan as trustee of the Aidzan Superannuation Fund, of which Peter was the sole beneficiary.
Reasoning of the primary judge
1. The Sunnyholt Property was sold in 2019 by Aidzan’s liquidators. The net proceeds of the sale were $6,992,444 (J[88]) and the Commonwealth Bank of Australia accounts in which they were held were made, on KAL’s application, the subject of a freezing order (In the matter of K. & A. Laird (N.S.W.) Pty Ltd (in liq) [2022] NSWSC 510). KAL’s primary claim was that those moneys were held by Aidzan (and by Nazdia as successor trustee of the Aidzan Superannuation Fund) subject to a constructive trust, each having received them knowing of Peter’s breaches of duty (Barnes v Addy (1874) LR 9 Ch App 244).
2. The primary judge held that Peter had breached his fiduciary duty to KAL (at J[105]):
… Aidzan’s acquisition of the Sunnyholt Property, initially as trustee for the Peter Laird Trust, amounted to a breach of the no conflict rule, where [Peter] had a material conflict between his duty owed to KAL to determine whether to acquire the Sunnyholt Property on its behalf on the one hand and, on the other, his duty as a director of Aidzan and his interests as a shareholder of Aidzan and the sole beneficiary of the Peter Laird Trust in acquiring that property for the trust. It is no answer to a claim for conflict of interest, by diversion of corporate opportunity, that KAL could not or would not have acquired the property, by reason of Mr Burges’ advice, had Aidzan not done so. In any event, an entity other than KAL could have acquired the property in a manner that provided a corresponding economic interest to ALH, WE and the ultimate shareholders in ALH, the other members of the Laird family, in the Sunnyholt Property where KAL had, as a matter of reality, funded the acquisition of that property.
1. With respect to the accessorial claim against Aidzan and Nazdia, his Honour concluded (at J[117]):
I am satisfied that the elements of a claim for knowing receipt are established as against Aidzan and Nazdia. I have held above that the relevant breach of fiduciary duty by [Peter] has been established, and Aidzan and then Nazdia received the Sunnyholt Property by reason of and knowing (through [Peter]) the facts of that breach.
1. Peter, Aidzan and Nazdia pleaded limitation defences to each of KAL’s claims and it was common ground that the claim to the net proceeds of sale, taking account of the extended definition of “trust” in s 11, was subject to s 47(1) of the Limitation Act (J[122]):
11 Definitions
(1) In this Act, unless the context or subject matter otherwise indicates or requires—
…
Trust includes express implied and constructive trusts, whether or not the trustee has a beneficial interest in the trust property, and whether or not the trust arises only by reason of a transaction impeached…
47 Fraud and conversion; trust property
(1) An action on a cause of action—
(a) in respect of fraud or a fraudulent breach of trust, against a person who is, while a trustee, a party or privy to the fraud or the breach of trust or against the person’s successor,
…
(c) to recover trust property, or property into which trust property can be traced, against a trustee or against any other person, …
…
is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust if brought after the expiration of the only or later to expire of such of the following limitation periods as are applicable—
(e) a limitation period of twelve years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of action has accrued, …
1. The appellants argued that Peter’s knowledge of those facts was to be attributed to KAL with the result that KAL first discovered the facts giving rise to its claims when they occurred in 1990.
2. As Peter was acting within the scope of his authority as director, it was said that, subject only to the “fraud exception”, his knowledge was to be attributed to the company. Adopting von Doussa J’s formulation of that exception in Beach Petroleum v Johnson, it was submitted (J[131]):
… that the acts of [the directors] in committing KAL to the course they did in March 1990 was an act the knowledge of which is imputed to KAL. … [However] any knowledge of [the] directors of KAL is not imputed to KAL where that knowledge was obtained in the course of a fraud on the company. However, … the fraud exception to imputed knowledge does not apply if the company obtains a benefit from the transaction, even if the director is also, in that transaction obtaining a personal benefit in breach of duty, and that the director’s conduct must be in “total fraud” of the company for the fraud exception to imputed knowledge to apply: Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [284]; Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 at [78].
1. The appellants identified three respects in which KAL was said to have benefitted from Peter’s conduct in acquiring the Sunnyholt Property through Aidzan and then leasing it to KAL. They were the tax deductions obtained by KAL for rental payments made under the Sunnyholt Lease, KAL’s occupancy of the Sunnyholt Property under a registered lease for a term of four years with an option to renew, and KAL’s having access to undercover storage at those premises.
2. The primary judge concluded at J[138]:
With a degree of hesitation, I consider that I should treat KAL’s occupancy of the Sunnyholt Property and the tax deductions that it received from payment of rent to Aidzan as a benefit to KAL, although that benefit was achieved at the cost of the payment of an above-market rental to Aidzan for a considerable period. However, that does not seem to me to establish that Aidzan’s acquisition of that property (as distinct from entry into the Sunnyholt Lease and occupation of that property) delivered a benefit or part benefit to KAL to allow [the directors’] knowledge of the relevant facts of that acquisition to be attributed to KAL in 1990 or thereafter. KAL obtained no real or apparent benefit from the arrangements formed in January 1990, by which Aidzan acquired the Sunnyholt Property and KAL assumed liabilities in respect of that acquisition, although I recognise that [Peter] (and likely [Dorothy]) then planned that KAL would in future occupy that property and pay rent on it so as to fund Aidzan’s acquisition of that property. It seems to me that KAL only obtained any potential benefit from its lease of that property under the Sunnyholt Lease executed some six months after Aidzan contracted to acquire the property, and any actual benefit only from its occupation of that property two years later, in early 1992. I accept that [the directors’] knowledge of the terms of the Sunnyholt Lease and the fact that Aidzan had leased the property to KAL as trustee for the Peter Laird Trust should be attributed to KAL, but that is not sufficient to disclose that the transaction had been structured so that KAL’s shareholders and the other Laird siblings had been excluded from any economic interest in the property. (Emphasis added.)
1. In short, his Honour reasoned that any “benefit” obtained by KAL sufficient to disentitle it from relying on the “fraud exception” was not obtained through Peter’s initial breach of duty in causing Aidzan to acquire the Sunnyholt Property instead of KAL, but rather through Peter’s subsequent breach in causing KAL to enter into the Sunnyholt Lease. On that basis, the primary judge rejected the submission that the limitation period with respect to the Sunnyholt Trust claim commenced in 1990, holding that KAL did not first discover the relevant facts until its liquidator became aware of them on 24 August 2018. As the underlying proceeding was commenced in December 2020, KAL’s claims to the proceeds of sale were brought within the 12-year limitation period.
The relevant principles of attribution
The issue
1. The appellants submit that the general rule (derived from agency principles) is that a director’s knowledge is attributed to the company provided the director is acting within the scope of his or her authority. That rule is said to be subject to an exception described generally as the “fraud exception”, which only applies if the director acted “totally in fraud” of the company so that the company did not “by design or result” obtain a benefit from the director’s conduct. In support of this formulation, the appellants cite Beach Petroleum v Johnson at [22.34], and cases in which that formulation of the exception has been applied, including Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [282]-[285]; Bluemine Pty Ltd (in liq) v AKA (Civil) Pty Ltd [2022] NSWCA 160 at [235]-[240] and Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 at [78].
2. KAL makes two responses to the appellants’ reliance on that exception. First, it is said that the “fraud exception” so formulated could not apply to the present case, because there can be no attribution of a director’s knowledge of his or her own breaches of duty where the attribution is sought to defeat the company’s claim against that director for those breaches. Secondly, even if this were a case for applying a general rule of attribution subject to the “fraud exception” as formulated by von Doussa J, there should have been no attribution because KAL did not “by design or result” obtain a “benefit” from Peter’s conduct.
Bilta v Nazir
1. The need for a “fraud exception” to a more general rule governing the attribution of knowledge to corporations was rejected by a majority of the Supreme Court of the United Kingdom in Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1 (‘Bilta v Nazir’). Two directors of Bilta had conspired with various corporate defendants in a fraudulent scheme involving the trading of offshore carbon credits. The effect of the scheme was that Bilta was left with the entirety of the VAT obligations and with no funds with which to meet that liability. The defendants (Bilta’s directors and other parties involved in the fraud) pleaded that Bilta was prevented from recovering any loss because of an illegality defence. It was said that Bilta, as a party to the fraudulent scheme, could not rely on the circumstances of that fraud to make good its claim. That argument was unanimously rejected, partly on the basis that the knowledge of the two directors could not be attributed to Bilta.
2. Lords Toulson and Hodge viewed the “fraud exception” as “simply an instance of a wider principle that whether an act or a state of mind is to be attributed to a company depends upon the context in which the question arises” (at [181]). Lord Neuberger (at [9]) and Lord Mance (at [37]-[44]) agreed, the former framing the overarching principle to be applied in the form of an “open” question:
[W]hether or not it is appropriate to attribute an action by, or a state of mind of, a company director or agent to the company or the agent’s principal in relation to a particular claim against the company or the principal must depend on the nature and factual context of the claim in question.
1. Lord Sumption considered that, while the agency-based rules of attribution applied “regardless of the nature of the claim or the parties involved”, the “fraud exception” (which he labelled the “breach of duty exception”) operated as a rule of public policy to prevent attribution only in certain circumstances (at [86]). He later qualified that position, saying that the “technique of applying the general rules of agency and then an exception for cases directly founded upon a breach of duty to the company is a valuable tool of analysis, but … no more than that” (at [92]).
2. Addressing Lord Sumption’s position, Lord Neuberger (at [9]) and Lords Toulson and Hodge (at [181]) agreed that the circumstances in which the “fraud exception” had historically been applied were not limited to cases of fraud, but extended to breaches of duty by a director.
3. Each of their Lordships agreed that there should be no attribution of a director’s knowledge to a company as a defence or bar to the company’s claim against that director for fraud or breach of duty. For Lord Sumption, such a claim was “the paradigm case for the application of the breach of duty exception” (at [89]). Lords Toulson and Hodge described it as “the classic example of non-attribution” (at [181]). Lord Mance observed (at [38]):
… it is certainly unjust and absurd to suggest that the answer to a claim for breach of a director’s (or any employee’s) duty could lie in attributing to the company the very misconduct by which the director or employee has damaged it.
1. In so concluding, their Lordships referred with approval to the following reasoning of Lord Walker NPJ, sitting in the Hong Kong Court of Final Appeal, in Moulin Global Eyecare Trading Ltd (in liq) v Commissioner of Inland Revenue (2014) 17 HKCFAR 218; [2014] HKCFA 22 at [80]:
The situation to which [the “fraud exception”] most squarely applies (and some would say, the only situation to which it should properly be applied) is where a director or senior employee of a company seeks to rely on his own knowledge of his own fraud against the company as a defence to a claim by the company against him (or accomplices of his) for compensation for the loss inflicted by his fraud. The injustice and absurdity of such a defence is obvious, and for more than a century judges have had no hesitation in rejecting it.
1. In his reasons, Lord Sumption identified the central “problem” posed by earlier authorities (prior to the Court of Appeal’s decision in Bilta v Nazir) as being that they had “generally treated the imputation of dishonesty to a company as being governed by tests dependent primarily on the nature of the company’s relationship with the dishonest agent, the result of which is then applied universally” (at [86]).
2. Bilta v Nazir was followed in Singularis Holdings Ltd (in liq) v Daiwa Capital Markets Europe Ltd [2020] AC 1189, Baroness Hale noting (at [30]):
This court [in Bilta v Nazir] held unanimously that where a company has been the victim of wrongdoing by its directors, the wrongdoing of the directors cannot be attributed to the company as a defence to a claim brought against the directors – and their co-conspirators – by the company’s liquidator for the loss suffered by the company as a result of the wrongdoing. The court explained that the key to any question of attribution was always to be found in considerations of the context and the purpose for which the attribution was relevant.
1. The approach of the Court in Bilta v Nazir was much influenced by Lord Hoffmann’s analysis in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, which emphasised that the answer to a question as to whose act or knowledge is to count as the act or knowledge of the company depends on the context in which and purpose for which such attribution is relevant. Baroness Hale summarised Lord Hoffmann’s analysis of the different rules (including those created by statute) by reference to which acts and knowledge are attributed to a company at [28]:
[Lord Hoffmann] identified three levels of attribution (at pp 506-507). The primary rule is contained in the company’s constitution, its articles of association, which will typically say that the decisions of the shareholders or of the board of directors are to be the decision of the company on certain matters. But this will not cover the whole field of the company’s decision-making. For this, the ordinary rules of agency and vicarious liability, which apply to natural persons just as much as to companies, will normally supply the answer. However there will be some particular rules of law to which neither of these principles supplies the answer. The question is not then one of metaphysics but of construction of the particular rule in question.
Two subsequent Australian decisions
1. In Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294, this Court (Gleeson, Leeming and White JJA), having referred to the decisions in Bilta v Nazir and Singularis and to [22.34] of von Doussa J’s judgment in Beach Petroleum v Johnson, observed (in dicta):
[255] But this analysis [of von Doussa J] must be reconciled with later authority. It is to be steadily borne in mind that the rules of attribution are context-dependent. The circumstances in which a company is treated as liable by reason of the conduct and knowledge of the natural persons through whom it acts depends upon the particular statute or rule of common law or principle of equity. This cannot easily be reconciled with an inflexible “fraud exception”, that immunises a company from attribution irrespective of the relevant statutory or common law or equitable rule, in cases where a director has acted “in total fraud” upon the company and the company has not obtained a benefit.
[256] The point may be illustrated by contrasting liability in equity for knowing receipt and knowing assistance. An element of liability for knowing receipt is that the third party has received a benefit (ordinarily, property). It would seem to follow that the “fraud exception” as formulated in Beach Petroleum NL v Johnson, which turns on the absence of the company obtaining a benefit, would never be available.
1. The Court also agreed (at [257]) with the observations of Allsop CJ (sitting at first instance) in All Class Insurance Brokers Pty Ltd (in liq) v Chubb Insurance Australia Ltd (No 2) [2021] FCA 782:
[167] The judgment of the Supreme Court in Bilta [2015] UKSC 23; [2016] AC 1 is to the effect that there is no general fraud exception to imputation, rather the question is an open one: whether or not it is appropriate to attribute an action by, or a state of mind of, a company director or agent to the company or the agent’s principal in relation to a particular claim against the company or the principal must depend on the nature and factual context of the claim in question: Bilta at 11 [9] per Lord Neuberger, see also 18-19 [41]-[45] per Lord Mance JSC, 64-73 [180]-[209] per Lord Toulson and Lord Hodge JJSC, cf Lord Sumption JSC at 38 [86]; P Watts and FMB, Bowstead and Reynolds on Agency (21st ed, Sweet & Maxwell, 2018) at [8-214].
[168] Drawing upon the Court’s reasoning in Bilta, the UK Supreme Court in Singularis Holdings Ltd (in liquidation) v Daiwa Capital Markets Europe Ltd [2019] UKSC 50; [2020] AC 1189 held at 1205 [34] that the question as to whether knowledge of a particular officer of a company should be attributed to the company depends on the particular context in which the question of attribution arises. …
1. The reasoning in these English and Australian authorities explains clearly why, in a case like the present, where the substantive claim is by the company against its director for breach of duty, the director’s knowledge will not be attributed to the company for the purpose of defeating or barring the company’s claim. That leaves open the possibility that, in a particular context, some special rule of attribution, including one arising by statute, might apply. For that reason, in the present case the meaning of “first discovers” as used in s 47(1)(e) of the Limitation Act with respect to a corporate plaintiff must be addressed. However, in view of the way in which this appeal was argued, it is first necessary to consider the relevance to the present case of von Doussa J’s formulation of the “fraud exception” in Beach Petroleum v Johnson at [22.34] and the decisions informing or applying the principles to which his Honour there refers.
Scope of any “fraud exception”
1. Where applied to a general rule of attribution, the so-called “fraud exception” has not been limited to circumstances involving actual fraud or dishonesty of a director upon the company (Bluemine at [219]).
2. That accords with the reasoning in In re Hampshire Land Company [1896] 2 Ch 743, to which the exception is commonly traced (cf P Watts, ‘Imputed Knowledge in Agency Law – Excising the Fraud Exception’ (2001) 117 LQR 300, which identifies as that source the decision of Lord Brougham LC in Kennedy v Green (1834) 3 My & K 699). The Hampshire Land Company borrowed money from a building society. The notice calling the general meeting in which the borrowing had been authorised was defective. The secretary of the company, who was also secretary of the building society, knew of the defect. The building society later attempted to prove for the amount of the loan in the company’s winding-up. That was resisted on the basis that the knowledge of the common secretary should be imputed to the building society so as to prevent its relying on the internal management rule.
3. Delivering an ex tempore judgment, Vaughan Williams J rejected the suggestion that “the knowledge of [a] common officer is always the knowledge of the two companies” (at 748), instead identifying the relevant agency questions as being:
First, was it within the scope of the duty of the officer to give notice to the other company of the information he had got; and, secondly, was it within the scope of his duty, as the officer of the company sought to be affected by notice, to receive such notice?
1. Observing that this was “not at all the case here”, his Honour referred to an “exception to the general rule”, namely that if the common officer had been guilty of a fraud that officer’s knowledge of that fraud would not have been imputed to the society, reasoning as follows (at 749-750):
…because common sense at once leads one to the conclusion that it would be impossible to infer that the duty, either of giving or receiving notice, will be fulfilled where the common agent is himself guilty of fraud. It seems to me that if you assume here that Mr. Wills was guilty of irregularity — a breach of duty in respect of these transactions — the same inference is to be drawn as if he had been guilty of fraud. … but whether his conduct amounted to fraud or to breach of duty, I decline to hold that his knowledge of his own fraud or of his own breach of duty is, under the circumstances, the knowledge of the [society]. (Emphasis added.)
1. As Lord Sumption noted in Bilta v Nazir at [72], Hampshire Land Company did not in fact involve any allegation of fraud; and the exception to which Vaughan Williams J was referring applied to prevent the attribution to a principal of its agent’s knowledge of his or her own breach of duty, whether or not the breach involved actual fraud (at [71]). It was for that reason that Lord Sumption described the exception as the “breach of duty exception” rather than the “fraud exception”.
The importance of context and purpose in resolving questions of attribution
1. In Bilta v Nazir, for the purpose of assisting an analysis directed to the nature and factual context of the claim in question, Lords Toulson and Hodge at [204] (and to a similar effect, Lord Sumption at [87]) identified three categories of case in which a question as to attribution might arise:
It is helpful in the civil sphere, to consider the attribution of knowledge to a company in three different contexts, namely (i) when a third party is pursuing a claim against the company arising from the misconduct of a director, employee or agent, (ii) when the company is pursuing a claim against a director or an employee for breach of duty or breach of contract, and (iii) when the company is pursuing a claim against a third party.
1. In respect of the second category, whereas Lords Toulson and Hodge limited it to a claim by the company against a director or employee, Lord Sumption included “third parties acting in concert” with the director. However, this difference is of no moment because Lords Toulson and Hodge equally recognised that, where the claim by the company against a third party arises from that third party’s involvement as an accessory in the director’s breach of duty or fraud, “there is no good policy reason to attribute to the company the act or the state of mind of the director who was in breach of his fiduciary duty” (at [207]). In other words, the rule of attribution in respect of a claim by the company against a related party (including one liable as an accessory) of the defaulting director is the same as that which applies to the claim by the company against the defaulting director.
2. Beach Petroleum v Johnson is an example of a case in which claims falling into more than one of the above categories were made, with different outcomes. The corporate plaintiff, Beach, brought claims against its directors and against three companies controlled by the same directors, Spargos Mining NL, Enterprise Gold Mines NL and Jingellic Minerals NL (the “SEJ companies”) for conspiracy by unlawful means. The SEJ companies argued that the common directors’ knowledge should not be attributed to them because of the “fraud exception”. Thus the case was one in which a third party (Beach) was pursuing a claim against those companies arising from the misconduct of their directors (the first of the categories referred to above). In that context, von Doussa J described the “fraud exception” as follows (at [22.34]):
Provided that the director is acting within the scope of his or her authority, in civil proceedings the state of mind of a director ordinarily will be attributed to the company where there is a duty on that director to communicate his or her knowledge to the company. The exception to this rule is where the director is acting totally in fraud of the company, that is, where all the director's activities are directed against the interests of the company, and not partly for the benefit of the company. If the director is guilty of fraudulent conduct which is not totally in fraud of the corporation, and by design or result the fraud partly benefits the company, the knowledge of the director in the transaction will be attributed to the company. (Emphasis added.)
1. The reference to a “benefit” obtained “by design or result” is taken from the Supreme Court of Canada’s decision in Canadian Dredge & Dock Co Ltd v The Queen [1985] 1 SCR 662. The question there was whether the companies, having received contracts, subcontracts and other benefits in the course of their directors’ illegal scheme, could be attributed with the directors’ knowledge for the purpose of establishing criminal liability against those companies. Von Doussa J considered that Estey J’s statement of the law (at 712-713) provided “compelling guidance”. His Honour reasoned (at [22.32]):
If, for the purposes of criminal responsibility, a company is imputed with the knowledge and intention of a person who is the directing mind of the company, acting in the field of operation assigned to him, when his actions are not totally in fraud of the company and by design or result are partly for the benefit of the company, the imputation of the knowledge and intention of that person to the company for the purposes of civil responsibility should be no less extensive…
1. The relevance of attribution to the claims in Beach Petroleum v Johnson referred to in [52] above was in determining the civil liability of the SEJ companies to Beach, as distinct from determining whether those companies had a defence to a claim brought by Beach, the success of which would have turned on Beach’s knowledge. Similarly, but in the context of a criminal prosecution, in Canadian Dredge the purpose for the attribution was in determining whether the companies were criminally liable for the acts of persons who were their directing minds. The issue in the present case is quite different, and is whether Peter’s knowledge of his breaches of duty should be attributed to KAL for the purpose of making out his limitation defence to its claim.
2. In Beach Petroleum v Johnson, a further and separate issue of attribution arose which was much closer to the circumstances of the present case. Beach made a claim against the SEJ companies for misleading or deceptive conduct. Here, the SEJ companies argued that their conduct was not causative of Beach’s loss because in the relevant counterfactual, had the knowledge of the fraudulent directors been communicated to Beach, it would not have acted any differently because those directors (as its directors) were already aware of the true facts. Beach’s response was that, where all of its directors were party to the fraud, the only way proper disclosure could have been made to it was by way of notice to the company in general meeting. Von Doussa J agreed, rejecting the argument that in a causation counterfactual involving “proper” disclosure that disclosure could be achieved by attribution of the fraudulent directors’ knowledge to Beach (at [22.76]):
In my opinion it is unrealistic to assert that if there had been a proper disclosure of the true position to Beach that would not have led to a different outcome. To remove the misleading and deceptive character of the conduct in question, a full and proper disclosure of the true position to Beach would be required. A statement of the true position by the fraudulent agents of SEJ in that capacity to themselves in the capacity as agents of Beach would be no disclosure at all. As a matter of law Beach had no knowledge of the fraud because, being the victim, it was not imputed with the knowledge of those acting on its behalf. Notice of the true position, if it were to be effective notice, would have to be given to someone other than the parties to the fraud. As the only directors of Beach in June 1989 were Messrs Fuller, Cummings and Main, notice could not be given effectively to a director. The only organ of the company to whom effective notice could be given would be the shareholders. Had the shareholders been told the true position, it is beyond doubt that the transactions would not have occurred. (Emphasis added; citation omitted.)
1. Similar reasoning applies to the attribution sought in the present case. As KAL’s controlling, and later sole, director, Peter was the only natural person with knowledge of his wrongdoing who could have caused KAL to commence proceedings in relation to his wrongdoing. However, there was no realistic possibility of that occurring, as to which see below at [76].
2. Von Doussa J’s reasoning at [22.76] for rejecting the SEJ companies’ causation argument is informed by the agency rules referred to at [22.22]:
The reasoning in Re Hampshire Land Company and Houghton is expressed in terms reflecting principles of agency. The officer or director whose knowledge was in question was considered as a representative of the company. By the time of those decisions it was well established that a principal was not imputed with the knowledge of facts known to the agent where the agent was committing a fraud upon the principal and the information known to the agent was relevant to the fraud. The Belmont Finance cases provide a more recent example of the application of the principle… (Emphasis added; citations omitted.)
1. The first of the Belmont Finance cases referred to by von Doussa J is Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250. There, Belmont’s directors, in breach of their fiduciary duties (and in unlawful contravention of s 54 of the Companies Act 1948), sought to extract value from Belmont by causing it to buy the shares of another company at a considerable overvalue. Belmont brought proceedings against its directors who had authorised the transaction and for an account against three companies associated with the directors for knowing receipt. The three companies relied on an illegality defence, which for its success required that the knowledge of the directors be attributed to Belmont so as to render Belmont a co-conspirator in the unlawful conduct. Belmont’s claim against its directors and their related companies was within Lord Sumption’s second category (see [51] above). As to the question of attribution, Buckley LJ said (at 261-262):
… in my view such knowledge should not be imputed to the company, for the essence of the arrangement was to deprive the company improperly of a large part of its assets. … I think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company; and indeed it is a well-recognised exception from the general rule that a principal is affected by notice received by his agent that, if the agent is acting in fraud of his principal and the matter of which he has notice is relevant to the fraud, that knowledge is not to be imputed to the principal.
1. Applying the same reasoning in the present case would mean that Peter’s knowledge would not be attributed to KAL for the purpose of making good his and the other appellants’ limitation defences.
2. In answer to the difficulties which the analysis to this point presents for their argument, the appellants submit that the reasoning of von Doussa J at [22.34] adopts a stricter and narrower form of the “fraud exception” than has been adopted in other jurisdictions, including the United Kingdom. In support they cite Lord Mance’s observation in Stone & Rolls Ltd (in liq) v Moore Stephens (a firm) [2009] 1 AC 1391 at 1535 (par (i) in the Annex referred to in [248]) that “the phraseology developed in [Canadian Dredge] … indicates a test which is both more rigid and more extreme than that which English law would adopt, particularly since the Privy Council’s decision in Meridian”. They also rely on the following statement of Lord Walker NPJ in Moulin Global Eyecare at [91]:
The Supreme Court of Canada adopted a rather different test involving the notion of an act being ‘totally in fraud of the corporate employer and where the act is intended to and does result in benefit exclusively to the employee-manager.’ That test has had some influence in Australia but has not been adopted in England or Hong Kong.
1. It is said to follow that, in Australia, and notwithstanding the position in other jurisdictions, there is a single “fraud exception”, the application of which depends, in every case, on whether the company has by design or result partly benefitted from the director’s fraud or breach of duty. If it has benefitted, the director’s knowledge is attributed to the company, irrespective of the context in which, and purpose for which, attribution is sought.
2. The authorities relied on by the appellants tend to involve either a third party pursuing a claim against the company in respect of misconduct of its director (the first category referred to in Bilta v Nazir) or the company pursuing a claim against an unrelated third party such as an insurer (the third category, noting the qualification above at [51]). None squarely considers the position where a director seeks to attribute his or her knowledge to the company for the very purpose of defeating a claim by the company against them for breach of duty or wrongdoing.
3. Bluemine is a case in the first category. The liquidator of Bluemine and Earth Civil brought claims against several individual and corporate defendants in relation to a complex fraudulent scheme. An aspect of the fraud involved the two AKA companies recording substantial payments and management fees to Bluemine and Earth Civil in order to obtain taxation benefits in the form of GST input credits. Bluemine and Earth Civil were left with significant taxation liabilities which they were unable to meet. The director of the AKA companies had knowledge of the fraudulent scheme. The question was whether his knowledge could be attributed to the AKA companies to render them liable as accessories. The answer was that it could. Both companies had obtained taxation benefits from the scheme, meaning the director’s activities “were not in total fraud of the AKA companies and were partly for [their] benefit” (at [264]).
4. All Class Insurance Brokers is an example of the third category of case. The company’s claim was against a third-party insurer for losses arising from its director’s fraudulent conduct. The issue was whether the director’s knowledge of that conduct should be attributed to the company in determining whether it had made adequate disclosure to the insurer. The insurer succeeded in its argument as to attribution on the basis that the director was “misusing property of the company impressed with trust obligations to others to seek to benefit the company (and, perhaps, through the company, himself)”. That meant his dishonesty was “at least in material part, not in fraud of the company, but designed to benefit the company” (at [178]). The outcome was that the insurer’s non-disclosure defence succeeded.
5. Such a case requires a balancing of the interests of the company, and specifically the members of the company, with the interests of the innocent third party against whom the claim is brought. In this way it relevantly differs from a case like the present where the company claims against the director and no issue as to the interests of any (innocent) third party arises. So much is evident from the comments of Allsop CJ at [164]:
The knowledge of a person in either category, whether the “directing mind and will” or an agent, may not be imputed to the corporation where that person’s knowledge is an element of his or her fraud against the corporation: Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 at 261-262; Beach Petroleum NL v Abbott Tout Russell Kennedy [1999] NSWCA 408; 48 NSWLR 1 at 99 [473]-[476]; Macleod v The Queen [2003] HCA 24; 214 CLR 230 at 264 [128]; cf Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 610-614. Lord Neuberger in Bilta (UK) Ltd (in liquidation) v Nazir (No 2) [2015] UKSC 23; [2016] AC 1 at 10 [7] stated the principle as follows:
… Where a company has been the victim of wrong-doing by its directors, or of which its directors had notice, then the wrong-doing, or knowledge, of the directors cannot be attributed to the company as a defence to a claim brought against the directors by the company’s liquidator, in the name of the company and/or on behalf of its creditors, for the loss suffered by the company as a result of the wrong-doing, even where the directors were the only directors and shareholders of the company, and even though the wrong-doing or knowledge of the directors may be attributed to the company in many other types of proceedings.
1. These remarks are consistent with the analysis in Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 (a related proceeding to Beach Petroleum v Johnson). Beach argued that its solicitors had breached their fiduciary duties by acting for various companies in the group. The solicitors argued that Beach had given them its fully informed consent in relation to these potentially conflicting engagements. In response Beach submitted that its directors’ knowledge as to the potential conflicts could not be attributed to it in circumstances where those directors were actively defrauding it. Addressing that submission, the Court (Spigelman CJ, Sheller and Stein JJA) said (at [474]):
Those cases stand for the propositions that in a claim by a company against directors, who have conspired to defraud it, the knowledge of the conspiring directors is not imputed to the company because it would be irrational to do so; Belmont Finance Corporation Limited at 261-2; and that, where a third party claims a company is estopped by conduct amounting to acquiescence, the knowledge of directors acting in fraud of the company and outside their authority will not be treated as knowledge of the company, for reasons of justice and commonsense; J C Houghton & Co at 14-15 and 19; see Beach Petroleum NL v Johnson (1993) 43 FCR 1. Such claims are quite different from those where solicitors are seeking to establish a defence of fully informed consent.
1. This reasoning focuses on the nature of the claim in question and, in respect of a claim such as that in the present case, is wholly in agreement with the position stated in Bilta v Nazir as summarised at [37] above.
2. The Australian and English authorities discussed above make clear that where a claim is brought by a company against its director for fraud or breach of duty, that director’s knowledge is not to be attributed to the company as or in support of a defence to the company’s claim. The outcome is the same where the company’s claim is brought against companies associated with or controlled by that director and those companies seek to attribute the director’s knowledge to the plaintiff company so as to defeat its claim. See Beach Petroleum v Johnson at [22.22] and [22.76], Beach Petroleum v Kennedy at 474, and All Class Insurance Brokers at [164]; and Belmont Finance v Williams Furniture at 261-262, Bilta v Nazir, and Singularis at [30]. It necessarily follows that the appellants’ argument that, irrespective of the context in which and purpose for which it is sought, attribution of a director’s knowledge is to be determined by the application of a single “fraud exception” which turns on whether the company has partly benefitted from the director’s fraud or breach of duty must be rejected.
3. As the reasoning in Bilta v Nazir shows, the outcome for the present case is capable of being explained by the application of an exception to a general rule, informed by the principles of agency, that a director’s knowledge acquired in the scope of his or her duty is that of the company. In relation to attribution sought where the claim is by the company against a director for a breach of duty or fraud, and for the purpose of defeating the claim, the application of such an exception is not qualified by reference to whether the company receives some benefit or whether the conduct is not in “total fraud” of the company.
4. The alternative, and preferable, approach is to recognise that the rules and principles of attribution applicable in a given case depend on the nature of the claim and purpose for which the attribution is sought. In the present case, that the claims are for breaches of duty and that the attribution is sought to support a limitation defence leads inevitably to the conclusion that there should be no attribution. Borrowing from the language of Lord Mance (at [42]) in Bilta v Nazir, where an illegality defence was raised to a company’s claim for breach of duty on the basis that the directors’ illegal conduct was that of the company, and applying his language in the present case, it is “self-evidently” impossible that Peter should be able to argue that KAL “either committed or knew about the breach[es] of duty, simply because [Peter] either committed or knew about [them]”. To proceed otherwise would “ignore the separate legal identity of the company” and “empty the concept of duty of content”.
5. An approach which focuses on context and purpose in applying any agency-based rules of attribution permits greater regard to be had to the underlying reasons for which the exercise of legal attribution is invoked and the interests of the different parties concerned in the outcome of that exercise. This was the conclusion of the majority in Bilta v Nazir (at [9], [37]-[44] and [181]). In doing so, reference was made to the views expressed in an earlier edition of Bowstead & Reynolds on Agency, the current edition of which makes the same point at [8-214] (P Watts and F Reynolds, Bowstead & Reynolds on Agency (22nd ed, 2021, Sweet & Maxwell)):
The putative defence that the exception is used to rebut is premised on the fallacy that a principal is prima facie deemed to know at all times and for all purposes that which his agents know. As observed already, imputation has never operated in such a way. Before imputation occurs, there needs to be some purpose for deeming the principal to know what the agent knows. There is none in this type of case. Reasoning of this sort has now been adopted in the Bilta case; there is no exception, rather there is no reason to impute knowledge in these cases. (Emphasis added; footnotes omitted.)
1. That approach also has the support of the observations of this Court in Anderson v Canaccord at [255].
Attribution for the purpose of Limitation Act, s 47(1)(e)
1. The language of and purpose underlying s 47(1)(e) of the Limitation Act is wholly consistent with there being no attribution where the facts said to be discovered are facts known only to a director who relies on a limitation defence in answer to the company’s claim against him or her for breach of duty arising from those facts.
2. Under s 47(1)(e), time does not commence running until “the plaintiff … first discovers … the facts giving rise to the cause of action and that the cause of action has accrued”. A plaintiff company “first discovers” facts when those facts are taken to be known to the company by the exercise of legal attribution. That exercise is ordinarily informed by principles of agency.
3. The “first discovers” provision identifies for the purpose of the running of the relevant limitation period the time from which it is reasonable to require that a prospective plaintiff consider commencing proceedings. After the expiry of that period, that plaintiff’s claim is “not maintainable”. As McHugh J observed in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553; [1996] HCA 25, the limitation period “represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated”.
4. The fixing of the limitation period from the time when the relevant facts are first discovered, or might with reasonable diligence have been discovered, assumes that thereafter a plaintiff, in the case of a company by its officers or agents, has the opportunity to form a view, and take advice, as to whether to commence proceedings. If the prospective defendants are the only natural persons with actual knowledge of the relevant facts, there is no rational reason to believe that from a plaintiff company’s perspective those defendants would cause proceedings to be commenced against themselves. In such a case, the company remains without any director, officer, or authorised agent having actual knowledge of the relevant facts who might pursue its interests by the commencement of proceedings or who, having made reasonable inquiries, would have had such knowledge.
5. In this context the reference to when a plaintiff “first discovers” facts giving rise to a cause of action is, in the case of a claim by a company against a director or officer, to be construed as concerned with knowledge, necessarily attributed, which is capable of being acted upon by a director or officer other than the person against whom the claim is brought. Accordingly, as a matter of construction, s 47(1)(e) would not be satisfied by the attribution of Peter’s knowledge to KAL where that knowledge was of his own wrongdoing. Whether the knowledge of some other natural person of those same facts could be attributed to the company would remain to be considered separately, and does not arise in this case.
6. In the end the disposition of grounds of appeal 1 to 3 is straightforward, as is the disposition of grounds of appeal 4, 6 and 7 and ground 1 of the cross-appeal (which are dealt with below). KAL makes claims against its director, Peter, and Aidzan and Nazdia as accessories to Peter’s breach of duty. There is no controversy as to Peter’s breach. There is no controversy as to the liability of Aidzan and Nazdia for knowing receipt. Although Peter as the primary wrongdoer was aware of the relevant facts from 1990, his knowledge is not to be attributed to KAL. At the earliest, the limitation period ran from the appointment of KAL’s liquidator in August 2018. It follows that KAL’s claims to beneficial ownership in the proceeds of sale of the Sunnyholt Property were not statute barred.
7. Accordingly, grounds of appeal 1 to 3 should be rejected.
Claim to Sunnyholt Surplus Rent (Ground of appeal 4; Ground of cross-appeal 1)
Background
1. It will be recalled that, in 1990, Peter caused KAL to enter into the Sunnyholt Lease with Aidzan. The right to rents received from KAL was assigned by Aidzan to a third-party lender, Michell, in order to repay a loan taken out to fund part of the acquisition of the Sunnyholt Property. The initial term of the Sunnyholt Lease was four years. KAL remained as lessee beyond the expiration of that initial term.
2. KAL continued to pay rent beyond the time when the Michell Facility (which had been refinanced by ANZ in 1998) was fully repaid. That was taken to have occurred on 30 June 2005. KAL stopped paying rent after FY2012.
3. At trial, KAL sought an order that the appellants pay it $2.4 million, being the amount of rent it alleged had been paid between 1 July 2005 and 30 June 2013. That amount has since been revised to $2,094,545.
Consideration
1. The success of KAL’s claim depended on it establishing a beneficial entitlement to the Sunnyholt Property. If it could do so, then, subject to any limitation bar, there could be no basis upon which Aidzan could assert an entitlement to retain rents paid to it by KAL under the Sunnyholt Lease after repayment of the Michell Facility on 30 June 2005.
2. In the light of the conclusion reached on grounds of appeal 1 to 3 that KAL’s claim to a beneficial entitlement to the proceeds of sale of the Sunnyholt Property is not barred, ground of appeal 4 must be rejected.
3. This leaves the respondent’s cross-appeal, which contends that the primary judge erred in restricting the Sunnyholt Surplus Rent claim to the period after 12 December 2008.
4. The relevant finding of the primary judge is at J[148]:
On the findings that I have reached above [as to beneficial ownership of the Sunnyholt Property], KAL benefited or partly benefited from its occupancy of the Sunnyholt Property under the Sunnyholt Lease and the substantial tax deductions it received for payment of rent under that lease and [the directors’] knowledge of the terms of that lease and the circumstances surroundin[g] its entry and of the payment of rent to Aidzan should be attributed to KAL as it occurred. Neither party suggested that the position was different for the long period in which KAL continued to occupy the property after the term of the Sunnyholt Lease had expired. I accept that this claim is properly characterised as a trust claim and it is therefore barred by s 47(1)(e) of the Limitation Act, but only for rent paid before 11 December 2008.
1. For the reasons given above, this analysis does not correctly identify the approach to attribution in the context of a claim by a company against its director for breach of duty, where the attribution is relied on as a defence or bar to that claim.
2. It is not necessary to consider KAL’s alternative argument, which assumed the application of the “fraud exception” and turned on whether Peter’s conduct, considered as a whole, was not in “total fraud” of KAL. Had it been necessary to do so, I would have upheld that argument. Although KAL did receive benefits in the form of occupancy of the Sunnyholt Property and tax deductions in respect of rental payments made to Aidzan, those benefits were to be viewed in the broader context of Peter’s conduct. That conduct involved Peter causing Aidzan to purchase the Sunnyholt Property using KAL’s funds or loan funds obtained by the assignment of KAL’s undertaking to pay rent to Aidzan for use of the Sunnyholt Property. The fact that KAL was entitled to tax deductions on those rental payments did not alter the fact that, taken as a whole, the transaction was designed to benefit Aidzan (and, in turn, Peter) at the expense of KAL. Those tax deductions merely reduced the loss suffered by KAL as a result of that scheme. This was not a case like Bluemine where the very impetus of the scheme was the obtaining of taxation benefits in fraud of the Commissioner of Taxation.
3. The result is that KAL did not discover the facts giving rise to its claim to the Sunnyholt Surplus Rent until, at the earliest, the appointment of its liquidator in August 2018. This meant the entirety of its claim was brought within the limitation period prescribed by s 47(1)(e) of the Limitation Act. The cross-appeal should be allowed and judgment for the respondent increased from $1.2 million to $2,094,545.
Claim to the Superannuation Payment (Grounds of appeal 6-8)
Background
1. In early 1993, Peter established the Aidzan Superannuation Fund and the PAL Property Trust. Aidzan was appointed as trustee of both. Peter was the sole member of that fund, which was the sole unitholder in the trust.
2. Much later, in around 2007, Peter caused KAL to pay $1 million of its funds to the Aidzan Superannuation Fund. The evidence was that he initially intended this to be a superannuation contribution made by him. Subsequently, in around 2012, on the advice of his accountant, the payment was “recharacterised” as a loan made by KAL to Peter in 2007 and treated accordingly in KAL’s accounts from that time.
3. It was accepted that this conduct of Peter was a breach of his fiduciary duties owed to KAL and involved a misappropriation of its funds. Two issues arose. The first was whether KAL’s equitable claim was barred by the application of the six-year limitation period in s 15 of the Limitation Act by analogy. The primary judge held that it was not. The Superannuation Payment was not wholly or partly for KAL’s benefit because the payments on which Peter relied “would, at best, reduce KAL’s loss rather than giving rise to any benefit to it” (J[177]). That meant time did not commence running until KAL’s liquidator discovered in 2018 the fact of the $1 million payment in 2007. This conclusion is the subject of grounds of appeal 6 and 7.
4. The second issue was whether the amount of compensation payable to KAL should be reduced by two “loan repayments” of $100,000 and $680,000 said to have been made by Peter in 2012. The primary judge held that only the $100,000 sum should be applied in reduction of that liability (J[174]). This conclusion is the subject of ground 8.
5. In the result the primary judge awarded equitable compensation of $900,000 to KAL (J[179]). Although KAL had sought a declaration that this sum was held on constructive trust, his Honour declined to make that order in respect of the funds of a regulated superannuation fund (J[178]).
Limitation defence (Grounds 6 and 7)
1. The relevant appellants are Peter and Nazdia. Their primary argument in relation to the Superannuation Payment remains that Peter’s promise to repay the $1 million sum to KAL with interest meant that KAL obtained a partial “benefit” from his conduct and, accordingly, that Peter’s knowledge of his conduct should be attributed to KAL from at latest 22 January 2012 (ground 6). It was said to follow that s 55 of the Limitation Act could not be applied by analogy to suspend the running of the limitation period under s 15, with the result that KAL’s claim to the Superannuation Payment was barred.
2. That argument must be rejected for the reasons that the argument on grounds of appeal 1 to 3 was rejected. The language in s 55(1) is not relevantly different to that used in s 47(1)(e). Whether KAL obtained any “benefit” from Peter’s promise to repay the Superannuation Payment is not relevant to whether Peter’s knowledge of his breach of duty should be attributed to KAL. That knowledge would not be attributed to KAL so as to prevent the suspension of the running of the six-year limitation period; and it was not otherwise submitted that s 55 would not apply.
3. Even if the rule of attribution was as formulated and applied by the primary judge, there was no error in the conclusion that KAL did not benefit wholly or in part from Peter’s conduct. The relevant conduct was Peter’s misappropriation of $1 million of KAL’s funds. That occurred in 2007. It was a breach of his fiduciary duty. His “promise” to repay that sum, made five years later, did no more than recognise KAL’s entitlement to be compensated for Peter’s earlier breach. Similarly, the “promise” to pay interest on that amount did no more than reflect KAL’s entitlement to be compensated for being kept out of its moneys over the previous five years.
4. Grounds of appeal 6 and 7 should be rejected.
Whether amount of equitable compensation should be reduced by the $680,000 payment (Ground 8)
1. The appellants submit that the primary judge erred in failing to treat the payment of $680,000 made by Peter to KAL on 29 June 2012 as reducing the amount of equitable compensation to which KAL was entitled.
2. There is no dispute that this sum was paid. The appellants bore the onus of establishing that the payment was to be applied in reduction of the “loan”. In circumstances where Peter was the controlling mind of KAL, it was necessary to establish that it was Peter’s intention, actual or to be inferred, that when paid the money was to be applied in that way. It was not Peter’s case that, at some point after the payment had been made, there was a consensus between him and KAL that KAL’s liability to him in respect of that payment should be set off against the “recharacterised” loan amount.
3. Peter’s evidence was that, after being reminded by KAL’s liquidator in October 2020 of the payment of $680,000, he “established” that this was a payment by him against his “outstanding loan”. He first claimed that to be the position in an email of February 2021. When cross-examined about that payment being a “repayment of a loan”, he maintained that “it absolutely was”.
4. In the absence of any specific evidence from Peter that in late June 2012 he had given actual consideration to the fact that this payment was to be applied in reduction of the existing “loan”, the appellants’ argument relied upon an inference being made to that effect from the circumstances in which the payment was made. Those circumstances included the existence of the partly repaid “loan” with a balance outstanding of $900,000, and the fact that Peter had made a significant payment to KAL of $680,000 for no apparent consideration. It was said to defy “ordinary human experience” that a person would pay such a sum without having any reason to do so. KAL’s position was that, in circumstances where Peter had paid $680,000 to KAL and then caused KAL to make various payments either to him or for his benefit, the Court could not be satisfied that the payment was made in reduction of that “loan”.
5. The critical findings of the primary judge are set out at J[170]-[172]:
[170] The position as to the second “repayment” of $680,000 is more difficult. [Peter’s] evidence is that he “repaid” $680,000 of the balance of $900,000 on 29 June 2012. He did not take that position in the solvency declaration dated 23 August 2018 in support of the members voluntary winding up, which acknowledged that he then owed KAL $900,000 in respect of “trade debtors & interest unknown”. In a subsequent examination by the liquidator on 3 August 2020, he referred only to the initial repayment of $100,000 made against the purported loan in respect of the superannuation, and accepted that he owed $900,000 to KAL in respect of that “loan” and interest on that amount since 30 June 2007. While I recognise that [Peter] has suffered significant health issues from time to time, and in this period, I find it difficult to see that he could have forgotten a payment of that size, while apparently able to advance his own interests in respect of the distribution of [Dorothy’s] estate and issues arising in the winding up.
[171] By letter dated 9 October 2020, Mr Hayes [KAL’s liquidator] then sought information from [Peter] as to a deposit of $680,000 into KAL’s ANZ account on 29 June 2012. [Peter] did not respond until 16 February 2021, and he then observed that:
‘I have since established that the deposit of $680,000.00 was a payment by me against my outstanding loan. I have recently obtained a copy of my bank statement verifying this payment. Should you require a copy of this statement please let me know.’
[172] It seems to me that, at best, this information was so incomplete as to be misleading, where [Peter] referred to his payment to KAL without referring to substantial payments made by KAL to his associated entities at about the same time that had funded that payment, and his review of the bank statement to which he referred would have raised an obvious question as to the connection between those transactions. (Citations omitted.)
1. That analysis identifies two inconsistencies in Peter’s account with respect to the $680,000 payment. The first is his failure to mention that payment in his 2018 solvency declaration and in his 2020 examination by KAL’s liquidator. Indeed, when asked by the liquidator at that time whether he accepted that he owed $900,000 to KAL, Peter responded, “absolutely”. The second is his failure, upon being told of the $680,000 payment by the liquidator in October 2020, to refer in his response to any of the payments totalling $468,000 which on the same day he had caused KAL to make either to him, the Aidzan Superannuation Fund (of which he was sole beneficiary) or the PAL Property Trust (in which that fund was the sole unitholder).
2. In the result the primary judge considered that it was “possible” that Peter had paid the $680,000 to KAL in reduction of the Superannuation Payment recharacterised as a loan, but concluded that on the evidence he was not satisfied of that fact on the balance of probabilities (J[174]). Accordingly, his Honour did not treat the $680,000 payment as reducing the compensation to which KAL was entitled.
3. At this point it is necessary to set out more fully the circumstances in which the $680,000 was paid.
4. In 2007, Peter caused KAL to make the Superannuation Payment. Sometime in early 2012 he was advised by his accountant that this payment should not have been made or treated as a superannuation contribution. In early 2012, the Superannuation Payment was retrospectively recorded in KAL’s books as a “loan at call”. Peter transferred a sum of $100,000 to KAL “shortly after” receiving that advice and that amount was applied in reduction of that loan. As a result, the value of the “loan at call” was recorded in KAL’s financial statements from 30 June 2008 as $900,000, albeit that those financial statements were prepared in or after January 2012 and are not available for periods after FY2010.
5. On or around 29 June 2012, a series of transactions took place between Peter, KAL, the Aidzan Superannuation Fund and the PAL Property Trust. The evidence did not explain the order in which these transactions occurred or were to be taken as having occurred (J[173]). Of the $680,000 paid to KAL, payments totalling $468,000 were made by it to three parties, one of whom was Peter. Another of those parties, the superannuation fund, paid Peter an amount of $560,000.
6. More specifically, Peter’s bank statement records that on 29 June 2012 three sums of $120,000, $160,000 and $400,000 were deposited into his account. The $120,000 sum was transferred from KAL’s account. Peter’s evidence was that this sum represented his post-tax salary for FY2012. As for the other two amounts totalling $560,000, Peter’s evidence was that his accountant had told him that the superannuation fund could distribute those amounts to him “as his pensions” for the previous two financial years (FY2011 and FY2012). That fund’s bank statements were not in evidence but a document headed “The Aidzan Superannuation Fund Detailed Schedule of Fund Assets for the year ended 30 June 2012” records two debits of $160,000 and $400,000 on 30 June 2012.
7. Also on 29 June 2012, Peter’s bank statement (with the ANZ bank) records a debit of $680,000. A corresponding credit entry of $680,000 is recorded in KAL’s bank statement (with the same bank) for that day.
8. KAL’s bank statement also records three debits on 29 June 2012. The first is the salary payment of $120,000 to Peter. The second is a payment of $18,000 to the Aidzan Superannuation Fund, said to be an employer superannuation contribution made on Peter’s behalf (J[175]). The third is a payment of $330,000, which Peter said was rent paid to the PAL Property Trust for KAL’s use of the Sunnyholt Property during FY2012. The PAL Property Trust’s accounts for FY2012 show the “rent received” as $600,000 and that this amount was distributed in that financial year to the sole unitholder in that trust, Peter’s superannuation fund.
9. The outcome of this series of ‘end-of-financial-year’ transactions was that, from the $680,000 paid by Peter to KAL, Peter caused KAL to discharge “obligations” to pay Peter’s annual salary ($120,000), KAL’s annual employer superannuation contribution for Peter ($18,000), and rent due to the PAL Property Trust ($330,000).
10. The evidence does not establish what happened to the balance of $212,000 (being the $680,000 received less the $468,000 paid away). In oral submissions before the primary judge, KAL’s counsel submitted:
And the fact that there's another [$212,000], which he didn't pay out on that day, doesn't much matter because … your Honour sees that there are, over the course of time, lots of debits in substantial amounts of money and the 212 - there's no evidence as to what the 212 was, but it’d be inferred that he was paying the money in because he thought he had some obligation to pay KAL an extra 212,000. He was funding 468 to himself, and put in another 212, presumably because he understood that he was making up for some other amount that had been taken out at some other time. There are debits all through the course of those accounts…
1. KAL’s bank statements in evidence before the primary judge were, for the most part, not reproduced in the appeal books. They were bank statements for periods before and after 29 June 2012, although the evidence suggested KAL finally ceased trading in about 2013. Only three of those bank statements were before this Court, being for the weeks 25 June 2010 to 5 July 2010, 25 June 2012 to 2 July 2012 and 30 December 2013 to 6 January 2014. These statements show that KAL’s account balance decreased from $462,055.15 to $112,828.37 between 5 July 2010 and 25 June 2012, and from $349,110.66 to $114,595.40 between 29 June 2012 and 30 December 2013.
2. The books and records of KAL, the PAL Property Trust and the Aidzan Superannuation Fund that were in evidence were incomplete, it would seem for reason that they were kept at the Sunnyholt Property in a safe which was stolen from that property in around 2016.
3. It should also be noted at this point that the primary judge accepted that Peter had suffered “significant health issues from time to time” (J[170]), including around the time the $680,000 payment was made. Nevertheless, the primary judge did not consider those health issues sufficient to explain how Peter could have forgotten in 2018 and again in 2020 that he had repaid $680,000 of his “loan” in June 2012, which was five months after the $1 million superannuation contribution was ‘rebadged’ as a loan (J[170]).
4. KAL also pleaded an alternative claim for compensation against Peter, which alleged breaches of various equitable and common law duties in causing KAL to incur rental obligations to the PAL Property Trust and salary obligations to Peter after 30 June 2007, when it is said KAL should have ceased trading. As finally made, this claim was limited to the period from 2008 to 2010 because KAL had insufficient documentary evidence to make out its trading losses incurred from 2011 to 2013. In respect of the payment of rent, the compensation sought was also part of the Sunnyholt Surplus Rent claim, and accordingly was only pressed in the event that claim was unsuccessful. In relation to the salary payments, KAL would have been entitled to relief but for the primary judge’s conclusion at J[195]-[196] that a limitation defence was available (which was not, in that respect, challenged).
5. The primary judge considered the interaction between that alternative claim to the rent and salary payments and the $680,000 payment by Peter as follows (at J[175]):
For completeness, to the extent that $120,000 was then paid by KAL to [Peter] as salary, it will be recoverable by KAL only to the extent that it falls within KAL’s claim for salary paid out by reason of [Peter’s] failure to close the business at an earlier date. There is no challenge to [Peter’s] entitlement to retain the amount of $18,000 paid to him, purportedly as a superannuation contribution, on his evidence in cross-examination. The third purported “repayment” of $330,000, funded by [sic] a purported rent payment by KAL to Aidzan as trustee for the PAL Property Trust, falls within its claim as to the Sunnyholt Surplus Rent, which I have addressed above.
1. This reasoning of the primary judge raised a risk of double recovery by KAL. $468,000 of the moneys paid by Peter to KAL had funded the satisfaction of salary, superannuation and rental “obligations” of KAL, which as to salary had been, and which as to rent continued to be, the subject of claims to recover compensation. But it was not contended before the primary judge or in this Court that any part of the $680,000 was to be taken into account in calculating moneys due under any other claim for rent or salary payments.
2. In this context, counsel for KAL, Mr Leopold SC, submitted to this Court that the payment of $680,000 was one of many credits and debits between KAL and Peter before and after the payment was made:
LEOPOLD: But the argument propounded by Peter at trial amounted to taking a large credit entry in the accounts and it could have applied to any, over the years, any number of large credit payments that went into that account. There were – there were debits and credits happening every second day, often of a very considerable amount. That one was latched on to—
MEAGHER JA: So his Honour’s finding assumes in a sense that the money was somehow accounted for in the books. Doesn’t it?
LEOPOLD: I’m not sure if it assumes it was accounted for in the books. His Honour just looked at the deposit [and] said he wasn’t satisfied because the evidence wasn’t sufficiently transparent, that it was a reduction of Peter’s liability, that it could have been anything and particularly, given that he only ever claimed that there’d been a $100,000 reduction liability, his Honour wasn’t persuaded on the balance of probabilities on the evidence that it was not $100,000 but 780. It’s just – it was just one of a number of deposits made very frequently into account.
1. Addressing the ‘round robin’ of cheques and payments on 29 June 2012, of which the $680,000 payment from Peter to KAL formed a part, the analysis above shows that the payments made between Peter, KAL, the PAL Property Trust and the Aidzan Superannuation Fund were part of end-of-financial-year taxation and superannuation adjustments between those parties. That analysis also shows that, from Peter’s perspective at least, some of those payments were made to enable the discharge by KAL of “obligations” to pay rent, salary and an employer superannuation contribution.
2. Two further matters are significant. The first is that the payment to KAL exceeded the sum of KAL’s “obligations” by $212,000. There is an absence of any documentary evidence as to why that excess amount was paid to KAL and how those funds were subsequently applied by it. The second is that the amount of $680,000 paid to KAL was the sum of the three payments made into Peter’s account on that day. At least one of those payments could not have been made to Peter if KAL had not paid $330,000 to the PAL Property Trust.
3. The question remains whether Peter’s payment to KAL was to be applied in partial satisfaction of the $900,000 liability in addition to its being a payment in a series of end-of-year payments made to generate the distributions to Peter which in fact occurred, driven by financial and taxation advice received by him and the other entities. In this regard it is significant that the total amount received by Peter and paid by him to KAL in the ‘round robin’ was the same.
4. From Peter’s perspective, there appear to be four possibilities as to what occurred in relation to the payment of the $680,000. The first is that, as between Peter and KAL, it was to be applied in reduction of his outstanding “loan” balance of $900,000, and that the $680,000 was to be used by KAL to make payments in accordance with the relevant financial and taxation advice. The second is that it was paid in accordance with such advice to enable the end-of-financial-year transactions to occur; but that the question as to how that payment would be treated in the books of KAL was not addressed. The third possibility is that it was proposed that the money as paid was to be applied in repayment of some other existing or anticipated liability of Peter to KAL. The final possibility, which is most unlikely, is that Peter intended the money be paid to KAL as a gift.
5. Dealing then with the first possibility, KAL’s financial statements for the year ended 30 June 2012 were not in evidence. At the same time it was not suggested (because of their theft) that they were available, but had not been tendered. However, KAL’s financial statements from 30 June 2008 were in evidence and recorded the balance in the relevant loan account as $900,000. When questioned by reference to those earlier balance sheets in the August 2020 liquidator’s examination, it was put to Peter that “no repayments had been made [to that loan] at all; is that right?”. He responded:
A. There was one initial payment of 100,000. Because I think the loan was originally $1 million.
Q. I see.
A. So I’m sure I paid $100,000 plus interest.
Q. And as I understand your position, you accept today that you owe $900,000 to the company; is that right?
A. Absolutely.
1. Peter’s response is firm, although given eight years after the relevant events. In the face of this evidence, in conjunction with Peter’s declaration of solvency in 2018, which referred to the same amount, and the absence of any contemporaneous or later record showing that the $680,000 was applied in reduction of the recharacterised loan, it was open to the primary judge to be sceptical as to the reliability of Peter’s evidence on this subject. That is particularly so given that Peter gave no evidence before the primary judge suggesting that the accounting or other treatment of this amount had been discussed with his accountant or that he had otherwise formed an intention in June 2012 to treat the moneys in the way now contended for.
2. From Peter’s perspective, the significance of the payment was as one to be made at the end of the financial year, no doubt at a time when the focus was on the way in which taxable and non-taxable income would be produced by KAL and the superannuation fund before the financial year end. There is nothing in these circumstances and Peter’s evidence which makes it more probable than not that he intended that the money when advanced was to be treated as applied in reduction of the earlier “loan”. The other realistic possibilities included that the money was paid to KAL with the question as to its accounting treatment as between KAL and Peter being left unaddressed; or that at the time it was expected that the $900,000 loan would be repaid in some other way.
3. In the result the primary judge is not shown to have erred in not being satisfied that the $680,000 when paid was to be applied as Peter contends. It follows that the compensation awarded for the Superannuation Payment claim was not to be reduced by that amount. Ground 8 should be dismissed.
Respondent’s notice of contention
1. Having found for the respondent on each of the grounds of appeal and on the cross-appeal, it is unnecessary to consider the other points raised by its notice of contention.
Conclusion
1. For these reasons the appeal should be dismissed, the cross-appeal allowed, and the appellants/cross-respondents ordered to pay the costs of the proceeding in this Court.
2. The orders I propose be made are:
1. Dismiss the appeal.
2. Allow the cross-appeal.
3. Set aside orders 6 and 7 made by Black J on 4 July 2023 and instead order:
1. that Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd pay to K. & A. Laird (N.S.W.) Pty Ltd (in liq) the amount of $2,094,545 in rent paid to Aidzan Pty Ltd (in liq) in relation to the Sunnyholt Property for the period from 1 July 2005; and
2. that Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd pay to K. & A. Laird (N.S.W.) Pty Ltd (in liq) interest, pursuant to s 100 of the Civil Procedure Act 2005 (NSW), on the sum of $2,094,545 in the sum of $1,889,254.70.
1. Peter Laird, Aidzan Pty Ltd (in liq) and Nazdia Pty Ltd as appellants/cross-respondents pay K. & A. Laird (N.S.W.) Pty Ltd (in liq) as respondent/cross-appellant’s costs of the appeal and cross-appeal.
1. ADAMSON JA: I have had the benefit of reading the reasons of Meagher JA in draft. I agree with the orders proposed by Meagher JA, largely for the reasons given by his Honour.
2. As his Honour’s review of the authorities demonstrates, the question whether the knowledge of a director will be imputed to a company is to be answered by reference to the context, with particular regard to the identity of the plaintiff and the defendant in the proceedings and the nature of the claim. The law has a concern to prevent a party from profiting from his or her own breach, including in the context of the Limitation Act 1969 (NSW). As Deane J said in Hawkins v Clayton (1988) 164 CLR 539 at 590; [1988] HCA 15:
“If a wrongful action or breach of duty by one person not only causes unlawful injury to another but, while its effect remains, effectively precludes that other from bringing proceedings to recover the damage to which he is entitled, that other person is doubly injured. There can be no acceptable or even sensible justification of a law which provides that to sustain the second injury will preclude recovery of damages for the first.”
1. This statement was made in a case where a solicitor, Clayton, who had negligently failed to locate Hawkins, the executor of a will (who was also the residuary beneficiary), sought to resist liability on the basis of s 14(1) of the Limitation Act 1969 (NSW) as Hawkins had not commenced proceedings until more than six years after the testatrix’s death. While Brennan and Gaudron JJ found that time did not begin to run until Hawkins assumed the office of executor, Deane J held that Hawkins’ cause of action did not accrue until the expiration of the period in which the wrongful act itself (not informing Hawkins of the will of which he was executor) effectively precluded the bringing of proceedings.
2. The principle articulated by Deane J – that a party ought not be permitted to profit from his or her own breach – is one of general application. It underpins the statements extracted by Meagher JA of Lord Mance in Bilta (UK) Ltd (in liq) v Nazir (No 2) [2016] AC 1 at [38] that “… it is certainly unjust and absurd to suggest that the answer to a claim for breach of a director’s (or any employee’s) duty could lie in attributing to the company the very misconduct by which the director or employee has damaged it” and of Baroness Hale in Singularis Holdings Ltd (in liq) v Daiwa Capital Markets Europe Ltd [2020] AC 1189 at [30] that “where a company has been the victim of wrongdoing by its directors, the wrongdoing of the directors cannot be attributed to the company as a defence to a claim brought against the directors – and their co-conspirators – by the company’s liquidator for the loss suffered by the company as a result of the wrongdoing.”
3. Thus, in the present case, where the wrongdoer, Peter, is a director and the injured party, the respondent, is the company of which the wrongdoer was a director, the authorities which Meagher JA has addressed recognise that it would be wrong and illogical to attribute the director’s knowledge of the wrongdoing to the company, since to do so would be to doubly wrong the company and permit the director to profit from his own breach.
4. The ebb and flow of the law from the articulation of general principle to the statement of a rule with exceptions and back again to general principle represents an attempt to articulate, with greater or less precision, how multifarious fact situations ought be decided consistently: see, for example, in the context of torts: Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 at 486-488 (Mason, Wilson, Deane and Dawson JJ); [1987] HCA 7. It was open to the primary judge to decide the matter by referring to principles derived from well-established authority which used the language of “fraud exception”. However, for the reasons given by Meagher JA, it may generally be preferable to avoid such terms because of the difficulties of incorporating the requisite nuance as to context and circumstances in the expression of a so-called general rule subject to a “fraud exception”.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 18,063 |
nsw_caselaw:190fc1224b58d48dc4b24417 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Crackin’ Snack Pty Ltd v Gameking Australia Pty Ltd [2024] NSWCA 182 | https://www.caselaw.nsw.gov.au/decision/190fc1224b58d48dc4b24417 | 2024-08-04T23:50:12.713015+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Crackin’ Snack Pty Ltd v Gameking Australia Pty Ltd [2024] NSWCA 182
Hearing dates: 22 May 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Before: Bell CJ at [1];
Payne JA at [249]; and
Adamson JA at [250]
Decision: 1. Dismiss the appeal.
2. Order the Appellants to pay the Respondents’ costs of the appeal.
3. Refuse leave to appeal from the costs judgment of Andronos SC DCJ.
4. Order the Appellants to pay the Respondents’ costs of the application for leave to appeal from the costs judgment of Andronos SC DCJ.
Catchwords: CONSUMER LAW – Misleading or deceptive conduct – Purported termination of contract – “No transaction” case – Termination unavailable where breach of contract was minor and innocent party affirmed the contract
COURTS AND JUDGES – Bias – Alleged “differential” treatment of parties – Adverse credibility assessments not evidence of bias
COSTS – Where a judge other than the trial judge determines costs – Offer of compromise unreasonably rejected – Discretion as to costs not constrained by Uniform Civil Procedure Rules 2005 (NSW) r 36.16(3A) where primary judge expressly provided opportunity to apply to vary costs order under that rule.
Legislation Cited: Civil Procedure Act 2005 (NSW) ss 56, 98
Competition and Consumer Act 2010 (Cth) sch 2 – Australian Consumer Law ss 236, 237
Uniform Civil Procedure Rules 2005 (NSW) rr 14.14, 36.15, 36.16(3A)
Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333
Carpenter v Morris [2023] NSWCA 154
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54
Damjanovic v Sharpe Hume and Co [2001] NSWCA 407
Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63
Feldman v Nationwide News Pty Ltd (2020) 103 NSWLR 307; [2020] NSWCA 260
Henville v Walker (2001) 206 CLR 459; [2001] HCA 52
House v The King (1936) 55 CLR 499; [1936] HCA 40
Keegan v Ballast Point Pty Ltd [2022] NSWCA 179
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68
Majak v Rose (No 5) [2017] NSWCA 238
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48
Mohareb v Booth [2020] NSWCA 49
Mohareb v Kelso (No 2) [2018] NSWCA 246
Mohareb v State of New South Wales (No 2) [2024] NSWCA 69
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3
QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 15; (2023) 97 ALJR 419
Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd (No 2) [2024] NSWCA 13
State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283
Zakaria v Dr Noyce [2012] NSWSC 981
Category: Principal judgment
Parties: Crackin’ Snack Pty Ltd (First Appellant)
Simon John Hall (Second Appellant)
Gameking Australia Pty Ltd (First Respondent)
Darren John Brown (Second Respondent)
Linda Sharon Brown (Third Respondent)
Representation: Counsel:
S Hall (in person, Appellants)
E Young and S McGrath (Respondents)
Solicitors:
MC Lawyers & Advisers (Respondents)
File Number(s): 2023/361841
Publication restriction: N/A
Decision under appeal Court or tribunal: District Court of New South Wales
Jurisdiction: Civil
Citation: N/A
Date of Decision: 20 October 2023
Before: Gibb DCJ
File Number(s): 2022/89782
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
These proceedings concerned a contract for the sale of vending machines (the Contract) between Crackin’ Snack Pty Ltd and its sole director, Mr Hall (the Appellants), as the purchaser and guarantor, and Gameking Australia Pty Ltd (Gameking) as vendor. The Contract provided for the sale of 112 vending machines for $350,000, but there was a shortfall in the number of machines supplied with the extent of the shortfall being a matter of dispute between the parties at first instance.
The Appellants continued to operate the vending machine business for a number of months following completion, and following their knowledge of the missing machines. The Respondents offered to supply additional machines, and three additional machines were in fact supplied pursuant to a separate contract but never paid for by the Appellants. The parties also agreed before the purported rescission of the Contract to set off certain amounts owing by each to the other under the Contract (the offset agreement).
A number of months following completion, the Appellants issued Gameking with a rescission notice, purporting to rescind the Contract for the shortfall in the delivery of the 112 machines referred to in a schedule to the Contract. The Appellants subsequently commenced proceedings against Gameking and its general manager and sole director, Mr Brown and Ms Brown (the Respondents), alleging misleading or deceptive conduct, breach of contract and negligence. The Appellants contended that the entire purchase price was repayable, as they would not have entered the Contract “but for” the Respondents’ misleading conduct.
Gibb DCJ (the primary judge) determined that the Respondents’ failure to provide three vending machines was in breach of contract and involved misleading or deceptive conduct, causing a loss of $10,000. Her Honour awarded the Appellants a sum of $26,300, accounting for the parties’ offset agreement and taking into account the non-payment by the Appellants for the additional machines supplied by the Respondents but never paid for by the Appellants. The primary judge held that the Appellants could not terminate the Contract as they affirmed it, and that the rescission notice was issued after completion. Her Honour rejected the Appellants’ claim that they would not have entered the Contract “but for” the misleading conduct, and also rejected a number of other claims made by the Appellants.
The primary judge held that costs should lie as they fall, but gave the parties 14 days to apply to vary the costs order. The Respondents applied to vary the costs order. The primary judge referred the costs hearing to Andronos SC DCJ (the costs judge) following the Appellants’ assertion (made after the substantive hearing) that the primary judge was biased. The costs judge held that indemnity costs were payable by the Appellants from 21 September 2023 because of the Appellants’ unreasonable rejection of the Respondents’ oral without prejudice offer of settlement.
The Appellants challenged the primary judgment on multiple grounds, arguing amongst other matters that the primary judge was biased, and that her Honour had erred in holding that they would not have entered the Contract but for the Respondents’ misleading representations that 112 vending machines would be provided. In relation to the costs judgment, it was contended that there was no power to vary the costs judgment under r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
The Court (Bell CJ, Payne JA and Adamson JA agreeing), dismissed each challenge raised by the Appellants. Its holdings included that:
1. The Appellants failed to establish that the primary judge’s decision was affected by actual or apprehended bias. Disagreement with the reasoning or outcome of a decision cannot, by itself, establish bias nor do adverse credit assessments of witnesses, without more, generate an apprehension of bias. Where allegations of actual or apprehended bias are made, “cherry-picked” passages of transcript must be read in their full context, including in light of the Court’s legitimate role in the efficient conduct of Court proceedings: [80]-[106] (Bell CJ); [249] (Payne JA); [250] (Adamson JA).
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Feldman v Nationwide News Pty Ltd (2020) 103 NSWLR 307; [2020] NSWCA 260; Mohareb v Booth [2020] NSWCA 49; Mohareb v Kelso (No 2) [2018] NSWCA 246, applied.
1. The primary judge did not err in her rejection of the Appellants’ counterfactual “no transaction” case, namely that they would not have entered into the Contract “but for” the misleading and deceptive conduct in relation to the actual number of vending machines to be delivered under the Contract. This conclusion was supported by the evidence of Mr Hall and the fact of affirmation of the Contract after the Appellants’ learnt of the shortfall: [115]-[121] (Bell CJ); [249] (Payne JA); [250] (Adamson JA).
2. Andronos SC DCJ did not err in determining the costs judgment despite the unresolved allegations of the primary judge’s bias: [215]-[221] (Bell CJ); [249] (Payne JA); [250] (Adamson JA).
3. There was no want of power to vary the costs order under UCPR r 36.16(3A) in the circumstances of the case: [222]-[234] (Bell CJ); [249] (Payne JA); [250] (Adamson JA)
State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283; Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd (No 2) [2024] NSWCA 13; Mohareb v State of New South Wales (No 2) [2024] NSWCA 69, distinguished.
JUDGMENT
Introduction
1. BELL CJ: This appeal involves proceedings arising from and related to a contract in a modified form of the 2004 edition of a “Contract for the sale of business” (the Contract). The “Type of business” was identified in the Contract as “Vending machine”.
2. The Contract was executed on 1 December 2021, for a consideration of $350,000. The Contract was between:
1. Crackin’ Snack Pty Ltd (Crackin’ Snack) and Simon Hall (together the Appellants) as the purchaser and guarantor respectively; and
2. Gameking Australia Pty Ltd (Gameking) as the vendor.
1. Gameking was the first defendant in the proceedings at first instance and the First Respondent in this Court. Mr Darren Brown and Ms Linda Brown were the shareholders of Gameking (together, the Respondents) and were the second and third defendants in the proceedings below, and are the Second and Third Respondents in this Court.
2. Annexure A of the Contract listed some 112 vending machines, each identified by an “Asset ID”. Annexure B to the Contract detailed the sites at which various vending machines were located.
3. The primary judge noted that it was “common ground” that Crackin’ Snack took possession of the Assets on 7 December 2021: Red 119P.
4. A software system called “Seed Pro” monitored sales for the vending machines and processed credit card payments made to purchase an item from the vending machines: Red 175H. Gameking had a licence to use Seed Pro. The primary judge held that (Red 119Q-S):
“The defendants allowed the plaintiffs to use the defendants' software database and licence after completion. That was no part of the contract or any purchase. The plaintiffs did not consider their use of the defendants' software suitable or sufficient. But that is not a contractual issue as such; nor does it arise from or constitute any misleading or deceptive conduct.”
1. Clause 34 of the Contract provided that Crackin’ Snack pay to Gameking any remaining “Cash Balance and Stock” which was leftover in the vending machines at the time of completion. The primary judge held that, at the time “when hostilities broke out”, Crackin’ Snack had not paid $32,383.61 in cash and stock which it was obliged to pay to Gameking: Red 164G.
2. Mr Hall provided affidavit evidence that, on 14 December 2021, he and Mr Brown agreed orally that Gameking would receive any credit card payments made in relation to purchases from the vending machines following completion to indirectly repay the debt owed relating to the “Cash Balance and Stock”: Red 185Q-186F. Somewhat perversely, the Appellants (one of whom was Mr Hall) challenged a finding made to this effect – see further at [154] below.
3. By email sent on 19 December 2021 at 9.34pm, Mr Hall informed Mr Brown of a shortfall in the number of machines as compared to the 112 listed in Annexure A of the Contract. The primary judge noted that (Red 120X-121C):
“It is common ground that some of the asset IDs were not transferred to the purchaser. The amended statement of claim pleaded that 10 machines were missing. The defendants conceded the pleading point about asset IDs, and said frankly that there were errors in the appendix A list; but say variously that 103 or 106 machines were transferred.”
1. By email sent on 19 December 2021 at 11.57pm, Mr Brown replied, offering to replace the missing vending machines:
“In regards to machines if it’s an issue I will give you the effected [sic] machines or equivalent if required.”
The primary judge noted that this offer was not taken up, nor was a repeated offer in January 2022: Red 123C, 124J.
1. By letter sent on 8 January 2022, Mr Hall informed Mr Brown of the Appellants’ right to claim damages, but Crackin’ Snack continued in possession and use of the vending machines that were transferred: Red 143S-U, 144W.
2. By emails on 8 January and 9 January 2022, the Respondents again offered to provide extra vending machines and find additional sites for the vending machines.
3. Whilst the Appellants rejected various offers, Gameking had provided three vending machines by 3 February 2022 pursuant to a separate oral agreement of 6 December 2021, and offered to provide further machines: Red 154 U-V.
4. On 25 February 2022, Crackin’ Snack purported to rescind the Contract, by issuing a Rescission Notice asserting that the Contract was void ab initio “as a result of Gameking’s misrepresentations and misleading and deceptive conduct”.
5. As of 24 November 2022, Gameking had retained $46,648.14 in credit card payments, exceeding the amount which the primary judge considered was owed by Crackin’ Snack, being $22,383.61 (that is, $32,383.61 owed in cash and stock (see [7] above), minus what her Honour estimated to be Crackin’ Snack’s $10,000 loss caused by not having received 3 vending machines or, to put it slightly differently, only receiving 109 vending machines from Gameking: Red 164H-I, 217K.
Commencement of proceedings and primary judgment
1. Proceedings were commenced on 29 March 2022 by statement of claim, with claims being made alleging misleading or deceptive conduct of various kinds as well as unconscionable conduct, and for breach of contract and in negligence. An amended statement of claim was filed on 28 August 2023.
2. The Appellants contended that Gameking was liable for misleading or deceptive and unconscionable conduct, breach of contract, and/or negligence due to:
1. its failure to provide 112 vending machines as specified in Annexure A of the Contract;
2. its failure to provide the Appellants with a Seed Pro software licence;
3. its retention of credit card payments earned from use of the Appellants’ vending machines; and
4. the poor condition of the vending machines.
1. The Appellants further claimed that Mr and Ms Brown had themselves engaged, or were persons involved, in misleading or deceptive conduct. The primary judge rejected the Appellants’ claims against Mr and Mrs Brown: Red 109.
2. In the event, the primary judge held that there was a failure to deliver part of the “contractual assets”, namely 6 vending machines were not provided, being those matching Asset IDs 1616458; 1642066; 1641589; 1632000; 1671867; and 1622639. The primary judge also held that 3 sites listed on Annexure B were not provided, being the sites at Yagoona Tavern; Binksie Services at Granville; and the Royal Hotel at Granville. Red 126H-J, and that the Respondents had engaged in misleading and deceptive conduct in this respect: Red 189W-X, 200O-T. There was no challenge by way of cross-appeal to this finding.
3. In an important passage which is key to understanding the primary judge’s reasoning, her Honour held that (Red 126K-R):
“This not being a purely contractual analysis, the overall dealings are relevant[.] There were 3 extra machines provided separately (for which the agreed $15,000 payment was not made), which brought with them 2 sites. The “missing” machine at Oakdale, was not missing and brought with it an extra site. The missing number of sites was met by the extra sites and Oakdale.
The parties had made separate arrangement about the 3 additional machines, with “a couple of new sites” outside of the contract. That was agreed upon separately on about 6 December 2021 at a price of $15,000. The machines (with individual asset IDs) were provided; but no payment was made. Mr Brown deposed that Mr Hall said “just add them to the bill”, which I infer was the bill that was expected to be raised in respect of cash and stock, payable separately under the contract.
Putting aside the agreed payment (of $15,000), which was not made for the extra machines, the first plaintiff received a net shortfall of 3 machines missing as against the contractual expectation and representation. (Alternatively the 6 (5-20 year old) missing machines were offset by a sum of $15,000, being the price of 3 new machines (being money payable but withheld by the plaintiffs.)
The defendants made repeated offers to supply the missing machines or replacements. That offer was not accepted and led to more dispute between the parties in the following months.” (Citations omitted.)
1. The primary judge held that one of the allegations of misleading or deceptive conduct, relating to the number of vending machines that would be transferred on completion of the Contract, was made out: Red 136P-R. The primary judge also held that the failure to provide all 112 vending machines constituted a breach of contract and negligence: Red 149Q-R, 189W-X.
2. The gravamen of the Appellants’ complaint both at first instance and in this Court was that Mr Hall was entitled to repayment of the entirety of the purchase price of $350,000 on the basis that, but for the misleading or deceptive conduct, the Contract would not have been entered into at all. In other words, the Appellants advanced what is commonly known as a “no transaction” case.
3. Her Honour, however, rejected the contention underpinning the no transaction case. Relevantly in this context, Mr Hall had accepted in cross-examination that the number of machines was not the deciding factor in the Appellants purchasing the machines: Red 141L-O.
4. Her Honour also rejected the other elements of the Appellants’ case, as explained more fully below.
5. Her Honour ultimately awarded Crackin’ Snack $26,300.39. The judgment sum comprised: (i) $10,000 in damages representing the loss suffered referable to what was effectively the net three missing vending machines (see [15] above); and (ii) restitution of the credit card payments directed to Gameking which exceeded the amount owed to it under the offset agreement noted at [8] and [15] above: Red 218O-V.
6. The Appellants have now appealed on some 14 grounds including that the primary judge was biased against the Appellants, that her Honour misapplied the principles of misleading or deceptive conduct, that her Honour incorrectly characterised the Contract as simply involving an “asset sale” as well as challenging her Honour’s rejection of various allegations of misleading or deceptive conduct other than the central misrepresentation that her Honour found was made out.
7. In order to understand the numerous grounds of appeal, it is necessary to go into some further detail in relation to the lengthy primary judgment. Regrettably (and not for the first time: see Keegan v Ballast Point Pty Ltd [2022] NSWCA 179 at [3]), this judgment of some 111 single spaced pages contained no paragraph numbering, making the task of both the parties and this Court far more difficult than needed to be the case both in terms of written submissions and the drafting of reasons for judgment. For that reason, references to the Red Book have been retained when referring to the primary judgment in these reasons for the benefit of the parties albeit that this will be of no utility to any other reader of this judgment.
Failure to provide six vending machines
1. The primary judge held that the failure to provide six of the 112 vending machines listed in Annexure A constituted a breach of contract, negligence and, to the extent that there was a contractual representation that 112 machines would be supplied, that representation amounted to misleading or deceptive conduct: Red 136M-P, 149Q-R, 189W-X.
2. In substance, there was a shortfall of only three vending machines in circumstances where three machines were supplied by the Respondents shortly after completion of the Contract but the $15,000 which Mr Hall had agreed to pay for those additional machines was never paid.
Seed Pro software licence: not liable
1. The Appellants argued at first instance that Gameking breached the Contract and engaged in misleading or deceptive conduct due to Gameking’s failure to provide Crackin’ Snack with a licence to the Seed Pro software system.
2. Clause 1.1 of the Contract provided that the “business” included the “software of the business”. Furthermore, Special Clause 51.1(d) required that Gameking “provide… all computer software, programs and systems”.
3. The primary judge held that Gameking was under no obligation (contractual or otherwise) to provide Crackin’ Snack with a licence to Seed Pro because Gameking did not own the software: Red 176F. Rather, Crackin’ Snack was obliged to secure the licence itself: Red 176H. Consequently, the primary judge held that there was no liability for misleading or deceptive conduct, or breach of contract, in relation to Seed Pro: Red 137L-O.
Retaining credit card payments: not liable
1. Despite taking possession of the vending machines, Crackin’ Snack could not access the proceeds from credit card payments to the machines, because Mr Hall/Crackin’ Snack did not create an account with Seed Pro: Red 184K.
2. The primary judge was satisfied that, on 14 December 2021, Mr Hall and Mr Brown agreed that the credit card payments for snacks from the vending machines could be directed to Gameking’s Seed Pro account to offset the amounts which were still owed to Gameking: Red 185Q-186F, 187C. Her Honour accepted Mr Hall’s evidence that he and Mr Brown had the following conversation concerning an offset agreement (Red 185T-Y):
“Darren [Mr Brown]: ... and I've put the amounts for the other three machines on there as well. So, let’s say that it’s looking like 54 thousand overall, but I'll send through the workings.
Me [Mr Hall]: I’ll have a look when you send it through. What about the credit card payments? Because they should come to me.
Darren: And there is that stock you picked up on Friday.
Me: So let’s say this. We’ll offset anything that’s owed between our two companies. It just makes it easier, rather than I pay you and you then pay me. There’s no point in doing that. So anything that’s owed to Crackin’ Snack you just use it to offset what I’ll need to pay Gameking. How’s that sound?
Darren: Yes, ok, that sounds fair. I should be able to send through those workings tonight and I'll offset anything, so you just have a final amount to pay.
Me: Great. I'll wait for your email and have a look ....”
1. The primary judge found that the agreement was consistent with Mr Hall and Mr Brown’s contemporaneous communications. For example, on 24 December 2021, Mr Hall sent Mr Brown an email confirming the offset agreement, explaining that “the card reader money will still be paid into the Gameking accounts”: Red 186J-K. Despite this agreement, it was contended by the Appellants that the Respondents had engaged in misleading or deceptive conduct by keeping the proceeds from the credit card payments directed to Gameking’s Seed Pro account. The primary judge rejected the Appellants’ claim for misleading or deceptive conduct on the basis that the parties had agreed to this arrangement: Red 187L-M, 190.
2. The remaining issue, dealt with below, was that the Respondents retained funds derived from credit card payments beyond that which was owed to Gameking. To the extent that there was unjustified retention of funds, this was the subject of the restitutionary component of the damages ultimately awarded: see [25] above.
“Good working order” of the vending machines: not liable
1. The Appellants also pleaded that the vending machines provided by Gameking were “not each in good and proper working order”: Red 190T-U. Special condition 10.1.1.16 [sic.] of the Contract provided that:
“As of the date of this agreement, all machines are in good working condition, sold with fair wear and tear, and as is and where is with all defects and faults if any and have been well serviced from reputable suppliers in NSW.”
1. Save for one vending machine, which was missing a coil (and was subsequently fixed by Mr Brown: Red 191X), the primary judge held that there was “no evidence that any of [the] faults had manifested relevantly as at completion”: Red 191V-W. Rather, her Honour held that there was “no reliable evidence that any of the equipment or vending machines was not in good and proper working order at completion”: Red 192C.
2. Consequently, the primary judge rejected the Appellants’ claim that Gameking had breached the Contract by failing to provide vending machines in “good working order”: Red 192-197.
Primary judgment on termination
1. The Appellants contended that the Contract could be terminated due to the Respondents’ failure to provide all 112 vending machines.
2. The primary judge held that the Appellants could not terminate the Contract because Crackin’ Snack: (i) had elected to affirm the Contract; and (ii) failed to provide any notice of rescission before completion.
3. In relation to affirmation, the primary judge held that the Appellants could not terminate or rescind the Contract because they had elected to affirm the Contract when in possession of knowledge concerning the breach, namely the shortfall of machines: Red 144R-S, 146S-U, 147T U, 147H. The primary judge held that the Appellants’ election to affirm the contract was also evidenced by the continued operation of the vending machine business: Red 144W.
4. Furthermore, the Appellants had sent a letter on 7 January 2022, asserting that completion of the Contract “had occurred”; and another letter, sent on 8 January 2022, asserted that the “only way to compensate Crackin’ Snack for the breach is through damages”.
5. Clause 23.1 of the Contract provided (with emphasis added) that:
“23 Rescission of contract
23.1 If this contract expressly gives a party a right to rescind, the party can exercise the right:
23.1.1 only by serving a notice before completion; and
…”
1. Special condition 2.6 of the Contract provided that:
“If the Vendor breaches this contract or otherwise commits an act or omission of fraud, willful [sic] misconduct or negligence, or does not Complete by the Completion Date, the Purchaser may immediately terminate this agreement by notice in writing, without any further obligation to the Vendor or incurring any costs, expenses, damages or losses and the deposit will be refunded to the Purchaser plus the Vendor will pay on demand, the Purchaser’s costs incurred in relation to this contract, including legal costs.”
1. Taking cl 23.1 and special condition 2.6 of the Contract together, the primary judge held that the contractual right to termination could only be exercised before completion had occurred: Red 149W. The primary judge held that the Contract was completed on 7 December 2021, before the Appellants had provided the purported notice of rescission to the Respondents, on 25 February 2022: Red 147H. Therefore, despite the Appellants’ notice of rescission, there was no express contractual right to rescind/terminate the Contract at that time: Red 150J. Rather, the primary judge held that the Appellants’ purported termination constituted a repudiation of the Contract: Red 150Q.
2. After completion, equity would not order rescission of a contract for the sale of an asset such as shares, for example, in the absence of fraud: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 585; [1995] HCA 68.
“No transaction” case
1. As noted above, the Appellants contended that they would not have entered into the transaction had Crackin’ Snack known that it would only receive 106 vending machines (or 103 machines, as it also contended) (the “no transaction” case).
2. The primary judge did not accept or find that Crackin’ Snack or Mr Hall would not have entered into the transaction had they or Crackin’ Snack through Mr Hall known all the facts: Red 163.
3. Earlier, at Red 154, her Honour had held:
“When the plaintiffs fixed upon a price in October 2021 and made an offer there were 108 machines under discussion and no representation that there were 112 machine[s] in 2021. The defendants’ material (and that of the broker) listed about 108 machines (although the accountant’s working sheet disclosed that there had been 112 machines more than a year earlier (as at 30 June 2020). I accept that Mr Hall believes that he now recalls mention of 110 machines. But I accept the broker’s evidence in cross-examination that he referred to 108 machines consistently … The plaintiffs’ case rests on the repeated assertion that had Mr Hall known of the shortfall in the number of the vending machines he would not have entered into the transaction on behalf of the first plaintiff. There is no objective evidence supporting that statement, which is made repeatedly, by reference to the assertion of the 10 missing machines and each other allegation. The objective and contemporaneous evidence is inconsistent with that assertion; which I do not accept. The contemporaneous evidence is to the contrary; and I so find.” (Citations omitted.)
1. The primary judge also rejected the Appellants’ “no transaction” claim because they refused to accept further replacement vending machines from the Respondents, despite continuing to operate the vending machine business for weeks after completion: Red 153T-X. The logic of this argument was that, had the number of 112 vending machines been critical to the Appellants, and they would not have entered into the Contract otherwise, rejection of “top-up” machines was quite inconsistent with the Appellants’ no transaction argument.
Quantifying the value of the missing vending machines
1. The primary judge held that quantifying the value of the missing vending machines was “speculative” because: (i) the missing vending machines were not identified; (ii) the age or condition of the missing vending machines was unknown; (iii) no expert opinion was provided; and (iv) no valuation evidence was provided, including evidence about the market for vending machines: Red 153M-N, 157R. As such, the primary judge found that there was no “satisfactory” way to value the missing machines: Red 163W.
2. The primary judge, after considering various different ways of calculating the value of three vending machines (see Red 159C-163U), arrived at the figure of $10,000: Red 164H. Despite deciding upon this figure, her Honour acknowledged that $10,000 was a “rather excessive quantification”, and that “the better view is that it is closer to half of that”: Red 164E-H.
3. Nonetheless, the primary judge held that the Appellants suffered loss in the sum of $10,000 due to the Respondents failing to provide the three vending machines: Red 164F.
Failure to pay for cash and stock
1. Clause 34 of the Contract provided that the Appellants must pay to the Respondents any remaining “Cash Balance and Stock” which was leftover in the vending machines at the time of completion.
2. As already noted, the primary judge held that, “when hostilities broke out”, the Appellants had failed to pay the Respondents $32,383.61 for cash and stock in the vending machines at the time of completion: Red 164G.
3. Therefore, the primary judge held that, in substance, the Appellants had not suffered any “net loss”: Red 164C-D. Rather, the Appellants owed the Respondents “at least $22,383.61”, which accounted for the $32,383.61 owed by them to the Respondents for cash and stock, minus their “loss” of $10,000 due to three missing vending machines: Red 164H-I.
Credit card receipts
1. As noted above at [8] and [34], the Appellants and Respondents agreed that the Respondents could take the Appellants’ revenue received from credit card payments to “offset” the debt owed by the Appellants to the Respondents: Red 186E-F.
2. The Appellants, after accounting for the three missing vending machines, owed $22,383.61: Red 164H-I. However, the Respondents had drawn $46,648.14 from vending machine credit card payments as of 24 November 2022: Red 217K. The reason for the overdrawn amount (i.e., an amount in excess of that which the Respondents were entitled by agreement to set off against amounts owed to them by the Appellants) was that, after the Appellants had issued the notice of rescission on 25 February 2022, they did not seek to recover further funds generated by sales from the vending machines, leaving the amounts in Gameking’s Seed Pro account. Her Honour said (Red 216 O-R):
“…He [Mr Hall] eschewed entitlement to those payments when he abandoned the contract.
There lies the complexity at the core of the relationship between these parties. The first defendant continued to receive the credit card payments generated by the machines. The first defendant could do nothing else except block receipt of the monies. In principle that would have laid waste to that money, until there was a signed consent to transfer. The evidence does not disclose that the plaintiffs signed a consent to transfer as receiver. But so long as the first plaintiff owned the machines, as it did, the money generated through their sales belonged to the first plaintiff.”
1. As earlier noted, it was pleaded that Gameking’s receipt of credit card payments beyond what was owed to it should be “disgorged” by way of unjust enrichment: Red 217N-O. After quoting Carpenter v Morris [2023] NSWCA 154 at [62]-[63], [68]-[70], her Honour concluded that “[t]his is such a case” justifying restitution of unjust enrichment: Red 217R-218O.
2. Her Honour determined that the Respondents should disgorge $26,300.39 in favour of the Appellants, reasoning (Red 218O-V):
“It is not easy to identify when the monies held pursuant to the 14 December 2021 agreement exceeded the monies owed. I find that equilibrium was reached around about 3 February 2022 when credit card receipts were at $19,613.55 as at the week ending 1 February 2022 and credit was allowed for $20,347.75, including commission of $734.36.
I reach that by applying the earlier analysis that the first plaintiff owed $32,383.61 for cash (float) and stock (which may be an underestimation), received 3 extra machines (in which respect I disregard the $15,000), and allowing the rather excessive quantification of $10,000 to the value of the 3 missing machines, the first plaintiff owed the first defendant a net balance of at least $22,383.61.
(The better view may be that equilibrium was reached on 25 February 2022 having regard to the plaintiffs' quantification of the sum then held and the plaintiffs' use of the defendants' software which relieved the first plaintiff of the liability to pay $1,652.50 per month for its own software.)
I have taken the simple view that monies received after the 3 February 2022 invoice should be disgorged. That is a sum of $46,648.14 less $20,347.75, i.e., $26,300.39.” (Citations omitted.)
1. That is, her Honour held that “$26,300.39 should be returned to the plaintiffs as monies had and received in excess of any loss or damage”: Red 219C. There was no cross-appeal against this finding, and the moneys were paid prior to the hearing of the appeal.
2. The primary judge also made credibility findings which were relevant to at least ground 1 of the notice of appeal. The main witnesses were Mr Hall and Mr and Mrs Brown.
3. The primary judge made the following general observations as to Mr Brown:
* he was “careless” and “clumsy”: Red 167R;
* “…loquacious, to the point of being the sort of person of whom it may be said colloquially that he would talk under wet cement.”: Red 171S; and
* “But they [Mr and Ms Brown] were the opposite of mala fide, making clumsy attempts to appease or assist the plaintiffs by raising new sites for machines…The attempts to suggest opportunities or assuage customers ended up illustrating the trope that no good deed goes unpunished and increasing Mr Hall’s suspicion and animosity”: Red 172S.
1. The primary judge made the following observations in respect of Mr Hall:
* “…credit and reliability issues… [was] overlaid by Mr Hall’s occasional lack of frankness, and false promises about payment in some respects”: Red 166R;
* “Mr Hall’s written style is a version of precise legalism. But on Mr Hall’s side misapprehensions are overlaid with suspicion and anger”: Red 169R; and
* “At various points Mr Hall’s sense of grievance had influenced his recollection and destroyed its reliability”: Red 170J.
Costs judgment
1. On 20 October 2023, the primary judge ordered that there be “no order in respect of costs with the intention that costs lie as they fall”, but gave each party 14 days to apply for variation of the costs order in accordance with r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
2. On 3 November 2023, the Respondents filed a motion, consistent with her Honour’s orders, seeking a variation as follows:
“(a) There is no order as to costs as between the first plaintiff and the first defendant up to and including 27 November 2022, with the intention that the costs lie as they fall.
(b) The second plaintiff is to pay the first defendant’s costs of the proceedings up to and including 27 November 2022 on an indemnity basis, or alternatively, on the ordinary basis.
(c) The plaintiffs are jointly and severally liable to pay the defendants’ costs of and incidental to this proceeding on an indemnity basis from 28 November 2022.”
1. The Respondents’ application was brought on five bases, which can be summarised as:
1. Mr Hall was entirely unsuccessful in his personal claim;
2. The Appellants were entirely unsuccessful in their claim against Mr and Ms Brown;
3. The Appellants unreasonably failed to accept a Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank) offer, and the Respondents have since done better at trial than the terms of their offer;
4. The Appellants unreasonably failed to accept a without prejudice offer to settle proceedings, and the Respondents have since done better at trial than the terms of their offer; and
5. The Respondents succeeded at trial on majority of issues.
1. On 26 February 2024, before the costs variation motion had been heard, the Appellants made an application for the primary judge to recuse herself from determining the issues of costs, on grounds of bias. The primary judge directed that the costs application be heard by another judge, saying:
“Mr Hall did not get precisely what he wanted in the first instance. Although I do not think that that can constitute at law either bias or apprehended bias, I can understand why… a self represented party could feel concerned not having got what he wanted in the first place to go back before the same judge to agitate another matter. Now, I don't think that’s a matter of either bias or apprehended bias. But I can understand the point of concern. And to be quite frank, I see no reason why it can’t be determined by another judge. Now, I don’t see that it can cause anyone any prejudice. I think there’s a case for saying that where a litigant, particularly a litigant in person, has already had a disappointing outing, unless someone is part heard it could and should go before another judge. And I am content for that to occur.”
1. On 8 May 2024, Andronos SC DCJ delivered judgment in respect of costs: Crackin’ Snack Pty Ltd v Gameking Australia Pty Ltd (No 2) (unreported, 8 May 2024). Two preliminary issues were raised by the Appellants.
2. First, the Appellants argued that Andronos DCJ could not decide the costs issues until the Appellants’ claims concerning the alleged bias of the primary judge had been determined. His Honour rejected this contention and held that the bias issues must be determined by the Court of Appeal.
3. Secondly, the Appellants argued that the Court’s general discretion as to costs under s 98 of the Civil Procedure Act 2005 (NSW) (CPA) did not apply because the present application to vary a costs order under r 36.16(3A) of the UCPR constrained the discretion to consider cost. Rather, the Appellants contended that Andronos DCJ was confined to considering arguments as to costs as advanced by the Respondents’ notice of motion, dated 3 November 2023: see [67] above.
4. His Honour determined that the Respondents were not constrained to advancing the arguments raised in their notice of motion. Furthermore, his Honour held that Mr Cakic’s 3 November 2023 affidavit, which accompanied the motion, did not confine itself to the relief sought in the motion.
5. Having resolved the two preliminary issues, his Honour turned to the substantive costs questions raised by the Respondents’ notice of motion. His Honour acknowledged that a purported Calderbank offer to settle the case was made by the Respondents on 28 November 2022, and that the figure offered constituted a “significant compromise”.
6. However, his Honour determined that the contents of the letter accompanying the offer of settlement did not disclose the strength of the offeror’s defence. Therefore, his Honour held that the Appellants did not have sufficient information to determine whether it would be unreasonable to reject the offer. Consequently, his Honour held that it was not unreasonable for the Appellants to have rejected the offer.
7. Nonetheless, his Honour held that an oral without prejudice offer made by the Respondents on 20 September 2023 (and confirmed by email on the same day) was unreasonably rejected by the Appellants, and was more generous than the judgment obtained by the Appellants.
8. His Honour rejected the Respondents’ contentions that a special costs order should be awarded on the basis that the Appellants were unsuccessful in respect of almost all of the causes of action advanced, and that the case was more expensive and time consuming than was warranted. The key difficulty with such submissions was that, given his Honour was not the presiding judge during the trial, it was, in his view:
“…impossible to form an impressionistic view of the relative success of the parties on the issues as they were presented without reviewing the entirety of the evidence, transcript and submissions of a fiercely contested 10-day hearing and hearing submissions from the parties as to the appropriate breakdown of time spent on each issue.”
1. In turn, his Honour held that there should be no order as to costs as between the parties up until 20 September 2023, and that the Appellants should pay the Respondents’ costs from 21 September 2023 on an indemnity basis by reason of the rejection of the without prejudice offer referred to at [76] above.
Grounds of Appeal
1. By Notice of Appeal filed on 18 January 2024, the Appellants raised 14 grounds of appeal from the orders made by the primary judge. The Notice of Appeal was extremely discursive in that it combined a number of grounds with argument which were in turn supplemented in the Appellants’ lengthy written submissions. Subject to that qualification, the grounds of appeal can be broadly summarised as follows (Red 225-236):
1. The primary judge “pre-determined the case, acted with bias, and treated the [parties] differentially”;
2. The primary judge erred in applying the principles relating to loss caused by misleading or deceptive conduct;
3. The transaction was erroneously characterised as an “asset sale only”;
4. The primary judge erred in finding that the Appellants would not have entered the transaction but for the Respondents’ misleading conduct;
5. The primary judge erred in not finding that the Contract was for 112 unique machines, all on sites;
6. The primary judge erred in finding that the “special condition” in the Contract overrode the “standard condition” in the Contract in relation to the “good working order” of the vending machines;
7. The primary judge erred in finding that the Appellants bore responsibility for effecting the systems and software transfer, including Seed Pro;
8. The primary judge erred in finding that the parties agreed to an offset arrangement involving the Respondents receiving the Appellants’ credit card takings from the vending machines;
9. The primary judge erred in finding that the Respondents disclosed that iVendGroup Pty Ltd (IVG) had the exclusive right to occupy 13 sites and in not finding that cl 10.1.14 of the Contract was misleading;
10. The primary judge erred in finding that the Contract was completed as and from 7 December 2021;
11. The primary judge erred in permitting the Respondents to argue that the Appellants had affirmed the Contract, as it was not pleaded;
12. The primary judge erred in finding that the Contract had completed;
13. The primary judge erred in determining the loss suffered; and
14. This Court should find that the Second and Third Respondents engaged in “contravening conduct” and are liable to compensate the Appellants.
Ground 1: Apprehended or actual bias
1. The Appellants contended that the primary judge predetermined the case, acted with bias and treated the Appellants differentially as compared to the Respondents. It may be noted, as the Respondents submitted, that the Appellants made no allegation or complaint of bias until after judgment was delivered by the primary judge, albeit prior to argument on costs. In this context, as was observed by the majority in Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [76]:
“If a party to civil proceedings, or the legal representative of that party, knows of the circumstances that give rise to the disqualification but acquiesces in the proceedings by not taking objection, it will likely be held that the party has waived the objection.”
1. The arguments advanced in support of this ground of appeal bear some similarity to some of the arguments advanced in favour of a finding of actual or apprehended bias in Feldman v Nationwide News Pty Ltd (2020) 103 NSWLR 307; [2020] NSWCA 260. There I said at [43] (Payne JA concurring):
“Further, the fact that the primary judge ultimately rejected the appellant’s case for a variety of reasons does not and cannot demonstrate actual or apprehended bias. In Mohareb v Kelso (No 2) [2018] NSWCA 246 at [15], this Court said that:
‘Disagreement with the reasoning, or the outcome, provides no basis for an assertion of actual bias’.”
1. In Mohareb v Booth [2020] NSWCA 49 at [37], Basten JA, White JA and Simpson AJA had said:
“An allegation of actual bias must be clearly proved. Such a finding is not made lightly. Adverse findings, even adverse findings that are contrary to the evidence or unreasonable or hopelessly flawed, will not be sufficient. The circumstances in which actual bias is established will be rare and exceptional.”
1. The Appellants contended that the decision by the primary judge not to determine the issues as to costs was itself suggestive that her Honour acknowledged that she was biased, and or suggested that “her Honour simply couldn’t be bothered hearing the [Appellants] and found a way to recuse herself”. The former submission did not follow at all, for reasons given below; the latter submission bordered on the scandalous. By the time the costs argument came to be heard, the Appellants had already flagged their contention that the primary judge was biased against them. Another judge was available to hear the argument, and her Honour’s decision not to hear the costs application was plainly not because of any acceptance on her part that she had been biased: see [69] above. Rather, it was a pragmatic way of dealing with a matter that had already been extremely costly to the parties against the contingent possibility that even further costs would be incurred given the bias contentions which, by that stage, had been raised by the now Appellants in respect of the primary judge.
2. The Appellants further argued that the primary judge’s bias was manifested by her conduct during the hearing in various respects. For instance, the Appellants relied upon her Honour’s remark that – “Mr Hall, the reality is we’re in week two and this is a two-day case” – a comment that was said to highlight that her Honour’s “mind was closed to exploring the issues and submissions that Mr Hall was preparing to make”.
3. This remark was made on day 8 of a case that had been set down for four days and which her Honour evidently considered could have been determined within two days. Her Honour’s observation reflected at most frustration (and at both parties) rather than any bias against Mr Hall. The full context in which the judge made her remark highlights the vice, often evident in complaints of bias, in the selective quoting or “cherry-picking” of aspects of the transcript. The fuller context set out below highlights the flawed and confected aspect of the complaint in respect of bias:
“HER HONOUR: 10 o’clock tomorrow, Mr Hall, because the reality is we’re in week two and this is a two day case. We now need to move along. Happy to give you the break till 10 o’clock tomorrow morning, but we do need to move along.
HALL: I appreciate that, your Honour, as well too, but there’s a significant amount of material that needs to be gone through.
HER HONOUR: I understand that, but we don’t have weeks. It’s now towards the end of the year and I have other matters. Today’s Wednesday, isn’t it?
YOUNG: Today’s Wednesday. It was originally set down for four days. We’re now in day eight.
HER HONOUR: Mr Hall, we need to move along I’m afraid.
HALL: No, I appreciate that.”
1. The Appellants asserted that the primary judge’s conduct during the hearing evidenced bias in six respects.
2. First, they submitted that the primary judge’s purportedly erroneous credibility and reliability assessments of Mr Hall were indicative of bias (whether actual or apprehended). The primary judge held that there were “various credit and reliability issues” which were “overlaid by Mr Hall’s occasional lack of frankness”.
3. In a case such as the present, it was scarcely surprising (and entirely proper) for the primary judge to express credit findings in relation to the principal witnesses. The primary judge was also critical of aspects of Mr Brown’s evidence, describing him as “careless” and “clumsy” (Red 167R): see [64] above.
4. More generally, the following two passages from the primary judgment put her Honour’s treatment of witness credibility into proper perspective, and are also quite inconsistent with the assertion of actual or apprehended bias:
“There are various credit and reliability issues. They are generally less the result of any overt dishonesty or lack of frankness by anyone than reflective of the massive cultural divide between the main players in this transaction”: Red 166Q.
…
“But the colour and light flowing from the respective senses of grievance has its obvious effect upon the reliability of the evidence, where recollections on all sides are replete with error, misapprehension and misunderstanding. It is therefore necessary to look to the contemporaneous documents and actions with some care. I have looked to contemporaneous action and documents where there is conflict in the evidence. I have preferred the objective record where there is conflict.”: Red 174T. (Emphasis added.)
1. The Appellants contended that the primary judge “made up the evidence used to make an adverse finding relating to Mr Hall’s credibility and reliability”. This serious allegation had no proper basis. The material referred to, namely that Mr Hall and Mr Brown were not at a bank together at 5pm (Red 193L-O), related to a finding by the primary judge that was open to her on the evidence that Mr Hall himself had given. That finding may or may not have been contestable, but to characterise her Honour as having “made up” the evidence in order to found an adverse credit finding against Mr Hall was neither warranted nor appropriate.
2. Secondly, the Appellants contended that, in relation to whether a vending machine was removed from the Royal Hotel Granville, the primary judge’s conduct in “totally rejecting relevant evidence, with no justification, prior to judgment” manifested “absolute tunnel vision in the [Respondents’] favour and complete disregard for opposite evidence”. As exposed in the course of oral argument on appeal, the Appellants were critical of the primary judge’s finding (in their favour) as to whether a particular vending machine said to have been at Royal Granville Hotel, was in fact transferred prior to completion. The relevant passage is found at Red 124Y-125E:
“Seed Pro shows machine removed to the defendants' warehouse effective 1 September 2021. Mr Brown said that was effectively default entry. Mr Hall tendered a copy of Cantaloupe record on 14 December 2021. That shows asset ID 1642066 at the Royal Granville Hotel (between the main bar and the gaming room) and needing a new SIM card. Mr Hall could not find the machine when he attended the site to change the SIM card.
I find that the machine was not transferred, although the evidence is equivocal, and that finding may be in error in the light of the December 2021 Seed Pro record.” (Emphasis added; citations omitted.)
1. The Appellants’ complaint was founded on the use of the word “equivocal”. Her Honour’s use of that word was not inappropriate where business records indicated the presence of the machine at the hotel, and the fact that Mr Hall had not been able to find the machine when he attended the site was not necessarily or self evidently decisive on the issue. Again, this is an example of the Appellants seizing on a single word in a lengthy judgment to seek to found a basis for the serious allegation of actual bias.
2. Thirdly, the Appellants argued that the primary judge’s decision to permit Mr Brown to use a mobile phone in the witness box in order to check or search for a reference evidenced bias. The primary judge permitted Mr Brown to use a mobile phone to confirm whether the vending machine with Asset ID 1624585 was the Oakdale machine. The Appellants further contended that the primary judge’s “bias is palpable” due to the following leading question to Mr Brown: “What you’re saying, as I understand it, is that the machine is actually onsite?”
3. The Appellants referred in this regard to Damjanovic v Sharpe Hume and Co [2001] NSWCA 407 at [148] (Damjanovic) where the Court criticised her Honour for asking “questions [which] could have left no reasonable bystander in any doubt that her Honour was eliciting from Mr Maley answers favourable to his evidence”.
4. To seize on a judgment delivered by the primary judge over twenty years earlier than the instant case and wholly unrelated to it in order to found a submission of bias was misguided. Further, as pointed out by the Respondents, her Honour had similarly permitted Mr Hall to consult his mobile phone to confirm or ascertain some information in the course of his evidence and Mr Hall did not object to Mr Brown’s use of the phone at the time.
5. In oral address, Mr Hall sought to distinguish his use of the phone from Mr Brown’s by claiming that he was using the phone in his capacity as a self-represented litigant, rather than as a witness. This is not a material distinction and, in any event, it overlooks the fact that her Honour offered both parties opportunities to access their phones at specific points of the trial, as a matter of fairness.
6. In terms of the question asked by the primary judge said to constitute palpable bias, the form of her Honour’s question as set out above at [93] was not, in the context, objectionable. Her Honour was self-evidently endeavouring to clarify what was an extremely “messy” factual situation in relation to the location of multiple vending machines which were in contest between the parties.
7. Fourthly, the Appellants contended that the primary judge’s answering for witnesses on contested evidence was indicative of bias. The Appellants claimed that the primary judge intervened and prevented Mr Hall from questioning Mr and Ms Brown at various points during the trial. These objections were in truth complaints about her Honour’s rejection of various serious allegations of backdating of certain email correspondence which had been made by Mr Hall. It is not necessary to go into any great detail in dealing with them for the reason advanced in Mohareb v Kelso (No 2) [2018] NSWCA 246 at [15], namely that “[d]isagreement with the reasoning, or the outcome, provides no basis for an assertion of actual bias”.
8. Fifthly, the Appellants argued that various comments made by the primary judge during the trial evidenced “obvious pre-judgment”. The Appellants relied upon comments already noted in these reasons, including:
“The truth is, Mr Hall, we can go on as long as you like; it doesn’t cause me any difficulty, but the dollars are mounting all the way around”
1. What has already been said at [85] is sufficient to deal with this particular complaint. It was an observation uttered in the course of a trial that had taken a disproportionately long period of time. Moreover, its utterance must be seen in the context of s 56 of the CPA. Further, as the Respondents submitted, this observation was “fair and appropriate” because it was merely reminding Mr Hall of the cost implications of any adjournment.
2. Sixthly, and finally, the Appellants complained that they were not provided with adequate time to construct oral submissions. On day 8 of the trial, the primary judge gave the Appellants until 10am the next morning to proceed to oral submissions, which the Appellants contended was an insufficient amount of time. When asked for a “couple more days”, the primary judge responded that there would be “costs implications, I’m afraid”.
3. This exchange was not an example of bias but discretionary case management that was open to the primary judge. In point of fact, the Appellants were given time over a long weekend to prepare detailed and lengthy written submissions which were supplemented by oral submissions.
4. Mr Hall also collected a number of instances said to support his claim of bias under the heading “deferential treatment for submissions, more pre-judgment and more Dorothy Dixers”. Part of his complaint seemed to be that her Honour asked some questions of the other side in the course of submissions that she had not asked him. This overlooks the fact that it was open to Mr Hall to address such questions, if he chose, in reply. The fact that a question is asked in the course of submissions of one side but not asked of another is not an indicium of bias. Mr Hall also complains that he was disadvantaged because of the fact that he was a self represented litigant. As both his oral and written submissions in this Court demonstrated, as well as a review of the transcript at first instance reveals, Mr Hall is plainly intelligent and had a detailed understanding of the facts and was able to present his arguments articulately.
5. Further, what Mr Hall characterised as “Dorothy Dixer” questions to his opponent, Mr Young of counsel, were, on proper analysis, no more than her Honour grappling with and seeking assistance to understand what was, on one view, a complex factual case which had run for two weeks.
6. In the course of oral argument when pressed as to the weakness of many of his sub-arguments in respect of bias, Mr Hall resorted to the refrain that, while particular arguments may not be particularly persuasive, they had a cumulative force. I reject this contention. A multiplicity of manifestly weak arguments does not readily translate into a persuasive overall argument.
7. Appeal ground 1 must be dismissed. There was no basis for any conclusion that the primary judge was either actually biased or that the conduct of the proceedings gave rise to any apprehended bias: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6].
Grounds 2 and 4: Loss caused by misleading or deceptive conduct
1. Grounds 2 and 4 of the appeal overlap in the way they have been advanced by the Appellants and it is thus convenient to deal with them together.
2. In their written submissions, the Appellants contended that the primary judge erred in assessing their loss for misleading or deceptive conduct in two respects. First, the Appellants argued that, when assessing loss under ss 236 and 237 of the Australian Consumer Law (ACL), one cannot consider the benefit which the victim has received to offset the loss suffered as a result of misleading or deceptive conduct. This was evidently a reference to the fact that Crackin’ Snack was provided with 3 additional vending machines for which it agreed to pay $15,000 but in fact never paid for them, and the primary judge treated this benefit as diminishing what would otherwise have been part of the Appellants’ loss.
3. The Respondents countered that the primary judge did not err in applying principles concerning loss under s 237 of the ACL, and that the primary judge was correct to consider the overall dealings between the parties in determining the Appellants’ loss. This submission accords with the observation of Gleeson CJ in Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [18] (Henville) that the “task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case”.
4. In oral address, Mr Hall put ground 2 in the following manner:
“Going to ground 2, and this is misleading and deceptive conduct principles and the loss test. Now, the appellants say that ss 18, 236, 237 and 243 of the ACL, they have a particular logic, and firstly there must be a determination of the conduct which is breaching the s 18 prohibition, and then determination of the loss caused by that conduct enlivening damages as of right under s 236, or further remedies under ss 237 or 243 that do justice.
Now, in this particular case, her Honour actually did the opposite, and she appears to look at loss first before considering the conduct and the representations in this particular matter.”
1. This submission was not sustained on an examination of her Honour’s reasons. The Appellants were critical of the fact that her Honour dealt at a relatively early stage of her judgment with the question of how many vending machines were in fact in existence or supplied to Crackin’ Snack on completion. This was a far from straightforward topic, and it was entirely orthodox for her Honour to deal with a factual question early in her reasons before proceeding to detailed legal analysis. Ascertaining the shortfall was relevant not only to questions of contractual breach but also whether any breach was so fundamental as to warrant termination or a statutory remedy of rescission. It was also relevant to her Honour’s conclusion as to whether or not what she held to be a representation in the Contract was in fact misleading or deceptive.
2. There is no “one way” in which to construct a judgment, especially in a complex matter with overlapping causes of action and complicated facts. That having been said, the structure of the primary judgment is relatively logical, as reflected in the following passage which followed the primary judge’s holding at Red 136 that Mr Brown did not check whether the machines/asset IDs or locations were correct before entering into Contract, exposing both himself and the other defendants jointly and severally to claims of misleading conduct by that effective concession of the absence of reasonable grounds for the contractual representations (Red 136M-R):
“Mr Brown’s carelessness demonstrates the absence of reasonable grounds and makes out the relevant misrepresentation in respect of Appendix A and Appendix B of the contract, and relevantly, subject to the finding that the representation expressly was to the effect that there were vending machines matching the listed 112 asset IDs rather than 112 machines.
There were missing machines; and the representation(s) otherwise was misleading and deceptive conduct within the meaning of the Australian Consumer Law. However, a finding that the representations made in appendix A and B should be characterised as misleading and deceptive conduct; as with a finding of breach of contract (where there is no claim for damages by reason of the finding) does not resolve the issue as to any loss suffered or remedy. The same is true to the extent that the breach is configured in negligence (as it was pleaded in some respects).”
1. Her Honour then moved to questions of affirmation, the asserted entitlement to rescission, considered the Appellants’ failure to account for the cash and stock left in the machines as at completion, considered the value of the missing machines and discussed case law including Henville, Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3, Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 before turning to questions of value and quantification.
2. Contrary to the Appellants’ somewhat bold submission, the structure of her Honour’s decision did not disclose a misunderstanding or misapplication of relevant principles.
3. Secondly, the Appellants contended that the primary judge “closed her mind” and “was not concerned to consider whether the loss was that the Appellants would not have entered the transaction at all”. The first answer to this contention was that her Honour not only considered this question but expressly resolved it against the Appellants.
4. First, the primary judge noted that Mr Hall accepted in cross-examination that the number of machines was not the deciding factor in the Appellants purchasing the machines: Red 141L-O. Secondly, the Appellants were “very keen to proceed” with what they described as a “very good deal” in response to the advertisements for “approximately 108” machines. As the primary judge held (Red 132H-J):
“All the pre-contractual discussions had referred to “about 108 machines”. The defendants and the broker each referred to about 108 machines. Mr Ramsay warned about numbers varying. The defendants did not say that there were 112 machines (although that number of asset IDs was listed), and consistently referred to there being about 108 machines when a number was used in negotiations and discussions.”
Thirdly, after identifying the shortfall in vending machines, the Appellants continued ownership and possession of the machines, repeatedly affirming the Contract. The Appellants’ affirmation of the Contract was inconsistent with their “no transaction” theory of the case, a position which no doubt suited them forensically but which was inconsistent with their conduct up until the issue of the purported notice of rescission. It was also inconsistent with the fact that the “Accountant’s Summary”, which became Annexure A to the Contract, noted that certain vending machines produced zero income, reducing the likelihood that the exact number of vending machines was critical to the sale in the sense that the Appellants would not have entered into the Contract unless there were 112 machines.
1. The Appellants contended that the primary judge erred in finding that their demands for compensation on account of the shortfall of the machines suggested that they would have entered the transaction but for the Respondents’ misleading conduct. Furthermore, contrary to the primary judge’s reasoning, the Appellants claimed that their rejection of replacement vending machines suggested that they would not have entered the transaction but for the Respondents’ misleading conduct. That stance was equally consistent with the Appellants regretting their decision to enter the Contract.
2. The Respondents relied upon an email sent by Mr Hall to Mr Brown on 19 December 2021, which showed the Appellants’ attempt to leverage the estimated loss caused by the shortfall of the machines to reduce the monetary amount which the Appellants owed to the Respondents in outstanding “cash float and stock”. Mr Hall’s letter attached a table, which claimed that he suffered loss caused by 10 purportedly missing vending machines in the sum of $31,250. The table further proposed that the purported loss of $31,250 should be used to reduce the Appellants’ outstanding debt of $51,546.53 owed to the Respondents, representing the value of unpaid cash float and stock.
3. The Respondents contended that the 19 December 2021 email was inconsistent with the Appellants’ claim that they would not have entered the transaction had they known that only 106 machines would be provided, for two reasons. First, the Appellants did not contend in the letter that providing only 106 machines was a fundamental breach of contract, creating a right to terminate. The letter made no claim that the Appellants would not have entered the transaction had they known there would be a relatively modest difference between the number of machines referred to in Annexure A of the Contract and those in fact delivered. Secondly, the letter evidenced a commercial decision to elect to affirm the contract on the basis that the Appellants’ loss suffered by the shortfall of machines should be used to reduce its then current liabilities to the Respondents. The letter therefore manifested the Appellants’ willingness to continue with the bargain struck with the Respondents, despite receiving less than 112 machines, suggesting that it would have entered the transaction notwithstanding the shortfall.
4. In response, the Appellants argued that the 19 December 2021 letter did not reveal an intention to affirm the contract, because:
“… what the appellants are saying [in the 19 December 2021 email] is that this is not a business then which should be valued at $350,000 because from those missing machines themselves, if nothing else, it should be at least $30,000 less.”
This response only indicates that the Appellants were, as at that date, not looking to rescind the Contract but to remedy the shortfall by effectively seeking a discount on the purchase price as a notional form of damages.
1. Both grounds 2 and 4 of the notice of appeal should be rejected. There was no error of principle, and the primary judge’s reasons for rejecting the Appellants’ “no transaction” case were sound.
Ground 3: Asset sale and loss
1. The Appellants challenged the primary judge’s characterisation of the Contract as “more of an asset sale than a business sale” (Red 111N-O) although precisely what flowed from this challenge was not entirely clear. The Appellants contended that the sale was a “business sale”, as evidenced by the title of the Contract being “Business Sale Agreement”, and referred to various terms of the Contract. Such a construction was, according to the Appellants, consistent with the intention of the Contract, which was to enable the Appellants to take over the business of the Respondents. This submission is inconsistent, however, with cl 33.1 of the Contract, which provided that “[s]ubject to Completion, the Vendor will sell and transfer the Assets to the Purchaser at Completion”. Assets were defined under cl 32.1 as “Vending Machines”, “Cash Balance” and “Stock”. The only reference to good will was contained in additional clause 10.14, under a sub-heading “Vendor’s promises” which was in the following terms: “There are no third party assets in any of the business assets or good will”.
2. The characterisation of the Contract as a business sale was, according to the Appellants, relevant to determining the loss caused by not receiving the missing vending machines. The Appellants claimed that her Honour’s characterisation of the Contract as an asset sale enabled her to treat the vending machines as a detachable component of the sale, which could be remedied by simply providing a replacement machine. This approach, according to the Appellants, ignored the goodwill attached to the business, comprised by the vending machines. One reason this submission goes nowhere is that there was no evidence led as to the goodwill of the business and there was no separate value attributed to goodwill. So much was confirmed in the following exchange between Mr Hall and the primary judge:
“HER HONOUR: That’s fine, Mr Hall, but can you tell me what the value is that the goodwill has under this contract so that I can identify this because if you’re taking that view, that’s fine, but we - normally in a contract, you’d have goodwill quantified at X, so what is goodwill quantified at under the contract?
HALL: I appreciate it, your Honour--
HER HONOUR: Can you just give me a figure--
HALL: --and you are correct, there’s no quantification.”
1. The Respondents contended that the Appellants’ focus upon goodwill is misconceived, and that no goodwill was sold under the Contract. They pointed out that the usual indicia of goodwill were not sold, including the logo, livery, customer lists or methodology and that the single reference to goodwill in cl 10.1.14 of the Contract appeared to be a redundant provision that had no practical effect in light of the definition of Assets. There was no other contractual reference to goodwill.
2. In any event, the primary judge’s observation upon which this ground of appeal rests was simply that the Contract was “more of” an asset sale than a business sale. That observation was innocuous, and simply a reflection of the terms of the particular Contract, including cll 33.1 and 32.1. That is sufficient to dispose of this ground of appeal.
3. The Appellants’ argument in this regard is in some ways also self-defeating. If the Contract entailed the sale of a “vending machine” business, that is what the Appellants received, albeit that there was a modest shortfall/discrepancy in the number of vending machines supplied. Such a small discrepancy would not have been sufficient to terminate the Contract for fundamental breach.
Ground 5: The 112 machines-on-sites representations
1. The Appellants contended that the primary judge erroneously determined that there was “no contractual representation that there were 112 machines; nor that there is a one-to-one correlation of asset IDs and machines”: Red 131D. This argument goes nowhere as her Honour in fact found a representation was in substance made to the same effect. As her Honour said:
“There are 112 asset IDs listed in Appendix A. Although the contract made no express representation about “112 machines” per se, it plainly represented that the machines listed by asset IDs (which are 112 in number) would be located at the sites listed in annexure B.”
1. Secondly, the Appellants argued that the Respondents’ misrepresentation as to the 112 machines caused the Appellants to lose their opportunity to rescind the agreement under cl 2.6 of the Contract. This argument, so far as I understood it, essentially involved a repetition of the “no transaction” argument which was properly rejected for reasons already set out. Furthermore, this argument is inconsistent with what the primary judge correctly held to be the Appellants’ affirmation of the Contract.
Ground 6: Machines in good working order
1. The Appellants contended that the primary judge erred in finding that the vending machines transferred by the Respondents were in “good” or “proper” working order, as contemplated by cll 10.1.4 and 10.1.1.16 of the standard and additional terms of the Contract respectively.
2. Clause 10.1.4 of the standard Contract provided that “the equipment is in proper working order”. Clause 10.1.16 of the additional terms to the Contract provided:
“As of the date of this agreement, all machines are in good working condition, sold with fair wear and tear, and as is and where is with all defects and faults if any and have been well serviced from reputable suppliers in NSW.” (Emphasis added.)
1. The Appellants characterised cl 10.1.4 as a “future representation” on the basis that cl 10.2 purportedly constituted a promise at both the Contract and completion date. Clause 10.2 of the Contract provided:
“These promises are made as at the contract date and are also made as at completion.”
1. I reject the characterisation of any representations arising from the identified contractual provisions as being representations as to future matters. Rather, both clauses were, in terms, representations as to state of the machines as at the Contract date and as at the date of completion.
2. Clause 10.1.4 provided that the equipment “is” in proper working order, and provided no warranty as to its future condition. Furthermore, cl 10.1.1.16 is prefaced with the words “[a]s of the date of this agreement”.
3. It should also be noted that the Appellants at no time, pleaded or argued that cll 10.1.4 or 10.1.1.16 were representations as to future matters – and the case was conducted on that basis.
4. This ground also fails at a basic factual level. The primary judge made the following findings, the lack of challenge to which is fatal to this ground of appeal (Red 191T-Y):
“It is common ground that these are mechanical machines of varying age, being between 5 and 20yrs old; and located at various sites that are not under the vendor’s control. The contractual special condition expressly referred to the machines being “as is and where is with all defects and faults if any.”
The plaintiffs’ allegation was particularised by reference to 6 machines and listed a series of machine faults in the amended statement of claim. There is no evidence that any of these faults had manifested relevantly at completion on 7 December 2021, save that the Bass Hill police station machine was then known to be missing a coil. That was a minor fault (or defect) consistent with fair wear and tear, with the machine itself in good working condition. (Replacing the coil with a new one was a minor matter, and Mr Brown supplied a replacement coil and a whole tray.)” (Emphasis added.)
Ground 7: Software systems
1. This ground of appeal relates to paragraph 34 of the Statement of Claim which was as follows:
“The [Respondents]… by written terms of the Business Sale Agreement, represented that the first defendant would transfer to the first plaintiff any and all software and systems used by the business, and/or the first defendant would sign all forms and make all necessary applications to enable the first plaintiff to have the benefit of any and all such software and systems…”
1. Clause 20.3.1 of the Contract provided:
“On completion the vendor must…sign all necessary forms and make all necessary applications to… make all other services to the business and the premises available to the purchaser (subject to the consent of all the suppliers of the services)…”
1. Clause 51.1(d) of the Contract provided:
“Upon Completion the Vendor will… in addition to the requirements of the Vendor in clause 20, provide to the Purchaser all computer software, programs and systems (including the login details) for such, all policies, procedures, manuals, handbooks and templates used in the operation and running of the Business…”
1. By paragraph 35 of the Statement of Claim, the Appellants complained that Gameking had not transferred any of the “Seed Assets” used by the business. It was then simply pleaded that, as a result of this, the Respondents had engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive.
2. In respect of the Seed Pro software systems, the Appellants challenged the primary judge’s finding that (Red 176I-J):
“At completion, and until the Plaintiffs advised the new account details and consent to receive a transfer, it was impossible to transfer anything.”
1. Clause 20.1.1 of the Contract provided that, on completion, the Respondents must give the Appellants “possession of the business”. Clauses 1.1 and 1.2 together defined the “business” as including the “licences” and “software of the business”. As the primary judge noted, Gameking merely had a licence to use Seed Pro and did not own the software. Furthermore, the primary judge held that there was no obligation for the Respondents to provide access to the Seed Pro software which it did not own. Rather, the Appellants were required to acquire their own licence to use Seed Pro.
2. It is convenient at this point to set out the primary judge’s findings in this regard (Red 176H-178Q):
“Cantaloupe’s role was known to all parties at all relevant times; as was the fact that the first plaintiff needed to establish its own software account and licence. The plaintiffs did not do this until about mid-January 2022. At completion, and until the plaintiffs advised the new account details and consent to receive a transfer, it was impossible to transfer anything.…
The third defendant gave the software providers (Cantaloupe) the purchaser’s details on 2 December 2021. There were there steps involved in a transfer:
• First the purchaser had to establish an account with Cantaloupe, which started with the purchaser completing a request form;
• Then, as Cantaloupe told the defendants on 2 December 2021, both sender and receiver needed to sign a consent to transfer:
... after this request form is returned and the agreement is finalised with the new operator, we would need to have you and the new operators sign the device transfer agreement.
Mr Hall deposed that he was present in the van with Mr Brown on 6 December 2021 when the defendants told Cantaloupe that the sale was to progress and arrangements should be made for the transfer of the machines to the new purchaser. In cross-examination Mr Hall largely agreed with that …
Mr Hall said frankly that the account had not been set up in December 2021. Part of the delay in the first plaintiff’s establishment of a new account arose from Mr Hall’s oversight, which he confessed frankly in exhibit B:
151 Around 5:30pm on 7 December 2021 Nick from Cantaloupe sent me an email, attaching a copy of the Cantaloupe Agreement and Cashless Processing Form that I needed to complete. Exhibited at SJH-1, p 195 is a copy of the email. At the time I did not see the email as it went into my SPAM folder.
At completion (and for some time afterwards) the defendants had done and did all that was within their power to allow for the transfer of software and data. The first defendant had no contractual obligation to allow the purchaser any access to the defendants' software account or licence, which they continued to use in respect of machines that were not part of this sale.….
But it was mutually known fact that the vendor did not own the relevant Cantaloupe software; and the plaintiffs had to establish their own account for their own business, to which the defendants were to transfer the relevant data. The defendants had no duty to surrender their own account (which was used for their continuing business that was not sold) or hand it to the plaintiffs. …
Mr Brown set up a dummy log-in on the vendor’s account for the first plaintiff on about 9 December 2021. Thereafter the defendants allowed the plaintiffs to use the defendants’ licence and account. Mr Hall operated under the defendants’ licence and used the defendants’ account/licence.”
1. The Appellants contended that her Honour erred in (i) finding that the Appellants were required to acquire their own licence; and (ii) finding that the Respondents had the obligation to acquire their own licence. The Appellants claimed that cl 51.1(d) of the additional contractual terms contemplated that the Respondents would provide all computer systems and software, including logins to the Respondents’ Seed Pro account. The reference in cl 51.1(d) can only sensibly be to software owned by Gameking. There was no reference to any licences and even if such a term were to be implied, it could only be to a licence that was capable of being transferred. The primary judge’s finding was that Crackin’ Snack needed to establish its own software account and licence.
2. The Respondents argued that cl 51.1(d) of the Contract did not require the Respondents to transfer the Seed Pro software to the Appellants because it did not own the software – it merely possessed a licence for the software. That submission was plainly correct. Further, the extracts of the primary judgment set out above negate the Appellants’ submission that the primary judge wrongly determined that they and not the Respondents bore responsibility for effecting the systems and software transfer. Her Honour’s judgment simply pointed out that part of the process involved Crackin’ Snack establishing its own account, which it did not do.
3. The Respondents contended that it was impossible to transfer data to the Appellants because the Appellants failed to create a Seed Pro account until 14 January 2022. That submission accorded with the primary judge’s findings. Prior to this date, the Respondents argued that they acted promptly to facilitate the Appellants’ acquisition of a Seed Pro account, as evidenced by Mr Brown providing the Appellants’ details to Cantaloupe on 2 December 2022. Such efforts were reflected in Mr Brown’s affidavit dated 23 December 2022, which provided that:
“Once we started the stock purchase scheduling process, I worked out that Simon had not been given a Seed Pro login by Nick, nor had he even downloaded the Seed Pro app onto his mobile phone. I assisted Simon in downloading the app on his mobile phone and then telephone called Nick to establish an interim Seed Pro login for Simon, so that Simon could use Gameking’s Seed Pro account to gain access to all of the machines he had purchased.”
Mr Brown further stated that he personally assisted Mr Hall in accessing Seed Pro through Mr Brown’s Gameking account as an interim measure until Mr Hall established his own account:
“To setup Simon I had to create an email account for Simon, which I did by creating an @gameking.com.au email account for Simon. I did this as an interim measure only, for perhaps a month or so, expecting that Simon would establish a Seed Pro account under his own business. Once Simon logged in, he had to set his own password”.
1. Consequently, the Respondents claimed that they displayed a willingness and capacity to transfer all data to the Appellants, but were prevented from doing so due to the Appellants’ delay in establishing a Seed Pro account.
2. In reply submissions, the Appellants contended that the delays in establishing its own Seed Pro account were caused by dealings with Cantaloupe, which involved factors outside its control. This submission fails to establish any fault on the part of the Respondents.
3. In any event, the Appellants’ case with regard to the software and system transfer allegations was expressed in terms of misleading or deceptive conduct. No misleading or deceptive conduct was established. Moreover, the Appellants did not explain on appeal what loss or damage Crackin’ Snack suffered in the period between completion of the Contract and the establishment of its own account with Cantaloupe, the software licensor.
4. Ground 7 is rejected.
Ground 8: Credit card takings
1. The Appellants contended that the Respondents should not have been permitted by the primary judge to rely upon the purported 14 December 2021 offset agreement to explain why the Respondents received the credit card payments directed to the Appellants’ vending machines, as the offset arrangement was not pleaded by the Respondents, and therefore “ambushed” the Appellant.
2. The Respondents argued that reliance upon the offset agreement could not have ambushed the Appellants because Mr Hall’s own affidavit, dated 23 October 2022, made express reference to the offset agreement. Mr Hall’s affidavit relevantly recounted a conversation between himself and Mr Brown, stating:
“Me: So let’s say this. We'll offset anything that’s owed between our two companies. It just makes it easier, rather than I pay you and you then pay me. There’s no point in doing that.
So anything that’s owed to Crackin’ Snack you just use it to offset what I’ll need to pay Gameking. How's that sound?
Darren: Yes, ok, that sounds fair. I should be able to send through those workings tonight and I’ll offset anything, so you just have a final amount to pay.”
1. While pleadings play an important role in identifying the issues in any given case, those issues frequently expand by reference to the way in which the parties have themselves conducted the case: see for example, Dare v Pulham (1982) 148 CLR 658 at 664; [1982] HCA 70. This was plainly such a case, and the Appellants cannot be heard to complain about a matter which they introduced into the case. The primary judge acted on Mr Hall’s own evidence.
2. Furthermore, the Appellants’ case relied upon the offset agreement as evidence to calculate the loss suffered due to the Respondents’ misleading conduct. Therefore, the Respondents’ reference to the offset agreement could not have taken the Appellants by surprise or caused procedural unfairness, because the Appellants relied upon the very same agreement in evidence.
3. The Appellants contended that the objective evidence did not support the existence of an offset agreement between the parties. This argument was undercut by the Appellants’ own admission through their affidavit evidence (see [151] above) that an offset agreement had been struck. Additionally, by letter dated 7 January 2022, Mr Hall informed Mr Brown of the offset agreement, stating that “I further reiterate that we agreed to offset any amounts owed between the two companies”. Earlier in the same letter, Mr Hall had said:
“In addition, when we met… on 14 December 2021, we agreed to offset any amounts owed between Crackin’ Snack and Gameking.”
1. The Appellants contended that the Respondents rejected an offset agreement on 7 January 2022, where Mr Brown said by email to Mr Hall:
“In regards to credit card sales I note this will all be worked out correctly and fairly and by Nick so we can make allowances for this seperately [sic] at the end…”
This passage is taken out of context by the Appellants. It entailed Mr Brown responding to Mr Hall’s complaint that there was a lack of clarity as to precisely what was owed. This was a matter which Mr Brown indicated could be clarified by Cantaloupe.
1. It was open to the Respondents to rely upon the affidavit evidence provided by Mr Hall, which accepted that an offset agreement had been struck, even if this was not necessarily accepted by the Respondents at the time. Pleading rules aim to prevent surprise; and the Respondents could not have taken the Appellants by surprise when relying upon an agreement which the Appellants had, by affidavit, accepted had been made.
2. Ground 8 is rejected.
Ground 9: Involvement of IVG
1. The essence of ground 9 was that the primary judge erred in finding that the Respondents disclosed that IVG had the exclusive right to occupy 13 sites and in not finding that cl 10.1.14 of the Contract was misleading. That clause warranted that “[t]here are no third party interests in any of the business assets or good will”.
2. The Appellants’ submission was that:
“cl.10.1.14 was specifically inserted as Mr Hall wanted assurance that no other party had a role in the business, consistent with Mr Hall not wanting a franchise-like business. … The guarantee of a non-franchise/no 3rd party interests business led the Plaintiffs into the Agreement. It was not clear on the contract that IVG had exclusive rights to 11 sites and that taking over those sites required an ICA where IVG maintains site relationships and can direct the Plaintiffs to upgrade machines. Mr Ramsay agreed he said the IVG fees were a hangover from the vendor finance arrangement. Mr Brown himself said the Agreement references to IVG were redundant. The Plaintiffs would never have entered the Agreement had the true facts been disclosed, or the cl.10.1.14 guarantee not been given. And whilst not the sole cause of the ‘loss’, being entry into the Agreement, that conduct that made a non-trivial or material contribution.”
1. The Assets the subject of the Contract were defined as the Vending Machines, Cash Balance and Stock. IVG had no interest in the business assets. Nor is it clear how it was said to have any interest in the goodwill of the business. It does not appear to have been in issue that Gameking did not own any of the sites on which any of the Vending Machines were located. As best it could be understood, the Appellants’ argument in this respect was a variation of the no transaction argument but one difficulty with it was that, to the extent that any representation could be spelt out of cl 10.1.14 of the Contract, the fact that IVG may have had the right to occupy 13 sites did not render the representation misleading or deceptive.
2. The primary judge made a number of findings to the effect that IVG’s role was disclosed both prior to entry into the Contract and in the Contract itself. Thus, the primary judge explained that IVG:
“was referenced in special conditions 33 and 52, and the price of the arrangements was disclosed in the attached profit and loss statement.” (Red 204G-J)
1. In addition, Mr Ramsay, the broker, provided unchallenged evidence that he told Mr Hall that (Red 170K-N):
“[IVG] is the company the IVMOA members set up for the buyout of Smith’s vending machines around Australia. Members of IVMOA purchased areas they wanted or operated in…. IVG basically manage relationship arrangements, such as contractual negotiation for sites and each independent operator pays per machine site and management fee to IVG for this service. IVG’s fees are currently up for review, I can’t really comment on the fees until that is completed so the fees are not known at this stage.”
1. The primary judge made reference to a profit and loss sheet attached to the Contract, which disclosed that IVG managed 29 vending machines and charged $1,740 for managing such machines: Red 204Q-W. In turn, the primary judge found that the Contract “disclosed the managed sites with some particularity”: Red 204F-G. Her Honour’s conclusion that there was no misleading conduct was based upon her finding that:
“The existence and nature of the IVG sites, called managed sites, and identified in the contract as ones for which commission was payable to IVG was manifest on the face of the contract, further identified in the listed managed sites (exhibit B) and 29 machines identified as under management in the profit and loss statement.” (Red 212 D-E)
1. Her Honour also found that the “roles of IVMOA and IVG were disclosed” by Mr Brown to Mr Hall (Red 202J-K) in a series of different conversations, some of which were strongly disputed by Mr Hall. The primary judge accepted Mr Brown’s evidence that he told Mr Hall that (Red 201T-W):
“I am a member of IVMOA. It is a good idea to become a member as they help you in many ways such as securing bulk buying discounts for stock of approximately 30%. Also, if you want to buy this business you will need to become a member of IVMOA because several of the 108 machines we are selling are managed by IVG, an IVMOA subsidiary. The role of IVG is to negotiate agreements for machines located on sites owned by large entities such as State Rail. It makes sense for IVG to negotiate with such large site owners on a global basis on behalf of IVMOA members rather than to have a situation in which dozens of independent operators each try to do different deals for a small portion of the client’s needs. Each machine provided to an independent operator attracts a small monthly management fee and commission per machine payable to IVG to forward to the major customer.”
1. In reaching this finding, and rejecting Mr Hall’s position that he disputed it, the primary judge had the undoubted benefit of observing the two witnesses give their evidence. Her Honour also concluded that Mr Brown’s account was supported by the various references to IVG in the Contract including the “Managed Sites” list in Annexure B to the Contract.
2. To the extent that the primary judge accepted Mr Brown’s version of other conversations with or in the presence of Mr Hall in relation to IVG including those on 6 December 2021, Mr Hall developed orally (in reply) and in writing a detailed attack to the effect that the conversation found to have occurred by her Honour did not in fact take place. He pointed to the absence in telephone records of the alleged participants to that conversation any record of it having occurred. It is not, in my view, necessary to resolve any controversy as to this disputed conversation as it does not appear to me to have been material to the primary judge’s reasoning. As explained above, her Honour’s reasoning with regard to IVG turned on the various references to IVG in the Contract which were understandably found to undermine the Appellants’ non-disclosure case.
3. The Appellants also contended that the primary judge erred in referring to the fact that IVG “owned” various vending machine “sites”. The Respondents claimed that, read in context, her Honour’s language of “IVG…owned various sites” in fact referred to IVG’s rights to manage the sites. I agree with this submission but, as with a number of the points taken on appeal, nothing appears to me to turn on it in any event.
4. The Respondents argued that, as the primary judge held, the Appellants must have been aware of IVG and other third party’s roles as it was “express on the face of the Contract and inherent in the nature of the business”: Red 203F-G. Indeed, cl 52.1(m) of the Contract provided, under the heading of “Commission payments”:
“The IVG commission calculation will become the Purchaser's responsibility and liability and if IVG do not apportion the commission data then the Purchaser agrees to be liable for the full month with both parties making the allowances as above.”
The Respondents also noted that IVG, and its connection to the vending machine business, was made clear in various sections of the Contract, including in the definitions section where IVG was expressly defined, and cl 33.4 of the Contract, which provided:
“The Purchaser acknowledges it will be subject to IVend Group [IVG] membership, and the vendor must use its reasonable endeavours to ensure that this condition precedent is satisfied as soon as is practicable.”
1. Secondly, the Appellants claimed that Mr Brown had downplayed the role of IVG as “redundant” to Mr Hall, and agreed to remove their inclusion in the Contract. In this respect, the Appellants referred to Mr Brown’s evidence under cross-examination, where he said:
“Q. You had said to me [Mr Hall], Mr Brown, “That’s all redundant now. Gameking owns all of the machines and has done for a long time”.
A. We’d owned them for two years, yes.”
The Respondents pointed to the fuller context of the cross-examination to support the submission that Mr Brown refused to omit reference to IVG in the Contract due to its relevance to the business:
“Q. Is it true that you said, “No, look that reference is redundant. The BSA was when we were buying machines off the Smith’s”?
A. It was.
Q. Is that what you said, Mr Brown?
A. We had an in depth conversation about it and you wanted it removed and I’m like, “I don't know how to do this out of this”. So we agreed to leave it there, because I was not sure how to move forward at that point cause it was a big part of the contract in the beginning and I wanted to make sure it was clear that you knew you had to be part of IVMOA and IVG and that was for me that was my security that the solicitor had put that in in the previous occasion, and that was why I wanted it in and that’s why it was left there,--
…
Q. That’s not true, Mr Brown, is it?
A. Well why did you agree to leave it there then?
Q. I had said to you to know that that should be removed, the references to the BSA should be--
A. You did you say you wanted it out, and I said I didn’t know how to and you agreed to leave it in there because you couldn’t see any issues of it being there and it gave me the peace of security that we weren’t changing it too much.
Q. You had said to me, Mr Brown, “That’s all redundant now. Gameking owns all of the machines and has done for a long time”.
A. We’d owned them for two years, yes.
Q. Is that what you said to me, Mr Brown?
A. I told you we’d owned them for two years.
Q. I then said to you, “Well then that reference to IVG, it’s not relevant”.
A. It was relevant.
Q. ‘I’m not buying machines from them”.
A. You weren’t, and I told you it was relevant still because you had to pay them the commission.” (Emphasis added.)
1. Thirdly, the Appellants contended that the inclusion of cl 10.1.14 indicated that Mr Hall would not have entered the transaction had he been aware of IVG’s involvement, as he did not want to join a “franchise-like business”. The Respondents claimed that the purpose of including cl 10.1.14 was to ensure that the Appellants did not owe any third parties money in respect of the machines themselves. Such a purpose was reflected by Mr Hall’s own affidavit evidence, which provided:
“… New ‘no third party interests’ clause
I recall that when we got the proposed new clause regarding third party interests, we had a short discussion to the following effect:
“Darren: Ok, next.
Me: This clause shouldn’t be an issue. You own everything, don’t you? No one else is involved, everything is Gameking’s? Just to be sure.
Darren: Yes, that’s not an issue. We own everything, it’s ours, it’s in our name. So I can give that.”
1. Subjective evidence is not of course available to interpret the meaning of a contractual term. Where the term is said to have amounted to a misleading representation in the context of negotiations more generally, and where questions of reliance are concerned, it may, however, have some relevance. To this extent, Mr Hall’s evidence did not support Crackin’ Snack’s claim. IVG did not have any ownership or interest in the assets sold.
2. In turn, as the primary judge found, Mr Hall was on notice as to the existence of IVG and the necessity of paying commission in relation to certain sites.
3. For the above reasons, ground 9 is rejected.
Grounds 10 and 12: Completion and unconscionability
1. Grounds 10 and 12 overlap and can be considered together. The Appellants’ written submissions did not fully reflect all of the points made in the discursive sub-grounds of appeal (ground 10, for example, contains six separate sub-grounds). In these circumstances, these reasons focus on the points advanced in the Appellants’ written submissions. Broadly speaking, however, the Appellants contended that her Honour erred in finding: (i) that the Contract had completed (grounds 10 and 12); and (ii) that the Respondents had not acted unconscionably by withholding the Appellants’ credit card payments (ground 10).
2. The primary judge determined that completion of the Contract occurred on 7 December 2021 (Red 130G) by analysing whether the key contractual obligations required at completion had been performed by that date.
3. Clause 33.1 of the Contract provided that:
“Subject to Completion, the Vendor will sell and transfer the Assets to the Purchaser at Completion.”
1. Clause 20.5.1 of the Contract provided that:
“On completion the purchaser must… pay to the vendor, by cash, settlement cheque, or by making an electronic funds transfer, the price (less any deposit paid) and any other amount payable by the purchaser under this contract…”
1. The primary judge held that (Red 129E-N):
“The vendor sold and transferred the "Assets" as defined in the special conditions i.e., the Vending Machines; the Cash Balance; and the Stock) to the first plaintiff/Purchaser with some deficiencies (6 missing machines)' at the same time as the extra 3 machines were conveyed. The purchaser paid the purchase price for the vending machines in full on 7 December 2021…. The first plaintiff purchaser took possession of the machines, stock and float, and started operating the business on 7 December 2021.”
1. Such events led to her Honour’s conclusion that “I find that there was completion at the payment of the purchase price on 7 December 2021”: Red 130G. This reasoning turned upon an analysis of the terms of the Contract, the purchaser’s payment to the vendor and the act of taking possession of the machines.
2. The thrust of the Appellants’ attack on this finding was that the Respondents had, in various exchanges of correspondence in late 2021, early 2022, denied that there had been contractual completion whilst, ironically in the context of these grounds of appeal, at the same time, it was the Appellants who were maintaining that there had been contractual completion, consistent with the primary judge’s now challenged finding.
3. Thus, the Appellants contended that completion had not occurred by relying upon statements by Mr Brown on 24 January 2022, which provided:
“I refer to clause 34 of our contract that states that completion will occur once payment for stock and cash and sales in machines has been paid for by you and I note to date you have still not done this as requested by us many times.” (Emphasis added.)
That was not an accurate paraphrase of cl 34 of the Contract.
1. The Appellants also relied upon a statement made by Mr Brown on 3 February 2022, where he said to Mr Hall:
“I am unsure how you can confuse a simple statement of clause 34.4. ‘The cash and Stock Invoiced Amount will be Payable by the Purchaser to the Vendor on Completion’. If you have not paid it, it has not completed, Not [sic] difficult to understand so I am being very fair here.”
Again, this reference to cl 34.4 did not bear upon the ascertainment of the Completion Date. All it meant was that there was an obligation to do something on or by that date, the failure to comply with would amount to a breach of contract.
1. The Respondents contended that there was “abundant evidence” suggesting that the primary judge was correct to find that completion had occurred. For instance, as the primary judge held, the Respondents sold and transferred the “Assets” (minus the six missing machines) to the Appellants, and the Appellants paid the Respondents the full purchase price for the vending machines on 7 December 2021: Red 129E-G. On the same date, as her Honour held, the Appellants took possession of the vending machines and commenced operating the business: Red 129N.
2. The Respondents also contended that the Appellants’ notice of rescission letter, dated 25 February 2022, proceeded on the basis that completion had occurred. Indeed, Mr Hall asserted in the notice that the “machines were either removed from their sites by Gameking prior to completion or never existed”.
3. The Appellants further asserted, in ground 12 of their appeal, that completion could not have occurred because six of the machines were not provided – meaning that a condition precedent to completion had not been satisfied.
4. Clause 33.1 of the Contract provided that “[s]ubject to Completion, the Vendor will sell and transfer the Assets to the Purchaser at Completion”. Given that “Assets” included the vending machines, the Appellants contended that completion could not have occurred where some of the vending machines had not been transferred. Clause 33 dealt with an obligation which was due to be performed as at a particular point of time. Any failure or partial failure to perform any obligation would amount to a breach of contract.
5. The Respondents countered the Appellants’ claim that any shortfall in vending machines “rendered completion impossible”. They pointed to the strong body of evidence illustrating that the Appellants treated the transaction as having completed, both in terms of what they said to the Respondents and also to third parties, and by their conduct on taking over and operating the business as if the Contract had been completed. Contrary to the Appellants’ submission, these matters negatived the suggestion that a “reasonable person having regard to [the] context, purpose and objects of the transaction would still find that completion has not occurred”.
6. Reliance was also placed by the Appellants upon cl 51.1(d) of the Contract which provided that, “[u]pon Completion, the Vendor will… provide to the Purchaser all computer software, programs and systems (including the login details) … used in the operation and running of the Business”. The Appellants contended that the relevant systems and software, being Seed Pro, had not been transferred, therefore precluding completion having taken place. The obligation in cl 51.1(d) was not a pre-condition to completion but one which only arose once completion had occurred. This argument did not avail the Appellants.
7. The Appellants also argued under ground 10 that the Respondents acted unconscionably in two key ways. First, the Respondents were said to have “unfairly leveraged their position” by allegedly keeping 47-60% of the Appellants’ “monthly takings”. The Appellants contended that such strategies were undertaken by the Respondents with the purpose of forcing the Appellants to repay over $50,000 owed under the Contract. The Respondents countered by submitting that the offset arrangement could not be considered unconscionable given that the arrangement was proposed by the Respondents, and consented to by both parties. Indeed, as noted earlier in these reasons at [8], the Appellants relied upon this arrangement in Mr Hall’s affidavit evidence.
8. The Appellants further asserted that the Respondents acted unconscionably by: (i) representing that completion had not occurred by the emails dated 24 January 2022 and 3 February 2022; but (ii) contending in submissions that completion had in fact occurred by 7 December 2021. That is, the Appellants claimed that the Respondents’ “backflipping” in relation to whether completion had occurred was unconscionable. It is not unknown that parties to litigation take different positions in litigation to those taken at the time of the dispute. In the present case, both sides can be seen to have done this. As a forensic step, that may or may not be effective but to do so does not amount to unconscionable conduct that vitiates a transaction.
9. These grounds of appeal should be rejected.
Ground 11: Unpleaded arguments concerning affirmation of the contract
1. The Appellants contended that the primary judge erred in permitting the Respondents to argue that the Contract was completed and affirmed by the Appellants as the Respondents had not pleaded affirmation. The Appellants also made reference to UCPR r 14.14(2)(a) which requires defendants to plead defences that could take the opposing party by surprise.
2. The Respondents drew attention to the fact that, at the time of the parties’ dispute, the Appellants had asserted that completion of the Contract had occurred in letters dated 7 and 8 January 2022 such that they could hardly have been taken by surprise that this was an issue in circumstances where they sought to argue on appeal that the Contract had not been completed on 7 December 2021.
3. Affirmation of the contract was implicit in the Appellants’ assertion as to their entitlement to contractual damages and or a reduction in the purchase price. The Respondents submitted, and I accept, that whether or not the Appellants had affirmed the Contract was squarely in play at the trial and in any event, is really a legal conclusion which resulted from a consideration of the parties’ conduct including evidence adduced by the Appellants themselves.
4. The Appellants alternatively argued that they did not unequivocally elect to affirm the contract. To this, the Respondents relied upon the letter authored by Mr Hall on 8 January 2022, which threatened to sue for damages, with no reservation of rights to terminate the Contract. Furthermore, the very existence of the offset agreement, referred to in the same letter of 8 January 2022, supports the Appellants’ affirmation of the Contract.
5. Ground 11 should be rejected.
Ground 13: Calculating loss
1. The Appellants raised eight challenges to the primary judge’s calculation of the Appellants’ loss. First, the Appellants contended that they did not owe a debt to Gameking in respect of “Stock and Trade”. The Respondents argued that such submissions could not be sustained in light of the Appellants’ acceptance of its debt of $54,550.71 according to its own calculations as at 19 December 2021. That submission is accepted.
2. Secondly, the Appellants challenged the way the primary judge calculated the cash and stock. Clause 34.2 of the Contract provided that cash and stock must be calculated according to the balance existing during the four-hour period from 8.01pm on 6 December 2021 to 12.01am on 7 December 2021. The Appellants contended that, contrary to cl 34.2, Mr Brown impermissibly calculated stock and float according to a seven-day period, from 7 to 14 December 2021. The Respondents submitted that the timeframe for calculating cash and stock was not challenged contemporaneously or at the trial, and therefore could not be raised as part of this appeal. That submission is accepted.
3. Thirdly, the Appellants claimed that any debt in respect of stock and trade had not materialised due to failing to comply with formality requirements concerning the issuing of invoices under cl 34.3 of the Contract. Clause 34.3 of the Contract provided:
“The Purchaser acknowledges that it will be invoiced directly by the Vendor on the day of Completion (Cash and Stock Invoice Date) for the Cash Balance and Stock Amount residing in each Vending Machine acquired by it under this Agreement.”
The Appellants contended that no invoice was issued, and therefore no debt was due.
1. The Respondents argued that they did provide an invoice, therefore satisfying cl 34.3, and in turn enlivening the Appellants’ obligation to repay the debt owed in respect of stock and trade. Specifically, the Respondents claimed that they issued a spreadsheet to the Appellants which detailed the sums owing by the Appellants over stock and trade. As the primary judge held, the Appellants did not dispute the debt indicated in the spreadsheet, with Mr Hall and Mr Brown having the following text message exchange on 16 December 2021:
“Mr Brown: Hi Simon fyi
That money for stock and cash etc has not hit out account yet
Mr Hall: Hey Darren. Sorry missed your call – on the road doing the Sim changes!
I was going to transfer tonight as had already hit transfer limit. Will likely have to do it in 2 lots as limit is back down to $40k.”
This exchange illustrates the absence of merit of this ground of appeal, and the Appellants’ attempt to elevate form over substance.
1. Fourthly, the Appellants argued that no set off agreement was contemplated by the Contract, and therefore the arrangement could not be relied upon by the Respondents in defence of their receipts of the credit card takings. Such arguments have already been considered under ground 8 and rejected.
2. Fifthly, the Appellants challenged the Respondents’ purported “double charging” of certain stock, as itemised by line 1 of an invoice dated 3 February 2022. The Respondents contended that such claims could not be raised on appeal in circumstances where the Appellants did not challenge line 1 of the invoice at the time of receipt of the invoice, or at trial. Again, that submission should be accepted.
3. Sixthly, the Appellants contended that, under line 1 of the 3 February 2022 invoice, the item attributing $15,000 for the “additional machines purchase” is an overestimation. The Respondents again asserted that claims concerning overestimation could not be challenged on appeal because such issues were never raised at the time of the invoice being received, or at trial. Again, that submission should be accepted.
4. Seventhly, the Appellants argued that, given her Honour’s difficulty in assessing the value of the missing machines, they would never have entered a fixed price contract knowing machines were missing. This argument repeated the Appellants’ “no transaction” case, which has already been rejected. The Respondents further added that the Appellants’ observations about the primary judge’s difficulties in calculating loss could not have influenced the Appellants’ decision-making process before entering the Contract.
5. Ground 13 is rejected.
Ground 14: Providing relief to all Appellants, against all Respondents
1. The Appellants argued that the primary judge’s orders should have been made against all of the Respondents in favour of Mr Hall and Crackin’ Snack. The Respondents contended that there is no utility in this ground of appeal, as it is not in dispute that the judgment sum has already been paid to Crackin’ Snack in full. That submission should plainly be accepted. Ground 14 should accordingly be rejected.
2. As none of the grounds of appeal against the judgment has been made out, the appeal against the judgment ought be dismissed with costs.
Challenges to the costs judgment
1. By order 4 of her orders of 20 October 2023, the primary judge made an order that there be no order as to costs “with the intention that costs lie as they fall”. She also, however, made an order that each party had 14 days to apply for variation of her (no) costs order in accordance with UCPR 36.16(3A). In making this order, the primary judge recognised that the parties had not separately been heard on costs and thus indicated that her order that there be no order as to costs was provisional and subject to any arguments that the parties may wish to make.
2. By Notice of Motion filed on 3 November 2023, the Respondents sought the following orders:
“1. Order 4 of the orders made by Her Honour Judge Gibb on 20 October 2023 are varied as follows:
(a) There is no order as to costs as between the first plaintiff and the first defendant up to and including 27 November 2022, with the intention that the costs lie as they fall.
(b) The second plaintiff is to pay the first defendant’s costs of the proceedings up to and including 27 November 2022 on an indemnity basis, or alternatively, on the ordinary basis.
(c) The plaintiffs are jointly and severally liable to pay the defendants' costs of and incidental to this proceeding on an indemnity basis from 28 November 2022.
2. The plaintiffs pay the costs of this Notice of Motion on an indemnity basis.
3. Any such other orders as the Court deems fit.”
1. The costs judgment was delivered by Andronos DCJ on 8 May 2024: Red 225-236. The circumstances by which this matter came before his Honour have been explained earlier in these reasons at [69] above.
2. On 13 May 2024, following a case management hearing, Registrar Jones, on the Appellants’ application, directed the filing of a Summons seeking leave to appeal from the costs judgment.
3. On 16 May 2024, six days before the hearing of the substantive appeal, the Appellants filed a summons seeking leave to appeal against the whole of the decision of Andronos DCJ in relation to costs. The Appellants filed a White Folder on 17 May 2024 which contained a draft notice of appeal and an outline of the Appellants’ submissions concerning the application for leave to appeal.
4. Although, due to the short period of time prior to the hearing of the substantive appeal, the Respondents had filed no written response to the Appellants’ outline of submissions for leave to appeal at the hearing of the substantive appeal, Mr Young for the Respondents advanced oral submissions as to costs.
5. The Appellants raised the following arguments in their draft notice of appeal:
1. The costs orders should be set aside because the issue of the primary judge’s bias had not been resolved by the time that costs were determined;
2. His Honour lacked power to make the costs orders under UCPR
r 36.16(3A) because he identified no irregularity or misapprehension affecting the primary judge’s cost orders;
3. His Honour lacked power to make the costs order, as he determined issues which were raised by the Respondents after the 14 day period, prescribed by UCPR r 36.16(3A), had lapsed;
4. Indemnity costs from 21 September 2023 should not have been awarded as the oral offer made on 20 September 2023 was “without prejudice”;
5. The Second Appellant should not have been jointly and severally liable on an indemnity basis because the Second Appellants’ unsuccessful claims imposed minimal costs; and
6. His Honour erred in awarding the Respondents’ costs of the motion because the Respondents were entirely unsuccessful with respect to the orders notified and sought by them.
Ground 1: Determining bias before costs
1. The Appellants argued that Andronos DCJ erred in determining costs before the Appellants’ complaint concerning the primary judge’s purported bias was resolved, submitting that a “single judge who is to hear the matter should also first decide any raised issue of bias”, referring to the dicta of Edelman J in QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 15; (2023) 97 ALJR 419 at [130] (QYFM).
2. The Appellants argued that Andronos DCJ erred in holding that:
“There is no step in the determination of the costs motion which requires the prior determination of the allegation of bias against Gibb DCJ, and no impediment on that basis to my hearing and determining the costs motion.”
1. The Appellants further contended that costs could not be determined before the bias issues were resolved, as a “bias issue…concerns the jurisdiction of the court”: QYFM at [121]. Therefore, the Appellants claimed that Andronos DCJ’s jurisdiction to determine costs remained uncertain. Consequently, the Appellants argued that the “uncertain” nature of Andronos DCJ’s jurisdiction rendered the costs judgment irregular, and therefore capable of being set aside pursuant to r 36.15 of the UCPR; citing Zakaria v Dr Noyce [2012] NSWSC 981 at [24]-[25]. Rule 36.15(1) of the UCPR relevantly provides:
“A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.”
1. There was no relevant irregularity. Invocation of r 36.15 of the UCPR adds nothing given that a challenge to the costs judgment has been brought by way of application for leave to appeal.
2. Andronos DCJ accepted the general principle that a court, when faced with an allegation of bias, should address that question first. However, as his Honour explained, the principle did not apply in the circumstances of the present case:
“[18] I do not accept the plaintiffs' submissions that this principle operates in the present circumstances. The authorities to which the plaintiffs referred dealt with the determination of the question of bias raised prior to a determination by the tribunal against whom the allegation is raised. As was the case in QYFM, an allegation of bias brought against a trial judge, or an appellate judge, prior to determination by that judge of the issues before the Court must be dealt with at an early stage. A hearing before an unbiased court is an essential component of the exercise of judicial power.
[19] That is not the case here. The allegation of bias was first raised by the plaintiffs in their Notice of Appeal in January 2024, and was first raised before Gibb DCJ on 13 February 2024. By that time, Gibb DCJ had already delivered judgment and the question of whether the plaintiffs can succeed in establishing actual bias by the trial judge will be determined by the Court of Appeal. Gibb DCJ dealt with the allegation of bias first raised before her on 13 February 2024, not by determining it herself, but by adopting the expedient course of referring the matter back to the list judge so another judge could determine the costs application. Thus, any question that she may have been biased did not arise prior to any determination by her of any matter in issue in these proceedings, including the costs motion.”
1. His Honour continued at [20]:
“I am not asked to review her Honour’s determination but to determine the question afresh as a matter of discretion in accordance with the CPA and the UCPR. There is no step in the determination of the costs motion which requires the prior determination of the allegation of bias against Gibb DCJ, and no impediment on that basis to my hearing and determining the costs motion.”
1. There was no jurisdictional impediment to Andronos DCJ determining the question of costs. As explained earlier in these reasons, in light of the fact that the Appellants only raised their bias argument after delivery of the principal judgment, the primary judge adopted a pragmatic approach by referring the costs argument to Andronos DCJ. Had her Honour not taken this course, it may well have been appropriate for her to address the bias question but there was no objection to Andronos DCJ determining the matter nor any suggestion that he was in any way biased.
Ground 2: No misapprehension identified
1. The Appellants contended that the power to vary a costs order under r 36.16(3A) of the UCPR, being the power identified by the primary judge in her orders of 20 November 2023 (see [66] above) was not enlivened, as the Respondents did not identify an irregularity or misapprehension affecting the primary judge’s initial costs orders.
2. Rule 36.16(3A) of the UCPR provides, under the heading “Further power to set aside or vary judgment or order”:
“If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.”
1. The Appellants contended that a party relying upon r 36.16(3A) to vary a costs order must prove that the impugned order was attended by irregularity or misapprehension of law. In support of this contention, the Appellants relied upon State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283 (Hollingsworth (No 2)) at [17], [19]-[20]; Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd (No 2) [2024] NSWCA 13 (Ranclose) at [5]; and Mohareb v State of New South Wales (No 2) [2024] NSWCA 69 at [22].
2. A similar argument was made before Andronos DCJ. On 28 March 2024, Andronos DCJ invited both parties to provide further submissions as to the effect of Hollingsworth (No 2) and other authorities on the Court’s power to vary a costs order under r 36.16(3A). The Appellants noted that the Court in Ranclose at [5] summarised the principles established in Hollingsworth (No 2) as follows:
“(1) The power conferred by UCPR, r 36.16 is to be exercised “sparingly and with caution” having regard to the importance of the finality of litigation…
(2) In order to enliven the exercise of the jurisdiction, what must emerge “is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing”…
(3) The reference to misapprehension in this context “is concerned with matters of oversight and inadvertence, and not with deliberate decisions which are said to be incorrect”…
(4) Ordinarily, questions of costs should be raised and addressed at the appeal hearing rather than by parties making separate and subsequent applications…” (Emphasis added; citations omitted.)
1. The Appellants contended that, given the Respondents did not identify any matter of oversight or misapprehension by the primary judge in determining costs, they could not invoke the court’s jurisdiction under r 36.16(3A).
2. The difficulty facing the Appellants’ argument was that, unlike the abovementioned cases, the primary judge expressly conferred an opportunity on the parties to seek a variation of her Honour’s default or provisional position that the parties pay their own costs: see [66] above. That is, as the Respondents contended, the costs motion was filed in accordance with the primary judge’s orders entered on 20 October 2023 which contemplated, in circumstances where the parties had not been heard as to costs, that there may be matters either side wished to raise which may bear upon the exercise of the costs discretion. Her Honour expressly provided the parties an opportunity to vary what was in substance a provisional cost order. There was nothing unorthodox in this although it may have been preferable for the primary judge to have refrained from making any orders as to costs before she had inquired of the parties what orders as to costs they sought, given the complexity of the matter and the fact that the Appellants had a small measure of success.
3. Judges at first instance will routinely give a provisional indication as to costs in light of their disposition of the case. A judge will necessarily not know, however, whether there have been any offers of settlement, for example, which may bear upon the exercise of the discretion as to costs. In the context of this case, there was no need for the identification of any misapprehension of the facts or the relevant law given that the parties had not been given an opportunity to address the question of costs.
4. In any event, the primary judge did not know (and appropriately so) of the attempts made by the Respondents to settle the proceedings. That was obviously a matter that was relevant to the exercise of the costs discretion.
5. The arguments advanced on the costs hearing did not involve any re-agitation of arguments already made and ruled upon, or because of a desire by one party to advance further arguments not made in the course of the hearing. As a consideration of cases such as those referred to in [224] above and Majak v Rose (No 5) [2017] NSWCA 238 shows, it is those kinds of considerations that have led to the entirely correct cautious and conservative approach to the operation of r 36.16 of the UCPR. They were simply not present in the current case.
Ground 3: Holding the Respondents to the variation sought
1. The Appellants argued that, contrary to r 36.16(3A), Andronos DCJ erroneously considered costs-related arguments which were raised more than 14 days after the primary judge’s initial costs judgment on 20 October 2023.
2. Specifically, the Appellants argued that his Honour should not have had regard to the Respondents’ written submissions dated 26 February 2024 (outside the 14 day period), which he claimed proposed further orders sought beyond those sought in the notice of motion filed on 3 November 2023 (which was within the 14 day period).
3. This excessively technical argument must be rejected. The 14 day period referred to in the rules concerns the time frame for filing an application, not the filing of evidence or written submissions in support of the application. In any event, in the present case, the notice of motion was accompanied by an affidavit of Mr Cakic’s of 3 November 2023.
4. A notice of motion filed pursuant to r 36.16(3A) of the UCPR is not a pleading. The 14 day period prescribed by the rule plays an important role in signalling the need for the expeditious challenge to an order. Moreover, the jurisprudence that has built up around the operation of the rule as reflected in the cases referred to in [224] above ensures that the important principle of finality is not undermined. Subject to that observation, however, the scope of the arguments able to be deployed when such an application is made is a matter for the judge hearing the application whose obligation is to do justice as between the parties, consistent with the overriding purpose of the rules, as set out in s 56 of the CPA. In any event, the notice of motion sought in paragraph 3 the making of “any such other orders as the Court thinks fit”. In other words, the orders ultimately made were within what was sought in the Notice of Motion.
Grounds 4 and 5: Indemnity costs
1. The Appellants contended, by grounds 4 and 5, that his Honour erred in awarding indemnity costs against the Appellants from 21 September 2023. Ground 4 claimed that his Honour erred in finding that the Respondents’ oral offer made on 20 September 2023 could generate costs consequences. This was because, according to the Appellants, when Mr Cakic made the offer of compromise to Mr Hall, Mr Cakic said that the offer was “all without prejudice”, yet made no mention of the qualifying words “save as to costs”.
2. Two difficulties confront this argument. First, as Andronos DCJ held below, whether Mr Cakic said the qualifying words “save as to costs” is not determinative of whether a genuine offer of settlement was made by the Respondents. Indeed, as his Honour noted, Mr Hall was likely aware that the settlement discussions were without prejudice, and that if settlement were not reached, the discussions might be relied upon. Secondly, at 5.43pm on the same day as the offer, Mr Cakic sent an email to Mr Hall, summarising the terms of the oral offer under the heading “without prejudice save as to costs”. As Andronos DCJ held:
“…it is plain that the characterisation in the email of the communication being without prejudice save as to costs extends to the earlier conversation as well.”
1. Ground 5 contended that his Honour’s finding that the Second Appellant was jointly and severally liable for indemnity costs from 21 September 2023 was punitive – undermining the compensatory nature of cost awards.
2. Andronos DCJ’s order in relation to the Second Appellant was plainly within the scope of his discretion, and no House v The King (1936) 55 CLR 499; [1936] HCA 40 (House) error vitiates the exercise of the discretion. The settlement offer which led to the indemnity costs order was a settlement offer in respect of the whole of the proceedings, including the claims brought by the Second Appellant.
Ground 6: Costs of the motion
1. The Appellants contended that the parties should bear their own costs in respect of the motion to vary the primary judge’s costs orders because, according to the Appellants, the Respondents were almost entirely unsuccessful on the motion.
2. As noted above at [78], Andronos DCJ ordered that the Appellants pay the Respondents’ costs on an indemnity basis from 21 September 2023. In doing so, his Honour rejected the Respondents’ arguments that: (i) the Respondents’ offer to settle on 28 November 2022 was an effective Calderbank offer; and (ii) that the Respondents were substantially successful at trial. Nonetheless, the Respondents were successful in proving that the Appellants unreasonably rejected their offer of compromise on 20 September 2023, resulting in his Honour awarding indemnity costs from 21 September 2023.
3. His Honour’s order in effect that the costs of the hearing of the motion followed the event was open to him, entirely orthodox and plainly correct.
4. To the extent that the Appellants required leave to appeal from the judgment of Andronos DCJ, I would refuse leave. To the extent that leave was not required, I would reject the challenges made to his Honour’s discretionary judgment in respect of the costs of the trial.
The Respondents’ further challenge to the costs judgment
1. The Respondents separately contended by their own application for leave to appeal that Andronos DCJ erred in [84] of his costs judgment of 8 May 2024 when holding that he could not determine the relative success of the parties at trial. His Honour held that:
“One of the difficulties arises from having a judicial officer, other than the trial judge, determining the appropriate order for costs on the basis of costs following the event in complex proceedings, in which neither party was wholly successful. It is impossible to form an impressionistic view of the relative success of the parties on the issues as they were presented without reviewing the entirety of the evidence, transcript and submissions of a fiercely contested 10-day hearing and hearing submissions from the parties as to the appropriate breakdown of time spent on each issue. It would be contrary to the principles of the just, quick and cheap determination of the real issues in dispute and the principles of proportionality to undertake such a task on a costs application without submissions directed to these issues. This is particularly so, where the costs application may be determined with reference to an anterior offer to settle the proceedings which was unreasonably rejected.” (Emphasis added.)
1. The Respondents accepted that a challenge to his Honour’s reasoning in this regard would be assessed by reference to House. The Respondents claimed that, having regard to either the quantum or issues raised in the pleadings, the Respondents enjoyed “undoubtedly substantial success” at trial. Contrary to his Honour’s position, the Respondents claimed that, through considering the pleadings and primary judgment, he could have formed an impressionistic view of the real and practical relative successes of the parties.
2. In turn, the Respondents contended that his Honour should have taken account of the Respondents’ considerable success at trial when exercising his discretion to award costs under s 98 of the CPA.
3. It is apparent from the extract of his Honour’s judgment at [243] above that Andronos DCJ was not provided with “submissions directed to these issues”, viz. the success of either party or the respective issues and the time devoted to the resolution of each of the issues. In these circumstances, there was no vitiating error affecting the exercise of his Honour’s discretion. As Mr Hall submitted, the complaint made by the Respondents was in part at least an “issue of their own making” in that they did not provide the judge with the assistance required to make a fractional costs order.
4. Leave to the Respondents to appeal from the costs judgment of Andronos DCJ should be refused.
5. For the reasons given above I propose the following orders:
1. Dismiss the appeal.
2. Order the Appellants to pay the Respondents’ costs of the appeal.
3. Refuse leave to appeal from the costs judgment of Andronos SC DCJ.
4. Order the Appellants to pay the Respondents’ costs of the application for leave to appeal from the costs judgment of Andronos SC DCJ.
1. PAYNE JA: I agree with Bell CJ.
2. ADAMSON JA: I agree with Bell CJ.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 23,204 |
nsw_caselaw:19105e7bc9db147db77634d1 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Master Alchemy Pty Ltd v Byron Shire Council [2024] NSWLEC 1459 | https://www.caselaw.nsw.gov.au/decision/19105e7bc9db147db77634d1 | 2024-08-04T23:50:38.191150+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Master Alchemy Pty Ltd v Byron Shire Council [2024] NSWLEC 1459
Hearing dates: 24-25 June 2024; 19 July 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Class 1
Before: Dixon SC
Decision: The Court orders:
(1) The appeal is dismissed.
(2) Development application no. 10.2022.518.1 for the demolition of an existing dwelling and construction of 2 x two-storey dwellings with basement parking and a pool at 50 Shirley Street, Byron Bay is determined by refusal of consent.
(3) The exhibits are to be returned following publication of the judgment, except for A, B, D, L, M and 1.
Catchwords: APPEAL – development application – site located within a heritage conservation area – proposed demolition of the existing dwelling – effect of development on heritage significance of area concerned – whether the proposal is consistent and compatible with the existing and future character of the streetscape – density – bulk and scale
Legislation Cited: Environmental Planning and Assessment Act 1979, ss 4.15, 8.7
Land and Environment Court Act 1979, s 34AA
Byron Local Environmental Plan 2014, cll 4.3, 4.4, 5.10
State Environmental Planning Policy (Resilience and Hazards) 2021, s 2.11
Cases Cited: Helou v Strathfield Municipal Council (2006) 144 LGERA 322; [2006] NSWLEC 66
Texts Cited: Byron Shire Development Control Plan 2014
Spennemann, D H R, ‘What Actually Is a Heritage Conservation Area? A Management Critique Based on a Systematic Review of New South Wales (Australia) Planning Documents’, (2023) 6 Heritage 5270, https://doi.org/10.3390/heritage6070279
Category: Principal judgment
Parties: Master Alchemy Pty Ltd (Applicant)
Byron Shire Council (Respondent)
Representation: Counsel:
R O’Gorman-Hughes (Applicant)
A Seton (Solicitor) (Respondent)
Solicitors:
McCartney Young Lawyers (Applicant)
Marsdens Law Group (Respondent)
File Number(s): 2023/255997
Publication restriction: Nil
JUDGMENT
1. The applicant has appealed against Byron Shire Council’s refusal of its development application (DA 10.2022.518.1) for the demolition of an existing dwelling and construction of 2 x two-storey dwellings with basement car parking and a pool facing 50 Shirley Street, Byron Bay (site).
2. The appeal, made pursuant to the provisions of s 8.7(1) of the Environmental Planning and Assessment Act 1979 (EPA Act), was subject to mandatory conciliation under s 34AA of the Land and Environment Court Act 1979 (LEC Act) on 24 June 2024. As agreement was not reached, the conciliation conference was terminated, and as required by s 34AA(2)(b) of the LEC Act the matter proceeded to hearing the next day in Sydney. The parties have consented to the admission of evidence given during the conciliation conference including the heritage experts’ evidence taken onsite (Ex J).
3. While the Council’s Amended Statement of Facts and Contentions (ASOFC) has raised several issues in respect of the new development, the first issue is the proposed demolition of the existing dwelling which stands within the Shirley Street Heritage Conservation Area (HCA).
4. The Council contends on the evidence of its heritage consultant, Ms Deborah Wray, that the existing dwelling should be retained because it contributes to the heritage significance of the Shirley Street HCA under Sch 5 of the Byron Local Environmental Plan 2014 (LEP). The Council further maintains that the demolition of the existing dwelling does not satisfy the objectives of cl 5.10 “Heritage Conservation” of the LEP nor the relevant controls in Chapter C1 “Non-Indigenous Heritage” of the Byron Shire Development Control Plan 2014 (DCP). It also contends that demolition does not “avoid an adverse impact on the built environment heritage” as required by s 2.11 of the State Environmental Planning Policy (Resilience and Hazards) 2021 (RH SEPP).
5. The applicant contends the retention of the existing dwelling is not protected by the above controls because the existing dwelling is not consistent with the Statement of Significance and the physical description of the buildings that constitute the Shirley Street HCA. It relies on the evidence of its heritage expert, Mr Graham Hall, who in disagreeing with Ms Wray, goes as far as to describe the existing dwelling as a “pretentious fake” with “…no architectural integrity” (Ex 4 p 20). Mr Hall supports the application for demolition and the new build.
Decision
1. For the reasons that follow, I have determined to refuse consent and dismiss the development application.
Evidence
1. The ASOFC describes the site as a rectangular lot with an area of 1012m2. It has a northern boundary to Shirley Street, which is a classified road (MR545), and a southern boundary to Shirley Lane. Both frontages are 20.117m wide.
2. On the southern boundary of the site facing Shirley Lane, the Council has approved the construction of two x 2-storey dwellings with two swimming pools to create a multi dwelling housing development comprising three dwellings on the site (DA 10.2021.275.1 (DA 2021)). Relevantly, conditions 5 and 6 of that consent require the retention and repair of the existing dwelling house at the Shirley Street frontage (being the third dwelling in the approved development). As this application proposes the demolition of the existing dwelling, an approval of its demolition in these proceedings will require the deletion of conditions 5 and 6 of DA 2021. It is to be noted that this southern boundary development is near completion.
3. The existing dwelling on the northern boundary is an original single storey elevated dwelling house behind a low brick fence, with vehicular access from Shirley Street to a single internal garage. This existing dwelling is setback approximately 6m at its closest point to the front boundary and is agreed to have been built around 1952.
4. It is accepted that the existing dwelling falls outside the “key period” (1920 -1950) identified in the State Heritage Inventory for the Shirley Street HCA (Ex 4, p 10). The listing states:
“A group of dwellings within the area defined by Wordsworth Street to the east, Shirley and Cavanbah Streets to the north, Kendall Street to the west and Byron Street to the south. Building materials, (weatherboard, original timber stumps, sharply pitched corrugated iron roofs, bricked chimneys and fireplaces, fenestration styles), building layouts, whether for use as dwellings or for public use, setbacks from the street, property size, access to properties, boundary fences, features of public landscaping (species and style of planting) and driveway constructions are consistent within the period 1920 – 1950.”
(Ex 4 p 4)
1. The Statement of Significance for this HCA in the State Heritage Inventory 126030 dated 2005 describes the area in the following terms:
“A group of dwellings and public buildings, rear lanes, street trees and landscaping which, taken together, illustrate a pattern of settlement in Byron Bay of distinctive character. The area contrasts strongly with the modern beachside developments on the eastern side of Shirley Street, although the two areas are unified by the striking avenue of mature Norfolk Island pine trees.”
1. The extent of the Shirley Street HCA is outlined in red below:
1. While the term “heritage conservation area” is defined in the LEP there is no fine-tooth analysis of the particular buildings in the Shirley Street HCA such as to ascribe a grading of “Contributory item”, “Neutral/Infill or “Intrusive” – which is often employed in DCPs to help guide where redevelopment is likely to be supported and where conservation is appropriate.
2. In the absence of the definition of contributory items, the heritage experts agreed that the development proposal must be considered with reference to the assessed significance set out in the State Heritage Inventory for the Shirley Street HCA and the Byron Shire Community-Based Heritage Study 2007. However, they rely on different authorities for the purpose of understanding and interpreting the HCA.
3. Ms Wray has applied the criteria advanced by Dirk Spennemann in his academic paper published by Heritage (13 July 2023). [1] In addressing the lack of definitions and common criteria in the assessment of heritage conservation areas and contributory items, Mr Spennemann has crafted definitions which Ms Wray suggests local councils can adopt or adapt. If applied, she is of the opinion that the subject dwelling would be consistent with a Contributory Item Class 1 as follows:
“any building, work, tree or place and its setting which clearly reflects a key period of significance for the heritage conservation area and that forms a key element of the collective cultural heritage asset base of the heritage conservation area. This item retains its overall form as built during the key period of significance without additions or alterations visible from the street that are not congruent with the key period of significance. A key criterion is what the item offers to the streetscape or character of the heritage conservation area. As a result, the focus for a contributory item class 1 is how the item appears in the public domain, and especially from the street.” [2]
1. Against that criteria and her consideration of the Statement of Significance for the Shirley Street HCA, Ms Wray gave evidence that the existing dwelling, built in 1952, contributes to this HCA because it demonstrates the historical development in the early post-war period in Byron Bay. She advocates for the retention of examples of domestic architecture from different eras within the HCA and identified this existing dwelling’s importance for its curved corners, round port hole windows, glazing proportions and the timber sash windows which emulate the “Waterfall” and “P” and “O” Liner design elements associated with post-war freedom and optimism etc (Ex 4 p 16). She also endorses the retention of the building because of its historic association with local business families. She describes it as part of a collective of dwellings which Ms Wray argues contributes to the aesthetic significance of the Shirley Street HCA being representative of a departure from the weatherboard and iron materiality and design of traditional timber cottages.
2. Ultimately, Ms Wray gave evidence that the existing dwelling’s contribution rested upon on its unique representation of the last phase of the development of the Shirley Street HCA. A “rare” example of domestic architecture being the only two-storey height 1950s building of this design in the HCA.
3. Relying on the publication “Conservation Areas” by Heritage Office, and Department of Urban Affairs and Planning 1996 (Ex 4 p 3) and the Court’s planning principle in Helou v Strathfield Municipal Council (2006) 144 LGERA 322; [2006] NSWLEC 66 (Helou) which defines “contributory item” at [44] as:
“…a building that is not individually listed as a heritage item, but by virtue of age, scale, materials, details, design style or intactness is consistent with the conservation area, and therefore reinforces its heritage significance”.
Mr Hall assessed the significance – the contributory value – of the dwelling against the Statement of Significance and the physical description in the State Heritage Inventory to reach the conclusion that the existing dwelling makes no contribution to the Shirley Street HCA.
1. Mr Hall believes that the existing dwelling was originally a traditional timber “Queenslander” (Ex B) but today is best described as “a larger than average single storey fibro and tile post war austerity cottage elevated on posts”. He considers the existing dwelling to be distinguished by its materials and detailing from “…the single storey weatherboard and corrugated iron cottages” identified for conservation in the Shirley Street HCA. In his evidence, Mr Hall references the fact that the existing dwelling does not satisfy the criteria set out in the State Heritage Inventory relevant to the HCA, nor fall within the relevant timeframe of 1920 -1950s; and concludes that there is no heritage value in the dwelling (Ex 4 p 11). He sees it as no more than a timber-framed dwelling, with curved corners and clad in fibro with no architectural integrity (Ex 4 p 19). And, insofar as Ms Wray’s evidence amplifies the uniqueness of the existing dwelling in the area Mr Hall argues that this only further justifies his conclusion that the existing dwelling does not reference or contribute to the heritage value of the HCA. He disagrees with Ms Wray’s evidence that buildings which do not have the identified significant characteristics of the conservation area (an atypical house), but demonstrate aspects of the area’s history should be conserved. Mr Hall believes that the extension of the protection of the HCA to items that are not contributory is inequitable, and inconsistent with the work that was undertaken to identify the HCA to protect it by the community-based heritage study in 2007 which led to the listing of the Shirley Street HCA. The study, coordinated by Dr Donald Ellesmore, identified the HCA as significant because of the preponderance of 1920-1950 weatherboard and corrugated iron cottages. He is also of the opinion that inclusion of this dwelling obscures the important historical characteristics of the HCA as it seeks to preserve something that is not sufficiently important to the history of the area. And in respect to aesthetic value, Mr Hall is of the view that the existing dwelling is a “mock replication” (Ex 4 pp 14-20).
The locality
1. At the site view, I was able to observe the pattern of subdivision in the surrounding locality. The aerial photograph of the site below (outlined in blue) assists understanding the surrounding development.
1. The area contains a mixture of residential uses (predominantly dwelling houses) on the southern side of Shirley Street, and medium density housing and tourist uses (multi dwelling housing, serviced apartments, and motels) on the northern side of Shirley Street. The immediate streetscape encompasses the established Norfolk Pine Avenue plantings, a Tuckeroo, and grassed verges.
2. Focussing on the southern side of Shirley Street and the entire road reserve (containing the grassed verges and Norfolk Pine Avenue plantings on both sides of the street) that is the HCA identified in Sch 5 of the LEP, I observed several modest single storey, traditional timber clad, hipped and gabled roofed cottages - including the properties on the eastern and western boundaries of the site. There were also fibro cement clad dwellings, and larger infill developments addressing Shirley Street and Shirley Lane. Some of the infill two-storey developments along the Shirley Street frontage were approved prior to the introduction of the Shirley Street HCA, and associated planning controls, but not all of them. The developments at 42 Shirley Street and 25 Shirley Lane are also two storeys and recent approvals.
3. However, it is to be noted that there are no basement car parks on the southern side of Shirley Street within the HCA. Vehicle access along the southern side of Shirley Street remains with minimal interruption to the street frontages and parking generally incorporated at the side or to the rear of dwellings behind the avenue of listed Norfolk Pine trees.
4. For completeness, I note that the site is subject to flooding with current flood levels detailed in the Belongil Creek Flood Risk Management Plan (BMT WBM March 2015). There is a cross fall sloping down to Shirley Lane of approximately 1.13%. The site is also located within the Coastal Erosion Hazard Area on the Byron Bay Coastal Hazards Map under Chapter E5 of the DCP, and mapped as having acid sulphate soil - Class 3 and Class 5 on the Acid Sulphate Solis Map under the LEP. The site is also identified as bushfire prone land and mapped “vegetation buffer” under the gazetted bushfire mapping certified by the NSW Rural Fire Service on 12 July 2022.
Byron Local Environmental Plan 2014 (LEP)
1. The site and adjacent properties on the southern side of Shirley Street are within Zone R2 Low Density Residential pursuant to the provisions of the LEP. The northern side of Shirley Street opposite the site is in Zone R3 Medium Density Residential.
2. The objectives of the Zone R2 Low Density Residential are:
• To provide for the housing needs of the community within a low density residential environment.
• To enable other land uses that provide facilities or services to meet the day to day needs of residents.
1. Development for the purposes of a “dual occupancy (attached)” and “multi dwelling housing” is permissible with consent in Zone R2.
2. The terms “multi dwelling housing” and “dual occupancy (attached)” are defined as follows in the LEP:
dual occupancy (attached) means 2 dwellings on one lot of land that are attached to each other but does not include a secondary dwelling.
multi dwelling housing means 3 or more dwellings (whether attached or detached) on one lot of land, each with access at ground level, but does not include a residential flat building.
1. Relevantly, Section 1.6.11 in Chapter D1 of the DCP contains the following objectives, performance criteria and prescriptive measures concerning density in multi dwelling housing developments:
“D1.6.11 Density
Objectives
1. To ensure that medium density housing development, including multi-dwelling housing (including Manor Houses and Terraces) and attached dwellings are compatible in bulk and scale with development in the locality and is consistent with objectives of the zone.
2. To enable a variety of housing types within the Shire.
Performance Criteria
1. To provide a range of housing options that are compatible with locality that is suitable within the Low Density Residential Zone.
Prescriptive measures
1. Multi-dwelling housing and attached dwellings within the R2 Low Density Residential Zone are to have a maximum of 3 dwellings per 1000m2 of lot size. Any additional dwellings require a site area of 333m2 per dwelling. Prescriptive measure one for this part does not apply if the proposal includes the provision of affordable housing.”
1. The proposed development, if implemented concurrently with the development approved under DA 2021, will result in there being a multi dwelling housing development containing four dwellings on one lot that is 1,012 m2 in area, which is not consistent with the prescriptive measures in Section D1.6.11 in the DCP.
2. For that reason, the Council contends that the density of the development is not consistent with the low-density residential character, bulk and scale of the locality, and is contrary to the objectives and performance criteria in Section D1.6.11 of the DCP.
3. The site is subject to a maximum height of buildings of 9m pursuant to the Height of Buildings Map referred to in cl 4.3 of the LEP and the proposed development is 9m.
4. The site is subject to a maximum floor space ratio of 0.5:1 pursuant to the Floor Space Ratio Map referred to in cl 4.4 of the LEP and is compliant.
Consideration
1. As the Council identified in closing, there are four fundamental issues raised by the application. The first one is the effect of the proposed demolition of the existing 1950s dwelling on the heritage significance of the Shirley Street HCA (Tcpt, 19 July 2024, pp 33(49)-34(2)); and the effect of the erection of the new building on the heritage significance of the Shirley Street HCA.
2. The second is whether the proposed development is likely to cause an adverse impact on the built environment heritage of the Shirley Street HCA, and whether the new development will retain and complement the character and the significance of the HCA. In that regard, the Council is particularly critical of the proposed basement car park and ramp, the building’s setbacks and the spatial arrangement and the removal of the existing landscape setting.
3. Thirdly, the proposed development’s non-compliance with the specific controls in the DCP relating to density, the building height plane, and the side and front setbacks (Tcpt, 19 July 2024, p 34(12-15)).
4. Lastly, the failure in the design of the driveway ramp to provide the minimum site triangle area required for pedestrian safety as set out in the DCP, which adopts the Australian Standard, and seeks to provide a 2m x 2.5m area within the site, clear of obstruction to provide visibility for the driver of the vehicle.
5. Dealing first with the issue of demolition of a building in this HCA, it is useful to set out the main provisions in the LEP and SEPP.
6. Clause 5.10 of the LEP provides:
5.10 Heritage conservation
Note—
Heritage items (if any) are listed and described in Schedule 5. Heritage conservation areas (if any) are shown on the Heritage Map as well as being described in Schedule 5.
(1) Objectives The objectives of this clause are as follows—
(a) to conserve the environmental heritage of Byron,
(b) to conserve the heritage significance of heritage items and heritage conservation areas, including associated fabric, settings and views,
(c) to conserve archaeological sites,
(d) to conserve Aboriginal objects and Aboriginal places of heritage significance.
(2) Requirement for consent Development consent is required for any of the following—
(a) demolishing or moving any of the following or altering the exterior of any of the following (including, in the case of a building, making changes to its detail, fabric, finish or appearance)—
(i) a heritage item,
(ii) an Aboriginal object,
(iii) a building, work, relic or tree within a heritage conservation area,
(b) altering a heritage item that is a building by making structural changes to its interior or by making changes to anything inside the item that is specified in Schedule 5 in relation to the item,
(c) disturbing or excavating an archaeological site while knowing, or having reasonable cause to suspect, that the disturbance or excavation will or is likely to result in a relic being discovered, exposed, moved, damaged or destroyed,
(d) disturbing or excavating an Aboriginal place of heritage significance,
(e) erecting a building on land—
(i) on which a heritage item is located or that is within a heritage conservation area, or
(ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance,
(f) subdividing land—
(i) on which a heritage item is located or that is within a heritage conservation area, or
(ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance.
(3) When consent not required However, development consent under this clause is not required if—
(a) the applicant has notified the consent authority of the proposed development and the consent authority has advised the applicant in writing before any work is carried out that it is satisfied that the proposed development—
(i) is of a minor nature or is for the maintenance of the heritage item, Aboriginal object, Aboriginal place of heritage significance or archaeological site or a building, work, relic, tree or place within the heritage conservation area, and
(ii) would not adversely affect the heritage significance of the heritage item, Aboriginal object, Aboriginal place, archaeological site or heritage conservation area, or
(b) the development is in a cemetery or burial ground and the proposed development—
(i) is the creation of a new grave or monument, or excavation or disturbance of land for the purpose of conserving or repairing monuments or grave markers, and
(ii) would not cause disturbance to human remains, relics, Aboriginal objects in the form of grave goods, or to an Aboriginal place of heritage significance, or
(c) the development is limited to the removal of a tree or other vegetation that the Council is satisfied is a risk to human life or property, or
(d) the development is exempt development.
(4) Effect of proposed development on heritage significance The consent authority must, before granting consent under this clause in respect of a heritage item or heritage conservation area, consider the effect of the proposed development on the heritage significance of the item or area concerned. This subclause applies regardless of whether a heritage management document is prepared under subclause (5) or a heritage conservation management plan is submitted under subclause (6).
1. Relevantly, cl 5.10(2)(a)(iii) provides that development consent is required to demolish a building within a heritage conservation area.
2. The matters that a consent authority must consider before granting consent under cl 5.10 are set out in subcl (4) namely:
(4) Effect of proposed development on heritage significance The consent authority must, before granting consent under this clause in respect of a ... heritage conservation area, consider the effect of the proposed development on the heritage significance of the ... area concerned.
1. The relevant heritage controls are further refined by the provisions in Chapter C1 of DCP in relation to non-Indigenous heritage as detailed in the SOFC at pp 7, 11, 13 and 14.
2. Section 2.11 of the RH SEPP also applies to the site because the property is located with the coastal use area. Section 2.11 states as follows:
2.11 Development on land within the coastal use area
(1) Development consent must not be granted to development on land that is within the coastal use area unless the consent authority—
(a) has considered whether the proposed development is likely to cause an adverse impact on the following—
…
(v) cultural and built environment heritage, and
(b) is satisfied that—
(i) the development is designed, sited and will be managed to avoid an adverse impact referred to in paragraph (a), or
(ii) if that impact cannot be reasonably avoided—the development is designed, sited and will be managed to minimise that impact, or
(iii) if that impact cannot be minimised—the development will be managed to mitigate that impact, and
(c) has taken into account the surrounding coastal and built environment, and the bulk, scale and size of the proposed development.
1. Subsection 2.11(1)(a) of RH SEPP requires a consent authority to consider whether the proposed development is likely to cause an adverse impact on various things - including the cultural and built environment heritage.
2. If there is an adverse impact on the cultural and built environment heritage that the proposed development would cause, then the Court needs to form a positive opinion of satisfaction in respect of the matters identified in s 2.11(1)(b). It needs to be satisfied that:
(i) the development is designed, sited and will be managed to avoid an adverse impact referred to in paragraph (a), or
(ii) if that impact cannot be reasonably avoided—the development is designed, sited and will be managed to minimise that impact, or
(iii) if that impact cannot be minimised—the development will be managed to mitigate that impact…
1. The Council's case is that there will be an adverse impact on the built environment heritage of this particular HCA and that there has been no attempt to avoid that impact. It argued that the development fails in the first test because there is an ability to reasonably avoid the impact.
2. In addressing cl 5.10, the Council emphasises the objective identified in subcl (1)(b) which is to conserve the heritage significance of heritage items and heritage conservation areas, including their associated fabric settings and views. It submits that the clause requires consideration to be given to the effect of the proposed development in the context of that particular objective. The Council noted cl 5.10 is supplemented by Chapter C1 “Non-Indigenous Heritage” of the DCP, which specifically deals with demolition and specifies the matters to be assessed when assessing demolition of relevantly a building of a heritage conservation area. Five matters are specified for consideration:
* the heritage significance of the item;
* the structural condition of the item,
* comparative analysis of the item in relation to other items,
* the contribution the item makes to the streetscape or precinct, and
* the design and suitability of the proposed replacement development.
1. As previously mentioned, Ms Wray gave evidence that the retention of the existing dwelling and original low brick fence is required to satisfy the objectives in cl 5.10 of the LEP, and the avoidance, minimisation and mitigation of impacts required to be demonstrated under the RH SEPP (Ex 2 Tab 15; Ex 4). She believes that the existing dwelling demonstrates the historical development of Byron Bay in the immediate period following WWII and contributes to the aesthetic character of the Shirley Street HCA through its design elements, setbacks, spatial and landscaped setting, and associated low fence typical of the era. It is in her words “a rare example of its type and era within the Shirley Street HCA and is of a modest size and standard which predates current domestic architecture by 70 years”.
2. Ms Wray believes that the demolition of the existing dwelling and low brick fence will have an adverse impact on the historical and aesthetic significance and rarity of the Shirley Street HCA (NSW State Heritage Register criterion a, c & f). She maintains that the development will have a negative impact on built environment heritage which can be reasonably avoided if the existing dwelling and low brick fence are retained, considering the surrounding coastal and built environment heritage, and the bulk, scale and size of development in the Shirley Street HCA. Particularly, given that restoration and sympathetic alterations and updates to the dwelling are permissible under the provisions of the LEP.
3. Ms Wray also believes that the proposed development conflicts with the policy stated in DCP Chapter C1 “Non-Indigenous Heritage” requiring single storey development within heritage conservation areas, and elements such as 1.2m front fencing and car parking and driveways that retain and reflect the character and established patterns and visual setting in the streetscape. To her mind, the design of the replacement dwellings is not harmonious with the overall existing built and landscaped character and the adjoining modest single storey traditional dwellings within the Shirley Street HCA. In particular, the buildings’ bulk, site coverage, reduced setbacks, uncharacteristic and dominant access to basement parking, fencing and the removal of mature landscaping.
4. In short, her evidence is that the design of the replacement building is not suitable and this is a relevant consideration under C1.2.2.3 of the DCP which weighs against demolition.
5. Insofar as demolition is proposed, Mr Hall’s evidence is that there is no heritage significance in the existing dwelling.
6. He is strongly of the opinion that in circumstances where the building is inconsistent with the Statement of Significance and physical description of the buildings that constitute the HCA, it is not protected by the controls. In acknowledging that the existing dwelling was built outside the relevant period of 1920-1950. Mr Hall gave evidence that the precise date is not crucial. He contends that the significance of the HCA is based on the common characteristics of workers’ housing between the wars and the early post-war period as detailed in the State Heritage Inventory. As Mr Hall explained in his written evidence, the austerity style houses of the immediate post-war period had many characteristics in common with the small interwar houses in the area apart from the common use of asbestos cement wall cladding; and consequently the streetscape remained coherent. However, in the 1950s, the post-war housing shortage eased and a greater range of building materials became available, and a diversity of individual and individualistic designs emerged. These began to erode the coherence of the area, and the visual evidence of its history as a working-class area, which are the basis of its significance. The existing dwelling, in his view, is one such individualistic example (Ex 4 pp 13-14).
Findings – Heritage
1. Clause 5.10 expressly permits the demolition of heritage items; buildings and works within a heritage conservation area with consent (cl 5.10(2)(iii)). In determining demolition, I must consider the matters raised in cl 5.10(4).
2. In this case, for the reasons outlined by Mr Hall and based on my own observations I accept that the building’s design and materials are not consistent with those features identified as significant in the HCA (Ex 4 p 5).
3. Clause 5.10(4) requires my consideration of “the effect of the proposed development on the heritage significance of the area”. In this case, this requires my consideration of two elements – the demolition and the proposed replacement building which collectively comprise the “proposed development”. After a consideration of the development as proposed, I am not prepared to consent to demolition of the existing dwelling because the proposed replacement building will in my assessment of the evidence adversely effect the heritage significance of the HCA for the reasons articulated by the Council.
4. In forming that view, I accept that the existing building may illustrate the evolution of residential development design styles in Byron Bay and it may have been the home to respected business people in the area as Ms Wray suggests. However, this could be said in respect of any dwelling. An item in a conservation area should, as Mr Hall states in his evidence, be assessed directly for its contribution to the areas defined heritage significance. This is done by determining whether the dwelling falls into the key period of significance and the extent to which it retains its original character (Ex 4 p 15).
5. In circumstances where there is no fine-grained analysis of the existing dwelling, the starting point for assessment is the Statement of Significance for the Shirley Street HCA and the physical description in the State Heritage Inventory. The principle in Helou is useful as a guide in understanding what is a “contributory item”. It was clear from my observations at the site view that the existing building does not contribute to the HCA for the reasons identified by Mr Hall as summarised earlier. In short, the building “by virtue of age, scale, materials, details, design style or intactness” is not consistent with the conservation area (Helou) as defined in the Statement of Significance and State Heritage Inventory (Ex 4 p 12).
6. Both the time of construction, and its design and materials are not consistent with those matters identified as triggering the significance of the HCA (Ex 4 p 5). Ms Wray seeks to substitute the significance of the HCA identified in the statutory listing with a different test. Along with other things, she identifies the building as significant based on the building’s illustration of “the evolution of residential design styles in Byron Bay and other irrelevant matters such as the subsequent occupation of the building in the 1970s”. I prefer Mr Hall’s more orthodox heritage assessment.
The proposed replacement development
1. The Council’s planning expert, Mr Jeff Mead and Mr Dwayne Roberts, the applicant’s planner, have addressed the planning concerns raised by the Council in respect of the replacement development in their joint report filed on 6 June 2024. They also gave short oral evidence in Court.
2. As the applicant identifies, there are three levels of control that arise from the operation of the DCP:
* the controls in Chapter D1, which refer to Part E of the DCP (D1.2.6);
* the controls in Chapter E5, which contain the “Residential Character Narratives” – see E5.8.4; and
* the heritage controls in Chapter C1.
1. Mr Mead identifies in the Planning JER a number of elements which are out of character for the locality and inconsistent with the streetscape and character controls prescribed in Chapter D1 “Residential Accommodation in Urban, Village and Special Purpose Zones” of DCP and the existing and desired future character of the locality as prescribed by Chapter E5 “Certain locations in Byron Bay and Ewingsdale” of the DCP.
2. In short, Mr Mead gave evidence that the two-storey development by its design diminishes the dominance of horizontal form on the site which is antipathetic to the character – both existing and prescribed by the DCP (Ex 5 p 7). He is of the opinion that Section C1.6.2 of the DCP should be given weight over Section D which is more general.
3. The relevant objectives in Section D1.2.6 in Chapter D1 of DCP are:
“1. To retain and enhance the unique character of Byron Shire and its distinctive landscapes, ecology, towns, villages, rural and natural areas.
2. To ensure that new development respects and complements those aspects of an area’s natural and built environment that are important to its existing character.”
1. The Performance Criteria, at paragraph 1, stipulates that the development must demonstrate how it is consistent with the relevant Residential Character Narrative in Part E of the DCP (there are no Prescriptive Measures in this control in the DCP).
2. Part E5.8.4 sets out the Character Narrative for that part of Byron Bay that is described as “Pocket A”. This part of the DCP describes the area and then provides the following guidance as to “development”:
“Developments should use contemporary interpretations of the traditional design elements and detailing found in the older homes and support the “Place Principles” of the Byron Town Centre Master plan by:
• offering a range of dwelling sizes and types to cater for a variety of socio-economic groups, including local residential living mixed with commercial opportunities (i.e. live/work) to offset the overly dominant visitor accommodation in the Byron Bay town
• avoiding building elements typical of the 1950’s to 1970’s residential flat and shop top buildings, with a high proportion of solid walls devoid of decorative architectural elements and/or parking/driveway areas dominating the street frontage, creating a poor and unsafe pedestrian environment”.
1. Mr Mead emphasised in his evidence that D1.6.11 of the DCP limits sites within the R2 Low Density Residential Zone to a maximum of three dwellings per 1,000m2 of lot size and for any additional dwellings a further 333m2 is required. This site is 1,012m2 which is 321m2 short of this requirement – a 24% variation. He is of the opinion that the proposed two dwellings are inconsistent with the density controls of the DCP and the density which dominates the character of development within the locality.
2. Mr Mead emphasises that the objective of the density control in D1.6.11 is to ensure compatibility in bulk and scale with development in the locality, and consistency with the objectives of the zone. He contends that the incorporation of a large basement car park generates adverse impacts in the HCA streetscape. The number of dwellings proposed contributes to the overall building width and footprint, which results in non-compliance with the setback and building height plane controls.
3. The non-compliant front setback is particularly problematic because it results in an uncharacteristic presentation of this two-storey form to the street. The removal of the pergolas in the amended plans does not overcome concern about the bulk and scale.
4. The evidence of Mr Roberts in the Planning JER directly addresses the controls in E5.8.4. He has considered the style of recent development in the vicinity of the property and within the Shirley Street HCA. A photographic record of that investigation is included in the Planning JER (Ex 5 Annexure B) and is separately included in the applicant’s bundle of documents (Ex C Tab 6).
5. When the (effective) controls in Part E5.8.4 are considered, in the context of the proposed development, Mr Roberts is of the opinion that the development is consistent with the character of Pocket A and is consistent with the relevant objective of D1.2.6 (“To ensure that new development respects and complements those aspects of an area’s natural and built environment that are important to its existing character”) and therefore is acceptable.
6. Both planners accepted that there is no basement car parking on the southern side of Shirley Street. Mr Mead gave evidence that the access ramp and opening to the basement parking does not respect or complement the existing character or streetscape in the context of the primary frontage in a heritage conservation area. The attempt to disguise this uncharacteristic basement car park and ramp behind the 1.4m front fence and self-closing gate does not ensure that new development respects and complements those aspects of an area’s natural and built environment that are important to its existing character (Objective 2).
7. Objective 3 and Performance Criteria 3 of Section D1.6.4 of the DCP provides for efficient on-site car parking which minimises the visual impact of long straight paved spaces. Mr Mead gave evidence that the proposed development does not achieve this objective. It proposes a long driveway and ramp to the basement parking on the site. The driveway ramp in his assessment dominates the eastern side boundary of the site. Mr Mead assesses the parking arrangement is neither efficient or necessary (Ex 5 par 3.16).
8. Furthermore, Mr Mead offers the opinion that the proposed basement parking is not convenient because there is no access from the basement to the two dwellings, and that the development fails Objective 1 of Section D1.6.4 of the DCP.
9. Mr Roberts is not in agreement and gave evidence that the provision of parking meets requirements created by development (Table B4.1 Parking rates, B4.2.12 Parking schedules, Chapter B4 Traffic Planning, Vehicle Parking, Circulation and Access).
Findings – The proposed replacement building
1. To some extent the amendments to the plans during the hearing in response to the evidence (Ex L) have resolved some of the Council’s concerns.
2. The modifications of the front fence to wooden paling with gaps contextually sympathetic with the streetscape in the HCA at a height of 1.4m to provide some screening to the driveway entry offers an acceptable degree of transparency and is an improvement. The removal of the pergolas and amendments to the rear of the development to reduce bulk and overshadowing is also a positive change.
3. However, after consideration of the matters in s 2.11 of the RH SEPP against the evidence, I find that the replacement building is likely to cause an adverse impact on the cultural and built environment heritage of the HCA area; and I am not satisfied that the development (as amended) has been designed, sited, and will be managed to mitigate or manage that adverse impact. Put simply, the attempt to incorporate a fourth dwelling on this part of the site, in breach of the density control, is the cause of the adverse impact generated by this development. In that regard, I accept Mr Mead’s evidence that Objective 1 of Section D1.6.11 of the DCP that seeks to ensure that attached dwellings are compatible with the bulk and scale of development in the locality has not been met. Based on my observations of the streetscape along the southern side of Shirley Street, I accept that the proposal exceeds the residential density across the surrounding sites, which generally contain one or two dwellings, with single storey elements. For that reason, I accept Mr Mead’s expert assessment, that it is likely that single dwelling does represent the maximum density capacity for the site at Shirley Street (Ex 5 p 8).
4. A further consequence of the fourth dwelling is the requirement for a basement car park and non-compliant driveway design both of which are uncharacteristic in the HCA. And, in my assessment the architects’ effort to disguise this intrusive feature behind a self-closing gate has obvious limitations. When the gate is open or when viewed through or over the 1.4m front fence (which is higher than the 1.2m fence anticipated by the DCP), these measures are ineffective. I do not accept Mr Hall’s assessment that the development is a contemporary interpretation of traditional design elements in the HCA. There are no basement car parks in the HCA. It will be an intrusive element visible to pedestrians when the gate is open and to those walking or cycling near the fence and not on the pedestrian path.
5. At the view, it was apparent that the footpath area is regularly utilised by walkers and cyclists heading to and from town and the beach. The current design of the driveway ramp compromises pedestrian safety as it is non-compliant with the DCP and the relevant Australian Standard. And, the impacts of the design changes necessary to make the driveway compliant on the retaining wall and side setback are unclear on the evidence before the Court.
6. The removal of the pergolas does not overcome the development’s non-compliances with the building height plane on at least two elevations, at both the ground and the upper levels. These non-compliances have consequences. The reduced side setbacks result in additional overshadowing onto the two new dwellings at the rear and the bulk and scale of the building more generally. Such consequences would be avoided with a compliant building.
7. In that regard, I do not accept from the bar table the submission (without satisfactory evidence) that the non-compliance with the height plane is the result of compliance with the flood planning level of 2.82AHD but rather a desire to squeeze another dwelling onto the Shirley Street frontage as Mr Mead said.
8. The existing building is between 6 and 7.5m from the front setback. The control in D1.2.2 of the DCP provides for a 9m setback to the classified road but a variation of 6.5m may be sought for a single storey dwelling or single storey elements of two storey elements. Mr Mead gave evidence, at 4.10 of the Planning JER (Ex 5 p 12), that he was a little flexible on this 9m but did not accept the proposed 6.5m front setback as measured from the face of the building rather than the front wall of the planter at the top level. He does not accept the 4.5m setback is sufficient from the classified road in this HCA. I accept Mr Mead’s evidence particularly when Mr Roberts conceded that the Council has approved the front setback control for new approvals such as 42 Shirley Street in accord with the DCP control. There is no satisfactory basis to disregard that control in this case in my assessment of the evidence.
9. The non-compliant features of the design (front and side setbacks and breaches of the building height plane) support my conclusion that the development has not been designed, sited and will be managed to avoid an adverse impact on the cultural and built environment which in this case is a conservation area: RH SEPP s 2.11.
10. Importantly, Objective 1 of Section D1.6.11 of the DCP seeks to ensure that attached dwellings are compatible in bulk and scale with development in the locality. I am satisfied on the evidence of Mr Mead and my observations that the proposed development will exceed the existing residential density across the surrounding sites which contain one or two dwellings with single and double storey elements.
11. While Objective 2 of the DCP seeks to enable a variety of housing types - the already approved development on the site provides two attached dwellings, and a single dwelling, thereby achieving this objective whilst also achieving the maximum permitted density being the three dwellings. The proposed construction of two dwellings in place of the existing dwelling reduces the housing types on the site contrary to the control.
12. I have considered the photograph record of the style of recent developments in the vicinity of the property and within the HCA and based on my own observations do not accept Mr Roberts’ assessment that the proposed addition of 2 x attached dwellings to the Shirley Street frontage is “entirely consistent with the existing and desired future character of the surrounding streetscape”. The basement car park is not consistent with the controls in Part E5.8.4; the character of Pocket A and the relevant objective of D1.2.6 “To ensure that new development respects and complements those aspects of an area’s natural and built environment that are important to its existing character”.
13. The proposal, as Mr Mead states in his evidence, “significantly increases the vertical bulk and density of development on the site” such that the proposal will be out of character with the locality. The reference for the locality is the HCA. While there are a significant number of two-storey dwellings, they provide parking in front of the dwelling or beside it. In my considered opinion the proposed housing type is not characteristic to the Shirley Street HCA. The applicant submits that the DCP controls should be applied flexibly in accord with s 4.15(3A)(b) of the EPA Act but that is only when the development otherwise has acceptable impacts with respect to bulk, scale and character – which is not the application before the Court for the reasons articulated by the Council’s experts.
14. Accordingly, for the reasons stated, development consent to the proposed development is refused and the application is dismissed.
Final orders
1. The Court orders:
1. The appeal is dismissed.
2. Development application no. 10.2022.518.1 for the demolition of an existing dwelling and construction of 2 x two-storey dwellings with basement parking and a pool at 50 Shirley Street, Byron Bay is determined by refusal of consent.
3. The exhibits are to be returned following publication of the judgment, except for A, B, D, L, M and 1.
………………..
S Dixon
Senior Commissioner of the Court
**********
Endnotes
1. Ex 4; Spennemann, D H R, ‘What Actually Is a Heritage Conservation Area? A Management Critique Based on a Systematic Review of New South Wales (Australia) Planning Documents’, (2023) 6 Heritage 5270, https://doi.org/10.3390/heritage6070279
2. Ex 4 pp 11-12; Spennemann, D H R, ‘What Actually Is a Heritage Conservation Area? A Management Critique Based on a Systematic Review of New South Wales (Australia) Planning Documents’, (2023) 6 Heritage 5270, https://doi.org/10.3390/heritage6070279
Amendments
31 July 2024 - Correction to typographical error in Catchwords.
31 July 2024 - Correction to typographical error at [79] - deletion of the word "only".
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 8,260 |
nsw_caselaw:1910700089d6e9d13bab487b | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Daley v Budget Auto Group Pty Ltd [2024] NSWCATAP 149 | https://www.caselaw.nsw.gov.au/decision/1910700089d6e9d13bab487b | 2024-08-04T23:50:38.241661+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Daley v Budget Auto Group Pty Ltd [2024] NSWCATAP 149
Hearing dates: 27 June 2024
Date of orders: 1 August 2024
Decision date: 01 August 2024
Jurisdiction: Appeal Panel
Before: M Harrowell, Deputy President
D Goldstein, Senior Member
Decision: 1. Leave to appeal is granted, the appeal is allowed and the orders made14 March 2024 in application 2024/00076640 are set aside.
2. The proceedings are remitted for hearing by a differently constituted Tribunal.
3. The remitted proceedings should be first listed for directions, the Tribunal on remittal to make such directions for the future conduct of the proceedings as it thinks fit.
Catchwords: PRACTICE AND PROCEDURE – Tribunal Member acting as a conciliator and as the Member constituted to hear the dispute – obligations of Tribunal when performing dual role – power to set aside consent orders – duty of Tribunal to ensure parties understand nature of proceedings - incorrect and incomplete statements as to the law during conciliation – reliance by party consenting to orders on incorrect or incomplete statements made by Tribunal
Legislation Cited: Australian Consumer Law (NSW)
Civil and Administrative Tribunal Act 2013 (NSW)
Civil and Administrative Tribunal Rules 2014 (NSW)
Motor Dealers and Repairers Act 2013 (NSW)
Cases Cited: Aboriginal Housing Office v Harrison [2021] NSWCATAP 97
Keybridge Capital Limited v Molopo Energy Limited [2024] NSWSC 779
McDonald v McDonald [2016] NSWCATAP 244
Richards v Lindley [2024] NSWCATAP 9
Yuen v Thom [2016] NSWCATAP 243
Texts Cited: Nil
Category: Principal judgment
Parties: Marie Daley (Appellant)
Budget Auto Group Pty Ltd (Respondent)
Representation: Counsel:
Mr M Fox (Appellant)
Solicitors:
Appellant: Legal Aid NSW
M Sultan (Director) (Respondent)
File Number(s): 2024/00136250
Publication restriction: Nil
Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales
Jurisdiction: Consumer and Commercial Division
Citation: Not applicable
Date of Decision: 14 March 2024
Before: K Ruschen, General Member
File Number(s): 2024/00076640
REASONS FOR DECISION
1. This appeal concerns the purchase by the appellant of a used Nissen Navarra motor vehicle (vehicle) from the respondent on 23 October 2023 for an amount of $7,500.
2. At the time of purchase, the vehicle had travelled 396,497 km.
3. In an application filed in the Tribunal on 27 February 2024, the appellant says the vehicle “broke down the day after purchase” and that she paid $3,595 in towing costs and repairs. The appellant said the respondent “refused to supply any remedy” and that she had “rejected the vehicle in compliance with ACL provisions”. The appellant was seeking a refund and compensation, the amount claimed in the application being $11,095.
4. The application was listed for conciliation and hearing on 14 March 2024. At that time, consent orders were made by the Tribunal to resolve the dispute. The orders were in the following terms:
1. Marie Waley is amended to Marie Daley.
2. The respondent Budget Auto Group Pty Ltd, [address], is to pay the applicant Marie Daley, [address], the sum of $1000.00 by on or before 28 March 2024. Details of the money order: agreed settlement sum $1,000.
Note: Failure to pay the money owed, can result in this certified money order, being registered by the person owed the money, in the Local or District Court to enforce the debt. This may result in additional costs and interest being added to the amount payable.
These orders are made BY CONSENT of the parties in full and final settlement of the Application.
1. The appellant appeals this order.
Notice of Appeal
1. A notice of appeal was filed on 11 April 2024. The appeal was filed in time.
2. The orders sought on appeal were as follows:
1. The original settlement orders are set aside.
2. The motor vehicle was correctly rejected in compliance with the ACL and the contract rescinded.
3. Title of the vehicle passed to the dealer upon receipt of the rejection letter.
4. The respondent to refund of the contract price to the appellant ($7500).
5. The respondent pay damages to the appellant ($3602).
1. The grounds of appeal were in the following terms:
Despite the consent orders, the applicant is seeking leave to lodge this appeal on the following grounds.
(a) the decision of the Tribunal to make consent orders was not fair and equitable;
i. The Tribunal erred in law by failing to consider or apply section Australian Consumer Law. The member’s comments and directions have misled parties that any further action would likely fail.
ii. The Tribunal has not considered the evidence before it provided by the applicant which was not fair and equitable in the circumstances.
iii. Undue influence and unjust conduct contributed to the making of the agreement.
1. Following a call over on 1 May 2024 and directions being made by the Appeal Panel, the appellant filed submissions and evidence in support of her position. As necessary, we will refer to these documents below.
2. The respondent did not comply with the directions of the Appeal Panel. No Reply to Appeal was filed nor were any written submissions and other documents provided.
3. The appeal was heard on 27 June 2024. At that time, the appellant was represented by Mr Fox, a solicitor from Legal Aid NSW in Dubbo. Mr Sultan, director, appeared for the respondent.
4. Notwithstanding the respondent’s failure to comply with the Appeal Panel’s directions, the parties were content for the matter to proceed on the basis the respondent’s representative would be entitled to make oral submissions. No adjournment was otherwise sought.
Consideration
1. This appeal concerns the manner in which conciliation was conducted by the Tribunal Member presiding at what is referred to in the Consumer and Commercial Division (CCD) as a “Group List” hearing and whether consent orders made in consequence of what occurred may be set aside.
2. There is a right of appeal on a question of law. Otherwise, leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). As these proceedings are an appeal from a decision of the CCD, leave may only be granted if the appellant may have suffered a substantial miscarriage of justice: Sch 4 cl 12(1) NCAT Act
3. In order to understand the issues raised by this appeal, it is useful to briefly set out what may occur at a Group List, how consent orders are made by the Tribunal and how consent orders might be challenged on appeal.
Group Lists and conciliation
1. Group Lists are the listing procedures adopted by CCD for various lists which include residential tenancy disputes, consumer claims, and motor vehicle claims (of which the present proceedings are one).
2. Where proceedings are listed in a Group List, the Registrar issues to the parties a notice entitled “Notice of conciliation and hearing (group list)”. The notice specifies the location of the hearing, its date and time. That notice includes a heading “Important information”. Under this heading the parties are referred to the Tribunal’s website and a document entitled “Hearing preparation checklist”. In turn, this document refers to a fact sheet entitled “Conciliation”, which explains the process and who may facilitate the conciliation process on behalf of the Tribunal. In this regard, a registrar conciliator, Tribunal Member or other person appointed by the Tribunal may perform this role.
3. When parties appear on the first listing date, the Tribunal will usually identify the issues which arise in the proceedings and require the parties to undertake a process of conciliation to investigate whether the dispute can be resolved by consent without the need for a contested hearing.
4. As noted in the Conciliation fact sheet, the conciliation may be carried out by a person appointed as conciliator or by the Tribunal Member before whom the proceedings are listed for hearing (Presiding Member). Where proceedings have been the subject of conciliation by a conciliator which has not resolve the dispute, the Presiding Member may also speak to the parties concerning the possible settlement of their dispute. This is both permissible under s 37 of the NCAT Act and in consistent with the objects of the NCAT Act found in s 3 and the guiding principle found in s 36 of the NCAT Act.
Power to make consent orders
1. Where proceedings settle, the Tribunal may make orders by consent. As noted in Aboriginal Housing Office v Harrison [2021] NSWCATAP 97 (Harrison) at [80] and following:
1. consent orders can be made to give effect to a written agreement as permitted by s 59 of the NCAT Act. If consent orders are made under this section, any agreement must be in writing and signed by or on behalf of the parties and lodged with the Tribunal. The Tribunal must be satisfied it would have the power to make a decision in the terms of the agreed settlement or in terms consistent with the terms of the agreed settlement: see s 59(1); or
2. consent orders can be made by the Tribunal at a hearing in the absence of a written document complying with s 59(1)(a). Of course, the parties must appropriately indicate their consent to the Tribunal for this purpose.
1. In either case, where appropriate, the Tribunal must have regard to r 37 of the Civil and Administrative Tribunal Rules 2014 (NSW) (Rules) which requires the Tribunal “to take into account the interests of any vulnerable person (whether or not a party to proceedings)” if the particular person is a party to or the subject of the proceedings concern and it is appropriate to do so. The definition of a vulnerable person is found in r 37(3).
Principles applicable to setting aside a consent order
1. As is evident by their nature, consent orders are made in consequence of an agreement between the parties. Such orders can only be made if they are within the power of the Tribunal to make by reason of the NCAT Act or the relevant enabling legislation. Parties cannot agree to extend the Tribunal’s jurisdiction so as to permit the making of orders which the Tribunal otherwise has no power to make.
2. Once made, consent orders are binding on the parties, unless set aside. In this regard, they may give rise to res judicata or an issue estoppel and/or operate in a manner to prevent parties from subsequently litigating the same subject matter: see eg Keybridge Capital Limited v Molopo Energy Limited [2024] NSWSC 779 at [77]-[84].
3. Because a consent order is made pursuant to an agreement between the parties, it may be set aside at common law on the same basis as an agreement might be set aside. As to what circumstances are necessary to justify such a course, the Appeal Panel said in Yuen v Thom [2016] NSWCATAP 243 (Yuen) at [36]-[40]:
36 At common law, a consent order may be set aside on the same basis that the underlying agreement may be set aside. This was considered by the Appeal Panel in Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110. The Appeal Panel said at [27]:
At common law, the grounds for setting aside a consent order are the same as those for setting aside the agreement on which it is based: Bernard Cairns, Australian Civil Procedure (8th ed, 2009 Law Book Co) at 418. In Harvey v Phillips (1956) 95 CLR 235, the High Court said, at 243-4, that:
The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like.
37 To set aside a consent order on one of the above bases, it must be possible to point to some contumelious conduct on behalf of the respondent. For instance, in the case of duress it must be shown that illegitimate pressure was placed on the appellant such that there was no reasonable alternative for her but to submit: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, 46A. There is no suggestion that illegitimate pressure was brought to bear, the complaint here is that the appellant did not fully understand the process.
38 With respect to undue influence one must point not only to a source of power to deprive another person of free voluntary consent, but also the result of the actual influence: Johnson v Buttress (1936) 56 CLR 113, 134. This is not a case where one of the presumed relationships of undue influence arises such as for a parent and child or solicitor and client: White v Wills [2014] NSWSC 1160, [64], [75]. Here, no actual influence was pointed to.
39 In relation to mistake, the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party’s motives for entering into the contract: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [39], [42]-[43]. Assuming for the purposes of argument, that the appellant was mistaken as to whether or not she could refuse the respondent’s offer, the question is whether that mistake was of a type that vitiates her consent. A common mistake arises when the mistaken belief is held by both parties: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [41], applying Solle v Butcher [1950] 1 KB 671, 693. That does not arise here. A unilateral mistake is where one party is mistaken but the other party should have been aware of the mistake: Taylor v Johnson (1983) 151 CLR 422, 432. The appellant does not contend that the respondent ought to have known of any mistake upon which she was operating. A mutual mistake arises where both parties are mistaken, but their mistakes are different such that there is no meeting of minds: Charitou v The Owners of Strata Plan 10394 [2015] NSWSC 1059, [22]. Here, the parties both understood the bargain that was made; there is no misapprehension about the terms of the purported agreement. The issue is, was there an agreement reached even though the appellant did not understand the bargaining process. The Appeal Panel is of the view that the answer is yes because a reasonable observer would have concluded that an agreement was reached: see N Seddon, R Bigwood and M Ellinghaus, Cheshire & Fifoot Law of Contract (LexisNexis, 10th Aus ed, 2012) at [3.9].
40 Other factors might arise such as non est factum (not my deed). The defence of non est factum is available to a limited class of persons who through no fault of their own, such as by blindness or illiteracy, are unable to have any understanding of the meaning of a particular document and sign the document in the belief that it was radically different from what was in fact signed: Petelin v Cullen (1975) 132 CLR 355, 359-60. However, the appellant is not suggesting she did not understand the document she was signing.
1. These matters go to the question of whether there was in fact an agreement between the parties, not whether the conduct of the Tribunal provides a basis to impugn consent orders.
2. Whether the conduct of the Tribunal gives rise to circumstances that could vitiate any consent or permit the orders to be set aside on appeal is a different question. This is because considerations relevant to whether an agreement has been formed between the parties are different to those relevant to evaluating the conduct of the Member or Members constituting the Tribunal.
3. As explained in Harrison at [38], the issue is one of irregularity in the conduct of the Member, the consideration being similar to the enquiry undertaken when reviewing the conduct of an arbitrator in a commercial arbitration. At [41]-[51] the Tribunal continued:
41 Adapting these principles to the Tribunal, a Member’s conduct is to be considered in the context of the obligations imposed upon the Tribunal under the NCAT Act and the manner in which those obligations are performed. They must also be considered in the context of the role or roles the Member is to perform.
42 As stated above, in proceedings before the Tribunal, a Member may be required to act as both conciliator/facilitator and subsequently as decision-maker, s 37 of the NCAT Act empowering the Tribunal to use “any one or more resolution processes” … “to resolve or narrow issues”. The making of a consent order following settlement is the exercise of power as a decision maker.
43 The performance of both roles in the same proceedings is not prohibited. However, the obligations imposed upon the Tribunal may limit the ability of a particular Member to exercise the Tribunal’s order making powers if that Member has acted as a conciliator/facilitator and what occurred during the alternative dispute resolution process makes it inappropriate to do so.
44 In performing these roles, consistent with the objects in s 3 of the NCAT Act, the Tribunal must ensure it:
(1) “is accessible and responsive to the needs of all its users”;
(2) “resolve[s] the real issues in dispute in proceedings justly, quickly, cheaply and with as little formality as possible”;
(3) makes decisions that “are timely, fair, consistent and of high quality”; and
(4) “is accountable and has processes that are open and transparent”.
45 The principles of case management, the limitation on Tribunal resources and issues of proportionality, the Tribunal’s caseload, and the powers granted and obligations imposed on it under ss 36, 37 and 38 of the NCAT Act require the Tribunal to engage with the parties using various forms of dispute resolution which are available and appropriate in the circumstances of the particular case.
46 Where alternative dispute resolution processes are adopted and consent orders are consequentially made or the Tribunal proceeds to determine a dispute at a contested hearing where alternative dispute resolution processes have been engaged, the Tribunal is nonetheless required to comply with its statutory and other obligations imposed at law. Procedural obligations include:
(1) affording the parties natural justice: s 38(2) NCAT Act;
(2) acting with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s 38(4) NCAT Act;
(3) ensuring the parties to the proceedings understand the nature of the proceedings: s 38(3)(a) NCAT Act;
(4) if requested, explaining any aspects of the procedure of the Tribunal or any decision or ruling made by the Tribunal that relates to the proceedings: s 38(3)(b) NCAT Act;
(5) ensuring the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s 38(3)(c) NCAT Act.
47 Failure to comply with these obligations is to be treated as an irregularity, the Tribunal being permitted to wholly or partly set aside a decision in proceedings when dealing with such irregularity: see s 53(3) and (4) of the NCAT Act and Atkinson v Crowley [2011] NSWCA 194 per Basten JA at [12]-[13]. Such failures may also constitute an error of law: see eg Italiano v Carbone & Ors [2005] NSWCA 177.
48 Where an order is made by consent by the same Member who has assisted the parties in reaching a settlement agreement, this fact alone is not sufficient to give rise to an irregularity that might render such an order liable to be set aside. Rather, there must be some breach of the obligations above which would give rise to a substantial injustice that should be corrected.
49 Such injustice might arise by the Tribunal imposing undue pressure on the parties to reach a settlement. At an extreme position, bullying or intentionally preventing a party from presenting its case would also give rise to circumstances justifying the setting aside of any consent order made.
50 Relevant considerations would also include whether the party affected is a vulnerable person within the meaning of r 37 of the Rules.
51 On the other hand, statements made during the course of a conciliation process, where no decisions are made and where a party is not otherwise prevented from pursuing its lawful claims would not, without more, be conduct that would give rise to an irregularity sufficient to justify the setting aside of an order made by consent.
1. The approach in Harrison was recently affirmed in the decision of Richards v Lindley [2024] NSWCATAP 9 (Richards) at [31]. In that case, which concerned a consumer claim about a battery from an e-bike that had exploded and damaged the e-bike and surrounding property, the Appeal Panel set aside the consent order. At [33] the Appeal Panel said:
In order to set aside an order made by consent, there must be some conduct which is in breach of these obligations and which would give rise to a substantial injustice that should be corrected. An example might be where the Tribunal Member engaged in bullying behaviour or placed undue pressure on the parties to reach a settlement. As is relevant to this matter, as it was in Harrison, a statement made by a Member during the course of a settlement process, where no final decision is made on the evidence and where a party is not otherwise prevented from pursuing its claims would not, without more, be conduct that would give rise to an irregularity sufficient to justify the setting aside of an order made by consent: Harrison at [51].
1. The Appeal Panel there found the conduct of the Member did give rise to circumstances justifying setting aside the consent orders for the following reasons:
1. The Member made erroneous and misleading statements as to the Tribunal’s jurisdiction and the remedies available to Mr Richards;
2. The transcript showed Mr Richards was significantly influenced by the Member’s statements in reaching an agreement with Mr Lindley;
3. Mr Richards had a disability. While the Member was unaware of the disability, “she made no attempt to check that Mr Richards either understood or agreed to the final form of the orders made, including the notation, which is what would be expected”.
1. The Appeal Panel concluded at [41]:
41 We are of the view that the Member’s misunderstanding of the law and her insistence to Mr Richards that he could not make the claim he had against Mr Lindley, in combination with Mr Richards’ disability, prevented him from pursuing his claim for the full amount of his claimed his (sic) loss. The Member was in breach of her obligations to ensure that the parties understood the nature of the proceedings (by mischaracterising those proceedings) and to ensure that Mr Richards understood the agreement he was entering into. We are satisfied that these matters give rise to a substantial injustice such that the appeal should be allowed.
1. From these decisions, the following considerations emerge when evaluating the conduct of a Member constituted as the Tribunal to determine proceedings who also acts as a conciliator and deciding whether there has been some irregularity or misconduct which should lead to a consent order being set aside:
1. Were any statements made during the conciliation by the Member concerning the law and its operation incorrect?
2. Were the incorrect statements in fact relied upon by the party seeking to set aside the consent order?
3. Were any incorrect statements made by the Member, which might give rise to any misunderstanding of the law in the minds of a party, ameliorated by any other statements made by the Member, such as reliance should not be placed on what is said during discussions and/or parties should obtain and rely on their own independent legal advice?
4. Was the party seeking to challenge the consent order legally represented and/or able to obtain independent legal advice concerning any statements made by the Tribunal prior to the consent orders being made?
5. Was the party seeking to challenge the consent order under a disability?
6. Were the requirements of r 37 of the Rules met?
7. To the extent incorrect statements are made, were they material to the settlement that has been reached?
8. Was consent actually obtained by the Tribunal prior to making the order being challenged?
9. Do the above matters lead to the conclusion that the consent orders should be set aside because there has been a substantial injustice?
1. Of course, the preferable (but not mandatory) position in conciliation is that the Tribunal Member does not make any statement that might be considered by the parties to be a concluded view of the Tribunal of any matter of fact or law which is in dispute. Also, the Tribunal should not make statements in the nature of legal advice.
2. An exception might be where there can be no reasonable dispute about a particular issue and any statement made by the Tribunal is correct. In this case, the Tribunal is acting in accordance with the guiding principle found in s 36(1) which “is to facilitate the just, quick and cheap resolution of the real issues in the proceedings”.
3. In this way, the facilitation process is properly seen as that adopting a “neutral” position of the Tribunal Member. Consistent with this approach, the Tribunal Member may identify possible issues and outcomes but not make incorrect statements which might be seen as a decision by which the parties would inevitably be bound.
4. We should note in passing, that the position might be different concerning statements made during the course of a hearing. As frequently occurs, a tribunal or court hearing proceedings might express views during the course of the hearing as to possible or final conclusions. Subject to issues of procedural fairness and bias (actual or apprehended), such conduct will not, of itself, give rise to circumstances justifying the setting aside of any consent order that might be made because a settlement is reached part way through a hearing.
Disposition of this appeal
1. The appellant contends in her written submissions that the consent orders should be set aside on the basis of unilateral mistake, mistake of fact and undue influence and unconscionable conduct.
2. As to unilateral mistake of law, the appellant says the Tribunal “erred in law by failing to consider or apply section 54 of the Australian Consumer Law”.
3. The appellant then makes reference to the Tribunal “repeatedly [making] comments that led the parties to believe that any action would fail, the vehicle [having] ‘no warranty’ and “no dealer guarantee’.” In this regard, the appellant said the Tribunal failed to mention “a vehicle still had to meet the guarantees under the ACL”.
4. As to mistake of fact, having referred to the appellant having contacted the dealer the day after purchase to advise of the issues and the dealer only offering a remedy of a $500 cash payment, the appellant said at [28] of her submissions:
The evidence lodged with the application was not considered by NCAT. The members assumption that the [appellant] failed to give the respondent the opportunity to fix the vehicle is false. The respondent also told NCAT the [appellant] rang him the day after purchase to advise of the problems and offered them $500 only”.
1. As to undue influence and unconscionable conduct, having referred to Harrison at [58], the respondent said at [37]-[39]:
37 The [appellant] and her husband reside in a small community of Brewarrina, NSW.
38 They had to travel to Sydney to attend the conciliation and if the matter had been set down for a hearing would likely assume they had to travel back to Sydney.
39 This travel would likely be a significant time and cost to the [appellant] and likely have influenced her decision to agree to the settlement.
1. As to unilateral mistake of law and mistake of fact, these matters go to the issue of whether the agreement can be set aside by reason of the fact there was no agreement between the parties, as opposed to any irregularity in the conduct of the proceedings by the Tribunal. As explained in McDonald v McDonald [2016] NSWCATAP 244 at [59(4)]:
(4) With respect to mistake:
(i) the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party’s motives for entering into the contract;
…
(iii) a unilateral mistake is where one party is mistaken but where there are no other vitiating circumstances, such as misleading or deceptive conduct, fraud or misrepresentation, a unilateral mistake will not generally constitute a basis for setting aside an agreement unless the mistake is a serious mistake in relation to a fundamental term of the agreement and the other party knew of, or contributed to, the mistake.
1. There are a number of reasons why these submissions should be rejected.
2. First, despite the language used in the submissions, the Tribunal was not considering or making any determination concerning its application to the matters in dispute. The Tribunal was acting as a facilitator.
3. Secondly, there is no conduct of the respondent to which we have been referred that would lead us to conclude there was a unilateral mistake made by the appellant of which the respondent was aware that would justify the setting aside of the consent order on these bases: cg Yuen at [39].
4. Thirdly, as to the matters said to constitute undue influence and unconscionable conduct, it will be evident that the facts referred to in the submissions identify commercial reasons why a party might wish to settle proceedings to avoid incurring any expense in pursuing their claims. They are not matters which would, of themselves, cause any settlement agreement to be set aside, let alone matters which might be said to be conduct of the respondent which might vitiate any settlement agreement.
5. Consequently, the challenge on these bases fails.
6. However, as will be evident from the written submissions and what was said in oral submissions at the hearing of the appeal, the appellant also says she was misled because of comments made by the Tribunal Member during the course of settlement discussions. The appellant relied on the transcript of the hearing at first instance at which the consent orders were made and identified particular extracts of what the Member said. The transcript (tcpt) is contained in the appellants bundle (AB), filed in this appeal.
7. As we noted above, the discussions with the presiding Member occurred in the hearing room. The Member was not then hearing the dispute, but rather continuing to explore the possibility of settlement. Before that time there had, apparently, been settlement discussions outside the hearing room, where offers had been made but no agreement reached.
8. In short, the appellant says the communications from the Member only concerned the absence of any warranty under the Motor Dealers and Repairers Act 2013 (NSW) (MDR Act). The Member failed to make mention the vehicle still had to meet the guarantees under the ACL, the appellant having paid $7,500 for the vehicle. Consequently, the appellant said she was misled regarding her rights under the law.
9. This challenge needs to be considered in the context of the application that was made to the Tribunal and what was said by the Member, the appellant and her husband during the settlement discussions.
10. First, the original “Motor vehicle consumer claim application” dated 27 February 2024, which was filed in Dubbo, contained the following information in section 4. Under the heading 4A “What orders do you want?” the appellant says:
Rescission of the contract.
a) full refund of contract price $7500.
b) Compensation for economic loss $3595.
c) compensation for noneconomic loss – stress and anxiety.
1. Under the heading 4B “Why are you applying to NCAT?” the appellant said:
Car broke down the day after purchase.
I have paid $3595 in tow costs & repairs.
I have rejected the vehicle in compliance with ACL provisions.
I am seeking a refund & compensation.
1. The appellant had attached to her application a letter purporting to reject the vehicle dated 12 February 2024 (Rejection Letter). The letter was in the following terms (formal parts omitted):
I refer to the above vehicle purchased from your dealership on 23 October 2023.
The vehicle has broken down multiple times and I have incurred significant expense trying to have the car repaired and made roadworthy.
On the 24 October 2024 the vehicle was taken to Repco in Tuggerah as there was smoke coming from the motor and oil was leaking from the car. The Repco mechanic carried out repairs to the car as detailed in the attached invoice/We paid a total of $2125.00 and work was completed on 10 November2023.
On 25 December 2023 the car broke down again arid was towed to Jax Tyres & Auto at ### which cost $132.
Jax Auto had to carry out further repairs which costs $458
The vehicle was driven to Goonellabah and then to Coraki. On the way back home to Brewarrina, the vehicle broke down again and was towed to Paul ray mechanical in Inverell which cost $887.
The car has now been diagnosed as needing a new engine. A second-hand motor will cost between $5000-$7500 and a new motor $15000 excluding labour. The vehicle is not roadworthy and not able to be driven.
This car is not for (sic) for purposes, free of defects, durable, acceptable or safe. It likely has latent defects and I feel as I have been misled about the roadworthiness of the car.
Rejection notice
As required by the Australian Consumer Law (ACL), this letter serves to reject the vehicle and request a full refund of the vehicle plus costs that I have incurred trying to make the car roadworthy. The total cost I am seeking is $11,102
The car is currently located at ### is not driveable so it can not be returned to your dealership at my expense. Please contact me on 0491 927 780 to arrange collection of the vehicle.
If I have not heard from you by Friday 23 February 2024 I will commence action in NCAT seeking rescission of the contract under the ACL and damages
1. We note in passing the invoice from Topline Automotive Services Pty Ltd trading as Repco Services (Repco) dated 24 October 2023, in the amount of $65.00, records a number of items which require repair. At the end of that invoice it states:
Vehicle in its current state is unroadworthy and would fail Registration safety inspection.
1. It would seem from a subsequent invoice from Repco dated 10 November 2024 that the works listed in the invoice dated 24 October 2023 were carried out. There is no suggestion, at this stage, that the vehicle was “unroadworthy”.
2. Quite clearly, the appellant was asserting a claim under the Australian Consumer Law (NSW) (ACL) and purported to reject the goods under that legislation and had some understanding of the relevant legislation.
3. However, the appellant says the conduct of the Member misled her as to her rights in consequence of which she agreed to settle the proceedings.
4. Below are some of the passages of the transcript upon which the appellant relies to support this proposition, together with the responses from the appellant, her husband (Eddy) and the respondent’s representative. We have also added other extracts of the transcript which we consider relevant to determining this appeal. In doing so, we have listened to the sound recording and corrected some errors in the transcription. We have added emphasis to some statements, which are relevant to the factual conclusions we reach below.
5. At AB 27-28 the following discussions occurred:
Member: "You've got a bit of difficulty here because you've deprived the see, the Tribunal has to consider what the appropriate remedy is and … in the first instance, we consider whether a work order is appropriate rather than money. OK, now umm. You have deprived the respondent and opportunity to fix It at their own cost. The reason we give them that opportunity is because it will be cheaper for them because they'll do it, They’re in house cost price rather than pay another service provider, retail, or commercial rates. Alright, basically what you've paid somebody OK? Umm, so if you've deprived them of that opportunity quite often, there's no remedy left for you. What are you seeking now? Are you seeking a refund still or what? What are you? What are you seeking?
Eddy: We are seeking financial stress, right?
Appellant: Yeah.
Member: No, no,
Appellant: We rang up the next day to ask and we have our money back.
Member: But what are you seeking today? That the reimbursement of repair costs?
Appellant: Yeah
Member: or refund of the vehicle?
Appellant: If both possible
Member: Well, you can’t get both … (unintelligible)
Eddy: Isn’t it an Australian law no car yard in Australia sells a vehicle over $1000 for a couple $1,000 or 5000 without warranty.
Member: No, that’s not rights sir.
Eddy: That’s what we’ve been told.
Member: No. Well, there is the. Umm, the second-hand vehicles. There is a piece of legislation called the Motor Dealers and Repairers Act, okay? And under that legislation, vehicles that are either over 10 years old or have done over 164,000 kms … (unintelligible)
Respondent: 160,000 kms. Yeah.
Eddy: Shouldn’t have been sold from a car yard.
Member: Over 160,000 kilometres are exempt from the dealers guarantee. 160,000 kilometres are exempt from the dealers guarantee, so when it is sold, there is no guarantee on a vehicle that either more than 10 years old or was done over 160,000 kilometres. So you bought a vehicle? How? How many kilometres?
Respondent: 360,000 kilometres.
Member: So almost so, more than double that.
Eddy: We brought a dummy. We brought a dummy.
Member: Yeah. What I'm saying is Consumer, the idea is a Consumer should. I mean put it this way. Personally, I would probably never buy a vehicle and has done 400,000 kilometres if I wanted a reliable vehicle to use for my daily use. I wouldn't buy it. Alright. Umm, because me idea is that a Consumer must accept when you're buying a vehicle that's either more than 10 years old or over$160,000, its reliability is now becoming seriously compromised because it's at the end of its reliable lifespan. And once it passes that lifespan, who knows what whether it could break down every single day."
1. The conversation then continued about the amount spent on repairs by the appellant, those repairs being done between 24 October 2023 and 3 January 2024: see invoices attached to the original application form.
2. At AB 31-2 the following exchange occurred in response to the respondent and the Member discussing the provision of warranties:
Member: So you wouldn’t be allowed to give your warranty for a vehicle that’s 17 years old with almost 400,000 kilometres. Of course things are going to go wrong. Nobody’s going to give you a warranty for that.
Eddy: So….
Member: not even for three months.
Eddy: … why let them? Why are they allowed to sell?
Member: Because the legislation says they can and the legislation says it comes with no guarantee and the consumer has to decide, do I want to buy the vehicle that’s more than 10 years old or more than 160,000 kilometres and take my chances. Or do I want to by a vehicle that is only 8 years old and comes with a warranty.
Eddy: We had three different Australian mechanics, right? Put it on paper saying that shouldn't be on the road in the first place.
Respondent: That's after you had an .. .(Unintelligible) and the car broke down on you.
Eddy: That's why I went and got it. Fine. I've done it. You will get nowhere to today by the sound of it, not taking $1000 dollars. OK, . . (Unintelligible) swore in front of the judge.
Member: Oh. So. OK, So what do you want to do? You want to take your chances and go to a hearing: Have the tribunal decide, or do you want to reconsider? Maybe make a counter offer like what? What? What? What would it take for you to resolve this, bare in mind all the risks that you've got with this claim? Aye, so you've got a vehicle. That's very old. Done a lot of kilometres
Eddy: And we’re broke and we can't fix it.
Member: A lot of wear and tear and it's life and … you didn't get back to him on his $500.00 dollar offer. So he was left not knowing, you know that there's anything major wrong when he could have taken the vehicle back in and had a look at it, got it diagnosed and got it. Well, its own cost and I think that the tribunal needs to consider, umm, you've gotta guaranteed $1000 at the moment. We could maybe make a counter, I mean, is there anything left in the Kitty? You push it up a bit to make it a bit more attractive,
Respondent: The boss said $1000 bucks is all his willing to offer.
Member: If you get close to that, he might be prepared to go back to his boss and see if he can push it up a little bit. When they've got a business to run, there might be motivated by the fact that if they can settle it, they don't have to have to have people out of the office out down here.
Eddy: We have a life to live too.
Member: Sorry. What was that, Sir?
Eddy: We gotta life to live to. And we’re in the middle of nowhere, we got no access like the city got right. We’re in the middle of nowhere. We travelled down here on our last little bit of money. We gotta bludge money to get back home now. Alright. me and my missus. My got nothing, absolutely nothing. Everything went on the vehicle. The vehicle’s that bad I had to buy a pair tyre for it. Lucky I had a couple of spare jacks and wheel spanners at home.
Member: Are you using the vehicle now?
Eddy: No.
Appellant: It won't go.
Eddy: It won't go, it's at a mechanic at Inverell. It made it as far as the Grafton ranges. Coming back from Lismore on the Mid North Coast.
Member: OK. Yeah. Do you want me to timetable it for a
hearing, or do you want to consider resolving it for around $1000 or something else that you might want to offer to see if they are interested?
Eddy What do you reckon?
Appellant: I have no idea. I have no idea
Eddy: I think we will seek legal advice from our lawyer in Dubbo.
Member: So can that offer remain open for a period of time.,
Respondent: Yes
Member How long?
Respondent: As long as you seek.
Member: So I think it's a good idea to get some advice. OK, because as soon as you come in that door with a vehicle that's over 10 years old and over $160,000, … 160,000 kilometres. Umm, you've got an uphill battle, right? Because of the legislation, your hill is even steeper to get up because it's 'not just over 10 years old, it's significantly over it. It's 17 years old or something, 16 years old, and it's significantly over the 160,000 kilometres. It's more than double that. It's about 2 1/2 times that 400,000 nearly. So you’ve got an uphill battle, right? And then you've got the issues. The arguments about did you deprive them of the opportunity to repair it by not ever coming back to him and just going away and paying the cost to someone else and then coming and commencing these proceedings. So you have to bear in mind that if you run this matter and lose, for example, you won't be able to turn around and say, hey, can we have that $1000 because they'll have a decision of the tribunal to say they're not liable, right. And that's the end of it. That's why there's a benefit in settling it. Because you get a guarantee.
Eddy: Well, can he come up at least three or three and a half,
Member: But what I'm asking
Eddy: … put toward that car to get it fixed. That's what I'm saying. We haven't got a dime left in our pocket.
1. After further discussions an offer was then made by the respondent to provide a second car, at no cost to the appellant. It was identified as a 2006 model Ford Falcon, which the respondent said was registered. In addition respondent said the appellant would be entitled to keep the Nissan.
2. This offer was rejected, the appellant deciding to accept the $1000 cash offer previously made. This was on the basis she would “try and get the truck fixed” (AB 42 tscp para 231).
3. In connection with the offer, the following exchange occurred. (AB 37):
Appellant: We still keep the truck aye? We take the thousand and still keep the truck?
Member: You just wanna do that?
Appellant: If that’s the only way … it's gonna happen, we'll have to, because we have to. Because that is a good car minus what’s going on, but you know, we paid too much money to get rid of that truck. We wanted help,
Member Right.
Appellant: But now.
Member: Right. Well, that is an unknown, even though, you know, you could...
Appellant: Seems we’re not gonna win anyway.
Member … get a second vehicle that you could maybe sell for $10,000. You know, it could be a dud worth only $500. I don't know.
Appellant: No, I got Fords My son's got Ford.. It’s only a rubbish tip then.
Eddy: I got a car yard full of bombs back home.
Member Are you absolutely certain. Do you want to have a quick chat outside together and make sure this is what you wanna do. You wanna resolve this application for $1000?
1. Discussions then continued before the Member about other possibilities for settlement. However, the appellant’s final position was that she would accept $1000.
2. Prior to making the orders the Member said (AB 38):
Member: So there will be a money order. So just listen carefully, because I am there is not my decision. I wanna make sure it’s by consent, so there will be a money order that the respondent pay the [appellant] the sum of $1000 in full and final settlement of this application and that will be paid within 14 days. Agreed.
1. Each party then acknowledge their agreement.
2. Finally, the Tribunal said in concluding remarks (AB 38):
Member: I think it sensible. You know, because. Least you’ve got certainty you’re getting that and don’t risk an adverse outcome where it’s, you know, nothing basically. …
1. In our view, the passages from the transcript which we have set out above demonstrate a number of problems about the manner in which the conciliation process was undertaken.
2. The Tribunal Member, who was also in the position of a decisionmaker, made statements concerning the applicable law that were incomplete and/or incorrect.
3. While we would infer from the application form and the fact that a rejection notice had been issued that the appellant had received advice about or otherwise understood that she may have a claim under the ACL, the statements made by the Tribunal and the responses from the appellant during the conciliation process lead us to conclude that the decision to settle was as a result of the Tribunal incorrectly stating there was no warranty applicable to the supply and therefore the claim was unlikely to succeed.
4. While there is no evidence to suggest the appellant was a vulnerable person within the meaning of r 37 of the Rules, nonetheless the actions of the Tribunal in this case gave rise to an irregularity and caused the appellant to misunderstand the nature of the proceedings, contrary to the Tribunal’s obligations under s 38(5)(a) of the NCAT Act.
5. In this regard, it is clear from the facts we have set out above that the real issues in dispute were (and are):
1. Were there any terms, express or implied in the contract concerning the vehicle and its qualities: eg that the vehicle was registrable and/or roadworthy?
2. Was the vehicle of acceptable quality within the meaning of s 54 of the ACL?
3. Was there a breach of any of these obligations?
4. If there was a contravention of s 54 of the ACL, was there a major failure?
5. If there was a major failure, was the appellant entitled to reject the goods?
6. If yes to the preceding question, what was the rejection period and were the goods rejected in the rejection period? In this regard, the appellant was advised the vehicle was not roadworthy on 24 October 2023 when the vehicle was put in for repairs with Repco. However the Rejection Notice was not issued until 12 February 2024.
7. What, if any, loss and damage is the appellant entitled to recover. On this aspect, the appellant may be entitled to damages even if the rejection period has passed. Also there may be an issue about whether the appellant, by her conduct in continuing to use the vehicle, is disentitled to an award (either in whole or in part).
1. In the circumstances, in agreeing to settle her dispute and consent to the orders made, the appellant thereby suffered a substantial injustice.
2. In saying so, we note the Tribunal was correct that the “dealer guarantee” in section 68 of the MDR Act did not apply due to the age and kilometres of the vehicle at the time of sale: see s 69 re definition of limitation periods and the circumstances in which the dealer guarantee applies. However, this does not ameliorate the effect of what the Tribunal said and the consequential affect on the appellant’s decision to consent.
Conclusion and orders
1. We are satisfied that, to the extent necessary, the appellant should be granted leave to appeal and the consent order should be set aside and the proceedings remitted for rehearing.
2. As the above issues raise technical matters concerning the vehicle about which expert evidence or evidence from qualified mechanics may be needed, the parties should get appropriate legal advice about what evidence they propose to adduce. The proceedings will be listed for directions in the CCD so the parties can advise the Tribunal what evidence they propose to provide and to fix a timetable for rehearing by a different Member.
3. The appellant had sought the proceedings be listed for hearing in Brewarrina or in a location nearby. As the supply was in Sydney and the proceedings commenced there, we do not propose to make an order to change the venue at this time.
4. Finally despite the events that have occurred, the parties are still able to settle their dispute if they consider such a course is appropriate and should be adopted. If a settlement is subsequently reached, the Tribunal should be advised.
5. In the meantime we make the following orders:
1. Leave to appeal is granted, the appeal is allowed and the orders made14 March 2024 in application 2024/00076640 are set aside
2. The proceedings are remitted for hearing by a differently constituted Tribunal.
3. The remitted proceedings should be first listed for directions, the Tribunal on remittal to make such directions for the future conduct of the proceedings as it thinks fit.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 8,749 |
nsw_caselaw:190e352f8ed63f62dfd45329 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Bui v Health Care Complaints Commission [2024] NSWCATOD 110 | https://www.caselaw.nsw.gov.au/decision/190e352f8ed63f62dfd45329 | 2024-08-04T23:50:38.283661+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Bui v Health Care Complaints Commission [2024] NSWCATOD 110
Hearing dates: 26 March 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Occupational Division
Before: A Starke, Senior Member
A Bennett, Senior Member
B Scott, Senior Member
J Sillince, General Member
Decision: (1) The Tribunal makes a reinstatement order under section 163B(1)(c) of the Health Practitioner Regulation National Law in respect of the practitioner.
(2) Pursuant to s 163B(4) of the Health Practitioner Regulation National Law, the following conditions are imposed on the practitioner's registration:
(a) The practitioner must not work as a pharmacist in charge for a minimum period of 12 months.
(b) The practitioner must not work as the sole pharmacist on duty for a minimum period of 12 months.
(c) The practitioner must not be the proprietor of a pharmacy for a minimum period of 12 months.
(d) Within 21 days of the notice of imposition of these conditions, the practitioner must provide to AHPRA, on the approved form (HP7), acknowledgement that AHPRA may:
(i) seek reports from the Senior Practice Manager/Senior Manager/Senior Partner/proprietor/owner/partner in ownership pharmacist/other as appropriate (the senior person) at each place of practice on at least a quarterly basis or as otherwise required;
(ii) request and access from the senior person at each place of practice copies of rosters, pay slips, or the equivalent.
(e) Within 21 days of employment at any pharmacy where the practitioner is employed as a pharmacist or is contracted to provide services as a pharmacist, the practitioner must provide to AHPRA acknowledgment from the senior person at each place of practice:
(i) on the approved form (HPS7) that they are aware AHPRA will seek reports from them;
(ii) that they have sighted a copy of the decision of the Tribunal which cancelled the practitioner's registration (Health Care Complaints Commission v Bui (No.2) [2022] NSWATOD 45 and a copy of these Reasons for Decision which impose these conditions.
(f) All costs associated with compliance with the conditions on his registration are at the practitioner's own expense.
(g) Conditions a-f above are to be reviewed 12 months following the date of imposition.
(3) The applicant is to pay the costs of the respondent as agreed or assessed.
Catchwords: OCCUPATIONS – Pharmacist – Application for reinstatement
Legislation Cited: Casino Control Act 1992
Civil and Administrative Tribunal Act 2013 (NSW)
Health Care Complaints Act 1993 (NSW)
Health Practitioner Regulation National Law (NSW)
Pharmacy Business Ownership Act 2001 (QLD)
Poisons and Therapeutic Goods Act 1966 (NSW)
Poisons and Therapeutic Goods Regulation 2008 (NSW)
Cases Cited: Ake v Health Care Complaints Commission [2019] NSWCATOD 165
Bahramy v Medical Council of NSW
Blair v HCCC [2023] NSWCATOD 35
Briginshaw v Briginshaw (1938) 60 CLR 336
Dawson v Law Society of NSW [1989] NSWCA 58
Donnelly v Health Care Complaints Commission [2014] NSWCATOD 155
Ex parte Tziniolios; Re Medical Practitioners Act (1966) 67 SR NSW) 448
Frayar v Health Care Complaints Commission [2015] NSWCATOD 117
Health Care Complaints Commission v Bui [2021] NSWCATOD 77
Health Care Complaints Commission v Bui (No 2) [2022] NSWCATOD 45
Health Care Complaints Commission v Do [2014] NSWCA 307
Health Care Complaints Commission v Nguyen [2019] NSWCATOD 166
Health Care Complaints Commission v Philipiah [2013] NSWCA 342
Jan v Health Care Complaints Commission [2021] NSWSC 350
Mnyandu v Health Care Complaints Commission [2015] NSWCATOD 43
Mooney v Medical Council of NSW [2024] NSWCATOD 24
Ng v Health Care Complaints Commission [2018] NSWCATOD 105
Qasim v Medical Council of New South Wales [2021] NSWCA 173
Re Mansoor Haider Zaidi [2006] NSWMT 6
Roberts v Health Care Complaints Commission [2015] NSWCATOD 35
Ristevski v Medical Council of NSW [2016] NSWCATID 18
Scully v Health Care Complaints Commission [2013] NSWMT 7
Zaidi v Health Care Complaints Commission 1998] 44 NSWLR 82
Zepinic v Health Care Complaints Commission [2020] NSWSC 13
Texts Cited: Nil
Category: Principal judgment
Parties: Qui Van Bui (Applicant)
Health Care Complaints Commission (Respondent)
Representation: Counsel:
A Kelly (Respondent)
Solicitors:
Health Care Complaints Commission (Respondent)
Applicant (self-represented)
File Number(s): 2023/00454779
Publication restriction: Pursuant to s 64(1) of the Civil and Administrative Tribunal Act 2013 (NSW), the disclosure and/or publication of the names of the patients named in the Complaint is prohibited.
REASONS FOR DECISION
Introduction
1. In June 2021, a differently constituted Tribunal found pharmacist, Qui Van Bui, guilty of professional misconduct under s 139E of the Health Practitioner Regulation National Law (NSW) ('the National Law'): Health Care Complaints Commission v Bui [2021] NSWCATOD 77 ('Bui Stage One').
2. In April 2022, that same Tribunal exercised its discretion to make disciplinary orders and cancelled Mr Bui's registration as a pharmacist: Health Care Complaints Commission v Bui (No 2) [2022] NSWCATOD 45 ('Bui Stage Two'). In addition, the Tribunal prohibited Mr Bui from applying for review of the cancellation order for 18 months.
3. Once the non-review period of 18 months expired, Mr Bui exercised his right under s 163A of the National Law to apply for a reinstatement order pursuant to s 163B(1)(c) of the National Law.
4. Prior to the hearing, the Health Care Complaints Commission ('the Commission') filed a Reply opposing the application, and reserved its position to seek costs. At the hearing, the Commission appeared as contradictor to the reinstatement application.
5. After listening to the applicant's oral evidence in the hearing, the Commission sought to amend its Reply, adopting a neutral position rather than opposing the application. The Commission also sought an order against the applicant for payment of the Commission's costs, as agreed or assessed.
6. We have decided to make a reinstatement order in favour of the applicant, to impose conditions on his registration, and to require him to pay the respondent's costs of the proceedings.
7. These reasons should be read in conjunction with Bui Stage One and Bui Stage Two.
Non-disclosure and non-publication order
1. Due to the confidential nature of evidence concerning patients named in the Complaint against the practitioner (considered in Bui Stage One and Bui Stage Two), the Tribunal made an order on 26 March 2024 pursuant to s 64(1) of the Civil and Administrative Tribunal Act 2013 (NSW) ('the CAT Act') that the disclosure and/or publication of the names of patients named in the Complaint, is prohibited.
Material and evidence before this Tribunal
Filed on behalf of the applicant
1. The following material was filed on behalf of the applicant:
1. Mr Bui's application filed on 15 December 2023, to which the following documents were attached:
1. a letter dated 8 December 2023 setting out his grounds for seeking reinstatement;
2. various certificates from the Pharmaceutical Society of Australia ('the PSA') confirming his completion of training as well as other certificates relevant to the practice of pharmacy;
3. a copy of the decision dated 10 July 2019 of the Pharmacy Council of New South Wales ('the Pharmacy Council') to remove conditions on Mr Bui's registration under s 150(1)(b) of the National Law;
(not marked).
1. A bundle of documents filed on 16 February 2024, containing Tabs 1 to 10 (some of which contain duplicate copies of documents attached to Mr Bui's application), namely:
1. Tab 1 (letter/submission dated 8 February 2024 from Mr Bui and a statement from Mr Bui dated 13 February 2024);
2. Tab 2 (application for AVL hearing);
3. Tab 3 (Mr Bui's Resume);
4. Tab 4 (various certificates and material issued by the PSA);
5. Tab 5 (various reference documents including cover pages of documents issued by the Australian Health Practitioner Regulation Agency ('AHPRA'), the PSA, the QLD government, the Pharmacy Board of Australia);
6. Tab 6 (Mr Bui's membership of the PSA);
7. Tab 7 (reference list of legislation in States and Territories of Australia);
8. Tab 8 (Pharmacy Council decision on 10 July 2019 to remove conditions on Mr Bui's registration);
9. Tab 9 (acknowledgments of Mr Bui's contributions to the Westbrook community in Queensland);
10. Tab 10 (two personal and character references and one medical certificate from Dr Lindsay Haase);
(altogether, marked for identification as "Exhibit A1").
1. A further bundle of documents filed on 7 March 2024 comprising:
1. Tab 11 (bank statement);
2. Tab 12 (home loan account bank statement);
3. Tab 13 (statutory declaration dated 29 February 2024 by Mr Bui's wife);
4. Tab 14 (Exclusion Order(s) issued by the Star Entertainment QLD Limited);
(altogether, marked for identification as "Exhibit A2").
1. a supplementary bundle filed on 13 March 2024, replacing pages in Tab 5 filed on 16 February 2024;
(marked for identification as "Exhibit A3").
Filed on behalf of the respondent
1. The following material was filed on behalf of the respondent:
1. written Reply filed on 26 February 2024 (marked for identification as "Exhibit R1");
2. a bundle of documents filed on 26 February 2024 (marked for identification as "Exhibit R2");
3. AHPRA Evidentiary Certificate dated 20 March 2024 setting out the practitioner's registration history, filed on 21 March 2024 (marked for identification as "Exhibit R3").
Oral evidence and submissions at the hearing
1. The applicant appeared by AVL and was cross-examined during the hearing.
Further documents filed after the hearing
1. The following orders were made at the hearing on 26 March 2024 requiring:
1. the Commission to file and serve, by 9 April 2024, the conditions it considered to be appropriate to be placed on the applicant's registration, should the Tribunal be minded to make a reinstatement order;
2. the applicant to file and serve, by 23 April 2024, a reply to the conditions that the Commission considers appropriate to be placed on the applicant's registration, should the Tribunal be minded to make a reinstatement order.
1. The Commission filed its proposed conditions on 9 April 2024, and provided a copy to the applicant.
2. Mr Bui's reply dated 12 April 2024 to the Commission's proposed conditions was sent to the Tribunal's Registry but it appeared that Mr Bui's reply may not have been provided to the Commission.
3. On 18 April 2024, the Commission sought leave to provide revised conditions and made no objection if the applicant wished to provide an amended response to the Commission's proposed revised conditions.
4. To ensure procedural fairness to both parties, in particular so that the Tribunal could be confident that each party had received and considered the other party's submissions regarding any conditions that may be imposed on the applicant's registration, the Tribunal made the following further orders on 5 July 2024:
1. Leave was granted to the Commission to file and serve its proposed revised conditions dated 18 April 2024;
2. The applicant was given until 12 July 2024 to file and serve his previous submission dated 12 April 2024 to the Commission;
3. The applicant was given until 19 July 2024 to file and serve any submissions in reply to the Commission's proposed revised conditions dated 18 April 2024.
1. On 8 July 2024, Mr Bui's reply to the Commission's proposed revised conditions was received in the Tribunal's registry. It appeared that this second reply had been provided to the Commission.
The legislation
Jurisdiction is protective, and not punitive
1. The starting point when considering an application for reinstatement is to note that the jurisdiction of the National Law is protective, and not punitive, since the paramount consideration is protection of the health and safety of the public. Section 3 and 3A specify the objectives and guiding principle of the National Law in New South Wales, as set out below:
"3 Objectives
(1) The object of this Law is to establish a national registration and accreditation scheme for-
(a)the regulation of health practitioners; and
…
(2) The objectives of the national registration and accreditation scheme are-
(a) to provide for the protection of the public by ensuring that only health practitioners who are suitably trained and qualified to practise in a competent and ethical manner are registered; …"
1. Section 3A(1) of the National Law clearly specifies the paramount consideration, namely, the health and safety of the public:
"3A Guiding principles [NSW]
(1) The main guiding principle of the national registration and accreditation scheme is that the protection of the health and safety of the public must be the paramount consideration."
Principles of the national registration and accreditation scheme
1. Section 3A(2) of the National Law sets out other guiding principles of the national registration and accreditation scheme, including the need for the imposition of restrictions on the practice of a health professional to ensure health services are provided safely and are of an appropriate quality:
"(2) The other guiding principles of the national registration and accreditation scheme are as follows-
…
(c) restrictions on the practice of a health profession are to be imposed under the scheme only if it is necessary to ensure health services are provided safely and are of an appropriate quality."
Unsuitability to hold registration if not a fit and proper person
1. Sections 52 to 56 of the National Law contain provisions dealing with the general registration of health practitioners. Section 55 deals with the circumstances of unsuitability for an individual to hold registration:
"55 Unsuitability to hold general registration
(1) A National Board may decide an individual is not a suitable person to hold general registration in a health profession if-
…
(h) in the Board's opinion, the individual is for any other reason-
(i) not a fit and proper person for general registration in the profession; or
(ii) unable to practise the profession competently and safely."
Practitioner's right of review
1. Sections 163 to 163C of the National Law contain provisions dealing with reviews. The applicant practitioner's right of review as set out in s 163A relevantly provides:
"163A Right of review [NSW]
(1) A person may apply to the appropriate review body for a review of-
…
(b) a relevant order made in relation to the person.
…
(4) In this section-
decision-making entity
means the following-
…
(d) the Tribunal …
…
relevant order, in relation to a person, means any of the following orders made by a decision-making entity-
…
(b) an order that the person's registration be cancelled or that the person is disqualified from being registered in a particular health profession; or
…"
Purpose of review is to determine appropriateness of the order concerned, not to review the decision of the Tribunal to cancel a practitioner's registration
1. A review determines the appropriateness, at the time of the review, of the order concerned: s 163C(1) of the National Law. In this case, the Tribunal's task is to determine the appropriateness of the cancellation order and whether to now make a reinstatement order.
2. These proceedings are not a re-hearing of the original complaints against Mr Bui. The review is not a review of the decision to cancel Mr Bui's registration, or a review of any findings made in connection with that decision: s 163C(2) of the National Law. Section 163C of the National Law relevantly provides:
"163C Inquiry into review application [NSW]
(1) A review under this Division is a review to determine the appropriateness, at the time of the review, of the order concerned.
(2) The review is not to review the decision to make the order, or any findings made in connection with the making of that decision."
Powers to make a reinstatement order and impose conditions
1. The Tribunal's powers on review include dismissing the application or making a reinstatement order: s163B(1) of the National Law. The Tribunal may also impose conditions on a person's registration: s 163B(4) of the National Law.
2. A reinstatement order is an order that the person may be registered if the person applies to the National Board and the National Board decides to register the person: s 163B(3) of the National Law.
3. Section 163B relevantly provides:
"163B Powers on review [NSW]
(1) The appropriate review body must conduct an inquiry into an application for review and may then do any of the following-
(a) dismiss the application;
…
(c) make a reinstatement order;
…
(3) A reinstatement order is an order that the person may be registered in accordance with Part 7 if-
(a) the person makes an application for registration to the National Board; and
(b) the relevant National Board decides to register the person.
…
(4) The appropriate review body may also impose conditions on the person's registration or alter the conditions to which the person's registration is to be subject under the reinstatement order."
Power to award costs
1. Cl 13 in Sch 5D to the National Law contains provisions relevantly dealing with the power of the Tribunal to award costs, and relevantly provides:
"13 Tribunal may award costs [NSW]
(1) The Tribunal may order the complainant (if any), the registered health practitioner or student concerned, or any other person entitled to appear (whether as of right or because leave to appear has been granted) at an inquiry or appeal before the Tribunal to pay costs to another person as decided by the Tribunal."
Determining the appropriateness of a reinstatement order
1. As clarified by Leeming JA in Jan v Health Care Complaints Commission [2021] NSWSC 350 at [21], the Tribunal's opinion as to whether the applicant is a fit and proper person will inform its consideration of "appropriateness".
2. Whether Mr Bui is, in the opinion of the National Board, a "suitable person" to hold general registration in a health profession under s 52(1)(c) of the National Law, incorporates whether he is a "fit and proper person" to hold that registration: (s 55(1)(h) of the National Law).
3. The onus is on Mr Bui to demonstrate that he is a fit and proper person, suitable to hold registration, and is able to practise in a competent and ethical manner: Qasim v Medical Council of New South Wales [2021] NSWCA 173 at [18]. He must prove this to the civil standard, that is, on the balance of probabilities (tempered by the requirements of Briginshaw v Briginshaw (1938) 60 CLR 336 ('Briginshaw').
4. In the case of Re Mansoor Haider Zaidi [2006] NSWMT 6 ('Re Mansoor') at [42], the Medical Tribunal noted that an applicant for reinstatement is in a more disadvantageous position that an original applicant:
"[A]n applicant for reinstatement … is in a more disadvantageous position than an original applicant. He must displace the decision for deregistration which has been made. As a consequence, presumptions of fitness which might otherwise arise than from an absence of contrary suggestions can no longer advantage him, precisely because of the removal of his name from the Register on the basis of unfitness."
1. Being in a more disadvantageous position, a practitioner who applies for reinstatement must provide clear proof to establish that there has been a reformation of character: Zepinic v Health Care Complaints Commission [2020] NSWSC 13 at [85].
2. The ultimate issue, according to Re Mansoor, is the applicant's worthiness and reliability that the practitioner will act in accordance with the highest standards and responsibilities of the profession:
"[The] ultimate issue … is a question of [the applicant's] worthiness and his reliability for the future. What in this respect the Tribunal must determine is whether it is satisfied that for the future the applicant will act in accordance with the high standards and responsibilities of the profession."
1. As helpfully set out in Ng v Health Care Complaints Commission [2018] NSWCATOD 105 ('Ng') at [29], the Tribunal may draw inferences from what has happened in the past and what led to the cancellation of their registration so as to assess the practitioner's worthiness and reliability for the future:
"In making an assessment of the applicant's worthiness and reliability for the future, the Tribunal may draw inferences from what has happened in the past and, in particular, what led to their being removed from the Register. At [50] in Scully referred to In Re Jason Martin [2010] NSWMT 13 where the Medical Tribunal pointed out it is not "a question of what an applicant has suffered in the past. It is a question of his [her] worthiness and his [her] reliability for the future." That Tribunal noted the difficulty associated with predicting how a practitioner would behave in the future and remarked "the decision in the particular case is to a greater or lesser extent dependent upon the Tribunal's assessment of the applicant."
1. As noted in Scully v HCCC [2013] NSWMT 7 at [48], the power to reinstate should "be exercised with great caution and only upon solid and substantial grounds".
2. However, as already noted, the purpose of the jurisdiction is not punishment or further punishment of a practitioner: Zepinic at [85]. Rather, the jurisdiction that is exercised is for the protection of the public. There is no public interest in denying forever the chance of redemption and rehabilitation to a former practitioner: Dawson v Law Society of NSW [1989] NSWCA 58 at per Kirby P at [17]. As expressed in a recent case, Mooney v Medical Council of NSW [2024] NSWCATOD 24 at [15]:
"On the contrary, the public is better served if, in appropriate cases, those who have offended, once they have affirmatively proved they are reformed, are afforded a second chance."
Background and history of the proceedings
1. The applicant had been formerly registered as a pharmacist under the National Law. He obtained a Bachelor's degree in Pharmacy from the University of Sydney in 1994 and was first registered as a pharmacist in 1999.
2. At the time of the conduct the subject of the complaints against him, Mr Bui had been practising as a pharmacist for around 17 years in hospital and community pharmacies. From 2013 to 2017, he was the pharmacist in charge of a busy pharmacy in St Mary's, Sydney.
3. In December 2016, another pharmacist, Jason Nguyen, reported to the Pharmaceutical Regulatory Unit of the NSW Ministry of Health ('the PRU') that he had been supplying medication without a prescription to Mr Bui in a car park at The Star Sydney Casino, in Pyrmont, Sydney. The PRU conducted an investigation and concluded that there was sufficient evidence to substantiate Mr Nguyen's allegation of selling drugs to Mr Bui. Ultimately, a differently constituted Tribunal found Mr Nguyen guilty of professional misconduct and cancelled his registration as a pharmacist: Health Care Complaints Commission v Nguyen [2019] NSWCATOD 166.
4. The PRU also interviewed Mr Bui who vehemently denied the allegations made by Mr Nguyen. However, the PRU's investigation concluded there was sufficient evidence to substantiate an allegation that Mr Bui had breached the regulations governing the dispensing of Schedule 4 drugs (substances listed in Appendix D of the Poisons and Therapeutic Goods Regulation 2008 (NSW)) ('the PTGR') which can only be supplied on prescription.
5. In June 2017, Mr Bui moved away from Sydney and bought a pharmacy business in Westbrook, a semi-rural town in Queensland, where he was the pharmacy proprietor (until his registration was cancelled in April 2022).
6. On 7 September 2017, following consideration of the PRU's report, the Pharmacy Council exercised its power under s 150(1)(b) of the National Law to impose a series of conditions on Mr Bui's registration, including that he does not possess, supply, dispense, administer or manufacture benzodiazepines. Mr Bui was required to surrender his benzodiazepine drug authority, and to either return to suppliers all benzodiazepines stocked at each pharmacy in which he had a financial interest or engage the services of a waste management contractor to destroy any supplies of that drug.
7. The Pharmacy Council referred the matters alleged against Mr Bui to the Commission. In turn, the Commission referred a complaint (comprising three individual complaints explained below) to the New South Wales Civil and Administrative Tribunal ('NCAT') about Mr Bui.
8. Whilst the Pharmacy Council subsequently removed the conditions restricting Mr Bui's practice (on 10 July 2019), the Commission's application for disciplinary findings and orders against him continued.
9. In Bui Stage One, the Tribunal made findings in relation to three individual complaints against Mr Bui and found him to be guilty of professional misconduct under s 139E of the National Law.
10. Subsequently, in Bui Stage Two, the Tribunal decided to cancel his registration as a pharmacist pursuant to s 149C(1) of the National Law. The Tribunal also imposed a non-review period of 18 months pursuant to s 149(C)(7) of the National Law. Mr Bui was also ordered to pay the Commission's costs, as agreed or assessed.
Complaints against the applicant
1. Without re-hearing the original complaints, we determine whether it is appropriate to make a reinstatement order against the background of the findings made by the Tribunal in Bui Stage One, which are set out below. The matters addressed in Complaint One are referred to as "the Dispensing Complaint". The matters addressed in Complaints Two and Three are referred to as "the Casino Complaint".
Complaint One ("the Dispensing Complaint")
1. Complaint One consisted of 13 particulars concerning patients known as Patient A, Patient B, Patient C, Patient D, Patient E, Patient F and Patient G. Complaint One alleged that Mr Bui had inappropriately dispensed "prescribed restricted substances" (Schedule 4D drugs) and "drugs of addiction" (Schedule 8 drugs) between September 2015 and January 2017 while working at Emerald Pharmacy, in St Mary's in New South Wales.
2. As already noted, Schedule 4 drugs can only be supplied on prescription. Likewise, Schedule 8 drugs, listed in Schedule 8 of the Poisons List as proclaimed under s 8 of the Poisons and Therapeutic Goods Act 1966 (NSW), can only be supplied on prescription and are subject to tight restrictions because of their potential to cause addiction.
Particular 1 of Complaint One
1. Particular 1 alleged that Mr Bui had failed to record the prescribing practitioner's details when dispensing medication on four occasions. Mr Bui denied Particular 1 however he admitted that he was ignorant of the legal requirement to enter a doctor's full name when dispensing prescription.
2. The Commission provided an expert's report prepared by pharmacist, Nina Benson, who was of the opinion that Mr Bui's conduct fell significantly below that required of a pharmacist and that it warranted strong criticism.
3. The Tribunal found that Mr Bui had dispensed restricted substances without recording the name and details of the prescribing doctor on two occasions. The Tribunal was not satisfied that the proven conduct over an eight-month period in a busy pharmacy dispensing around 100 prescriptions per day, amounted to unsatisfactory professional conduct.
Particular 2 of Complaint One
1. Particular 2 alleged that between 22 March 2016 and 20 January 2017 Mr Bui failed on occasion to record the supply of pseudoephedrine contrary to clauses 24 and 25 of the PTGR. The policy rationale underlying the requirement to record details of the supply is to seek to prevent the conversion of pseudoephedrine-based products to illegal drugs including crystal meth, ice, meth and speed.
2. Mr Bui admitted that on occasion he supplied pseudoephedrine without recording that he had done so, as required by the PTGR. The Tribunal found that Particular 2 was established. The Tribunal also found that Mr Bui's lack of knowledge of the regulations governing the supply of pseudoephedrine fell significantly below the standard reasonably expected of a pharmacist of Mr Bui's level of training and experience. The Tribunal found the conduct amounted to unsatisfactory conduct.
Particulars 3 and 4 of Complaint One
1. Particulars 3 and 4 alleged that Mr Bui had on 14 occasions concurrently dispensed Schedule 4D benzodiazepines, namely temazepam, diazepam and nitrazepam, to Patient A and that the quantity of nitrazepam dispensed in July 2015 ought to have raised concerns about Patient A's potential drug seeking behaviour and addiction.
2. Mr Bui conceded that, in dispensing a large number of benzodiazepines to Patient A over a lengthy period, he had deferred to the prescribing practitioner.
3. The Tribunal found that Mr Bui failed to exercise independent judgment and that the standard reasonably expected of a practitioner of Mr Bui's training and experience would be to recognise the potential that Patient A was at risk of becoming dependent on or addicted to benzodiazepines. In that circumstance, Mr Bui ought to have raised concerns with the prescribing doctor about the concurrent supply of benzodiazepines and the quantity supplied to the patient. The Tribunal found that the conduct amounted to unsatisfactory professional conduct.
Particulars 5, 6 and 7 of Complaint One
1. Particulars 5, 6 and 7 alleged that Mr Bui had, over a period of around six months, dispensed excessive quantities of three benzodiazepines, namely temazepam, diazepam and nitrazepam, to Patient B in circumstances where Mr Bui failed to have regard to Patient B's dispensing history which revealed drug-seeking behaviour and addiction issues.
2. Mr Bui admitted each sub-particular but claimed that he had conferred with the prescribing practitioner about a strategy to wean Patient B off benzodiazepines. Mr Bui failed to record those discussions with the prescribing doctor.
3. The Tribunal found that the conduct the subject of Particulars 5, 6 and 7 demonstrated that the knowledge, skill and judgment possessed, and the care exercised by Mr Bui fell significantly below the relevant standard.
Particulars 8 to 13 of Complaint One
1. Particulars 8 to 13 concerned Mr Bui's actions in dispensing benzodiazepines to Patients C, D, E, F and G while each was being prescribed methadone on the Opioid Substitution Program. Mr Bui admitted that the dispensing of benzodiazepines, namely oxazepam (to Patients C, F and G), clonazepam (to Patient D) and alprazolam (to Patient E) was inappropriate in circumstances where:
1. the pharmacy was also dispensing methadone to each patient;
2. the concurrent use of methadone and benzodiazepines carries an increased risk of sedation and overdose;
3. different practitioners were prescribing methadone and benzodiazepines, and Mr Bui failed to inform those practitioners of that fact;
4. Patient G was being prescribed methadone and oxazepam at the same time that he was also being prescribed large quantities of the benzodiazepine clonazepam.
1. Mr Bui argued that the Methadone Guidelines did not mandate that diazepam is the only benzodiazepine that can be prescribed to patients on the Opioid Substitution Program.
2. The Tribunal found that sub-particulars 8(c), 9(c), 10(c), 12 (c) and 13(d) were not proven but the balance of sub-particulars 8 to 13 inclusive were admitted or proven. The Tribunal pointed out that the essence of the complaint was the concurrent dispensing of benzodiazepines and methadone in circumstances where the concurrent use of those drugs carries an increased risk of sedation and overdose. The Tribunal further found that Mr Bui's dispensing of the subject benzodiazepines was not in accordance with recognised therapeutic standards and he had failed to inform prescribers that their patient was being prescribed benzodiazepines or methadone by another practitioner.
3. The Tribunal found that the proven/admitted conduct fell significantly below the relevant standard and amounted to unsatisfactory professional conduct.
Complaint Two ("the Casino Complaint")
1. Complaint Two alleged that between July 2015 and September 2016, Mr Bui purchased and received Schedule 4 and Schedule 4D drugs from Mr Nguyen "outside the proper practice of pharmacy" in circumstances where there were no valid prescriptions, Mr Bui intended to distribute the purchased drugs to members of the public without valid prescription, and the supply occurred at the Star Sydney Casino, from the boot of Mr Nguyen's car.
2. Complaint Two alleged that the conduct particularised in that complaint amounted to "unsatisfactory professional conduct" within the meaning of s 139B(1)(i) of the National Law, i.e. "any other improper or unethical conduct relating to the practice or purported practice of the practitioner's profession".
3. Mr Bui denied Complaint 2.
4. The Tribunal was satisfied, on the balance of probabilities, that the conduct the subject of the complaint was proven.
5. The Tribunal found the conduct to be "improper or unethical conduct" relating to the practice of pharmacy. The Tribunal found that it amounted to unsatisfactory professional conduct within the meaning of s 139B(1)(l) of the National Law.
Complaint Three ("the Casino Complaint")
1. Complaint Three alleged that the conduct the subject of the dispensing complaint and the Casino complaint, individually and together, amounted to "professional misconduct" as defined by s 139E of the National Law.
2. The Tribunal found Complaint Three proven.
The reinstatement hearing
1. The application for reinstatement hearing took place on 26 March 2024. The practitioner was unrepresented and had been granted leave to attend by audio visual link, in light of his residency in Queensland. Ms Kelly, Solicitor Advocate for the Commission, represented the respondent.
2. The Tribunal explained to the practitioner the nature and process of the hearing, and explained that he could seek an adjournment at any time, if needed, to compose any submissions that he may seek to make.
3. During Mr Bui's cross-examination, the Tribunal asked questions of the practitioner to ascertain his understanding of the relevant issues and these are discussed under the heading "Consideration" in these Reasons.
The applicant's oral submissions
1. The applicant made short oral submissions in opening, highlighting some matters which we note are referred to in his letter dated 8 December 2023 accompanying his application for reinstatement, his letter to the Tribunal dated 8 February 2024 and his statement dated 13 February 2024.
2. Mr Bui asserted that he had actively addressed the issues raised by the previous Tribunal by undertaking professional courses. He submitted that he had done everything to remedy any deficiency in his practices and keep up to date by undertaking courses from the PSA and his own self-study.
3. The practitioner referred to the change in his circumstances after losing everything he had worked for and said that he wanted to make a professional contribution to the community by working as a pharmacist which he had hoped to do until he retired.
The applicant's written submissions and evidence in support of the application
Letter dated 8 December 2023
1. Mr Bui's letter dated 8 December 2023 argued that he had taken remedial action to rectify any deficiencies in his practice and asserted that he was no longer a risk to the public as evidenced by the Pharmacy Council's decision to lift restrictions on his licence in July 2019.
2. He explained his changed circumstances, having relocated from Sydney to a rural location in Queensland, and having run a pharmacy business that was valued by the community in Westbrook from 2017 until April 2022 when his registration was cancelled.
3. Mr Bui expressed his remorse for his past incidents and his understanding of the protective jurisdiction of the law. He implored the Tribunal to reinstate him so that he could be a good role model for his children, and make a valuable contribution to society in his practice of pharmacy.
Letter dated 8 February 2024
1. Mr Bui's letter dated 8 February 2024 acknowledged that the deficiency in his past practice could pose a risk to the public and betray the trust that the community has about the profession. He said he was embarrassed and felt sorry for the inconvenience caused to his customers in Westbrook who had relied upon him for health care services. Mr Bui said he felt shame for his actions and asserted that he had been living with stress and anxiety for six years.
2. He reiterated that he had made every effort to take remedial action by undertaking courses offered by the PSA and undertaken independent study to rectify any deficiencies in his practice and keep himself up to date. He cited a number of the courses that he had undertaken, including of particular relevance, courses dealing with ethics, dispensing and counselling medication management.
3. Mr Bui asserted that he had equipped himself and become competent in pharmacy practice standards and ethical decision-making.
4. Mr Bui asserted that he had practised at Westbrook for 5 years without complaint and that his contribution to the community, especially throughout the pandemic, had been valued and recognised.
Statement dated 13 February 2024
1. In his statement of 13 February 2024, Mr Bui again reiterated his previous statements that he had implemented recommendations from the Pharmacy Council and the PSA on courses of study, that his circumstances had changed and that he had done everything to remediate, so that he could return to the practice of pharmacy and make a professional contribution to the community.
2. Additionally, Mr Bui stated that he had quit gambling and had detached himself from any gaming venue since 2017.
Applicant's oral evidence
1. In light of Mr Bui's statements on the effects of the proceedings over the previous 8 years upon his mental, physical and emotional health, Counsel for the respondent asked what the practitioner had done since the Bui Stage Two decision in April 2022 to address his mental health.
2. The practitioner acknowledged that he had consulted with his GP, Dr Haase, in October 2021, and that he had been prescribed an anti-depressant medication for a few months and had been referred to a counsellor for mental support. He recalled that he had seen a counsellor in Toowoomba, probably in 2021.
3. He said that he accepted responsibility for the issues himself and that he ascribed to the theory that he needed to be strong and "fix himself". His evidence was that he had engaged in exercise, spent time with his family, confided in a pharmacist friend and consulted with a pharmacy support group who understand the pressure on pharmacists and provide advice and help on mental issues.
4. Upon the suggestion that there is a difference between a support group which listens and therapeutic counselling, Mr Bui asserted that he had been unable to afford a counsellor and was struggling to pay legal fees in instalments. He had been the sole breadwinner and had not been able to afford private extra-curricular lessons for his children. He said that the effect of what he had done was a big deterrent and that he was now fit and healthy.
5. When questioned about his intentions, Mr Bui said that he would like to purchase another pharmacy business in a regional area which is around 35 minutes' drive from Brisbane, contingent upon the sale of his home.
6. Mr Bui gave evidence that he was currently working two jobs for around 38 hours per week as a delivery driver and also doing part-time packing of medications for patients (Webster packs).
7. Mr Bui asserted that he spends around 3 hours per week on professional development and had undertaken in excess of the requirements. He had focussed on communication and ethical dispensing in 2019 and was currently undertaking courses for 2023/2024. In order to address matters in the dispensing complaints against him, Mr Bui said he had done case studies, round table ethics, Q-script training and a course on abuse and dependence.
8. Counsel for the respondent criticised the reference dated 1 February 2024 of the practitioner's referees, John and Elizabeth Carter, who had provided a similar reference considered in the Bui Stage Two decision, for citing the Casino incident simply as "the incident". Mr Bui's evidence was that the Carters have known the background very well but he didn't ask them to go into more detail in their reference for these reinstatement proceedings. His evidence was that he had told Mr and Mrs Carter that he had met Mr Nguyen at the Casino, that Mr Nguyen had done something wrong and was found guilty, and that the Tribunal also found Mr Bui to be guilty of supplying without a script.
9. Mr Bui said that he recognises that he had a past unhealthy lifestyle, gambling at the Casino. He maintained his denial of guilt but said that he accepted the Tribunal's finding and wanted to show that today, he is a different person.
10. Mr Bui said that he had isolated himself and moved from New South Wales to regional Queensland, concentrated on work, and quit gambling. He regretted that he had wasted valuable time and placed his family in difficulty. He said that he was now 50 and didn't have much time left to serve the community.
11. Counsel for the respondent asked the practitioner about his risk of repetition, noting that the Tribunal was unable to assess his risk in repeating the conduct with respect to the "Casino issue" in the face of his denials. To this, Mr Bui asserted that he understands that buying without a prescription, legally and ethically, is wrong.
12. Mr Bui was asked about the relevance of the bank statement material he had provided in the reinstatement application since the reinstatement hearing does not look behind the findings in the disciplinary hearing. Mr Bui acknowledged that the Tribunal was not here to reconsider the order from the original hearing but said there had been misunderstanding about a number of transfers between his home loan and his personal account, that he had withdrawn cash on several occasions to play at the Casino (inferring they were not transfers to Nguyen) and that he had increased his home loan for gambling use. When asked about why he had not produced bank statements in Bui Stage Two, he said that he had not been able to access bank statements easily at that time.
13. When questioned about his gambling, Mr Bui acknowledged that he had a gambling "addiction" but subsequently adjusted his answer to distinguish a "gambling addiction" from a "gambling problem". He said that he always knew that gambling was not a good thing to do, but he had too much spare time on his hands and had friends working at the Casino. He said he was hanging out in the wrong place and then he started losing. Upon reflection, Mr Bui said that he "hated" gambling because of the damage to himself, his wasted time, and the impact upon his family. He said he had learned from his mistake and detached himself. He had excluded himself from the Casino for 5 years and risked a fine or gaol time if he did go to the Casino. Mr Bui insisted that because he can go without gambling, he does not have an "addiction". However, looking back, he conceded that he had previously had a problem with gambling.
14. Counsel for the respondent asked Mr Bui if he was successful in being reinstated, would he be amenable to practice under conditions. His response was that it would depend upon the period of the conditions. He said that he was planning to do locum work, and wanted to provide services in a country town but asserted that it is almost impossible to start up a pharmacy in an area where there are no medical services offered.
15. The Tribunal Panel asked Mr Bui about whether his current pharmacy employer was aware of the cancellation of his registration. His evidence was that he had said that he had experience in a pharmacy and had not sought to hide the cancellation of his registration, but his employer had not asked him about his history. It appears that his employer asked Mr Bui to dispense and label medicines and Mr Bui advised that he could not do that. Mr Bui said that he had only recently told that employer about his registration history and had been working under supervision.
16. It was suggested to Mr Bui, since he has been working for around 18 months with a pharmacy, that a reference may have been beneficial to his application and his employer could have been asked to appear before the Tribunal to lend weight to Mr Bui's assertions. Mr Bui said that he had not fully understood the process required for seeking reinstatement. He said that he had been a very responsible employee and did his job properly and that his employer trusted his performance and personality. He approached the matter of seeking to be re-registered as being required to demonstrate his clinical knowledge, skills, and professional behaviour. Again, he asserted that he had done everything he could, and would never forget the lesson he had learned.
17. Mr Bui was questioned about his knowledge and responsibility for dispensing medications to patients. A scenario was put to him where he was asked to imagine being employed as a pharmacist in a busy pharmacy in a community and he notices that a customer has been prescribed a number of boxes of Oxycodone. In the scenario put to him, he also notices scripts for Oxycodone and benzodiazepines from other pharmacies. Mr Bui was asked what he would do. The practitioner demonstrated his knowledge of the processes for identifying the patient and reviewing the patient's dispensing history. He said he would make sure that it was safe and suitable to supply the medication, and if necessary, speak with the patient's doctor, and use the Q-script system to enter the medication to ensure what had been supplied could be monitored. If he suspected pharmacy shopping, Mr Bui said that he would attempt to find out why different pharmacies were supplying the medications and if he thought the patient was at risk of harm, he would hold supply and discuss the circumstances with the prescribing doctor, and attempt to identify the best treatment for the patient.
18. When asked if the doctor was not taking accountability for the risk to the patient, Mr Bui said that he would inform the doctor that it was not in accordance with guidelines, and that he would not supply the medication and would annotate the script appropriately.
19. When further pressed on how he would manage the circumstances if he thought the patient was at risk of harm, Mr Bui said that he would ask the doctor to cancel the prescription. If the patient was at risk of overdosing, Mr Bui said he would contact other pharmacies where the patient may be receiving supply, with a view to cautioning them about the patient's possible addiction and dependence. He said he would advise the patient on the recommended dosage and caution the patient about the potential harm of exceeding that dosage.
20. When asked about how he would respond to a customer who may be addicted to opioids and may not be receptive to advice about overdosing, Mr Bui said that he would obtain information on organisations to help the patient with the addiction. He would advise the prescribing doctor of the patient's problem and refer the patient to a local hospital with a treatment unit to help.
21. The practitioner was asked by the Tribunal why he had not exempted himself from the Casino earlier than he did. Mr Bui did not explain the delay and simply stated that he knew he could quit himself but he wanted to further support his application for reinstatement by providing evidence of his self-exclusion.
22. At that point in his cross-examination, Mr Bui became quite emotional, saying that he had received counselling from his local priest on how to be a good person. Since selling the business in September 2022, he had been to regular confession and services. He said he was human, had learned from his mistake, had reformed and was determined not to repeat his offending conduct again.
Closing submissions
Applicant's closing submissions
1. The practitioner's closing submissions summarised generally the matters addressed in his correspondence, asserting that he:
1. had consulted with the Pharmacy Council, the PSA and a pharmacy support group and had taken remedial action to maintain his professional competencies through various courses as set out in his filed material;
2. had reflected upon, and truly regretted his conduct 8 years ago, and that the consequences of his action were a massive deterrent;
3. had reformed himself to be a fit and proper person to hold registration, having quit gambling altogether and made a big sacrifice to relocate with his family to a rural town;
4. had not re-offended;
5. did not present a risk to the public as demonstrated by his 5 years of practice at Westbrook from 2017 to 2022 where he helped set up a medical hub and received many acknowledgments for his contribution to the community;
6. had practised in a legal and professional manner at Westbrook, risking infection to himself and his family during the pandemic, and providing financial support and donations to help overseas students during that time;
7. understands that he must practice in accordance with the National Law and would like to do locum work in a regional area to contribute to a community by practising his profession.
Respondent's closing submissions
1. Adopting a neutral position, Counsel for the respondent summarised the key relevant principles, namely:
1. the paramount consideration under s 3 of the National Law is to ensure the health and safety of the pubic,
2. the onus on the applicant to demonstrate that he presents no risk to the safety of the public on the balance of probabilities (subject to the Briginshaw civil standard) and the reputation of the profession;
3. to be given a 'second chance' an applicant must provide clear proof of reformation of character, as well as worthiness and reliability for the future;
4. whether it is appropriate to make a reinstatement order will depend upon whether the applicant is a fit and proper person;
5. Mr Bui had provided only limited new evidence such as the reference from Mr Truong, a statutory declaration from his wife, a reference from the Carters and evidence of his self-exclusion from the Casino, but no evidence of his participation in a pharmacy support group;
6. on the issue of Mr Bui's gambling history, the Commission drew attention to the practitioner's continued denial of the Casino complaint in circumstances where he conceded he had a problem, though not an addiction.
1. The respondent submitted that, if reinstated, the risk of Mr Bui repeating his conduct could be ameliorated with conditions on his registration.
Consideration
1. Bearing in mind the paramount consideration being the health and safety of the public, our assessment of the appropriateness of the cancellation order and the making of a reinstatement order depends upon whether Mr Bui is a "suitable person" to hold registration and whether he is a "fit and proper person" for general registration.
2. The starting point for deciding whether to make a reinstatement order is to consider the findings of the previous Tribunal decision and determine whether the shortcomings identified have been addressed and overcome: Bahramy v Medical Council of NSW [2017] NSWCATOD 146 at [53].
3. In determining whether those shortcomings have been addressed, we look at whether he has gained insight into the matters that led to his being removed from the register, what changes have been made to his circumstances, and whether he is now a fit and proper person to be registered. We consider whether Mr Bui has proved on the balance of probability that he can be trusted to practise in a way that conforms to the professional standards expected of a health practitioner and presents no risk to the health and safety of the public or their confidence in the profession of pharmacy.
4. In assessing Mr Bui's worthiness and reliability to act in accordance with the high standards and responsibilities of the profession for the future, we have considered his character.
5. Character evidence is admissible because it relates to the probability of a person re-offending: Ng at [45].
6. There are two key areas of concern:
1. First, with respect to the Dispensing Complaints, does the Tribunal consider Mr Bui presents a risk to the health and safety of the public? Has Mr Bui demonstrated he is technically competent in his understanding of his professional responsibilities and the professional and ethical standards of the practice of pharmacy? Has Mr Bui demonstrated his understanding of the compliance requirements relating to restricted substances?
2. Second, with respect to the Casino Complaint, the ultimate issue is a question of Mr Bui's worthiness and reliability for the future, such that the Tribunal can be satisfied he has reformed and is a person who will act will act in accordance with the high standards and responsibilities of the profession. It is important to note that the Tribunal in Bui Stage Two at para [27] stated:
"In circumstances where there is no apparent explanation for Mr Bui's conduct in respect of the Casino complaint, we could not be satisfied that that conduct will not be repeated or that conditions could be formulated to mitigate that risk."
Evidence to consider re the Dispensing Complaint
1. The practitioner demonstrated his knowledge when answering questions from the Tribunal concerning the requisite standards of pharmacy practice and the exercise of his professional judgment to query prescriptions with prescribing practitioners as appropriate. His answer demonstrated his understanding of the required steps to achieve compliance with the law including properly recording the names and details of doctors when dispensing Schedule 4D and Schedule 8 drugs; properly recording the supply of pseudoephedrine; understanding the process of staged supply to assist weaning patients off drugs; and documenting procedures to manage and record issues.
2. We also take into account the following matters which are favourable to Mr Bui's application:
1. the commitment that he has shown to his continuing professional education and training, in particular, undertaking PSA courses after having his registration cancelled. These relevantly include:
1. Communication and collaboration, professionalism and ethics (March 2023);
2. Addiction and substance abuse (May 2023);
3. Dispensing and counselling (Cannabis drug interactions; dry mouth management; disposal of Schedule 8 medicines) (May 2023, July 2023, September 2023).
1. his frank admissions about previous failings, his contrition and apparently genuine remorse;
2. his continued professional membership of the PSA and subscriptions to various online resources to maintain and update his knowledge and practice;
3. the removal (on 10 July 2019) of conditions previously imposed on his registration by the Pharmacy Council under s 150 of the National Law that prohibited his possession, supply, dispensing, administration or manufacture of benzodiazepines, although we note this step had already been taken prior to the decision in Bui Stage Two.
Evidence to consider re the Casino Complaint
1. The question of Mr Bui's character is relevant to the Tribunal's assessment of his suitability to practice in an ethical manner and the likelihood of him reoffending.
2. However, the assessment of a person's character is not without complexity. This was discussed in Ng at [43]-[46]:
"[43] The assessment of character is central to the current proceedings. The Commission argues that Dr Ng must demonstrate a shift of character". This implies that a person's character lies somewhere on a spectrum or a line on a graph and that by some form of therapy, psychological or psychiatric treatment or personal resolve that character can be shunted back up the line or spectrum to the more virtuous end.
[44] We are doubtful that such characterisation is helpful in assessing whether a person has a "good character". This is a simplistic, mechanical approach to human psychology that is inconsistent with the realities of human experience and behaviour. The biblical story of the self-righteous being told "let he who is without sin cast the first stone" is a classic account of the fact that human beings are complex and cannot be graded in black and white terms as the metaphor of a character shift implies.
[45] Character evidence is admissible because it relates to the probability of a person either committing an act alleged against them or the future risk of re-offending. The remarks of Walsh JA in Ex parte Tziniolios; Re Medical Practitioners Act quoted above appear to suggest that if a person has been proven to be of bad character, if may be difficult for him (or her) to reform. But they do not explain what bad character is. It is self-evident that a momentary or single act of deviance from an otherwise unblemished course of conduct is much less indicative of ingrained "bad character" and an overall lack of fitness to practise a profession than a course of unethical conduct. We have no doubt that if a course of confirmed unethical behaviour is proven, it will be difficult for a person to prove that he or she is a person who is "fit and proper" for reinstatement."
1. An additional complexity in this case is that Mr Bui has denied the Casino complaint and maintained his denial throughout these proceedings. By continuing to deny the Casino complaint, it could be argued that Mr Bui has limited insight into that conduct as being unethical and a person with no insight remains unsuitable and unfit to be registered.
2. There is no report from a counsellor to demonstrate that he has reflected upon the conduct and whether he has any insights into why such conduct would not be regarded as ethical practice of pharmacy. Mr Bui's evidence is that he exercised strength of character and personal resolve to reform himself without the need for therapeutic counselling (but he found the pharmacy support group to be helpful).
3. We do, however, regard Mr Bui's decision to ban himself from casinos in Queensland as objective evidence that he has reflected on the conduct the subject of the Casino Complaint.
4. The Exclusion Order dated 27 February 2024 issued by The Star Entertainment QLD Limited under s 79 of the Casino Control Act 1992 was issued in response to Mr Bui initiating sanctions against himself by providing a self-exclusion notice on 26 February 2024. Under the five year Exclusion Order, Mr Bui is prohibited from entering or remaining in The Star Gold Coast, Treasury Brisbane and The Star Brisbane Casinos. He is prohibited from taking part in keno gaming and from taking part in approved wagering at any of those named casinos.
5. We regard Mr Bui's self-exclusion as a demonstration of his sincerity and determination to avoid gambling in the future, a matter that could be regarded as showing insight as well as reformation of any character flaw that may have been present due to his previous gambling behaviour.
6. Further, relying upon the decision in Zaidi v Health Care Complaints Commission [1998] 44 NSWLR 82, the fact that Mr Bui does not make an admission of the Casino complaint is not determinative of the key issue. It would be unjust to require Mr Bui to lie in order to seek to demonstrate that he has insight. We do have his acceptance of the Tribunal's findings and his express acknowledgment that the supply of drugs without prescriptions is unlawful and can harm the public.
7. The Tribunal in Ng at [46] also considered the concept of assessing the probability of a person's future offending behaviour having regard to whether they have engaged in a single act of misconduct or repeated breaches:
"[46] On the other hand, a momentary or single act of misconduct should be seen against a person's whole history as well as the person's reputation as attested to by those who know the person. In applying the protective principle, the Tribunal is obliged to consider probabilities. It is more probable that a person who repeatedly misbehaves or breaches ethical codes will do so again than a person who does so only once in a long history of professional practice. The authorities cited above all acknowledge the general understanding that human beings can change their behaviour and learn from experience."
1. Mr Bui has provided only a limited number of character references and none of them articulate in any detail the Casino complaint. A reference from Mr Bui's current employer (who is a practising pharmacist) to attest to his trust in the practitioner may have been helpful in assessing Mr Bui's good character.
2. There are a number of matters favourable to Mr Bui that we take into account:
1. while he continues to deny the Casino complaint, Mr Bui accepts the Tribunal's findings. In addition, he accepts that the conduct found proven by the Tribunal is of a serious nature, that the supply of medications without a prescription is unlawful and unethical, and can harm the public;
2. the change in his circumstances by relocating to a semi-rural town in Queensland and having remained there since 2017, demonstrating his detachment from his previous lifestyle;
3. his assertion that he has quit gambling and has not visited any gaming venue since June 2017;
4. the practitioner is now 50, a family man with children aged 4 and 10, and has expressed a strong desire to be a good role model for his children and to make a positive contribution to the community in the practice of pharmacy with the time remaining in his working life;
5. he has no criminal conviction;
6. he has suffered emotionally, physically, mentally and financially, and has lived with anxiety and stress for the past 6 or 7 years which we regard as a strong deterrent and protective factor against any repeated offending conduct;
7. he has consistently expressed remorse and deep shame, and has acknowledged that he betrayed the trust of the public in the pharmacy profession;
8. the personal reference from John and Elizabeth Carter who attest to Mr Bui as being a person of good character and refer to Mr Bui's highly regarded reputation in the community. We only give a small amount of weight to this reference since it refers to "the incident" but says nothing further of the circumstances that led to the cancellation of Mr Bui's registration;
9. the personal reference from Dr Lindsay Haase which attests to Mr Bui being sincere, responsible and family focussed and a person who strives to provide for his family and serve his community. The reference also refers to Mr Bui's "safe provision of medications to his many patients". The Tribunal relies on this evidence to the extent that it relates to Mr Bui's sincerity and good character as assessed by a member of the medical profession, and we give the reference a moderate amount of weight;
10. the personal reference from Wayne Truong who states that he has observed Mr Bui undergo significant personal growth and introspection. Mr Truong also states that Mr Bui has "sought out resources and support to address the root causes of the issues leading to the suspension". The reference states that Mr Truong is "fully aware of his situation that had led to his suspension" and also refers to "the issue" that occurred 8 years ago, but otherwise does not demonstrate his detailed knowledge of the Casino complaint details. We accordingly only place a moderate amount of weight on Mr Truong's assessment of the practitioner's character.
11. the statutory declaration from Mr Bui's wife attests to her husband's remedial actions and desire to become a better person, but can only be given a small amount of weight due to their close relationship.
Conclusion
1. We accept that Mr Bui has made a significant shift in his personal circumstances to position himself for his anticipated re-registration as a pharmacist at considerable sacrifice to himself and his family, and has sought to remedy previously identified shortcomings.
2. We are satisfied that the risk of the applicant reoffending is low for the following reasons:
1. he has insight into the circumstances of his offending with respect to the Dispensing Complaint, has sought to rectify any deficiencies in his education or practice with appropriate recommended courses, and demonstrated in his oral evidence that he has the skills and competencies to practice ethically and safely;
2. he has shown insight into the Tribunal's concerns regarding the Casino Complaint as evidenced by his acceptance of the findings, his statements about the unlawfulness and harm to the public when medications are supplied without a prescription, and the Exclusion Order;
3. his remorse appears to be genuine for the inconvenience caused to the community at Westbrook and the distress caused to his patients and his family, and the practitioner's focus on remediating his damaged financial position does not detract from his expressions of regret for the harm he has caused by his conduct;
4. the deterrent effect of his de-registration has had a strong aversive effect upon him and this will be a powerful protective factor against any possible reoffending.
1. We are satisfied that the cancellation order is no longer appropriate and that the conduct the subject of the cancellation decision is unlikely to recur.
2. We are satisfied that Mr Bui is "suitably trained and qualified to practise pharmacy in a competent and ethical manner" and is a "fit and proper person" to hold registration. We consider Mr Bui to be highly motivated, as a result of his disciplinary experience, to promote confidence in the professionalism of pharmacy.
3. In our view, Mr Bui has proven on the balance of probabilities that he can be trusted to practise in an honest and ethical manner in the future and we are satisfied that he is a fit and proper person to have his registration reinstated.
Conditions to be imposed on the practitioner's registration
1. Nonetheless, given the paramountcy of the health and safety of the public and the length of time since Mr Bui last practised without restriction, we have decided to take a cautious approach and impose conditions upon Mr Bui's licence. The imposition of conditions for a period of 12 months will serve to provide practical support for his confident return to practice.
2. During the hearing, the practitioner was asked whether he would be amenable to conditions being imposed upon his registration if the Tribunal was minded to make a reinstatement order.
3. The practitioner indicated that he would be prepared to accept reasonable conditions if the Tribunal made a reinstatement order, but said that it would depend upon the period of time that the conditions would be operative.
4. In closing submissions, the Commission stated that it adopted a neutral position to the application and would consider the imposition of reasonable conditions upon the practitioner's registration if the Tribunal was minded to make a reinstatement order.
5. The Tribunal made orders, as already noted, requiring the parties to make submissions as to any conditions considered appropriate if the Tribunal reinstated the practitioner.
6. The Commission's first proposed conditions included mentoring requirements and were proposed to be imposed for two years.
7. The Commission's revised proposed conditions removed the requirements for mentoring and imposed conditions for one year.
8. The applicant practitioner rejected both the initial and revised conditions, arguing that the imposition of restrictions would serve to further punish him unnecessarily. We do not find those submissions persuasive and are obliged to ensure the paramount consideration under the National Law.
9. The Tribunal considers the respondent's revised conditions are reasonable in the circumstances, with two exceptions. First, we have removed a reference to AHPRA having access to information from Medicare or private health insurers and/or practice billing data which may have relevance to a medical practitioner but no relevance to the practice of pharmacy. Second, we have amended the Commission's proposed fifth condition so that it is capable of practical implementation within 21 days of the practitioner being employed as a pharmacist, or contracted to provide services as a pharmacist.
10. In our view the conditions set out in these Reasons provide comfort in protecting the health and safety of the public in the twelve months that the practitioner eases himself into practice. The conditions will allow the practitioner to apply his learnings in practice, with the support of a fellow senior manager.
Costs
1. The Commission sought an order that the practitioner pay the costs of these proceedings. Mr Bui asked the Tribunal to order that each party pay its own costs, relying upon his assertion that he has financial limitations.
2. Appearing as contradictor, the Commission's role is to assist the Tribunal by ensuring that all relevant material is disclosed so as to enable the Tribunal to determine all relevant facts in issue pursuant to s 38(6) of the CAT Act.
3. In Ake v Health Care Complaints Commission [2019] NSWCATOD 165 at [46-49], the Tribunal set out the principles to be applied to determine the costs of proceedings for the reinstatement of a practitioner:
"[46] In exercising the power to award costs, conferred by cl 13, Sch 5D to the National Law, the general "rule" is that costs follow the event: Health Care Complaints Commission v Philipiah [2013] NSWCA 342 at [42]; Qasim v Health Care Complaints Commission [2015] NSWCA 282 at [85] and Health Care Complaints Commission v Do [2014] NSWCA 307 at [51].
[47] Whether the discretion to award costs should be exercised in favour of the Commission raises the issue of whether the so-called compensatory principle - that without some disentitling conduct a successful party is generally entitled to recover their costs - can and should be applied where the Tribunal makes a reinstatement order under s 163B of the National Law.
[48] This issue was addressed in Ameisen v Medical Council of New South Wales [2015] NSWCATOD 49 (Ameisen). There, the Tribunal considered it a misnomer to describe an applicant who is reinstated following an inquiry to review a "relevant order" as having been "successful". Reasoning that this characterisation "misunderstands the nature of the respondent's involvement in the proceedings", the Tribunal pointed out at [90] that reinstatement proceedings "arise because of the prior misconduct of the applicant [practitioner], and can be seen as ancillary [to the original proceedings which resulted in the cancellation of the practitioner's registration]". The Tribunal ordered Dr Ameisen to pay the respondent Council's costs, notwithstanding its decision that he be reinstated to the register of medical practitioners.
[49] This approach was followed in Ristevski v Medical Council of NSW [2016] NSWCATOD 18. There, the tribunal concluded at [87]:
"Provided the respondent conducts its case appropriately, it should be compensated regardless of whether the order is granted or refused." "
1. In considering a number of cases where the applicant practitioner was reinstated but was not ordered to pay the costs of the respondent, the Tribunal had been critical of aspects of the respondent's participation in the inquiry. As summarised in Ake at [50]:
"[50] In Ristevski the Tribunal examined a number of cases where on review of the relevant order, the applicant practitioner was reinstated but not ordered to pay the costs of the respondent Council or Commission: Mnyandu v Health Care Complaints Commission [2015] NSWCATOD 43, Donnelly v Health Care Complaints Commission [2014] NSWCATOD 155 and Roberts v Health Care Complaints Commission [2015] NSWCATOD 35. The Tribunal concluded that each case had "exceptional features" and the relevant Tribunal had been critical of aspects of the respondent's participation in the inquiry: Ristevski at [74], [78], [82] and [88]."
1. In reinstatement proceedings, the respondent's role as contradictor has been described as a "public interest respondent", as explained in Ake at [51]:
"[51] We agree with the view expressed by the Tribunal in Ristevski at [70]-[71] that in conducting a review of a relevant order under s 163B of the National Law, there is a public interest in the Tribunal being assisted by the relevant practitioner Council or the Commission. Without a respondent in this class of matters, there is a risk that the Tribunal might only have available the self-serving evidence adduced by the applicant practitioner. The involvement of, to use the term coined in Ristevski, a "public interest respondent" in review proceedings, assists the Tribunal in discharging its obligation to ensure that all relevant material is disclosed so as to enable it to determine all relevant facts in issue: s 38(6)(a) of the Civil and Administrative Tribunal Act 2013 (NSW)."
1. In a more recent case, Blair v HCCC [2023] NSWCATOD 35 ('Blair'), a nurse's application to be reinstated was not successful and the practitioner sought an order that each party pay its own costs, arguing that a costs order was pointless because he had no assets. The Tribunal explained at [83] the rationale behind the recognition of the Commission's role in proceedings of this nature, with reference to Ristevski:
"… A reinstatement application ordinarily has its genesis in a finding of professional misconduct involving conduct so egregious that cancellation of registration is required in the public interest. The applicant should factor in the possibility of their application being tested and challenged by a respondent for the public interest. Provided the respondent conducts its case appropriately, it should be compensated regardless of whether the order is granted or refused."
1. The Tribunal concluded in Blair at [85] that the Commission had proceeded in an appropriate way and ordered costs against the practitioner.
2. In an earlier case involving a pharmacist, Frayar v Health Care Complaints Commission [2015] NSWCATOD 117, the application for re-registration was dismissed. The Tribunal noted at [106] the role of a contradictor in proceedings of this nature and ordered the applicant to pay the Commission's costs:
"It was necessary that the Respondent act as a contradictor in these proceedings. Despite the protestations of the Applicant that he is impecunious, that is no good reason why a costs order should not be made in favour of the Respondent. We order that the Applicant pay the costs of the Respondent incurred in respect of these proceedings."
1. In another case, Holbrook v HCCC [2014] NSWCATOD 86 at [142], a psychologist's application for reinstatement was not successful. His submission that each party bear its own costs rested solely on his asserted financial difficulties but the Tribunal was not persuaded to depart from the usual course of ordering the practitioner to pay the Commission's costs.
2. In the case before us, the Commission has proceeded in an appropriate way. There are no "exceptional features" such as those cited in Mnyandu v Health Care Complaints Commission [2015] NSWCATOD 43, Donnelly v Health Care Complaints Commission [2014] NSWCATOD 155 and Roberts v Health Care Complaints Commission [2015] NSWCATOD 35, that would warrant a departure from the principle that the applicant should pay the costs of the respondent in these reinstatement proceedings. We find no reason to be critical of aspects of the respondent's participation in the inquiry. The Commission properly drew to the attention of the Tribunal to material relevant to the proper consideration of the applicant's application.
3. We are thus satisfied that it is appropriate that the practitioner be ordered to pay the Commission's costs, and do so accordingly.
ORDERS
1. We make the following orders:
1. The Tribunal makes a reinstatement order under section 163B(1)(c) of the Health Practitioner Regulation National Law in respect of the practitioner.
2. Pursuant to s 163B(4) of the Health Practitioner Regulation National Law, the following conditions are imposed on the practitioner's registration:
1. The practitioner must not work as a pharmacist in charge for a minimum period of 12 months.
2. The practitioner must not work as the sole pharmacist on duty for a minimum period of 12 months.
3. The practitioner must not be the proprietor of a pharmacy for a minimum period of 12 months.
4. Within 21 days of the notice of imposition of these conditions, the practitioner must provide to AHPRA, on the approved form (HP7), acknowledgement that AHPRA may:
1. seek reports from the Senior Practice Manager/Senior Manager/Senior Partner/proprietor/owner/partner in ownership pharmacist/other as appropriate (the senior person) at each place of practice on at least a quarterly basis or as otherwise required;
2. request and access from the senior person at each place of practice copies of rosters, pay slips, or the equivalent.
1. Within 21 days of employment at any pharmacy where the practitioner is employed as a pharmacist or is contracted to provide services as a pharmacist, the practitioner must provide to AHPRA acknowledgment from the senior person at each place of practice:
1. on the approved form (HPS7) that they are aware AHPRA will seek reports from them;
2. that they have sighted a copy of the decision of the Tribunal which cancelled the practitioner's registration (Health Care Complaints Commission v Bui (No.2) [2022] NSWATOD 45 and a copy of these Reasons for Decision which impose these conditions.
1. All costs associated with compliance with the conditions on his registration are at the practitioner's own expense.
2. Conditions a-f above are to be reviewed 12 months following the date of imposition.
1. The applicant is to pay the costs of the respondent as agreed or assessed.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Amendments
30 July 2024 - Removed full name of member
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 12,846 |
nsw_caselaw:19101ff949686575eb370b2d | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-02 00:00:00 | Health Care Complaints Commission v Mosca [2024] NSWCATOD 115 | https://www.caselaw.nsw.gov.au/decision/19101ff949686575eb370b2d | 2024-08-04T23:51:03.176694+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Health Care Complaints Commission v Mosca [2024] NSWCATOD 115
Hearing dates: 10 July 2024
Date of orders: 02 August 2024
Decision date: 02 August 2024
Jurisdiction: Occupational Division
Before: A Starke, Senior Member
K Austin, Senior Member
L Campbell, Senior Member
A Gray, General Member
Decision: (1) Pursuant to s 149C(1)(b) and s 149C(1)(c) of the Health Practitioner Regulation National Law (NSW), the respondent’s registration as a health practitioner is cancelled for a period of 3 years.
(2) Pursuant to s 149C(5) of the Health Practitioner Regulation National Law (NSW), the respondent is prohibited from providing health services as defined in s 4 of the Health Care Complaints Act 1993 (NSW) for a period of 3 years.
(3) Pursuant to clause 13 of Schedule 5D of the Health Practitioner Regulation National Law (NSW), the respondent is to pay the Commission’s costs as agreed or assessed in accordance with the applicable costs legislation.
Catchwords: OCCUPATIONS – Nursing – Application for disciplinary findings and orders where practitioner convicted of two offences of Dishonestly obtain property by deception contrary to s 192E(1)(a) of the Crimes Act 1900 (NSW) and one offence of Persons Unlawfully in possession of property, contrary to s 527C(1)(a) of the Crimes Act 1900 (NSW ) and sentenced to 18 months imprisonment to be served by way of Intensive Correction Order expiring on 13 October 2024 – practitioner found to have engaged in unsatisfactory professional conduct under s 139B(1)(l) of the Health Practitioner Regulation National Law (NSW) in that the practitioner engaged in improper and unethical conduct related to the practice of nursing – practitioner found guilty of professional misconduct under s 139E of the Health Practitioner Regulation National Law (NSW) in that the practitioner engaged in unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration and engaged in more than one instance of unsatisfactory professional conduct of a sufficiently serious nature to justify the suspension or cancellation of the practitioner’s registration.
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW)
Crimes Act 1900 (NSW)
Crimes (Sentencing Procedure) Act 1999 (NSW)
Evidence Act 1995 (NSW)
Health Care Complaints Act 1993 (NSW)
Health Practitioner Regulation National Law (NSW)
Cases Cited: Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336.
Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41
Chen v Health Care Complaints Commission [2017] NSWCA 186
Clyne v NSW Bar Association (1960) 104 CLR 186
Director General, Department of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102
Gautam v Health Care Complaints Commission [2021] NSWCA 85
HCCC v Brush [2015] NSWCATOD 120
HCCC v Brush (No. 2) [2015] NSWCATOD 154
HCCC v Collins [2021] NSWCATOD 132
HCCC v CSM [2016] NSWCATOD 125
HCCC v Karunaratne (No 2) [2018] NSWCATOD 201
HCCC v Limboro [2018] NSWCATOD 117
HCCC v Meneghetti [2020] NSWCATOD 39
HCCC v Wood [2020] NSWCATOD 60
Health Care Complaints Commission v Aref [2018] NSWCATOD 133
Health Care Complaints Commission v Do [2014] NSWCA 307
Health Care Complaints Commission v Elshaimy [2019] NSWCATOD 17
Health Care Complaints Commission v FLJ [2023] NSWCATOD 7
Health Care Complaints Commission v Litchfield [1997] NSWSC 297
Health Care Complaints Commission v Liu [2016] NSWCATOD 133
Health Care Complaints Commission v Mitchell [2015] NSWCATOD 151
Health Care Complaints Commission v Shrimpton (No 2) [2019] NSWCATOD 48
Lee v Health Care Complaints Commission [2012] NSWCA 80
Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72
Parker v Comptroller of Customs (2009) 83 ALJR 494; [2009] HCA 7
Prakash v Health Care Complaints Commission [2006] NSWCA 153
Category: Principal judgment
Parties: Health Care Complaints Commission (Applicant)
Joyce Paran Mosca (Respondent)
Representation: Counsel
E Bayley (Applicant)
Solicitors
Health Care Complaints Commission (Applicant)
File Number(s): 2024/00112168
Publication restriction: Pursuant to an order made on 12 April 2024, the disclosure of the name of any person listed in the Schedule to the Complaint is prohibited under s 64(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW).
Note: A reference to the name of a person includes a reference to any information, picture or other material that identifies the person or is likely to lead to the identification of the person.
REASONS FOR DECISION
Overview
1. This matter concerns an application by the Health Care Complaints Commission (‘the Commission’) for disciplinary findings and orders with respect to a complaint (‘the Complaint’) against the health practitioner, Joyce Paran Mosca, a registered nurse (also referred to in these Reasons as ‘the practitioner’ or ‘the respondent’).
2. The Complaint is comprised of three parts, with particularised grounds for each part. The Commission determined to prosecute the Complaint pursuant to s 90B(1) of the Health Care Complaints Act 1993 (NSW) (‘the HCC Act’), alleging that:
1. the respondent has been convicted of two offences of Dishonestly obtain property by deception, contrary to s 192E(1)(A) of the Crimes Act 1900 (NSW) and one offence of Persons Unlawfully in possession of property, contrary to s 527C(1)(A) of the Crimes Act 1900 (NSW) (‘the Offences’), being a ground for complaint pursuant to s 144(a) of the Health Practitioner Regulation National Law (NSW) (‘the National Law’);
2. the respondent has been guilty of unsatisfactory professional conduct within the meaning of s 139B(1)(l) of the National Law in that the practitioner has engaged in improper or unethical conduct relating to the practice of nursing, being a ground for complaint pursuant to s 144(b) of the National Law;
3. the respondent has been guilty of professional misconduct within the meaning of s 139E of the National Law, being a further ground for complaint pursuant to s 144(b) of the National Law.
1. Whilst employed as a Care Manager in an aged care facility (‘the Facility’), the respondent obtained the bank cards of two elderly residents of the Facility (referred to in these Reasons as ‘Patient A’ and ‘Patient B’) and used the cards to make multiple purchases for herself in NSW and in the Australian Capital Territory over a period exceeding two years.
2. Both Patient A and Patient B were vulnerable because of their age and respective cognitive conditions. Patient A was 85 years old and had been diagnosed with Dementia. Patient B was 78 years old and had been diagnosed with Dementia and Alzheimer’s disease.
3. According to the Police Facts Sheet, the respondent used Patient A’s bank card 61 times between 4 May 2021 and 7 December 2022, to a total value of $5,402.21. The respondent used Patient B’s bank card 116 times between 7 September 2020 and 25 August 2022 to a total value of just under $2,996.42. The bulk of transactions occurred in Yass in NSW, and other transactions occurred in the Australian Capital Territory.
4. The respondent pleaded guilty and was convicted on 14 April 2023 in the Local Court at Yass with respect to criminal offences committed in NSW. With respect to the two counts of dishonestly obtaining property by deception (by using the bank cards belonging to Patient A and Patient B to purchase items for herself), she was sentenced to a term of imprisonment of 18 months to be served by way of intensive correction in the community in accordance with s 7 of the Crimes (Sentencing Procedure) Act 1999 (NSW). With respect to the charge of having goods in her personal custody suspected of being stolen (by having Patient B’s bank card still in her possession at the time of being charged on 7 December 2022), the respondent was fined $450.00 and ordered to return the property to Patient B.
5. The Commission sought orders to have the respondent’s registration cancelled and to disqualify her from being registered for two years. The Commission also sought an order prohibiting the practitioner from providing health services for a period of two years, and an order for costs.
6. The respondent did not file a reply to the Commission’s Complaint and did not file any written submissions for consideration. On the day before the hearing, the respondent advised that she would not be attending the hearing and submitted three character references.
7. Pursuant to s 149 of the National Law, the Tribunal may exercise disciplinary power if it finds the subject matter of the Complaint against the practitioner to have been proved, or she admits to it in writing to the Tribunal. After hearing and considering all the relevant evidence, we find the subject matter of Complaints One, Two and Three to have been proved.
8. Having regard to the respondent’s deceitful conduct over a significant period of time whilst employed in a position of trust and responsibility for the care of vulnerable elderly patients, we are satisfied that she is guilty of professional misconduct justifying cancellation of her registration under s 149C(1)(b) of the National Law. We are also satisfied that the circumstances of the Offences including the practitioner’s actions after her criminal conduct was discovered, render the practitioner unfit in the public interest to practise the profession of nursing, justifying cancellation of her registration under s 149C(1)(c) of the National Law.
9. We have accordingly decided to cancel her registration and to set a non-review period of 3 years effective from the date of this decision before the practitioner will be entitled to apply for a review of the cancellation order and seek to be reinstated.
10. We are also satisfied that the respondent poses a substantial risk to the health of members of the public as an unregistered nurse, and accordingly we make a prohibition order under s 149C(5) of the National Law prohibiting her from providing health services for a period of 3 years effective from the date of this decision.
11. Finally, we order the respondent to pay the applicant’s costs of these proceedings.
Non-publication order
1. The Tribunal made an order on 12 April 2024 pursuant to s 64(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW) that the disclosure and or publication of the names of any person listed in the Schedule to the Complaint is prohibited. Accordingly, in these reasons, the persons listed in the Schedule to the Complaint are referred to as ‘Patient A’ and ‘Patient B’.
Material filed in these proceedings
Filed on behalf of the Commission
1. In support of its Application for disciplinary findings and orders filed on 25 March 2024, the Commission relied on the following documents:
1. a bundle of documents filed on 11 June 2024 (marked for identification as “Exhibit A1”);
2. a bundle of supplementary documents filed on 19 June 2024 (marked for identification as “Exhibit A2”);
3. a further bundle of supplementary documents filed on 5 July 2024, being documents produced under Summons from RSL LifeCare on 3 July 2024 (marked for identification as “Exhibit A3”);
4. a Chronology filed on 9 July 2024 (marked for identification as “Exhibit A4”);
5. an Evidentiary Certificate dated 5 July 2024 issued by the Australian Health Practitioner Regulation Agency (‘AHPRA’), filed on 8 July 2024 (marked for identification as “Exhibit A5”);
6. a copy of AHPRA’s Registration Standard: Criminal History document as at 1 July 2015, handed up during the hearing on 10 July 2024 (marked for identification as “Exhibit A6”);
7. a copy of correspondence dated 20 June 2024 from the Commission to the respondent enclosing a hard copy of the documents that the Commission proposed to rely upon, as well as copies of various receipts from Australia Post confirming delivery of material to the respondent, handed up during the hearing (marked for identification as “Exhibit A7”);
8. written submissions dated 10 July 2024, handed up on the day of hearing (not marked).
Filed on behalf of the respondent
1. As already noted, the respondent sent an email to the Tribunal on 9 July 2024 advising that she would not be attending the hearing on 10 July 2024. The respondent also provided 3 character references for the Tribunal’s consideration.
Procedural note
1. Upon receipt of the respondent’s email of 9 July 2024, the Tribunal’s Registry wrote to both parties and noted that if the respondent did not attend the proceedings, the hearing may proceed and a decision may be made in her absence. The Registry further noted that it may be in the respondent’s interests to attend the hearing as listed on 10 July 2024.
2. The practitioner did not respond to the Registry’s note and did not attend the hearing.
3. The Tribunal noted that Orders made on 12 April 2024 contained a notation stating: “The respondent has advised that she does not intend to defend the matter and will not be participating in the hearing”.
4. Having regard to the respondent’s advice to the Tribunal on at least two occasions that she did not intend to participate in the hearing, the Tribunal Panel decided to hear the Commission’s application in the respondent’s absence.
The Complaint
1. The Commission set out three grounds which constituted the Complaint in these proceedings:
1. that, under s 144(a) of the National Law, Ms Mosca had been convicted of a criminal offence (‘Complaint One’), the particulars of which are set out below:
Particulars of Complaint One
On 14 April 2023 at Yass Local Court, the practitioner was convicted of criminal offences; namely:
two offences of Dishonestly obtain property by deception, contrary to section 192E(1)(a) of the Crimes Act 1900 (NSW); and
one offence of Persons Unlawfully in possession of property, contrary to section 527C(1)(a) of the Crimes Act 1900 (NSW).
One of the relevant circumstances of the criminal conviction in particular 1 is that the victims of the offences were Patient A and Patient B, who were under the care of the practitioner.
1. that Ms Mosca is guilty of unsatisfactory professional conduct under s 139B(1)(l) of the National Law in that the practitioner has engaged in improper or unethical conduct relating to the practice of nursing (‘Complaint Two’), the particulars of which are set out below:
Particulars of Complaint Two
Between 1 August 2022 and 14 November 2022 the practitioner used a bank card belonging to Patient A, without the knowledge and consent of Patient A, to make purchases, as set out in the table annexed and marked ‘Annexure A’ to the Complaint.
Between around 29 September 2020 and 8 August 2022 the practitioner used a bank card belonging to Patient B, without the knowledge and consent of Patient B, to make purchases, as set out in the table annexed and marked ‘Annexure B’ to the Complaint.
1. that Ms Mosca is guilty of professional misconduct under s 139E of the National Law, in that the practitioner has engaged in unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration, and/or engaged in more than one instance of unsatisfactory professional conduct that, when the instances are considered together, amount to conduct of a sufficiently serious nature to justify the suspension or cancellation of the practitioner’s registration (‘Complaint Three’), the particulars of which are set out below:
Particulars of Complaint Three
Complaint Two is repeated and relied upon.
Issues for the Tribunal to consider and determine
1. The issues for the Tribunal to determine are:
1. whether the conduct in each of Complaints One, Two and Three is proven or admitted;
2. whether the asserted unsatisfactory professional conduct in Complaint Two is proven;
3. if Complaint 2 is proven, whether the proven unsatisfactory professional conduct is sufficiently serious to amount to professional misconduct for the purpose of Complaint Three;
4. whether, and if so in what manner, the Tribunal should exercise its disciplinary powers under Subdivision 6 of the National Law, including whether to suspend (for a specified period) or cancel the practitioner’s registration, whether to impose a non-review period with respect to an order cancelling the practitioner’s registration, and whether to make a prohibition order prohibiting her from providing health services for a specified period of time or permanently ; and
5. whether to order Ms Mosca to pay the Commission’s costs of these proceedings.
Background to the proceedings
Family and employment history
1. The respondent is currently 53 years of age, and is married with three children and one grandchild. She came to Australia from the Philippines on a student visa to study a Master of Information Technology and then transferred to nursing. One of her children is living in the Philippines and looks after the respondent’s mother who also lives in the Philippines and has suffered a stroke.
2. Ms Mosca was first registered as a nurse on 27 May 2016, after obtaining a Bachelor of Nursing from the Australian Catholic University in 2015.
3. Between July 2016 and December 2016, the practitioner worked initially as an agency nurse and also as a casual nurse in a private hospital in Sydney. In December 2016 until November 2017, she worked as a full-time registered nurse at an aged care facility in Sydney.
4. In December 2017, the practitioner started working for the Facility in Yass, initially as a full-time registered nurse until January 2020. She was then promoted to the role of Care Manager at the Facility, from February 2020 until July 2021.
5. Patient A was admitted into the Facility in 2018. Patient B was admitted in March 2020.
6. In July and August 2021, the practitioner worked full-time at a different location, initially as an Acting Facility Manager and then as Facility Manager from September until December 2021. She then returned to work at the Facility as a full time Care Manager in January 2021 until her suspension pending an investigation into the alleged Offences and ultimately her resignation in February 2023.
7. The practitioner was charged on 7 December 2022 following which the Police notified RSL LifeCare of the allegations and advised that the bail conditions prohibited the practitioner from entering the Facility.
8. RSL LifeCare suspended the practitioner with pay on 8 December 2022 pending an investigation into the allegations against her, and subsequently notified the Council of the charges against the practitioner.
9. On 24 January 2023, the practitioner notified AHRPA that she had been charged with the Offences and attached a letter from her GP stating that she was suffering ongoing anxiety and depressive symptoms since being charged by Police on 7 December 2023.
10. On 9 February 2023, the practitioner tendered her resignation with RSL LifeCare.
11. RSL LifeCare subsequently notified the Nursing and Midwifery Council of NSW (‘the Council’) of the charges against the practitioner and advised that the practitioner had provided her resignation with effect from 9 February 2023.
12. At the time of the hearing in these proceedings, it was not known whether the practitioner has secured employment since February 2023, although it is known from a document filed in the criminal trial that she had an offer of employment from a friend, to work as a manager in one of his restaurants in Victoria.
Events leading to criminal proceedings
1. Drawing predominantly from the Police Facts Sheet, we understand that the practitioner’s criminal conduct came to light as a result of events that took place on 17 November 2022 and the week immediately following.
2. On 17 November 2022, Patient A’s son visited his mother at the Facility. Patient A wanted a television for her room, and her son had agreed to purchase it with her bank card. Patient A and her son searched her room but were unable to find the card.
3. The following day, Patient A’s son received a bank statement showing multiple purchases from various stores in Yass and Canberra. The transactions were thought to be highly suspicious since Patient A had no means of travelling to shops to purchase items, and no way of going to Canberra for shopping. Patient A’s son reported the card as being stolen and returned to the Facility to again search for the card.
4. The practitioner assisted in the search for the card and agreed to not divulge to any person that the card was missing and had been used unlawfully. We note that the practitioner had in fact used Patient A’s card at Woolworths that morning. It was to be the last time she used the card, because it had been reported as being stolen and then her use of it came to light.
5. At around 6pm that night, the practitioner telephoned Patient A’s son, asking to speak with him immediately. A short time later, the practitioner attended his home and handed over the bank card in the name of Patient A and said that she had “mistakenly” used the card. She asked that Police not be notified and said that she was intending to repay the money she had spent.
6. One week later, on 25 November 2022, the practitioner contacted Patient A’s son and asked him to attend the Facility as she had $6000 that she wished to repay. Later that day, he attended the Facility and was led to the practitioner’s office where she handed him an envelope containing $6000 in denominations of $50 and $100.
7. On 7 December 2022, the practitioner attended the Yass Police Station and was placed under arrest. While in custody, Police conducted a search of the practitioner’s purse and located a bank card in the name of Patient B. When asked why she was in possession of the card, the practitioner said she was purchasing clothing for Patient B.
8. The practitioner declined to answer further questions.
9. The practitioner was charged on 7 December 2022 with two offences:
1. that, by deception, the practitioner used a bank card issued to Patient A to dishonestly obtain fuel, clothing and groceries contrary to s 192E(1)(a) of the Crimes Act 1900 (‘Sequence 1’, Complaint One); and
2. that the practitioner had in her custody a bank card belonging to Patient B which may be reasonably suspected of being stolen or otherwise unlawfully obtained, contrary to s 527C(1)(a) of the Crimes Act 1900 (‘Sequence 2’, Complaint Two).
1. The practitioner was granted bail on conditions including that she must not contact Patient A or Patient B, must not enter the Facility and must surrender her passport.
2. Sometime later, the Police contacted Patient B’s son who reviewed his father’s bank statements and noticed there were multiple purchases from various stores in Yass and Canberra that were suspicious. He advised Police that he was responsible for purchasing his father’s clothing and that no other person had permission to possess or use his father’s card.
3. The practitioner was subsequently charged with Dishonestly obtain property by deception, contrary to s 192E(1)(a) of the Crimes Act 1900 in that, by deception, she used a card number in the name of Patient B to dishonestly obtain groceries, food, petrol and alcohol (‘Sequence 3’, Complaint One).
4. The applicant pleaded guilty to Sequence 1 and Sequence 3 on 3 March 2023, and pleaded guilty to Sequence 2 on 14 April 2023.
5. In the Local Court at Yass, Magistrate Beattie sentenced the practitioner to 18 months imprisonment with respect to Sequence 1 and Sequence 3, to be served by way of intensive correction in the community. With respect to Sequence 2, the practitioner was fined $450.
Council’s suspension of registration under s 150 of the National Law
1. Under s 150 of the National Law, the Council must, if at any time it is satisfied it is appropriate to do so for the protection of the health or safety of any person or persons, or if satisfied the action is otherwise in the public interest, suspend a health practitioner’s registration or impose conditions on the practitioner’s registration. Action taken under s 150 is interim in nature pending further review.
2. In this matter, on 1 February 2023, the Council received a Notice of Certain Events which had been submitted by the practitioner to AHPRA advising that she had been charged with an offence punishable by 12 months’ imprisonment or more. Subsequently, the practitioner provided a Court Attendance Notice and Police Facts Sheet advising that she had been charged with “Dishonestly obtain property by deception” and “Goods in personal custody suspected being stolen (not motor vehicle)”.
3. Then, on 16 February 2023, the Council received an additional notification from RSL LifeCare advising of the charges against the practitioner and advising that the practitioner had provided her resignation with effect from 9 February 2023.
4. Pursuant to s 150 of the National Law, the Council convened an urgent hearing on 6 March 2023 to consider whether, in light of the charges against the practitioner, urgent interim action was required for the health and safety of any person or in the public interest.
5. The practitioner elected to not attend the hearing which was conducted ‘on the papers’.
6. The Council had for its reference a file note regarding a telephone conversation between a Council officer and the practitioner on 6 February 2023. The practitioner was noted to have said she had been advised by her lawyer not to answer any questions and that she would not be providing any information about the allegations. The practitioner said that her bail conditions required her to report to Police each Monday, Wednesday and Friday. She said that she didn’t consider herself to be well enough to return to nursing work as she was suffering depression, anxiety and panic attacks, but also said that she would like to return to nursing in the future, perhaps working at a medical centre.
7. The Council considered the practitioner’s positive performance appraisal in November 2022 and noted there were no concerns about her clinical practice and no record of a pattern of poor workplace conduct. Her CPD records indicated her attendance at courses including aged care standards, clinical governance and open disclosure, however, there were no reflections or insights from the practitioner about her understanding of the material in those courses.
8. The Council understood the allegations concerned a substantial amount of money and involved conduct over a significant period of time. In the Council’s view, the allegations, if proven, reflected a very serious breach of judgment and responsibility, and posed a serious risk to public safety. The Council had grave concerns that there was a clear difference between the practitioner’s alleged actions and her stated professional career objectives, experience and education.
9. The Council was not aware of any proposed future work arrangements for the practitioner. However, the Council considered that suspension of her registration pending the ongoing investigation was the most appropriate action to take. The Council did not consider that there were conditions that could be imposed on her registration that would sufficiently mitigate concerns with respect to both the public interest and in terms of protecting the safety of the public.
10. In coming to its decision to suspend the practitioner’s registration, the Council acknowledged that it was not able to ask the practitioner directly about whether she was accessing any additional supports including counselling or pharmacologic treatment. The Council took into account a number of matters including:
1. the gravity of the charges;
2. the practitioner’s alleged conduct in response to the discovery of the alleged actions against her; and
3. the apparent limited expression of remorse or reflections on the harm the alleged actions have had on the impacted residents of the Facility, their families and the general community.
1. The Council suspended the practitioner’s registration with immediate effect from 6 March 2023, pursuant to s 150(1)(b) of the National Law.
2. After suspending the practitioner’s registration, the Council referred the matter to the Commission for investigation pursuant to s 150D of the National Law.
Commission’s investigation and application for disciplinary findings and orders
1. By letter of 29 May 2023, the Commission advised the practitioner that her alleged conduct raised a significant issue of public health or safety, warranting investigation. Further, the practitioner was advised that if substantiated, the complaints would provide grounds for disciplinary action against her. The practitioner was invited to provide her response and a copy of her current CV.
2. The practitioner responded on 9 June 2023 and provided a copy of her CV. She stated that she had pleaded guilty and was convicted of two counts of Dishonestly obtain property by deception and one count of Goods in personal custody suspected of being stolen (not m/v). In her covering email, the practitioner begged for forgiveness for her actions.
3. After conducting an investigation into the complaints referred to it, the Commission advised the practitioner on 27 September 2023 that the evidence indicated she had been charged and convicted of three criminal offences. The Commission advised the practitioner that two other complaints were being considered. We note that those other matters were not ultimately prosecuted in the proceedings before us.
4. The Commission gave the practitioner the opportunity, pursuant to s 40 of the HCC Act, to make submissions.
5. In her response on 24 October 2023, Ms Mosca stated that she did not intend to make any submissions and she did not intend to engage further in the disciplinary proceeding against her.
6. On 14 November 2023, after considering the practitioner’s response, the Commission advised the practitioner that it intended to refer the complaints to the Director of Proceedings to determine whether a complaint should be prosecuted before a disciplinary body (in this case, the Tribunal).
7. On 26 February 2024, the Commission advised the practitioner that a further ground of complaint was alleged, namely improper or unethical conduct in the practice of nursing pursuant to s 139B(1)(l) of the National Law. The practitioner was invited to make submissions within 28 days. It appears that no submissions were received from the practitioner.
8. On 25 March 2024 the Commission filed its application for disciplinary findings and orders in the Tribunal with respect to the Complaint.
Relevant statutory provisions and legal principles
Guiding principle and paramount consideration
1. In all matters before it under the National Law, the Tribunal is guided by s3A which states:
“The main guiding principle of the national registration and accreditation scheme is that the protection of the health and safety of the public must be the paramount consideration.”
1. Accordingly, when assessing whether it is appropriate to make disciplinary orders against a practitioner, the fundamental and paramount consideration for the Tribunal is the protection of the health and safety of the public.
Orders are intended to be protective and not punitive
1. Orders are made under the National Law for the protection of the public and not for the purpose of punishing the practitioner, as pointed out by the High Court of Australia in the context of the disbarment of a legal practitioner in Clyne v NSW Bar Association (1960) 104 CLR 186 (‘Clyne’) at [201]-[202]:
“Although it is sometimes referred to as the ‘penalty of disbarment’ it must be emphasised that a disbarring order is in no sense punitive in character. When such an order is made, it is made from the public point of view, for the protection of those who require protection, and from the professional point of view, in order that abuse of privilege may not lead to loss of privilege.”
1. The decision in Clyne has been adopted in a number of Tribunal decisions including Health Care Complaints Commission v Liu [2016] NSWCATOD 133 (‘Liu’) at [42] and Health Care Complaints Commission v Meneghetti [2020] NSWCATOD 39 (‘Meneghetti’) at [97].
2. Although the specific purpose for which orders are made is protective of the public interest and not punitive with respect to the practitioner, it is acknowledged that such orders may be punitive in their effect, and that punitive effect may be relevant in formulating a protective order: Meneghetti at [98]; Lee v Health Care Complaints Commission [2012] NSWCA 80 (‘Lee’) at 20 citing Director General, Department of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102; (2009) 74 NSWLR 523 at [83].
Maintaining ethical and professional standards
1. Protective orders arising from disciplinary proceedings against members of a profession are intended to maintain proper ethical and professional standards, primarily for the protection of the public but also for the protection of the profession: Meneghetti at [98] citing Health Care Complaints Commission v Litchfield [1997] NSWSC 297; (1997) 41 NSWLR 630 (‘Litchfield’) at [637].
Maintaining public confidence in high standards of a profession
1. Protective orders serve to maintain public confidence in the high standards of the medical profession: Meneghetti at [98] citing Prakash v Health Care Complaints Commission [2006] NSWCA 153 (‘Prakash’) at [91].
Effect of deterrence
1. Protective orders also involve an element of deterrence, encouraging other practitioners to recognise the importance of complying with professional standards and the risks of failing to do so: Meneghetti at [97] citing Prakash at [91].
Grounds for complaint against registered health practitioners
1. Section 144 of the National Law sets out the grounds on which complaints may be made about a registered health practitioner:
“(a) Criminal conviction or criminal finding
A complaint the practitioner has, either in this jurisdiction or elsewhere, been convicted of or made the subject of a criminal finding for an offence.
1. Unsatisfactory professional conduct or professional misconduct
A complaint the practitioner has been guilty of unsatisfactory professional conduct or professional misconduct.
1. Lack of competence
A complaint the practitioner is not competent to practise the practitioner’s profession.
1. Impairment
A complaint the practitioner has an impairment.
1. Suitable person
A complaint the practitioner is otherwise not a suitable person to hold registration in the practitioner’s profession.”
Meaning of “unsatisfactory professional conduct”
1. Section 139B(1) of the National Law sets out the meaning of “unsatisfactory professional conduct” of registered health practitioners.
2. In these proceedings, reference to “unsatisfactory professional conduct” includes circumstances where there is any other improper or unethical conduct relating to the practice of purported practice of the practitioner’s profession: s 139B(1)(l).
Meaning of “professional misconduct”
1. Under s 139E of the National Law, “professional misconduct” of a registered health practitioner means the following:
“(a) unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration; or
(b) more than one instance of unsatisfactory professional conduct that, when the instances are considered together, amount to conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration.”
Powers of the Tribunal if a complaint is proved or admitted
1. If a complaint is proved or admitted, the Tribunal may exercise its disciplinary powers as set out in s 149 of the National Law:
“The Tribunal may exercise any power conferred on it by this Subdivision in relation to a registered health practitioner or student if—
(a) it finds the subject-matter of a complaint against the practitioner or student to have been proved; or
(b) the practitioner or student admits to it in writing to the Tribunal.”
1. The Tribunal’s general powers to suspend or cancel a practitioner’s registration are found in s 149C(1) of the National Law as set out below:
“(1) The Tribunal may suspend a registered health practitioner’s registration for a specified period or cancel the registered health practitioner’s registration if the Tribunal is satisfied—
(a) the practitioner is not competent to practise the practitioner’s profession; or
(b) the practitioner is guilty of professional misconduct; or
(c) the practitioner has been convicted of or made the subject of a criminal finding for an offence, either in or outside this jurisdiction, and the circumstances of the offence render the practitioner unfit in the public interest to practise the practitioner’s profession; or
(d) the practitioner is not a suitable person for registration in the practitioner’s profession.”
Tribunal’s power to make a prohibition order
1. In addition to its powers to suspend or cancel a practitioner’s registration, the Tribunal has power to make a prohibition order against a practitioner if it is satisfied that the practitioner poses a substantial risk to the health of members of the public. The power to make a prohibition order is found in s 149C(5) of the National Law, as set out below:
“(5) If the Tribunal suspends or cancels a registered health practitioner’s or student’s registration and it is satisfied the person poses a substantial risk to the health of members of the public, it may by order (a prohibition order) do any one or more of the following—
(a) prohibit the person from providing health services or specified health services for the period specified in the order or permanently;”
Burden of proof and standard of proof
1. The burden of proof rests with the Commission: Gautam v Health Care Complaints Commission [2021] NSWCA 85 at [3].
2. The standard of proof required to establish a complaint is the civil standard, that is, on the balance of probabilities: Liu at [40]. Because of the seriousness of the allegations and the gravity of their consequences, the Tribunal must have “a reasonable satisfaction” that the particulars of a complaint have been proved, as per Dixon J. in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 (‘Briginshaw’) at [362]:
“The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.”
1. Section 140 of the Evidence Act 1995 (NSW) provides that matters including the gravity of the matters alleged may be taken into account when making findings of fact. However, s 38(2) of the Civil and Administrative Tribunal Act 2013 (NSW), provides that the Tribunal is not bound by the rules of evidence. Therefore, strictly speaking, neither the Briginshaw civil standard (having the particulars of a complaint proved to the reasonable satisfaction of the Tribunal) nor s 140 of the Evidence Act 1995 applies directly in decision-making by the Tribunal: Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41.
2. However, as noted in Meneghetti at [13]-[14], the general accepted approach is that when deciding whether the evidence is sufficient to meet the civil standard of proof, the Tribunal will be informed by matters including the seriousness of an allegation and the gravity of the consequences of making the finding.
Use of approved standards, codes or guidelines in disciplinary proceedings
1. Under s 41 of the National Law, an approved code or guideline approved by a National Board is admissible in disciplinary proceedings.
2. Accordingly, the Code of Conduct for Nurses issued by the Nursing and Midwifery Board of Australia which sets out the professional behaviour and conduct expectations for nurses in all practice settings, is admissible in these proceedings and is a legitimate standard or benchmark against which the practitioner’s conduct may be assessed or measured.
3. In these Reasons, any reference to the Code of Conduct for Nurses is a reference to the document filed by the applicant in these proceedings.
Consideration
1. After examining all the relevant evidence, we make the following findings with respect to Complaints 1, 2 and 3.
Complaint One
1. Complaint One is that the practitioner has been convicted of criminal offences, which is a ground for complaint pursuant to s 144(a) of the National Law.
2. The evidence supporting Complaint One includes:
1. bank statements relevant to Patient B’s bank card showing that on 112 dates from 7 September 2020 to 25 August 2022, the practitioner used Patient B’s card in Yass to dishonestly obtain groceries, food, petrol and alcohol (total value of $2,669.42);
2. bank statements relevant to Patient A’s bank card showing that on 59 occasions between 2 June 2021 and 18 November 2022, the practitioner used Patient A’s card in Yass to dishonestly obtain groceries, food, petrol and alcohol (total value $5,402.21);
3. the Police Facts Sheet showing that one of the relevant circumstances of the criminal conviction is that the victims of the Offences were Patient A and Patient B who were under the care of the practitioner;
4. The Court Attendance Notice establishing that the practitioner was charged by Police on 7 December 2022;
5. the Transcript, Certificate of Conviction and Intensive Correction Order establishing that the practitioner was convicted at the Local Court in Yass of the three Offences;
6. the practitioner’s letter to the Magistrate (undated but presumed to have been written shortly before the sentencing hearing on 14 April 2023) admitting that she used Patient A’s card and Patient B’s card and pleading guilty to the Offences;
7. the practitioner’s response dated 6 June 2023 to the Commission, admitting that she used the cards belonging to Patient A and Patient B and was convicted of the Offences after pleading guilty;
8. the practitioner’s email of 9 March 2024 to the Commission, admitting that she was convicted of the Offences after pleading guilty.
1. We find Complaint One to be proven.
Complaint Two
1. Complaint Two relates to the practitioner’s dishonest use of the cards of Patient A and Patient B to make purchases for herself in the Australian Capital Territory.
2. Complaint Two asserts that the practitioner is guilty of unsatisfactory professional conduct under s 139B(1)(l) of the National Law as she has engaged in improper or unethical conduct relating to the practice or purported practice of nursing.
3. We firstly consider the evidence to decide whether the practitioner engaged in the alleged conduct before then evaluating whether the conduct meets the threshold of being “improper or unethical”.
4. The evidence that the conduct took place includes:
1. the bank statements relevant to Patient B’s card showing that on 37 occasions between around 29 September 2020 and 8 August 2020, the practitioner used Patient B’s card, without the knowledge and consent of Patient B, to make purchases in the Australian Capital Territory (total value of $1,185.08);
2. the bank statements relevant to Patient A’s card showing that on 24 occasions between around 1 August 2022 and 14 November 2022, the practitioner used Patient A’s card, without the knowledge and consent of Patient A, to make purchases in the Australian Capital Territory (total value of $1,559.42);
3. the Police Facts Sheet showing that:
1. Patient A had no means of travelling to local shops to purchase items and no way of attending Canberra for shopping;
2. Patient B’s son was responsible for purchasing Patient B’s clothing and no other person had permission to possess or use Patient B’s card;
1. the practitioner’s letter to the Magistrate admitting that she used Patient A’s card and Patient B’s card;
2. the practitioner’s response dated 6 June 2023 to the Commission, admitting that she used the cards belonging to Patient A and Patient B.
1. We find that the evidence establishes that the practitioner engaged in the conduct as alleged and particularised.
2. We now turn to consider whether the conduct meets the threshold of “improper or unethical conduct relating to the practice or purported practice of nursing” under s 139B(1)(l) of the National Law, to support a finding that the practitioner has been guilty of unsatisfactory professional conduct.
The meaning of “improper” and “unethical”
1. The words “improper” and “unethical” are not defined in the National Law. The assessment of what constitutes “improper” or “unethical” conduct is based upon the ordinary meaning of those words.
2. The word “improper” was considered by the High Court of Australia in Parker v Comptroller of Customs (2009) 83 ALJR 494; [2009] HCA 7 where French CJ stated:
“… [t]he relevant ordinary meanings of improper include “not in accordance with truth, fact reason or rule; abnormal, irregular; incorrect, inaccurate, erroneous, wrong.” ”
1. In Liu at [51], the Tribunal considered the meaning of “improper” with reference to the Macquarie dictionary:
“The Macquarie Dictionary defines improper as follows:
1.not proper; not strictly belonging, applicable, or right: an improper use for a thing.
2.not in accordance with propriety of behaviour, manners, etc.: improper conduct.
3.unsuitable or inappropriate, as for the purpose or occasion: improper tools.
4.abnormal or irregular.”
1. Again, in Liu at [52], the Tribunal considered the meaning of “unethical”, with reference to the Macquarie dictionary:
“Unethical is defined as follows.
1.contrary to moral precept; immoral.
2.in contravention of some code of professional conduct.”
1. In the professional disciplinary context, there is some overlap between “improper” and “unethical”: Health Care Complaints Commission v Aref [2018] NSWCATOD 133 (‘Aref’) at [19].
2. The test of whether conduct is “improper” is an objective one: Liu at [54]. “Improper” conduct includes conduct that is not in conformity with standards of professional conduct that would be expected by reasonable persons with knowledge of the duties, powers and authority of a person in the position of the practitioner: Aref at [20].
3. Conduct that is “improper” has a tendency to bring the profession into disrepute or reduces public confidence in the profession: Liu at [55].
4. It is not necessary for the Tribunal to be satisfied that the conduct is intentional, to find that is “improper”: Aref at [19].
5. The gravity of the conduct in question must be measured against the extent to which it departs from proper standards, and not by reference to the worst cases: Aref at [21], applying Litchfield at [638].
6. Under the Code of Conduct for Nurses, practitioners are required to abide by relevant laws. Under Principle 1, dealing with legal compliance, clause 1.2 requires nurses to practise honestly and ethically. Under Principle 4 relating to professional behaviour, nurses are to embody integrity, honesty and respect.
7. By her own admission, the practitioner knew that her conduct was wrong. In her letter to her Honour, the practitioner stated:
“… I cannot pretend that I didn’t know what I was doing the whole time I was using her card … I got tempted to use the card more, and, shamefully, I did. I continued my disgusting behaviour and began using the card of [Patient A] … for groceries, petrol, and foods, etc.”
1. Also by her own admission, the practitioner violated the trust placed in her to look after the most vulnerable people in our society.
2. The conduct was not opportunistic but involved repeated deliberate decisions over a period of more than two years to dishonestly obtain goods by deception. On each and every occasion that the practitioner used Patient A’s card or Patient B’s card, she stole from persons who were in her care, the very persons she was required to protect.
3. As Care Manager, the practitioner ought to have been well aware of her obligation to not steal patients’ belongings, despite her assertion that the Facility did not have a clear policy on the use of residents’ cards. Clause 1.2 of the Code of Conduct for Nurses provides:
“Nurses practise honestly and ethically and should not engage in unlawful behaviour as it may affect their practice and/or damage the reputation of the profession. Nurses must:
a. respect the nurse-person professional relationship by not taking possessions and/or property that belong to the person and/or their family …
…
c. not participate in unlawful behaviour and understand that unlawful behaviour may be viewed as unprofessional conduct or professional misconduct and have implications for their registration.”
1. On any view, the practitioner’s conduct was abnormal, irregular and plainly wrong, and easily falls within the meaning of “improper”. The conduct was dishonest, deceptive and fraudulent, and in breach of the professional behaviour and conduct expected of nurses to embody integrity and honesty. Honesty is an ethical value that reflects a person’s truthfulness, sincerity and openness, yet the practitioner was engaging in crimes of dishonesty against the very patients she was obliged to protect. The practitioner’s conduct was thus, plainly, “unethical”.
2. Further, the conduct fell well below the standard expected of a registered nurse, charged with fulfilling the duties and responsibilities within the power and authority enjoyed by the practitioner in her role. The practitioner’s conduct has the potential to bring the nursing profession into disrepute and reduce public confidence in the profession.
3. The seriousness of the conduct is aggravated by a number of factors including:
1. the vulnerability of the victims due to their age and cognitive diagnoses which were known to the practitioner who was responsible for their care and welfare;
2. the practitioner was in a trusted position of leadership;
3. the length of time of the offending;
4. the volume of transactions;
5. the practitioner’s ongoing deception to participate in a ‘fake’ search for Patient A’s card, knowing the card was in her possession;
6. the practitioner’s attempt to cover up her offending, saying that she had “mistakenly” used the card and asking Patient A’s son to not inform the Police.
1. We find that the practitioner engaged in improper or unethical conduct relating to the practice or purported practice of nursing and is guilty of unsatisfactory conduct under s 139B(1)(l) of the National Law.
2. We therefore find Complaint Two to be proven.
Complaint Three
1. Complaint Three (constituted by the particulars of Complaint Two) asserts that the practitioner is guilty of professional misconduct pursuant to s 139E of the National Law in that the practitioner engaged in unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or cancellation of the practitioner’s registration and/or engaged in more than one instance of unsatisfactory professional conduct that, when the instances are considered together, amounts to conduct of a sufficiently serious nature to justify the suspension or cancellation of the practitioner’s registration.
2. The evidence relied upon in support of Complaint Three is the same evidence relied upon in support of Complaint Two.
3. Under s 139E(a) of the National Law, “unsatisfactory professional conduct” of a sufficiently serious nature to justify suspension or cancellation of a practitioner’s registration equates to “professional misconduct”. In Chen v Health Care Complaints Commission [2017] NSWCA 186 at [19], the Court of Appeal per Basten JA regarded professional misconduct as merely a category of unsatisfactory professional conduct which is sufficiently serious to justify suspension or cancellation.
4. The practitioner’s conduct in approaching Patient A’s son, asking him to not notify Police, demonstrates that she was acting surreptitiously, to avoid detection. She used the bank cards of Patients A and B knowingly, deliberately and persistently. The conduct was extensive, for more than two years, and involved a significant amount of money. The conduct was contrary to the interests of two residents in the Facility and their respective families, as well as the nursing profession and the community at large.
5. For the reasons given above, we find that the conduct in Complaint Two is of a sufficiently serious nature to meet the threshold of “professional misconduct” under s 139E of the National Law, to justify suspension or cancellation.
6. We therefore find that Complaint Three is proven.
Justification for cancellation of the respondent’s registration
1. We now consider whether or not the practitioner’s conduct warrants suspension for a specified period or cancellation of her registration.
2. In these proceedings, the Commission submitted that the practitioner’s registration ought to be cancelled, and argued that there were two grounds to support their submission:
1. first, if the practitioner is found guilty of professional misconduct, her registration ought to be cancelled pursuant to s 149C(1)(b) of the National Law;
2. in the alternative, the circumstances of the offence for which the practitioner was convicted rendered her unfit in the public interest to practise nursing, thereby justifying cancellation of her registration pursuant to s 149C(1)(c) of the National Law.
1. In determining what protective orders are appropriate, the paramount consideration is the protection of the health and safety of the public.
2. The national scheme provides for the protection of the health and safety of the public by ensuring that “only health practitioners who are suitably trained and qualified to practise in a competent and ethical manner are registered”: s 3(2)(a) of the National Law.
3. When making protective orders, we also have regard to the following recognised principles:
1. maintaining the standards of the profession, to preserve public confidence in the integrity of the nursing profession and thereby protect the community: Prakash at [91];
2. deterring both the practitioner and others from engaging in similar conduct, to maintain professional standards and thereby ensure public safety and faith in the profession: Litchfield at [637];
3. protecting the health and safety of the public is not confined to protecting current or potential patients but includes protecting the public from similar misconduct of others and upholding public confidence in the standards of the profession: Health Care Complaints Commission v Do [2014] NSWCA 307 at [35];
4. whilst the Tribunal’s jurisdiction is primarily protective and not punitive, it is unavoidable that protective orders may be incidentally punitive: Clyne at [201]-[202]; Litchfield at [637]; Liu at [42] and Meneghetti at [97]; Lee at [20] and [31] and Meneghetti at [98].
Cancellation on the ground that the practitioner is guilty of professional misconduct under s 149C(1)(b)
1. We firstly consider our finding of professional misconduct and whether it justifies cancellation of the practitioner’s registration.
2. We are of the view that the practitioner’s improper and unethical conduct is so incompatible with what is an acceptable standard of behaviour for a registered nurse, that cancellation of Ms Mosca’s registration is warranted under s 149C(1)(b) of the National Law.
Cancellation on the ground that the circumstances of the Offences render the practitioner unfit in the public interest to practise nursing: s 149C(1)(c)
1. Notwithstanding our finding that cancellation of the practitioner’s registration is warranted on the grounds of her professional misconduct, we also consider whether her conviction and the circumstances of her offence render her unfit in the public interest to practise nursing, such that, on those alternative grounds, cancellation of her registration is also warranted.
2. A number of Tribunal cases have considered the phrase “unfit in the public interest to practise the practitioner’s profession”, since it is not defined in the National Law.
3. Written submissions made on behalf of the Commission helpfully summarised how the phrase is interpreted. We adopt some of those submissions as set out below:
“c. whether a practitioner is unfit in the public interest to practice will require the Tribunal to take into account not only the offence but also the circumstances in which they were committed, including the relevant factual background and the impact of the conviction on the practitioner in terms of any insight, contrition and remorse: HCCC v Karunaratne (No 2) [2018] NSWCATOD 201 at [51];
d. whether a practitioner is unfit in the public interest to practise will consider both the direct risk to patients and the indirect risk to the public through damage to their trust in the profession. When health professionals are convicted of serious criminal conduct and professional role and responsibilities, the public’s ability to entrust their care to those health professions may be imperilled if the convicted practitioner continues to practise. The serious nature of the offences and the length of time over which they occurred, may cause most reasonable members of the public to fear placing themselves, or their loved ones, in the care of a convicted practitioner lacking rehabilitation and insight: HCCC v Wood [2020] NSWCATOD 60 at [17]-[23];
e. Whether a practitioner is unfit in the public interest to practise must be assessed in light of a holistic inquiry into suitability which takes into account the wider context of the practitioner’s conduct, including motivation, insight into the harm caused and any attempts at rehabilitation. All of these considerations, past and present, must inform an assessment of current suitability to practise, within a legislative framework of public protection in which the health and safety of the public are the paramount consideration. Public protection goes beyond specific questions of individual deterrence and the risk of repetition to encompass the broader goal of safety through the setting and maintaining of professional standards and public confidence in the health professions: HCCC v Limboro [2018] NSWCATOD 117 at [22].”
1. In its Written Reasons for Decision dated 24 March 2023, the Council found that the extent of the deception by the practitioner who occupied a senior position of trust against the most frail and vulnerable persons in the community, warranted suspension of her registration in the public interest pending referral of the matter to the Commission:
“The alleged deception occurred whilst Ms Mosca was employed in a senior position of trust, with very limited practical oversight and with the organisations (sic) own documents reflecting their confidence in her professionalism and adherence to policy and procedures.
We considered that the practitioner was a registered nurse in a position of leadership and management in the facility and in the local community, and it is even more critical in these circumstances that she would demonstrate the highest levels of professional conduct. The alleged victims in these circumstances are some of the most frail and vulnerable persons in the community with cognitive and age related impairments requiring the support and care of a registered health practitioner. It would be fair to consider these residents to be of high risk of experiencing financial abuse, and it would be expected a senior clinician and manager would take responsible steps to protect residents against this, and not be the perpetrator.”
1. Further, the Council reflected on the right of the community and patients to be able to trust those providing care and the risk that the practitioner’s behaviour posed to vulnerable elderly residents with cognitive impairments and their susceptibility to financial abuse. The practitioner was found to have significantly breached the standards of professionalism, ethics and respect for vulnerable patients which is central to the practice of nursing.
AHPRA’s Registration Standard: Criminal History
1. In assessing whether the nature of the conviction and the circumstances in which it was perpetrated render the practitioner unfit in the public interest to practise nursing, we consider AHPRA’s “Registration Standard: Criminal History” (1 July 2015). This standard sets out ten factors relating to a practitioner’s criminal history that the National Board considers may be relevant to determining their registration. Those factors are considered below:
1. The nature and gravity of the offence and its relevance to health practice
1. In sentencing the practitioner, Magistrate Beattie noted that Ms Mosca had obtained the cards of Patient A and Patient B because of her job. Her Honour referred to the seriousness of the practitioner’s repeated offending, knowing it was wrong:
“…every time you used those cards you are effectively stealing from those vulnerable people. You did not stop, you just kept on using them. You say the first time you used it was a mistake and I accept you on that because you have a card from the same bank and after that you knew, and you knew every time what you were doing was wrong but you kept going with it. That is really serious.”
1. Her Honour noted, further, the seriousness of the dishonesty with reference to a number of aggravated factors being the vulnerability of Patient A and Patient B, the practitioner being in a position of trust, the length of time of the offending and the number of transactions involved.
2. Apart from her actual use of the cards, the gravity of the practitioner’s dishonesty is exacerbated by a number of matters that give cause for concern:
1. The practitioner’s acknowledgment of her offending conduct only came about because a suspicion was raised by Patient A’s son, and not because the respondent decided at her own volition to arrest her behaviour and confess to her crimes. The number of transactions accredited to her dishonest use of the cards in the names of Patient A and Patient B demonstrates that the respondent was using the cards habitually and frequently, with no sign of abatement. Had it not been for that intervening event, the conduct is likely to have continued.
2. Even though the practitioner knew she had Patient A’s card in her possession, she participated in a ‘fake’ search with Patient A’s son in his mother’s room in the Facility.
3. Upon realising her dishonesty would soon be discovered, the practitioner described her usage of the card to Patient A’s son as “mistaken”. Even at that point of admission, the practitioner was behaving dishonestly.
4. The practitioner sought to keep her conduct concealed, by asking Patient A’s son to not notify the Police. Asking Patient A’s son to conceal the practitioner’s own crime adds another layer of deception.
5. Despite the circumstances surrounding the discovery about her use of Patient A’s card, the practitioner still held onto the bank card in the name of Patient B until it was located by Police when conducting a search of her purse. She had not sought to return that card to Patient B or voluntarily surrender it to Police.
1. As pointed out by the Council in its s 150 decision, the gravity of the offending conduct increases because the respondent was in a position of leadership and management, and was expected to model those standards. In a senior position, with very limited practical oversight as to how she carried out her duties, the respondent was trusted to care for and protect vulnerable patients and not be the perpetrator of abuse towards them:
“We considered that the practitioner was a registered nurse in a position of leadership and management in the facility and in the local community, and it is even more critical in these circumstances that she would demonstrate the highest levels of professional conduct. The alleged victims in these circumstances are some of the most frail and vulnerable persons in the community with cognitive and age related impairments requiring the support and care of a registered health practitioner. It would be fair to consider these residents to be of high risk of experiencing financial abuse, and it would be expected a senior clinician and manager would take responsible steps to protect residents against this, and not be the perpetrator.”
1. There is no question that the offending conduct is relevant to the practice of nursing under the National Law. The highest standards of professionalism, ethics and respect for vulnerable patients is central to the practice of nursing.
1. The period of time since the health practitioner committed, or allegedly committed, the offence
At the time of these proceedings, approximately 18 months had passed since the last day on which the practitioner committed an offence by using the bank card of Patient B on 18 November 2022. Accordingly, we place a moderate amount of weight on the recency of the respondent’s conduct when considering the appropriate period of disqualification from registration.
1. Whether a finding of guilt or a conviction was recorded for the offence
We place a considerable amount of weight on the fact that the practitioner pleaded guilty and was convicted for the Offences.
1. The sentence imposed for the offence
In imposing sentencing, the Magistrate took a number of subjective issues into account, including a Clinical Psychologist’s report stating that the respondent was suffering from a mental health impairment that led to a temporary and ongoing disturbance of thought, mood, volition, deception and memory. In considering imprisonment, her Honour thought that the respondent was not a good example to stop other people from committing similar offences because of the circumstances of her mental health issues. Accordingly, her Honour considered it was appropriate for the respondent to serve her sentence in the community, under an Intensive Correction Order for 18 months, expiring on 13 October 2024. We note that under the Intensive Correction Order the practitioner is required to engage in Mental Health Counselling (as directed), however we do not have any further information on what that entails.
1. The ages of the health practitioner and of any victim at the time the health practitioner committed the offence
1. The practitioner was a mature adult aged 49 when she first started committing the offences and was aged 51 when they were discovered. She was not a person without life experience or education. Patient A was aged 85 and had been admitted to the Facility in 2018. Patient B was aged 78 and had been admitted to the Facility in March 2020.
2. The practitioner had been working as a registered nurse for more than 4 years when she first started using Patient B’s card. The practitioner knew the victims were elderly, and since both Patient A and Patient B were in her care, she knew their vulnerabilities as a result of their diagnoses of Dementia.
1. Whether or not the conduct that constituted the offence has been decriminalised
The conduct that constituted the Offences has not been decriminalised.
1. The health practitioner’s behaviour since committing the offence
The practitioner is still carrying out her obligations under the Intensive Correction Order and does not appear to have reoffended.
1. The likelihood of future threat to a patient of the health practitioner
1. The practitioner was interviewed by audio visual link on 15 March 2023 and assessed by Mr Sam Borenstein, Clinical Psychologist, for the purpose of preparing a psychological report for the criminal proceedings. Mr Borenstein opined that the practitioner was suffering a mental health impairment which led to a temporary and ongoing disturbance of thought, mood, volition, perception and memory, which impaired her emotional wellbeing, judgment and behavioural choices. Additionally, Mr Borenstein noted at the time of his report that the practitioner was receiving antidepressant medication and had been referred for psychological treatment. Mr Borenstein thought that the practitioner’s likelihood of reoffending was significantly reduced because of her level of remorse and the absence of criminogenic tendencies.
2. We have attached very little weight to Mr Borenstein’s assessment of the likelihood of the practitioner repeating her conduct. The practitioner declined to participate in the hearing and we were not able to ask her about the nature of mental health counselling she was undertaking, or her reflections on her conduct and her insight into the impact of her conduct on the patients, their families and the community. We were unable to assess the likelihood of her rehabilitation.
1. Information given by the health practitioner
1. The practitioner’s letter addressed to the Magistrate (undated, but presumed to have been written shortly before the sentencing hearing on 14 April 2023) addressed her personal circumstances in considerable detail. It contained a statement that the practitioner regretted breaching the standards of professionalism, ethics and respect for vulnerable patients. She apologised for the “trouble” she caused to the families of Patient A and Patient B. She described her actions as “disgusting” and acknowledged she had violated the trust in her to look after the most vulnerable people in our society.
2. In our view, the letter predominantly focused on the practitioner’s difficult financial circumstances to explain and seek to justify why she was tempted to use the cards.
3. In terms of explaining when the practitioner first started using Patient B’s card, the practitioner attempted to deflect blame on other staff for putting lost and found items on her table without formal documentation or handover procedures. She also blamed her employer for not having a clear-cut policy on using resident’s cards for their own benefit (meaning the benefit of the residents). The difficulty with those submissions is the practitioner has failed to explain how a bank card placed on her table would then find its way to be in her personal possession (whether there had been formal documentation or a handover procedure or not). Further, a policy on using resident’s cards for the benefit of residents lends nothing towards explaining how such a policy would negate the behaviour of a nurse who uses a resident’s card for their own personal benefit (rather than the resident’s benefit). This deflection of blame suggests the practitioner has not genuinely accepted responsibility for her conduct.
4. Overall, the letter of around 20 paragraphs, is written from the perspective of the consequences for the practitioner:
“So, I found out that I had the resident’s cards, I continued using them for my personal expenses such as groceries, goods and petrol. I knew that continuing to use [Patient A and Patient B’s] card was wrong, it was a horrible action which has changed my whole life upside down and brought unimaginable torment. The irony of all this as well is that I am now in a worse financial position than I was when all of this started.”
1. The practitioner’s letter dated 6 June 2023 to the Commission was quite short. It stated that she had pleaded guilty, was convicted and had been sentenced to be served by way of Intensive Correctional Order. The letter expressed her remorse for betraying the trust of the residents, the facility and the nursing profession as a whole. The letter contained the following paragraphs about her reflections:
“As part of my reflective process, I am doing continuing professional development, focusing on reminding myself of the importance of trust and honesty.
In August 2023 I will commence a unit of study at the Australian Catholic University – Health Care Ethics, Principles in Practice which will help me, through the reflective process, to improve my ethical values not only in my practice as a nurse, but in my life generally.”
1. The practitioner’s email dated 9 March 2024 to the Commission is extracted below:
“Thank you for the opportunity to respond on the matter, however the Local Court in Yass already handed a decision convicting me of the crime of fraud last April 14, 2023 after I pleaded guilty. In this regard I am not sure what to say or do as I am now without a lawyer to advise me (or capable of getting one due to financial constraints). My nursing registration was suspended thus, was out of my nursing job since and currently doing part time jobs to help my husband in paying bills.
I am under Intensive Correction Order for 18 months as punishment by the Magistrate in Yass Local Court of my wrongdoing which I am now undertaking.
Hope this letter gives you an insight of what depressing situation I am right now. With my situation, I am so remorseful of what I have done and has affected me and my family.”
1. The practitioner’s email of 9 July 2024 to the Tribunal expressed remorse for her action. The correspondence does not contain any insight into the effect of her conduct upon the residents, their families, the nursing profession or the community. It is written from the perspective of the impact of the practitioner’s action upon her own life, and the impact upon her family.
2. The practitioner provided copies of three references that had been prepared for use in the criminal trial, asserting that all of her referees were aware that she proposed to submit them for use in the proceedings before this Tribunal:
1. from Mr John Hedges, a character reference dated 28 March 2023, stating that he trusted her to make decisions in the best interests of his wife who was a resident of an aged care facility where the practitioner worked, and attesting to the practitioner’s dedication to her work;
2. from Ms Peta-Jane Hewlett, a reference dated 20 March 2023, stating that in her opinion the practitioner’s offence was “totally out of character” and describing the practitioner as compassionate, reliable and trustworthy;
3. from Ms Lynette Sainsbury, a character reference dated 23 March 2023, stating that the practitioner was a colleague and friend whose professional credibility and leadership in the workplace was outstanding, as was the standard of care that she gave to all residents.
1. We accept that the practitioner was well regarded by her work colleague. We find the character references to be of limited assistance. They were provided before the practitioner was convicted and sentenced, and have not subsequently been refreshed or tested.
1. Any other matter of relevance
The practitioner’s election to not engage with the Council or the Commission, or these proceedings demonstrates a reluctance to come to terms with the gravity of her criminal conduct and the impact upon the victims, their families, the reputation of the Facility, and the reputation of the nursing profession. We hold concerns that the practitioner does not have an appreciation of the conduct and behaviours expected of nurses (as articulated under the Code of Conduct for Nurses).
1. It appears to this Tribunal that the practitioner’s predominant focus in her letter to the Magistrate was on the subjective circumstances of her impoverished upbringing and financial stress, as well as the impact of the consequences of her offending upon herself and her family. Overall, we are not persuaded that the practitioner has genuinely reflected on the gravity of her offending, the impact of her offending on the victims of her crime, or the reputation of the nursing profession.
2. Whether a practitioner is unfit in the public interest to practise may include consideration of whether the practitioner’s criminal offence exhibits traits in the practitioner inconsistent with the practise of an honourable profession: Health Care Complaints Commission v FLJ [2023] NSWCATOD 7 (‘FLJ’) at [93].
3. Applying the rationale in FLJ, we have concerns about the character traits exposed in the practitioner, particularly with respect to her attempts to mislead and hide her conduct. We have found that the practitioner’s conduct breached the fundamental values of integrity and honesty under the Code of Conduct of Nurses. Her crimes of dishonesty exploited the very people she was engaged to protect, and exhibits traits in the practitioner that are inconsistent with the practise of the honourable profession of nursing.
4. Having regard to the evidence before us, and our consideration of AHPRA’s factors, we find that the conviction and the circumstances of the offence render the practitioner unfit in the public interest to practise nursing, justifying as an additional ground, cancellation of her registration.
Period of non-review
1. The Tribunal has the power and discretion to set a non-review period with respect to an order cancelling a practitioner’s registration. The purpose of setting a non-review period is to protect the health and safety of the public. The effect of setting a non-review period is that a practitioner may not make an application for review of the cancellation order during the non-review period: s 163A(3) of the National Law.
2. At the end of the non-review period, the practitioner is entitled to make an application to the Tribunal for reinstatement: s 163A(1) of the National Law.
3. The paramount consideration when determining the length of time set by a non-review period is the protection of the health and safety of the public. The duration of the non-review period indicates the minimum period within which the Tribunal considers the practitioner should not be able to practise their profession by sending a clear message of denouncement of the offending conduct to the practitioner, the nursing profession and the public about professional standards to be maintained.
4. We agree with the Commission’s submission that a non-review period is needed in the circumstances of this case. We are of the view that the non-review period will allow Ms Mosca further time to demonstrate whether:
1. she has gained genuine insight into the gravity of her conduct and its impact upon the residents, the public, the reputation of the nursing profession;
2. she has undertaken appropriate rehabilitation to identify and address her risk factors;
3. she has completed meaningful further education, particularly to address ethical professional conduct;
4. her character is truly reformed, such that she can demonstrate her worthiness to hold registration and reliability that she will behave honestly and ethically in the future.
1. The decision on the period of time during which a practitioner may not apply for review, is dependant on the facts and circumstances of each case. The predominant consideration is the protection of the public: Lee at [23]-[24]. The non-review periods imposed in previous Tribunal decisions do not set a benchmark for subsequent cases: Health Care Complaints Commission v Elshaimy [2019] NSWCATOD 17 (‘Elshaimy’) at [47].
2. The Commission referred the Tribunal to a number of cases where protective orders were made against nurses who have used patients’ credit cards, including:
1. Health Care Complaints Commission v Shrimpton (No. 2) [2019] NSWCATOD 48 (‘Shrimpton’) at [13], concerning a registered nurse who had used an elderly patient’s credit card to make 5 personal purchases (each under $100.00) over a period of around one week, had her registered cancelled with a 3-year non-review period imposed, as well as a prohibition order;
2. Health Care Complaints Commission v Franco [2019] [2023] NSWCATOD 86, concerning a registered nurse and Care Director who had used an elderly patient’s credit card to make multiple transfers over 4 years into her own bank account totalling around $165,000.00, had her registration cancelled with a 2-year disqualification period and a prohibition order.
1. In the case before us, the practitioner used the bank cards of not one, but two, patients who were elderly and vulnerable and were in the care of the practitioner, the conduct continued for around 25 months, the volume of transactions was consistently high, the practitioner initially sought to conceal her crime and avoid arrest, and involve Patient A’s son in that attempted concealment. In the circumstances, where concern for the elderly and their susceptibility to abuse (including financial abuse) is well known to be one of the highest risk factors deserving protective action in aged care, the practitioner’s conduct is particularly offensive. The general public needs to be confident that they are protected from this practitioner and to be confident that the conduct is strongly denounced.
2. The practitioner declined to attend the hearing which meant that the Tribunal had no opportunity to evaluate her disposition towards her criminal conduct and no opportunity to evaluate whether her rehabilitation was likely to be successful.
3. The Tribunal’s comments in Shrimpton are equally appropriate when describing the nature and circumstances of the offence with which Ms Mosca was convicted, namely, that the conduct:
“… strikes at the very heart of the integrity and ethical candour that the public are entitled to expect of the nursing profession. There was an absence of propriety, honesty and integrity in her practice. The gravity of her conduct in using the credit card of a frail and elderly patient extends to the surrounding circumstances and the breach of trust it involved.”
1. On balance, for the reasons set out above, we consider that a non-review period of three years is appropriate in the circumstances of this case.
Prohibition order
1. The Commission also sought a prohibition order against the practitioner under s 149C(5) of the National Law, arguing that:
1. she poses a substantial risk to the health of the public because there is a concern she could use her nursing training to seek work as an unregistered health practitioner (such as an aged carer, assistant in nursing or disability worker) working with vulnerable patients and with limited supervision of her practice;
2. if she was permitted to provide health services as an unregistered practitioner during the period when her registration is cancelled, it would substantially undermine the protective purpose of the cancellation order.
1. The phrase “substantial risk to the health of members of the public” is not defined in the National Law. It has, however, been considered by the Tribunal to be a risk that is material and real or apparent on the evidence. It is not a risk that is without substance and is not merely speculative: HCCC v Brush [2015] NSWCATOD 120 at [96] and more recently in HCCC v Collins [2021] NSWCATOD 132 at [97].
2. The Commission put forward a number of arguments concerning the risk profile of the practitioner including that:
1. there was a risk that, because the practitioner engaged in deceptive conduct for a lengthy period of time, she may engage in that conduct as an unregistered practitioner in future;
2. she had demonstrated that she is predisposed to submitting to the temptation to use bank cards belonging to other persons for her own purpose which poses a danger to patients she may have access to in another healthcare setting where those patients may have cash or credit cards or valuables, and they may be asleep, sedated, unconscious, immobile or have cognitive or communication difficulties;
3. because she had compounded her deceptive conduct by minimising and attempting to conceal her offence to avoid an adverse outcome, she could not be trusted to tell the truth which is anathema to the proper conduct of health professions.
1. We accept the Commission’s submissions as expressing a reasonable concern in circumstances where we do not have before us objective evidence that the practitioner has genuine insight into her offending conduct and its impact. We also have no information to confirm that she has embarked upon a rehabilitation program to address her risk factors (other than to note that under the Intensive Correction Order, the practitioner is required to engage in mental health counselling as directed).
2. On the evidence before us, we are of the view that the practitioner’s past dishonest and unethical conduct does “pose” a potential risk if that conduct were to be repeated. We are also of the view that the risk posed is real and material. Further, the concern that she poses a substantial risk to the health of members of the public is not speculative, but has substance. The risk can be mitigated during the non-review period of the cancellation order, with a prohibition order.
3. Accordingly, we consider that a prohibition order under s 149C(5) of the National Law, for a period of 3 years, is reasonable and appropriate in the circumstances.
Awarding costs against the respondent
1. Under clause 13(1) of Schedule 5D in the National Law, the Tribunal has the power to order the respondent to pay the Commission’s costs. Under clause 13(3A) of Schedule 5D, the Tribunal may fix the amount of costs itself or order that the amount of costs be assessed by a costs assessor under the applicable legal costs legislation or on any other basis.
2. The Court of Appeal has affirmed that, as a general rule, costs of proceedings before the Tribunal should follow the event (that is, the successful party is entitled to receive their costs), and mere impecuniosity is not a justifiable reason for departing from that rule: Elshaimy at [47].
3. The presumption that a successful party is entitled to receive their costs is generally only displaced where there has been some disentitling conduct by the successful party: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [40] applied by the Tribunal in several decisions including HCCC v CSM [2016] NSWCATOD 125 at [98] and HCCC v Brush (No. 2) [2015] NSWCATOD 154 at [9].
4. The Tribunal accepts there has not been any disentitling conduct by the Commission to warrant a departure from the general rule. Accordingly, we have decided to order the respondent to pay the Commission’s costs as agreed or assessed in accordance with the applicable costs legislation.
ORDERS
1. We make the following orders:
1. Pursuant to s 149C(1)(b) and s 149C(1)(c) of the Health Practitioner Regulation National Law (NSW), the respondent’s registration as a health practitioner is cancelled for a period of 3 years.
2. Pursuant to s 149C(5) of the Health Practitioner Regulation National Law (NSW), the Tribunal makes a prohibition order prohibiting the respondent from providing health services as defined in s 4 of the Health Care Complaints Act 1993 (NSW) for a period of 3 years.
3. Pursuant to clause 13 of Schedule 5D of the Health Practitioner Regulation National Law (NSW), the respondent is to pay the Commission’s costs as agreed or assessed in accordance with the applicable costs legislation.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 02 August 2024 | 14,067 |
nsw_caselaw:19100bbdd69a2e04687fa91e | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Rahman v Campbelltown City Council [2024] NSWLEC 1453 | https://www.caselaw.nsw.gov.au/decision/19100bbdd69a2e04687fa91e | 2024-08-04T23:51:03.222699+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Rahman v Campbelltown City Council [2024] NSWLEC 1453
Hearing dates: 12 and 13 June 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Class 1
Before: Peatman AC
Decision: The Court orders that:
(1) The appeal is upheld.
(2) The Respondent delete Conditions 29 and 41A of Exhibit 2 (Draft Conditions of Consent) and file these Conditions of Consent as Annexure A within 7 days of these orders.
Catchwords: DEVELOPMENT CONSENT – conditions – developer contribution or levy – driveway construction
Legislation Cited: Environmental Planning and Assessment Act 1979, ss 4.12, 4.15, 4.17, 7.11, 7.12, 7.13, Pt 7
Land and Environment Court Act 1979, s 17
Campbelltown Local Environmental Plan 2015, Pt 2, cll 2.1, 2.2, 2.3, 4.3, 4.4, 7.10
Environmental Planning and Assessment Regulation 2021, s 23
State Environmental Planning Policy (Affordable Rental Housing) 2009
State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004
State Environmental Planning Policy (Housing) 2021, s 7, Ch 3, Pt 3, ss 67, 68, Sch 10
State Environmental Planning Policy (Resilience and Hazards) 2021
Standard Instrument (Local Environmental Plans) Amendment (Miscellaneous) Order 2021
Cases Cited: ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18
Anglican Church Property Trust Diocese of Sydney v Camden Council [2021] NSWLEC 118
Calleja v Botany Bay City Council (2005) 142 LGERA 104; [2005] NSWCA 337
Cranbrook School v Woollahra Municipal Council (2006) 66 NSWLR 379; [2006] NSWCA 155
Fitch v Shoalhaven City Council (1987) 67 LGRA 165
Intrapac Skennars Head Pty Ltd v Ballina Shire Council (2021) 249 LGERA 400; [2021] NSWLEC 83
Rose Consulting Group v Baulkham Hills Shire Council (2003) 58 NSWLR 159; [2003] NSWCA 266
SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55
SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34
Texts Cited: Campbelltown Community Participation Plan 2023
Campbelltown Local infrastructure Contributions Plan 2018
Campbelltown Local Infrastructure Contributions Plan 2018 (Amendment 1)
Campbelltown (Sustainable City) Development Control Plan 2015
Category: Principal judgment
Parties: Mohammed Rahman (Applicant)
Campbelltown City Council (Respondent)
Representation: Counsel:
P Jayne (Solicitor) (Applicant)
H Irish (Respondent)
Solicitors:
SWS Lawyers Pty Ltd (Applicant)
Marsdens Law Group (Respondent)
File Number(s): 2023/274646
Publication restriction: No
Judgment
1. COMMISSIONER: On 12 July 2023, the Applicant lodged Development Application No. 2366/2023/DA-CL (DA) with Campbelltown City Council (Council) seeking consent for the demolition of existing structures and construction of a co-living housing development comprising two two-storey buildings containing a total of 15 private rooms (12 single rooms and 3 double rooms) accommodating a total of 18 residents, associated landscaping and at-grade parking for 3 cars, 3 motorcycles and 4 bicycles for the property known as 1 Durham Street, Minto, being the whole of the land in Lot 17 Deposited Plan 597326 (Site):
1. Proposed Building 1 is located at the front of the site and proposed Building 2 is located at the rear, with a central car park located between the two buildings and an area of communal open space located at the rear of each building.
2. Building 1 contains 7 private rooms and Building 2 contains 8 private rooms. Both buildings have an adaptable room. Each building has a communal laundry and a communal indoor living area.
3. Building 1 contains a communal bin storage area and a bulky waste storage room intended to be used by occupants of both buildings.
4. Each proposed private room contains a kitchenette and a bathroom.
1. On 29 August 2023, the Applicant commenced proceedings pursuant to s 8.7 of the Environmental Planning and Assessment Act 1979 (EPA Act) against the Council’s deemed refusal of the DA, in accordance with the time provisions in s 8.11 of the EPA Act.
2. The proceedings fall within Class 1 of the Court’s jurisdiction pursuant to s 17(d) of the Land and Environment Court Act 1979 (LEC Act).
3. The Site:
1. Is rectangular in shape with a total site area of 836m2, having a frontage of 15.24m to Durham Street and a depth of 54.86m.
2. Has a moderate slope from the rear towards the front, and a slight cross fall from east to west, and its levels vary from approximately RL36.87 to RL39.46.
3. It currently contains a single-storey brick dwelling with tiled roof and detached double garage at the rear with scattered vegetation.
1. The Site in the locality:
1. The Site adjoins single-storey residential buildings to the east, west and south.
2. The locality is characterised by a mixture of single detached dwellings and multi-dwelling housing, with a gradual transition occurring from lower density development to medium density development.
3. Dominant characteristics of the existing built form include landscaped areas forward of the building line and habitable room windows facing the street. Vehicle parking areas are typically setback behind the primary building line and are not visually prominent.
4. The Site is located within proximity to Minto railway station and Victoria Park.
Council’s Further Amended Statement of Facts and Contentions filed 18 May 2024, Ex 1: pp 1, 2 and 3.
1. The Site is within Zone R3 Medium Density Residential pursuant to the Zoning Map in Campbelltown Local Environmental Plan 2015 (CLEP 2015).
Figure 1: Aerial photograph of the Site with the Site shaded in red: Ex 1, p 2, par [10].
1. Development for the purpose of “co-living housing” is prohibited in Zone R3, but permissible with consent under the State Environmental Planning Policy (Housing) 2021 (Housing SEPP) as shop top housing is permissible with consent in Zone R3.
2. A maximum building height of 9m applies to the Site pursuant to CLEP 2015 cl 4.3 and the Height of Buildings Map.
3. Clause 7.13 (Design excellence) of CLEP 2015 applies to the DA. Council’s Design Excellence Panel considered the DA on 21 and 25 September 2023 and were satisfied (Ex 3, Tab 8, pp 42-46).
4. Council commenced public exhibition and notification of the DA to adjoining and surrounding property owners in accordance with the Campbelltown City Council’s Community Participation Plan on 29 September 2023. The exhibition/notification period was 28 days and concluded on 30 October 2023. One submission was received which requested conditions of consent be imposed to maintain privacy relating to window sill heights and pot sizes for plantings.
5. The Court granted several motions to rely upon amended plans, the final motion being granted on 16 May 2024. These are the plans relied upon by the Applicant for the purposes of the DA hearing.
6. At the commencement of the hearing, Council advised that all substantive issues and jurisdictional pre-requisites in Part B1 of Council’s Further Amended SOFAC, Ex 1, pp 6-8 being vehicular manoeuvring and car parking, stormwater management, precedent, and public interest, had been addressed by previous amendments to the DA.
7. The two remaining matters for the Court’s determination are:
1. Whether the Draft Condition of Consent as foreshadowed in Ex 1, Further Amended SOFAC, Part B2, Contention 1 (now 29(c) of the Draft Conditions of Consent – Ex 2) may be imposed; and
2. Whether Condition 41 or 41A of Ex 2 should be imposed having regard to ss 7.11(1) and (2) and 7.13 of the EPA Act, and Campbelltown Local Infrastructure Contributions Plan 2018 (CLIC Plan 2018).
1. Council drew the Court’s attention to the following Documents in Ex 3, Council’s Bundle of Documents:
1. Owner’s consent: Tab 1, pp 5-9.
2. Tab 4, p 34: Email from Council on 17 August 2023 advising development contributions totalling “$121,914.34 subject to indexation and month: CPI 134 June 2023”.
3. Tab 8, pp 42-45, Campbelltown Design Excellence Panel determined that the design is “Acceptable with changes described”.
4. Tab 9, pp 46-52: Council’s notification plan.
5. Tab 10, p 53: Objector’s submission dated 29 October 2023 regarding sill heights on windows facing his property, and pot sizes.
6. Tab 11, pp 54-62: Housing SEPP:
1. Page 55: “7 Land to which Policy applies. This Policy applies to the State.”
2. Page 58: Part 3 Co-living housing
“67 Co-living housing may be carried out on certain land with consent
Development for the purposes of co-living housing may be carried out with consent on land in a zone in which development for the purposes of co-living housing, residential flat buildings or shop top housing is permitted under another environmental planning instrument.
Example-
Co-living housing may be used as off-campus student accommodation.”
1. Page 58:
“68 Non-discretionary development standards – the Act, s 4.15
...
(2) The following are non-discretionary development standards in relation to development for the purposes of co-living housing –
…
(f) for development on land in Zone R2 Low Density Residential or Zone Re Medium Density Residential – the minimum landscaping requirements for multi-dwelling housing under a relevant planning instrument.”
1. Pages 60-62: Definitions including, inter alia, “Western Parkland City means the land described as the Western Parkland City in the Six Cities Region”.
1. Tab 1, pp 70-159: CLEP 2015:
1. Page 76:
“Part 2 Permitted or prohibited development
2.1 Land use zones
...
2.2 Zoning of land to which Plan applies
For the purposes of this Plan, land is within the zones shown on the Land Zoning Map.
2.3 Zone objectives and Land Use Table
(1) The Land Use Table at the end of this Part specifies for each zone
(a) the objectives for development, and
(b) development that may be carried out without development consent, and
(c) development that may be carried out only with development consent, and
(d) development that is prohibited.
(2) The consent authority must have regard to the objectives for development in a zone when determining a development application in respect of land within the zone.”
1. Page 80:
“Zone R3 Medium Density Residential
1 Objectives of zone
∙ To provide for the housing needs of the community within a medium density residential environment.
∙ To provide a variety of housing types within a medium density residential environment.
∙ To enable other land uses that provide facilities or services to meet the day to day needs of residents.
∙ To provide for a wide range of housing choices in close proximity to commercial centres, transport hubs and routes
∙ To enable development for purposes other than residential only if that development is compatible with the character and scale of the living area.
∙ To minimise overshadowing and ensure a desired level of solar access to all properties.
2 Permitted without consent
Nil
3 Permitted with consent
...Shop top housing...”
1. Page 112: cl 7.10 (Essential services), which includes “(d) stormwater drainage or on-site conservation”. This is further referenced in Contention 2, Part B1 in Ex 1. This contention has been resolved to the satisfaction of Council, and was resolved by amended plans to which the Applicant has been granted leave to rely upon. The other essential services relevant to the DA as set out in cl 7.10 of CLEP 2015 have been supplied for the DA.
2. Page 153: extract of Council’s Zoning Map outlining the Site in blue.
3. Pages 154-155: Floor Space Ratio Map, and extracts demonstrating that there is no applicable FSR to the Site.
4. Pages 156-157: Height of Building Map and extract. The DA is compliant.
5. Pages 158-159: Lot Size Map and extract which shows that the Site and DA fall within the lot size standard.
1. Tab 14, pp 160-245: Campbelltown (Sustainable City) Development Control Plan 2015 (CDCP 2015):
1. Pages 223-224: clause 3.7.2.9 Landscaping and deep soil planting: Requirements for Multi-Dwelling House – zone R3:
“a) Multi dwelling housing shall satisfy the following requirements relating to landscape:
i) a detailed landscape design plan shall be submitted by a suitably qualified person with the development application; and
ii) a minimum of 20% of the total site area shall be available for deep soil planting; and
iii) no more than 30% of the area forward of any building line shall be surfaced with impervious materials.”
1. Tab 16, pp 353-359 Campbelltown Local Infrastructure Contributions Plan 2018 (CLIC Plan 2018):
1. Page 355-356:
“1. Introduction
The Campbelltown LGA is situated on the south western edge of Sydney and extends from Glenfield in the north to Menangle and Gilead in the south. At the time this plan was prepared Campbelltown LGA had a population of approximately 160,000 people (excluding new release and rural residential areas).
…
Sections 7.11 and 7.12 of the … EPA Act authorises councils and other consent authorities to require contributions of land or money from development toward the provision, extension or augmentation of Local Infrastructure (or towards recouping the cost of their provision, extension or augmentation).
Where the consent authority is a council or an accredited certifier, a Local Infrastructure contribution may be imposed on a development only if it is of a kind allowed by and determined in accordance with a contribution plan, such as this plan.
This plan’s main purpose is to authorise the Council or an accredited certifier to impose conditions on development consents or complying development certificates (CDCs) requiring section 7.11 contributions or section 7.12 fixed rate levies from development to which the plan applies.
The contributions that are made by developers will be applied by the Council to deliver the schedule of infrastructure land and works shown in Appendix A to this plan.
…
This plan includes the following:
∙ A schedule of contribution rates for various classes of developments.
∙ Information on how the section 7.11 contribution rates were calculated.
…”
1. Page 356:
“2. Plan summary
2.1 How to use this plan
This plan has been broken up into the following parts to allow easy navigation by Council staff, developers and private certifiers. A brief description of each part is provided below
Part 2 – Plan summary
This part identifies both the land and development that this plan applies to, as well as the contribution rates that apply to these developments...”
1. Page 357: Part 2.2 (Dictionary) defines “Local Infrastructure” as “Public amenities and public services that are traditionally the responsibility of local government excluding water supply or sewerage services”.
2. Page 357: Part 2.4 (What are the purposes of this plan?) authorises the consent authority to require a contribution under s 7.11 or a levy under s 7.12 of the EPA Act, to be made towards the provision, extension or augmentation of Local Infrastructure required as a consequence of development in the Campbelltown LGA, or which were provided in anticipation of, or to facilitate, such development. And the:
“Other purposes are as follows:
∙ To provide the framework for the efficient and equitable determination, collection and management of development contributions in Campbelltown LGA.
∙ To establish the relationship between the expected development and proposed Local Infrastructure to demonstrate that the section 7.11 contributions required under the plan are reasonable.
∙ To allow the opportunity for Local Infrastructure to be provided by land developers as works in kind in lieu of paying a monetary contribution.
∙ To allow the opportunity for the dedication of land by land owners at no cost to Council in lieu of a monetary contribution
∙ To ensure that the broader Campbelltown community is not unreasonably burdened by the provision of Local Infrastructure that is required as a result of development in the Campbelltown LGA.”
1. Page 357:
“2.5 (What land does this plan apply to?)
This plan applies to land in Campbelltown LGA identified in Figure 1.”
1. Page 358: Part 2.6 (What development does this plan apply to?) describes the relevant section, if type (a), as “Residential development that would result in a net increase in residents on the land”. Noting that this CLIC Plan 2018 preceded the Housing SEPP – there is no specific provision for co-living housing.
2. Page 358: Table 2 Development types and the contributions types that apply. The main types that increase the number of residents “boarding houses, group homes, hostels” which are analogous to co-living housing. And page 359, Table 2 continued:
Development Contribution type that applied Relevant table in this plan
Mixed use development where the development would result in a net increase in dwellings Section 7.11 contributions or section 7.12 levy Table 4 or Table 5
1. Page 360: Table 4 sets out the s 7.11 contributions rates, and Table 5 sets out the s 7.12 levy rates. Table 6 sets out the Assumed Occupancy Rates for calculating contributions and demand credits.
2. Page 361: Part 3 sets out how are the contribution rates calculated, and at reference (c):
“Contributions that are imposed must be reasonable (s7.11(2) and (4)), and that a developer may appeal to the Land and Environment court on the grounds that contributions imposed on a development are unreasonable in the particular circumstances of the case (s7.13(3)).”
1. Page 381: Part 4.2.3 sets out the latest rates to be used:
“The section 7.11 contribution imposed on a development will reflect the latest, indexed contributions rates authorised by this plan.
The monetary section 7.11 contribution rates shown in Table 4 reflect the contribution rates at the date of this plan commenced. These rates will be regularly adjusted for inflation and fluctuations in land values (see section 6.3).”
1. Page 385: Part 6.3 (Adjustment of contribution to address the effects of inflation) gives authority to adjust the rates over time.
Applicant’s submissions
1. Part 3 of Ch 3 “Co-living housing” of the Housing SEPP applies to this DA. Specifically, s 68(2) (Non-discretionary development standards) provides as follows:
“(2) The following are non-discretionary development standards in relation to development for the purposes of co-living housing –
…
(f) for development on land in Zone R2 Low Density Residential or Zone R3 Medium Density Residential – the minimum landscaping requirements for multi dwelling housing under a relevant planning instrument…”
1. The property is zoned R3 Medium Density Residential and a “relevant planning instrument” is defined under Sch 10 of the Housing SEPP to include a “development control plan”.
2. Pursuant to the Housing SEPP, s 68(2) of the non-discretionary standards, the minimum landscaping requirements for multi-dwelling housing under CLEP 2015 applies. Relevantly, clause 3.7.2.9(a)(iii) of CDCP 2015 applies which provides that ‘no more than 30% of the area forward of any building line shall be surfaced with impervious materials”.
3. In contention under Part B2 of Ex 1 is whether Draft Condition 29(c) should be further amended. The contention states:
“Pervious driveway
A condition of consent should be imposed requiring the plans to be amended to require the driveway to be of full concrete construction.”
1. The particulars of this contention are summarised below:
1. The DA as amended proposed that part of the driveway be constructed with a pervious material for a width of 1m on its western extremity. The use of a pervious material for the driveway is not considered necessary as the DA proposes an acceptable extent of pervious area forward of the building line.
2. Concrete for the construction is preferable in terms of achieving a uniform streetscape presentation for the DA, and also for reasons of durability and maintenance given the driveway will be traversed by vehicles.
3. The following condition of consent, in terms similar to the following, should be imposed requiring plans to be amended to provide for the full concrete construction of the driveway:
“Amendments to Approved Plans
The plans referred to in Condition 1 are to be amended to provide for the driveway to be of full concrete construction.
The plans amended pursuant to this condition are to be submitted to and approved by the Council’s Manager Development Assessment prior to the issue of the Construction Certificate. The development is to be carried out in accordance with the plans amended in accordance with this condition.”
1. Condition 29(c) of the Draft Conditions of Consent, Ex 2 p 4:
“29 Amendments to Approved Plans
The plans referred to in Condition 1 are to be amended to address the following:
a. Deleted.
b. Deleted
c. The driveway shall be fully constructed of concrete.
…”
1. The pervious driveway which is a contention under Part B2 (Contentions to be addressed via conditions) headed “Pervious Driveway” remains to be addressed (Ex 1, pp 8-9). In relation to the pervious driveway, the area of the entire front setback is 5.5m x 15.24 = 83.82m2.
2. The concreted area in the front setback measures 5.5 x 4.32 = 23.76m2. This represents (23.76/83.82) = 28.3% of the total front setback area would be impervious.
3. If the permeable area is extended to 1m on the western edge in Figure 2 below as non-permeable concrete, the total area is 5.5 x 5.5 = 30.25m2. This represents (30.25/83.82) = 36% of the total front setback area which would be impervious.
Figure 2: Extract from Drawing No. DA200 “Ground Floor” (prepared by Mike & Morlly Architects, Issue P6, dated 23 April 2024) (taken from the Council’s Submissions).
1. Conversion of the driveway material under the proposed Condition 29(c) would exceed the CDCP 2015 control for total impervious area.
2. The second issue in contention is draft Condition 41 and 41A of the Draft Conditions of Consent, Ex 2, pp 12-14. Council’s draft Condition 41 is on pp 12-13 of Ex 2, and the Applicant’s draft condition 41A is on pp 13-14 of Ex 2.
3. The issue turns on the fact that the particular typology (co-living housing) is not expressly listed in Table 2 of CLIC Plan 2018 (Ex 1, p 358). Notwithstanding the prior opening words in section 2.6 of the Contributions Plan (a) Residential accommodation development that would result in a net increase in residents on the land), we say that it has to be read in conjunction with Table 2 in terms of the typologies set out therein.
4. Monetary contribution: the Applicant contends that a monetary contribution pursuant to s 7.11 of the EPA Act is not required for this ‘type’ of development as the CLIC Plan 2018 does not have the definition of ‘co-living housing’, After the date the DA was lodged, Campbelltown Local Infrastructure Contributions Plan 2018 (Amendment 1) came into effect (Amended Contributions Plan). The DA was lodged on 12 July 2023, prior to the Amended Contributions Plan on 27 November 2023.
5. For the reasons set out below, s 7.11 contributions do not apply to this DA:
1. Section 2.2 (Dictionary) of the CLIC Plan 2018 states:
“Words and phrases used in this plan have the same meaning as the terms defined in the CLEP 2015, or the EPA Act, except as provided for below.
“In this plan, the words and phrases have the meanings as set out in Table 1.”
1. Table 1: “Terminology used within this plan”, meaning the CLIC Plan 2018 (Ex 1, p 357) does not contain a definition of ‘co-living housing’, and therefore the applicable definition is the Standard Instrument definition contained in the CLEP 2015.
2. Table 2: “Development types and the contributions types that apply” of the CLIC Plan 2018 (Ex 1, p 358), the Applicant notes that the development type ‘co-living housing’ is not listed under the “Residential’ section.
3. As a statutory instrument made under the EPA Act, the CLIC Plan 2018 is construed according to the ordinary principles of statutory construction (ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18 at [28], and Cranbrook School v Woollahra Municipal Council (2006) 66 NSWLR 379; [2006] NSWCA 155 at [36]-[43]. Accordingly, section 2.6 of Contributions Plan 2015 must be construed having regard to its text and context, which includes its purpose (SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14] and [37]-[39]; SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [20], and Anglican Church Property Trust Diocese of Sydney v Camden Council [2021] NSWLEC 118 at [77].
4. The Applicant submits that the opening general statement in section 2.6 of the CLIC Plan 2018, that: “this plan applies to … Residential Accommodation development that would result in a net increase in residents on the land” and such “…developments will be subject to condition requiring a contribution imposed under section 7.11 of the EP&A Act” must be read with the detailed information in Table 2. Table 2 expressly identifies the specific subtypes of ‘residential accommodation’ where a 7.11 contribution applies. As a matter of ordinary statutory interpretation, the whole of the provision (section 2.6) needs to be read in context including the detail in Table 2.
5. Absent the express inclusion of ‘co-living housing’ (or houses) in the residential section of the ‘development types’, must lead to a conclusion that this particular development must be caught by the catch-all in Table 2, i.e. “Other Development” – which applies a levy pursuant to s 7.12 of the EPA Act.
6. Section 4.17(1)(h)(iii) of the EPA Act gives a consent authority power to impose conditions of consent, and provides (inter alia) that a condition of consent may be imposed if it is authorised to be imposed under ss 7.11 or 7.12 of the EPA Act. Section 7.13(1) of the EPA Act provides:
“A consent authority may impose a condition under section 7.11 or 7.12 only if it is of a kind allowed by, and is determined in accordance with, a contributions plan (subject to any direction of the Minister under this Division).”
1. The Applicant further submits that this is a matter of statutory interpretation and is not a matter that would otherwise trigger the Court’s jurisdiction in relation to s 7.13(3) of the EPA Act, i.e. whether the condition is unreasonable.
2. Therefore, it is clear that there is no power to impose s 7.11 development contributions on this DA, as that part of the applicable development CLIC Plan 2018, does not apply to the type of development sought in the application, being co-living housing.
3. However, there is power under the Contributions Plan to impose a levy pursuant to s 7.12 of the EPA Act, in the sum of $8,100 based on the Applicant’s Cost Summary Report dated 6 July 2023 submitted with the DA, Ex B.
4. The Applicant refers the Court to Ex 2, pp 12-14 and recommends the deletion of the Council’s Draft Condition 41, and the insertion of the Applicant’s alternative Condition 41A.
Council’s submissions
1. In relation to Draft Condition 29(c) of Ex 2, Council submits that having regard to the DA’s permissibility with consent being pursuant to the Housing SEPP, Council agrees with the summary provided in pars [15]–[17] in the Applicant’s submissions above.
2. It is also not disputed that absent the provision of the permeable paving at the western extremity of the proposed driveway (shown in Figure 2 above) the proposed development will not comply with section 3.7.2.9(a)(iii) in Part 3 of Volume 1 of CDCP 2015, and therefore the non-discretionary development standard in s 68(2)(f) of the Housing SEPP.
3. Condition 29(c) has the effect of amending the DA so that the whole of the proposed driveway shall be constructed of concrete, for the reasons provided in particulars (a) and (b) of Part B2, Contention 1 of Ex 1, notwithstanding that the result would be that the DA does not comply with the non-discretionary development standard.
4. As the development the subject of the DA complies with the non-discretionary development standard, it is s 4.15(2) of the EPA Act, rather than s 4.15(3) of the EPA Act which is invoked. The only fetter on the consent authority’s discretion to impose a condition of consent on such development is that which is expressed in s 4.15(2)(c) of the EPA Act, being that the relevant authority must not impose a condition of consent that has the same, or substantially the same, effect as the standard but is more onerous than that standard.
5. The effect of Draft Condition 29(c) is to allow greater than the otherwise allowable maximum impervious area forward of the building line, having regard to the particular circumstances of this case. The draft condition does not offend s 4.15(2)(c) of the EPA Act because it does not have the same, or substantially the same, effect as the non-discretionary development standard, and nor is it more onerous. Draft Condition 29(c) ought to be imposed for the reasons outlined in particulars (a) and (b) of Contention 1 in Part B2 (see [18]-[19] above).
6. In relation to Draft Condition 41, it is well accepted that the development contributions provisions within Pt 7 of the EPA Act are the exclusive source of power to a consent authority to impose a condition on a DA requiring the dedication of land free of cost or the payment of monetary contributions (Fitch v Shoalhaven City Council (1987) 87 LGRA 165 at 170).
7. Section 7.13(1) of the EPA:
“(1) A consent authority may impose a condition under section 7.11 o 7.12 only if it is of a kind allowed by, and is determined in accordance with, a contributions plan (subject to any direction of the Minister under this Division).
…
(3) A condition under section 7.11 that is of a kind allowed by a contributions plan (or a direction of the Minister under this Division) may be disallowed or amended by the Court on appeal because it is unreasonable in the particular circumstances of that case, even if it was determined in accordance with the relevant contributions plan (or direction). This subsection does not authorise the Court to disallow or amend the contributions plan or direction.”
1. Council agrees that the CLIC Plan 2018, rather than the Campbelltown Local Infrastructure Contributions Plan 2018 (Amendment 1) applies to the DA due to the time of its lodgement on 12 July 2023. The Contributions Plan commenced on 19 December 2019.
2. The imposition of a condition under s 7.11 of the EPA in terms of Draft Condition 41 (Ex 2) on a development of the kind proposed is authorised by CLIC Plan 2018 for the reasons set out below.
3. The Applicant’s argument that the CLIC Plan 2018 does not authorise the imposition of a condition under s 7.11 of the EPA Act is wholly predicated upon the fact that the common development types (typologies) included in Table 2 to section 2.6 of the CLIC Plan 2018 do not expressly refer to ‘co-living housing’. This development type did not exist until the Housing SEPP commenced on 26 November 2021, and the State Environmental Planning Policy (Affordable Rental Housing ) 2009 was repealed.
4. Table 2 in section 2.6 of the CLIC Plan 2018 does not purport to be an exhaustive list of the types of residential and non-residential developments to which the differing types of contributions apply. This is clear from the sentence preceding Table 2 which expressly states: “Table 2 shows common development types and the types of contributions that apply to those developments under this plan”.
5. The ultimate determinant as to which of the ‘contributions types’ applies, a s 7.11 contribution or s 7.12 levy under the EPA Act, is governed by (a) and (b) (thereafter called “Type (a) and Type (b)” developments) in the chapeau of s 2.6 of the CLIC Plan 2018. Table 2 merely assists as an aid to the identification of the particular “Type (a)” or “Type (b)” development by reference to “common development types”.
6. In that regard, the development proposed is clearly a type of “Residential Accommodation development that would result in a net increase in residents on the land” as per section 2.6(a) of the Contributions Plan as a single-storey brick dwelling is to be demolished and a co-living housing development accommodating a total of 18 residents is to be constructed. The Dictionary in CLEP 2015 as currently in force now identifies “co-living housing” as being a type of “residential accommodation”. Whilst “co-living housing” was not separately identified as a type of ‘residential accommodation’ at the time of the CLIC Plan 2018 commenced, the genus of “residential accommodation” was (and continues to be) an open-ended class and merely required and continues to require that the development be a “building or place used predominantly as a place of residence”. It could not reasonably be contended that the proposed development is not such a building or place.
7. The ‘co-living housing’ development typology was not introduced into the Standard Instrument (and therefore CLEP 2015) until the commencement of the Standard Instrument (Local Environmental Plans) Amendment (Miscellaneous) Order 2021 on 26 November 2021 (SI amendment Order 2021).
8. In addition to introducing the ‘co-living housing’ development typology, it is relevant to note that the SI Amendment Order 2021 also replaced the previous definition of “boarding house” with the now current definition of that development typology. Prior to the commencement of the SI Amendment Order 2021 and from the date the CLIC Plan 2018 commenced, including section 2.2, the term “boarding house” was defined in CLEP 2015 as follows (Ex 3, Tab 18, pp 450-451, Dictionary in CLEP 2015):
“boarding house means a building that:
(a) is wholly or partly let in lodgings, and
(b) provides lodgers with a principal place of residence for 3 months or more, and
(c) may have shares facilities, such as a communal living room, bathroom, kitchen or laundry, and
(d) has rooms, some or all of which may have private kitchen and bathroom facilities, that accommodate on or more lodgers,
but does not include backpackers’ accommodation, a group home, hotel or motel accommodation, seniors housing or a serviced apartment.”
1. Given the time at which the CLIC Plan 2018 was adopted, even if the Court were to conclude that it is necessary to refer to Table 2 in the CLIC Plan 2018 to give meaning to the balance of section 2.6 of the Plan, it would be reasonable to characterise the proposed development type as being a “boarding house” for the purpose of the CLIC Plan 2018 having regard to the historical context in which the Plan was made.
2. It is available to the Court to conclude that:
1. The development proposed in the DA is clearly an innominate type of “Residential Accommodation development that would result in a net increase in residents on the land”.
2. The development proposed in the DA lodged on 12 July 2023 is of the then ‘boarding house’ type of “Residential” development with the “common development types” included in Table 2 to section 2.6 of the CLIC Plan 2018.
1. “Contributions plans are not …. To be elevated to some form of delegated legislation” (Rose Consulting Group v Baulkham Hills Shire Council (2003) (2003) 58 NSWLR 159; [2003] NSWCA 266). See Santow JA at [42]-[43], [47]-[49] referring to the predecessor provision to ss 7.13(1), 7.13(3), 7.11(1) and 7.11(2). See also Calleja v Botany Bay City Council (2005) 142 LGERA 104; [2005] NSWCA 337 per Tobias JA at [25]: “… any attempt to always find planning logic in planning instruments is generally a barren exercise”.
2. If the Court was minded to apply s 7.13(3), Council relies upon Intrapac Skennars head Pty Ltd v Ballina Shire Council (2021) 249 LGERA 400; [2021] NSWLEC 83 (‘Intrapac Skennars’), per Preston CJ at:
1. Paragraphs [40]-[41]: s 7.11 of the EPA Act authorises the imposition of a contribution in two circumstances: ss 7.11(1) and (3).
2. Paragraphs [42]-[45]: sets out the two constraints on exercise of the power:
1. “Section 7.11(2) provides: “A condition referred to in subsection (3) may be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities an and public services concerned.””
2. “Section 7.11(4) provides: ‘A condition referred to in subsection (3) may be imposed only to require a reasonable contribution towards recoupment of the cost concerned.””
3. Section 7.13(1) is subject to a power of dispensation by the Court. It empowers the Court on appeal to disallow or amend a condition under s 7.11 if it is unreasonable in the particular circumstances of the case.
1. As the development is not otherwise exempted under section 2.7 of the CLIC Plan 2018, it follows that the absence of any reference to “Co-living housing” in the “common development types” in Table 2 to section 2.6 of the Plan is not determinative, and is immaterial, and that the Court may and should impose Draft Condition 41 because it is a condition under s 7.11 of a kind allowed by and determined in accordance with s 7.13(1) of the CLIC Plan 2018.
2. If necessary, it is also arguable that Draft Condition 41 may be imposed by the Court on appeal under s 7.13(3) notwithstanding that it may not be determined in accordance with the relevant contributions plan. Section 7.13(3) operates to allow a dispensation from the constraint imposed by s 7.13(1).
Findings
1. The DA has owner’s consent pursuant to s 4.12 of the EPA Act, and s 23 of the Environmental Planning and Assessment Regulation 2021 (EPA Regulation).
2. In relation to CLEP 2015 (s 4.15(1)(a)(i) of the EPA Act):
1. The Site is within Zone R3 Medium Density Housing, and shop top housing is permissible with consent. Development for the purpose of co-living housing is an innominate prohibited use under Zone R3, but permissible with consent under the Housing SEPP. The Housing SEPP provides:
1. Part 3 (Co-Living housing)
“Development for the purposes of co-living housing may be carried out with consent on land in a zone in which development for the purposes of co-living housing, residential flat buildings or shop top housing is permitted under another environmental planning instrument.
Example-
Co-living housing may be used as off-campus student accommodation.”
1. The DA complies with cl 2.3 (Zone Objectives) and the following objectives of Zone R3 Medium Density Residential:
“∙ To provide for the housing needs of the community within a medium density residential environment.
∙ To provide a variety of housing types within a medium density residential environment.
∙ To enable other land uses that provide facilities or services to meet the day to day needs of residents.
∙ To provide for a wide range of housing choices in close proximity to
∙ To minimise overshadowing and ensure a desired level of solar access to all properties.”
1. Clause 4.3, and the Height of Buildings Map: the height control is 9m and the DA complies;
2. Clause 4.4 and the Floor Space Ratio Map: the floor space ratio is not applicable to this Site;
3. The Lot Size Map: the lot size map is not applicable to the Site.
4. Clause 7.10: Essential Services, which include “(d) stormwater drainage or on-site conservation”. Subject to Conditions of Consent in Annexure A, the stormwater management contention being Contention 2 in Part B1 of Ex 1 was resolved by amended plans. Council is satisfied as to the other essential services to be supplied pursuant to the DA.
5. Clause 7.13: The DA has the approval of Council’s Design Review Panel (Ex 3, Tab 8).
6. Council has complied with its Notifications Policy and received one objection (Ex 3, Tab 9, pp 46-52). Council has considered the objection (Ex 3, Tab 10) (s 4.15(1)(d) of the EPA Act).
7. Council has considered the objection and the public interest (s 4.15(1)(e) of the EPA Act)
1. Further in relation to s4.15(1)(a)(i) the Applicant has complied with:
1. The State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004 with the filing of the BASIX Certificate No. 1399057M dated 20 June 2023 (Ex A, Tab 17).
2. The Housing SEPP as follows:
1. Section 68 in relation to the non-discretionary development standards, except for s 68(f) which is in contention in these proceedings.
2. Section 69, the standards for co-living housing;
3. The filing of a Plan of Management – Co-living House dated 1 July 2023 for 1 Durham Street Minto NSW 2566 (Ex A, Tab 16).
4. Subject to the Conditions of Consent in Annexure A.
1. State Environmental Planning Policy (Resilience and Hazards) 2021: the Council has not raised any contention regarding this State Environmental Planning Policy. The Site is located within single-storey residential buildings, and a single-storey residential building and garage which is onsite will be demolished (Ex 1, p 3). I accept that further investigation for possible contamination of the Site is not required.
1. The two remaining matters for the Court’s determination are:
1. Whether the Draft Condition of Consent as foreshadowed in Ex 1, Further Amended SOFAC, Part B2, Contention 1 (now Condition 29(c) of the Draft Conditions of Consent – Ex 2) may be imposed; and
2. Whether Condition 41 or 41A of Ex 2 should be imposed having regard to ss 7.11(1) and (2) and 7.13 of the EPA Act, and the CLIC Plan 2018.
1. Should Condition 29 be deleted, or should the driveway be constructed entirely of concrete with no pervious area?
1. Pursuant to s 68(2) of the Housing SEPP, as development control plans are deemed to be “planning instruments”, the minimum landscaping requirements for multi-dwelling housing is under CDCP 2015. Clause 3.7.2.9(a)(iii) of CDCP 2015 applies which provides that “no more than 30% of the area forward of any building line shall be surfaced with impervious materials”.
2. The Applicant contends that as s 68(2) of the Housing SEPP is part of the non-discretionary standards, that the driveway as described as ‘pervious’ in Ex A Tab 3: Ground Floor Plan No. DA200 Rev 7 should not be amended. By creating part of the driveway as ‘permeable paved’ the Applicant meets the standard of “no more than 30% of the area forward of any building line shall be surfaced with impervious materials”.
3. For the reasons set out in Ex 1, Part B2, proposed condition 1 (now 29(c)), the Council submits that in accordance with the particulars set out therein, the whole of the driveway forward of the building line should be concreted – essentially to address commonality in this suburban streetscape, and that the DA proposes an acceptable level of pervious area forward of the building line. The Council relies on the application of s 4.15(2) of the EPA Act.
4. In the usual case, it would be the Applicant arguing that compliance with the standard is not necessary in the circumstances, and the drafting of s 4.15(2) addresses that situation. It is unusual for Council to be requesting the Court to apply s 4.15(2) to relieve compliance with the development standard.
5. I note the reasons for Council’s position in Ex 1, Part B2, as set out in the Particulars. However, I also note par [14] of Ex 1 where Council states:
“Dominant characteristics of the existing built form in the local area include generous landscaped areas forward of the building line and habitable room windows facing the street. Vehicle parking areas are typically setback behind the primary building line and are not visually prominent.”
1. After considering both submissions, and the content of Ex 1, I find that the permeable paved area adjacent to the concrete driveway as requested by the Applicant will address both the non-discretionary standard, and the streetscape by reducing the width of the hard-stand concrete driveway, and enhancing the pervious area.
2. I find that Condition 29 in the Draft Conditions of Consent (Ex 2) should be deleted.
1. Should Condition 41 or 41A of the Draft Conditions of Consent in Ex 1 remain?
1. The parties are agreed that if I find:
1. Section 7.11 of the EPA Act applies then the contribution is $125,832.76 (Ex 2, pp 12-13); or
2. Section 7.12 of the EPA applies then the contribution is $8,100.00 (Ex 2, pp 13-14).
1. I note that the DA was lodged on 12 July 2023 and the CLIC Plan 2018 was in place. Amendment 1 to the CLIC Plan 2018 commenced on 19 December 2023, and clause 3.2 provides the transitional provision that development applications lodged prior to 19 December 2023 will be assessed under CLIC Plan 2018. Therefore the relevant plan is CLIC Plan 2018.
2. The Applicant relies upon the fact that ‘co-living housing’ as a residential type of housing is not listed in Table 2 of section 2.6 of the CLIC Plan 2018.
“2.6 What development does this plan apply to?
Subject to Section 2.7, this plan applies to:
(a) Residential Accommodation development that would result in a net increase in residents on the land
(b) other development that has a proposed cost of more than $100,000.
Type (a) developments will be subject to condition requiring a contribution imposed under section 7.11 of the EP&A Act.
Type (b) developments will be subject to a condition requiring the payment of a levy under section 7.12 of the EP&A Act.
Where a single development application comprises a mix of type (a) and (b) developments, either a section 7.11 contribution or a section 7.12 levy will be imposed. The contribution method which produces the greater amount will be the method used for that application.
Table 2 shows common development types and the types of contributions that apply to those developments under this plan.
(1) Development with a cost exceeding $100,000 only.
(2) Only required where development involves an enlargement, expansion or intensification of a current use of land, as required under 25J(3)(g) of the EP&A Regulation.
(3) The contribution type used will be the type that yields the highest contribution amount, refer to Section 2.9.1 of the plan for details Refer to Section 2.9 of this plan for the rates that apply to different development types.”
1. Section 2.10, calculates s 7.11 contributions, and sets out the assumed occupancy rates and demand credits in Table 6. Relevant to this case are:
Development type Assumed occupancy rate
Residential accommodation
Detached Dwelling houses, dwelling with 3.16 persons per dwelling
3 or more bedrooms
... ...
Boarding houses 1 person per bed
Group homes 1 person per bed
Hostels 1 person per bed
1. The Applicant rests its case on the fact that ‘co-living housing’ is not one of the common typologies listed in Table 2 of the CLIC Plan 2018.
2. The dictionary of the CLIC Plan 2018 (clause 2.2) does not have a definition of co-living housing, and “words and phrases” used in this plan have the same meaning as the terms defined in the CLEP 2015, or the EPA Act, except as provided for below. In this plan, the words and phrases have the meanings as set out in Table 1.
3. As a statutory instrument made under the EPA Act, the CLIC Plan 2018 is construed according to the ordinary principles of statutory construction (as set out above by the Applicants at [28] above. The Applicant concludes its argument by limiting the residential development referred to in section 2.6(a) to those residential typologies listed in Table 2.
4. The Applicant contends that the DA falls within “other development” under Table 2, and therefore a s 7.12 levy applies.
5. I prefer the submissions of the Council in regard to this issue. The development type of co-living housing did not exist until the Housing SEPP commenced on 26 November 2021.
6. I have set out section 2.6 and Table 2 of the CLIC Plan 2018 above because the case of both parties rests on the interpretation of this section. Section 2.6 answers the question of what developments the plan applies to? Put simply:
“(a) Residential accommodation which would result in a net increase to residents on the land; or
(b) other…”
1. Under “other” there is no typology of residential accommodation listed in Table 2. It only appears under the heading “Residential” in Table 2.
2. The heading for Table 2 is: “Development types and the contributions types that would apply”. Table 2 is not intended to exclusively list every type of possible development, especially one that has not been designed prior to the adoption of CLIC Plan 2018. The chapeau for Table 2 states: “Table 2 shows common development types and the types of contribution that apply to those developments under this plan”.
3. Co-living housing as a development type has only existed since the Housing SEPP commenced on 26 November 2021, just over two and a half years ago. Although it is likely to be a common type of residential development in the future, one could hardly expect the Council to have inserted it in its contributions plan three years before this type of development existed.
4. I find that co-living housing is a type of residential development in accordance with section 2.6 (a) of CLIC Plan 2018.
5. The typology of co-living housing falls within Table 2 under the common typologies of “Boarding houses, group homes, hostels” for the purpose of determining that s 7.11 of the EPA Act applies, and the assumed occupancy rates under Table 6 of CLIC Plan 2018. The only other possible type listed within Table 2 is seniors living housing, either independent units or integrated facilities with residential care facilities, neither of which apply when considering how the contribution is calculated under Table 6 (that is, 3.16 per dwelling vs 1 per private room for boarding houses/group homes/hostels vs , or 1.66 persons per dwelling for seniors development).
6. In considering the statutory regime, and taking into account the text and context of the application of developer contributions, section 2.6 cannot be viewed alone. Consideration also needs to be given in this case to sections 2.2, and 2.10 of CLIC Plan 2018. Therefore, pursuant to s 4.17(1) of the EPA Act and s 39(2) of the LEC Act, I find that the DA is likely to require the provision for, or increase in demand for, public amenities and public services within the area pursuant to s 7.11(1) of the EPA Act.
7. I note the amount of contribution has been agreed between the parties, and I am not required to decide the reasonableness of the contribution to be paid (Intrapac Skennars, per Preston CJ at [40]-[45].)
8. The Draft Conditions of Consent in Ex 2 are to be amended to delete condition 41A, leaving condition 41.
9. I shall uphold the appeal, and direct the parties to file a final copy of Annexure A – Conditions of Consent in relation to conditions 29(c) and 41A.
10. The Court orders that:
1. The appeal is upheld.
2. The Respondent delete Conditions 29 and 41A of Exhibit 2 (Draft Conditions of Consent) and file these Conditions of Consent as Annexure A within 7 days of these orders.
M Peatman
Acting Commissioner of the Court
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 8,492 |
nsw_caselaw:191025c8c3849ddaec6b6ba2 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Environment Protection Authority v Forestry Corporation of New South Wales [2024] NSWLEC 78 | https://www.caselaw.nsw.gov.au/decision/191025c8c3849ddaec6b6ba2 | 2024-08-04T23:51:03.309045+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Environment Protection Authority v Forestry Corporation of New South Wales [2024] NSWLEC 78
Hearing dates: 10 July 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Class 5
Before: Pepper J
Decision: See orders at [168].
Catchwords: ENVIRONMENTAL OFFENCES: breach of conditions of Integrated Forestry Operations Approval – conducting unlawful harvesting in environmentally significant areas – pleas of guilty – appropriate sentence – whether environmental harm – whether harm substantial – whether harm foreseeable – whether offender could take practical measures to reduce harm – whether offender had control over commission of offences – whether offender demonstrated contrition and remorse – whether offender is of good character and unlikely to reoffend – comparable cases – application of totality principle – monetary penalty imposed – moiety ordered – publication order made – professional costs ordered – investigation costs refused.
Legislation Cited: Biodiversity Conservation Act 2016, ss 2.14, 12.8, 13.12, 13.23 and 13.25
Crimes (Sentencing Procedure) Act 1999, ss 3A, 21A, 22 and 23
Criminal Procedure Act 1986, ss 215, 257B, 257G
Fines Act 1999, s 122
Forestry Act 2012, ss 5, 69L, 69M, 69P, 69SA and 69SB
National Parks and Wildlife Act 1974, ss 133, 175 and 194
Protection of the Environment Operations Act 1997, s 120
Cases Cited: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357
Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234
Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683
Chief Environmental Regulator of the Environment Protection Authority v The Forestry Corporation of New South Wales [2017] NSWLEC 132
Chief Executive, Office of Environment and Heritage v Ausgrid [2013] NSWLEC 51; (2013) 199 LGERA 1
DH v R [2022] NSWCCA 200
Director-General, Department of Environment, Climate Change and Water v Forestry Commission of New South Wales [2011] NSWLEC 102
Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278
Environment Protection Authority v Bartter Enterprises Pty Ltd (No 4) [2021] NSWLEC 45
Environment Protection Authority v Ditchfield Contracting Pty Ltd [2018] NSWLEC 90
Environment Protection Authority v Forestry Commission of New South Wales [2004] NSWLEC 751
Environment Protection Authority v Forestry Commission of New South Wales [2013] NSWLEC 101
Environment Protection Authority v Forestry Commission of New South Wales [2022] NSWLEC 75
Environment Protection Authority v Forestry Corporation of NSW [2022] NSWLEC 75
Environment Protection Authority v Forestry Corporation of NSW [2022] NSWLEC 70
Environment Protection Authority v Forestry Corporation of NSW (Mogo State Forest prosecution) (Local Court (NSW), Dick LCM, 15 November 2023, unrep)
Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100
Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299
Hoare v The Queen [1989] HCA 33; (1989) 167 CLR 348
Liverpool City Council v Leppington Pastoral Co Pty Ltd [2010] NSWLEC 170
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120
Natural Resources Access Regulator v Lidokew Pty Ltd [2024] NSWLEC 59
R v Abboud [2005] NSWCCA 251
R v Dodd (1991) 57 A Crim R 349
R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566
R v Nichols (1991) 57 A Crim R 391
R v Olbrich [1999] HCA 54; (1999) 199 CLR 270
R v Oliver (1980) 7 A Crim R 174
R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383
Secretary, Department of Planning and Environment v Khouzame [2024] NSWLEC 54
v Visconti [1982] 2 NSWLR 104
Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465
Walden v Hensler [1987] HCA 54; (1987) 163 CLR 561
Category: Sentence
Parties: Environment Protection Authority (Prosecutor)
Forestry Corporation of New South Wales (Defendant)
Representation: Counsel:
G Wright SC with Z Shahnawaz (Prosecutor)
I Hemmings SC with R Coffey (Defendant)
Solicitors:
Legal Services Branch, Environment Protection Authority (Prosecutor)
Forestry Corporation of New South Wales (Defendant)
File Number(s): 2022/171639 & 2022/171640
Publication restriction: Nil
JUDGMENT
Forestry Corporation of New South Wales Pleads Guilty to Two Environmental Offences
1. Forestry Corporation of New South Wales (“FCNSW”) has pleaded guilty to two offences against s 69SA(1)(b)(i) of the Forestry Act 2012 in that it contravened conditions of its Integrated Forestry Operations Approval for the Coastal Region, granted on 16 November 2018 (“the Coastal IFOA”), during the preparation for, and while conducting harvesting operations within, compartment 299A of the Yambulla State Forest (“the Forest”). The particulars of the offences are as follows:
1. on 26 March 2020 FCNSW failed to show two known “Environmentally Significant Areas” (“ESAs”) on the operational map it had prepared for harvesting operations in compartment 299A of the Forest contrary to condition 53.3 of the Coastal IFOA and clause 4.4(1)(g) of Protocol 4 of the Coastal IFOA (“the mapping offence”); and
2. between 6 April and 6 July 2020 FCNSW carried out forestry operations within one of the two known ESAs contrary to condition 91.1(a) of the Coastal IFOA (“the harvesting offence”).
1. The relevant statutory provision creating the offences is as follows:
69SA Offence of contravening requirements of approval
(1) A person who contravenes a requirement imposed by an integrated forestry operations approval is guilty of an offence.
Maximum penalty—
(a) for an offence that was committed intentionally and that caused or was likely to cause significant harm to the environment—
(i) in the case of a corporation—$5 million, or
(ii) in the case of an individual—$1 million, or
(b) for any other offence—
(i) in the case of a corporation—$2 million, or
(ii) in the case of an individual—$500,000.
(2) This section applies to requirements (however described) imposed on the Forestry Corporation or on persons carrying out forestry operations and whether arising before, during or after the carrying out of forestry operations. …
FCNSW’s Operational Context
1. FCNSW is constituted as a State owned corporation under s 5 of the Forestry Act.
2. Forestry operations in State forests, which involve the cutting and removal of timber from land for the purpose of timber production, is regulated in New South Wales (“NSW”) by the Forestry Act.
3. Approvals for forestry operations are granted pursuant to s 69M of the Forestry Act, and are called Integrated Forestry Operations Approvals (“IFOAs”). Section 69M is in the following terms:
69M Granting of approvals
(1) Approval for the carrying out of forestry operations to which this Part applies may be granted under this Part. Such an approval is called an integrated forestry operations approval.
(2) This Part does not prevent or affect the carrying out of forestry operations authorised by or under any other provision of this Act or any other Act or law. However, the carrying out of forestry operations to which an integrated forestry operations approval applies is subject to the terms of the approval.
1. The terms of an IFOA are established by s 69P of the Forestry Act:
69P Terms of approval
(1) An integrated forestry operations approval is to describe the forestry operations covered by the approval, including a description of the area of the State to which it applies.
(2) An integrated forestry operations approval is—
(a) to make provision for or with respect to the carrying out of forestry operations covered by the approval, and
(b) to set out conditions subject to which those forestry operations are to be carried out, including conditions that may be imposed under any of the following—
(i) a biodiversity conservation licence under the Biodiversity Conservation Act 2016,
(ii) a licence under Part 7A of the Fisheries Management Act 1994,
(iii) an environment protection licence under the Protection of the Environment Operations Act 1997.
(3) An integrated forestry operations approval may apply or adopt protocols, codes, standards or other instruments that are publicly available and in force from time to time.
(4) Without limiting subsection (3), any such protocols may include those prepared by the Environment Protection Authority.
FCNSW Performs Forestry Operations in Compartment 299A
1. FCNSW is the only entity with a licence to perform forestry operations in the Forest. It must carry out forestry operations subject to the terms of the Coastal IFOA, any applicable Protocol, and any relevant operational plan.
2. The preparation of operational plans for forestry operations rests with FCNSW. Condition 53.3 of the Coastal IFOA relevantly states that:
53.3 Each operational plan must include the following documents for each forestry operation in each operational area prepared in accordance with of Protocol 4: Operational plans:
(a) general requirements for all operational plans;
(b) additional specific requirements for operational plans relating to harvesting operations, roading, burning operations, forest products operations;
(c) a location map; and
(d) an operational map.
1. To give effect to ecologically sustainable forest management (“ESFM”), the Coastal IFOA contains a condition for the “minimum measures required to be implemented to protect [threatened] species, communities and their habitats from the impacts of forestry operations” and to “ensure sufficient and adequate habitat” is maintained (condition 15.1).
2. These measures include defining areas as ESAs, namely, areas “identified and retained to provide refuge, connectivity, and to support forest regeneration” (Outcome statement for Division 3 of Chapter 3 of the Coastal IFOA). Pursuant to the Coastal IFOA, ESAs are to be “protected during forestry operations to maintain their intended, specific environmental values” (Outcome statement for Division 2 of Chapter 5 of the Coastal IFOA).
3. ESAs are categorised in the Coastal IFOA as either Category 1 or Category 2 ESAs by reference to their habitat and environmental features (condition 49.1). The two ESAs the subject of these proceedings were Category 1 ESAs.
4. The Coastal IFOA prohibits certain activities being carried out within an ESA. Condition 91.1 relevantly states:
91.1 The following conditions apply to a category 1 ESA:
(a) forestry operations are prohibited within the ESA unless otherwise specified in the approval;
(b) machinery entry into the ESA is prohibited;
(c) a tree (or any part of a tree) must not be felled into the ESA;…
1. Such was the level of protection for ESAs that even if a tree was accidentally felled in an ESA it could not be removed unless to do so would cause no further damage to the vegetation within the ESA, machinery could not enter the ESA to retrieve the tree (or part of the tree) and any disturbance caused by the removal of the tree had to be immediately rehabilitated (condition 93.2 of the Coastal IFOA).
2. An operational map was an essential document to give effect to the conditions of the Coastal IFOA. Clause 4.3(1)(g) of Protocol 4 of the Coastal IFOA provides that:
(1) The operational map for forestry operations in an operational area must show:
…
(g) location and extent of all areas excluded from forestry operations including:
(i) known ESAs; and
(ii) other areas on which forestry operations cannot be carried out …
1. Ordinarily, the process of preparing the operational map is informed by extensive planning assessments and surveys, as detailed in Chapter 4, Division 1 of the Coastal IOFA. This includes broad area habitat surveys designed to identify habitat features and species listed in the Coastal IFOA, undertaken by a suitably qualified person, and mapped in accordance with Coastal IFOA Protocols.
2. Condition 23.4 of the Coastal IFOA makes provision for the implementation of site-specific operating conditions (“SSOCs”) to apply to certain forestry operations if in a specific and unique circumstance FCNSW will not be able to comply with the conditions of the Coastal IFOA. In this context, conditions 23.4 and 23.5 state that:
23.4 If applying a condition of the approval at a specific site would result in a poor environmental outcome, or if in a specific and unique circumstance FCNSW would not be able to comply with the conditions of the approval, then prior to commencing the relevant forestry operation:
(a) FCNSW may submit a report to the EPA in accordance with Protocol 5: Approvals for restricted activities; and
(b) the EPA may grant a site-specific operating condition in response to the report that specifies:
(i) the conditions of the approval that must be implemented at the specific site for the duration of the forestry operation; and
(ii) site-specific operating conditions that must be implemented at the specific site for the duration of the forestry operation in that area, or for another time period specified by the EPA.
23.5 Where the EPA has issued FCNSW with a site-specific operating condition:
(a) the relevant forestry operation must be carried out in accordance with the site-specific operating condition; and
(b) unless otherwise specified in the site-specific operating condition, all other conditions of the approval must be complied with.
New Conditions Issued Following the Black Summer Bushfires
1. Between June 2019 and May 2020, the catastrophic Black Summer bushfires burnt State forests throughout NSW, including the Forest. In response, the EPA negotiated SSOCs with FCNSW for various sites.
2. The SSOCs defined certain “unburned” and “partially burned” areas as ESAs to enable forestry operations in burnt areas of the Forest, including in compartment 299A.
3. On 12 March 2020, Shane Clohesy, the Operations Planning Manager for FCNSW, sent an email to the EPA requesting SSOCs. In his email, he stated:
FCNSW has identified conditions of the CIFOA that cannot be complied with in this operational area due to the impact of the large-scale 2019/2020 wildfires. FCNSW is seeking site-specific operating conditions as per CIFOA condition 23.4 that will allow harvesting to occur while mitigating, to the greatest extent possible, the risks identified.
In the opinion of FCNSW it will not be possible in this operation area to meet all CIFOA conditions for:
1. Broad habitat searches – Safety issues associated with the effects of fire (such as increased overhead hazards, tree falling hazards, and concealed stump holes) means that it is not safe for staff to walk through the majority of the burnt area. This makes strict adherence with CIFOA requirements to identify and map features impractical to achieve in all circumstances. Alternative methods for undertaking broad area habitat searches similar to those applied in areas of impenetrable understory are sought to mitigate the risks.
1. Between 16 and 19 March 2020 the EPA consulted with FCNSW in relation to draft SSOCs for compartment 299A.
2. On 20 March 2020 the EPA emailed FCNSW attaching draft fire extent and severity spatial data associated with the preliminary SSOCs for compartment 299A.
3. In early 2020, the EPA and FCNSW discussed the fire extent and severity mapping (“FESM”) to be used to inform the SSOCs related to all fire-affected areas in NSW.
4. On 25 March 2020 Richard Bean, the then Chief Executive Officer of the EPA, issued SSOCs pursuant to condition 23.4 of the Coastal IFOA to FCNSW relevant to compartment 299A. The SSOCs applied in conjunction with the conditions of the Coastal IFOA and prevailed in the case of any inconsistency (conditions 7 and 8 of the SSOCs).
5. Conditions 15 to 18 of the SSOCs included that FCNSW was not required to carry out a “broad area habitat search” as defined in condition 57.1(c) of the Coastal IFOA and made provision for an alternative search.
6. To mitigate the removal of the survey requirements, the SSOCs mandated the retention of “unburned” and “partially burned” areas by designating them as ESAs, as set out in condition 13 of the SSOCs:
13. Any unburned area or partially burned area of at least 0.05ha (or approximately 20 by 20 metres) is taken to be an ESA under the approval. Those unburned areas or partially burned areas over one hectare in size are taken to be a Category 2 ESA. Those unburned areas or partially burned areas between 0.05ha and one hectare in size are taken to be a Category 1 ESA. …
1. Definitions of “partially burned”, “unburned” areas and the “site” were, according to condition 2 of the SSOCs, as follows:
Partially burned area means the area covered by a spatial data set held by the EPA and provided to FCNSW that the EPA is satisfied adequately shows partially burned areas at the site, as amended from time to time.
…
Unburned area means the area covered by a spatial data set held by the EPA and provided to FCNSW that the EPA is satisfied adequately shows unburned areas at the site, as amended from time to time.
…
Site means Yambulla State Forest compartments 299A, 345A, 350A, 355A, 357A, 415A, 418A, 423A, 483A, 484A, 506A, 507A and 508A.
1. FCNSW was required to monitor the effectiveness of the SSOCs pursuant to condition 65 of the Coastal IFOA, which stated that:
65. FCNSW must monitor the effectiveness of the site-specific operating conditions that apply to the site, and submit a further report to the EPA in relation to the site under condition 23.4 of the approval if in the reasonable opinion of FCNSW:
(a) These site-specific operating conditions:
i. result in poor environmental outcomes;
ii. do not effectively mitigate erosion and water pollution risks;
iii. are not delivering the objectives and outcomes of the approval; or
iv. are unable to be complied with, or
(b) FCNSW identify that the spatial data sets held by the EPA showing partially burned areas and unburned areas are inconsistent with those areas that appear to be partially burned or unburned at the site.
Operational Map for Compartment 299A
1. The spatial data sets that were used in the preparation of the operational map the subject of the mapping offence were provided to FCNSW on 26 March 2024. They were emailed by the EPA’s Principal Policy Officer, Roger Bluett, to FCNSW, including to Dean Kearney, Daniel Tuan, Clohesy and Justin Williams.
2. Along with the spatial data sets, the email enclosed a PDF Map. The attachments were described as “maps and accompanying data layers of ‘unburned areas’, ‘partially burned areas’…that apply to the site specific operating conditions for the Yambulla State Forest compartments 299A”. The EPA was satisfied that the data set adequately showed “unburned” and “partially burned” areas within compartment 299A.
3. On 26 March 2020 Clohesy forwarded the data set contained in the email to FCNSW’s Harvest Planner, Julia Clark. Clark was instructed to interpret and compare the spatial data set against the previous data provided by the EPA, which she had created on 18 March 2020, to confirm the accuracy of the operational maps for the compartment.
4. At 11:03 am on 26 March 2020 Clark submitted the operational map to Clohesy for approval. She stated in her email that “layers for compartment 299A checked and are the same as previously applied”. During the course of the EPA’s interview with Clark as part of its investigation into the commission of the offences, Clark admitted that she made a mistake with the data when preparing the map (discussed below at [61]). Clohesy approved the operational map at 11:34 am. However, FCNSW did not check the approved operational map against the PDF map supplied by the EPA.
5. Clohesy was aware of the requirement that polygons over 0.05 ha were to be protected in accordance with the SSOCs and reflected on any operational map.
6. Two areas that were required to be identified, namely, an “unburned” and “partially burned” area, were not included on the operational map prepared by FCNSW. The areas should have been identified on the operational map as two polygons.
7. The sizes of the polygons were approximately 0.35 ha to the east (“polygon 2”) and 0.08 ha to the west (“polygon 1”). Because they were greater than 0.05 ha and less than one ha in size, they were Category 1 ESAs under the SSOCs.
8. The omitted polygons from the operational map are depicted below with polygon 1 in pink and polygon 2 in blue, both indicated by red arrows:
1. The mapping offence relates to the absence of both polygon 1 and 2 from the operational map. The harvesting offence relates to the harvesting operation carried out within polygon 2.
Forestry Operations in Compartment 299A
1. Between 6 April and 6 July 2020 FCNSW carried out forestry operations in compartment 229A, including within polygon 2.
2. The harvesting crew who undertook the forestry operations comprised Aaron Porteous, Anthony Peck and Francis Umback of McKinnells Pty Ltd (“McKinnells”). Porteous and Peck operated the harvesting machinery. Umback, McKinnells’s Crew Manager, operated the forwarder.
3. Staff from FCNSW, including Production Coordinator James Flanagan and Production Assistant Sharon Fyffe, inducted the harvesting crew. This involved a walkthrough of the coupes. FCNSW supervisors in the field communicated directly with the harvesting crew.
4. The Harvest and Haul Plan (“HH Plan”), prepared by FCNSW for compartment 299A, identified the type of forestry operation as a “Harvesting and Roading Operation”. The HH Plan contained the following written instructions:
Harvesting operations must only be conducted as selective harvesting in burned areas at the site.
The objective is to harvest all available fire damaged trees down to a minimum basal area of 10m2 per hectare.
Crew is to select trees for removal and avoid damage to retained trees.
‑ direction to selectively harvest.
1. The HH Plan defined the “Operational Area” as “selective harvesting and haulage roads within the operational area. Refer to OM and Operational Area Map.”
2. At the induction FCNSW provided the crew with a hard copy of the operational map. The operational map and the HH Plan were also provided electronically on iPads. The operational map supplied to the harvesting contractors, including Porteous, Peck and Umback, is provided below:
1. The following instructions in the HH Plan were relevant:
1. On 6 July 2020 the operational diary was signed by Fyffe for FCNSW with the following declaration:
I, The HC, am satisfied the crew responsible for this harvesting operation has satisfactorily completed works described by the Harvest & Haul Plan for the compartment(s) and authorise the crew to move out of the compartment(s).
1. Data from FCNSW’s operations was provided to the EPA by online services. The data included tracklogs which consisted of data captured from GPS devices mounted on harvesting equipment that transmitted the position of harvesting machines.
2. The map below depicts tracklog data in green from 20 to 25 May 2020, overlaid with the EPA’s spatial data set for compartment 299A. It shows tracklogs traversing polygon 2:
The EPA’s Investigation
1. The EPA is responsible for monitoring the carrying out of forestry operations and enforcing compliance with the requirements of IFOAs pursuant to s 69SB of the Forestry Act.
2. In July 2020 authorised officer Jock Duncan was preparing for a routine inspection of forestry operations in compartment 299A. On 21 July 2020, accompanied by authorised officer John Forcier, Duncan conducted an inspection of compartment 299A. Within polygon 2, Duncan observed freshly cut stumps, debris on the ground from felled trees, and tracks on the ground, which he concluded was from the use of heavy machinery.
3. Duncan conducted further site inspections on 9 and 10 February 2021. He physically marked out an area within the Forest using an iPad with GPS and pink flagging tape. Within that area he located, mapped and photographed 53 cut stumps. A photograph taken by Duncan during these inspections appears below:
1. Duncan subsequently prepared a map using the GPS locations of each stump within the area:
1. On 15 September 2020 the EPA issued FCNSW with a statutory notice under s 12.8(2) of the Biodiversity Conservation Act 2016 (“the BCA”), requiring it to produce information and records (“the first statutory notice”).
2. The EPA received the following response from FCNSW to the first statutory notice on 1 October 2020:
The two unburnt/partially burnt polygons that you refer to were not included on the harvest plan operational map due to a manual spatial data editing error that occurred during map creation.
The unburnt/partially burnt spatial dataset was provided to FCNSW by EPA as a compressed shapefile attached to an email. This shapefile contained multi-part polygons and polygons that were less than 0.05ha in size. Due to this, the planner was required to edit the data to separate the individual features within the multi-part polygons, recalculate the area of each individual polygon and remove any that were less than the 0.05ha minimum threshold. It was during this process that the two unburnt/partially burnt polygons referred to in your letter were accidentally removed from the map.
1. The spatial dataset that was provided by the EPA contained shapefiles for multiple compartments within the Forest. Within the dataset that covered all the compartments there were a total of 124 polygons. No polygons were smaller than 0.05 ha.
2. On 16 March 2021 the EPA issued FCNSW a further statutory notice under s 12.8(2) of the BCA, which included the following enquiries:
Did any FCNSW employee(s) and/or contractor(s) remove any trees from within the Unburned area of the Forest, being a Category 1 ESA exclusion zone…?
…
Did any FCNSW employee(s) and/or contractor(s) enter the Unburned area of the Forest, being a Category 1 ESA exclusion zone … using machinery?
1. FCNSW responded on 31 March 2021 answering “yes” to both questions. It also provided documents in response including a draft operational map for compartment 299A. The draft map contained polygon 1 and polygon 2, which were absent from the final version of the operational map. The legend to the draft map contained the following categories of areas:
1. “Unburnt/Partially burnt (< 0.05 ha)” in green striped shading;
2. “Unburnt/Partially burnt (< 0.05- 1ha)” in solid dark green shading; and
3. “Unburnt/Partially burnt (> 1ha)” in solid light green shading.
1. The green striped shading in relation to the “Unburnt/Partially burnt (< 0.05 ha)” category was inaccurately applied to polygons not less than 0.05 ha. This included polygons 1 and 2, which were approximately 0.35 ha and 0.08 ha respectively.
2. The solid dark green shading in relation to the “Unburnt/Partially burnt (< 0.05- 1 ha)” category was also not accurately applied insofar as it failed to show polygons greater than 0.05 ha but less than 1 ha because it was not applied to polygons 1 and 2.
3. A comment from Clohesy on the draft operational map stated that there was “no need to show the <0.05 ha polygons. This is part of the NHA”. This is depicted in the image below:
The EPA’s Interviews with FCNSW
1. The EPA conducted the following records of interview with staff of FCNSW and its contractor, McKinnells:
1. on 20 April 2021 with Fyffe and Clark;
2. on 21 April 2021 with Peck, Umback and Porteous; and
3. on 22 April 2021 with Clohesy and Flanagan.
1. In his interview, Clohesy said that he was in a hurry when he approved the map and that there was pressure at the time to get the plans “up and running”. He explained that it was FCNSW’s responsibility to “induct and train McKinnells directly” and that the supervisors in the field would communicate with McKinnells.
2. Clark, who was responsible for creating the operational map, said that she understood that to give effect to clause 13 of the SSOCs when preparing the map she had to protect polygons 0.05 ha and above. It was her belief that she had mistakenly entered a measure of 0.5, rather than 0.05, which resulted in the two polygons being left off the map. She said that it must have been her who did this because no one else was involved in its preparation. When the problem came to her attention, she reloaded the EPA official layer to check that the polygons were there and then looked at her own map and noticed that they were missing.
3. Flanagan stated in his interview that Fyffe was supervising the crew. Fyffe said that her role was to look “after contractors”, note “environmental things”, walk onsite with the contractors based on a “pre-map” to indicate significant areas to avoid, such as First Nations cultural sites, inspect the compartment, and then to participate in an induction of the HH Plan, including its exclusions.
4. Flanagan and Fyffe confirmed that the operational map which omitted the polygons identified in the EPA’s spatial data set was the map used for the purpose of harvesting. Flanagan confirmed that the map on the iPad used by the contractors only had three of the five polygons marked and that there was no taping in the field identifying the two omitted polygons.
The Evidence Relied Upon by The Parties
1. In addition to a statement of agreed facts (“SOAF”), the EPA relied on an expert report prepared by Dr Julian Wall, a forest and landscape ecologist, dated 8 November 2022.
2. FCNSW read an affidavit of Anshul Chaudhary, Chief Executive Officer of FCNSW, affirmed 4 July 2024 (“the Chaudhary affidavit”), which deposed to FCNSW’s role in managing forests in NSW, detailed its cooperation with the EPA since the commission of the offences, and expressed regret and remorse that the offences had occurred.
Sentencing Principles
The Purpose of Sentencing
1. The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 (“CSPA”):
The purposes for which a court may impose a sentence on an offender are as follows—
(a) to ensure that the offender is adequately punished for the offence,
(b) to prevent crime by deterring the offender and other persons from committing similar offences,
(c) to protect the community from the offender,
(d) to promote the rehabilitation of the offender,
(e) to make the offender accountable for his or her actions,
(f) to denounce the conduct of the offender,
(g) to recognise the harm done to the victim of the crime and the community.
Statutory Matters Required to be Taken into Account in Sentencing
1. Subsections 21A(2) and (3) of the CSPA sets out aggravating and mitigating factors that the Court must consider. The factors relevant to the facts of this case are:
21A Aggravating, mitigating and other factors in sentencing
…
(2) Aggravating factors The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows
…
(d) the offender has a record of previous convictions (particularly if the offender is being sentenced for a serious personal violence offence and has a record of previous convictions for serious personal violence offences),
…
(g) the injury, emotional harm, loss or damage caused by the offence was substantial,
…
The court is not to have additional regard to any such aggravating factor in sentencing if it is an element of the offence.
(3) Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows–
(a) the injury, emotional harm, loss or damage caused by the offence was not substantial,
…
(e) the offender does not have any record (or any significant record) of previous convictions,
(f) the offender was a person of good character,
(g) the offender is unlikely to re-offend,
(h) the offender has good prospects of rehabilitation, whether by reason of the offender’s age or otherwise,
(i) the remorse shown by the offender for the offence, but only if–
(i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and
(ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both),
…
(k) a plea of guilty by the offender (as provided by section 22 or Division 1A),
…
(m) assistance by the offender to law enforcement authorities (as provided by section 23)…
1. For offences created by the Forestry Act the Court is also required to consider the matters set out in s 13.12 of the BCA (s 69SB of the Forestry Act). The relevant factors contained in that provision are for present purposes:
13.12 Sentencing for offence—matters to be considered
(1) In imposing a penalty for an offence against this Act or the regulations (or a native vegetation offence), the court is to take into consideration the following (so far as they are relevant)—
(a) the extent of the harm caused or likely to be caused by the Commission of the offence,
(b) the practical measures that may be taken to prevent, control, abate or mitigate that harm,
(c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused by the Commission of the offence,
(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence,
…
(2) The court may take into consideration other matters that it considers relevant.
1. A prosecutor carries the onus of proving any aggravating factors beyond reasonable doubt, whereas a defendant must establish mitigating factors on the balance of probabilities (R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27] and Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 at [131]).
2. The appropriate sentence for FCNSW is to be determined by an instinctive synthesis of all of the relevant objective and subjective circumstances of the case (Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357).
Objective Seriousness of the Offences
1. The objective gravity of the offence fixes both the upper and lower limits of proportionate punishment. It fixes the upper limit insofar as the sentence must not exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its objective circumstances (Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 and Hoare v The Queen [1989] HCA 33; (1989) 167 CLR 348 at 354). It fixes the lower limit because allowance for the subjective factors of the case ought not produce a sentence which fails to reflect the objective gravity or seriousness of the offence (R v Dodd (1991) 57 A Crim R 349 at 354 and R v Nichols (1991) 57 A Crim R 391 at 395).
2. The objective seriousness is to be determined by reference to the nature of the offences and not by reference to matters that are personal to a particular offender (Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 at [27]).
Nature of the Offences
1. The nature and purpose of the statutory provision that has been contravened, and its place in the statutory scheme, are relevant to the determination of the objective seriousness of the commission of an environmental offence (Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 at [168]-[172]).
2. The purpose of an IFOA is set out in s 69L of the Act as follows:
69L Purpose of integrated forestry operations approvals
(1) The purpose of this Part is to provide a framework for forestry operations to which this Part applies—
(a) that authorises the carrying out of those forestry operations in accordance with principles of ecologically sustainable forest management, and
(b) current structure of regulation of forestry operations in New South Wales, including under that integrates the regulatory regimes for environmental planning and assessment, for the protection of the environment and for threatened species conservation, including threatened species, populations and ecological communities under Part 7A of the Fisheries Management Act 1994.
1. Forestry operations under IFOAs are to be carried out in accordance with principles of ESFM, defined in s 69L(2) of the Forestry Act to mean:
(2) In this section—
principles of ecologically sustainable forest management means the following—
(a) maintaining forest values for future and present generations, including—
(i) forest biological diversity, and
(ii) the productive capacity and sustainability of forest ecosystems, and
(iii) the health and vitality of native forest ecosystems, and
(iv) soil and water quality, and
(v) the contribution of native forests to global geochemical cycles, and
(vi) the long term social and economic benefits of native forests, and
(vii) natural heritage values,
(b) ensuring public participation, provision of information, accountability and transparency in relation to the carrying out of forestry operations,
(c) providing incentives for voluntary compliance, capacity building and adoption of best-practice standards,
(d) applying best-available knowledge and adaptive management processes to deliver best-practice forest management,
(e) applying the precautionary principle (as referred to in section 6(2)(a) of the Protection of the Environment Administration Act 1991) in preventing environmental harm.
1. The legislative framework establishes a pathway for FCNSW to perform authorised logging operations in an ecologically sustainable manner in specified areas. The Coastal IFOA directly incorporates the principles of ESFM into its conditions. As the EPA argued, SSOCs are essential for ensuring that harvesting activities in fire-impacted forests are carried out to meet ESFM principles and conform with the legislative framework.
2. The offence created by s 69SA of contravening the requirements of an approval has an essential role in the overall statutory scheme in preventing contravention of the Forestry Act and its objectives. The prohibitions in the regime for IFOAs are critical aspects of the regulatory framework for environmental protection.
3. The EPA correctly submitted that by conducting forestry operations contrary to the conditions imposed under the Coastal IFOA, FCNSW undermined the integrity of the regulatory system (Environment Protection Authority v Forestry Corporation of NSW [2022] NSWLEC 75 (“Dampier State Forest”) at [45]).
4. More importantly, by failing to properly map the ESAs, and by conducting prohibited activities within one of those ESAs, FCNSW acted inconsistently with the principles of ESFM by undermining forest values for future and present generations and by not delivering best-practice forest management.
5. FCNSW submitted that although polygon 2 was likely to have had a value and contributed, at least in part, to the principles of ESFM, the trees and vegetation did not have a greater value compared with those in the other areas of the compartment that were also only moderately affected by the bushfires. I reject this submission. As I have found below (at [102]-[104]), the vegetation within polygon 2 had a greater ecological value than the remainder of compartment 299A due to its refugial status.
Maximum Penalty
1. The maximum penalty provided for an offence indicates the seriousness with which Parliament views the commission of the offence (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359 and Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698).
2. FCNSW is charged with two breaches of s 69SA(1)(b)(i) of the Forestry Act, each of which carry a maximum penalty of $2,000,000 in the case of a corporation.
FCNSW’s State of Mind at the Time of the Commission of the Offences
1. There was no evidence proffered by the parties as to the state of mind of FCNSW during the commission of the offences. I therefore make no finding in relation to this factor, other than to note that the omission of the polygons from the operational map was accidental.
The Environmental Harm Occasioned or Likely to be Occasioned by the Commission of the Harvesting Offence
1. Section 13.12(1)(a) of the BCA requires the Court to take into account the extent of the harm caused, or likely to be caused, by the commission of an offence, and if harm was caused, the CSPA requires the Court to consider whether that harm was substantial (s 21A(2)(g) and (3)(a) of the CSPA).
2. The concept of harm in the context of environmental offences extends to both actual and potential harm (Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 at [145]-[149]).
3. An analogous meaning of the term “harm” under s 194(1)(a) of the National Parks and Wildlife Act 1974 (“the NPWA”) was considered by Preston J in Bentley (at [175]):
175 Harmfulness needs to be considered not only in terms of actual harm but also harm that is likely to occur in the future as a result of the commission of the offence. The seriousness lies not only in the actual death or damage to the plants of the threatened species and their habitats at the time of commission of the offence but also in the potential for harm which the acts constituting the picking of the plants might entail.
1. The harvesting activity the subject of the harvesting offence resulted in 53 trees being felled and harvested within polygon 2. As a result of the carrying out of this forestry operation there was also compaction and disturbance of ground cover elements.
2. The EPA submitted that the extent of the actual harm caused was substantial due to the compromised state of the Forest following the Black Summer bushfires and the consequential ecological importance of the areas designated as ESAs. It was in this context, that the EPA further contended that the severity of the potential cumulative harm caused by the unauthorised harvesting was substantial.
3. The EPA relied upon the evidence of Dr Wall who opined that the Black Summer bushfires caused:
1. approximately 77% of the Forest, including all of compartment 299A, to be impacted by various categories of fire severity as mapped by FESM;
2. major habitat loss in the surrounding landscape in the three to six months prior to the harvesting offence, as well as some level of impact within polygon 2; and
3. moderate canopy scorch and fire impacts to the understorey of the area marked as “unburned”, namely, polygon 2.
1. Based on his observation of field images taken on 21 July 2020, video footage taken on site between 9 and 10 February 2021, commentary recorded by the EPA inspectors, and FESM mapping, Dr Wall opined that at the time of the commission of the offences, polygon 2 had a reasonably intact midstory canopy, including a non-epicormic canopy, that the harvested trees would have possessed relatively healthy foliage at the time of their harvest, and that the subject area would have provided an ongoing nesting and foraging habitat for forest dwelling fauna.
2. Moreover, following the Black Summer bushfires, due to the more severe canopy scorch and consumption in adjacent areas of the fire-affected Forest, any relatively intact areas of the Forest, including the mapped ESAs the subject of these proceedings, took on a greater level of significance from an environmental and ecological point of view, especially as a wildlife refugium for native plants and animals to recolonise. He considers that the area unlawfully harvested would have provided refuge for mammal, bird and reptile species and many invertebrate, especially less mobile species, those with small home ranges (that is, less than 1 ha), and those unable to cross burned areas due to risk of exposure or predation.
3. Wildfire refugia are places where living organisms and ecosystem processes can persist during and after major wildfires. There are two classes of wildlife refugia:
1. persistent wildfire refugia, which are associated with parts of the landscape that experience longer fire-return intervals or reduced fire severity than the surrounding matrix over the long term. These are unburned areas and partially burned areas that persist through multiple fires and facilitate persistence of fire-sensitive plants and animals within a forest ecosystem; and
2. transient wildfire refugia, which are associated with areas that are unburned or partially burned through a single fire event and are generally formed through stochastic factors rather than predictable or deterministic factors.
1. Dr Wall defined a “refugium” as follows:
A refugium is an area of habitat within a landscape that has been relatively lightly impacted by a disturbance event such as a wildfire compared with other areas and continues to provide a level of ecological function that supports persistence of species during and after the event.
1. At the time of the offence, polygon 2 would have provided ongoing nesting and foraging habitat for forest dwelling fauna species. Dr Wall states that it was his “strong opinion” that the harm caused to the refugial status of the subject area was actual harm rather than likely harm.
2. It was his assessment that the actual harm to the Forest caused by the commission of the offences included:
1. the removal of 53 trees cut by machinery roughly 10 to 20 cm above ground level, comprising Silvertop Ash and Yellow Stringybarks, that likely ranged from 10 to 16 m in height and 10 to 25 years in age. This included the direct mortality of some trees that were not likely to have been fire affected;
2. the direct loss of living biomass. The total living above-ground biomass of the trees lost would have been between two to six tonnes;
3. the significant loss of canopy cover over the subject area. The total volume of crown foliage removed would have ranged between 1,500 m3 and 2,500 m3, representing 20% to 50% of all living trees within polygon 2;
4. the reduction in vertical connectivity between the living canopy of large trees and understorey vegetation due to the removal of foliage in the 10 to 16 m height category;
5. the crushing, compaction and disturbance caused by machinery movements of unburned or partially burned on-ground refuge including coarse woody debris, patches of leaf litter, earth mounds, shallow burrows, tunnels, grassy tussocks, low forbs and shrubs that persisted after the fires; and
6. actual harm to the status of polygon 2 as a transient wildlife refugium.
1. According to Dr Wall, this had the following likely ecological consequences:
1. during the harvesting operation, the direct loss and forced displacement of fauna from the area comprising polygon 2 into surrounding areas of the Forest, including birds, small mammals, reptiles and invertebrates. This increased their risk of exposure and predation;
2. following the harvesting operation, the direct loss of living biomass that provided protection, foraging and nesting habitat for various arboreal species. The reduction of habitat would have led to the loss of some fauna within polygon 2;
3. the reduction of vertical connectivity between the forest floor and canopy compromising the capacity of some species to forage; and
4. a reduction in the use of the subject area as a stepping stone between other unburned or partially burned areas of the Forest in and around the Forest, with less mobile species being more impacted.
1. In addition, as a result of the harvesting offence, there was potential harm to three (out of 13) threatened bird species known to inhabit the Forest: the Dusky Woodswallow; the Scarlet Robin; and the Varied Sitella. The potential harm included the forced displacement of these canopy-foraging birds due to loss of foraging substrate, nesting opportunities and foliage cover, as well as reduced opportunities to support these species post-fire.
2. Based on Dr Wall’s report the EPA conceded, however, that the harvesting operations within polygon 2 would not have affected the long-term trajectory of post-fire recovery in the Forest and that the full assemblage of flora species would be present again within 10 years in the absence of further wildfires.
3. During the cross-examination of Dr Wall the following relevant evidence was elicited:
1. that the EPA had correctly delineated the boundaries of the ESAs (T5:32-34, 7:24-37 and 10:09-19);
2. that he did not conduct a site inspection of the subject area (T5:17-30);
3. the term “unburned” was employed by him to describe polygon 2 because it was the term provided to him by the EPA (T3:28-37 and 4:05-10). He adopted the term based on his view that polygon 2 contained “areas where the canopy wasn’t unburned and areas where…it was partially burned” (T20:23-26). In other words, the term “unburnt” included partially burnt areas;
4. he had variously described the fire impact on polygon 2 as “medium” (T5:06-09), “relatively lightly” and “reasonably lightly burned” (T14:26-30 and 16-17:04). When asked to clarify these descriptions he said (T24:38-25:04):
Q. And do you distinguish between your description, “reasonably lightly burned” and FESM’s categorisation of medium? Can you clarify that?
A. So FESM’s definition of medium is understorey burn and light canopy burn. So the canopy is retained intact. And FESM’s definition of light burn is, is understorey, light understorey burn with no canopy, no burn in the canopy at all.
Q. When you use the description reasonably lightly burnt, which you have used throughout your cross-examination--
A. Yeah.
Q. --are you using that term in some way that differs from the medium category FESM burning? That’s what I am looking to clarify.
A. Yes. I think that there were parts of, there would have been parts of the subject area that were, in, in relation to what FESM would describe as light and then there would be parts that were medium. So, and that, and that was, yeah, that’s, that’s right.
1. at a “strategic level”, Dr Wall said that FESM was “very good” and that it was “subject to robust quality assurance procedures” (T5:42-6:07). He noted, however, that “FESM doesn’t behave…at a very local scale” but that FESM assisted at a landscape level to identify the severity of the fire (T7:10-19);
2. by reference to FESM, Dr Wall agreed that the surrounding Forest conformed with the part-medium and part-high fire severity within polygon 2 (T8:07-9:08). However, having regard to photographic evidence he conceded that he was “not totally confident that FESM is telling the correct picture” and that polygon 2 was “light to moderately burnt” (T9:10-17). He later clarified this evidence by stating that at a landscape level, FESM demonstrated that the polygon had “proportionally more medium impacted fire scar than the surrounding country, which is more high to extreme” (T19:46‑20:12);
3. he could not determine the boundaries of the ESAs as shown in the photographs and video footage (T12:24-32, 14:33-36 and 16:01-05). Dr Wall conceded that it was possible that the photographs depicted areas outside the ESAs, but he stated that he was looking at the trees that were located in the subject site (T16:41-50). He also agreed that if the photographs depicted areas outside of the ESAs, then they indicated a medium intensity fire both inside and outside the polygon (T13:06-12);
4. based on the definition of “refugium” adopted in his report, he confirmed that polygon 2 would be a refugium if it was relatively lightly impacted by fire compared to the surrounding areas (T19:21-37);
5. in comparing polygon 2 to the surrounding Forest, he confirmed that it “experienced a fire that was a lot less severe than the surrounding areas” (T4:39-40). Later he said that, “the potential for plants to regenerate within the subject sites, because it was a relatively light fire, would have been higher than elsewhere in the forest where…the area was subject to extreme or high intensity fire” (T18:17-20);
6. there was a distinction between what FCNSW sought to describe as an “unburned area”, being unburned areas on the ground marked for the purposes of mapping, and what he was describing as “unburned vegetation”, being features of polygon 2 that persisted through the fires, such as unburned canopy (T20:46‑21:42); and
7. his estimate of the total biomass felled by the harvesting of the 53 trees within polygon 2 was based on an assumption that all of the tree canopy in polygon 2 was retained following the Black Summer bushfires. While he conceded that the photographs indicated that there had been some loss of canopy, he nonetheless believed that, consistent with FESM, most of the canopy was intact (T23:36-24:17).
1. FCNSW accepted that the offences caused both actual and potential harm, however, it cavilled with the refugial status of polygon 2. It submitted that the Court could not be satisfied on the totality of Dr Wall’s evidence that polygon 2 was relatively lightly impacted by fire compared to the surrounding area, and therefore, that the harvesting occurred in a refuge area because:
1. FESM did not show a relative difference at a landscape level in the ESAs and their surrounds. This was supported by Dr Wall’s description of both polygon 2 and the surrounding Forest as having experienced a “medium” fire severity;
2. there was no evidence to support Dr Wall’s assumption that the EPA’s delineation of the ESA was correct. Dr Wall made no inquiries of the EPA in this regard;
3. the photographic evidence depicted more than the ESAs and there was visually no difference between the vegetation inside and outside the ESAs. The evidence was therefore consistent with the conclusion that the severity of the fire outside the ESAs was no different than the severity inside; and
4. during cross-examination, Dr Wall departed from the language he had adopted in his report to describe the “unburned areas” by reference to FESM, by stating that the term meant “unburned canopy”. This evidence was inconsistent with the operation of FESM which defined “medium” as involving 20-90% of scorched canopy, that is, there was still unburned canopy.
1. Having noting this evidence it is nevertheless the case that:
1. Dr Wall did not resile in cross-examination from his opinion that FESM supported his conclusion that polygon 2 experienced a relatively light burn compared to surrounding areas (T19:46-20:12);
2. FESM was not the only evidence that Dr Wall had relied upon for his conclusion that polygon 2 was a refugium. He also had regard to photographic and video evidence; and
3. whether the photographic and video evidence showed trees outside the polygon was not determinative because the polygon was not a hard boundary. At most, this indicated that the wildlife refugium was slightly bigger than the area of the polygon.
1. I accept Dr Wall’s evidence that polygon 2 was a wildlife refugium. The varying language used by Dr Wall to describe the status of the fire severity within polygon 2 (including “medium” and “relatively light”, or “unburned area” and “unburned canopy”) does not warrant departure from this finding. Both Dr Wall’s oral and written evidence was consistent with a conclusion that the fire impact was less severe within polygon 2 when compared to the surrounding Forest.
2. Accordingly, I reject FCNSW’s challenge to the refugial status of polygon 2. The definition of refugium given by Dr Wall in his report, and accepted by FCNSW, was that of an area relatively lightly impacted compared to its surrounds. The very basis of the EPA’s identification of polygon 2 as an ESA was that it was an “unburned area” within a surrounding burnt forest. It follows that it was relatively less burned than the surrounding areas, making it a wildlife refugium. That FCNSW seeks to challenge this evidence suggests that it does not accept a key aspect of the harm it has caused by the commission of the offences.
3. I am satisfied beyond reasonable doubt that the commission of the harvesting offence caused actual and potential harm in the manner set out in Dr Wall’s report. I am further satisfied that the harm caused was substantial because the felling of the 53 trees not only had individual environmental value, but collectively, the trees represented a significant ecological cohort, the felling of which, together with the compaction and disturbance to ground cover, disrupted the refugial status of polygon 2 in a forest that had been severely impacted by bushfire (s 21A(2)(g) of the CSPA).
The Environmental Harm Occasioned or Likely to be Occasioned by the Commission of the Mapping Offence
1. The EPA submitted that there was potential for environmental harm to be caused by the commission of the mapping offence.
2. While polygon 1 was not harvested because it was not marked on the operational map, the EPA stated that there was the potential for it to be harvested and for environmental harm similar to that caused by the harvesting offence to have occurred within it. I agree. I therefore find that the commission of the mapping offence had the potential to cause substantial harm.
Reasonable Foreseeability of the Harm Caused or Likely to be Caused to the Environment by the Commission of the Offences
1. Section 13.12(1)(c) of the BCA obliges the Court to have regard to the extent to which the offender could reasonably have foreseen the harm caused, or likely to be caused, by the commission of an offence.
2. At all relevant times, FCNSW, through its officers, was aware of the conditions of the Coastal IFOA. This included the requirement that ESAs were to be protected in accordance with the SSOCs and identified on any operational map. It was reasonably foreseeable that failure to identify ESAs on the operational map would result in harvesting trees that were otherwise to be retained, and therefore, cause environmental harm. Accordingly, I am satisfied to the requisite extent that the environmental harm was reasonably foreseeable in respect of the commission of both offences.
Practical Measures that Could Have Been Taken to Prevent or Mitigate the Environmental Harm
1. Section 13.12(1)(b) of the BCA requires the Court to take into account the practical measures that may be taken to prevent, control, abate or mitigate the harm caused by the commission of an offence.
2. The mapping offence arose due to Clark incorrectly inputting the spatial data into the operational map and failing to adequately review her work. Clark’s supervisor, Clohesy, also failed to properly check her work despite being required to sign off on the operational map. The harvesting offence occurred due to the mapping offence. As stated above, both mistakes were inadvertent.
3. The EPA submitted that the principal preventative measure that FCNSW could have taken was to implement more robust processes in the finalisation of the operational map. This can hardly be cavilled with.
4. The EPA also contended that the SSOCs provided more liberal conditions than the previous obligations imposed on FCNSW under the Coastal IFOA in respect of surveying the proposed operational area. It argued that this ought to have indicated to FCNSW the importance of the spatial data set as a key determinative factor in the protection of an ESA. As a result, FCNSW should have been more diligent in entering the spatial data into its operational map, and moreover, it should have been supported by a process of verification.
5. I do not accept that the SSOCs augmented the care that FCNSW was required to take in ensuring that the spatial data was correct in respect of the ESAs. It was the status of the area as an ESA that demanded that the mapping be carried out with due care and diligence.
6. The EPA further submitted that FCNSW should have adopted Dr Wall’s suggestion of undertaking a targeted rehabilitation process within a nearby part of the Forest by means of mitigating the harm caused by the commission of the offences. According to Dr Wall this would offset the actual loss of refugial status and the potential loss of threatened species habitat caused by the offending.
7. In relation to Dr Wall’s proposed offset measure, Chaudhary stated that FCNSW had not considered the proposal in any detail (T28:31-29:13):
Q. Sir, you’ve said that you’re aware of the recommendations that Dr Wall made?
A. Yes, in the report. Not specific details but I know there are recommendations in the report.
Q. And you would have seen that he made four specific suggestions about ways in which the Forestry Corporation might undertake an offset measure for rehabilitation of a part of the forest?
A. Yeah, I’m not aware of the specific details of what those offset measures are, yep.
Q. But you read that part of his report, did you, at the time?
A. I’ve read the, the report and the, particularly the executive summary in detail. I can’t recall, sorry, exactly what those recommendations are offhand.
Q. And is it you can’t recall what the recommendations are because they haven’t been given consideration within Forestry Corporation, is that the case?
A. Look, in terms of this, you know, we, we’ve actually worked out how we avoid an error like this from happening again, so we focused on the root cause of not having this sort of issue occur again. That’s what we’ve spent time doing.
Q. Do you agree that preventing a recurrence of the offence is a slightly different issue to the issue of an environmental step that might be taken in order to offset the harm that was caused by the actual offence? Do you agree that’s a separate issue?
A. Yes.
Q. And just dealing with my previous question, is it the case that you haven’t considered within Forestry Corporation the specific suggestions made by Dr Wall for how that might be done with Yambulla State Forest?
A. Yes, I, I cannot recall that we have, we have considered those in detail.
1. In terms of steps taken by FCNSW to avoid a similar incident occurring, Chaudhary’s evidence was somewhat vague if not equivocal (T30:10-31):
Q. And is that because nothing in particular has been done to avoid any future instance similar to this case?
A. No, that’s not the case.
Q. Well, what action has been taken by Forestry to avoid--
A. Yep. Yep, so we, we’ve done a number of things. This particular issue arised out of the site-specific operating conditions, which was not the normal process of how we operated under the Coastal IFOA, and there was manual data entry as a result of that, and notwithstanding any of that, the error should not have occurred. But the process we have in place, there’s no further data entry that is manual. It’s, all the maps are automated. So we’ve taken that, we’ve improved that process if you like. We’ve also, since I’ve taken the CEO role, we’ve bolstered the Compliance Team, so I’ve actually centralised the Compliance Team into the corporation and we’ve got additional resourcing, we do proactive checks and audits, and, and that, that all has improved. There’s also learnings out of these. Every time we have an instance like this, I sit with my team, we go through root cause analysis. And one of the learnings out of this particular one, it was a protocol amendment. And whenever we have one of these now, and we had one recently, we really put tools down and do a very different approach in trying to better understand the implications of the rule set before any harvesting is done. So we’ve implemented a number of things like that to avoid something like this from happening again.
1. FCNSW submitted that the error in mapping the spatial data arose out of “unique circumstances” that would not occur again. It asserted that the SSOCs required substantially more human input and analysis compared with the automated data management system under the Coastal IFOA. As Chaudhary attempted to explain (T31:05-33):
Q. Now, you’re aware that the mapping offence arose from a misinterpretation of spatial dataset information by your staff or Forestry staff?
A. Yes. Yep.
Q. And you would be aware, you referred to the fact that this arose under the site-specific operating conditions, but under the Coastal IFOA spatial dataset information is used frequently and very routinely.
A. That’s correct.
Q. Yes. And so it’s not, you’re not suggesting that this kind of error couldn’t happen again?
A. No, I’m suggesting it should not happen again and that’s because when you have a site-specific operating condition you have to develop new processes specific to each site, and the maps were manually updated, as I understand, in our geospatial system, whereas the - so we have a normal process of ...(not transcribable)... that automates that, that, that part of the process. This was a bit of a unique situation.
Q. Well, it’s not that unique, is it? It’s not all spatial dataset data is automated. There is a need at times for a manual interpretation of spatial datasets that are provided by the EPA?
A. Look, it’s probably going beyond my understanding of it, but what I’ve learnt from my team is that the dataset is automated from a mapping point of view where the maps are prepared. The site-specific operating conditions - and bearing in mind this was all happening immediately after the Black Summer fires. This was I think one of the first SSOCs, so we were trying to develop the processes at the same time. This had a manual part to it, which I understand we don’t have. It’s part of the normal CIFOA, you know, processes.
1. I do not accept that the circumstances giving rise to the error in spatial mapping were unique because they required manual data entry. Rather, the error occurred due to a failure to implement adequate systems to properly transition to a new process as necessitated by the SSOCs. It is entirely conceivable, if not likely given the impact of climate change on native vegetation, that FCNSW will have the need for SSOCs again.
2. I find that FCNSW failed to take the preventative measure of implementing a robust process for reviewing the operational map to ensure that all of the ESAs were properly identified on it. In addition, I find that Chaudhary’s evidence of the steps that FCNSW has taken to prevent future similar incidents was unhelpful given its highly generalised content.
Control Over the Causes of the Commission of the Offences
1. Section 13.12(1)(d) of the BCA requires the Court to take into account the extent to which the person who committed the offence had control over the causes that gave rise to it.
2. The EPA submitted that at all times FCNSW had control over the causes of the commission of both offences because:
1. it was responsible for preparing the operational map;
2. while the harvesting offence arose out of the conduct of the contractors engaged by it, FCNSW nevertheless exercised direct control over them and had provided them with the erroneous operational map;
3. its employees inducted the harvesting crew on site, conducted the walkthrough, and communicated directly with the crew in the field; and
4. the harvesting crew was required to adhere to the operational map provided by FCNSW.
1. It was conceded by FCNSW that it had complete control over the causes giving rise to the commission of both offences. This concession was properly made in light of the evidence before the Court (s 13.2(1)(d) of the BCA).
Conclusion on Objective Seriousness
1. A sentencing judge is not required to nominate a point on a scale of seriousness when assessing the objective seriousness of an offence. While occasionally useful, such an exercise adds little substance to the task of instinctive synthesis and determination of a proportionate sentence. As was observed by the Court of Criminal Appeal in DH v R [2022] NSWCCA 200 (at [60]):
60. The assessment of objective seriousness of an offence is an essential element of the process of instinctive synthesis, a purpose of which is the imposition of a proportionate sentence: Zreika v R [2012] NSWCCA 44 at [46]; R v Dodd (1991) 57 A Crim R 349 at 354; Khoury v R [2011] NSWCCA 118. A sentencing judge is required to identify all the factors relevant to the objective seriousness of an offence but is not required to nominate a point on the scale of seriousness by reference to a notional mid-point. The use of descriptors such as “low end of the middle of the range”, “upper end of the middle of the range” or, “just below or above the midpoint” add nothing of value to the process of instinctive synthesis and the determination of a proportionate sentence.
1. Nevertheless, on any view, the environmental crimes committed by FCNSW were objectively serious, causing, as they did, substantial actual and potential ecological harm.
Subjective Circumstances of FCNSW
Contrition and Remorse
1. Pursuant to s 21A(3)(i) of the CSPA, remorse is only a mitigating factor if:
(i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and
(ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both),
1. In Waste Recycling Preston J suggested at least four ways by which an offender may demonstrate genuine contrition and remorse, which are relied upon without repetition (at [204], [210], [212] and [214]). I respectfully adopt and apply his Honour’s analysis in the present proceedings.
2. In his affidavit, Chaudhary expressed contrition as follows:
10 On my behalf and that of FCNSW, I express sincere regret and remorse that FCNSW employees failed to properly prepare maps recording the ESA areas required for retention and that harvesting occurred within one of those areas.
11 I have read the report of Dr Julian Wall, date 9 November 2024. While I am aware that the precise nature of harm to Yambulla State Forest is still in dispute, I accept that the harvesting resulted in the harvesting of 53 trees that should have been retained, the loss of biomass and impacts on habitat after the fires. I also acknowledge that the failure to map the ESAs resulted in machinery entering one of the polygons in circumstances where this was not permitted. I regret to have caused any harm to the environment.
1. Chaudhary and Linda Broekman, FCNSW’s Senior Compliance Manager, were present for the sentencing hearing on behalf of FCNSW (T1:18). However, Chaudhary was required to be present for cross-examination and left as soon as it was concluded.
2. The Chaudhary affidavit was filed late in breach of the Court’s timetable. Leaving aside delay, the affidavit constitutes no more than a bare expression of contrition and remorse, the kind of which was cautioned against in Waste Recycling (at [203]). Moreover, FCNSW has not taken any steps to remediate the harm caused by the commission of the offences (Chief Executive, Office of Environment and Heritage v Ausgrid [2013] NSWLEC 51; (2013) 199 LGERA 1 at [80]). In addition, it has not wholly accepted responsibility for the environmental harm caused by the commission of the offences insofar as it rejects the refugial status of polygon 2.
3. I therefore give only limited weight to FCNSW’s expression of contrition through Chaudhary.
Early Pleas of Guilty
1. A guilty plea entered at the earliest available opportunity entitles a defendant to the full 25% discount for the utilitarian value of that plea (ss 21A(3)(k) and 22 of the CSPA and R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 at [160]).
2. The EPA submitted, and FCNSW accepted, that guilty pleas were not entered at the earliest opportunity. FCNSW entered guilty pleas on the morning of a contested liability hearing that was listed for four days. Having said this, the guilty pleas demonstrate some acceptance of culpability and some weight must be given to FCNSW’s entry of the pleas and the resultant savings in time and resources as a consequence. I therefore find that FCNSW is entitled to a 10% discount for its guilty pleas.
Assistance to the EPA
1. FCNSW provided assistance to the EPA in the prosecution of the offences (ss 21A(3)(m) and 23 of the CSPA), including by participating in the preparation of the SOAF and in cooperating with the EPA throughout the investigation.
Prior Convictions of FCNSW
1. FCNSW has a lengthy record of prior convictions for environmental offences (s 21A(2)(d) and (3)(e) of the CSPA):
1. on 12 June 2004 the Court convicted FCNSW (formally the Forestry Commission of New South Wales) of one offence against s 120(1) of the Protection of the Environment Operations Act 1997 (“the POEOA”) for causing the construction of a dirt road in the Chichester State Forest in such a manner that parts of it collapsed and resulted in pollutants entering the waters of the forest. The Court ordered FCNSW to pay a monetary penalty of $30,000 and awarded costs to the EPA (Environment Protection Authority v Forestry Commission of New South Wales [2004] NSWLEC 751 (“Chichester State Forest”));
2. on 8 June 2011 the Court convicted FCNSW of one offence against s 175(1)(a) of the NPWA insofar as it breached a condition of a threatened species licence contrary to s 133(4) of that Act by conducting bushfire hazard reduction burning in the Smokey Mouse exclusion zone of the Nullica State Forest. The commission of the offence was caused by the inadequate shading of the exclusion zone on the relevant map. The Court ordered FCNSW to pay $5,600 to a project to improve the Smoky Mouse monitoring sites in the South East Forests National Park and awarded costs in the agreed sum of $19,000 (Director-General, Department of Environment, Climate Change and Water v Forestry Commission of New South Wales [2011] NSWLEC 102 (“Nullica State Forest”));
3. on 10 July 2013 the Court convicted FCNSW of one offence against s 120(1) of the POEOA for polluting waters and one offence against s 133(4) of the NPWA for breach of its threatened species licence arising from hazard reduction burns in the Mogo State Forest. The cause of the commission of the offences was inadequate training of persons involved in the preparation of a burn plan which resulted in an inaccurate plan. The Court ordered FCNSW to pay a total monetary penalty of $35,000 to be directed towards a project in the affected area. Legal and investigation costs were awarded to the EPA (Environment Protection Authority v Forestry Commission of New South Wales [2013] NSWLEC 101 (“Forestry Commission”));
4. on 5 October 2017 the Court convicted FCNSW of one offence against s 133(4) of the NPWA for breach of its threatened species licence arising from its failure to conduct a thorough search for rocky outcrops in the Glenbog State Forest, which were consequently not identified on the harvest plan. The Court fined FCNSW $8,000, ordered it to publish a notice in the Bega District News in relation to its commission of the offences, and awarded costs to the EPA (Chief Environmental Regulator of the Environment Protection Authority v The Forestry Corporation of New South Wales [2017] NSWLEC 132 (“Glenbog State Forest”));
5. the Batemans Bay Local Court convicted FCNSW of one offence against s 69SA(1) of the Forestry Act for carrying out unlawful harvesting operations which resulted in the removal of four hollow bearing trees in Mogo State Forest. That Court fined FCNSW a total of $20,000 with 50% payable to the EPA as moiety, awarded the EPA costs in the amount of $84,340, and made a publication order (Environment Protection Authority v Forestry Corporation of NSW (Mogo State Forest prosecution) (Local Court (NSW), Dick LCM, 15 November 2023, unrep));
6. on 9 June 2022 the Court convicted FCNSW of four offences contrary to s 2.14(4) of the BCA. The offences related to the carrying out of harvesting activities in koala and rainforest exclusion zones in the Wild Cattle Creek State Forest. The Court fined FCNSW a total of $135,600 with 50% payable to the EPA as a moiety, awarded costs in the sum of $150,000 to the EPA, and ordered FCNSW to publish notices in The Sydney Morning Herald and the Coffs Coast News of the Area in relation to its commission of the offences (Environment Protection Authority v Forestry Corporation of NSW [2022] NSWLEC 70 (“Wild Cattle Creek”)); and
7. on 22 June 2022 FCNSW was convicted of three offences contrary to s 69SA(1) of the Forestry Act in that it failed to mark the boundary of an ESA in breach of its threatened species licence and consequently carried out harvesting operations in bat roosting exclusion zones in the Dampier State Forest. The Court fined FCNSW a total of $225,000, with $45,000 to be paid to the Australasian Bat Society Inc and 50% to be paid to the EPA as a moiety. The Court ordered FCNSW to pay the EPA’s legal and investigation costs, and made publication orders (Dampier State Forest).
1. The EPA submitted that the two most comparable cases to the present proceedings were Dampier State Forest and Wild Cattle Creek.
2. FCNSW submitted that less weight ought to be attributed to its history of offending because it has not previously committed an offence similar to the harvesting and mapping offences.
3. FCNSW’s submission must be rejected. It has a significant history of unlawfully carrying out forestry operations, which is exactly what the mapping and harvesting offences are (Wild Cattle Creek and Dampier State Forest). In addition, it has previously been convicted for failing to mark the boundary of ESAs and exclusion zones in breach of environmental approvals (Dampier State Forest and Wild Cattle Creek). I therefore take into account its extensive antecedents.
The Good Character of FCNSW and the Likelihood That it Will Reoffend
1. FCNSW did not provide the Court with any evidence of its good character. Having said this, there is no evidence before the Court that FCNSW is not of good character but for the commission of the offence. I therefore make no finding in relation to this factor (s 21A(3)(f) of the CSPA).
2. With respect to the likelihood of reoffending, the EPA submitted that FCNSW did not tender any cogent evidence of steps that it has taken organisationally to avoid future offending in this context. It was only during cross-examination that Chaudhary deposed to some of the measures that FCNSW had implemented (T30:10-36 and set out above at [115]).
3. The EPA further submitted that it was likely that FCNSW would reoffend in similar circumstances because it may need to adopt SSOCs again in the future and because FCNSW is required to use spatial data sets under the Coastal IFOA. Accordingly, the EPA submitted that the Court should not find that its likelihood of reoffending is low or that it has good prospects of rehabilitation.
4. I accept both submissions and make concomitant findings, especially given FCNSW’s continued engagement in forestry activities in the State (s 21A(3)(g)‑(h) of the CSPA).
Deterrence, Denunciation and Retribution
1. The Court is required to take into account both specific and general deterrence (Walden v Hensler [1987] HCA 54; (1987) 163 CLR 561 at [569]-[570] per Brennan J).
2. The penalty imposed by the Court must serve as a general deterrent (Axer at [359], Camilleri’s Stock Feeds at [701] and Bentley at [139]; and see also s 3A(b) of the CSPA). In Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278 Preston J discussed general deterrence in the context of sentencing for environmental crime (at [66]-[68]). Those principles are applied here without repetition.
3. Embedded in the determination of the appropriate sentence to be imposed on FCNSW is an element of general deterrence in order to ensure that those conducting forestry operations, including contractors engaged by FCNSW, operate in a manner that is compliant with licence conditions, does not offend the legislative regime regulating forestry operations in the State and that does not cause environmental harm (Camilleri’s Stock Feeds at [701], Axer at [357], Wild Cattle Creek at [183] and Dampier State Forest at [91]).
4. In relation to specific deterrence (s 3A(b) of the CSPA), the EPA submitted that because FCNSW continues to hold the Coastal IFOA permitting it to undertake forestry operations, has a pattern of environmental offending, has not provided any compelling evidence of measures taken by it to prevent its reoffending, and does not accept the true extent of harm that it has caused by its offending, the penalty imposed upon FCNSW must serve to deter it from future criminality and reinforce its overriding responsibility to ensure that its activities are carried out lawfully (Veen at 477, R v Abboud [2005] NSWCCA 251 at [33] and R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 at [54]). I accept this submission and find that specific deterrence must form a part of the imposition of an appropriate penalty in these proceedings.
5. Finally, the Court must impose a sentence that achieves the purposes of denouncing the conduct the subject of the offences and making FCNSW accountable for its actions.
The Totality Principle
1. The totality principle was recently considered in Natural Resources Access Regulator v Lidokew Pty Ltd [2024] NSWLEC 59 (at [48]-[50] and [52]). I respectfully adopt and apply the principles enunciated by Duggan J in that case without repetition.
2. The EPA submitted that while the harvesting offence arose from the mapping offence, the criminality involved was distinct. The mapping offence relates to the failure of FCNSW to properly prepare its operational map, including failing to have an adequate system in place to check for errors. Although the commission of the harvesting offence was a consequence of this initial infraction, it involved a different activity, namely, instructing and directing the harvesting crew to undertake forestry operations in accordance with the erroneous operational map.
3. FCNSW did not dispute the submission, however, it emphasised the need for the Court to avoid double counting the environmental harm flowing from the commission of the harvesting offence by also taking it into account when assessing the objective seriousness of the mapping offence. Having said this, FCNSW noted that the potential for harm remain relevant in assessing the mapping offence.
4. The submissions of the parties are correct and ought to be accepted.
Consistency in Sentencing
1. The task of the sentencing court is to seek even-handedness in the imposition of a sentence (R v Oliver (1980) 7 A Crim R 174 at [177] and R v Visconti [1982] 2 NSWLR 104 at [107]). Care must be taken in comparing cases where the circumstances of, and facts relating to, the offences may be different (Axer at 365).
2. The EPA provided to the Court a table of seven comparative cases against FCNSW that it submitted were of assistance in ensuring even-handedness in sentencing. These included: Chichester State Forest; Nullica State Forest; Forestry Commission; Glenbog State Forest; Mogo State Forest; Wild Cattle Creek and Dampier State Forest.
3. I have considered the cases referred to the Court by the EPA in sentencing FCNSW for the offences that it has committed. I have had particular regard to Wild Cattle Creek and Dampier State Forest, which are, in my opinion, most analogous to the present proceedings.
Costs
1. On 19 March 2024 Pritchard J made an order, by consent, that FCNSW pay the EPA’s costs for all proceedings as agreed or assessed. It is not apparent, however, what statutory power was exercised in making the order. Pursuant to s 215 of the Criminal Procedure Act 1986 (“CPA”), a Court generally has the power to make an order for professional costs only at the conclusion of summary proceedings. Section 215(1) relevantly states:
215 When professional costs may be awarded to prosecutor
(1) A court may at the end of summary proceedings order that the accused person pay the following costs to the registrar of the court, for payment to the prosecutor, if the accused person is convicted or an order is made against the accused person—
(a) such professional costs as the court considers just and reasonable,…
1. Accordingly, out of abundant caution I will order FCNSW to pay the EPA’s professional costs pursuant to s 257B of the CPA.
2. The EPA submitted that the quantum of any monetary penalty should not be reduced to take account of the award of costs merely because FCNSW has agreed to pay the EPA’s costs voluntarily (Liverpool City Council v Leppington Pastoral Co Pty Ltd [2010] NSWLEC 170 at [50] and Secretary, Department of Planning and Environment v Khouzame [2024] NSWLEC 54 at [125]-[126]).
3. An award of costs does not result in a commensurate reduction in any monetary penalty imposed. Rather, I have taken the fact of the payment of costs by FCNSW, which both the EPA and FCNSW agreed will be substantial, into account as a factor in mitigation.
4. The EPA additionally sought an order for its investigation costs and expenses pursuant to s 13.23 of the BCA in the sum of $5,932.40. Section 13.23 relevantly provides that:
13.23 Orders regarding costs and expenses of investigation
(1) The court may, if it appears to the court that the Office of Environment and Heritage has reasonably incurred costs and expenses during the investigation of the offence, order the offender to pay to the Environment Agency Head the costs and expenses so incurred in such amount as is fixed by the order.
…
(3) In this section—
costs and expenses, in relation to the investigation of an offence, means the costs and expenses—
(a) in conducting any inspection, test, measurement or analysis, or
(b) of transporting, storing or disposing of evidence,
during the investigation of the offence.
1. The amount claimed by the EPA is made up of expenses that it submits were incurred during the investigation of the offences, including conducting interviews, issuing and reviewing responses to statutory notices, and inspecting the Forest.
2. FCNSW contended that the expenses described by the EPA did not fall within the definition of “costs and expenses” in s 13.23 of the BCA, because:
1. the EPA’s description of the costs did not provide sufficient detail for the Court to be satisfied that they fell within the ambit of s 13.23 of the BCA (T65:17-32);
2. the EPA is a publicly funded regulator. The evidence was obtained by the EPA’s internal investigators and was funded as part of monies allocated by the Government. Properly construed, the provision relates to expenses associated with engaging external service providers to assist in the EPA’s investigation, not for reimbursement of resources already within the EPA’s budget; and
3. similarly, there is no warrant to construe the provision as authorising an award of costs for the EPA officers who carried out the investigation as part of their ordinary duties. To interpret the section in this way would result in s 13.23(3) having no work to do.
1. In my view, because the burden rests with the EPA to establish beyond reasonable doubt that the costs claimed fall within s 13.23(3) of the BCA and because the Court has not been furnished with sufficient evidence to support the EPA’s assertions that the sum of $5,932.40 is made up of “costs and expenses” that meet that statutory definition contained in that provision, I decline to make an order for investigation costs.
Appropriate Sentence
1. Having regard to the objective seriousness of the offences and the mitigating subjective factors of FCNSW, together with the penalties imposed in the comparable cases, I find that the imposition of a monetary penalty is warranted for each offence as follows:
1. for the harvesting offence a monetary penalty of $250,000; and
2. for the mapping offence a monetary penalty of $150,000.
1. After the application of the 10% discount for the utilitarian value of the early guilty pleas, the penalty for the commission of each offence is reduced to:
1. for the harvesting offence a monetary penalty of $225,000; and
2. for the mapping offence a monetary penalty of $135,000.
1. This brings the total monetary penalty to be imposed on FCNSW to $360,000.
Moiety
1. The EPA contended that half of any monetary penalty imposed by the Court ought to be paid to it pursuant to s 122 of the Fines Act 1999. Having regard to all of the circumstances of the case, I find that it is appropriate to make such an order, especially in circumstances where no investigation costs have been ordered. FCNSW did not resist such an order and the Court makes it.
Publication Order
1. The EPA seeks publication orders pursuant to s 13.25(1)(a) and (b) of the BCA. The terms of the publication order are set out at annexure ‘A’ to this judgment. Those terms were agreed, save for FCNSW’s objection to the characterisation of the harm caused to the “refuge”, which, for the reasons explained above, is not a submission that I accept.
2. In the context of sentencing, a publication order serves the functions of general deterrence, denunciation, and a recognition of the harm caused by the offending conduct (Environment Protection Authority v Bartter Enterprises Pty Ltd (No 4) [2021] NSWLEC 45 at [105] and Environment Protection Authority v Ditchfield Contracting Pty Ltd [2018] NSWLEC 90 at [76]). FCNSW’s offending conduct was not trivial and occasioned substantial actual and potential environmental harm. FCNSW will continue to undertake forestry harvesting activities and has not sufficiently demonstrated genuine contrition and remorse for its commission of the offences. These factors weigh heavily in favour of making a publication order in the terms sought by the prosecutor.
Orders
1. In conformity with the reasons given above, the Court makes the following orders:
In proceedings 2022/171640
1. the defendant is convicted of the offence contrary to s 69SA(1) of the Forestry Act 2012 as charged;
2. the defendant must pay a monetary penalty in the sum of $225,000;
In proceedings 2022/171639
1. the defendant is convicted of the offence contrary to s 69SA(1) of the Forestry Act 2012 as charged;
2. the defendant must pay a monetary penalty in the sum of $135,000;
In proceedings 2022/171639 and 2022/171640
1. pursuant to s 122 of the Fines Act 1996, 50% of each of the monetary penalties imposed on the defendant is to be paid to the prosecutor as a moiety;
2. pursuant to s 257B of the Criminal Procedure Act 1986, the defendant is to pay the prosecutor’s professional costs of the proceedings as agreed or assessed under s 257G of that Act;
3. within 28 days of the date of this order, pursuant to s 13.25(1)(a) and (b) of the Biodiversity Conservation Act 2016, the defendant must, at its own expense, cause a notice in the form of annexure ‘A’ to these orders to be published within the first 12 pages of the following publications, at a minimum size as near as practicable to 180 cm2:
1. The Sydney Morning Herald;
2. The Daily Telegraph; and
3. the Bega District News.
1. within 42 days of the date of this order, the defendant must provide the prosecutor with a complete copy of the notices as published pursuant to order 7; and
2. the exhibits are to be returned.
Annexure A
[Forestry Corporation of New South Wales logo to be inserted]
Forestry Corporation of New South Wales Convicted of Offences in Relation To Harvesting Operations In Yambulla State Forest in 2020
On 31 July 2024, Forestry Corporation of New South Wales (“FCNSW”) was convicted in the Land and Environment Court of NSW (“the Court”) for offences under the Forestry Act 2012 for breaching two conditions of its integrated forestry operations approval (“the approval”).
FCNSW breached the approval by failing to show two known Environmentally Significant Areas on an operational map prepared for harvesting operations within compartment 299A of the Yambulla State Forest and by carrying out forestry operations between April and July 2020 in one of the two Environmentally Significant Areas. As a result, 53 eucalypt trees were felled and harvested. The harvesting operation caused actual harm to the felled trees and impacted the refuge of various native flora and fauna species following the Black Summer bushfires. It also led to the compaction and disturbance of groundcover elements. The harvesting operations also potentially harmed the Dusky Woodswallow, Scarlet Robin and the Varied Sitella, being threatened bird species known to inhabit the Yambulla State Forest.
The prosecution was brought by the NSW Environment Protection Authority (“EPA”). FCNSW has been fined a total of $360,000 and has agreed to pay the EPA’s professional costs as agreed or assessed. This notice was placed by order of the Court and was paid for by FCNSW.
**********
Amendments
01 August 2024 - Pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005, by consent the Court orders that:
1 The words “Merimbula News Weekly” in Order 7(c) of the judgment in Environment Protection Authority v Forestry Corporation of NSW [2024] NSWLEC 78 be replaced with “Bega District News”.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 15,369 |
nsw_caselaw:1910792363cf721d2a22ea38 | decision | new_south_wales | nsw_caselaw | text/html | 2024-02-08 00:00:00 | Colquhoun v SAS Trustee Corporation [2024] NSWDC 319 | https://www.caselaw.nsw.gov.au/decision/1910792363cf721d2a22ea38 | 2024-08-04T23:51:03.336554+10:00 | District Court
New South Wales
Medium Neutral Citation: Colquhoun v SAS Trustee Corporation [2024] NSWDC 319
Hearing dates: 5-8 February 2024
Date of orders: 8 February 2024
Decision date: 08 February 2024
Jurisdiction: Civil
Before: Neilson DCJ
Decision: I set aside the decision of the Defendant (PSAC) made on 29 June 2023, I determine that the Plaintiff's hurt on duty salary pension benefit be from 22 December 2021, 78.875% of the attributed salary of his office.
Catchwords: POLICE – SUPERANNUATION BENEFIT – QUANTUM – Plaintiff entitled to base superannuation benefit – Computation of further benefit for partial incapacity in open labour market – What must be proved – Relevance of age – Where Plaintiff drawing large “salary” from own business in order to enjoy profit of business – Difference between superannuation and workers compensation.
Legislation Cited: Police Regulation (Superannuation) Act 1906
Workers Compensation Act 1926
Cases Cited: Aitkin v Goodyear Tyre and Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20, 22.
Heaney v BA Collieries Ltd [1944] 2 All ER 289, 291H.
Lembcke v SAS Trustee Corporation (2003) 56 NSWLR 736, [48].
Miles v SASTC [2016] NSWDC 56, [40].
Pira Pty Ltd Trading as Langdon and Bartley v Tucker (1996) 14 NSWCCR 26, 31-32.
SAS Trustee Corporation v Colquhoun [2022] NSWCA 184.
SAS Trustee Corporation v Rosetti [2018] NSWCA 68, [38] - [40].
Texts Cited: Nil.
Category: Principal judgment
Parties: Plaintiff – Thomas Ferguson Colquhoun
Defendant – SAS Trustee Corporation
Representation: Counsel:
Plaintiff – Mr Hammond, M.
Defendant – Mr Ower, T.
Solicitors:
Plaintiff – Cardillo Gray Partners
Defendant – State Super
File Number(s): 2023/00308026
Publication restriction: Nil.
Judgment
Background
1. HIS HONOUR: The Plaintiff, Mr Thomas Ferguson Colquhoun is a former Senior Sergeant of Police. He was attested as a probationary constable of police on 19 September 1973 and thereupon became a contributor to the Police Superannuation Fund established under the Police Regulation (Superannuation) Act 1906, to which I shall refer hereafter as “the Act”. The Plaintiff tendered his resignation from the New South Wales Police Force on 14 December 1993. That letter can be found in the police medical file, which is Exhibit Y, and can be found on page 200 of the Court Book containing medical documents. The third paragraph of that letter says this:
"As I am currently on extended leave and will not be returning to duty within a 30 day period, I wish this resignation to be effective immediately."
It appears that the NSW Police acceded to that request, and all the documentation before me tells me that the effective date of the Plaintiff's resignation was 14 December 1993.
1. On 21 August 2012 the Plaintiff made an application to the Defendant pursuant to section 10B(2) of the Act. On 30 July 2015, the Defendant, I assume through its agent, the Police Superannuation Advisory Committee ("PSAC"), declined to certify that the Plaintiff was incapacitated as the date of his resignation from a specified infirmity of mind or body. It is apparent that the Defendant then advised the Plaintiff, of what was then thought to be the correct appeal procedure, of making an application to the Defendant's Disputes Committee. There was a right of appeal from the Defendant's Dispute Committee to the Industrial Relations Commission of New South Wales sitting in Court Session. Apparently, the Disputes Committee declined to issue the certificate which the Plaintiff had sought, and he then appealed to the Industrial Relations Commission of New South Wales (“IRC”).
2. While proceedings were pending in the IRC the judicial positions on the IRC were abolished and what could be classified as "Court" work was transferred by statute to the Supreme Court of New South Wales. While the Plaintiff's application was pending before the Supreme Court, the Court of Appeal determined in SAS Trustee Corporation v Rosetti [2018] NSWCA 68 that there had never been a right of appeal along the path that the Plaintiff's application had followed, but the right of appeal then had at all material times been to this Court, as the successor of the Compensation Court of New South Wales, as the successor of the original Workers Compensation Commission of New South Wales, which had been granted jurisdiction under the Act in 1979. I understand that Adams J, sitting in the Supreme Court, then transferred the Plaintiff's application to this Court.
3. Eventually the Plaintiff's application came on for hearing before Quirk ADCJ. Her Honour delivered a lengthy, considered but ex tempore judgment on 19 March 2019. Her Honour's decision is Exhibit A. It consists of 44 pages in which her Honour conducted a detailed and thorough examination of the traumata to which the Plaintiff was exposed in the course of his service in the New South Wales Police. Her Honour also canvassed at length, the medical evidence.
4. On 18 September 2014, the Defendant had determined that whilst he was a member of the NSW Police, the Plaintiff had given notice of an injury causative of the infirmity of "anxiety/depression". In accordance with section 10B(2) of the Act, her Honour merely found eventually that the Plaintiff was, at the time of his resignation, incapable of discharging the duties of his office on account of "anxiety/depression". Her Honour based that formulation, I believe, on what had been determined by the Defendant on 18 September 2014 without adopting any specific diagnosis such as post-traumatic stress disorder, or major depressive disorder, or a chronic adjustment disorder with mixed anxiety and depressed mood, or a substance abuse disorder such as an alcohol abuse disorder.
5. It is clear however, from her Honour's recitation of the evidence, and from the medical evidence, that her Honour considered - as has been put to me - that whatever the correct diagnosis be, the condition suffered by the Plaintiff was either an anxiety disorder, or a depressive disorder, or both, and that the Plaintiff's substance abuse disorder was a consequence of anxiety and/or depression. On page 44 of her reasons, her Honour said this:
"I am satisfied on the preponderance of the evidence that at the time of his resignation, the Plaintiff was suffering anxiety and depression with some concomitant alcohol issues which I accept was a form of self medication. I find that as a result of his anxiety and depression, the Plaintiff was incapable of performing his duties, either in general duties at Gosford Police Station or as zone coordinator of the Hunter PCYC. I find that he was incapable of performing any duties at all in the police force, which is the expressed opinion of each of the Plaintiff's qualified experts and of Dr Snowden for the defendant."
1. Her Honour formally set aside the determinations made by the Defendant on 31 July 2015 and another made on 18 August 2016, and replaced those with a decision certifying that, pursuant to section 10B(2) of the Act, the Plaintiff was incapable of performing his duties of office at the time of his resignation due to the infirmity of anxiety/depression. Acting with his usual promptitude, the Commissioner of Police determined 364 days later, on 18 March 2020, that the suffering by the Plaintiff of the infirmity of "anxiety/depression" was caused by his having been “hurt on duty” as that term is defined in the Act.
2. On 9 April 2020, the Plaintiff's solicitors were notified that he was entitled to a hurt on duty pension commencing on 24 August 2012, the date that his application for a hurt on duty pension was received by the Defendant. That date can be found in the next judgment to which I shall refer. On 2 November 2020, the Plaintiff applied to have his pension backdated to the date of his resignation. That application was received by the Defendant on 30 November 2020. That application was rejected, and I believe that to have been on or about 18 February 2021. The Plaintiff then commenced a further appeal to this Court which was given matter number RJ116 of 2021.
3. That application was heard and determined by Kearns ADCJ. His Honour gave his judgment on 16 December 2021. His Honour found that there were special circumstances and, pursuant to section 9A(4)(b) of the Act, determined that the date from which the Plaintiff's annual superannuation allowance was to commence was 24 August 2002. Dissatisfied with that decision, the Defendant appealed to the Court of Appeal. That appeal was unsuccessful: SAS Trustee Corporation v Colquhoun [2022] NSWCA 184.
4. In the meantime, the Police Association of New South Wales, on behalf to the Plaintiff, made an application to the Defendant for an increase in the quantum of the Plaintiff's benefits pursuant to section 10(1A) of the Act. That application was considered by PSAC on behalf of the Defendant on 27 April 2022, and PSAC decided to approve an increase in the Plaintiff's pension from the base rate of 72.75% to 80.16% of the attributed salary of his office. That increase was to commence on 24 August 2012. The Plaintiff considered himself aggrieved by that decision and made a further application to this Court, which was given matter number 215250 of 2022. The Statement of Claim in those proceedings is Exhibit 5, the Defence thereto is Exhibit 6, and an Amended Statement of Claim filed by the Plaintiff on 28 November 2022 is Exhibit 7. The Originating Process contains in paragraph 13 this:
"The Plaintiff is aggrieved by the determination of PSAC on 27 April 2022.
Particulars
The determination of PSAC is not reflective of the Plaintiff’s incapacity for work outside the police force.
Any increase in the Plaintiff's annual superannuation allowance ought to be from the date of commencement, being 24 August 2022."
There are further particulars then given relating to the backdating of the claim, but I need not cite those.
1. In the course of those proceedings, the Defendant issued certain subpoenas to produce documents. Documents were produced, inter alia, by the Plaintiff and/or by Thomas Colquhoun Pty Ltd. Access was granted to those documents. At a callover of the Special Statutory Compensation List on 13 March 2023 I granted leave to the Plaintiff, by consent, to discontinue those proceedings, and made the usual orders following the granting of that leave. The orders that were made on 13 March 2023 are Exhibit 8. On 14 April 2023 the Defendant wrote to the Plaintiff's solicitors, a letter which is Exhibit G. Inter alia that says this:
"...documents including pay advices for your client for the 2021/22 financial year, were produced by your client to the Court under subpoena in the above proceedings.
On 8 February 2023, Neilson J granted leave to STC, the Defendant in those proceedings, to use those documents for the purpose of making a further decision under the [Act] with respect to your clients HOD pension.
Section 10(1D) of the...Act allows STC to, inter alia, vary at any time any determination it has previously made to award an initial amount of pension to a HOD pensioner. STC has delegated this power to PSAC.
The information on these payslips indicated that your client appears to be working what would be regarded as fulltime hours at a high hourly rate reflective of a managerial position, not a part time hours and basic administrative duties which was the basis for PSAC's decision of 27 April 2022. We also note that in the case of Lembcke v SAS Trustee Corporation [2003] NSWCA 136, the NSW Court of Appeal said at paragraph 48 that 'in determining incapacity, one may draw upon the well-established principle that a worker's actual earnings are likely to be the measure of incapacity for work outside the police force, unless it is established that the worker's actual earnings are not a proper test'. In the case of your client, if his current actual earnings are the measure of his incapacity for work, it is hard to see that he is much, if any incapacity.
We propose to refer your client's matter back to PSAC for consideration as to whether it should exercise the power under section 10(1D) of the...Act delegated to it, to vary the previous determination it made to award an increase in pension to your client so that the rate of pension payable to your client is commensurate with his current incapacity for work outside the police force."
1. Exhibit H is a letter sent to the Plaintiff's solicitor on 4 July 2023 that informed the Plaintiff's solicitor that PSAC at its meeting on 29 June 2023 determined pursuant to section 10(1D) of the Act to decrease the Plaintiff's pension from the rate of 80.16% to the rate of 72.75% of his attributed salary of office. PSAC also determined that the appropriate date for the decrease was 22 December 2021, which the letter points out was the start date of the earliest of the payslips available to PSAC which showed an increase in the Plaintiff's annual salary to $187,200.
The Present Proceedings
1. The current proceedings were commenced on 28 September 2023. The Plaintiff relies on an Amended Statement of Claim filed in Court on 5 February this year which seeks the following relief:
"1. An order pursuant to section 21(4) of the Act that the decision of PSAC on 29 June 2023 be set aside.
2. An order pursuant to section 21(4) of the Act that the decision of the Defendant dated 8 August 2023 be set aside."
1. The third head of relief claimed was deleted in Court, but it was this:
"3. An order pursuant to section 21(4) of the Act that the Plaintiff, who knew of the original determination of 29 June 2023, is entitled to, pursuant to section 10(1A)(b), receive a superannuation benefit equivalent to 80.16% of his attributable salary of his office from 24 August 2002."
1. Before I go into the details of the current dispute, there are a number of things which I should refer to. The first is to provide a short summary of the traumata to which the Plaintiff was exposed during the course of his service in the NSW Police, and that can be conveniently found in the judgment of Kearns ADCJ of 16 December 2021, which is Exhibit B. That short summary is this:
"1. In 1974 or 1975, the Plaintiff assisted during riots at the Central [Police Station] cells. He found this stressful.
2. In mid 1976, the Plaintiff responded to a fatal plane crash at Cooma. The pilot, whom the Plaintiff knew, and the two passengers were killed. It was a gruesome situation. The Plaintiff was shaken, he started to suffer nightmares and flashbacks which continue. His sleep was affected. He began to drink to take his mind off it.
3. In 1982 and 1983, the Plaintiff was subjected to "five fatals in five days". The Plaintiff took to drinking significant amounts of alcohol. After this, he became shaky and broke down and cried. One of the accidents had involved a kidney recipient who died. His sister was the donor. When the Plaintiff informed the family of the incident, the sister broke down hysterically. The Plaintiff continues to think of this. At the time, he was barely sleeping and was suffering nightmares. He started to develop chest pains. He had continued anxiety. He continued heavy drinking. He began smoking heavily, two packets per day. His general practitioner prescribed medication with codeine. That helped him sleep. He became dependent on codeine.
4. The Plaintiff continued to be exposed to serious crime and traumatic incidents. His ability to cope became less and less. He had continued problems with sleep, anxiety and alcohol intake.
5. In the late 1980s, the Plaintiff discovered inconsistencies with the financial records of Lake Macquarie Police Citizens Youth Club where he was stationed to work. Two of the members of the board were Richard Face and Richard Smith, both former police officers. Mr Face was also a local Member of Parliament. The Plaintiff made a complaint to his superiors about misappropriation of funds from the PCYC. The Plaintiff then became the subject of persecution and harassment and forced complaints.
6. In October 1990, an anonymous complaint was made about the Plaintiff. It was sent to a number of Members of Parliament, senior police officers and the Ombudsman. The document included allegations that the Plaintiff was unfit for promotion, he was not doing his job properly and sleeping on the job, he had personality issues, he put misrepresentation in his promotion application and told lies generally, he was corrupt and deceitful, he sun-baked nude at the PCYC, he was drinking on duty. The substance of the allegations were false. In December 1990 and January 1991, reports with regard to the allegations found them to be largely unsubstantiated. On 1 February 1991, the Ombudsman reported that his office was taking no action on the allegations.
7. On 22 February 1991, Richard Smith wrote to the ombudsman complaining that the investigations into the PCYC were vexatious and making further allegations about the Plaintiff including his alleged behaviour to female officers and using a recording device.
8. On 6 March 1991, the Ombudsman informed the Commissioner of Police that he declined to investigate the complaint of Mr Smith and Face.
9. On 6 March 1991, the Ombudsman informed Mr Smith and Face that there were reasons to investigate the Lake Macquarie PCYC and that there was no prima facie evidence to support the allegations against the Plaintiff.
10. On 21 March 1991, Mr Face wrote to the Ombudsman informing him that he would pursue the allegations through other means.
11. On 4 August 1993, Mr Face's solicitors wrote to the Plaintiff, indicating that Mr Face was contemplating defamation proceedings against the Plaintiff.
12. On 27 December 1993, the Plaintiff was charged with using a listening device to record conversations without the other parties' consent and also with a number of other offences.
13. On 26 October 1993, Mr Smith wrote to the Minister of Police and Emergency Services, iterating complaints that had earlier been made against the Plaintiff anonymously.
14. On 18 November 1993, a letter was sent from the senior manager of the Employee Assistance branch to the acting president of the Federation of PCYC containing the following:
"I am informed by your staff that Senior Sergeant Colquhoun has now exhausted all his available sick leave entitlements. Having regard to the circumstances of his absence, it will be inappropriate to grant special sick leave concessions to leave, unless you are prepared to grant him annual leave, arrangements will have to be made to cease further salary payments to him forthwith. This will need to be facilitated through the Staff and Personnel branch as soon as possible to avoid overpayment."
15. On 18 November 1993, a report from Acting Inspector AJ Buchanan noted that the Plaintiff was overdrawn on his sick leave and inquiries were necessary as to whether an application for special leave would be supported or whether he would avail himself of extended leave. The conversation with the Plaintiff that evening was noted in which the Plaintiff was agitated and stated he was not speaking to police anymore as he did not trust them. It might be noted at this point that the Plaintiff was increasingly stressed as confidential information he had provided to the police and also confidential medical information of the Plaintiff in the possession of the police had been leaked. It is not surprising that he did not trust the police.
16. On a date not clear, but probably in November 1993, Mr Face asked a number of questions in the Legislative Assembly of the Minister of Police and Emergency Services. The questions concerned the Plaintiff. They were on notice, which probably explains the different dates: 10 March 1994, 14 April 1994, 13 May 1994, on the documents that provide the questions and answers. The questions could only be described as vindictive and part of the campaign conducted by Mr Face against the Plaintiff. This caused further stress to the Plaintiff.
17. On 19 November 1993, the Newcastle Herald published an article about complaints that had been made against the Plaintiff.
18. On 14 January 1994 Mr Face wrote to the Minister for Police and Emergency Services concerning an application the Plaintiff had made for 'a security licence and a shooters licence'. He was opposing the application. In fact the Plaintiff had not applied for a shooters licence.
19. On 5 April 1995, the Plaintiff wrote to the Office of the Internal Affairs inquiring about his application for a security licence, and querying the length of delay in considering it.
20. In 1994 the Plaintiff was asked to attend Charlestown Police Station concerning an allegation that he was falsely claiming to be a Justice of the Peace. He was a Justice of the Peace. The allegation had been made by Mr Face."
1. I have omitted from that quotation His Honour's references to the source of the various traumata that he was summarising. It is of course ironical that Mr Richard Face was the member of the Legislative Assembly for Charlestown. In the Carr Government he became a Minister of the Crown, but was forced to resign and leave Parliament when he was charged with lying to the Independent Commission Against Corruption. Much of the traumata to which the Plaintiff was exposed was obviously because he found discrepancies in the records of the PCYC of which Mr Richard Smith was the president and Mr Richard Face was the secretary, and from which PCYC it was thought that each of Mr Smith and Mr Face were conducting a private business.
2. For nearly a year after his resignation the Plaintiff did not work. On 4 May 2015, the Plaintiff was interviewed by Dr Peter Snowdon, a consultant psychiatrist retained by the Defendant. Dr Snowdon took this history of the Plaintiff's work after leaving the NSW Police:
"Mr Colquhoun said that, for the subsequent eight months, he did 'nothing', but then, he said, with his working, he realised that he had to do something.
In this regard, he said that, because of financial considerations, he had to sell the house which he had built, describing this as a 'big shock to the wife', who was working as a secretary to the manager of Orica, for the Asia Pacific region.
On specific questioning, Mr Colquhoun said that he and his wife have remained very happily married, and have two children, a daughter aged 38, who is a photographer, and a daughter aged 32, who has her own children's clothes-store in which his wife now helps.
He said that he also has five grandchildren.
Mr Colquhoun said that his first step at returning to work was to obtain a taxi driver's licence, first, he said, leasing a taxi, before buying his own. On specific questioning, he said that he worked fulltime, 'absolutely' in this role, saying, with reference to a taxi, 'You've got to live in them, it's the only way to make money'.
He said too, that his years with the PCYC had taught him how to keep books, saying that he had to run it as a business, the expertise from which he extended into running the taxi.
I would comment that Mr Colquhoun appeared an intelligent man, who said that obviously long prior to resignation, he had obtained an Associate Diploma in Police Studies, specifically in Social Welfare, after four years, part time, in 1983.
He said he used to attend this course one day a fortnight.
With regard further to driving his own taxi, he said that, in 2007 or 2008, he had predominantly stopped driving himself, and had hired drivers, saying that then, two years later he sold the plates.
On a specific questioning regarding why he did this, he said that he achieved a good price, and he was 'getting too old for the long shifts', particularly those on Saturday and Sunday nights, adding, 'There's too many idiots out there, and with my background, I was going to belt someone'. In this regard, he said that there were "a few little incidents", but nothing like those to which he had been exposed in the Police.
He said that, just prior to selling the plates, he had lodged an expression of interest to transport children with special needs, as part of the Assisted Student Transport Program with the Department of Education.
He said that being successful in this regard, the students who he transported were at the "behavioural end of town", with which he had dealt for most of his police career.
He said, that he was also experienced in getting on with the parents of these children, who also had their own problems.
Mr Colquhoun said that he obtained increasing amounts of this type of work subsequently incorporating his business through his accountant, his son in law [Mr Ryan Ansell].
On specific questioning, he said that the entity which he traded as was Thomas Colquhoun Pty Ltd.
On specific questioning, he said that he had last, however, driven three years ago, employing drivers since, but adding that, occasionally, if they are ill, he stands in for them."
That history appears to me to be accurate and consistent with not only what the Plaintiff told me but also histories obtained by other medical practitioners.
1. In connection with earlier litigation, the Plaintiff's solicitors qualified Dr Jeff Bertucen, another consultant psychiatrist. Dr Bertucen first examined the Plaintiff on 6 August 2012, and wrote a report bearing date 13 August 2012. When examined by Dr Bertucen in August 2012, the Plaintiff told him that he directly invested about 20 hours per week into the business which he had, transporting intellectually disabled children on behalf of the Department of Education.
2. The most recent medical reports are those of Dr Ashwinder Anand, another consultant psychiatrist qualified by the Defendant. Dr Anand examined the Plaintiff on 27 October 2021 and wrote a report bearing date 4 November 2021. He also issued a supplementary opinion which bears date 1 December 2021. Quite surprisingly, Dr Anand thought the Plaintiff was totally incapacitated for work outside the police force because of his accepted hurt on duty disability. In his supplementary report, Dr Anand said this:
"I note that in my report I have mentioned that he's incapacitated for work outside of the police force because of the HOD conditions. While I maintain that he continues to be incapacitated to a marked degree because of his HOD conditions, I also note that he has been working in an administrative capacity between 2008 and up until the present. He has been contracted with the NSW Department of Education for the Assisted Student Transport Program which is responsible with conveying special needs children to and from school. He maintains at his role as an administrator in a managerial capacity.
I also note that he plans to retire and hand over the running of the business to his son in law which will impact on his income. After reviewing the information that is provided by you, I would like to respond to your questions in which you've asked to specify the number of hours that I assessed is currently capable of undertaking in a position outside the NSW Police, for example sedentary/office work."
The doctor went on to say that the Plaintiff had the capacity to work for around 15 hours per week in a sedentary capacity or administrative role outside of the police force.
1. On 22 February 2022, the Plaintiff was interviewed and assessed by Ms Kirsty Windsor, a Vocational Assessor, who has an Honours degree in psychology and further tertiary qualifications. She generated a report which bears date 3 March 2022, and to which I shall return shortly. However, the Plaintiff was also examined at the request of his solicitors by Dr Jeff Bertucen on 17 November 2023. That is both the date of the doctor's examination which was conducted by AVL and of the doctor's report. Dr Bertucen's reports are Exhibit T.
2. Dr Bertucen points out that he had last interviewed the Plaintiff on 6 August 2012. His report then contains this history:
"Since this time, Mr Colquhoun relocated to an owned acreage property in Eleebana, NSW. His daughter Melinee lives in the second dwelling on the property together with her partner, Scott, and their six children. Scott has been working for Mr Colquhoun's business for the last four years and does "90% of the work". Mr Colquhoun still operates his previous business (providing transport for intellectually delayed students on contract to the NSW State Government). He states that his business has significantly expanded since the last interview and now encompasses a fleet of 35 vehicles. Nonetheless Mr Colquhoun 'states that for last five to six years he has stepped back from the day to day running of the business and that he might invest 'maybe he'll only invest' one maybe two hours a week...and he's 'set out to pretty much run itself'.
Scott functions as the general manager of the company and handles the vast majority of day to day duties including recruiting of staff, handling vehicle breakdowns and procurement, payroll matters et cetera. He maintains an office in Charlestown and states that he has approximately 40 employees. On average Mr Colquhoun states that he might 'call into the office for 20 minutes maybe here and there'.
Mr Colquhoun, as noted, has also served for nine years on the board of the Central Leagues Club situated at Charlestown, Newcastle. Board meetings take place monthly and last two hours on average. He states that aside from this commitment 'I hardly go there for official purposes', however socialises in the club bar with friends between five to 7pm most evenings. The board position is voluntary and it occasionally involves minor conflict or 'politics'.
Mr Colquhoun stated 'I don't tend to get involved if I can help it...but sometimes you get heckled if some of the board members don't like a decision you have made'. He denies any significant or lasting effects on his mental state after these confrontations. Nevertheless he states, 'without my pills [see below] I wouldn't be able to function on the board'. Mr Colquhoun refers to his psychotropic medications (fluoxetine 20 milligrams in the morning, quetiapine 100 milligrams at night) prescribed initially in 2002 by his GP Dr Kim Manhood.
Mr Colquhoun's alcohol intake was discussed at length in the previous report and had been at toxic levels over the course of many years until about 2020. Aside from eight to ten schooners of beer daily Mr Colquhoun found that he is regularly drinking half a bottle of scotch 'in the middle of the night to get back to sleep'. Mr Colquhoun attended a psychologist, Toby Newton-John, over the course of several years (2012-2015) however sessions discontinued as he 'came to the conclusion he couldn't do anything more for me' in light of treatment resistant heavy alcohol consumption.
In 2020, however, Mr Colquhoun experienced a bout of severe reflex and stated 'even drinking water felt like drinking battery acid'. He ceased alcohol and the pain resolved after about one week or so. He has remained abstinent from alcohol since this time. Mr Colquhoun states that he had an endoscopy, which has been relatively normal, aside from some oesophageal, scaling and thickening. He denied any illicit substance use, or problem gambling, and has not smoked cigarettes for decades."
1. Dr Bertucen offered the diagnosis of "chronic post-traumatic stress disorder and major depressive disorder, currently in stable remission". He also points out that the previous chronic alcohol use disorder had gone into complete remission since approximately 2020. I understand from other medical reports and the evidence that the date for the cessation of alcohol was Good Friday 2020. Dr Bertucen offered a positive prognosis, he thought that the Plaintiff had a well-regulated lifestyle at the current time. He noted that he had a successful business, and his domestic circumstances were "harmonious". He expressed a view that ongoing abstinence from alcohol would contribute immeasurably to a positive ongoing prognosis. As to the Plaintiff's ability to work, Dr Bertucen said this in his report:
"Mr Colquhoun maintains that he invests a minimal amount of time into his successful business, the day to day running of which is apparently capably handled by his son in law. In my view however if Scott were to withdraw from the business it is in my opinion unlikely that Mr Colquhoun would be able to significantly increase his involvement due to residual features of depressed mood, anxiety (particularly at the prospect of confrontation or managerial responsibility), and as a result his capacity for employment was in his view not likely to expand significantly beyond what the doctor thought was either two to four hours per week that the Plaintiff was currently performing."
1. As has been pointed out by learned counsel for the Defendant, Mr Ower, there is an inconsistency in the opinions of Dr Bertucen. The Plaintiff is now much better than he was back in 2012. In 2012 he was working on the history obtained by Dr Bertucen then, for 20 hours per week. His psychiatric condition has improved remarkably, and his substance abuse disorder is in complete remission. He now theoretically has the ability to do even more work than he did in 2012. The doctor had to concede that in cross examination.
2. I return to the opinion of Ms Windsor. Her "executive summary" contains the following history of his work since leaving the police force, and of his current condition. It also contains a summary of her assessment of the Plaintiff, which is this:
"Following his resignation from NSW Police Mr Colquhoun worked as a taxi driver from approximately 1994 to 2008. At this time he secured contract work with the NSW Department of Education with the Assisted Student Transport Program. Mr Colquhoun grew this business to the point where at the time of assessment he reported having 35 drivers and 30 runs. He runs the business under the company name, Thomas Colquhoun Pty Ltd.
Mr Colquhoun initially was involved in all aspects of the business, including driving, hiring of drivers, liaising with all stakeholders, and undertaking administrative requirements. More recently, he has stepped back from having an active role; handing over the running of the business to his son in law in February 2021. At the time of assessment, Mr Colquhoun reported that he was going into the office at around five hours per week; to check emails and assess with any issues that may require his input.
With a regard to his HOD psychological condition, Mr Colquhoun advised that he was not engaging in any active treatment. He did not report experiencing any major stressors in his life and advised that he is mindful not to create any situations that will cause him stress.
With a regard to non HOD conditions, Mr Colquhoun reported pain and restriction with both knees and his lower back, which impacts on his capacity for walking, bending, and any manual work. He also reported having high cholesterol, hypertension, type 2 diabetes and alcohol addiction. It is noted that Ms Colquhoun has been sober since Good Friday 2020.
Medical evidence was reviewed for this assessment, with the most recent reports being those of Dr Anand, consultant psychiatrist, dated 4 November 2021 and 1 December 2021. Dr Anand opined a diagnosis of major depression with anxiety. He recommended that Mr Colquhoun has capacity to work around 15 hours per week in a sedentary capacity/administrative role outside the police force.
FINDINGS ON ASSESSMENT
Mr Colquhoun presents with good vocational capacity. Since resigning from the Police Force in 1993, he has secured and maintained employment; initially as a taxi driver and for the last 13, 14 years as an operator with the Assisted Student Transport scheme. He has demonstrated managerial, administrative, communication, organisation and decision making skills.
Mr Colquhoun's HOD condition does impact somewhat on his capacity in that he is likely to experience difficulty with any roles or situations which are stressful, highly demanding or conflictual. Mr Colquhoun has also reduced capacity in terms of hours of work, with 15 hours per week recommended by Dr Anand.
Mr Colquhoun's non HOD conditions also impact on his capacity, specifically his knee and back issues which restrict his capacity to undertake any roles requiring manual work or walking for prolonged periods of time.
Mr Colquhoun's age is also a factor which impacts on his employability. He is turning 68 this year. Whilst candidates cannot be discriminated against on the basis of age, realistically his prospects of obtaining work in particular fields at his age are somewhat limited. This is the case irrespective of his HOD conditions. Mr Colquhoun is also reducing his hours at work through choice; he has reached a stage in his life where he can continue to draw an income without needing to be actively involved in his business."
1. It ought be observed that Ms Windsor's opinion that the Plaintiff could only work 15 hours per week is based on the recommendation of Dr Anand, not on her own assessment. In section 14 of her report, Ms Windsor records this:
"Mr Colquhoun advised that on a typical day he will go to bed around 8.30/9pm and will sometimes "toss and turn". He generally gets up between 7.30/8am and will have breakfast and listen to ABC News. He will check the mail and emails, and will go into the office, where his receptionist will make him a cup of coffee, and he will check the drivers on their routes and any mail/email. He may go and have lunch with his wife. He will leave the office by 3.30/4pm and return home, then go to the local club from 4.30 6.30pm to meet up with 6 to 8 friends, where he will have diet ginger beer. He will then return home to have dinner and watch television. The assessor [Ms Windsor] questioned Mr Colquhoun about the disparity between the time spent at the office and his report of working one hour a day. It was somewhat unclear about how much time he's actually spending at the office. He indicated that he comes and goes through the day."
1. That, of course, was pursued in cross examination. The Plaintiff told me that he might arrive at the office at 10.30 or 11 o'clock, he might take an hour for lunch with his wife commencing at 12.30, and he thought that he might return to the office for about an hour after lunch. However, both in the offices at Charlestown and his local club, it was eventually established, I believe, he could be seen to be for about four hours a day or 20 hours a week. The Plaintiff clearly does not have any strict routine. For example, he reported that on some days he might not go to the office at all. But he also said on other days he might spend longer hours than usual in the office, and he drew attention to one day where he worked for six hours driving a vehicle in connection with one of his driving routes for the Department of Education.
2. The Plaintiff has not kept any diary or made any notes of his comings and goings as far as the business is concerned, and therefore it was somewhat hard to hold him down. However, it is highly likely that he might average about 20 hours per week working in some fashion or other for his business. For example, he is called upon from time to time by his son in law, Scott Longworth, to make some executive decisions and to give him advice from time to time. The office of Thomas Colquhoun Pty Ltd is in the same office as that of his accountant, his other son in law, Mr Ryan Ansell. It appears that both his sons in law are working actively for him, albeit that the only son in law on the payroll is Mr Longworth.
3. He obviously keeps an eye on his business. His son in law admitted that the Plaintiff is the managing director of the business and clearly Mr Longworth takes directions from him if directions are given to him. Clearly, Mr Longworth also takes advice from the Plaintiff. It can be seen that through his diligence and industry, the Plaintiff has built for himself a very successful business. He points out that the business can be terminated at any time by the Department of Education, no doubt if there were some problem such as some interference with a student, or injury to a student, or perhaps motor vehicle accident, something which might imperil the life of a student being transported by the Plaintiff's business. One can think of other situations in which the contract might be ended, including of course changes of policy by the Department of Education itself. However, at the current time the Plaintiff has a three year contract with the Department of Education which commenced at the beginning of this year. There is a review every six months which, according to the Plaintiff's evidence, has something to do with the CPI, meaning that each six months the rates payable to him might be varied in accordance with the CPI. However, it is clear that the Plaintiff has had this work for 15 years, up until the end of 2023, and will have the work for the next three years if nothing goes amiss, which given the longevity of contract thus far would appear to be likely. Clearly the Plaintiff has worked hard over the time, since 2018, to build up his business and it is doing very well.
4. Mr Scott Longworth gave evidence. He said that he had been working for Thomas Colquhoun Pty Ltd since January 2021. The other evidence is that it was in February 2021, but it seems likely that the work commenced at the commencement of the school year in 2021, which may have been late January or early February. Mr Longworth said that he worked for 40 or more hours per week. That can be found at T70.50, and T72.05. It took Mr Longworth about a year to learn the job from the Plaintiff. He was receiving a salary of some $82,000 per annum: T73.21. However, he also has the use of a company car, which can be used not only for work purposes but also for private use. That appears to be in addition to his salary. However, in addition to his salary Mr Longworth and his partner, the Plaintiff's daughter, and their six children enjoy free accommodation provided by the Plaintiff. The Plaintiff has a large property at Eleebana on which stand two dwelling houses. One is occupied by the Plaintiff and his wife, the other is occupied by Mr Longworth and his partner, Melinee, and their six children. It is a six-bedroom dwelling house.
5. I have no idea what a six-bedroom dwelling house may cost to rent in the Charlestown area of the Lower Hunter Valley, but it would not be an insignificant amount. The value of the company car provided to Mr Longworth and the free accommodation provided to him and his family must also be taken into account. It also transpires that the Plaintiff has a company car which he can use for business purposes, and for personal use, as does his wife Kerrie Colquhoun, whom the Plaintiff admitted used it solely for personal use. Furthermore, the Plaintiff's daughter, Melinee, has a company car, but she does not work in the company, she works as a retail assistant in a jewellery shop, part-time of course because she and her partner, Mr Longworth, have to raise six children between the ages of 15 and two, not an insignificant workload in itself. The income and benefits enjoyed by Mr Longworth must be considered because prior to his being hired at the commencement of 2021, the Plaintiff himself was doing all the work that he now does, and were Thomas Colquhoun and Thomas Colquhoun Pty Ltd at arm's length, which they are not, one could expect that he would have enjoyed the same income and benefits as Mr Longworth now enjoys.
6. The process which led to the Defendant granting the Plaintiff an increase in his HOD pension, and the circumstances in which the Defendant reduced his HOD pension must be taken into account, and I propose to do so now.
7. The application made by the Police Association of New South Wales on behalf of the Plaintiff for an increase in the Plaintiff's base HOD pension is Exhibit 2. The letter bears date 2 March 2021, it was received by the Defendant on 5 March 2021. On page 3 of the letter from the Police Association, these representations are made:
"Between 2008 and the present, Mr Colquhoun has been contracted with the NSW Department of Education from the Assisted Student Transport Program, which is responsible for conveying special needs children to and from school. Mr Colquhoun's business name is Thomas Colquhoun Pty Ltd. His main role in this business is administrative, in a managerial capacity. The business currently employs 30 drivers. He's assisted by his eldest daughter in the operation of the business, and he is rarely, if ever, involved in the physical driving of students. He works approximately 10 hours per week, earning $3,000 per week before tax. This has been his salary since 2013, however prior to that, his annual salary was between $30,000 and $40,000. When Mr Colquhoun initially started this work, he had one vehicle which he personally drove. In the first few years, he built up the business, so by 2015, he was doing administrative duties only unless he was needed to do driving. Initially, he worked a 40 hour week which has slowly reduced as he employed other drivers.
Mr Colquhoun submitted notice to the Department of Education on 10 February 2021 that he'll be stepping down from his managerial role, and his son in law will be taking over the day to day operation of the business. Mr Colquhoun has found that his HOD psychological condition affects his ability to do this type of work when he is under stress. When he has [handed] over the operation of the business to his son in law, Mr Colquhoun hopes to retire so he's only needed in the event of a major issue. Mr Colquhoun advises that once he steps back from work, he will need to employ other administrative staff which would impact on his income and estimates that his income would reduce to $1,000 per week pre tax. However, if a contract is not renewed or the government cancels the program, there would be zero income.”
The letter goes in to point out that the Plaintiff's current contract with the Department of Education expired on 31 June 2024, but it is clear from the Plaintiff's oral evidence that a new contract was granted to him at the commencement of this year. Furthermore, there is no 31 June in any one year.
1. Section 10(1BA) provides this:
"A superannuation allowance referred to in subsection (1A) or an additional amount of a superannuation allowance referred to in subsection (1D) is not payable to a disabled member of the police force unless an application for payment of the allowance or additional amount concerned is made:
(a) before the member reaches the age of 60 years, or
(b) not later than 5 years after the member resigns or retires,
whichever is the later.”
At the time that this application was made on behalf of the Plaintiff, he was both over 60 and more than five years had elapsed since he retired.
1. However, that provision can be dealt with under section 16A of the Act. That provision provides this:
"(1) STC may accept an election, application or choice that is not made or received within the time required under this Act if it is satisfied that in all the circumstances of the case it is desirable to do so.
(2) STC may impose conditions on the acceptance of the election, application or choice.
(3) STC may deal with the election, application or choice accepted under this section as if it had been made or received within the required time."
1. Exhibit 14 is a submission to the delegate for the STC and a decision of that delegate. That points out the problem with the application that had been made on behalf of the Plaintiff, and then points to the provisions of section 16A. There then appears on the first page of Exhibit 14 this recommendation:
"It is recommended that the chief executive, as delegate for STC, decide that the application made by former Senior Sergeant Thomas Colquhoun under section 10(1A)(b) of the...Act for an increase to his PSS section 10 HOD pension, that was made outside the timeframe provided for in section 10(1BA) of the...Act. It may be accepted under section 16A of the...Act and dealt with as though it had been made within time, on the condition that any increase in pension awarded by PSAC not have an effective date earlier than 24 August 2012. That recommendation was approved by the chief executive Mr John Livanas, on 18 May 2021."
1. The next thing that occurred was a letter sent by the Defendant to the Plaintiff bearing date 13 July 2021. That is Exhibit 3. That advised the Plaintiff that the chief executive had accepted the late pension increase under section 16A of the Act. It goes on to state this:
"We note that you own a business, Thomas Colquhoun Pty Ltd, and are contracted with the NSW Department of Education for the Assisted Student Transport Program. The application for pension increase confirms that you currently work for approximately ten hours per week in a managerial capacity, earning $3,000 per week (gross) which has been your salary since 2013.
To enable us to provide a full picture of the level of your incapacity for work outside the NSW Police, to the Police Superannuation Advisory Committee (PSAC), we request that you please provide us with the following information:
* a full copy of your business tax returns for the last three financial years (together with all schedules, attachments and assessments); copies of your profit and loss statements and a summary of the year to date figures.
* a fully [sic] copy of your personal tax returns for the last three financial years (including all attachments).
* a copy of your last three payslips.
Upon receipt of the above your application will receive further consideration."
1. On 21 July 2021 the Plaintiff sent an email to Amanda Reece, and to Mr Stuart Gray. Amanda Reece is an officer or employee of the Police Association of New South Wales. The application of 2 March 2021 was submitted under her hand. Mr Stuart Gray is the Plaintiff's solicitor. The Plaintiff sent him a copy of the letter of the Defendant of 13 July, which he received on 20 July 2021. The letter contains this material:
"I have no problem with supplying my personal tax returns and payslips, however, although I refer to the 'firm' as mine, it is in fact registered with ASIC...with sole shareholder being my wife Kerrie Fay Colquhoun. She is a director and I hold the position of managing director.
Therefore Thomas Colquhoun Pty Ltd is my employer owned by Kerrie Fay Colquhoun.
Hence I do not believe I'm entitled to disclose the subject tax returns as described in the attached. Please advise if I am wrong.
Further, until recently in my annual wage was $166,000. However due to COVID and other impacts in the 'firms' turnover, my annual salary is now $100,000. I am not entitled to any government subsidies to my way."
1. I do not know what advice the Plaintiff received in answer to his request. However, the next relevant event that occurred was the examination of Dr Anand on 27 October 2021, and the provision of his report of 4 November 2021 to the Defendant. The next relevant event was a letter from the Plaintiff to the Defendant bearing the date 18 November 2021, which is Exhibit 4. The opening paragraph of the letter refers to a request on 18 November 2021 which was said to be attached to it. The attachment is not part of Exhibit 4. It may have been a reiteration of what was requested in the letter of 13 July 2021, which is Exhibit 3. The last three paragraphs of Exhibit 4 are these:
"My son in law is effectively the manager of the firm and I now only perform an oversight role and I am now, for want of a term, semi retired, performing less than ten hours actual work per week.
Since leaving the NSW Police Force, I found the first 20 years very difficult financially, but I have been lucky of recent, having won a contract with the Government and being employed by a firm owned by my wife, who pays me.
My last three payslips are attached."
1. The payslips are part of Exhibit 4, and they are fortnightly payslips. Each of the three payslips state that the Plaintiff's annual salary was $104,000. That would indicate that the Plaintiff ought to have been paid $2,000 per week, or $4,000 per fortnight. The payslip for the fortnight ending 29 September 2021 shows the Plaintiff was working 30 hours per week, and he was being paid at the rate of $50 per hour, so that for the fortnight his total gross income was $3,000, that is $1500 per week. The payslip for the fortnight ending on 26 October 2021 shows that he worked for 80 hours at the rate of $50 per hour, indicating that his gross income for the fortnight was $4,000 or $2,000 per week. His payslip for the fortnight ending 9 November 2021 shows exactly the same earnings.
2. The next relevant event was, of course, the assessment by Ms Windsor on behalf of the Defendant. On page 9 of her report of 3 March 2022, which is Exhibit 1, the following is stated:
"Mr Colquhoun advised that he earns approximately $150,000 per year and that this fluctuates depending on how many driving contracts he has. He provided two payslips as follows:
“Pay period 9 June 2021 22 June 2021:
Net pay: $4,476
Pay period 23 June 2021 6 July 2021:
Net pay: $2,980"”
1. Of course, if the Plaintiff were earning $150,000 per annum, his average weekly wage would be approximately $2,885. It is clear that in addition to those payslips, Mr Colquhoun also had the payslips that had been provided to the Defendant under the cover of Exhibit 4. Despite knowing what the Plaintiff's payslips showed, Ms Windsor identified a number of jobs which she thought were appropriate work options for the Plaintiff. The first was as a general clerk who would earn $1,481 per week for a 38-hour week. The next was as an automobile driver who would earn $1,104 per week for a 38-hour week. However, such a driver would need to obtain a commercial driver's licence. The Plaintiff is not entitled to that because he is dependent upon insulin for his control of his type 2 diabetes, and that would disqualify him from having a commercial driver's licence. The third option put forward by Ms Windsor was an insurance investigator who, at the age of 45 years or more, would earn $1,941.38. The next option was an office manager who, at the age of 45 years or more, would earn $1,501 for a 38-hour week. The final option was a radio dispatcher who, again at aged 45 or more, could earn $1,742 for a 38-hour week. She also considered a security officer and a compliance officer.
2. However, she pointed out that a security officer can involve confrontation and high stress situations. Furthermore, it was noted that the Plaintiff's physical ailments, in particular the fact that he had both knees replaced and had back pain, would inhibit his ability to stand, walk and bend. As far as a compliance officer was concerned, she also noted that that involved a potential for high stress situations and being challenged about the decisions being made with regard to compliance. Again, she thought that the Plaintiff's HOD conditions would make him unsuitable for that role.
3. There are a number of other occupations that Ms Windsor thought were not suitable, only due to the Plaintiff's age and for vocational reasons, they included a consultant in security, a corporate services manager and a courier/delivery driver.
The Pension Increase
1. The next relevant document is Exhibit E, a submission to PSAC made on behalf of the administrator on behalf of the Defendant. On page 7 of Exhibit E, there is a precis of the Plaintiff's payslips that were annexed to his letter which is Exhibit 4. Despite knowing what the Plaintiff was then actually drawing, and had been drawing from Thomas Colquhoun Pty Ltd in recent times, and despite what the Plaintiff had admitted was his annual salary, the calculation contained in Exhibit E is based on the job of office manager that was chosen as one of the options by Ms Windsor. Under the heading "highest wage employment option without HOD infirmities" the submission refers to the job of office manager, the fulltime gross salary of $1,501 per week for a 38 hour per week, and then provides the total of $1,501. Under the heading "most appropriate/highest wage employment option with HOD infirmities" the job is again office manager, but merely for 15 hours a week, which ends up with a salary of $592.50 per week. The difference between the two is a loss of $908.50 per week, which gives a percentage loss of 60.53%. That would entitle the Plaintiff to a pension increase of 60.53% of 12.25% which ends up with a percentage increase of 7.41%, leading to a pension of 80.16%, which was the recommended pension rate in the submission.
2. The conclusion expressed on page 14 of the submission is this:
"The applicant is self employed and has a contract with the NSW Department of Education for the Assisted Transport Program. He has progressed from being a taxi driver to running the business and overseeing 35 drivers.
Mr Colquhoun advised that he stepped back from being actively involved in the business in February 2021 and his son in law has taken over the day to day operations, advising that he was at a point in his life where he could reduce the amount of work he was doing, continuing to draw a good wage (approximately $150,000 per year) and enjoy 'not doing much and getting paid'.
Currently, he indicated that he would go into the office each day to check emails, and respond to any issues that might need his attention. Ms Windsor commented on page 8 that it was '...somewhat unclear about how much time he's actually spending at the office. He indicated that he comes and goes through the day'.
Ms Windsor agreed with Dr Anand's assessment that Mr Colquhoun has the capacity to work around 15 hours per week outside the NSW Police Force.
For the purpose of the calculation, the most appropriate employment option of office manager has been utilised with HOD medical conditions on a part time basis (15 hours per week) and on a fulltime basis without HOD medical conditions; because this is a similar role to what the applicant has been undertaking for years while growing his business, and in Ms Windsor's opinion 'Mr Colquhoun possesses excellent vocational capacity for this role. His strength in decision making and organisation would be valued'.
Based on the above information the following recommendation is assessed on the applicant's current capacity for work on a part time basis."
1. At its meeting on 27 April 2022, PSAC decided to approve an increase to the Plaintiff's pension from the base rate of 72.75% to 80.16% of the attributed salary of his office at the date of his medical discharge. That increase was to become effective on 24 August 2012, which of course ties in with the conditional approval made by the Defendant under section 16A of the Act. As is normal in the letter to the Plaintiff advising of its decision, which is Exhibit F, the Defendant advised the Plaintiff of his right to make an application to this Court, which he did as I have earlier pointed out. However, that application was discontinued. It is clear from Exhibit 11 that on 22 December 2021 the Plaintiff's salary was increased to $187,200 per annum. The payslip for the fortnight ending 4 January 2022 shows the Plaintiff as working for 80 hours per fortnight at a rate of $90 per hour, giving a total gross wage for the fortnight of $7,200, or $3,600 per week.
2. Exhibit 11 contains payslips for the periods from 24 November 2021 until 4 July 2023. It was the reading of those payslips which caused the Defendant to make the decision, which is the subject of this appeal, the reduction of the Plaintiff's HOD pension back to the base rate, commencing on 22 December 2021, the commencement of the period of time when the Plaintiff's weekly income increased to $3,600. However, the only change was the increase in the wage being paid to the Plaintiff by Thomas Colquhoun Pty Ltd by a company which was in effect the mechanism he chose to run the business which he had developed over many years. Nothing other changed as far as anyone can establish.
3. The Plaintiff's medical condition stabilised in 2020 when he became abstinent from alcohol and was prescribed appropriate psychotropic medication by Dr Manhood. His workload eased commencing in 2021 when his son in law, Mr Scott Longworth, became the operations manager of the business. That easing back would have taken time because it took time to train Mr Longworth to do the job that, in essence, had previously been done by the Plaintiff himself.
Legal Principles
1. In Miles v SASTC [2016] NSWDC 56, I pointed out what a Plaintiff must prove if he wishes to establish an entitlement to an increased pension after one had been initially granted. In doing so, I reviewed earlier decisions of my colleagues. I said this:
“1 This is an application under s 21 of the Police Regulation (Superannuation) Act 1906 (“the Act”). The plaintiff seeks an increase in his pension entitlement under s 10(1A) of the Act. This is the plaintiff’s second application of this nature to this Court. His first application was in matter number RJ136 of 2005. I heard and determined that application on 2 February 2006. Initially, the defendant had determined that the plaintiff’s pension entitlement under s 10(1A)(b) entitled him to a total pension of 81% of the salary of his office. I set aside the decision of the defendant which had been made on 30 September 2004 and I determined that the plaintiff’s total pension entitlement was 82.55% of the salary of his office. Unfortunately, my reasons for judgment of 2 February 2006 have not been uploaded onto Caselaw or otherwise published. Because those reasons set out the background to the present application and the plaintiff’s situation as at 2 February 2006, I adopt those reasons and annex them to this judgment as annexure A.
2 The plaintiff made a further application to the defendant, dated 8 November 2013. That application had a covering letter from the plaintiff’s solicitors of 12 November 2013. Those two documents are exhibit Z in these proceedings. Question 27 of the application form is this:
“Are you currently incapacitated for work outside the Police Force to any extent?”
The answer provided by the plaintiff was:
“Yes, totally incapacitated.”
Question 29 of the application is this:
“Have you previously applied for a pension increase and are now in receipt of a pension amount of less than 85% of your attributed salary of office?”
The answer supplied by the plaintiff to that question was this:
"Yes, physical injuries have deteriorated."
3 The Police Superannuation Advisory Committee (PSAC), constituted under s 2H of the Act, pursuant to a delegation from the defendant under ss 2I and 2J of the Act, considered the plaintiff's application on 29 January 2015. PSAC declined to increase the plaintiff's pension above the rate that I fixed on 2 February 2006. A letter containing the defendant's decision, dated 2 February 2015, is addressed to the plaintiff's solicitors. A copy of it is exhibit AA before me. The plaintiff considers himself aggrieved by that decision and brings the present application.
What the plaintiff must prove
4 An initial thing that ought be considered is: what must the plaintiff prove? The authorities currently establish that the plaintiff must prove a change of circumstances since the last relevan1t decision, i.e., the decision that I made on 2 February 2006. The commencement point for this line of authority is the decision of Quirk DCJ in McDougall v SASTC (Unreported, 18 October 2004, RJ9881/03). As that decision has not been uploaded onto Caselaw or reported I should spend some little time pointing out the facts of the case and her Honour's ruling.
5 McDougall was medically retired from the NSW Police in 1993. He was certified as suffering from the infirmities of chronic anxiety disorder and chronic substance abuse. In December 1997 the Commissioner of Police determined that the suffering by McDougall of his chronic anxiety disorder and chronic substance abuse was caused by his having been hurt on duty. In February 1999 McDougall made an application to the present defendant for an increase in his pension under s 10(1A)(b) of the Act. That application was refused by the STC. That was the subject of an application to the Compensation Court of New South Wales pursuant to s 21. The case was "settled". The Court made orders by consent setting aside the decision of the defendant and replacing it with a decision granting an increase in the plaintiff's pension to a total of 77.5% of the salary of his office as at the date of discharge. The application which came before Quirk DCJ was an application for a further increase originally made by McDougall in a letter of 17 September 2002.
6 Of McDougall's second application to the defendant, her Honour said this:
“The appellant again cited his chronic sleeping problems and also his hypertension. In that letter, the appellant stated, 'my condition has improved somewhat, but I do not think I will ever return to good health again'. He also referred to his age, which was then 55 and that his employment prospects would be very slim even if he were in good health."
Her Honour then recited the declining by the defendant of McDougall's second application.
7 Commencing on p 8 her Honour said this:
"The appellant's own evidence is that his condition has been much the same over the last 25 years, perhaps in some ways improved - that is insofar as his insomnia is concerned, although he cites his age and other health problems as causing him more difficulty in 'handling it.'
However he does not really point to any specific way in which such difficulty would or could hinder his ability to work and as far as I can see his history to the doctors in terms of his capacity to work has been the same over the years since 1999 up to the present time.
Mr Ower relies on the principles of res judicata and estoppel or Anshun estoppel as operating to prevent the appellant from re litigating his application for an increase in his pension. Mr Dailly for the appellant submits that the settlement between the parties in 2002 may have been reached for all sorts of reasons and that there has been no judicial determination of the matter in issue at the time and which is again in issue before me.
The [Act] provides, as I have said, for an increase in the pension under s 10 to be made by the STC commensurate with member's incapacity for work outside the police force and as has been submitted by Mr Ower, and which is not disputed by Mr Dailly, the manner in which that section is to be interpreted is set out in Lembcke v SAS Trustee Corporation.
Section 10(1D) provides for the STC to vary any such determination at any time. The matters that the STC takes into account when considering an application to vary are not set out in the Act.
It would be extraordinary if the STC could simply vary a pension at will. There must be, in my view, some evidence brought before this Court on an appeal from a decision of the STC as to a change in circumstances or fresh evidence.
The evidence before me from the appellant is that, as I have already said, his condition is much the same. The facts are the same except for the age of the appellant, which obviously has increased since 2002, the date of the last settlement.
He is now 57 years of age and as even Dr Wade concedes, age is and could be a negative factor in the appellant or anyone else I suppose at the age of 57 finding and indeed performing some work.
However, age was a factor which was also relied upon by the appellant at the time that the last appeal from the decision of the STC came before the Court in 2002. Whilst it may be that there were reasons for the parties entering into the settlement which provided for an increase of the pension from 72.5% to 77.5%, there is no evidence before me of those reasons.
In my view, there has been no evidence of change of circumstances or fresh evidence, which would enable me to come to a finding other than that which was agreed between the parties - that is, that the 77.5% pension was commensurate at the time with the incapacity for work outside the police force, or that his incapacity had increased.”
8 What fell from her Honour as to the need for a proof of a change of circumstance or fresh evidence, was applied by Ashford DCJ in Wilson v SASTC (unreported, 1 November 2007, matter RJ369\06). Unfortunately I do not have a copy of Judge Ashford’s reasons for judgment in Wilson but what her Honour said has been subsequently quoted in another judgment which I shall soon cite.
9 In Collins v SASTC [2012] NSWDC 225; (2012) 11 DDCR 198, I said commencing at [15]:
“[15] The first thing to consider is what must be proved. A similar situation to the current case arose in McDougall v SAS Trustee Corporation (unreported, 18 October 2004, RJ9881/03), a decision of my colleague, Judge Quirk. Her Honour pointed out that under s 10(1D) the defendant might make at any time a determination of an additional amount payable under s 10 of the Act, and also vary any such determination at any time. Her Honour went on to say this:
"The matters that the STC takes into account when considering an application to vary are not set out in the Act.
It would be extraordinary if the STC could simply vary a pension at will. There must be, in my view, some evidence bought before this Court on an appeal from a decision of the STC as to a change in circumstances or fresh evidence."
[16] As this Court can only do what the STC ought to have done, the inference to be drawn from what her Honour said is that before the STC varies a pension there must be before it some evidence of a change of circumstances or some fresh evidence. Her Honour's decision was followed by Ashford J in Wilson v SAS Trustee Corporation (unreported, 1 November 2007, RJ369/06). Her Honour specifically agreed with Judge Quirk's reasoning. Unfortunately, neither of those two decisions has been reported, but her Honour Judge Quirk's decision ought to have been reported. I mean no criticism of the reporting service in saying that; it is probably the case that Judge Quirk did not send a copy of her decision for reporting.”
10 In Wheadon v SASTC (unreported, 19 September 2014, matter RJ558/13), the matter was considered by Gibb DCJ. On 1 November 2001, Wheadon applied to the defendant for an increase in his pension allowance to 100% the salary of his office backdated to 16 March 1998. That application was in effect under s 10(1A)(c) of the Act. That application was considered by the defendant on 30 April 2002. The defendant decided to increase the plaintiff’s pension allowance from 72.75% to 81% of the salary of his office with effect from 1 November 2001, the date that the defendant received the application to increase the pension. Although the pension increase had been sought under s 10(1A)(c), the determination by the defendant was under s 10(1A)(b) of the Act. Wheadon did not appeal that determination. Wheadon then made a further application to the defendant which was decided by the defendant on 3 June 2013. On that occasion the defendant increased Wheadon’s pension to 92% the salary of his office, payable to him from 18 February 2013. In other words, the defendant accepted that Wheadon was totally incapacitated for work outside the police force and granted him an allowance under s 10(1A)(c) of the Act. He then made an application to this Court under s 21 which came on for hearing before Gibb DCJ and led to the decision to which I have referred.
11 Commencing on p 10, her Honour said this:
“If the plaintiff’s submissions be right, there is no change in circumstances and no fresh evidence, and nothing has changed since the 2002 determination. The proper approach is to dismiss the plaintiff’s application in whole. The Police Superannuation Advisory Committee should not have made the decision that it did. As the defendant submitted:
‘OWER: …I’m just concentrating my submission on there being no change and, if there is no change, then technically there should be no change to the 81% over the whole period.’
This submission rests upon an issue that has been explored in judgments by other judges of this court, but not, it seems, by the Court of Appeal. On 18 October 2004, Quirk DCJ said in McDougall v SASTC: [Her Honour then quoted most of what I have quoted in [7] above.]
In November 2007, Ashford DCJ addressed a similar problem in Wilson v SASTC and applied the reasoning above:
‘McDougall v SASTC is a decision of Judge Quirk, unreported, on 18 December 2004 in respect of an application to increase the pension entitlement…
Her Honour was of the opinion the plaintiff had not demonstrated any change in circumstances or fresh evidence which could justify an increase in pension entitlement as sought. The plaintiff told the Court his condition remained much the same and her Honour came to the view that having regard to s 10(1D) which provides for the STC to vary any determination at any time it would be extraordinary if the STC could simply vary a pension at will, and for a plaintiff to succeed in such an application there must be some evidence before the Court such as would demonstrate a change in circumstances or fresh evidence. I agree with her Honour’s reasoning’.
It is not just judicial comity which dictates that I follow that line of reasoning. It accords with principle and common sense. The need for finality in decision making is not quarantined exclusively to litigation. It also has significance in the context of a statutory trust. McColl JA said in SASTC v Cox [2011] NSWCA 408:
‘14. As Basten JA (Allsop P and Young JA agreeing) observed in Swift v SASTC [2010] NSWCA 182 (at [10] - [11]) (“Swift”), while s 10 ostensibly took the form of the operative provision pursuant to which a disabled member of the force “may be granted” a relevant gratuity or allowance, it ‘contains no unequivocal conferral of power to make such a grant’ and s 10(1B) is “the closest to an express power” to grant an annual superannuation allowance to be found in the Police Superannuation Act.
[…]
94. The appellant is the “trustee” of the Fund. There is no reason to think the legislature intended to use the expression in other than its legal and technical sense (cf Bathurst City Council v PWC Properties Pty Ltd [1998] HCA59; (1998) 195 CLR 566 (at 585 - 586)), although it must be accepted that the Fund lacks the element of the “traditional trust [as] one under which the settlor, by way of bounty, transfers property to trustees to be administered for the beneficiaries as the objects of his bounty [and in respect of which] normally, there is no legal relationship between the parties apart from the trust [and] the beneficiaries have given no consideration for what they receive.’:…
The [Act] allows a period of 6 months after the person is notified of a decision to apply to the District Court for redetermination. It would be odd if it were open to seek a fresh determination (without having appealed that determination) without a change in circumstance or fresh evidence. I apply the same approach as was taken by Ashford DCJ in Wilson v SASTC.”
12 There are thus four judges of this Court who have adopted this approach i.e. Judge Quirk, Judge Ashford, Judge Gibb and I. On a second or further application under s 10(1A) of the Act it is incumbent upon the plaintiff to prove a material change of circumstance prior to his or her being entitled to a further determination of the quantum of the plaintiff’s pension entitlement.”
1. There appears to me to be no material change of circumstance. However, there was fresh evidence that became available to the Defendant, namely the knowledge of the substantial increase in what was being paid to him by his business.
2. In the same decision, I also considered the relevance of increasing age, it is irrelevant. At [40], I said this:
"The effluxion of time and age are not relevant considerations. Clearly, with a passage of time a Plaintiff's age will increase. Age was not something taken into account by Quirk DCJ in McDougall, nor in my view is it appropriate to take into account here. One good reason for not doing that is that there are statutes applicable in this State that prohibit employers from discriminating against persons on account of, interalia, their age. Further on the same topic, Dr Anderson expressed the view that there has been no dramatic change in the Plaintiff's condition since 2006, although he thought it fairly obvious that a gradual deterioration, particularly in the spinal column, was due to degenerative changes that had been diagnosed."
1. How pension increases should be calculated has been authority decided by the Court of Appeal in Lembcke v SAS Trustee Corporation [2003] NSWCA 136; (2003) 56 NSWLR 736; (2003) 25 NSWCCR 464. The leading judgment was given by Santow JA, with whom Meagher and Ipp JJA agreed, albeit that they gave further reasons. At [48], His Honour said this:
"In determining incapacity, one may draw upon the well established principle that a worker's actual earnings are likely to be the measure of incapacity for work outside the police force, unless it is established that the worker's actual earnings are not a proper test: Pira Pty Ltd Trading as Langdon and Bartley v Tucker (1996) 14 NSWCCR 26 at 31-32 applying the reasoning in Aitkin v Goodyear Tyre and Rubber Co (Aust) Ltd (1945) 46 SR (NSW) 20; 62 WN (NSW) 233."
1. Aitkin concerned the proper interpretation of section 11(1) of the Workers Compensation Act 1926, that is, it concerned the assessment of the compensation payable to a partially incapacitated worker under the Workers Compensation Act then in force. The decision was one of the Full Bench of the Supreme Court comprising Jordan CJ, Halse Rogers and Street JJ. The judgment of the Court was delivered by the Chief Justice. Commencing on page 22, His Honour said this:
"Section 11 provides that, in the case of partial incapacity, the weekly payment shall in no case exceed the difference between the amount of the average with the earnings of the worker before the injury, and the average weekly amount he is earning, or is able to earn, in some suitable employment or business, after the injury, but shall bear such relation to the amount of that difference as under the circumstances of the case may appear proper. The burden of proving that the incapacity established by the worker is partial only, and, if so, of proving the other facts necessary to limit the weekly payment under section 11 is upon the employer.
The English section corresponding with section 11 has been considered in several decided cases. It was held by the House of Lords in Blakenore v Delta Mule (1919) Ltd (1935) 28 BWCC 193 at 199, that the phrase "is earning or is able to earn", et cetera, means "is earning, or, in some suitable employment or business, is able to earn". Each of these alternatives has been elaborately considered in a number of decided cases. As to the phrase "is earning", it has been held that if the partially incapacitated worker is earning something, his action earnings must prima facie be taken as the basis, and the rate of compensation provided for by section 9 by a reduced by a calculation based on the excess of his pre injury average weekly earnings above what he is actually earning: Blakenore v Delta (1919) Ltd. If, however, it is proved that his actual earnings are not a proper test, because there is some reason unconnected with his earning power which makes them lower than they should be, the other alternative, what he is 'able to earn', must be adopted.
This is so where it is shown that he is deliberating taking lower, paid work than he could get, or is idling, and on this account receiving less than he could be reasonably expected to obtain, or where his actual earnings have been compulsorily reduced by something unconnected with his injury or general earning power:
Jones v Amalgamated Anthracite Collieries Ltd [1944] AC 14 at 25; but, if the compulsory outside influence, instead of reducing, increases his actual earnings beyond what his injury make him otherwise capable of earning, his actual earnings must be taken as the basis: Heaney v BA Collieries Ltd (1944) 171 LT 163.
If, however, he is not earning anything, or, for some good reason, what he is earning cannot be treated as a proper basis, regard must be had to the alternative basis provided by the section what he is 'able to earn'. It has been held that this means physically capable of earning remuneration of a particular amount in some suitable employment or business, irrespectively of whether the demand for workers in the suitable employment is such as to admit of his getting a job. Hence, if he is not earning anything, he is entitled to compensation calculated only on the basis of the excess of his pre injury average weekly earnings over what he could earn in some suitable employment if he could get a job: Cardiff Corporation v Hall [1911] 1 KB 1009; McNally v Furness, Withy & Co Ltd [1913] 3 KB 605 at 606; Bevan v Nixon's Navigation Co [1929] AC 44."
1. Learned counsel Mr Ower did not refer to Heaney v BA Colliers Ltd. It must be considered in light of what fell from the Chief Justice. Unfortunately, I do not have access to the Law Times reports, but Heaney v BA Colliers Ltd is reported at [1944] 2 All ER 289. The decision was one of the English Court of Appeal comprised of Scott, Luxmoore, and du Parcq LJJ. The judgment of the Court was delivered by du Parcq LJ. Heaney had been injured in an accident on 18 November 1937, and thereafter received compensation on the footing of total incapacity until early March 1938. From then until 3 September 1939, he was working intermittently for the respondent to the appeal on light duties, earning wages appreciably lower than his pre-accident wages, and receiving compensation on the basis of partial incapacity. On 3 September 1939, he was called up for military service, and since then had been receiving army pay and allowances which taken together amounted to less than his pre-accident wages, but exceeded probably those he could or would have earned in any civil employment. In May 1942, Heaney applied for review of compensation for partial incapacity commencing on 5 March 1938, giving credit for all sums received thus far by way of compensation. He contended that his army pay, and allowances should be disregarded and the compensation should be calculated on the basis of his true earning capacity. His Lordship said at 291H:
"In our judgment, the application of the words of the section to the facts of this case presents no real difficulty. It is well settled that the words 'which he is earning' are not qualified by the later words 'in some suitable business or employment'. If a workman is in fact earning money in any capacity the general rule is that amount which he is earning must be the basis of the calculation which falls to be made. This general rule has been applied in this Court to the pay and allowances of a man who has voluntarily enlisted in the army (Port of London Authority v Gray [1919] 1 KB 65). This general rule is, however, subject to a necessary exception. Section 9 lays down rules for calculating the amount of compensation for incapacity for work, and they must not be applied so as to compel an employer to compensate a workman for a loss of earnings which is due, not to incapacity for work, but to some cause wholly unconnected with his incapacity. If a man chooses to take work at a low rate of pay when he could get better paid work, or if he chooses to be idle and to do less work than might reasonably be expected of him, and so keeps down his wages, then his actual earnings cannot be taken as the basis of the calculation. In such cases the words 'which he is earning' cease to be applicable, and the arbitrator must ascertain what the man is 'able to earn in some suitable employment or business'.
The peculiarity of Jones’ case [1944] AC 14 was that the workman had not elected, but had been compelled to take work for lower pay than he could have earned in other employment. The decision of the House of Lords was that, in the circumstances his 'earnings' in the army could not be treated as the basis of the calculation. If they were so treated, the employers would be compensating the workman not for a loss due to incapacity but for the loss due to his liability to serve in the forces of the Crown. For this purpose we are of the opinion that no distinction can be made between the volunteer and the conscript. In each case the loss suffered is due to a cause which has nothing to do with the man's incapacity, and it is immaterial that the cause is in the one case the man's voluntary act, and in the other an act done under compulsion of law."
1. It can be seen, therefore, in the statement made by the Chief Justice in Aitkin, relying upon Heaney, that if the compulsory outside influence instead of reducing, increases his actual earnings beyond what his injury would make him otherwise capable of earning, his actual earnings must be taken as the basis of the calculation. However, there is no authority which states that in the situation such as the present, the Court must into account an abnormally large salary being paid to the worker because of his not being at arm's length from his employer.
2. Before I leave this aspect of the case, I should indicate that I have reread Pira Pty Ltd t/as Langdon & Bartley v Tucker again, but there is nothing in it that is relevant to this case other than the continuing application of Aitkin's case. Pira Pty Ltd t/as Langdon & Bartley v Tucker was an unsuccessful appeal from one of my decisions. The principal judgment was given by Abadee AJA with whom Cole JA and Beazley JA (as Her Excellency then was) agreed.
3. The other thing which I must point out is that this is not a claim for workers' compensation. This is a claim for a superannuation benefit. A worker does not, and in fact the law prevents him, from making any contribution to the purchase of compulsory insurance which pays for workers' compensation. That is not so with respect to superannuation. The Plaintiff, as I said at the commencement of these reasons, was a contributor to the Police Superannuation Fund. It is from that Fund that theoretically the benefits payable under the Act are made. It is to that Fund that the Plaintiff paid part of the salary of his office by way of contribution to his superannuation entitlement. The fact that the Police Superannuation Fund may well be in deficit and has been for many years is irrelevant. This was a cover which the Plaintiff by his contributions to the Superannuation Fund, purchased.
Consideration
1. Here, it is abundantly clear that the Plaintiff built up a very successful business. Due to his increasing age and the business’ increasing profitability, he decided to employ somebody to do work that he had previously been doing, thereby lessening the stress that might be placed upon him, lessening the physical demands of the work, and allowing him to enjoy the profit which his business was making.
2. Unfortunately, the affairs of Thomas Colquhoun Pty Ltd could have been better managed. Instead of his taking profit by way of a very large salary wholly incommensurate with what he was actually doing, he could have been paid director's fees, the company could have declared a dividend, he could have been a joint shareholder with his wife, they could have derived dividends from their shareholding in the company and could have taken the profit from the company in that fashion. Why that was not attended to, I do not know, but it may have something to do with a double impost of company tax and income tax. It, in my view, would be completely improper to take into consideration the fact that the Plaintiff was drawing on the profits of his company by taking an extremely large salary for what he was doing, drawing a weekly payment of $3,600 per week since 22 December 2021.
3. Another aspect of this case is this, I have remarked on many occasions in jocular terms that the inevitable result of the decision of the Court of Appeal in Lembcke v SAS Trustee Corporation is that, on the analysis of the section adopted by the Court of Appeal, it is almost axiomatic that there be some addition to the base pension to account for the incapacity of a former member of the police force who has lost part of his ability to earn in the open labour market. To use the jocular expression that I use with counsel, "Every punter gets a prize".
4. Clearly, there are certain things which the Plaintiff now cannot do because of his certified HOD infirmity of anxiety and depression, whatever the correct diagnosis of the condition is. In those circumstances, the decision of the Defendant to reduce the Plaintiff's salary back to the base rate is, in my view, insupportable. Furthermore, from admissions clearly made by the Plaintiff, for example, to Ms Windsor that he was earning approximately $150,000 per annum or $2,885 per week, and by the admission contained in the application made by the Police Association on his behalf that he was earning $3,000 per week before tax for his 10 hours work a week, the Defendant well knew that the Plaintiff's income was much greater than what was contained in the submission made to PSAC by the administrator retained by the Defendant. There was much force in the submission put to me by Mr Hammond on behalf of the Plaintiff that this is an attempt by the Defendant to remedy its own mistake contained in the submission made to it, which was acted upon by the PSAC on 27 April 2022.
5. The question is: what relief should the Court grant? Clearly the Plaintiff has invoked section 21 of the Act which allows determinations by this Court. Under section 21(4) this Court, after considering an application under section 21, may make a determination that the decision of the Defendant or of the Commissioner of Police, as the case may be, in respect of the application that was made be either confirmed or set aside, and replaced by a different decision made by the Court. I cannot, in my view, merely set aside the decision made by the Defendant on 29 June 2023. I am required by section 21(4)(b) to replace it with a different decision made by me.
6. Quirk DCJ made a very positive finding as to the Plaintiff's credibility. At page 33 she said this:
"I should say that the Plaintiff presented in a straight forward manner, made appropriate concessions in cross examination, and I by and large accept him as a witness of truth. Much of his evidence about his circumstances leading up to his resignation is corroborated in contemporaneous documents."
There was no adverse comment made by Kearns ADCJ about the Plaintiff's presentation. The Plaintiff presented as a very relaxed easy-going man who clearly has had exposure to many Court cases, not only concerning his pension entitlement but no doubt over the many years he was a serving member of the NSW Police Force. Clearly, he is the master of what he wishes to do, but he does not appear to me to seek to be idle. He was able, when first examined by Dr Bertucen, to work for 20 hours per week. Objectively his HOD condition has improved remarkably since that time. It would, in my view, be completely inconsistent to now say that he could only work for either five hours per week, or ten hours per week, or the 15 hours per week that forms the assessment of Dr Anand. I accept that the Plaintiff still has the ability to work for 20 hours per week. That must be contrasted with the 40 hours per week that Mr Scott Longworth is now doing for Thomas Colquhoun Pty Ltd, or, as Mr Longworth put it, 40 hours per week plus.
1. Had Mr Longworth not been retained by Thomas Colquhoun Pty Ltd the Plaintiff would now be doing what Mr Longworth does, albeit the Plaintiff may have been more promptly doing it because of his much longer experience in the job. If pressed, bearing in mind what I have already said about the base salary of Mr Longworth, and the perquisites that he receives from the Plaintiff, and the Plaintiff's company, I would value what the Plaintiff could do uninjured as being $150,000 per annum. In my view his ability to do that work, to earn that money over a 40 hour week has been diminished by half. The additional amount payable under section 10(1A)(b) is 12.25%. Half of that is 6.125%. When I add that to the base salary of 72.75% I ascertain that the amount payable is 78.875%. That, in my view, is what the Plaintiff's pension ought now be.
2. The question then becomes when I should commence that payment? Three options had been put before me by counsel. The first is today's date, the second is the date on which PSAC made its decision, 29 June 2023, and the third was 22 December 2021 when the Defendant reduced the Plaintiff's pension to the basic rate. On my view of the operation of section 21(4) of the Act, bearing in mind that the pension rate of 80.16% stopped on 21 December 2021 I should commence the rate I have determined from 22 December 2021.
3. I have inquired of counsel whether any further reasons are required. I am told that none is so required. For those reasons I set aside the decision of the Defendant (PSAC) made on 29 June 2023. I determine that the Plaintiff's hurt on duty salary pension benefit be from 22 December 2021, 78.875% of the attributed salary of his office. I order the Defendant to pay the Plaintiff's costs.
…….
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 16,238 |
nsw_caselaw:19105e1f0dc8189e3a4a20c1 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Hunter New England Local Health District v C [2024] NSWSC 929 | https://www.caselaw.nsw.gov.au/decision/19105e1f0dc8189e3a4a20c1 | 2024-08-04T23:51:28.227008+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Hunter New England Local Health District v C [2024] NSWSC 929
Hearing dates: 15 March; 12, 22 April 2024
Date of orders: 15 March; 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Equity - Duty List
Before: Parker J
Decision: See [96]-[97]
Catchwords: CHILD WELFARE — jurisdiction — Supreme Court of New South Wales — parens patriae — child requiring surgical procedures where blood transfusion may become necessary — parents consent to surgical procedures but refuse consent to possible blood transfusion on religious grounds — order authorising potential transfusion made — further consideration of whether application was necessary given provisions of s 174 of the Children and Young Persons (Care and Protection) Act 1998 (NSW) — whether to make suppression orders under the Court Suppression and Non-publication Orders Act 2010 (NSW) given existing protections parties have – closure of Court and file – pseudonym orders — equitable obligations of confidence — Court confidentiality — statutory suppression order made
Legislation Cited: Children and Young Persons (Care and Protection) Act 1998
Court Suppression and Non-publication Orders Act 2010
Cases Cited: Bourne v Raychem Corporation [No 3] [1999] 1 All ER 908
Breen v Williams (1996) 186 CLR 71
Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509
Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39
Crest Homes Plc v Marks [1987] 1 AC 829
Earl v Nationwide News Pty Ltd [2013] NSWSC 839
Harman v Secretary of State for the Home Department [1983] 1 AC 280
Hearne v Street (2008) 235 CLR 125
Hunter New England Local Health District v JI [2023] NSWSC 1245
Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21
Re Bernard [2009] NSWSC 11
Scott v Scott [1913] AC 417
Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217
Unicomb v Blais [2024] NSWSC 903
X v The Sydney Children’s Hospital Network (2013) 85 NSWLR 294
Texts Cited: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015)
P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters)
Category: Principal judgment
Parties: Hunter New England Health District (Plaintiff)
C (First Defendant)
M (Second Defendant)
F (Third Defendant)
Representation: Advocates:
J Wong (solicitor) (Plaintiff)
E Engwirda (counsel) (Second and Third Defendants)
Solicitors:
Crown Solicitors Office (Plaintiff)
Peake Legal (Second and Third Defendants)
File Number(s): 2024/99625
Publication restriction: Nil
JUDGMENT
1. These are proceedings in the Court’s parens patriae jurisdiction concerning the first defendant, who is a twelve year-old boy. They were brought to obtain authorisation to administer blood transfusions to him, if required, in the course of surgery in a hospital operated by the plaintiff. The reason for the application was that his parents, who are the second and third defendants, while consenting on his behalf to the surgery, did not consent to the use of blood transfusion procedures as part of it.
2. In accordance with the pseudonym orders made at the beginning of the proceedings, the child who is the subject of the proceedings is referred to as “C”, and his mother and father are referred to as “M” and “F” respectively. The hospital at which C was treated is referred to as “H”.
3. The application was brought on for hearing urgently. It came before the Court on 15 March, only hours before the surgery was scheduled to take place. In the time available, full argument was not possible, but I was satisfied, in the circumstances, that authorisation should be given for the administration of a blood transfusion if necessary. I made orders accordingly. The surgery went ahead; as it happened, no transfusion was required.
4. One of the issues referred to at the hearing on 15 March was whether the application was necessary at all, given the provisions of s 174 of the Children and Young Persons (Care and Protection) Act 1998 (“CYPA”). Those provisions permit the administration of medical treatment without consent in certain emergency situations. There was no time to make a final decision on this on 15 March, and I considered that the raising of the issue was not a reason, in the circumstances, to refuse the application. The parties however asked me to hear further argument at a later hearing, in case the issue might be relevant to some future application.
5. Another matter which was held over was the question of non-disclosure and non-publication. The hearing on 15 March was held in closed court and, as already indicated, I made orders that the defendants and the hospital be referred to by pseudonyms. But the plaintiff sought further orders under s 7 of the Court Suppression and Non-publication Orders Act 2010 (“CSPO Act”) concerning the proceedings (for convenience, I will refer to these as “statutory suppression orders”). Whether such orders should be made, and, if so, their scope, was also debated at later hearings.
6. This judgment therefore has three elements. First, I give my reasons for the orders I made on 15 March authorising the administration of blood transfusions to C, if required, in the surgery. Second, I set out my views on the application of CYPA s 174. Third, I deal with the application for suppression or non-publication orders under the CSPO Act.
Court’s authorisation of blood transfusions
1. On 10 March this year, C sustained a compound fracture to his lower left leg and was airlifted to H. Following consultations with C’s parents, M and F, his treating doctors decided to schedule surgery for him. The decision was confirmed on 12 March (a Friday) and the surgery was scheduled for 12:00 noon on the following Monday (15 March).
2. The application for approval first came before me in the Duty List on the morning of 15 March, two and a quarter hours before the surgery was scheduled to begin. The plaintiff was represented by a Solicitor Advocate of the Crown Solicitor’s Office, Ms Wong.
3. Ms Wong had prepared the application on the basis that it would be made ex parte. But moments before the hearing began, an email was sent on behalf of the parents stating their opposition to the application and seeking an adjournment to enable them to attend Court before the 12 noon deadline. I stood the application down to accommodate this request. At 11:15 am Mr Engwirda of counsel appeared for M and F, and the hearing then went ahead.
4. The application was supported by an affidavit from a plastic surgeon (“Dr P”), who was one of the surgeons to be involved in carrying out the procedures on C, and an affidavit from the Crown Solicitor with carriage of the matter.
5. Dr P, in his affidavit, set out the treatments that C had already received while at H, namely two surgeries to clean out and flush the wound. He then addressed the proposed surgical procedures, which involved surgeries undertaken by both the orthopaedics and plastics departments, stating that it was the standard and required treatment which was applied to injuries of this nature throughout the modern world.
6. Relevantly, Dr P stated:
Due to the significant amount of soft tissue that has been damaged on [C’s] leg, and the need to bring in tissue with [C’s] own blood supply, there are no smaller or less significant alternative treatment options which would have the same result.
…
If [C] does not have surgery on the 15 March 2024, or within the next 48 hours after that, the risk of infection becomes very high, and the risk of requiring amputation of the limb becomes very high.
1. He went on to emphasise the ‘very low’ likelihood that a blood transfusion might be required throughout the proposed surgery:
A risk of the surgery is that [C] may require a blood transfusion. My assessment is that the risk of [C] requiring a blood transfusion during the surgery is very low and it is very unlikely that we will need to undertake a blood transfusion.
…
I estimate that I have undertaken approximately 200 surgeries of this nature in the last 5 years. I estimate that a very small amount, approximately 10 patients, may have required a blood transfusion in the course of this surgery and in most of those cases, the patient required a transfusion due to a concurrent injury.
1. Dr P also summarised consultations which the parents had with various staff employed at H in which they were informed of the possible need for a blood transfusion to C. During these consultations, it was told to the parents that, in the “unlikely” circumstance that a blood transfusion was required and not administered during the principal surgery, there became a risk that C might lose his leg, or worse, die.
2. Finally, Dr P stated that C’s medical team had been sensitive to the religious beliefs of the defendants and, for this reason, planned to take additional steps throughout the surgical procedures to minimise C’s haemoglobin and blood loss.
3. The second and third defendants relied on an affidavit of M. She stated that she believed that the principal surgical procedures were the best course of treatment for C and that she was ‘eager’ for C to receive such procedures without delay. However, she did not consent to the “transfusion of whole blood, red blood cells, white blood cells, plasma or platelets for [C]” on the grounds that such procedure contravened her sincerely held religious convictions as a Jehovah’s Witness, and namely God’s command to ‘abstain from blood’ (Acts 15:28-29).
4. M also requested that, if the Court was minded to make orders authorising the transfusion of blood, they be limited in respect to their duration and only applicable to specified clinicians who are committed to avoiding any unnecessary use of blood transfusion procedures in accordance with her “deeply held religious beliefs”.
5. In response to M’s affidavit evidence, at approximately 11:37am, the form of the short minutes of order was amended. The amendments differentiated the surgical procedures from the blood transfusion procedures and limited the persons able to authorise the blood transfusions to certain ‘authorised clinicians’ who were, at all times, to minimise and avoid the unnecessary use of them.
6. The power of the Court, under its parens patriae jurisdiction, to make orders of the type sought by the plaintiff in circumstances such as the present is well established. The decision of the Court of Appeal in X v The Sydney Children’s Hospital Network (2013) 85 NSWLR 294 is the leading example. The scope of the power and the basis on which it is exercised, in the interests of the child who lacks legal capacity, emerge clearly from that decision, especially at [2]-[6] (Beazley P) and [26]-[31] and [51]-[68] (Basten JA). In X, the child in question was only four months away from turning eighteen and had forcefully expressed his own opposition to receiving a blood transfusion, but the order authorising it was upheld. That complicating factor does not arise in the present case because C is much younger, and it was not suggested that he had attained a sufficient level of maturity to form his own independent view.
7. The medical evidence of Dr P clearly established the need for the proposed surgical procedures and the lack of any adequate alternative treatment options. It also established that that there was a risk to C of leg amputation or death if a blood transfusion become required during the surgical procedures but was not administered. In the end, this did not appear to be in dispute. Prima facie, it was clearly in C’s best medical interests for his treating doctors to be able to administer a blood transfusion to him should that become necessary in the course of the surgery.
8. In considering my decision, I of course took into account the religious convictions of C’s parents and the importance to them that C be treated in accordance with the tenets of their faith. The weight of this factor, however, varies from case to case. In the case of a child with a terminal condition where the proposed treatment would not alleviate that condition, religious objections to that treatment might be of great weight. But in the present case, everyone agreed that surgery was necessary to correct damage from C’s injury, and the (potential) treatment in issue was simply an ordinary precaution to avoid adverse consequences which might otherwise result from that surgery.
9. No doubt C is being brought up to share his parents’ religion. But, given his age, it cannot be presumed that he will necessarily adhere to that religion as an adult. In circumstances where the Court was making a decision on C’s behalf with potentially life-changing implications, I thought that medical considerations, which strongly favoured the availability of blood transfusions, if required, outweighed religious objections to that course.
10. In this regard, it was also relevant that every reasonable step was being taken by H to minimise the possibility of transfusions being required. H was going as far as it medically could to accommodate the religious objections from C’s parents.
11. As already mentioned, there was an issue between the parties as to whether, in view of the terms of CYPA s 174, an authorisation order was required at all. Mr Engwirda contended that s 174 would be available if required; Ms Wong contended that it would (nor at least might) not be. There was no time to resolve the issue at the hearing.
12. It was my view that in cases where s 174 was available, it was still open to the Court to make a treatment authorisation order in its parens patriae jurisdiction (a view coinciding with the Court of Appeal’s decision in X: see [19] above). On no view, therefore, was the unresolved issue a reason to refuse authorisation. To the contrary, I thought the uncertainty as to the application of s 174 which existed at the time was itself a further factor in favour of making an order, which would put matters beyond doubt for those involved in C’s treatment.
13. For the above reasons, I was satisfied that the application was in the best interests of C and thus made orders, in the form of the amended short minutes of order, on 15 March.
Powers of medical practitioners under CYPA s 174
1. As I have mentioned above, the parties returned before the Court on 12 April to further consider the operation of CYPA s 174 in the context of its relevance to future applications of this nature. Each side provided further written submissions on the issue. Two affidavits were read on behalf of the defendants: a further affidavit from the second defendant, M; and an affidavit from the third defendant, F.
2. M’s second affidavit added further detail to what she had said in her original affidavit. Various consultations that she and F participated in with employees of H prior to the surgical procedures were summarised: the first with a haematologist; and the second with a paediatric social worker:
[The haematologist] explained that this was not the first time he had treated Jehovah's Witness patients and appeared sensitive to our instructions, assuring that he would do everything possible to avoid the administration of a blood transfusion. However, he explained that if a blood transfusion became urgent during the surgery, the law gives doctors the authority to administer it.
…
In the late afternoon of 14 March 2024, [the paediatric social worker] met with my husband and I [sic]. [She] indicated that the [H] legal team intended to seek a court order authorising the Doctors to administer a blood transfusion to [C] during the procedure.
1. F, in his affidavit, also referred to the consultation with the haematologist:
Although [the haematologist] was sensitive towards our concerns for [C’s] treatment and expressed he would do everything possible to avoid a blood transfusion, he did explain that in the event a blood transfusion became necessary to save [C’s] life or prevent serious injury during the procedure, there was provision in the law to allow for such treatment despite the absence of our consent.
1. CYPA s 174(1) provides:
174 Emergency medical treatment
(1) A medical practitioner may carry out medical treatment on a child or young person without the consent of--
(a) the child or young person, or
(b) a parent of the child or young person,
if the medical practitioner is of the opinion that it is necessary, as a matter of urgency, to carry out the treatment on the child or young person in order to save his or her life or to prevent serious damage to his or her health.
1. For the purposes of s 174, a “child” is a person under the age of sixteen, and a “young person” is above the age of sixteen but under the age of eighteen. C was therefore a “child” for the purposes of the application.
2. Initially, Ms Wong contended that the parens patriae case law showed that recommended medical treatment should generally be provided before it becomes an emergency. But, in the present case, I thought this was impossible given that the emergency treatment (blood transfusion) is a contingent one which would only arise, if at all, during the scheduled surgical procedure. When I put this to Ms Wong, she modified her argument to focus on the ‘foreseeability’ of the possible emergency treatment and the fact that it was “identified and discussed with the parents” prior to the scheduled surgery.
3. In the end, Ms Wong’s argument was that where a medical procedure has been foreseen as a possibility, it needs to be the subject of a request for consent, and it thereby ceases to qualify as ‘urgent’ for the purposes of s 174. Accompanying this argument, was a general proposition advanced by Ms Wong that, as a matter of construction, the word ‘emergency’, as it appears in the heading of s 174, means that it cannot have been foreseen.
4. The first problem for Ms Wong’s argument is that the text of s 174 does not speak in terms of foreseeability. The operative term is “urgent”.
5. The two terms are not antonyms. Foreseeability calls attention to an anterior point in time at which an event was to have been foreseen. Urgency relates to a state of affairs as at the moment the term is contemplated. It does not look to an anterior event. Circumstances may arise which make a course of action urgent even if those circumstances were foreseeable, or, for that matter, even if they were actually foreseen.
6. It follows that, textually, the question which arises under s 174 is simply whether, at the time the medical practitioner is called upon to consider carrying out the treatment in question, that treatment is, in the practitioner’s opinion, necessary “as a matter of urgency”. It is immaterial whether the need for such treatment was, or might have been, foreseen at an earlier point.
7. This conclusion is supported by the express provision in s 174 that treatment may be carried out “without the consent” of the relevant child or parents. This means that s 174 is available even if consent to the treatment in question has been sought in advance and refused. That is not consistent with “urgency” in s 174 containing an element of unforeseeability.
8. The same conclusion is reinforced by considerations of Parliamentary intention. No submissions about the statutory history of s 174 were provided to the Court. But it is plainly a facultative provision which is designed to operate in the interests of patients by giving their treating practitioners power to carry out treatment which otherwise might not be possible because of a lack of prior consent. Its obvious intention is to give practitioners power to give whatever treatment they may consider, in the exercise of medical judgment, is in the patient’s interests. To require a practitioner to consider whether the treatment had, or might foreseeably have, been foreseen, and consent obtained, at an earlier point would at best be a distraction. At worst it could be disastrous. There is no warrant for introducing such a restriction by way of implication.
9. I do not think that the use of the word “emergency” in the heading to s 174 makes any difference. In the first place, section headings are, at best, a “minor aid” and an “unsure guide” to interpretation in the event that the provision itself is ambiguous (see P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [5.120]). I do not think there is any relevant ambiguity in s 174. In any event, an “emergency” no more implies unforeseeability than “urgency” does.
10. Finally, I turn to consider the case law. CYPA s 174 was mentioned in two first instance parens patriae cases to which I was referred: by Gzell J in Re Bernard [2009] NSWSC 11 and by Henry J in Hunter New England Local Health District v JI [2023] NSWSC 1245 (there was no relevant discussion of its operation in X). During the hearing on 12 April, Ms Wong told me that she had been unable to find any other case law on the question.
11. In Re Bernard, the child was a two year-old boy who had been diagnosed with acute lymphoblastic leukaemia. Gzell J made orders granting medical practitioners a “general entitlement” to transfuse blood to a child in the absence of the parents’ consent “if” it became necessary to do so. But it seems that there was no real doubt that transfusions would be necessary. His Honour summarised the medical evidence (at [11], emphasis added):
Dr Bergin says that the medical treatment being administered to Bernard will require further transfusions of blood products. It is not possible to predict when transfusions will be required, nor to predict how often transfusions will be required.
1. In explaining his decision to make the orders sought, his Honour stated (at [19]):
The purpose of making an order granting general entitlement, subject to [the medical practitioner’s] determination, or that of her substitutes if she is not available, that there is no alternative, and subject to the parents being advised of a transfusion, if that be possible, is to ensure that [the child’s] treatment programme proceeds in an orderly fashion. That, in my view, is in the best interests of the child. It is not sufficient that the hospital waits until [the child] is in a critical condition and a medical practitioner decides to act as a matter of urgency under [CYPA s 174].
1. In JI, Henry J was faced with an application, similar to that which was before me, seeking authority to treat a three year-old girl, JI, with blood or blood products, if it became necessary, during a surgery. At [12], Henry J made the following comment:
JI’s medical practitioners may be able to carry out the treatment without the Parents’ consent or a Court order in the event they are of the opinion that it is necessary, as a matter of urgency, to save JI’s life or prevent serious damage to her health: [CYPA s 174]. I accepted the plaintiff’s submission that it was preferable and in JI’s best interests for her treating specialist and medical team to have certainty about treatment was authorised before JI’s condition deteriorated to the point of an emergency and an urgent decision was required under that Act.
1. In neither of these cases was the Court presented, as I have been, with detailed submissions on the operation of CYPA s 174. I do not think either decision calls into question the conclusions which I have reached in that regard.
2. For the reasons which I have given, I think that CYPA s 174 will be available in most, if not all cases, of the present type. But at the same time, the decision in X clearly establishes that the existence of s 174 does not limit the Court’s powers under the parens patriae jurisdiction, with respect either to a “young person”, or, a fortiori, a child: at [48]-[50]. It is open for the Court to make an order authorising a medical practitioner to administer medical treatment to a child without the consent of the child’s parents if the circumstances so require and it is in the child’s best interests to do so, irrespective of whether the medical practitioner would have power to administer that treatment under s 174.
3. The availability of s 174 is, however, something to be taken into account if the Court is asked to make an order under its parens patriae jurisdiction. It seems to me that there is a balancing exercise to be carried out. On the one hand, an order authorising specified medical treatment under the parens patriae jurisdiction, provided that any conditions in the orders are met, gives complete certainty and enables medical practitioners to proceed without any concern that action will be taken against them for administering the treatment in question. On the other hand, the making of a parens patriae application will impose costs on all parties, and may prove to be a distraction, especially if it is sought on the basis of a contingency which does not eventuate.
4. In these circumstances, if the treatment is particularly contentious, a parens patriae application may well be necessary to clarify the position so far as the medical practitioners are concerned, especially if, as in Re Bernard, the treatment in question is certain, or virtually certain, to be necessary. On the other hand, if the treatment involves a contingency which is unlikely to occur, and the child’s parents accept that their wishes can be overridden by a medical practitioner’s judgment of medical necessity under s 174, it may be better to spare all of the parties the costs of an application which the parents may feel duty-bound to contest.
5. In the present case, with the benefit of the argument which I have now received about the operation of CYPA s 174, I think that the section would have been adequate to protect C’s treating doctors should a transfusion have been required. On the evidence, it was quite unlikely that a transfusion would in fact be necessary, and the parents had been advised of, and apparently accepted, the existence of the statutory power to override their wishes concerning that contingency. Furthermore, every step had been taken, consistent with C’s proper treatment, to minimise the need for any such transfusion.
6. This, of course, is a hindsight view, and does not imply any criticism of the plaintiff’s decision to bring the parens patriae application in the present case. But should similar circumstances arise in future, it may be that no parens patriae application will be considered necessary.
Statutory suppression order
1. The plaintiff’s originating summons sought orders that the Court be closed and pseudonyms be assigned to the parties, and that, subject to any further order by the Court, the file be unavailable for review by any person except the parties (in C’s case, once he turns eighteen) and their legal advisors. The summons also sought the following statutory suppression order:
An order … up to and including 1 January 2030 or further order of the Court, pursuant to s7 of the [CSPO Act] prohibiting the publication or other disclosure of any information tending to reveal the identity of [C], [M], [F] or the Parents, H, any witness in the proceeding and any of the medical practitioners, nursing staff or other such persons who have provided or are to provide medical, surgical and nursing or ancillary treatment to [C].
1. In support of the summons, Ms Wong read an affidavit from the solicitor with carriage of the matter, Ms S. In her affidavit, Ms S supported the making of the above orders to protect the identity of the persons involved in the proceedings on the basis that:
The identification of [C] and his parents in the public arena potentially poses unnecessary stress or an increase in stress on the parents and [C] whilst he is currently seeking medical treatment. I am of the view that such stress is not in the best interests to [sic] [C].
In my opinion, it is necessary and in the public interest for the non-publication orders to be made and that the public interest in the making of those orders significantly outweighs the public interest in open justice.
1. M, in her initial affidavit, also sought the making of “an indefinite non-publication order” to be made in order to “ensure the privacy of both [C] and [M’s] family”.
2. As already noted, on 15 March I made a pseudonym order and an order that the proceedings be conducted in closed court. I also made the order for the file to be kept confidential, as sought. Such orders are usual in applications of the present type, and, as will be seen below, are justified by the nature of the proceedings. There was no time to hear argument about the statutory suppression order which was sought, and the issue was stood over for further hearing. But, from the outset, I did flag with the parties a particular concern that the order, as it appeared in the summons, contained a blanket prohibition on disclosure (to anyone, even a family member or friend of C) of information which might identify those who had been, or would be, involved in C’s medical treatment, irrespective of C’s wishes or those of his family.
3. When the matter returned before the Court on the 12 April, Ms Wong continued to press for an order in the same form as that sought in the summons. She advanced two bases, derived from s 8 of the CSPO Act, which she contended justified the making of an order of this nature. First, that it was necessary to protect the safety of the persons involved in the proceedings: s 8(c). Secondly, that such protection is necessary as a matter of public interest which outweighed the competing public interest in open justice: s 8(e). In her submissions she stated:
The likelihood that disclosure of the sensitive information would lead to identification of [C] and that such identification would be harmful to him is not the subject of evidence. It is respectfully submitted, however, that this can be safely inferred from the exceptional nature of the application combined with the specific names of the hospital and medical treaters.
1. For his part, Mr Engwirda read an affidavit from F and proposed his own amended draft version of the statutory suppression order. The affidavit indicated, in the same terms as M (see [52]), that he sought the making of an “an indefinite non-publication order”. The amended draft order was in the following form:
1. An order that pursuant to s7 of the [CSPO Act] prohibiting the publication of any information tending to reveal the identity of [C], [M], [F] or the Parents, H, any witness in the proceeding and any of the medical practitioners, nursing staff or other such persons who have provided or are able to provide medical, surgical and nursing ancillary to [C].
2. Order 1 shall continue until the death of [C] or other order of the Court.
3. Order 1 shall not bind the Defendants.
4. Reserve to all parties liberty to apply for an order that Order 1 be discharged or varied.
1. Mr Engwirda’s draft order removed the prohibition on disclosure and sought only a prohibition on publication. Other differences concerned the duration of the order and the persons who are subject to it. Mr Engwirda contended that s 12(2) of the CSPO Act, which requires that “the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made”, namely to protect [C]’s privacy, should not limit the operation of the order to C reaching any particular age. He further submitted that, “given that the order is precipitated by questions of [C]’s privacy, the Defendants should not be subject to the order”.
2. Mr Engwirda submitted that a statutory order was necessary in the public interest (CSPO Act s 8(1)(e)). But a question arose as to whether the order was truly necessary given that the proceedings had been conducted in closed court and given the obligations of confidentiality which apply to the plaintiff, its medical staff and its lawyers (below [62]-[70]). When I raised this with Mr Engwirda, he received instructions to cease pressing for any orders under the CSPO Act.
3. Ms Wong also altered her position after I raised this point. She ceased to press for a non-disclosure order but continued to seek a non-publication order. But this did not deal with all of the questions which I had foreshadowed on 15 March regarding the scope of the proposed order. Eventually, I adjourned the proceedings at Ms Wong’s request to allow her a further opportunity to address such questions.
4. When the matter returned on the 22 April, Ms Wong provided draft orders in the following form:
1. Pursuant to s7 of the [CSPO Act] order that up to and including 1 January 2030 or until further order of the Court, the publication of any information tending to identify the following persons is prohibited without their written consent:
a. any party to the proceedings;
b. any witness to the proceedings; and
c. the names of any medical staff of the Plaintiff who provided treatment to the First Defendant.
2. Pursuant to s7 of the Act, order that up to and including 1 January 2030 or until further order of the Court, publication by any party or witness to the proceedings, without the written consent of all parties, of the evidence led or the submissions made in the proceedings, is prohibited.
1. The question for the Court remains whether there is an appropriate basis in the first place to supress the publication of information relating to the proceedings and, if so, to what extent. But before dealing with that question, I think it is necessary to consider the other protections which the parties have from disclosure or publication of information about the proceedings and their subject-matter.
2. Those protections derive from three sources. One is the obligation which arises in equity from the receipt of confidential information. The second is the orders made on 15 March for the parties to be identified by pseudonyms, for the proceedings to be conducted in closed court, and for access to the court file to be restricted to the parties. The third is the obligation which attaches to documents provided compulsorily to the court.
3. Confidentiality in equity: Equitable obligations of confidence arise automatically where information has the necessary quality of confidence about it; and the information was imparted in circumstances importing an obligation of confidence: see Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21 at [39]. Obligations of confidence that will be enforced by equity need not be express.
4. In Breen v Williams (1996) 186 CLR 71, Gummow J described the equitable obligations of confidence owed by medical practitioners (citations omitted):
A medical practitioner has been said to be under an obligation in equity not to disclose confidential information concerning a patient which is learned in the course of professional practice, an obligation from which the medical practitioner may be released only with the express or implied consent of the patient.
1. In the usual case, this would cover all details of the advice and treatment given by the doctor to the patient. Indeed, confidentiality can extend to the very fact that the doctor is being seen by the particular patient: Earl v Nationwide News Pty Ltd [2013] NSWSC 839 at [15], per White J (as his Honour then was), and in my view that would usually be the case.
2. It has been established that the equitable obligation of confidence, in some instances, extends to third parties in receipt of confidential information. Mason J in Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 stated that (citations omitted):
…employees who had access to confidential information in the possession of their employers have been restrained from divulging information to third parties in breach of duty and, if they have already divulged the information, the third parties themselves have been restrained from making disclosure or making use of the information…
1. At a theoretical level, the scope of the obligation in this context is unsettled, and in particular, the degree of knowledge required by third parties about the confidentiality of the information itself remains undetermined: see JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) at [42-155]. But it does appear to be accepted that some types of information are so private and personal that their confidentiality is, or ought to be, obvious to anyone into whose hands they may fall. On the face of it, that would apply to medical information which might come to H’s staff in the course of C’s treatment.
2. It thus appears that, as a general rule, the equitable obligation of confidence would prevent disclosure by any of those working at H who were involved in C’s treatment, or had access to records of his treatment. But even putting aside questions which may arise at the margin, there are limitations to that protection for practical purposes.
3. The first is that breach of confidentiality obligations only gives rise to civil remedies. Those remedies may include an injunction, which, if breached, can be enforced by way of contempt proceedings. But this can only happen if the Court first makes an order. There is no direct method of enforcement available which allows for immediate sanctions for a breach.
4. The second limitation is that such obligations are rooted in medical confidentiality. They do not directly apply to information generated or disclosed in other circumstances. Thus not every piece of information which came into the possession of one of the participants in these proceedings will, of its nature, necessarily be confidential.
5. The third is that confidentiality obligations protect only the person to whom the duty of confidence is owed. In the present case, the confidentiality is that of C and only C has standing to enforce it (I leave aside the possibility that some of the advice given to C’s parents may be confidential to them as well). Moreover, should C choose to waive confidentiality, no-one else can resist disclosure.
6. Orders for pseudonyms, court closure and non-disclosure of file: These orders will prevent a member of the public finding out about the identity of C and his family, and the hospital at which C was being treated, from observing the Court proceedings or from reading the judgment. But that does not, at least in terms, prevent disclosure by the parties or the legal representatives or other persons (such a court officer or transcript writer) who happen to have been present during the hearing.
7. Court confidentiality: There are implied obligations which exist in relation to particular documents produced in legal proceedings. Originally, older authorities (and in particular the leading English decision, Harman v Secretary of State for the Home Department [1983] 1 AC 280) proceeded on the basis that a party to proceedings in which documents were compulsorily produced gave an implicit undertaking of confidentiality as a condition of access to those documents. The principle established in Harman was related to documents produced on discovery.
8. However, the law has developed to broaden this obligation. Lord Oliver of Aylmerton stated in Crest Homes Plc v Marks [1987] 1 AC 829, at 854, that that the implied undertaking "applies not merely to the documents discovered themselves but also to information derived from those documents whether it be embodied in a copy or stored in the mind".
9. Departing from the requirement that documents need to be produced as a matter of ‘compulsion’, a strand of authority developed which simply reasoned that a document that is obtained for one purpose should not be used for another: see Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510, cited in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 222-223. In Bourne v Raychem Corporation [No 3] [1999] 1 All ER 908, Laddie J extended the implied obligation to apply to ‘voluntarily’ provided taxation documents.
10. In 2008, the High Court adopted an analysis of the Harman principles which sees confidentiality as an obligation arising by operation of law upon access to materials produced, without the need for an undertaking: Hearne v Street (2008) 235 CLR 125 at [105]-[108]. The High Court, in this case, described this “implied obligation” as follows (at 155 [96]):
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.
1. One consequence was that the obligation was directly binding on non-parties to the proceedings (at [109] (emphasis added)):
The primary person bound by the relevant obligation is the litigant who receives documents or information from the other side pursuant to litigious processes. The implied undertaking also binds others to whom documents and information are given. For example, expert witnesses, who are not parties, commonly receive such documents and information and are bound by the obligation. It is likely that, in the future, documents and information will be provided to persons funding litigation, who will likewise be bound by the obligation. In Harman v Secretary of State for Home Department [[1983] 1 AC 280 at 300] the person in contempt was the party's solicitor. In Hamersley Iron Pty Ltd v Lovell [(1998) 19 WAR 316] it was the party's industrial advocate. In Watkins v A J Wright (Electrical) Ltd [[1996] 3 All ER 31 at 43] it was a person who was not qualified as a solicitor in the forum, but engaged in day-to-day conduct of the litigation. Laddie J thought “it would be just as much a contempt of court for, say, a shorthand writer or court usher to disclose discovery documents outside the action as it would be for one of the parties to do so” [Bourns v Raychem Corporation]…
1. But as Gleeson CJ remarked at the beginning of the judgment (at 131 [4]):
Because of the terms in which the [issue for determination] is expressed, it is unnecessary to decide how far beyond this class of persons consisting of servants or agents of a party the legal obligation extends: or the scope of the concept of use of a document for purposes other than the conduct of the legal proceedings in which the party is involved. Both questions could cause difficulties in other cases, but they do not arise in this case.
1. For present purposes, however, the key point is that such court confidentiality remains limited to documents produced under compulsion or information derived from such documents. It is well established that the obligation covers documents produced on subpoena or on discovery. There is more doubt about whether other documents generated for the purposes of the proceedings qualify. The authorities on affidavits produced pursuant to directions by the Court were recently reviewed by McGrath J: Unicomb v Blais [2024] NSWSC 903. His Honour concluded that such affidavits were not compulsorily produced for the purposes of the implied obligation. Even if they were, the same reasoning would not necessarily extend to every document generated in the course of the proceedings.
2. The significant change to the law effected by Hearne is that it dispensed with the need to ground the court confidentiality obligation in the giving of an undertaking by a party (by analogy with an express order of the Court). As the passage in Gleeson CJ’s judgment, which I have quoted, points out, there was no need in the case to go into questions of knowledge. The case established that, at least in some circumstances, there is a direct obligation on persons who come into possession of documents produced compulsorily, or information derived therefrom, to keep the documents confidential. Even so, the reference in the joint judgment to transcript writers or court ushers is noticeable. The idea seems to be that such a person is under a direct obligation of confidentiality merely as a result of becoming aware of information which the Court’s rules require to be kept confidential.
3. If this is correct, then there might be scope to expand the obligation of Court confidentiality beyond documents compulsorily produced. If transcript writers and court ushers are subject to a confidentiality obligation owed to the court as a result of coming into possession of information derived from documents disclosed compulsorily, why should they not be under such an obligation whenever they come into possession of information which the court is treating as confidential? Such a generalised principle would have obvious application to information elicited in a closed court hearing.
4. But for the moment this is only a potential development in the law. Whether the implied obligation of court confidentiality can be extended in this way has not been discussed in any of the authorities to which I was referred, or which I have consulted in the preparation of these reasons.
5. Order under CSPO Act: The Act takes as its starting point the fundamental common law principle that, apart from exceptional cases, court proceedings should be conducted openly and in full view of the public. The classical exposition of the common law principle is the decision of the House of Lords in Scott v Scott [1913] AC 417. But as the decision recognised, at 483, there are exceptions where proceeding in private is justified, and one of those involves the exercise of the parens patriae jurisdiction:
…the jurisdiction over wards and lunatics is exercised by the judges as representing His Majesty as parens patriae. The affairs are truly private affairs; the transactions are truly transactions intra familiam; and it has long been recognised that an appeal for the protection of the court in the cases of such persons does not involve the consequence of placing in the light of publicity their truly domestic affairs…
1. It follows that there is scope in the present proceedings for a statutory suppression order if the circumstances warrant it. In that regard, I agree with Ms Wong’s submission that the Court may receive evidence on the degree of risk to those involved in the proceedings if they are conducted in public, but does not require such evidence in order to make a suppression order. The Court may act on its own general knowledge.
2. The starting point is to consider the circumstances of C. Through no fault of his own, he is at the centre of these proceedings. They concern a deeply personal and private subject. His individual dignity and autonomy require that the subject matter of the proceedings should not be disclosed to strangers without his consent.
3. C’s parents are in a similar position. For them, too, the subject matter of the proceedings is also deeply private and personal. I accept that their faith gave them no choice but to refuse consent on C’s behalf, which inevitably meant that they would be made defendants in these proceedings. Like C, they have had no real choice in the matter.
4. The evidence before me shows that C’s parents have acted throughout in accordance with what they genuinely believe to be C’s best interests, including his spiritual interests. But unfortunately, there may well be some who would vilify them for the choice which they have made, especially if a transfusion had proved to be necessary. That is something which they are entitled to be protected against.
5. The evidence also demonstrates that those who have been responsible for C’s medical care at H, and have conducted this litigation on the plaintiff’s behalf, also have what they consider to be C’s best interest at heart. But their position is somewhat different from C’s parents.
6. In the first place, while those who are involved in C’s treatment are obliged to respect his confidence and not to disclose information about his treatment without his consent, they have no converse entitlement to privacy. They cannot object if C should wish to disclose his dealings with them.
7. Furthermore, it would be fanciful to think that anyone would attack C’s doctors for giving advice in accordance with their best medical judgment, or attack those who were responsible for bringing the present application for having done so. There is nothing to suggest that C’s parents, or Jehovah’s Witnesses generally, subscribe to any doctrine which would lead them to militancy. Indeed, the evidence from C’s parents that they would accept the Court’s decision demonstrates the contrary.
8. In the light of these general comments I turn to consider whether a statutory suppression order should be made, and if so the formulation of the terms of such an order.
9. As already noted, I considered that the terms of the order as initially presented by Ms Wong were too wide. An order in that form would have prevented C, or his parents, identifying anyone who had been involved in C’s treatment, whether that person’s role had been the subject of evidence or submissions before the Court or not. While C and his family should be entitled to keep the details of his treatment, and the identity of those who treated him, confidential, they also need to be able to disclose that information to other family members and friends if they wish.
10. On the other hand, the order as presented was too narrow. It referred only to information likely to disclose the identity of the parties to the proceedings. But, in my view, the justification for confidentiality is wider. It extends to the disclosure of details concerning the evidence about C’s treatment and about the communications between doctors and administrators at H and C’s parents. In my view, proper protection of that interest would require an order prohibiting the disclosure, not merely of the names of the parties, but of the evidence and submissions made in the proceedings.
11. Given my earlier conclusions, I do not propose to make any order suppressing the names of C’s doctors or those involved in his treatment or in these proceedings. Of course this means that if C and his parents wish to publicise any aspect of his treatment, including the advice they received from medical professionals and hospital administrators (although there is no reason to think that they will), neither the individuals involved nor the plaintiff can prevent that from happening. But that is no more than something to be expected for public institutions and those who work in them.
12. The final question is how long the order should last for. Clearly there should be an opportunity for anyone affected by the orders to seek variation in the future, if circumstances arise which justify that course. Apart from that, I see no reasons why C’s interest in privacy should cease when he turns 18.
13. There is also the interests of C’s parents. In my view their interests are independent of C’s. There is no reason to think that C, in his later life, will disagree with his parents’ refusal of consent, let alone expose them to public condemnation for that refusal. But, in my judgment, they would be just as entitled to be protected against their role in the proceedings being publicly disclosed without their consent by C as by anyone else. To reflect this, the order will provide that, subject to any other order the Court may make in future, the suppression order will extend for the joint lifetimes of C and his parents, unless released by all of them.
Orders
1. The orders the Court made on 15 March were relevantly:
(1) The Court be closed pursuant to s 71 of the Civil Procedure Act 2005 (NSW).
…
(9) The proceedings be known as “Hunter New England Local Health District v C” and that the child the subject of the proceedings be known as “C”.
(10) That the mother of child be referred to as “M”.
(11) That the father of the child be referred to as “F”.
(12) That the parents of the child be referred to as “the Parents”.
(13) That the hospital be referred to as “H”.
(14) That subject to any contrary order of the Court, the Court file not be available for review by any person other than C (upon reaching his majority or order of the court), M, F, the Plaintiff and or their legal representatives.
(15) Order that for the purposes of these orders:
(a) the transfusion of blood or blood products; and
(b) treatment ancillary to 15(a)
be referred to as the ‘blood transfusion procedures’.
(16) Order that for the purpose of these orders, the proposed surgical procedures, namely:
(a) orthopaedic surgery to treat a compound fracture of the left tibia and,
(b) plastics and reconstructive surgery to repair soft skin tissue damage on the left leg,
be referred to as ‘the surgical procedures’.
(17) Order that in the absence of the consent of the parents of the child, authorised medical treaters (‘authorised clinicians’) of H are authorised to order that:
(a) any qualified member of nursing staff of the H; or
(b) any qualified medical practitioner employed or contracted by the H, administer the blood transfusion procedures in relation to the child during his admission for the surgical procedures if:
(i) in the opinion of the authorised clinician, the blood transfusion procedures are necessary rather than any other medical procedures; and
(ii) in forming the opinion referred to in 17(b)(i) the authorised clinician at all times seeks to avoid unnecessary use of and to minimise the use of the blood transfusion procedures.
1. The supplementary order now made by the Court is:
(1) Order that, pursuant to s 7 of the Court Suppression and Non-Publication Orders Act 2010, up until the death of the last surviving defendant or until further order of the Court:
(a) the publication of any information tending to identify a person as a party to the proceedings;
(b) the disclosure of the evidence led in the proceedings or the submissions made in the proceedings,
is prohibited without the written consent of all surviving defendants.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 9,193 |
nsw_caselaw:191014c43f65cf14a0d59d66 | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Mahadik v Medical Council of New South Wales [2024] NSWCATOD 114 | https://www.caselaw.nsw.gov.au/decision/191014c43f65cf14a0d59d66 | 2024-08-04T23:51:28.352027+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Mahadik v Medical Council of New South Wales [2024] NSWCATOD 114
Hearing dates: 24 – 26 July 2023, 5 – 6 February 2024
Date of orders: 01 August 2024
Decision date: 01 August 2024
Jurisdiction: Occupational Division
Before: Coleman SC ADCJ, Principal Member
Dr R Barnett, Senior Member
Dr M Sheridan, Senior Member
R Wellington, General Member
Decision: (1) That the appeal is allowed.
(2) That pursuant to s 159C(1)(c) of the Health Practitioner Regulation National Law (NSW) (National Law) the decision of the Medical Council of New South Wales of 4 November 2022 is set aside and it is ordered that the registration of Parag Jayant Mahadik (Practitioner) be subject to the conditions hereunder for twelve (12) months commencing on the date on which the Practitioner commences private practice on a full or part-time basis:
1. To advise the Medical Council of New South Wales in writing at least twenty-eight (28) days prior to changing the nature or place of the Practitioner’s practice.
2. To practice under Category C supervision when undertaking or performing any cosmetic surgery procedures in accordance with the Medical Council of NSW’s Compliance Policy – Supervision (as varied from time to time) and as subsequently determined by the appropriate review body:
(a) the Council’s approved supervisor must be either:
(i) a registered Specialist surgeon with the Medical Board of Australia who has cosmetic surgery experience; or
(ii) a registered Specialist Plastic Surgeon with the Medical Board of Australia;
(b) the Practitioner is not required to be under category supervision for the following:
(i) non-invasive procedures: injectables, laser treatment, skin treatments, threads or skin cancer treatments;
(ii) upper eyelid blepharoplasties;
(iii) general plastic or reconstructive surgery;
(c) prior to each fortnightly supervision meeting the Practitioner must forward their upcoming theatre list to the Council approved supervisor for review and discussion:
(i) the Practitioner is to discuss the upcoming theatre lists for cosmetic surgery procedures with the Council approved supervisor with respect to patient selection and appropriateness of procedure;
(ii) a statement that the Practitioner is adequately complying with the conditions attaching to his registration and any concerns which the Council approved supervisor has in that regard are to be included in supervision reports;
(iii) the theatre list must be included with monthly supervision reports as an appendix;
(d) at each supervision meeting the Practitioner is to review and discuss his practice with his approved supervisor with particular focus on:
(i) patient selection (including preoperative assessment and consent);
(ii) operative technique;
(iii) clinical decision making;
(iv) medical records;
(v) post-operative care;
(vi) complications (including unplanned return to theatres, intraoperative and post-operative complications, and infections);
(e) to authorise the Medical Council of NSW to provide the approved supervisor(s) with a copy of the decision which imposed this condition;
(f) not to undertake any cosmetic surgery proceedings until a supervisor has been approved by the Medical Council of NSW, such approval to be provided within six weeks of the name/s of the supervisor/s being provided by the Practitioner (except for the procedures excluded by condition 2(b));
(g) no cosmetic procedure is to be performed unless the Practitioner has first discussed it with his supervisor at a supervision meeting (except for the procedures excluded by condition 2(b)).
3. Within 7 days of the end of each calendar month, the Practitioner is to provide the Medical Council of NSW with records of all procedures performed in the last month. The records must include the following:
(a) the patient’s full name and date of birth;
(b) the date and time of each procedure;
(c) all MBS/Medicare item numbers;
(d) the name and nature of the surgical procedure;
(e) the location of the surgical procedure; and
(f) any complications arising as a result of the procedure (and specifically advising of any unplanned return to theatre and/or post-operative infection.
4. Within 12 months the Practitioner is to have observation sessions observing 5 phalloplasties performed by a specialist surgeon registered and approved by the relevant authority in the United Kingdom or the United States of America:
(a) the Practitioner must be physically or virtually present in theatres and directly observing the overseas specialist surgeon undertaking the phalloplasty surgical procedure(s) during the entire episode of surgery;
(b) within 4 weeks of the completion of the observation sessions, the Practitioner is to provide a report to the Medical Council of NSW outlining the date, the name of the overseas specialist surgeon who performed the phalloplastic surgery which he observed, the location at which such surgery was undertaken, details of the surgery, its duration and any other information relevant to the surgery;
(c) details of what the Practitioner learnt from his observation of the sessions, and how that will impact his practice (including how the Practitioner will incorporate his learnings into future practice);
(d) the Practitioner is to authorise the Medical Council of NSW to approach the overseas specialist surgeon to provide his or her own report to the Council with respect to the surgery observed by the Practitioner and, if applicable, any concerns, discussions, feedback or other observations regarding the sessions and the Practitioner’s progress with phalloplasty;
(e) the Practitioner is to authorise the Medical Council of NSW to provide any overseas specialist surgeon with a copy of the Tribunal’s decision imposing this condition on the Practitioner’s registration and any other relevant report;
(f) the Practitioner is responsible for any costs incurred in relation to the period of observation and any reports pursuant to this condition.
5. The Practitioner is to authorise and consent to any exchange of information between the Medical Council of NSW and Medicare Australia for the purpose of monitoring compliance with these conditions.
6. The Practitioner is to undergo a Performance Assessment with a Council appointed assessor.
(3) That the costs of these proceedings are reserved.
(4) Pursuant to cl 7 of Sch 5D of the National Law, the publication of the names of any patient referred to in the proceeding is prohibited.
Catchwords: OCCUPATIONS — medical practitioners — practice conditions imposed on registration — appeal of decision pursuant to s 159 of the Health Practitioner Regulation National Law (NSW) — variation of practice conditions imposed — whether surgeries performed were below the standard reasonably required — whether post-operative assessments were below the standard reasonably required
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW)
Health Practitioner Regulation National Law (NSW)
Cases Cited: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
Medical Council of New South Wales v Smithson [2021] NSWCA 53
Mohareb v State of New South Wales [2024] NSWCA 69
Category: Principal judgment
Parties: Parag Jayant Mahadik (Appellant)
Medical Council of New South Wales (Respondent)
Representation: Counsel:
R Mathur SC (Appellant)
A Petrie (Respondent)
Solicitors:
Meridian Lawyers (Appellant)
H Maxwell (Health Professional Councils Authority) (Respondent)
File Number(s): 2023/00010076
Publication restriction: Pursuant to cl 7 of Sch 5D of the National Law, the publication of the names of any patient referred to in the proceeding is prohibited.
REASONS FOR DECISION
Introduction
1. On 14 December 2022 the Medical Council of NSW (Council) informed Parag Jayant Mahadik (Practitioner) of the reasons for its decision on 4 November 2022, to impose conditions on the Practitioner’s registration pursuant to s 150(1)(b) of the Health Practitioner Regulation National Law (NSW) 2009 (NSW) (National Law). The conditions obliged the Practitioner:
“1 To obtain Medical Council of NSW approval before changing the nature or place of his practice.
2 To perform all major surgical procedures in a Council approved accredited day facility or hospital approved by the Medical Council of NSW.
3 To practice under Category A supervision when undertaking or performing any cosmetic surgery procedures in accordance with the Medical Council of NSW’s Compliance Policy – Supervision (as varied from time to time) and as subsequently determined by the appropriate review body.
(a) The Council approved supervisor must:
(i) be either:
● a registered Specialist surgeon with the Medical Board of Australia who has cosmetic surgery experience; or
● a registered specialist plastic surgeon with the Medical Board of Australia.
(ii) be present in theatres and directly observing the practitioner performing all cosmetic surgery procedure(s) for the entire episode of surgery or duration of procedure.
(b) The practitioner is not required to be supervised when undertaking the following:
(i) non-invasive procedures: injectables, laser treatment, skin treatments, threads or skin cancer treatments;
(ii) upper eyelid blepharoplasties;
(iii) general plastic or reconstructive surgery.
(c) Prior to each weekly supervision meeting, the practitioner must forward their upcoming theatre list to the Council-approved Supervisor for review and discussion.
(i) the practitioner is to discuss the upcoming theatre list for cosmetic surgery procedures with the Council-approved Supervisor with respect to patient selection and appropriateness of procedure;
(ii) the details of the discussion, review and feedback are to be included in supervision reports;
(iii) the theatre lists must be included with monthly supervision reports as an appendix.
(d) At each supervision meeting the practitioner is to:
(i) review and discuss his practice with his approved Supervisor with particular focus on:
● patient selection
● operative technique
● clinical decision making
● medical records
● post-operative care
● Complications (including unplanned return to theatres, intro-operative and post-operative complications, and infection).
(e) To authorise the Medical Council of NSW to provide the approved Supervisor(s) with a copy of the decision which imposed this condition.
(f) Not to undertake any cosmetic procedures until a Supervisor has been approved by the Medical Council of NSW.
4 Within 7 days of the end of each calendar month, he is to provide the Medical Council of NSW with records of all procedures performed in the last month. The records must include the following:
(a) the patient’s full name and date of birth;
(b) the date and time of each procedure;
(e) all MBS/Medicare item numbers;
(d) the name and nature of the surgical procedure;
(e) the location of the surgical procedure;
(f) any complications arising as a result of the procedure (and specifically advising of any unplanned return to theatre and/or any postoperative infection); and
(g) for Cosmetic Surgery Procedures: the full name and signature of the Category A Supervisor who observe [sic] the practitioner undertake the procedure.
5 To authorise and consent to any exchange of information between the Medical Council of NSW and Medicare Australia for the purpose of monitoring compliance with these conditions.
6 To undergo a performance assessment.”
1. On 11 January 2023 the Practitioner appealed against the decision of the Council pursuant to s 159(1)(b) of the National Law, which provides (s 159(3)) that an appeal be dealt with by way of new hearing and fresh evidence, or evidence in addition to or substitution for evidence that was before the Council. The appeal was heard on 24, 25, 26 July 2023, and 5 and 6 February 2024. The Tribunal then reserved its decision. These are the reasons for our decision. The transcript of the hearing in February 2024 having not become available, over which we have no control, has delayed the delivery of the Tribunal’s decision.
2. At the commencement of the hearing, Senior Counsel informed the Tribunal that the Practitioner sought a variation of the conditions which the Council had imposed. At the commencement of the hearing Counsel informed the Tribunal that the Council sought to maintain the conditions which it had imposed in November 2022. The jurisdictional requirement to enliven s 150 created by s 150(1)(b) of the National Law was thus satisfied. By the conclusion of the hearing, and sensibly in our view, the ambit of disagreement between the parties had been considerably narrowed, although, as will be seen, important differences in their positions remained.
3. A document provided by Counsel for the parties to the Tribunal during the course of final submissions (Exhibit X1) set out the competing positions. The document recorded the Council’s position, and the Practitioner’s response to it with respect to each condition sought by the Council. Unless opposition is recorded, the Practitioner agrees to the conditions, which provide that he is obliged:
1 To obtain Medical Council of NSW approval before changing the nature or place of his practice.
[The practitioner opposed that condition and sought in lieu “To advise the Medical Council of NSW in writing at least seven days prior to changing the nature or place of business”.]
2 To practice under Category C supervision when undertaking or performing any cosmetic surgery procedures in accordance with the Medical Council of NSW’s compliance policy – supervision (as varied from time to time and as subsequently determine by the appropriate review body:
a) The Council approved supervisor must:
i. Be either:
● a registered Specialist surgeon with the Medical Board of Australia who has cosmetic surgery experience; or
● a registered Specialist Plastic Surgeon with the Medical Board of Australia.
b) The practitioner is not required to be under Category C Supervision for the following:
i. non-invasive procedures: injectables, laser treatment, skin treatments, threads or skin cancer treatment;
ii. upper eyelid blepharoplasties;
iii. general plastic or reconstructive surgery.
c) Prior to each fortnightly supervision meeting the practitioner must forward their upcoming theatre list to the Council approved supervisor for review and discussion.
i. the practitioner is to discuss the upcoming theatre lists for cosmetic surgery procedures with the Council approved supervisor with respect to patient selection and appropriateness of procedure;
ii. a summary of the details of discussion, review and feedback are to be included in supervision reports in accordance with the Council approved format;
[The practitioner opposed this condition.]
iii. the theatre list must be included with monthly supervision reports as an appendix.
d) At each supervision meeting the practitioner is to
i. review and discuss his practice with his approved supervisor with particular focus on:
● patient selection (including preoperative assessment and consent)
● to operative technique
● clinical decision making
● medical records
● post-operative care
● Complications (including unplanned return to theatres, intraoperative and post-operative complications, and infection).
e) To authorise the Medical Council of NSW to provide the approved supervisor(s) with a copy of the decision which imposed this condition.
f) Not to undertake any cosmetic surgery procedures until a supervisor has been approved by the Medical Council of NSW (except for the procedures excluded by condition 3 b)).
[The practitioner opposed that condition and sought in lieu that he was “not to undertake any cosmetic surgery procedures until a supervisor has been approved by the Medical Council of NSW such approval to be provided within 6 weeks of the name/s of the supervisor/s being provided by the Appellant (except for the procedures excluded by condition 3b))”.]
g) No cosmetic procedure is to be performed unless he has first discussed it with his supervisor at a supervision meeting (except for the procedures excluded by condition 3(b)).
3 Within 7 days of the end of each calendar month, he is to provide the Medical Council of NSW with records of all procedures performed in the last month. The records must include the following:
a. the patient’s full name and date of birth
b. the date and time of each procedure
c. all MBS/Medicare item numbers
d. the name and nature of the surgical procedure
e. the location of the surgical procedure; and
f. any complications arising as a result of the procedure (and specifically advising of any unplanned return to theatre and/or any post-operative infection)
4 Within 12 months of being approved by the Medical Council of NSW, the practitioner is to have observation sessions observing 5 phalloplasties of a registered specialist surgeon approved by the Council.
a) The Council approved surgeon must:
i. Be either:
● a registered Specialist Surgeon with the Medical Board of Australia who has cosmetic surgery experience; or
● a registered Specialist Plastic Surgeon with the Medical Board of Australia.
ii. The Council approved surgeon does not need to be the same person as the Council approved supervisor in condition 3.
b) The practitioner must be present in theatres and directly observing the Council approved surgeon undertake [sic] the phalloplasty surgical procedure(s) during the entire episode of surgery.
c) Within 4 weeks of the completion of the observation sessions, the practitioner is to provide a report to the Medical Council of NSW outlining the details of each surgical procedure observed, what he learnt and how that will impact his practice (including how the practitioner will incorporate his learnings in a future practice).
i. Prior to the practitioner submitting the reflective report to the Medical Council of NSW, the practitioner must submit the reflective report to the Council approved surgeon for review and discussion.
d) Within 4 weeks of the completion of the observation sessions, the practitioner is to authorise the Council approved surgeon to provide their own report to the Council.
ii. The report must include their comments on the content and authenticity of the practitioner’s report, confirmation of the dates and details of all observed procedures, and outline any concerns, discussions, feedback or other observations regarding the sessions and the practitioner’s progress with phalloplasty.
e) To authorise the Medical Council of NSW to provide (the) proposed and approved surgeon with a copy of the decision which imposed this condition on the practitioner’s registration and any other relevant report.
f) The practitioner is responsible for any costs incurred in relation to the period of observation (and) any subsequent reports.
[The practitioner opposed the imposition of any part of condition 4.]
5 To authorise and consent to any exchange of information between the Medical Council of NSW and Medicare Australia for the purpose of monitoring compliance with these conditions.
6 To undergo a performance assessment.
[The practitioner opposed the requirement to undergo a performance assessment.]”
1. As is apparent from their terms, the competing contentions relate in some ways to matters which appear more matters of form than of substance (condition 1, condition 2(c)(ii) and, arguably, 2(f)), whilst the Practitioner’s opposition to condition 4 proposed by the Council raises matters of obvious substance. The requirement of a performance assessment is not a purely formal matter, although, if the Council secured condition 4, it is difficult to see the necessity for condition 6.
2. Although the ambit of the dispute which the Tribunal must determine is comparatively narrow, determining the appropriate protective orders is less than simple or straightforward.
Evidence before the Tribunal
1. The Practitioner relied upon a bundle of documents which became Exhibit A1 in the proceedings, an Affidavit of the Practitioner’s solicitor filed 24 July 2023 (Exhibit A2), a letter to the Practitioner’s solicitors from the Health Care Complaints Commission (HCCC) dated 23 January 2023 advising that the HCCC considered that the Council was the “most appropriate body to manage” concerns arising from “an anonymous complainant about the care and treatment provided to a number of patients” of the Practitioner (Exhibit A3), 2003 American Society of Plastic Surgeons papers concerning “The “Pixie” Ear Deformity Following Face Lift Surgery Revisited” (Exhibit A4), a letter from NSW Health to the Practitioner conveying an “Offer of Temporary Employment – Contract Extension” dated 28 June 2017 (Exhibit A5), the Practitioner’s Casemix for RACS Logbook – Nepean Hospital – February 2023 to April 2023 (Exhibit A6), the Practitioner’s Major Case Logbook (Exhibit A7) and a complaint assessment form dated 24 November 2022 (Exhibit A8).
2. The Council relied on two volumes of documents (Exhibit R1), a supplementary bundle of documents (Exhibit R2), a critique of the Practitioner’s expert’s report (Exhibit R3), a document identifying changes to the conditions attaching to the Practitioner’s registration sought by the Council (Exhibit R4) and an internet sourced document titled “Find a Surgeon”.
3. The Tribunal received an initial table recording agreed and disputed conditions (Exhibit X), and a subsequent iteration of the table (Exhibit X1). The Tribunal also received a blank proforma Supervisor Approval Position Statement published on 1 February 2015 (Exhibit Y), and an undated blank Health NSW Supervision Report – Summary (Exhibit Y1).
Background
1. At all material times the Practitioner had general registration as a medical practitioner, but was permitted to practice plastic surgery as a non-specialist. After completing his MBBS, the Practitioner gained entry to a general surgery program in India and qualified for his MS in General Surgery in 2002. The Practitioner then entered into a plastic surgery fellowship program which lasted 5 years and obtained his MCh Plastic Surgery in 2008.
2. The Practitioner continued his post-graduate training when he came to Australia in 2008, and took up a position as a Fellow in Hand and Microsurgery at Liverpool Hospital for 15 months. The Practitioner then worked at Auburn and Westmead Hospitals for 9 months in 2009 as a Senior Registrar, Plastic and Reconstructive Surgery. Thereafter the Practitioner worked at Nepean Hospital for 12 months from 2011 to 2012 in the same role. In the interim, the Practitioner was a Fellow in Facial Trauma and Reconstructive Surgery at Royal Darwin Hospital. The Practitioner then worked at Westmead and Auburn Hospitals for 2 years as a Senior Registrar, Plastic and Reconstructive Surgery.
3. From 2015 to 2022 the Practitioner worked at a Consultant level (employed as a Career Medical Officer) across the specialty of Plastic and Reconstructive Surgery at Westmead Hospital. The Practitioner did not have his own patients as he did not have admitting rights as a Consultant. From 2020 the Practitioner had also been working at the Esme Clinic, initially 1 day a week, increasing to 2 days a week.
4. At the time of the s 150 determination, the Practitioner had undertaken a significant number of penile enlargements as the primary surgeon, a lesser but significant number of breast surgeries as the primary surgeon, a greater number as assistant surgeon, several hundred faciomaxillary procedures as the primary surgeon and more than 200 such procedures as the assistant surgeon.
5. The Practitioner ceased working at Westmead Hospital on 16 July 2022, after which time he increased his days in private practice. From July 2022 until the s 150 determination, the Practitioner was practising 3 or 4 days a week in private practice, reportedly seeing approximate 4 or 5 new patients per week, nearly all of whom were for cosmetic surgery.
6. The s 150 proceedings which resulted in the present appeal arose from two complaints made by former patients of the Practitioner, and six complaints made on behalf of other patients with respect to the Practitioner’s treatment of them. A further complaint was made shortly prior to the hearing of the appeal in 2023. Brief reference to the undisputed circumstances of the patients’ treatment by the Practitioner by way of background is instructive. None of the nine patients whose treatment resulted in complaints gave evidence before the Tribunal. Although the nine patients have been referred to by name during the hearing of the appeal, publication of their identity is prohibited. To further protect against patients’ identities becoming known, the Tribunal has not recorded the name of an interstate surgeon who complained about the Practitioner’s treatment of one patient, or any details of patients’ personal circumstances.
7. The Practitioner performed penile enlargement surgery on Patient A on 28 October 2021. Patient A returned to his interstate home on or about 30 October 2021. On 7 November 2021 Patient A was admitted to an interstate hospital where he was treated for post-operative infections. Patient A was discharged from hospital on 14 December 2021. There is no evidence that Patient A otherwise experienced post-operative complications. On 11 January 2022, a surgeon from the interstate hospital to which Patient A had been admitted made a complaint to the HCCC.
8. The Practitioner performed penile enlargement, length and girth, pubic lift and scrotal repair on Patient B on 31 March 2022. On 2 September 2022 Patient B made a complaint to the HCCC, alleging that “something went horribly wrong” during his surgery, as a result of which he allegedly suffered “pain post surgery’, “inappropriate amounts of bruising/swelling”, “wide spread infection”, “occasional urine leakage”, “considerable erectile dysfunction (severe twist in the penial head/shaft, difficulty maintaining erections/ejaculating” and “mental pain and suffering”. On 3 August 2022, Patient B consulted the Practitioner and discussed having further surgery performed by the Practitioner. Patient B did not see the Practitioner after that date. There is no evidence that Patient B alleges that he continues to suffer from any of the conditions which he outlined in his complaint.
9. The Practitioner performed blepharoplasty surgery (eyelid) on Patient C and removed a basal cell carcinoma (BCC) on 27 March 2021, and performed scar revision surgery on 28 December 2021. On 5 September 2022, and 12 September 2022, Patient C emailed the Practitioner, alleging that both surgeries had not been successful, and suggested that he should pay the anticipated cost of further remedial surgery which Patient C would arrange with another surgeon. There is no evidence that Patient C underwent further remedial surgery, or that he alleges that he continues to suffer from the conditions which he alleged on 5 September 2022.
10. The Practitioner performed a mini face lift and blepharoplasty (eyelid) on Patient D on 5 December 2021. The Practitioner performed micro fat grafting surgery on Patient D on 9 August 2022 and 2 September 2022. The complaint to the HCCC was made anonymously, and was asserted to have involved the Practitioner performing surgery in his rooms without other staff being present. The complaint did not allege that the Practitioner’s performance of Patient D’s surgery was deficient in any way. There is no evidence from Patient D in support of this complaint.
11. The Practitioner performed browlift, blepharoplasty (mini facelift) surgery on Patient E on 7 June 2022, eyelid surgery on 26 July 2022 and upper blepharoplasty (mini fat graft) to cheeks and eyelids, temporal brow lift surgery on 26 September 2022. The complaint, made to the HCCC anonymously, alleged that, during surgery in the Practitioner’s rooms, Patient E had lost consciousness, resulting in the Practitioner calling on a nearby anaesthetist to assist in restoring Patient E’s consciousness. Patient E has given no evidence in these proceedings.
12. The Practitioner performed bilateral eyelid reconstructive surgery and upper lid blepharoplasty on Patient F on 25 February 2021, bilateral breast augmentation surgery on 30 September 2021 and breast implant exchange- larger surgery on 17 March 2022. Patient F last consulted the Practitioner on 5 October 2022. The complaint, made to the HCCC anonymously, alleged that Patient F complained of breast implants “dropping out”, “sitting in funny positions” and above nipple and “suture lines” after her first surgery. Patient F has given no evidence in these proceedings.
13. The Practitioner performed mini facelift and brow lift surgery on Patient G on 2 October 2021. The last contact between the Practitioner and Patient G was by email on 22 August 2022. The complaint, made to the HCCC anonymously, alleged that Patient G was told to pay cash for her surgery to “avoid tax”, was offered a discount for multiple procedures, that her surgery was “abandoned halfway through”, and that the patient was left with scarring and “unsatisfactory results”, which the Practitioner failed to address. Patient G has given no evidence in these proceedings.
14. The Practitioner performed mini facelift and neck lift surgery on Patient H on 7 July 2022. On 19 June 2023, Patient H made a complaint to the HCCC, alleging that she had “lots of loose skin under her neck” and “pixie ears” after her surgery, which the Practitioner failed to address. Patient H gave no evidence in these proceedings. Patient H subsequently withdrew her complaint and it was not investigated by the HCCC (Tcpt, 24 July 2023, p 97).
15. An additional complaint related to Patient I, on whom the Practitioner performed face/neck lift surgery in rooms at a private hospital on 7 July 2022. Post-operatively, Patient I complained of excessive bruising and swelling, “lumps” under her neck and “pixie ears”. On 11 March 2023, Patient I reported that her neck swellings had subsided, but that her ear deformity had become worse, and that there was still excessive loose skin under her neck. Patient I did not see the Practitioner again after that date. Patient I did not give evidence in these proceedings.
Principles governing the proceedings
1. In Medical Council of New South Wales v Smithson [2021] NSWCA 53 the Court of Appeal reiterated the principles applicable to the determination of an appeal under s 159 of the National Law. The Court of Appeal said [20] that the “most important” principles were that (citations omitted):
“(1) The role of a Tribunal in a s 159 appeal of the present kind is to apply s 150 standing in the shoes of the Council. A hearing is de novo and not limited to evidence before the Council. The legal standard to be applied is fixed by s 150.
(2) The subject matter, scope and purpose of s 150 makes clear that it is a protective provision with two independent limbs. The touchstone for the exercise of the Council’s role under s 150(1) to make an order suspending the practitioner’s registration or imposing conditions on it is that the Council be satisfied that it is appropriate to do so for (i) the protection of the health or safety of any person or persons (the first limb) or (ii) that the action is otherwise in the public interest (the second limb). The two limbs may overlap but the public interest is not subsumed in the first limb. The two limbs are disjunctive; satisfaction of either will suffice to trigger the obligations imposed by s 150.
(3) The proceedings are not disciplinary and not necessarily referable to a complaint. The National Law otherwise makes provision for dealing with complaints against registered health practitioners: see Div 3 subdivs 2-6. The function of a s 150 hearing is purely protective in character. By s 150D, a Council must, after taking action under s 150(1) (except in the case of impairment), refer the matter to the Health Care Complaints Commission (HCCC) to be investigated as a complaint. By s 150F, in a case of impairment, the Council must consult with the HCCC to see if agreement can be reached as to whether the matter should be dealt with as a complaint or referred to an Impaired Registrants Panel.
(4) Principles relating to judicial review of administrative decisions are inappropriate to the exercise required by s 159. References by the Tribunal to the Council “taking into account irrelevant considerations” or references to the Wu Shan Liang principle … are a distraction from the task the Tribunal is required to perform in a s 159 hearing.
(5) Because the circumstances in which action under s 150 may be taken include that there may be a continuing dispute as to the relevant facts and that investigations into complaints concerning the practitioner by bodies such as the HCCC may not have been completed or even commenced, the Tribunal is not required to make conclusive findings of fact based on the material before it. The s 159 hearing does not involve determination of the merits of a claim.
(6) The role of the Tribunal is to make an assessment of the evidence and determine whether it is satisfied to make one of the orders referred to in s 150(1). The s 159 hearing is not the occasion to consider, let alone determine, whether a practitioner is currently a fit and proper person to carry on the role.
(7) The “protection of the health and safety of any person or persons” does not require there to be actual harm suffered by any person. Because s 150 is concerned with protection, it is sufficient if it can be demonstrated that there is a potential for harm. The Tribunal’s role in this case was to make an assessment of the evidence and determine whether it was appropriate, on either of the bases for which s 150 provides, that an order be made under s 150 for the protection of the health or safety of any person or persons or otherwise in the public interest.
(8) As s 150 is a protective provision, it is appropriate ordinarily for the Tribunal, in deciding whether it is satisfied that it is appropriate to make an order under the first or second limb, to make an assessment about the nature and degree of risk to the health or safety of any person or persons or to the public interest (in the sense of the chance of the suggested harm being realised) and the consequences of the suggested harm being realised (in the sense of the seriousness of the harm that will ensue if the risk is realised). Reaching that state of satisfaction involves the Tribunal making an assessment of all the evidence before it.
(9) The essential question which the proper conduct of a s 159 hearing de novo requires the Tribunal to address is whether allowing the medical professional to practice, or to practice with certain conditions, involves an unacceptable risk to the health and safety of the public, or otherwise involves an unacceptable risk to the public interest.”
1. It is readily apparent that, although the Tribunal stands in the shoes of the Council, the Tribunal has heard considerably more evidence than was available to the Council, and, unlike the Council, has had the benefit of hearing that evidence tested by searching cross-examination. That does not alter the task which the Tribunal must undertake, or the principles governing the operation of s 150 of the National Law, or invite the Tribunal to venture into the areas which the Court of Appeal has clearly indicated form no part of the Tribunal’s task.
2. As recorded earlier, there is no issue in this case that the health and safety of the public requires that conditions attach to the Practitioner’s registration. Even if that had not been conceded, the evidence before the Tribunal satisfies that jurisdictional requirement. There is no issue that allowing the Practitioner to practise with “certain conditions” does not involve an unacceptable risk to the health and safety of the public, or to the public interest. If that had not been conceded, the evidence before the Tribunal would have satisfied us that that was the case. The issue in this case has been what those “certain conditions” should be.
Evidence with respect to treatment of Patients A to H
1. The Practitioner relied on the expert reports of Dr Paul Curtin of 4 April 2023 and 16 June 2023 (A1, tabs 19, 20). The Council relied on the expert reports of Professor Anand Deva of 2 June 2023 (R1, tab 9) and 21 July 2023 (R 2, tab 5). Both experts were eminently qualified to express the opinions articulated in their reports. Both were cross-examined during the hearing. Before referring to the written and oral evidence of the experts, it is appropriate to consider a number of matters relied on by the Practitioner in support of his contention that, on all the matters about which the experts disagreed, the Tribunal should prefer the evidence of Dr Curtin to that of Professor Deva.
2. In cross-examination, Professor Deva was criticised for expressing his opinions “in the absence of having seen a single signed statement from a single patient save for (Patient B) in relation to discussions about medical and past surgical history, their needs and expectations of any elective cosmetic surgery and failure to both inform and educate patients as to the material risks of these procedures” (Tcpt, 24 July 2023, p 63). Importantly, as Professor Deva conceded on a number of occasions, not having seen such statements limited the extent to which he could, or did draw inferences adverse to the Practitioner.
3. The absence of patients’ statements did not in our view materially impact on the weight to be afforded to the evidence of either expert. The standard of the Practitioner’s work was able to be, and was evaluated by each expert by reference to the Practitioner’s clinical records and the photographs of post, and in some instances, pre-operative photos of the relevant parts of the patients’ bodies. In other instances, the absence of recent photographs of the patients potentially worked to the Practitioner’s advantage. So did the absence of patients’ statements.
4. As he made clear, Professor Deva, necessarily, based his opinions on the Practitioner’s clinical records, and, although suggesting that completed consent forms did not necessarily mean that a patient had given informed consent, could not identify anything which caused him to doubt that any of the nine patients had not given informed consent prior to the Practitioner performing their surgery. We do not understand any patient to have made that complaint, but, if any did, in the absence of evidence from them, there is no reason to go behind the signed consent forms, or to reject what the Practitioner claimed he had said to the patient by way of further explanation of the potential risks and benefits of the surgery which they were seeking. Both experts considered the terms of the patient consent forms to be adequate.
5. Professor Deva was cross-examined at length on the opinions of “cowboy” plastic surgeons which he has consistently shared on social media, and his asserted “crusade” against such surgeons, to the intent that Professor Deva allegedly did not, at its most benign, bring an impartial and unprejudiced mind to bear on the evaluation of the standard of the Practitioner’s treatment of the nine patients whose treatment resulted in the s 150 proceedings. Professor Deva did not resile from any of the previously expressed views to which he was referred. Whether Professor Deva’s views are well-founded is not a matter about which we need to make findings.
6. We are not persuaded that any views which Professor Deva held, or holds about practitioners who do not have specialist registration performing cosmetic plastic surgery coloured his view of the Practitioner’s performance. The “double might” test applied in recusal applications in judicial proceedings, though not directly applicable, is instructive for present purposes (Mohareb v State of New South Wales [2024] NSWCA 69). If Professor Deva might lack impartiality with respect to the ability of non-specialist medical practitioners to practise cosmetic plastic surgery safely, nothing to which the Practitioner has referred us establishes that Professor Deva might depart from properly and fairly discharging his duties to the Tribunal as an expert witness.
7. We are reinforced in rejecting the challenge to Professor Deva’s impartiality by the cross-examination of Professor Deva with respect to the substance of his opinions, during which he displayed a willingness to make appropriate concessions, and was responsive to Senior Counsel’s questions, without embellishment or advocacy. In what way any opinions held by Professor Deva caused, or resulted in his evaluation of the Practitioner’s treatment or care of any of the nine patients being other than in reliance on his undoubted training and experience has not been demonstrated. As will be seen, although the experts remain in disagreement about aspects of the Practitioner’s treatment or care of the patients, we do not consider that any such differences are referrable to the opinions of Professor Deva about which the Practitioner complains.
8. Professor Deva was criticised for assertedly failing to formally comply with the Expert Witness Code. In what way the alleged failure was suggested to adversely impact Professor Deva’s evidence was not identified. In his answers in cross-examination on this issue, Professor Deva made clear that he had been conscious of the requirements of the Code when preparing his reports. There is no reason to reject that evidence. We are not persuaded that any failure of Professor Deva to formally comply with the Code vitiated the reliability or objectivity of his opinion evidence. The challenge to Professor Deva’s impartiality which we have rejected, and the challenge which we will next consider are not dependent upon, or advanced by any failure of Professor Deva to formally comply with the Code.
9. In cross-examination, Professor Deva was criticised for failing to provide references in support of a number of his opinions. Professor Deva said in response to those criticisms that he was “drawing… on my clinical experience” (Tcpt, 24 July 2023, p 77) in forming his opinions, and reiterated that his opinions were “based on my clinical experience which is self-evident” (Tcpt, 24 July 2023, p 81). It has not been shown that Professor Deva lacked the training and experience to express his opinions, or that such opinions were not based on that training and experience (Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21). Other than in one instance, in reliance upon 2003 articles concerned with Pixie Ear Deformity (Exhibit A4) Professor Deva was not cross-examined on any reference material which he was criticised for failing to identify in his reports. This criticism of Professor Deva is misconceived. Once it is established, as it was in this case, that a witness is qualified to give expert opinion evidence, it is for those contesting the weight which should be given to that evidence to demonstrate, whether by erroneous reliance upon assumed or disputed facts, lack of recent or particular experience, or lack of particular qualifications, or the failure to base an opinion on training and experience, that the evidence is entitled to reduced, little or no weight. Although each expert’s opinions were challenged on some of those bases, other than with respect to Pixie Ear Deformity, the weight to be given to their evidence is not impacted by journal or other reference materials.
Experts’ general recommendations with respect to conditions attaching to Practitioner’s registration
1. As we have earlier recorded, the parties agree that conditions should attach to the Practitioner’s registration for a period. The parties’ experts each expressed views consistent with doing so. In his first report of 27 February 2023 (A1 Tab 19), Dr Curtin said:
“In my view it would be reasonable to impose some conditions on Dr Mahadik’s registration. Dr Mahadik qualified in both general and plastic surgery in India, and for the past 10 years has been employed Senior Registrar level in the plastic surgery unit of Westmead Hospital, the largest public hospital in Sydney. He has successfully negotiated repeated challenges posed by traumatic injury and other cancer reconstruction. In those areas, and in the management of surgical patients generally, he has considerable experience and expertise. With regard to cosmetic surgery, however, Dr Mahadik is a junior surgeon, and the documents illustrate several errors of judgement that he has made. Without doing an entire surgical audit it is not clear how representative those errors actually are. What does emerge from the documents is that Dr Mahadik is attentive to his patients and personally manages their post-operative care, something which seems to be relatively rare amongst the cosmetic surgical community. Nevertheless, it is likely that he would benefit from some level of mentoring to assist him in patient selection, and in the organisation of his records. The requirement for another registered specialist surgeon to attend his cosmetic operation sessions is really not feasible, and amounts to a de facto banning of cosmetic procedures by Dr Mahadik. For the next twelve months, he will be employed full-time in the public hospital system and there will be very little opportunity for him to work privately. Given the nature of the complaints made to the Council, in my view, a system of mentoring and reporting to the Council would provide a high level of protection to the public and would be a reasonable response to the complaints under consideration.”
1. Professor Deva said in his report of 2 June 2023 (R1 Tab 9) that a “number of common themes have emerged” from the material made available to him, which were identified as:
“• Failure to adequately assess patients; medical and past surgical history, their needs and expectations of any elective cosmetic surgery and failure to both inform and educate patients as to the material risks of these procedures.
• In some cases, the use of telehealth or video consultations to assess and book patients for elective cosmetic surgery and subsequently performing physical assessment of patients the day prior to surgery is inadequate and fails to give patients and/or Dr Mahadik adequate time to consider the risks and benefits of the proposed procedure(s).
• Failure to assess and inform patients at high risk of complications in the setting of obesity, diabetes, heavy smoking, weight loss following surgery and failure to inform patients of the potential impact of these conditions on outcomes.
• Failing to thoroughly document information on both history and physical examination in his medical records. Lengthy consent documents should not replace good communication and documentation of the process of assessment, informed and educated consent and managing patient expectations. There is no guarantee that patients are able to fully comprehend what is set out in consent documentation. For breast implant surgery, there now is a guide to informed educated consent from NSW Health Agency for Clinical Innovation (internet reference provided).
• Performing complex and lengthy procedures under local anaesthetic in rooms with, in one instance, failing to adequately prepare for resuscitation, should the need arise.
• Performing surgery on interstate patients who stay for a short time (in one case 24 hours) after surgery.
• A tendency to blame the patient for the complication e.g., aggressive massage, erections, smoking. It is better to ensure that patients are given clear instructions on post-operative care and how to best prepare for surgery. My practice is to decline facelift/neck lift surgery on smokers as they are at risk of both infection and skin necrosis.”
1. The concerns of each of Professor Deva and Dr Curtin were explored with them in cross-examination. Before referring to their evidence with respect to the patients whose treatment gave rise to the s 150 proceedings, considering the oral evidence of Professor Deva and Dr Curtin with respect their general concerns are instructive.
2. Professor Deva was cross-examined before Dr Curtin. In cross-examination (Tcpt, 24 July 2023, p 63) Professor Deva explained his concern with respect to the Practitioner’s patient consent forms and said that what “this area of practice, demands, is a real understanding of what the patient’s state of mind is, their request and need for surgery in the first place. And it is really important a practitioner offering any cosmetic surgery goes through a very, very structured and thorough process of clinical assessment prior to offering elective cosmetic surgery”. He added - and also “A process of step wise clinical assessment, psychological assessment before proceeding to any cosmetic surgery”. Professor Deva’s particular concern was “that there were voluminous pieces of paper with a patient’s signature on it but there was no real documentation in the actual clinical record that there was time and space given to ensure that the patient understood what they were signing”. Professor Deva agreed (Tcpt, 24 July 2023, p 66) that it was “highly subjective” as to whether a cosmetic procedure was needed.
3. In cross-examination of Professor Deva with respect to pre-operative patient selection and risk assessment (Tcpt, 25 July 2023, p 83) the following exchange occurred:
“Q You are not suggesting, are you, that mentorship is equivalent to Category A supervision, are you?
A No, I am – no, not at all. So I think these are all mechanisms which are open to whatever the decision is in terms of the level of input, right, whether that’s a mentor, a – you know, level of category of supervision, ongoing reports and assessments of patients and logbooks. These are all ways in which I think, you know, the public and the doctor in question can be hopefully upskilled and brought to a standard which is – where it is okay and safe for them to offer these procedures unsupervised. So I think there’s – there is a framework in place where some input can be put in. Now, what that is, it’s really not up to me to suggest.”
1. During a series of questions from the Tribunal, the following exchange ensued (Tcpt, 25 July 2023, p 84):
“Q You understand the two elements of achieving your FRACS, the first is your cumulative assessment where your supervisor signs off that you are ready to sit the exam?
A Yes.
Q Which means that you have achieved all the goals, all the elements of the curriculum and you have done all the operations that are required of you?
A Yes.
Q To a satisfactory degree. The second element is your oral assessment where the court of examiners, the fellowship exam occurs to finalise that process and check that everything is alright?
A Yeah.
Q Once you have obtained your FRACS and you have achieved your specialist registration you are then ready to be an independent surgeon without supervision?
A Absolutely. Yeah. Absolutely. Yeah.”
1. Professor Deva clarified that:
“You would certainly have to put your faith in the process that once an FRACS is obtained is that you have achieved that minimum standard. Then I completely agree with that. So should Dr Mahadik successfully get his FRACS then he would have been certified, as I have argued, by the body that does certify practitioners to perform invasive surgery. And he should be free to perform this. The difficulty here is that he commenced cosmetic surgery practice prior to achieving his certification and here we are hearing about these cases. So it is an unusual circumstance where it is almost that we have a little bit more information to consider, and for ultimately the College of Surgeons to consider if and when he presents for his certification and final step out into practice.”
1. Professor Deva said (Tcpt, 25 July 2023, p 85) that:
“Having looked through the material and with the assistance of Senior Counsel in the excruciating detail, I think all these cases have nuances and my sense, and just, you know, once again, my sense from now having looked at this material, having been questioned on it, having had a chance now to also look at things again last night, is that there is a concern in my mind, and having looked at this data and having answered questions on it, that the process of assessment, patient selection, care for patients after elective cosmetic surgery has been deficient. To correct that would require some degree of input. Now, what that level of input is, is entirely up to the Tribunal to decide. … but it is a difficult one, because if the decision is too light then my concern is that more patient(s) will continue to front up as time goes on and then, I guess, you know, we will be back here having to discuss, you know more issues related to it. So some sort of external input, whether that’s anything ranging from a mentor discussing cases all the way through to level A supervision, somewhere in there is the right balance that allows both Dr Mahadik to reflect and improve on his practice to ensure that patients are being properly assessed, informed and educated, consented. Having the right procedure offered to them and carried out with a level of competence and with good aftercare.”
1. Professor Deva reiterated (Tcpt, 25 July 2023, p 86) that “Some degree of supervision and input is really important. I think in cosmetic surgery, particularly practitioners that are working in isolation, don’t have the benefit, like me, of working as part of a bigger department with regular audit M and M meetings.” Professor Deva also said that plastic surgery “is a strange area of practice with many different pushes and pulls. And so anything to bring practitioners into a more structured framework where they have actively and – active structure of input and feedback around them I think is a good thing” and that “there is a great benefit of dealing with these cosmetic patients with the backing and input of trusted colleagues. And so that’s where I would hope that things would end up.”
2. In response to further questioning from the Tribunal Professor Deva said (Tcpt, 25 July 2023, p 88) that:
“Ideally, I think, a combination of having someone observe you and then observing someone, having someone observe you and then operating independently, that sort of mix is the best way to pick up operative skills. But I am not a hundred per cent sure that just focusing on operative skills is adequate for cosmetic surgery training, and being able to offer safe cosmetic surgery to patients seeking it. And so what elements of education I think are important, apart from just operative skills, it is learning to talk to patients, learning to understand and communicate effectively, expectations, learning about red flags, learning about ethics of practice, learning about ethical advertising, and learning about the limitations, your own limitations in terms of what you can and can’t do. And that’s a journey that we are on, currently, with Ahpra looking at cosmetic surgery.”
1. Professor Deva was asked (Tcpt, 25 July 2023, p 89) whether the Tribunal should have “confidence” in the Practitioner obtaining his FRACS qualification “to be able to assure us that he is ready to work” to which Professor Deva replied “absolutely”. Professor Deva added that if the Practitioner “successfully passes the FRACS then (he) emerges fully equipped to deal with these cases going forward”.
2. In further cross-examination with respect to the practicability of Category A supervision, it was suggested that such supervision in a public hospital “won’t necessary compromise you as a surgeon; but in the private domain, which this increasingly is, or is, that’s a large hurdle for (a) surgeon to achieve, isn’t it?” to which Professor Deva replied “You are absolutely correct. As I said before, this focus is purely on the operative skills. So I think that within the level of supervision there are other skills in terms of assessing patients clinically, communication, explanation of risk, informed educated consent, post-operative management of patients. Those aspects could certainly be done without necessarily having to operate on patients.”
3. Dr Curtin was the Practitioner’s supervisor from 2012 to 2022 (Tcpt, 25 July 2023, p 96). When asked to describe his experience of the Practitioner over that period Dr Curtin said (Tcpt, 25 July 2023, p 97) that he “became aware” of the Practitioner in about 2009 when he thought that the Practitioner worked in the public health system at Auburn but that he:
“started off at Westmead, eventually, in 2012. And we – it quickly became apparent that he was an experienced operator, was technically very good, and so he was able to fulfil that (Registrar) role for us in providing somebody on the ground who was experienced when difficult cases came through the emergency door. And so that was the background to his appointment. And he was able to undertake responsibilities that you wouldn’t give to a trainee, normal trainee, because he had just done so much in the past and he built on that experience over the years. So certainly the last five or six years of his time at Westmead it was virtually acting as a consultant, although he wasn’t a consultant, and patients were not admitted under his name and he had to report regularly to the consultants who were in charge. So that was his role and he – I was head of the department – I was head of the department for about 25 years at Westmead and so I was aware of who were the good surgeons and who wouldn’t. Who were the ones that would struggle and who were having troubles and Dr Mahadik was not one of them.”
1. In response to questions from the Tribunal (Tcpt, 25 July 2023, p 105) Dr Curtin said that, between 2012 and 2022 the Practitioner was “supervised, well and truly” and that he “gradually became very confident in his abilities”.
2. In cross-examination with respect to the conditions which he considered appropriate to be attached to the Practitioner’s registration (Tcpt, 25 July 2023, p 110), Dr Curtin said:
“Well, the category A and B seem to be where you really need somebody, a more experienced person immediately available, would be applicable to people who might have technical deficiencies or lack surgical skills. I don’t think that’s quite the situation with Dr Mahadik. I think that he’s technically a very capable surgeon and the cosmetic procedures are relatively minor surgical procedures from a technical point of view. They create difficulties because of the demands that patients place on surgeons and the need to make sure that complication rates are very very low or non-existent. And so, I mean, those requirements should apply to all forms of surgery, but the fact is that cosmetic surgery makes bigger demands on a surgeon in those respects, and he - as he will admit, himself, I’m sure, that he’s, when it comes to cosmetic surgery, he is a beginner. But anyone who practises cosmetic surgery has got to start somewhere. There’s no easy way when it comes to starting, you have got to dive in. Because you can assist, and assist, and assist, eventually you have got to do the procedure, yourself. And you can’t make that step unless you have got the technical competence in your hands and those sort of technical skills and some surgical judgement. So those skills Dr Mahadik has demonstrated over many years at Westmead. He has got those basic skills. But he is a beginner with cosmetic surgery and he has made some errors in starting out. He has had some – he has made some judgmental errors in patient selection. I have outlined those in the report and we are all aware of those. He has made a few, in my view, technical errors with his surgery, which he no doubt learnt from. And anybody who starts out in cosmetic surgery is going to make a few technical errors, I can assure you. And so he would benefit from some mentorship. How that – exactly how that might be carried out or instituted, I am not sure, but I don’t think he needs anything – he doesn’t need anyone standing over him to watch him make an incision.”
1. The last comments made by Dr Curtin resonate with the Tribunal. The Practitioner’s evidence, particularly in view of the nature and extent of his recent surgical experience as evidenced by his surgical logs, suggest that, although there is room for improvement in the Practitioner’s “technical skills”, the potential risk he poses to public health and safety relates more to his pre and post operative skills.
2. Dr Curtin reiterated (Tcpt, 25 July 2023, p 114) that he had described the Practitioner as “a beginner cosmetic surgeon”, a description from which he did not resile. As ultimately submitted by Senior Counsel for the Practitioner, that description needs to be considered in the context of the whole of Dr Curtin’s evidence, and the evidence more generally, including, overall, the evidence of Professor Deva. In further exchanges between the Tribunal and Dr Curtin the following exchange ensued (Tcpt, 26 July 2023, p 39):
“Q I’ve given thought to our previous discussion about what is manageable conditions, looking at the observership proposed in paragraph 6, Tab, or whatever of observership, observing a plastic cosmetic surgeon, say, six half day operating sessions over a twelve month period and finding two phalloplasties during that period of time to watch would not be particularly onerous for someone to achieve.
A I don’t think so.
Q And, then, in terms of mentorship, finding someone to mentor you reasonably closely to the satisfaction of the Council shouldn’t be too difficult, either.
A Well, it might be. My issue – my concern – I think mentorship would be the right way to go and I think that would provide sufficient protection to the public, but the question is what is the – what is the – for the mentor, what implication has that got for his own medical insurance.”
1. Dr Curtin further said (Tcpt, 26 July 2023, p 41) that he thought:
“I think B would be extremely difficult in practical terms to set up and, you know, you’ve outlined some of the issues, and I agree with those. It would be difficult enough organise a proper C mentorship, but I think – I think the C mentorship would be – would rectify the problems that are present here and the C mentorship that’s been put forward is – or the sort of mentorship that’s been described in the conditions that have been put forward, they could also apply to a C category condition as well with the two weekly meetings and all the other issues, apart from being in the same facility, which I don’t think is necessary.”
1. In further cross-examination (Tcpt, 26 July 2023, p 11) Dr Curtin explained why he did not think it was necessary “for somebody to be on site when Dr Mahadik was operating”. He clarified in response to questions from the Tribunal that he did not consider Category B supervision of the Practitioner’s surgical operations necessary. Dr Curtin said (Tcpt, 26 July 2023, p 13) “I suspect there might be difficulties in finding a plastic surgeon in Sydney who was experienced and doing a lot of this sort of – I’m not saying it doesn’t exist, but I don’t know whether Dr Barnett has got any views about that”. In response Dr Barnett replied:
“I find this particular condition possibly impractical, because of the difficulty of finding such a surgeon and I think, too, to impose an impractical condition may not be in Dr Mahadik’s best interests to be honest. I’m not in active practice, but I certainly know of nobody, and haven’t come across anybody part from Dr Hertsch, as you mentioned, who may be doing these procedures and before actually locking Dr Mahadik into this, it might be wise is somehow we found such a person and ascertained that that person was willing to act, because otherwise I don’t know whether we are if we’ve imposed a totally impractical condition.”
1. There followed a discussion between the Tribunal and Counsel with respect to a number of the conditions proposed by the Council (Exhibit R4) including the imposition of conditions “that acts as a de facto suspension that make it impossible to practise” (Tcpt, 26 July 2023, p 14). From that discussion, the following exchange ensured:
“Q Would you like to discuss what your understanding of the practice of plastic and cosmetic surgery is at the moment, tell us about how the private hospital system is working – or evidence?
A Yes. There’s quite a lot of cosmetic surgery done in private hospitals – fully accredited big private hospitals and procedures that are going to have general anaesthetics or longer anaesthetics and particularly in patients that have got maybe older or have got some risk factors are generally done in a private hospital setting. Now, there is quite a lot of cosmetic surgery that is done in day surgery units as well, and also cosmetic surgery done in doctors’ rooms. That varies from place to place. We’ve seen with Dr Mahadik that he has done procedures under local anaesthetic and twilight anaesthesia, and I know that’s done in doctors’ rooms and – but I think most people would prefer not to – not to carry out – not to undertake procedures, particularly on people that are older that have got any risk factors – significant risk factors, certainly anything beyond local anaesthetic purely – I think people would prefer to do these in private hospitals or a day surgery centre.”
1. Dr Curtin said (Tcpt, 26 July 2023, p 41) that he thought Category B supervision “would be extremely difficult in practical terms to set up and, you know, you’ve outlined some of the issues, and I agree with those. It would be difficult enough organising properly a proper C mentorship, but I think – I think the C mentorship would be – would rectify the problems that are present here and the C mentorship that’s been put forward is – or the sort of mentorship that’s been described in the conditions that have been put forward, they could also apply to a C category condition as well with the two weekly meetings and all other issues, apart from being in the same facility, which I don’t think is necessary.”
2. Dr Curtin reiterated (Tcpt, 26 July 2023, p 47) that he still described the Practitioner as a “beginner in the cosmetic surgery realm”. We have earlier recorded our view that, having regard to the totality of the evidence, that comment should not be taken too literally.
3. In response to a question from the Tribunal (Tcpt, 26 July 2023, p 49):
“Q As Dr Mahadik’s mentor over the whole time – primary mentor, you would consider yourself for his whole time at Westmead?
A Yes.
Q Are you disappointed that he’s fallen short, given your evidence in terms of his practice?
A Yeah, I am a bit. I am a bit, but I’m not – I’m not surprised. Well, I think cosmetic surgery is very demanding and he – he’s – he’s an enthusiastic surgeon. He works hard. He’s – he’s an ambitious guy and I think – and his – his – in many ways his mastery of surgical techniques may have sort have led him down the wrong path a bit – you know, made him a little bit overconfident in his approach to cosmetics.”
Evidence with respect to the nine patients
Patient A
1. In his first report (R1 Tab 19) Dr Curtin described Patient A as a “self-referred patient who was requesting surgical improvement of what he perceived to be an unusually small penis”. After referring to the Practitioner’s initial assessment of Patient A by video link on 12 July 2021, Dr Curtin referred to the operation on 28 October 2021 which was preceded by a “physical examination on the previous day”. Dr Curtin referred to Patient A’s blood tests prior to surgery, which showed a marginally elevated HbA1c level which “suggested a pre-diabetic state that Mahadik believed carried an increased risk of post-operative infection, but not a risk that would contraindicate surgical treatment”. Dr Curtin referred to Patient A’s additional risk of “surgical site infection because of his tobacco habit”, but suggested that the risk thereby created was “similar” to the “risks of overall complications” experienced by non-smokers. Dr Curtin referred to the records of the Kingsgrove Day Hospital as placing Patient A “in the morbidly obese category where the risks of surgical site would infection are significantly increased”. Dr Curtin suggested, accurately, that it was “likely that the extent of this man’s obesity was not apparent to Dr Mahadik until the day before the scheduled surgery”. By reference to the Practitioner’s clinical records, Dr Curtin was of the opinion that the surgical technique “appears to have been appropriate for (Patient A’s) condition”.
2. At the s 150 hearing the Practitioner agreed that Patient A was obese, but said that he had not rejected him because he had cleared hospital admission criteria. The Practitioner accepted at that time that checking the weight of the patient and the patient’s suitability for the proposed surgery was the surgeon’s responsibility, not that of the hospital. The Practitioner acknowledged that, with hindsight, his approach to Patient A’s surgery had “created a problem”, which he said he had “learned from”. The Practitioner said at the s 150 hearing that, as a result of his experience with Patient A, he excluded patients with a BMI over 38. Patient A weighed 128 kilograms and had a BMI of 41, placing him in the morbidly obese category. The Practitioner also said at the s 150 hearing that, since the complaint to the Commission, he had implemented other procedures, including a requirement that a patient have another adult accompany them, and that they be seen by a local practitioner. The Practitioner said at the s 150 hearing that he now asks patients who smoke to cease smoking for at least 6 weeks prior to the surgery, and that he would not undertake surgery for diabetics if they were over HbA1c 8, even if they were otherwise fit. The Practitioner agreed at the s 150 hearing that it would have been better for him not to have done so many different procedures on Patient A in one operation, and that staging the procedures was a better approach, which he had since adopted.
3. Dr Curtin referred to Patient A’s post-operative review by the Practitioner on the day following his surgery, and his advice to “spend another night in Sydney resting before returning home” on 31 October 2021. Dr Curtin recorded, accurately, that a virtual follow-up visit was arranged to take place 10 days later. Dr Curtin referred to Patient A’s post-operative wound infection and hospitalisation on 7 November 2021, and to the Practitioner’s telephone or video consultations with Patient A on 22 November 2021, 3 December 2021 and 19 January 2022 “when the surgical wounds appeared to have completely healed and Dr Mahadik offered some advice regarding rehabilitation”.
4. Dr Curtin was of the opinion that the risks of wound infection were “probably in the order of about 10% for this man, and likely to become manifest within 2 weeks of surgery. It appears that no surgical drains were used which might have reduced the risks of infection, although unlikely to have completely prevented that outcome. A short course of antibiotics commenced intraoperatively has been shown to be effective in reducing the risk of post-operative wound infection. It may have been Mahadik’s habit to prescribe antibiotics in such cases (as he had done with Patient B) but there is no record that antibiotics were prescribed for (Patient A).”
5. Dr Curtin was of the view that the care and treatment provided to Patient A by the Practitioner did not fall below that expected of a competent practitioner “with the exception that it would have been desirable to advise (Patient A) that he would need to be available for regular face to face review for a period of two weeks following surgery. Had a closer review been carried then the presence of an infection might have been detected earlier, although early detection very often does not avoid the need for a surgical drainage procedure. It is obviously preferable for the original surgeon to manage any post-operative complications, but in a Country like Australia where patients may have to travel long distances to access treatment, such continuity of management is not always feasible.”
6. In the context of his evaluation of the Practitioner’s record keeping, Dr Curtin noted that the “medical history section” of the Practitioner’s consultation template “carried very little information”. He noted that there was “no referral letter from a general practitioner or any details as to who that might be”. Overall, Dr Curtin considered that the Practitioner provided a reasonable standard of contemporaneous and legible records regarding patient care.
7. After referring to the matters to which Dr Curtin had referred, Professor Deva said (R1 Tab 9) that the Practitioner’s response to the complaint “unfortunately, does not fully address his failure to adequately work up this patient for surgery. As a newly diagnosed diabetic, who is obese and a smoker, the material risks of poor outcomes including wound dehiscence and infection were not clearly explained and accepted by the patient prior to his procedure. The acknowledgement of his health problems was not documented in his two virtual consultations. Performing a physical assessment, a day prior to surgery does not constitute a reasonable timeframe for the patient to fully understand and accept these risks. There was also no discussion about the patient’s newly diagnosed diabetes with his regular general practitioner, with the assumption made that his disease was well controlled on medication.”
8. Professor Deva further said that “The post-operative management of a patient from interstate, who is cleared to return home at the first post-operative assessment, 24 hours following surgery shows a lack of understanding of the higher risk posed by the patient’s underlying illness and the need for close post-operative monitoring and care”.
9. Significantly, neither Dr Curtin nor Professor Deva suggested that they considered any aspect of the actual surgery performed on Patient A by the Practitioner to have been deficient. Although ultimately holding different views as to their seriousness, the concerns expressed by each of Dr Curtin and Professor Deva with respect to the deficiencies in the Practitioner’s pre and post operative care of Patient A were similar in substance.
10. In cross-examination (Tcpt, 25 July 2023, p 16) Professor Deva confirmed that he had not ever performed penile enlargement surgery, but had been “involved on 5 occasions, the last of which was in 2018” in “some corrective procedure in relation to function post-operative to a penile enlargement procedure”.
11. Professor Deva was cross-examined (Tcpt, 25 July 2023, pp 20-21) about his criticism of the Practitioner’s post-operative management of Patient A. Professor Deva clarified (Tcpt, 25 July 2023, p 21) that “basically it is about the making of this decision to say it is okay to fly back at the 24 hour time point. It is not about saying you can fly back at 24 hours, it is saying I am seeing you 24 hours after the procedure and I am fine with you now going home. Back interstate. That is the – the decision at that time point is the issue not the decision as to when to fly home. It was making a decision so soon after the procedure and allowing this patient to return interstate. That decision was made 24 hours”. It was put to Professor Deva “In circumstances where Dr Mahadik directs and the patient has the support of a nurse in the intervening hours between when he is in Sydney and when he flies back to (interstate)?” To which he replied “So even the timeframe – I did not comment on the 2 day timeframe, I am commenting on when that decision was made by Dr Mahadik, and as you say, documented in his notes very clearly. The decision to allow him to go back interstate was made at 24 hours after assessing this patient following the surgery. And that is exactly what I have written so that’s what I referred to as the decision making. Assessing a patient 24 hours after surgery I don’t think is sufficient time, particularly in someone with a risk of infection”.
12. Professor Deva was cross-examined at length with respect to the difference between his statement that Patient A developed a grossly infected wound dehiscence after his return home, and the hospital discharge summary recording “no gross infection”. Professor Deva’s view that there were some inconsistencies and uncertainty with respect to the “timeframes” and whether he was right about that is not really the point which, as Professor Deva made clear was the time at which the Practitioner suggested that Patient A could return home, the absence of effective post-operative care which that necessarily resulted in and the conditions from which Patient A suffered pre-disposing him to post-operative infection.
13. In cross-examination (Tcpt, 25 July 2023, p 30) with respect to Patient A’s asserted “higher risk profile” Professor Deva said “Well, I think it is summarised here in Dr Curtin’s report. He referenced it. I mean, it was – obesity, smoking and diabetes, particularly if it is newly diagnosed and potentially not fully under control, do increase the surgical infection and surgical dehiscence and problems with healing”. When pressed to explain “what percentages are you talking about” with respect to those risks, Professor Deva said:
“In general terms if you look at published risk of all procedures in terms of smokers, obesity and diabetes, the risk is increased up to threefold but it does depend on the procedure. So if you were asking specifically about body contouring procedures, penile enlargements, any procedure which involves, you know cutting into tissue, elevating tissue, potentially degloving tissue and devascularising tissue, the risk is up to threefold but could be higher based on what those parameters are.”
1. Although Professor Deva was criticised in subsequent cross-examination for not providing references for his opinions, nothing to which he was referred suggests in our view that his opinion with respect to these issues lacked an adequate foundation in fact or expertise.
2. Professor Deva was reminded (Tcpt, 25 July 2023, p 36) that there were “four separate occasions when Dr Mahadik has had a discussion with the patient about risks”. He was then asked “Do you maintain your opinion as expressed in your report that the material risks of poor outcome including wound dehiscence and infection were not clearly explained and accepted by the patient prior to the procedure”. Professor Deva replied “I do”. When asked (Tcpt, 25 July 2023, p 37) to explain the basis on which he made that assertion, Professor Deva acknowledged that the risk was noted in the record as “increased slightly”, and that the Practitioner had discussed this with Patient A’s anaesthetist.
3. Professor Deva considered that the Practitioner’s medical records were not a “good record of properly working up a patient for an elective patient less than a day after first physically examining the patient. So the two virtual consultations were going through in detail but at arm’s length, as we are doing today, on a screen, but the first time Dr Mahadik actually physically assessed this patient was notes talking about, you know with his anaesthetist and medication was okay and then proceeding with surgery 24 hours later, omitting, as Dr Curtin has noted, the risk of obesity, which he seemed to be unaware of, and the risk of smoking, combined with diabetes, I don’t think is an adequate workup, understanding and communication of the magnitude of the risk, and the addictive factors of these three systemic, significantly systemic combinations for an elective cosmetic procedure of which there was no urgency”.
4. Professor Deva further submitted that Patient A’s symptoms “should have necessitated potentially a pause, particularly if it was the first time Dr Mahadik was actually physically examining this patient and looking at his body habitus and checking perhaps with the GP as to his diabetic control. Proceeding with surgery in 24 hours based on what I have seen in the notes and based on the standard which now holds, as Dr Curtin says, he is an equivalent of a consultant plastic surgeon, it, to me, is not the standard you would expect from some from one of my colleagues, of someone who is an equivalent of a consultant plastic surgeon”.
5. In response to a question from the Tribunal (Tcpt, 25 July 2023, p 40) suggesting that Patient A “was offered penis enlargement surgery on the basis of not examining the patient” Professor Deva said “That is correct.”
6. Dr Curtin was cross-examined in relation to Patient A’s surgery and reminded that, in his report, Dr Curtin had raised “issues” around Patient A being diabetic, a smoker and “morbidly obese”. It was put to Dr Curtin (Tcpt, 25 July 2023, p 116):
“Q Where you say the risks of surgical site wound infection are significantly increased. And it seems likely that the extent of his obesity was not apparent to Dr Mahadik until the day before the scheduled surgery. Well, saying all of that, Dr Mahadik, as a doctor, could have, having renewed all of that the date prior to surgery when he saw the patient for the first time, said to him that surgery is either not suitable or should be deferred to a later date couldn’t he?
A Yes.
Q And he should have, shouldn’t he?
A Probably.”
1. Shortly thereafter Dr Curtin said:
“I think the issue that you are making is a fair one that a face to face operation would have made him aware for the first time just how obese he was and, you know, his – he would have had – all other things he would have been able to assess probably on the video conference, on the video link. But, you know, he may not have really realised just how bulky this guy was and so I think the face to face did probably put a different complexion on his assess.”
1. Dr Curtin agreed (Tcpt, 25 July 2023, p 119) that, post-operatively, Patient A suffered a significant infection which was a “pretty serious outcome for a medical procedure”. Dr Curtin agreed that, in his report, he raised a concern that there was no record of antibiotics being prescribed for Patient A by the Practitioner, and agreed that not doing so “would invite your criticism”. Dr Curtin agreed (Tcpt, 25 July 2023, p 120) that he was “critical of the lack of the regular face to face review post-surgery for this patient” and also about the “continuity of treatment, given that this patient was from interstate” to which Dr Curtin replied “Yes. Yes. It is not good”. Dr Curtin agreed that he had also been “critical in relation to Dr Mahadik’s record keeping for the patient, including in relation to the medical history that was taken”.
2. The Practitioner was cross-examined with respect to Patient A’s surgery. The Practitioner agreed that the first time when he saw the patient’s penis was the day prior to surgery (Tcpt, 5 February 2024, p 38). The Practitioner agreed (Tcpt, 5 February 2024, p 39) that the patient was obese, although he did not “have a feel for how obese he was until (he) met him” at the face to face consultation the day prior to surgery. The Practitioner said that “in hindsight” he “completely” agreed that he should have “turned this patient away after seeing him at that face to face consult”.
3. The Practitioner agreed that the “red flags” with respect to the patient included that he suffered from depression, that he was smoking 10 cigarettes a day, having 6 drinks a day and had had a stroke or mini-stroke or a TIA 2 years prior to his surgery, suffered from chronic pain and previously had a hernia repair or scrotal surgery. The Practitioner agreed that “in hindsight” he should not have conducted surgery on this patient (Tcpt, 5 February 2024, p 40). The Practitioner agreed that “looking back on it now, you as a surgeon conducting the operation had a responsibility to assess this patient as to suitability” (Tcpt, 5 February 2024, p 40). The Practitioner reiterated that he had “erred on this occasion”. The Practitioner agreed that Patient A’s diabetes was not controlled at the time of his surgery and that he had a higher risk of infection than a normal patient (Tcpt, 5 February 2024, p 41). The Practitioner agreed “100% that he didn’t make appropriate arrangements for the continuity of care of this patient in Victoria”.
4. The following exchange occurred during the Practitioner’s cross-examination (Tcpt, 5 February 2024, p 44):
“A All interstate patients are advised to follow up with the local GPs at five to seven days and then follow me – follow up with me ten days. But this happened in between.
Q Did you speak to his GP before he underwent surgery?
A No, I didn’t.
Q Do you think looking back on it now that he [sic] should have?
A Yeah, I agree.
Q There is a post-operative follow up visit … and this is where the patient saw you, I think it was the day after the procedure.
A Yep.
Q And it was your view … that he could fly home in two days?
A That’s correct.
Q Did you see him again before he flew home after that consultation?
A No, I haven’t seen him.
Q Do you think, looking back on it now, the day after the procedure was an appropriate time to assess him as to suitability to return home?
A Look, I mean, for surgical patients post-op follow ups are organised for two reasons. One is the post-op follow up I organise within the first 48 hours to exclude any haematoma. The second post-op follow up is usually about ten days, ten to twelve days, when you suspect any secondary infection. But it’s very unlikely that in between, once you see then exclude a haematoma in the first 48 hours, in about ten days usually – so to answer your question, if I saw him again for the second time – I saw him on the first day, if I saw him on the third day before flying out, that wouldn’t have avoided his infection.”
1. The Practitioner agreed (Tcpt, 5 February 2024, p 45) that criticism of his record keeping for Patient A in relation to the medical history that was taken was justified.
2. The Practitioner explained (Tcpt, 5 February 2024, p 47) that “nowadays” all patients from interstate are accompanied by someone and advised not to return interstate for five nights after surgery.
3. The Practitioner agreed (Tcpt, 5 February 2024, p 48) that Patient A underwent four procedures at the same time. The Practitioner was asked “Looking back on it now, do you think you should have staged those procedures?” The Practitioner ultimately agreed that “If someone is this obese, you can, you can stage this procedure. I will stage this procedure first doing pubic lift alone and then the penile part”.
4. Cross-examination of Professor Deva and Dr Curtin and of the Practitioner ultimately renders our findings with respect to the Practitioner’s treatment and care of Patient A largely uncontroversial. As Professor Deva and Dr Curtin both acknowledged, their experience of surgery of the kind performed on Patient A was extremely limited. That limitation does not ultimately assume significance in view of the large measure of actual or implied agreement between them with respect to Patient A's pre and post operative treatment and care, and the Practitioner’s admissions with respect to them.
5. We find that the Practitioner made an error of judgement in that, having become aware, at the latest, the day prior to Patient A’s surgery, that proceeding with it the next day was potentially risky, he nevertheless did so. One of the risks arising from Patient A’s conditions actually materialised. Having made an error of judgement in proceeding with the surgery, the Practitioner made a further error of judgement in not seeing Patient A and assessing his condition before agreeing that he could return home interstate. It was also inappropriate for the Practitioner to rely upon a virtual examination of Patient A 10 days after his surgery.
6. The evidence does not establish that the surgery which the Practitioner actually conducted on Patient A was itself less than competently performed. The Tribunal’s concerns about the implications for public health and safety relate to the Practitioner’s failure to properly assess whether surgery on the patient was appropriate, when, as he admitted before us, it was not. If, on proper assessment, some surgery on the patient was considered safe, failing to sequentially undertake and successfully complete that surgery, and failing to manage the patient’s care post-operatively were significant deficiencies in the treatment and care of Patient A. Each of these criticisms is serious, and, if repeated, could have adverse, or more adverse consequences for a patient than those which Patient A suffered.
7. The Practitioner’s evidence revealed insight into the shortcomings of his treatment and post-operative care of Patient A. The Tribunal is satisfied that the Practitioner would not consciously make those errors again. It does not mean however, and is not suggested to mean that the Practitioner does not require mentoring in relation to those aspects of his practice, given that the Practitioner, for reasons which he explained, and which the Tribunal does not criticise, does not rule out undertaking performing phalloplastic surgery in the future.
Patient B
1. Dr Curtin (R1 Tab 19) referred to the surgery which the Practitioner performed on Patient B on 31 March 2022 at the Kingsgrove Day Hospital. Dr Curtin did not suggest that the surgical technique utilised by the Practitioner was inappropriate, or warranted criticism. Dr Curtin referred to Patient B’s post-operative complaints, and expressed his view that, having regard to the patient’s statements and photographs he had seen, the Practitioner’s care and treatment in the post-operative period was satisfactory.
2. Dr Curtin suggested that it “would have been desirable for (Patient B) to have lost weight before proceeding with this elective surgery, but clearly he had experienced difficulties with weight loss, and had remained obese despite undergoing a gastric sleeve procedure in 2012”. In addition, Patient B had undergone cervical discectomy in 2020, and hip replacement in 2015.
3. Professor Deva (R1 Tab 9) referred to the patient’s post-operative complaints and noted that the patient had an elevated BMI of 36 which was “technically obese” and that the Practitioner’s records did not reveal any “preoperative blood workup”. Professor Deva referred to the patient’s history of gastric sleeve surgery, and absence of documentation of any previous or intended weight loss.
4. Professor Deva noted that the Practitioner’s records did not document a “clear discussion of the risks of surgery for patients who are obese or the need for post-bariatric patients to attain and maintain a stable weight prior to any skin/fat resection and/or liposuction. The timing of skin excision/liposuction (pubic lift) surgery on this patient prior to his weight loss and maintaining a stable weight does not constitute acceptable practice in the treatment of post-bariatric patients”. For those reasons Professor Deva considered that the Practitioner’s care and treatment of Patient B showed “significant failing in proper preoperative assessment and proper informed educated consent as to the risks of surgery”.
5. In view of the Practitioner’s evidence with respect to advice given to the patients whose complaints gave rise to these proceedings, and the absence of evidence from the patients, we cannot be satisfied that the Practitioner failed to explain the risks to the Patient B. Nothing turns on that, given that it was ultimately the Practitioner’s responsibility to either refuse to operate until the particular risks of the patient were addressed or alleviated or, if he was to proceed, to obtain a clear written acknowledgement from the patient that he had pointed out the particular risks which the patient faced, and particularly the post-operative risks which the patient faced because of his circumstances. The evidence does not establish that the practitioner did that with respect to Patient A or Patient B.
6. As Professor Deva was cross-examined first, we will refer first to that cross-examination. It was suggested to Professor Deva (Tcpt, 25 July 2023, p 43) that his “criticism in global terms of Dr Mahadik was that you say there was an insufficient educated consent on the issue of obesity, and that the preoperative assessment was significantly below as he needed to stabilise his weight preoperatively, correct?”. Professor Deva replied “Yes”. Professor Deva was asked whether “After penile enlargement surgery or the corrective surgeries that you have been a party to, it is common, isn’t it, to have bruising and swelling post-operatively?”. Professor Deva replied “Yes”.
7. Professor Deva said that in surgery he had “been involved in replanting penises that have been amputated” it was important to “reattach a penis to prevent erections using – usually using Valium” but that anti-erection medication was not 100% effective to prevent erections. That concession was consistent with the Practitioner’s evidence, and militates against adverse findings with respect to issues with Patient B’s stitches post-operatively as a result of erections.
8. Professor Deva was asked (Tcpt, 25 July 2023, p 44) “and noting that this patient was obese at the time of his surgery in 2021, and noting his sleeve gastrectomy was some 12 years earlier, it would be fair to say … 12 years after sleeve gastrectomy is a sufficient amount of time, isn’t it, to allow a patient to stabilise their weight?”. Professor Deva replied “It depends on whether other treatments the patient has had, whether they are adherent to diet and exercise, whether they are on injectable, such as Ozempic, so there are many facts that then control weight post-sleeve gastrectomy. Most of the weight is lost early but it is important in anyone who has had bariatric surgery or weight loss surgery to get a clear understanding of what their weight gain and weight loss history is and to ensure that their weight has been stable for some time prior to offering any sort of body contouring surgery”.
9. It was put to Professor Deva that “Nowhere in this patient’s complaint does he state that he was not on a stable weight at the time that he presented in Dr Mahadik’s rooms?” Professor Deva replied “It is difficult to say. It was not documented. The weight history was not documented in the material that I looked at”. Professor Deva agreed (Tcpt, 25 July 2023, p 45) that the patient had not given any “indication as to an instability of weight prior to presenting to Dr Mahadik”. Professor Deva added that “This is not so much from the patient, it is from the doctor assessing the timing of surgery so I don’t understand the – I don’t understand why that is an issue”. It was suggested that it was “not a question of complaining, it is just about giving an accurate history, isn’t it, you’d agree with that?”. Professor Deva replied “True. So in the list of complaints that I have in front of me, pain, bruising, swelling, poor surgical technique, widespread infection, atrocious scarring, urine leakage, erectile dysfunction and pain and mental suffering. These are the lists from the patient complaint. It is true to say it is nothing about weight loss or gain”. In the absence of evidence from the patient, and in view of the number of complaints he raised, it is difficult to criticise the Practitioner on this issue in isolation.
10. Professor Deva was referred to the consent form signed by the patient on 28 February 2022 in relation to pubic lift and liposuction which noted “Obese individuals who intend to lose weight should postpone all forms of body contouring surgery until they have been able to maintain their weight loss”. It is not in doubt that Patient B signed that document. There is no evidence suggesting that the patient did not, or should not have understood what the form said about weight issues.
11. Professor Deva subsequently agreed (Tcpt, 25 July 2023, p 47) that the documentary evidence was that Patient B understood that an obese individual who intends to lose weight should postpone all forms of body contouring surgery until they have been able to maintain their loss. Professor Deva accepted that the “documentary evidence” supported the Practitioner’s contention.
12. Professor Deva was referred (Tcpt, 25 July 2023, p 48) to the Practitioner’s account of seeing Patient B 5 months after his last review, when he presented as “a completely different man, exuberating confidence and energy” having, he told the Practitioner, lost 13 to 15 kilos in weight in the previous 3 months. There is no reason to doubt that the Practitioner accurately recorded what Patient B reported to him. Professor Deva disagreed with the suggestion that it could be implied that Patient B did not intend to lose weight prior to his surgery. Whether he did or not is not relevant for present purposes- Patient B’s weight was what it was when he had his surgery. Professor Deva accepted (Tcpt, 25 July 2023, p 49) that one of the “driving forces for men in having that procedure done is that it proves their self-confidence and that can have a positive effect on their motivation to either lose weight, eat well, exercise, be pro social, seek intimate partners”.
13. Professor Deva suggested that “To protect the practitioner there has to be mirroring of not just prior, initial, lengthy consent paperwork but a reflection of that in the medical record, and ultimately, as we both agreed, a corroboration from interviewing these patients directly and finding out what process, did they have time and space to actually understand what they were initialling and signing. And I think that’s a very important step in the elective cosmetic surgery”.
14. In subsequent cross-examination Professor Deva reiterated his contention that there needed to be more than “paperwork” to establish that patients understood the risks of their proposed surgery and were thereby able to give an informed consent to such surgery. When asked to “point” to a document which stated that the consent forms that Dr Mahadik was using at the time of the surgery which gave rise to the complaints were “not within the standards expected”, Professor Deva agreed that he was unable to point to any such documentation. Professor Deva subsequently agreed (Tcpt, 25 July 2023, p 53) that there was “no aspect of the written documentation that Dr Mahadik was relying upon” at the time of the surgery which gave rise to the complaints that was “anything other than consistent with the requirements for consent under the guidelines” which have come into place.
15. Professor Deva reiterated (Tcpt, 25 July 2023, p 54) that he “had no issue with the content of the paperwork provided, it is the manner in which it was used and the effectiveness of whether informed educated consent was achieved for each of these patients that have lodged complaints. That’s the view that I think we need to address rather than whether or not the documentation was compliant or adequate”. The Practitioner’s evidence in cross-examination suggests that he now has a much better appreciation that patient selection involves more than merely relying on patients having signed consent forms.
16. Dr Curtin was cross-examined briefly in relation to Patient B’s care and treatment. Dr Curtin was reminded of the concern he recorded in his report with respect to Patient B’s obesity, and the following exchange occurred (Tcpt, 25 July 2023, p 122):
“Q It was not your view that it would have been desirable for him to have lost weight?
A Yes.
Q And it would have been better for that to have occurred prior to proceeding with the surgery, wouldn’t it?
A M’hmm.
Q And are you aware that Dr Mahadik says that he later did lose a lot of weight after the surgery?
A Oh, did he? Yes, well, I’m sure it would have been desirable – as I said, it would have been desirable for him to have lost weight before the surgery.”
1. Dr Curtin nevertheless remained of the view that Patient B being “borderline morbidly obese in and of itself raises issues around his (the Practitioner’s) decision making for that surgery”. Dr Curtin remained of the view which he had expressed in his report, and reiterated however that it would have been “preferable” for the Practitioner to have proceeded with the surgery after the patient lost weight. Dr Curtin properly conceded that he was “not in a position to comment on the appropriateness of the actual surgery technique itself”.
2. As with Patient A, neither Professor Deva nor Dr Curtin suggested that he had sufficient experience or expertise to express views about the Practitioner’s actual surgical technique with respect to Patient B. The evidence does not reveal defects in the Practitioner’s technical skills with respect to Patient A or Patient. In the cases of other patients, the criticisms relate more to the Practitioner’s choice of surgical technique than to the manner in which he employed the chosen technique. In the cases where the Practitioner was considered to have, or admitted that he had made mistakes, and his technical skills were below the expected standard, the expert evidence suggests that the Practitioner’s mistakes were indicative more of inexperience than incompetence. In some instances, the evidence suggests that the Practitioner may not have used the preferred surgical technique, but falls short of establishing that the technique he employed fell below the expected standard.
3. In cross-examination of the Practitioner (Tcpt, 5 February 2024, p 53) with respect to Patient B the following exchange occurred:
“Q He, in his complaint, said that he did (had) an extreme amount of pain and an unusual amount of swelling, bruising after the surgery. Do you accept that that was the case?
A So I accept that he had pain which was more than what he expected, but the swelling and bruising were just consistent with what he had, the procedure he had.
Q Did you explain to him prior to the procedure that that was a potential risk?
A Yes, I did.
Q He also says that he had an infection within the first 24 hours after surgery, do not accept that that was the case?
A No, not at all.
Q So it’s your evidence that there was no infection?
A Yeah, not in the first 24, 48 hours. Not in the first – not until the eighth day after the surgery.
Q On the eighth day there was an infection? He also says that there was an issue with his stiches separating, leaving a large gaping hole at the wound site?
A Yep.
Q Do you accept that that happened.
A Yes, that did happen.
Q The stitches in the pubic region began to separation?
A So the, the only stiches which came apart were the stitches at the junction of the penis and the scrotum underneath the penis. So we call this the penoscrotal junction. There were … two to three stiches which came apart. They started coming apart on the sixth post-operative day and on the eighth post-op day they had dehisced to leave a wound the size of a one dollar coin. So out of all the suture lines he had, one suture line dehisced at the junction of the penis and the scrotum which was of a one dollar coin size.
Q He also underwent a circumcision with you?
A Yeah.
Q Did he have stiches for the circumcision?
A Yeah.
Q Do you accept that the stiches of the circumcision also came apart?
A No, not the circumcision, it didn’t come apart.
Q He also says that he contacted you as he was concerned about the amount of pain and was worried about needing a skin graft and IV antibiotics did that happen?
A Yes, he did. Look, my practice – it’s a standard of my practice that I call patients on the evening of the surgery and the day after the surgery. So on the evening he didn’t pick up the phone, on the next day I spoke to him when he has complained about pain. The pain eased from day 2 to 3 and it is significantly after day 4, but when I spoke to him on day 1 a couple of things – he had a pubic lift, so the lower skin flap was sutured to the rectus muscle and he was advised not [sic] complete bed rest with toilet privileges at all, but he was coming on and off in the bed wanting to go for a walk, number 1. So that suture did hurt him and the second is the pain relief he was taking, he wasn’t taking – I think there could have been a communication gap that – with the nurses and him. He wasn’t taking the appropriate amount of pain relief which was advised to him again and from day 2 the pain started easing off, but it’s right to say that he didn’t expect that, that much of pain.”
1. The Practitioner agreed (Tcpt, 5 February 2024, p 55) that Patient B had a BMI of 35 and had undergone gastric sleeve surgery in about 2010, after which the Practitioner understood that the patient “lost his weight significantly and over the last 4 to 5, 4 to 5 years he had – he did a lot of exercises and all and in spite of that he wasn’t able to reduce his weight any further. So roughly 5 to 6 years on he was on his same weight when he came in and then later on, obviously for other reasons, he opted to go for the procedure”.
2. The Practitioner rejected a suggestion that, given the patient’s weight, at 110 kilograms, he should have deferred surgery until the patient lost weight. The Practitioner said (Tcpt, 5 February 2024, p 56) that, in response to his suggestion that he should reduce his weight, the patient had said to him “Look, no matter what I do, I’m not, I’m not able to lose more weight and I have this other problem which I want to get rid of”. The other problem related to his wish to “start a new life” and undergo the phalloplastic procedure which could improve his “level of confidence”. There is no reason to doubt that evidence. The practitioner reiterated that, notwithstanding his BMI index, Patient B was “without any medical comorbidities” and had “hypertension which was well controlled” and was thus “the right candidate”.
3. The Practitioner agreed (Tcpt, 5 February 2024, p 57) that the patient underwent “length and girth” phalloplasty, a pubic lift and pubic liposuction with an aesthetic circumcision and scrotal repair, the surgery being estimated to be of five and a half hours duration. The Practitioner said that he had asked the patient about his blood pressure and had been told that it was normal and that the patient had “checked it with my GP”. The following exchange occurred:
“Q Do you think, looking back on it now, that you should have staged the surgery for this patient?
A Look, in hindsight – so this – I’m operating on a single area. Recovery remains the same. Now, the problem which he had, which is the dehiscence at the site of his scrotum and his penis, as I did mention, this will happen even if I did that one single procedure because of the nature of the procedure so the answer to your question is yes and no that henceforth if I have to operate on them, I would stage them into first I do a pubic liposuction lift and then go to the penis. But in particular for him, I don’t think doing these procedures together has caused the wound dehiscence.
Q The bruising is greater doing multiple procedures, isn’t it?
A Look, liposuction will cause bruising. So if I did not do a liposuction, he would have – he wouldn’t have had much bruising at all. So the bruising which he was taken aback by was from the liposuction of his pubic area because before the pubic lift I have to liposuction. The lift can’t reach on the sides, so the sides were liposucked and that caused the bruising. So the bruising is in the skin. So there’s no – so the bruising necessarily does not cause complications, neither did it cause any complications in him.
Q The pain is greater with multiple procedures as well, isn’t it?
A So the pain he had – look, the site – the incident site, as long as the patient is taking regular pain relief as recommended and there is no haematoma and other things the pain is – I wouldn’t say there is no pain, because every surgery there is pain – but pain is not intolerable.”
1. The Tribunal asked the Practitioner (Tcpt, 5 February 2024, p 58) whether he had read the recent cosmetic plastic surgery guidelines from 1 July 2023. The Practitioner replied that he had not. The Tribunal then informed the Practitioner “In terms of a future practise, if we envisage one in the future, with you performing phalloplasties on a lot of patients from interstate, and the guidelines state that you must see the patient twice, or there must be two preoperative consultations, one of those at least must be in person with the practitioner who will perform the surgery. Following that, there must be at least a seven day cooling off period.” The Practitioner was asked whether he thought in those circumstances he “may change your practise”. The Practitioner replied that such regime was “already in place”. The Practitioner conceded (Tcpt, 5 February 2024, p 59) that first seeing the patients the day prior to surgery was “not ideal” and that in future he would “need to get them up at least once and at least 7 days” prior to surgery.
2. As became apparent later in the Practitioner’s evidence, the Practitioner is probably more experienced in performing surgery of the kind performed on Patients A and B than all but a handful of Australian surgeons. The evidence does not enable the Tribunal to be satisfied that the surgical skill employed by the Practitioner with respect to Patient B was deficient, although, as with Patient A, his pre and post-operative management of Patient B’s care was lacking. The Practitioner’s decision, in Patient B’s circumstances, to perform all of the procedures which he did on Patient B in one operation was, as the Practitioner effectively acknowledged, not in Patient B’s interests. The Practitioner’s judgment in doing so was lacking. The Tribunal accepts that the Practitioner is unlikely to err in that way in the future.
3. As with all other patients, the Tribunal has not heard evidence from Patient B. There is no reason to reject the Practitioner’s evidence that the Practitioner raised the matters which he says he did with Patient B, or to reject the Practitioner’s account of what Patient B said in response to those questions. As the evidence with respect to all of the patients in these proceedings confirms, drawing a bright line between surgical skill and patient satisfaction is not necessarily easy. The Tribunal’s findings with respect to Patient B are largely in the nature of those previously recorded with respect to Patient A. There is a need for the Practitioner to undergo further mentoring with respect to assessment of patients pre-operatively. Such mentoring should involve improving the Practitioner’s skill in determining the appropriateness of performing any surgery, and, if surgery is considered to involve no avoidable risks, performing in one surgical intervention only those procedures which can be performed safely and without avoidable pain or suffering for the patient and appropriately managing the post-operative care of patients.
Patient C
1. Dr Curtin said in his report (A1 Tab 19) that the Practitioner’s operation note did not “entirely explain where the skin lesion (which he removed from Patient C’s left lower eyelid) was located on the eyelid and what measures were taken to ensure that the additional excision did not compromise the blepharoplasty procedure, where judging the correct amount of skin to be excised is critical in obtaining a good result”. He further observed that “In any event, post-operatively there was some persistent ectropion evident in the left lower lid following surgery, and eventually, corrective surgery was carried out on 28/12/21. The left lower eyelid surgery on that day was also combined with a right sided forehead lift. The forehead lift appears to have been successful but it appears that the left lower eyelid corrective surgery did not completely correct the ectropion deformity.”
2. Dr Curtin’s opinion was that the Practitioner “appears to have provided a satisfactory level of care to (Patient C), but unfortunately the end results of surgery to the left lower eyelid were unsatisfactory. The initial surgery was probably compromised by the excision of the skin lesion, and the resulting ectropion was not corrected by the second procedure”. Dr Curtin considered that the Practitioner’s records were “complete and satisfactory”. Dr Curtin’s opinion was that “the lower lid blepharoplasty procedure is a particularly demanding one but unfortunately the treatment provided by Dr Mahadik in this case fell below that expected of a competent medical practitioner”.
3. After referring to the details of Patient C’s treatment emerging from the Practitioner’s clinical records, and pre and post-operative photos of the patient, Professor Deva said in his first report (R1 Tab 9) that he had “concerns as to the technique of lower lid blepharoplasty performed by Dr Mahadik. The procedure of canthopexy and then subsequent canthoplasty is poorly documented. I could not see an additional upper lid incision in any of the post-operative photographs, which is necessary for canthal fixation. This is to ensure that the canthus is pulled superiorly, which protects the lower lid from retraction and/or ectropion. My concerns are that the fixation of his left lateral canthus was not performed adequately and/or in the correct position in both his primary and revision surgery. This would explain why the patient’s deformity has persisted in spite of Dr Mahadik’s attempt at revision”. Professor Deva added that “The additional excision of what turned out to be a benign skin lesion at the time of lower lid surgery significantly contributed to a shortage of skin on this left side. With a less than adequate canthal suspension procedure, the ectropion remains uncorrected. It will be difficult to correct this longstanding deformity after both failed primary and revision surgery”.
4. In cross-examination of Professor Deva the following exchange occurred (Tcpt, 25 July 2023, p 59):
“Q Would you agree that giving an opinion as to whether or not revision surgery has been successful or not in the absence of the actual paragraphs [sic] is not the ideal position to take for an expert witness?
A I would say that’s, at this stage, putting – looking at the information I had in front of me, which is this patient presented for a procedure, underwent a procedure, underwent a revision procedures, had an additional skin lesion excised, which turned out to be benign, and who was still unhappy and now is complaining about the need for further revision surgery is what I have commented on. As I said at the beginning, and we both agreed, it would be really good to see this patient face to face and assess what the actual outcome has been and whether or not revision surgery was necessary. So I think a lot of material would – and important information – would be feigned [sic] from actually having these patients examined face to face.”
1. As is not in doubt, and unsurprising in the circumstances, neither Professor Deva nor Dr Curtin had the opportunity to see any of the patients with whom these proceedings are concerned in person, and only saw photographs of them taken some time ago. To the extent that the absence of that opportunity impacts upon their evidence, we do not perceive that it ultimately impacts more upon the evidence of one expert than the other- more detailed and up to date information may have assisted either party’s case. Given their expertise, and the thoroughness of their consideration of the issues presented for their opinions, the Tribunal’s determination of the proceedings is not adversely impacted by the limitation to which Professor Deva referred.
2. In cross-examination, it was suggested to Professor Deva (Tcpt, 25 July 2023, p 59):
“A When you see a patient who has had multiple revision surgery or one revision surgery and still a poor outcome then it usually means that the initial was – may have been compounded and not adequately addressed.
Q And do you …
A And certainly patients requiring a third or a fourth revision, in my experience, it is very difficult because now you are dealing with initial procedure and a subsequent revision procedures that failed to fix the problem and potentially could make revision surgery worse and more unpredictable.”
1. Professor Deva reiterated (Tcpt, 25 July 2023, p 60) that his evidence would have been “strengthened significantly” if he had been “given the chance to see each of these patients in person”. As we have earlier recorded, that was a limitation with which both Professor Deva and Dr Curtin had to contend. It was suggested to Professor Deva that “In many instances, you simply don’t have post-operative photos of the procedure”, or “or the revision” to which Professor Deva replied (Tcpt, 25 July 2023, p 61):
“A photo of the result after the first procedure, so there was – there was an expected outcome and in terms of the expected outcome from his first procedure. I think this patient did show quite significant ectropion as a result of Dr Mahadik’s first procedure.
Q Yes, but ---
A And so the correction of that significant ectropion, as a result of technique and additional excision of a benign skin lesion from the lower lid, does point, I think, to some significant technical failures.”
1. It was put to Professor Deva (Tcpt, 25 July 2023, p 64) that it was “correct to say that the difference between the first post-op and the subsequent post-op image suggests that the conduct of the patient may explain what ended up as a left eye droop”. Professor Deva replied “I disagree with that. In my experience, I ask all patients to massage their scar, and I give them clear instructions on how to do it. And I don’t think aggressive massage alone would result in the droop of the eyelid of that magnitude.”
2. In cross-examination of Dr Curtin (Tcpt, 25 July 2023, p 122) he was asked “Do you have an understanding now of where the additional excision was carried out?” Dr Curtin replied:
“A Well, I think the extra excision must have been either in the eyelid or very close to it and so it would have, to a degree, comprised [sic] the operation.
Q And led to the complications afterwards, potentially?
A I’m not sure that I ever saw photographs of this chap so I – I mean, there’s all sorts of reasons why you can get ectropion after a lower lid blepharoplasty, there’s a whole range of reasons. Loss of – excessive skin excision is just one of them. But that’s one that is a concern. So I don’t – I’m not quite sure why he got an ectropion but he got it. And it is a poor result.”
1. Dr Curtin reiterated his “view that Dr Mahadik, in this case, fell below the (standard) expected of a competent medical practitioner?” replying “Yeah, I think that’s probably right”. When asked why he was of that view Dr Curtin said (Tcpt, 25 July 2023, p 123):
“A Well, the result speaks for itself. It’s a tricky operation, you have to be very careful doing it and you have got to be conservative and it’s just the sort of operation that happens to people when they are starting off in cosmetic surgery.
Q And was that surgery something that he was doing at Westmead, or?
A Well, not precisely but indirectly because he would have been taking out skin cancers from eyelids and having to deal with those issues, very similar issues, and he would have known about canthoplasty procedures and ways of supporting the lower lid after surgery, after you have operated on it. So he would have understood the principles behind the procedure, and I’m sure he had seen the operation carried out lots of times. So I just think there are some judgemental errors, technical errors probably during the procedure.”
1. In cross-examination of the Practitioner the following exchange occurred (Tcpt, 5 February 2024, p 64):
“Q (Patient C) was the one who had surgery in relation to his eyes, the blepharoplasties. Do you say for this patient that part of his complication, that is, complications were caused by over massaging, is that right?
A Possibly, that’s what he says.
Q Do you think that there could have been any other causes?
A I don’t believe there could be any other cause in his situation.
Q It was Dr Deva’s evidence that he did not think that aggressive massage alone would result in a droop of the eyelid of that magnitude. Do you agree or disagree with that?
A I disagree with it.
Q He also raised an issue about the placement of the scar and the scar being normally going under the eyelashes to try and hide it?
A Yep. So, look, there are 2 types of incisions. The most common incision for a lower blepharoplasty is subciliary, which is under the eyelash. In (Patient C), since there was a lesion – a lesion is a – it’s a cancer, a small suspicious cancer lying underneath that line of incision, I decided to opt for the second option, which is a mid lid incision. So what I usually do in a mid lid incision there is a very fine line running between the eyelash and the (not transcribable). You ask the patients to smile as well and the crease, you mark the crease. So his procedure was done by a mid lid incision and the incision, regardless what incision you do, is not known to cause ectropion, which is the upturning of the eyelid. The choice of the incision is not known to give – is not one of the reasons why patients can have an ectropion. So that choice of the incision was tailored to accommodate the excision of the skin cancer sitting at the lower lid, eyelid.
Q Dr Curtin was of the view that it was a tricky operation, do you agree with that?
A Look, I agree because lower eyelid lesions are a very – I’ve commonly done these procedures for skin cancer excision is of the lower eyelids. How they work, for the context of what he’s, what he’s talking, this is trickier than a breast augmentation, I agree.”
1. The Practitioner referred (Tcpt, 5 February 2024, p 65) to having done “more than maybe fifty, if not one hundred, ectropion, treating the complications” a number of which resulted from surgery undertaken by other surgeons. The Practitioner suggested however that for blepharoplasty for eyes he was “pretty confident and I am very confident about blepharoplasties”. The following exchange also occurred (Tcpt, 5 February 2024, p 66):
“Q Dr Curtin was of the view that your conduct with this patient fell below the expected standard. Do you disagree with that?
A I disagree with it, yeah.
Q Dr Deva was of the view that the fixation of the left lateral canthus was not performed adequately and/or the correct position in both the primary revision surgery. Do you agree or disagree with that?
A I disagree with it.
Q He was also of the view that the additional excision of the known skin lesion contributed to a shortage of skin on the left side.
A Look, as I said, anything you excise is going – there will be, there will be a loss of tissue. The tissue has to (be) brought from somewhere else which has to be wart [sic] from somewhere else which, which was done. Now both Dr Curtin and Dr Deva in their opinions – the opinions are based on the assumption that … that the patient still has the same problem. So he had a procedure which the – I believe the canthoplasty suture fell off. He had a revision ectropion repair which was done which I have performed many of them. The procedure went very well.”
1. The Practitioner referred to the absence of complaint by the patient for 9 months and to the request for money which he subsequently made. Patient C did not give evidence in the proceedings. It has thus not been possible for his version of events to be tested, or for the Tribunal to have evidence of the ultimate outcome of the surgery which the Practitioner performed on him.
2. The evidence of Professor Deva and Dr Curtin does not in our view give rise to any difficulty in making findings with respect to Patient C’s treatment. The passages of the cross-examination of Dr Curtin to which we have referred comfortably satisfy us that, probably for the reasons suggested by Dr Curtin, and presumably in part by reason of attempting multiple procedures and inexperience, the Practitioner secured a “poor result” for Patient C. Whether these were “judgemental errors” or “technical errors” during the procedure is not a matter about which we can or need to make findings. It is sufficient to find that, as with Patients A and B, had the Practitioner not attempted to do as much as he did during Patient C’s initial surgery the patient’s subsequent complications, and potential need for revision may have been obviated.
3. The evidence highlights the importance, until he is a more experienced cosmetic and plastic surgeon, in the Practitioner being mentored with respect to pre-operative procedures or, as Professor Deva described it in his oral evidence “working up” the patient for surgery. Unlike the surgery performed on Patients A and B, the surgery performed on Patient C, as Dr Curtin suggested, probably involved “technical errors” on the part of the Practitioner, and fell below the standard expected of a surgeon. The evidence suggests that the Practitioner’s post-operative management of Patient C was also less than optimal. The Practitioner’s inability to acknowledge the opinion of his own expert with respect to the technical skills he demonstrated in the surgery on Patient C was disappointing, and not consistent with his willingness to acknowledge shortcomings with respect to the care or treatment of other patients. The Practitioner would be il-advised to adopt a similar approach to advice given to him by any mentor appointed pursuant to the conditions which the Tribunal will attach to the Practitioner’s registration.
Patient D
1. In his first report, Dr Curtin did not refer to Patient D’s surgery. Professor Deva did in his report, to which Dr Curtin responded. It is convenient in those circumstances to refer to Professor Deva’s report with respect to this patient first.
2. Professor Deva referred (R1 Tab 9) to the history of Patient D’s treatment and noted that, when assessed post-operatively on 17 December 2021 the patient presented with “swelling as expected”. Professor Deva referred to the patient’s further follow up on 19 April 2022 when the Practitioner “documented looser skin and scarring to her left earlobe with marionet lines on the left side”. Professor Deva expressed the opinion that “From her early post-operative photographs, I do have concerns about the operative technique utilised. The operation report documents a release of the mandibular ligament through a submental incision. This would be difficult and dangerous potentially placing the marginal mandibular branch of the facial nerve at risk. There are also prominent lower lid blepharoplasty scars which are at the lower lid cheek junction. It is more usual to site the scar either subciliary or mid lid”.
3. In his second report (A1 Tab 20) Dr Curtin said that it:
“seems odd that Dr Deva objects to a submandibular incision, a procedure often used in facelifts to remove submental fat and also to divide prominent bands of the platysma muscle. The short incision is made in the midline of the anterior neck and does not place the marginal mandibular branch of the facial nerve at risk. I would agree that the noticeable scars in the lower eyelids are unsatisfactory, but possibly the post-op photographs were taken within a few weeks of surgery when the scars were more noticeable. The skin of the lower eyelids is very tolerant to surgical incisions and noticeable scars in the long term are quite unusual. It is not known when these particular photos were taken but any images taken within 3 or 4 months of surgery are unlikely to give an indication of the final result. Some scars however can take 12 months to completely settle.”
1. In cross-examination (Tcpt, 25 July 2023, p 65) Professor Deva was asked whether he would “agree that the photographs that you reviewed, you had no information as to the date?” to which Professor Deva replied “I know, once again, these were not time stamped so, you know presumably, one has pre-op and one has post-op” photos indicating scarring. Professor Deva acknowledged that there had been no complaint by the patient.
2. It was suggested to Professor Deva (Tcpt, 25 July 2023, p 66):
“Q It would be correct to say isn’t it, that you can’t comment on scarring in the absence of knowing what date and time these photos were taken post-operatively because scarring resolves with time, doesn’t it?”
1. Professor Deva replied:
“It is not so much about the scar appearance, it is the placement of the scar, that’s what I was commenting on. So in lower lid blepharoplasty generally speaking you would put the scar under the eyelashes just to try and hide it, or through the mid lid, but this appeared to be a lot lower, and in fact, looking at the previous patient, the scar also sits at the junction between the eyelid and the cheek. Now there’s two problems with that position. This is talking purely technically, as someone who does a reasonable number of upper and lower lid blepharoplasty surgery, that the placement of that scar is the issue I have. So it is not that the patient is complaining that the scar is (indistinct) and I can see there’s no timeframe, it is the technical aspect of where that scar was placed. And this, in line with the previous eyelid surgery, makes me concerned about the technique that has been utilised. That was a point, not just that was bad or good or make any comments about the timeframe. There’s an additional technical point here where in the operation report he says the mandibular ligament was divided through a submental incision and I pick up this again on my response to Dr Curtin’s report. So once again, for the benefit of the Tribunal, if I can explain. A submental incision, if you can see on the screen is here under the chin. The mandibular ligament sits at the corner of the jowl so generally speaking, if you are dividing the mandibular ligament it is much safer to come from this direction rather than from this direction. And the mandibular ligament is an important structure because you need to release that, as we all know, to create a good jawline and contour but it sits very close to the marginal mandibular nerve that can be at risk from their surgery. So it was more a comment on the technical aspects of the surgery as based on the operation record and based on the photograph. Not to say that the scars were good or bad, or that the patient should be complaining about them.”
1. Professor Deva was then referred to Dr Curtin’s differing view in relation to that issue, to which he replied (Tcpt, 25 July 2023, p 67) that Dr Curtin “took that as submandibular incision as opposed to a submental incision so I stick to the fact that having performed a lot of facelifts, having been trained in this, that the submental incision should not need to go all the way (indistinct) divide the – could well be an error in the operation report, so I give the benefit of that doubt, but that in addition to the placement of the lower lid scars in this patient and the last patient does make me concerned about the technique and the training that is on display”.
2. Dr Curtin agreed in cross-examination (Tcpt, 26 July 2023, p 27) in response to the suggestion that “You yourself raised concerns about the noticeable scars in the lower eyelids being unsatisfactory” that he had done so. The surgical procedure which the Practitioner had utilised, which Professor Deva explained in some detail in the passage we have recorded above, as a procedure, was said by Dr Curtin to be “not dangerous, but it’s just a bit awkward” (Tcpt, 26 July 2023, p 28). It was suggested that the procedure “potentially places the marginal mandibular branch of the facial nerve at risk, doesn’t it?” to which Dr Curtin replied “Not, if you’re in the right plane”.
3. In response to further questions about the risks asserted by the Council to have been inherent in the procedure adopted by the Practitioner, Dr Curtin refused to accept that the procedure potentially placed the marginal mandibular branch of the facial nerve at risk, and said (Tcpt, 26 July 2023, p 30):
“I think you would need to get Dr Mahadik to explain exactly, because I’m not quite sure how you would release the mandibular ligament through that incision. I have to say that, you know, people talk about the mandibular ligament and the maxillary ligament. That was never something that I really ever considered doing, facelift surgery, but then facelifts may have been done in a whole lot of different ways for many years and they can be done at different levels, sometimes getting right up against the bone and – so that’s where some of these ideas about mandibular and maxillary ligaments have come in. I suspect that – that this has been wrongly – Dr Mahadik has made a mistake in his terminology here, but, as I said, you’ll have to ask him about that.”
1. In cross-examination of the Practitioner (Tcpt, 5 February 2024, p 68) with respect to Patient D’s surgery the following exchange occurred:
“Q It was Professor Deva’s view that there’s a prominent lower lid blepharoplasty scars which are at the lower cheek junction. Do you agree with that?
A Look, so, so again these, these photos – they were taken at a – roughly at a 10 week mark. And with any scarring, first of all facial scars – they take time to mature, more longer than scars anywhere in – scars over the body. And the reason being the face is very dynamic. You can’t stop the muscles from acting. So the scars, the scars take a little bit longer than a scar on your body. Scars are worse at 3 month mark and in all my consultations, each of it lasts for 1 hour and 10 minutes. Ten minutes are spent because I chose to do facial and aesthetic surgery. That 3 month mark, your scar will be worse because the build up of collagen is maximum and the scar vascularity is maximum. After 3 months, it slowly starts settling down. So this photo is actually at a, at a 10 week or 12 week mark which is at the time where the scar is worse. I have followed her up afterwards. The patient has no complaints. Patient – now she has moved to Bali permanently. She wanted to come back for a procedure but she knows now that I don’t practice. But I, I called them at 6 week mark – sorry, 6 month mark as well. But the scars have faded now.
Q It was also Professor Deva’s view that it is more usual to site the scar, either subciliary or mid lid?
A It’s a mid lid scar. That’s correct.”
1. The Practitioner was shown the pre and post-operative photos of Patient D. When asked to “point to where the scar is” the Practitioner indicated “just under the eyelash. We are talking about the eyelid, aren’t we? Because the comment was on the eyelid scar”. The Practitioner was reminded that Professor Deva had said that there were “prominent lower lid left blepharoplasty scars” and scars at the “lower lid cheek junction”. The Practitioner acknowledged that Professor Deva had said that but suggested that “If you look at the photos, this is a mid lid scar so it’s not at the lid cheek junction. It’s above. So this is the – you know, when you talk about two options, subciliary and mid lid, this is the second option”.
2. Patient D did not give evidence. There is no rational basis for rejecting the Practitioner’s evidence about his post-operative contact with her. Similarly, in the absence of more recent photographs, it is difficult to reject the Practitioner’s explanation for either the procedure he adopted with respect to Patient D or its success. Objectively, as Professor Deva fairly conceded, the procedure undertaken by the Practitioner raised “concerns” about the technique and the training that was on display.
3. Having regard to the gravity of the finding sought by the Council, and the matters to which we have referred, we are unable to be comfortably satisfied that Patient D’s treatment or care advances the Council’s case, or does so with respect to the proposed conditions which are in dispute. At its highest, and as Professor Deva properly acknowledged, the evidence raises some “concerns” about the technical skills employed during Patient D’s surgery.
Patient E
1. Dr Curtin said in his first report (A1 Tab 19) that the Practitioner’s records with respect to this patient did not reveal any “contradictions to proceed” with the “mini facelift” procedure which the Practitioner perforEmed on her. Dr Curtin considered the appropriateness of the surgical technique used by the Practitioner, and recorded that, during the course of additional surgery the operation was “halted” and the patient was “propped up”. Dr Curtin said that an Anaesthetist (Dr A) “apparently was available and attended within 5 to 7 minutes. He administered small doses of a benzodiazepine antagonist and vasopressor together with intravenous fluids and the patient quickly recovered so that the operation could be completed”. Dr Curtin recorded that the patient’s progress following the surgery was uneventful. Dr Curtin suggested that “Some patients appear to be prone to vasovagal episodes when undergoing minor procedures under local anaesthesia, whether it is the removal of the skin lesion or just a tooth extraction. In a fit person it is no cause for alarm and resolves quickly with simple postural manoeuvres”.
2. From the information provided to him, Dr Curtin was of the opinion that Patient E’s care and treatment by the Practitioner was satisfactory. He observed that it “seems likely in this case, that the procedure was somewhat more prolonged than anticipated this probably led to an increased level of anxiety on the part of (Patient E). Considering the type of infiltration local anaesthetic that was used, it is unlikely that pain was an issue, and in fact (Patient E) returned for further surgical treatment a couple of months later.” Dr Curtin considered that the Practitioner’s medical reports with respect to Patient E’s treatment were satisfactory.
3. Dr Curtin did not add to those comments in his second report (A1 Tab 20).
4. Professor Deva said in his report (R1 Tab 9) that the Practitioner’s “operation report records a skin only excision of pre-auricular skin. At the procedure, Dr Mahadik was first informed that (the patient) had multiple thread lifts prior and encountered thick scar tissue. During the procedure, a right cheek haematoma formed and required drainage. During this time, the patient began to feel dizzy and hypotensive. Dr Mahadik called in his anaesthetic colleague, Dr A, into rooms who administered resuscitation with intravenous fluids.” Professor Deva referred to a further procedure performed by the Practitioner on the patient, a little over a month after her initial surgery.
5. Professor Deva said that as photographs of Patient E’s outcomes were not dated, it was difficult to ascertain scarring, which “does appear very hypertrophic and visible”. He suggested that there also “appears to be long term swelling to the right hemiface, consistent with a resolving haematoma/seroma”. Professor Deva said that “Any lengthy facial surgery should not be performed in rooms. Failure to elicit history of previous thread surgery prior to operating on this patient also represents a failure of adequate assessment of this patient. Finally, there appears to have been inadequate preparation for support and resuscitation of patients in place prior to undertaking this procedure. It is fortunate that Dr Mahadik was able to call on his colleague to assist”.
6. The Practitioner’s operation report (A1 p 408) records that “Patient says she has done threads before? Multiple times”. Professor Deva was thus in error in suggesting that the Practitioner had failed to elicit the history of previous thread surgery prior to operating.
7. In cross-examination (Tcpt, 25 July 2023, p 67) Professor Deva agreed that, as with earlier opinions, he could not “comment on photographs where the date, or whether the photographs are taken 6 to 12 months post-operatively which gives the best indication as to result”. Professor Deva added that, as the photographs were not dated “it is difficult to assess scarring” and that he would “dearly love to assess today to look at the medium to long term outcome following the surgery” by either examining the patient or having available dated pre and post-operative photos. Professor Deva agreed with respect to the swelling of the patient’s face that “Once again, I don’t have a timeframe and I agree with you that a formal assessment of this patient face to face would be of great value”.
8. After being referred to the images of Patient E (A1 pp 351 – 372) Professor Deva conceded that he could not comment on whether the photographs provided evidence of long term swelling to the right hemiface (Tcpt, 25 July 2023, p 68). When reminded of his opinion that “there appears to be long term swelling to the right hemiface consistent with a resolving haematoma seroma”, Professor Deva reiterated that there was “some swelling to the right hemiface apparent from the photographs” but that, to say more he would need access to further dated photographs.
9. Professor Deva agreed (Tcpt, 25 July 2023, p 69) that the swelling was on the left not the right side of the hemiface after looking at the Practitioner’s clinical records (A1 p 410). In fairness, Professor Deva readily acknowledged that he had been in error and reiterated that he needed to look at the patient or have timestamped photographs to express opinions about the Practitioner’s treatment of Patient E.
10. It was put to Professor Deva (Tcpt, 25 July 2023, p 70) “Can you see the problem with your expert opinion in relation to it reflecting impartiality, when you have said that you can see on photos right hemisphere swelling and the actual facts are that there was never a haematoma on the right cheek”. Professor Deva replied “Well, at this stage, swelling post-surgery is difficult to assess if you don’t know the date of surgery. So I don’t think – I made the concession, right at the beginning of 70, that the photographs were included but I can’t really make any (indistinct). Now, there appears to me in this photograph there is swelling on the face and that could be (indistinct).” The reference “indistinct” indicates when the quality of the audio link with Professor Deva failed.
11. Professor Deva was asked (Tcpt, 25 July 2023, p 71) “You will recall that Dr Mahadik’s evidence was that (Patient E) apologised for not telling Dr Mahadik about her relevant medical history of having threads done. Correct, you recall that evidence?” Professor Deva acknowledged that he did. Professor Deva was then asked “Where is the evidence that this patient was resuscitated?” He replied “I have a note here that the patient became dizzy and hypotensive and the patient called – Dr Mahadik called his anaesthetic colleague, Dr A, into rooms to administer intravenous fluid.” Professor Deva explained that Patient E was someone who became “hypotensive and dizzy and required intravenous fluids”.
12. Professor Deva was referred to Dr Curtin’s opinion that it was quite common for a vasovagal event of the kind experienced by Patient E to occur in surgery of the kind which the Practitioner was performing on her. Professor Deva replied that “Once again, it is difficult to know what caused the hypotension. Was it a vasovagal, was a hypovolemia, was it a reaction to the anaesthetic? There are many causes of hypotension during a surgical procedure so we can’t be sure what caused it. But the patient did require another colleague to come in and administer the fluids intravenously”. It was suggested to Professor Deva (Tcpt, 25 July 2023, p 72) “That doesn’t mean the patient was resuscitated” to which Professor Deva replied “For hypotension requiring intravenous fluids, in my mind, that is resuscitation”. When reminded that Dr Curtin took a different view with respect to this issue, Professor Deva said “Well, I concede that, but once again, the type of the hypotension we can argue and speculate, but the facts remain that this patient was hypotensive, required intravenous fluids, and by definition if someone is hypotensive requiring intravenous fluids you are resuscitating the patient to raise their blood pressure”.
13. Professor Deva rejected the suggestion that there was no evidence to establish that the Practitioner’s clinical private rooms did not have adequate facilities to resuscitate a patient, saying:
“The fact that he had to call an anaesthetic colleague to help during a prolonged procedure means that he didn’t have adequate personnel for that eventuality. If he was able to resuscitate the patient himself with the equipment that was provided then presumably he would have allowed for that contingency. So, as I said, it was fortunate that his colleague was available to come and help and resuscitate and provide fluids to this patient”.
1. It was suggested to Professor Deva that it was quite common for surgeons to call on the greater expertise of other surgeons in other specialties. Professor Deva replied:
“It is, but usually in a setting of a facility where you are performing a prolonged procedure in a licensed facility where there are other doctors, staff around in the eventuality that a patient does become hypotensive. So, you know, the performance of a long invasive procedure in rooms requiring a colleague to come in and help to give the patient fluids is something that I think raises a question in my mind as to the adequacy and safety of this – of ah with this procedure was carried out.”
1. In cross-examination of Dr Curtin (Tcpt, 26 July 2023, p 32) Dr Curtin was asked:
“In relation to this patient, Dr Mahadik did not find out until after he commenced the procedure that she’d had threading previously. That’s something that he should have questioned. Assuming for one moment that he didn’t question the patient about that beforehand, that is something that he should question about.”
1. Dr Curtin replied “I think he asked her whether or not she’d had facial surgery and she said she had not had facial surgery. That should have included having threads”. As noted earlier, the Practitioner’s clinical records suggest that the Practitioner at least directed his mind to whether Patient E had reported prior facial surgery and referred to threads.
2. Dr Curtin was asked (Tcpt, 26 July 2023, p 32) “Do you think he could have – if he’d done the clinical examination of the patient’s face, felt that she had threads?” Dr Curtin replied “I don’t know. I can’t – I can’t comment. I can’t say that I – I’ve ever dealt with patients that have had threads, so whether they can be felt – I shouldn’t think they could be felt, but I’ve never felt threads in somebody’s face.” The Tribunal asked whether, for non-plastic surgeons, Dr Curtin could clarify what “threading” is. He replied:
“Well, I’ve never done it, so my understanding of it is fairly limited, but the idea is that you can lift the ageing face by putting threads down and anchoring them up here somewhere in the temple and you pass the threads down and pull them up and tighten them up and, of course, you do get an instant improvement if you do it the same on both sides, but you’ve got suture material sitting in the soft tissues and they eventually pull through, so I don’t know how permanent they are, but … I wouldn’t have thought they caused a lot of scarring.”
1. When asked (Tcpt, 26 July 2023, p 33) whether they would “get in the way of a cosmetic surgery procedure that you’re going to subsequently do” Dr Curtin said “I shouldn’t have thought so. You’ve got 3 or 4 long suture – pieces of suture material sitting in the soft tissues”.
2. It was suggested to Dr Curtin that using a “pinch technique”, which was suggested not to be a present day technique, had the potential to result in poor scarring. Dr Curtin said that it was “not something I’ve ever done” and that he could not comment, adding that “Whichever way you do a facelift, you’ve got to get the right amount of skin off and the right tension at the right places, so – I can’t really tell much from looking at this operation report. It’s some sort of pinch technique and it looks like an estimate of how much skin is going to be removed and that’s excised and then sutured, but it’s not – I really can’t make much comment on it”. Dr Curtin reiterated that the technique apparently used was not one he had ever used or was familiar with.
3. Dr Curtin was asked (Tcpt, 26 July 2023, p 34) “Do you think that Dr Mahadik would benefit from some training in modern mini facelifts”, a question predicated on Dr Mahadik having said at the s 150 hearing that he had learned the pinch technique in India, Dr Curtin replied:
“Well, I’m sure he’d benefit from seeing maybe a selection of other people do facelifts, but I think – I’m quite sure that whatever he – you know, facelift techniques have been around for a long time, well over a hundred years, and probably before that as well, and the – Dr Mahadik was trained at a big plastic surgery unit in India. It’s in the centre of India. He was a 1500 bed hospital. It was the first plastic surgery unit set up in India – a plastic surgery training unit set up in India and when it was established after the war, one of our leading surgeons, Benjamin Rank, went over and spent a couple of weeks there and helped them set it up and they set up a big unit with multiple surgeons, so this wasn’t some little ramshackle place. This was a major centre, and he was trained by some good plastic surgeons.”
1. Dr Curtin was asked, and eventually permitted to respond to a suggestion that Patient E’s surgery should not have been performed in Dr Mahadik’s practice rooms, but in a day surgery facility. Dr Curtin said (Tcpt, 26 July 2023, p 339):
“If I could just make a comment. I was a dentist before I was a doctor. We have people fainting in the chair from going to get a tooth pulled or a tooth filled. I used to do minor procedures in my room – I’d only do things under local anaesthetic, mainly moles and small skin lesions, and occasionally you’d have people that would faint like that. I think the whole business of having something cut off, even if something small, was intimidating, and so it happens. I think the fainting was probably not related to the procedure that was being done. The whole question of whether mini facelifts should be done in the rooms is another issue. I suppose it’s a question of how many it is, how long it takes, and what sort of anaesthesia you’re going to require to do it and whether the anaesthesia is safe. Those are issues. I think the fainting business is a red herring.”
1. Dr Curtin conceded that he had no knowledge of what resuscitation equipment Dr Mahadik had in his private practice.
2. With no intended disrespect, Patient E was referred to in cross-examination of the Practitioner as “the hypertensive woman” (Tcpt, 5 February 2024, p 71). The following exchange occurred during his cross-examination (Tcpt, 5 February 2024, p 71):
“Q You called a friend of yours who was an anaesthetist to insert a cannula and administer IV fluids to her. Is that right?
A I called my colleague for help, basically. Not necessarily to do an IV cannula, no. Because as a surgeon – I mean, let’s say, you know, I’m operating, I’m operating in a public hospital full fledged, well equipped tertiary care centre. Sometimes I listen an alarm bell. When the alarm bell goes on, a lot of anaesthetists, nurses – they run to the operation theatre from which the alarm bell has come. Not all of them can do everything. But what it’s meant for is if there is a problem, any help is appreciated. So a lot of people go, not all of them, not – doesn’t mean that the anaesthetist is there, can’t control things and all. So in this situation, she went into vasovagal. The patient went into vasovagal shock. Typically, towards the end of the procedure and most possibly due to pain because the anaesthetic was wearing off. So I stopped. Put her bed down. Propped her up. Gave her calf massages. The BP went 100 over 60. And it was typical rolling up of the eyelids and all, of the eyeballs and all. And I knew that my colleague lives next – in the next street and every Tuesday we go for a coffee at 5 and this was delayed. So I knew that he was at help. He, he was just 5 minutes away. And then I gave him a call, saying that “Look, are you available?” and he came in 2 minutes – in 5 minutes.
Q Did she stop breathing?
A No, she never stopped breathing.
Q Did she lose consciousness?
A Never. … she never lost consciousness, she never stopped breathing. All what happened was the BP dropped, blood pressure dropped. She was talking to us all the time and it was a typical vasovagal. Now in addition to that, the anaesthetist who came – because the rooms are equipped with everything, he had those drugs. And if you look at the drugs, he has written his, his notes on the operating board so there was no anaesthetic reversal and all which was given to her. So he gave her hydrocort, metaraminol to get the blood pressure up and she was fine.
Q Her eyes were rolling. She must have lost consciousness?
A No, it’s a sign of a vasovagal. So it’s a sign of a typical vasovagal attack which can happen to anyone who is having a small skin cancer cut out or dental procedure. An exaggerated response to pain or any unusual stimuli can cause a vasovagal.
Q It was Professor Deva’s view that he was critical of your decision to conduct the surgery for that fashion in your practice. Looking back on it now, do you agree with that?
A Look, as I did mention that if I knew the patient – and in my consultation you can see there is a specific “? have you had any procedures, fillers, threads done?”– and she has marked “no”. I asked her, she has marked no. If the patient has done – had some threads done before, guaranteed she was a patient to be done in the hospital. But the patients also – and this – I don’t think is uncommon in cosmetic surgery. That they go to a couple of doctors, they know “Okay, so this is the reason why I have to shell out more money for general anaesthetic in the hospital”. So they try to hide it from us. So this was hidden from me. And in hindsight, I thought if I knew this – so post-operatively on the second day, I followed the policy of open disclosure and she apologised for not disclosing it. And this was a situation where we discussed earlier that this is something which I have no control on. So this can happen again. And I started performing all mini facelifts in the hospital.”
1. The Practitioner was asked (Tcpt, 5 February 2024, p 72) the “exact completion time of the procedure” which was noted to have commenced at 2:00 p.m. but not to have a “finish time”. The Practitioner was unable to recall the exact time, although he said that the actual procedure “went for roughly about 3 hours” (p 73). The Practitioner stated that the procedure “usually takes about one and a half hour” but that the procedure was prolonged because of the patient’s “episode of vasovagal”.
2. It was suggested to the Practitioner that he used a “pinch technique” for the patient, to which he replied that the pinch technique was “not necessarily used in every patient” but that “the pinch is done to just estimate whether when you stitch the skin whether the skin is going to come along. So that pinched area can be taken off and what’s in your fingers can be excised and the other, other two edges can come together. So it’s not a, it’s not a different technique per se”. The Practitioner agreed that he “would have” done that with Patient E.
3. The Practitioner was asked whether he learnt the pinch technique in India. The Practitioner did not directly respond to that question, but said that “if I have to take a skin cancer out and I have to close the, the skin after cutting the skin cancer and I were to choose a direction in which I were to put a scar, so I’ll pinch the skin to make sure that okay, this is coming together easily [sic] than that. So in this instance or this situation, before marking, I mark the incision lines. And before marking how much of the skin has to be excised, I just do a pinch, saying “Okay, this can be comfortably excised and this is the mark so I, I am conservative. I don’t excise more. So it’s not a technique”. It was suggested to the Practitioner (Tcpt, 5 February 2024, p 74) that during his s 150 hearing the Delegates of the Council “expressed concern to you that that was an out of date technique”. The Practitioner disagreed that it was.
4. The Tribunal asked the Practitioner (Tcpt, 5 February 2024, p 74) whether he had “seen any of the surgeons you have assisted do facelifts and use that pinch technique or whatever you’d like to call it?” The Practitioner replied “In the facelifts, you undermine right up to the mid (not transcribable) line, even sometimes further. You have to go much more medially to, to cut the mandibular ligaments and all. So in the facelifts even I don’t do. But to answer your question, I haven’t”.
5. The Practitioner was asked about the concern raised by the Delegates of the Council at the s 150 hearing that, as a result of using the pinch technique there was too much tension on the patient’s scars. The Practitioner disagreed with that concern. The Practitioner was shown a post-operative photograph of the patient and it was suggested, having regard to the photograph (Tcpt, 5 February 2024, p 75) that there was “tension on that scarring”. The Practitioner replied that “whether or not this is a tension on the scar is – how do you define – how do you, how do you say that there is tension on the scar? One is if the scar is hypertrophic. In this situation, if the earlobe is pulled down. These are the only two ways you can say that the scar is under tension. Now this is a four week old scar. Because she has – this photo is taken because I have staged her procedure. I did the – she wanted to do this combined, a mini facelift and eyelid. I said “Look, no. We’ll just finish one first. See if you’re happy”.”
6. The Practitioner was reminded of Professor Deva’s suggestion that there appeared to have been inadequate preparation for support and resuscitation of patients in place prior to undertaking the procedure on this patient. In the course of his less than directly responsive answer, the Practitioner for less than convincing reasons rejected that suggestion, although he said that “Going forwards, I tidied them up even more, even better from the – from the anaesthetic college guidelines”.
7. Although the evidence does not enable us to be comfortably satisfied that anything done by the Practitioner in the course of the surgery performed on Patient E itself created a risk to the health and safety of the patient. Dr Curtin suggested that, whatever definition one applies to “resuscitation”, the “fainting business” was a “red herring”. We disagree. The evidence establishes that the Practitioner did not have adequate arrangements in place to deal with the situation which developed with Patient E. It is difficult to resist concluding that, on the Practitioner’s evidence, it was fortuitous, and fortunate that Dr A was readily available, attending within 5 minutes of Patient E’s difficulties materialising, and that Dr A happened to be an anaesthetist.
8. The evidence does not establish that the Practitioner employed technical skills which fell below the level expected of him. The evidence also suggests that the technique which the Practitioner employed was potentially not the optimal technique to have employed, and that further training and mentoring would be advisable.
9. The evidence suggests that surgery of the kind performed on Patient E should not have been undertaken in the Practitioner’s practice rooms but, if not in a hospital, at a day surgery facility at which an anaesthetist was available. The Practitioner’s evidence suggests that he would not in future undertake surgery of the kind performed on Patient E in rooms at which an anaesthetist was not present throughout the surgery.
Patient F
1. In his first report (A1 Tab 19) Dr Curtin referred to the two surgical procedures which the Practitioner performed on Patient F, who had first consulted the Practitioner about her breasts on 3 September 2021. Earlier in 2021 Patient F had undergone upper eyelid reduction by the Practitioner, apparently without complications.
2. Dr Curtin referred to preoperative photographs of Patient F, which he described as showing “a slim woman with small, slightly ptotic breasts, the left hanging marginally lower than the right”. Dr Curtin referred to the “bilateral breast augmentation with 245mL implants” which the Practitioner carried out at Kingsgrove Day Hospital on 30 September 2021 “via a standard infra mammary approach”. The clinical notes suggested that there were no complications with regular post-operative visits. The Practitioner’s clinical records noted that on 5 November 2021 the “breasts did not drop”. A photograph showed the post-operative result, which Dr Curtin described as “reasonably aesthetic, but the implants are not located immediately behind the nipples which are located in the lower pole of the breasts”.
3. The Practitioner’s records noted that in March 2022 the patient indicated that she would like to have larger implants. The Practitioner carried out such surgery on 17 March 2022, according to his records using implant size 375mL at the Kingsgrove Day Hospital. The last clinical record entry stated that the patient was “happy with outcome”. Dr Curtin considered that with respect to both operations, “the recommendations to proceed with surgery were entirely reasonable”. Dr Curtin was of the opinion that appropriate surgical techniques were used for both operations. Dr Curtin considered it as “of interest that there is no record of any complaint by the patient regarding the implant position beneath the breasts”. He further observed that “As is sometimes the case however, once the breasts have been augmented with carefully chosen implants, the patient is gradually persuaded that larger would be better, and she came back to Dr Mahadik requesting larger implants.” Dr Curtin considered the care and treatment of Patient F by the Practitioner to have been satisfactory.
4. In his subsequent report (A1 Tab 20), by reference to Professor Deva’s report, Dr Curtin said that he would “agree that after the first procedure the implants ended up lying in a position that was too high relative to the nipple areola complex (NAC). This is a result that sometimes happens in breast augmentation, and one of the causes can be a failure to create a pocket in the right place behind the breast. However, the implants cannot be sutured into place, and even if a satisfactory pocket is created, the implants may drift into a higher position under the influence of bandaging, and a bra. It is important during the surgery to ensure that the implant is lying in the correct position relative to the NAC, and that subsequent bandaging supports the implants in this position.”
5. Dr Curtin also referred to Professor Deva’s concern that there was no mention of the anti-infective techniques which he described “and about which he has himself published in the literature on several occasions”. Dr Curtin said that the “initial operation report” indicated that post-operative antibiotics were prescribed and concluded that it was “highly likely that this would have been done for the second procedure, although there is no record of that”.
6. Dr Curtin considered:
“The fact that nipple shields, pocket irrigation and glove change do not receive a mention on the operation record is not a definite indication that such measures were not implemented. A record of anti-infective techniques is not something you would necessarily expect on an operation record. If the patient was given antibiotics either during or before the surgery it is likely to have been recorded on the anaesthetic file but probably not of the operation record.”
1. Professor Deva said in his report (R1 Tab 9) that the Practitioner’s operation report erroneously described the implants used as “tear drop” when the implant stickers noted that they were “round” implants. Professor Deva’s concern with respect to the absence of mention of anti-infective techniques such as nipple shields, intravenous antibiotics, pocket irrigation or glove change was on the basis that “these intra operative strategies have been shown to reduce the risk of breast implant contamination and subsequent capsular contracture”. Neither expert suggested that either of those complications had occurred.
2. With respect to the revision augmentation and implant exchange performed on 17 March 2022, Professor Deva said that the Practitioner’s clinical records “once again (made) no mention of any anti-infective strategies reported to reduce the risk of implant contamination”. Professor Deva said that the post-operative photographs showed “persistent waterfall deformity and asymmetry in implant placement and nipple position. There may also appear to be rotation of the implant position with lateral displacement of the nipple/areola”. Professor Deva’s opinion was that:
“This case outlines serious deficiencies in patient assessment, informed consent, implant selection and operative technique. I note that Dr Mahadik on questioning at the s150 hearing confirmed that he had missed a mild tubular breast deformity. He also admitted to anchoring the skin flap to the chest wall. He failed to properly size and position the implant in the first procedure. For tubular breast deformity, the use of a pre-pectoral tear drop implant with internal parenchymal dissection to allow the implant to fall should have been utilised.”
1. Professor Deva said of the revision surgery that the Practitioner had failed “to address the original problem of a tight and inadequate lower pole. The bigger implants also appear to have now filled the upper pole and accentuated the waterfall deformity. There is now significant asymmetry in position of the implants with resultant asymmetry in nipple position. There also appears to be in one of the post-operative photographs, possible rotation of the anatomic implants. Securing the pocket to ensure that the anatomic implants are well positioned and do not rotate is difficult in revision surgery, especially in the setting of a total capsulectomy”.
2. Professor Deva’s ultimate comment was that “This highlights serious deficiencies in Dr Mahadik’s capacity to safely perform breast implant surgery and are well below the acceptable standard of practice to doctors who perform elective and revision breast augmentation surgery.”
3. In his commentary on Dr Curtin’s reports (R3) Professor Deva reiterated his concern that anti-infective procedures were not documented.
4. Professor Deva was cross-examined with respect to the “consent process” adopted by the Practitioner (Tcpt, 25 July 2023, p 73). As we have earlier recorded, in the absence of any evidence from the patient to suggest that she did not understand the nature of the surgery which she wished to have performed, or the risks associated with it, and in view of the evidence with respect to the adequacy of the “paperwork” used by the Practitioner, the matter to be considered is the quality of the Practitioner’s care and treatment of this patient.
5. In the course of cross-examination with respect to the appropriateness of the techniques adopted by the Practitioner and the outcomes, Professor Deva did not resile from, and amplified in detail why he had expressed, and adhered to his opinions. During the course of that cross-examination, Professor Deva was asked (Tcpt, 25 July 2023, p 78) whether he was aware that the patient “makes no complaint at all in relation to the end results” of her surgery, it being suggested that, if anyone was likely to have complaints it would be the patient. Professor Deva replied:
“Well, this was information only passed onto me earlier this week so I went on the basis that these were the patient’s records that I needed to look at and so the complaint – if there was no complaint, well, that’s good. We can only look at the result and look at the technique used and the way of preoperative assessment and the position and (indistinct) devices of the first and second operation and (indistinct) devices of the first and second operation and (indistinct) the outcome is optimal, where the (indistinct) is happy with a moderate to poor outcome is not necessarily something that we can predict.”
1. Later in his cross-examination, Professor Deva said (Tcpt, 25 July 2023, p 87) that he thought “the best type of education in cosmetic surgery is a cosmetic surgery fellowship. So where you are working as a fellow in – under the care of a – you know, experienced clinicians, you get to see them in rooms. So I think cosmetic surgery is not just about assisting in operations. I mean, there are – there is a whole degree of education in terms of communicating, understanding patient expectations, understanding, you know, red flags and trying to pick certain patients you don’t operate on. And I think those things could certainly be gained by a period of fellowship training”. The Practitioner is undergoing fellowship training.
2. In cross-examination (Tcpt, 25 July 2023, p 128) Dr Curtin acknowledged that the last time he did breast implant surgery was 10 or 12 years ago. After being referred to the transcript of the Practitioner’s statements at the s 150 hearing, Dr Curtin was asked whether that in any way changed his view. Dr Curtin replied (Tcpt, 25 July 2023, p 129):
“Well, I don’t know about that about the – this business of the lower skin flap anchoring to the chest wall. I’m not quite sure – I don’t think that, in itself – I am not quite sure exactly what that means and I assume that means that an attempt has been made to limit the lower extent of the pocket that has been made. Now, it’s, as I said, it’s possible that all of this was quite correct and that a correct pocket was made and the implant was put in exactly the right position. It is possible that’s all true. But at the end of the day the implant has ended up further up the pocket than it should have been. Now, why that is I can’t say. It may have been due to a technical problem on behalf of Dr Mahadik, it may not have been. It may have been due to the bandaging or something else.”
1. Dr Curtin agreed (Tcpt, 25 July 2023, p 131) that the follow up appointment with the patient after the first procedure recorded that the “implants did not drop and he recommended massage”. Dr Curtin agreed that the photos in front of him “show a deformity with the implant sitting high in the breast” and “ptosis of the breast tissue bilaterally”. It was suggested to Dr Curtin that those suggested issues with respect to the Practitioner’s surgical technique. Dr Curtin replied that it “may or may not have been due to his surgical technique” reiterating that it could have been. It was suggested to Dr Curtin that after reading what the Practitioner told the Medical Council at the s 150 hearing “that raises some concern around his surgical technique, doesn’t it?” Dr Curtin replied “Well, he – he had an explanation for it which may or may not have been correct. He was speculating as to what the cause was. He may have been right or wrong. Look, the end result is of that operation, it wasn’t satisfactory. There’s no argument about that. And she needed to have a revision”. Dr Curtin said that further speculation about how that came to be would not be productive.
2. In further cross-examination (Tcpt, 26 July 2023, p 13) Dr Curtin was asked further questions about Patient F’s surgery. It was suggested that at the first surgery the Practitioner “failed to properly size the implant” (Tcpt, 26 July 2023, p 22). Dr Curtin replied:
“Well, the lady came back and wanted a larger implant, so maybe the discussion hadn’t been adequate to start with, but, look, that happens, that ladies get a breast implant put in, they have an adequate discussion, they would decide that a particular size implant is just fine for what they want. I mean, there’s various ways of doing that. You’ve got trial implants they can put inside their bra before they have the operation. There’s various ways of doing it and we usually get a good friend to come in with the interview so that they can go through this process together. I think surgeons are very keen to try and see that ladies are satisfied with the right size of implant before they start, but even with all those measures, once a lady has had their operation, they can look at the result and say “Well, it’s still not big enough”. Now, I don’t know why that is, but that’s what happens and just because this lady has decided after the surgery that she wasn’t happy with the size doesn’t mean that an error had been made in the original decision.”
1. Dr Curtin added that there were “two consultations prior to the surgery in connection with making the right choices prior to the surgery, so, you know, I can’t comment further. Dr Deva has got his opinion about that. I’m just saying that it doesn’t follow that the lady wanted a larger implant, that an incorrect decision was made initially”. It was suggested that the Practitioner had “failed to position the implant properly in the first procedure”, a proposition with which Dr Curtin appeared to agree, adding (Tcpt, 26 July 2023, p 23):
“I’m not saying he was right. I’m just saying he might be right. We spoke about this yesterday and I said that there are other reasons for why the implants might have ended up in a high position, but a common cause for that is not making the pocket low enough – the pocket for the implant at the right place and, therefore, the implant sits up high and is always going to sit up high, but there are other reasons. As I said, you could make a huge pocket and the implant could still slip up because of bandaging or other factors.”
1. Dr Curtin suggested that the Practitioner’s “idea that the lady had a tubular deformity” was not an opinion he shared, for reasons which Dr Curtin explained. Dr Curtin considered (Tcpt, 26 July 2023, p 24) that “The second operation looked pretty good”, although he conceded (Tcpt, 26 July 2023, p 24) that the first post-operative photos showed that the implants were “still sitting too high”.
2. In later cross-examination (Tcpt, 26 July 2023, p 26) it was suggested that the case of Patient F “raises concerns about whether or not Dr Mahadik can perform effectively implant breast surgery, doesn’t it?” Dr Curtin replied:
“Well, it’s not – the fact that a revision occurred means that it wasn’t a good result. Looking at these photographs, I think there is some – there could well be some pre-existing minor breast asymmetry before her surgery started. The photographs we have are a bit oblique, so you can’t exactly tell that. But that’s a very common issue and – look, whenever a case hasn’t gone according to plan, you’ve got – you know, the question is what has happened here; has a mistake been made? But you can’t extrapolate necessarily from one case and say: well, the guy who did this is totally incompetent when it comes to breast surgery.”
1. The Practitioner rejected (Tcpt, 5 February 2024, p 59) Professor Deva’s suggestion that, in performing the first breast implant on Patient F, he “missed a mild tubular breast deformity”. The Practitioner was shown the pre and post-operative photographs of Patient F and asked (Tcpt, 5 February 2024, p 60) whether he thought that “the first surgery created a further asymmetry and displacement of the nipples?” to which the Practitioner replied that he disagreed “because breast augmentation is a procedure which enhances the existing anatomy and all patients should know this … and I make an effort that every patient understands this. So it’s a very simple procedure where implants are put behind the breast, either behind the breast tissue or the muscle and it only enhances the existing anatomy. So it doesn’t interfere with where the nipples are sitting”.
2. The Practitioner disagreed with Professor Deva’s suggestion that “The implants are not placed in the right position or they may have rotated”, and said that “The implants are put either under the breast or there is a muscle under the breast, they go under the muscle. So in both instances – in the first instance they were put under the muscle and they were not rotated, but they were high riding. For that reason she had a second procedure. When I say “high riding”, that doesn’t mean that the implant is rotated, it means that the implant is sitting at a higher position than it should”.
3. The Practitioner accepted that “The first surgery didn’t result in an ideal outcome … which necessitated the need for a second surgery”. The Practitioner agreed (Tcpt, 5 February 2024, p 61) that “could have been prevented” and reiterated that the first surgery did not give “an ideal outcome”. The following exchange occurred (Tcpt, 5 February 2024, p 61):
“Q In relation to Dr Curtin’s evidence it was his view that once the implants are inserted and they are in the pocket, if the pocket is not in the right place, then they are never going to drop. Do you agree that that –
A It’s all, it’s all about the pocket. If the pocket is correct, the implant will be fine.
Q The pocket wasn’t correct for the first procedure, was it?
A That’s right.
Q Do you accept that it wasn’t correct because of surgical error on your part?
A Rather than an error I would say judgement. So I did the necessary – because the lower pool was deficient, I dropped the IMF by 2 centimetres because I wanted it to be expandable. When I made the pocket I thought that I had made it too low, so I sutured my lower flap and IMF and I think it was right, but I was proved wrong because when I saw her post-operatively the lower pool, since I had sutured to the IMF to the chest wall, that probably was sutured a centimetre higher, which was an error, which meant that the pocket was not one hundred percent right to what I wanted to – so that was a judgement or error which had happened which straightaway came to my notice and at the 6 week mark I advised her that – it’s in my – I don’t remember the exact wording is - they are there – that, “I have to release my sutures to expand your lower pool to make it right” and the patient, the patient is a very smart architect and she, she realised that this is an error and I apologised for her and I say to her, “Look, I’m going to do this. I can’t charge you for this because this is my error” and then after that she took a second opinion before proceeding for the second surgery for the revision.”
1. The Practitioner agreed (Tcpt, 5 February 2024, p 62) that he made the pocket “too small” for the first surgery, resulting in the implants ending up “marginally in a position that was too high relative to the nipple”. The Practitioner was asked by the Tribunal whether he sat the patient up during the surgery. The Practitioner replied that he did, but that having done so he was “in the double mind” about the positioning of the implant and, as he realised later, “erred on the wrong side” in the manner alleged by the Council.
2. The patient did not give evidence in the proceedings. There is no reason to reject the Practitioner’s evidence of the events which followed the first surgery. As Senior Counsel for the Practitioner made clear during the course of the Practitioner’s evidence with respect to this patient, drawing a clear line between the technical aspects of the procedure and the patient’s subjective view of its success is not necessarily simple or easy. Although we would not express it in quite the terms Dr Curtin did in the passage of his evidence which we have cited above, the evidence does not establish that the Practitioner’s performance of Patient F’s initial surgery was below the standard reasonably expected, although, as he clearly conceded, he made an error or judgement during the course of it. The evidence does not comfortably establish that errors of that kind were referable to an absence of skill or competence. To his credit, the Practitioner immediately recognised that he had made an “error” and rectified the error, to the evident satisfaction of the patient. Our findings with respect to Patient F do not assist the Council’s case with respect to disputed conditions.
Patient G
1. Dr Curtin said in his first report (A1 Tab 19) with respect to Patient G that:
“This lady had a mini facelift procedure under local anaesthesia in Dr Mahadik’s rooms. I agree with his comments that this procedure is unable to offer the range of cosmetic improvements provided by the full facelift operation. There was some commentary from the Medical Council that the mini facelift operation should not be carried out in doctors’ rooms, but I think that there would be disagreement amongst plastic surgeons about this. Provided the facilities are properly equipped and patients are carefully selected it would be reasonable to carry out this limited facial surgery under local anaesthesia in an office facility.”
1. Professor Deva referred to the patient consulting the Practitioner on 19 May 2021 for assessment of facial ageing to the Practitioner, and noting, “saggy jowls” and an ageing face, and that the patient wanted a brow lift. The notes recorded the patient’s history of smoking, and the Practitioner’s advice that a mini facelift and brow lift could be performed in the rooms, but that “performing a neck lift in rooms was not legal”. The Practitioner recorded his recommendation to consider a mini facelift and temple brow lift. The Practitioner noted during his second consultation with the patient on 20 September 2021 that her history of smoking gave rise to a higher risk associated with the proposed surgery, and that she should stop smoking 6 weeks prior to surgery.
2. The Practitioner’s operation report with respect to the surgery he performed on 2 October 2021 referred to “standard mini-FL incision” and exposure of the “SMAS”, the skin flaps were mobilised and excess skin excised. The brow lift was recorded as “abandoned as the patient had understood that it was a full brow lift rather than a temple skill excision”.
3. The Practitioner’s clinical records of the patient’s second post-operative consultation noted that the patient presented with “left ear and cheek swelling” which he considered to involve partial dehiscence which was treated with topical and oral antibiotics. The patient was also advised to stop smoking.
4. Professor Deva’s review of photographs of the patient’s outcome and scarring were suggested by him to “show significant stretching of the superior preauricular scar and multiple inclusion cysts with an expected lack of correction of the nasolabial area and jowls from a skin only excision. The surgery was considered to be well below the standard expected of doctors performing cosmetic facial surgery.”
5. In cross-examination (Tcpt, 5 February 2024, p 69) the Practitioner was referred to Professor Deva’s concerns “in relation to the scarring, the significant stretching of the superior preaurical scar and multiple inclusion cysts with an expected lack of correction of the nasolabial area and jowls from a skin only excision” and asked whether he agreed that that was an issue. The Practitioner replied that:
“In a facelift that’s an issue. However, mini facelift, mini facelifts are completely different procedures. They are – so these are – like I wouldn’t say new but they are relatively – there is a new demand for mini facelifts where women who are roughly between 40 and 45 who find that non-surgical injectables and fillers are not working, and who have just minimal lower face ageing where they say “Look, facelift is an overkill” – they specifically come for a mini facelift. The enquiry isn’t – doesn’t say that “Doctor, what do I want?” so the enquiries come for mini facelift because they are thoroughly researched and these are surgeons who do facial aesthetics. They routinely do these procedures. So this only caters to, to the, to the jowls and jawline and upper one-third of the neck if there is loose skin. They do not cater to the mid, mid face as Dr Deva suggests, that it does not address it. They do not address mid face. Not much improvement into the nasolabial folds and all. And it’s actually what the patient wants and they are told that this is a minor procedure, it goes on for one to one and a half hour. And these are only the three areas which she will benefit from. So nasolabias, middle one-third of the face is not an indication about this procedure.”
1. The Tribunal asked the Practitioner “About that mini facelift technique, is this purely a skin lift or do you – are you under this mass at any point?” to which the Practitioner replied, “I am not under this mass.” The Practitioner was asked “So it’s purely a skin stretch?” The Practitioner replied “Yeah, correct. So it’s undermine for 5 to 7 centimetres. I am not under this mass. But before closing – skin excision obviously but before the skin excision, I take 2 sutures, one at the jawline, yeah and one slightly above, plicating the 2 sutures which plicate this mass and then excess skin is taken out. But we’re not under the – I [sic] not under this mass.”
2. The Practitioner was asked where he learnt the technique. In the course of his response, the Practitioner said that he previously assisted a doctor who was previously “the main facelift surgeon” who he had observed on a couple of occasions to perform mini facelifts. In summary, the Practitioner stated that he learnt the technique which he employed from “2 or 3 surgeons here and plus extensive resource of online or digital media”.
3. The patient did not give evidence in the proceedings. The Tribunal does not have the benefit of up to date photographs of the patient. We are not able to be comfortably satisfied that the surgery on Patient G was below the standard reasonably required of him or that any aspect of the Practitioner’s treatment of the patient advances the Council’s case with respect to disputed conditions.
Patient H
1. On or about 19 June 2023 Patient I, who attended Kingsgrove Hospital on 7 July 2022 for facelift surgery, complained that when she was in recovery, something “didn’t feel right” and that she felt “a lot of pressure on her face”. The patient reported that the Practitioner determined that she had a blood clot in her face which he immediately rectified surgically. The patient saw the Practitioner 2 to 3 weeks post-operatively, at which time she reported that there was “still lots of swelling and bruising”. The patient said that at her next appointment she had “lumps under her neck and the Practitioner didn’t really know what they were” but that they “should go down”. The patient said that she told the Practitioner during that consultation that she had “pixie ears” but that the Practitioner said that she did not. The patient complained that about 11 months later “the lumps are still going down” but that her ears were “worse” and that she has “lots of loose skin under her neck”.
2. The patient complained that at the end of 2023 the Practitioner was in India and it was “months until she was able to get hold of him” and that, when she saw the Practitioner he agreed that she had “pixie ears” and “advised that it was no big deal and he could fix it in surgery, however he couldn’t do it until the end of the year because he had ‘a lot of training to do’”. The patient complained that she had tried calling the Practitioner 2 weeks previously but, after multiple attempts, had been unable to speak with the Practitioner.
3. On 12 July 2023 the Practitioner’s solicitors provided a detailed response to her complaint, in the course of which the Practitioner confirmed the history of the patient’s treatment. In his response the Practitioner said that he had a “detailed consultation” with the patient regarding a facelift and neck lift procedure on 24 May 2022 during which the Practitioner said that he explained in detail “with the aid of diagrams” the “relevant risks and recovery” and discussed “expectations and outcomes” and the “goal” of the surgery being to provide the patient with a “more youthful and pleasing contour”. The patient was 52 years of age at the time of her surgery.
4. The Practitioner referred to his second consultation with the patient on 22 June 2022 during which the Practitioner said that he addressed “more specific questions, concerns and expectations”, including “the advanced nature of the neck fat and skin (turkey neck) and the need for a platysmaplasty with neck life” and the “limitations of the outcome in such situations”. The patient then signed the relevant inform financial and consent forms, copies of which were provided.
5. On 7 July 2022 the patient underwent a full facelift and neck lift under general anaesthetic at Kingsgrove Day Hospital. Post-operatively the small blood clot to which the patient referred was “evacuated and washed from right cheek in the operating suite”. The patient was then discharged and, the Practitioner asserted, had an “uneventful” recovery. The patient attended post-operative follow up appointments with the Practitioner on two occasions in July 2022, and in September 2022, October 2022 and March 2023. The Practitioner alleged that on each occasion the patient was “mostly quite satisfied with the outcome of the surgery” but was “however concerned about her right submandibular area swelling and redness over her right neck as compared to the left neck” which would “come and go and would be normal at times in between”. The Practitioner said that he “reassured” the patient that a “myriad of factors” could have caused or contributed to those symptoms which were “treated conservatively with anti-inflammatory antibiotics and scheduled follow ups”. The Practitioner said that at the patient’s nine month follow up on 11 March 2023 she “confirmed that the neck swellings had almost subsided and was thankful that a wait and watch approach had been adopted”, “asked for more advice about her right ear lobule which seemed to be slightly stretched more on the right ear lobule than the left”. The Practitioner said that he explained that “this probably could lead into a pixie ear due to the pull of the neck skin from the repaired turkey neck”. The Practitioner said that prior to undergoing the surgery the patient was advised:
“(a) about the possibility of pixie ears as the scars matured over time and that patients with heavy turkey necks had more propensity to develop late stretch issues;
(b) these could be addressed electively at a second stage after 12 to 18 months once the scars matured;
(c) pixie ear correction (if she needed and decided to have it) is a minor procedure which can be performed under local anaesthesia and takes 25 to 30 minutes of procedure time.”
1. In conclusion the Practitioner acknowledged that the patient’s complaint “may well have arisen as a result of his inability to meet with patients face to face and inadequate communication regarding follow up consultations” and further acknowledged that “the uncertainty in relation of [sic] his conditions, has resulted in a deficient system in responding and dealing with former patients who may be seeking follow up consultations”.
2. In his second report (R2 Tab 5), by reference to the Practitioner’s operative and clinical records Professor Deva noted that Patient H was a 52 year old female who attended the Esmee Clinic on 24 May 2022 enquiring about facial rejuvenation, that the Practitioner advised that she undergo a face and neck lift and was taken through the “relevant risks and recovery” with the aid of diagrams. The aim of Patient H’s surgery was recorded as being to provide her with a more “youthful and pleasing contour”. After a second preoperative consultation on 22 June 2022 the patient was admitted to Kingsgrove Day Hospital for her procedure on 7 July 2022. Although Professor Deva was critical of aspects of it, there is no suggestion that Patient H did not complete appropriate consent “paperwork” prior to her surgery. There is no evidence that the Practitioner failed to advise her of any relevant risks associated with the surgery.
3. Professor Deva referred to the surgery which was performed by the Practitioner, and said that the patient “developed an acute right post-operative haematoma during her recovery and returned (to) the operating theatre later that day”. The patient complained that “something didn’t feel right”, and that she felt “a lot of pressure on her face”. The Practitioner’s clinical records record that the patient’s second procedure occurred later that day and that right facial swelling commenced one and a half hours after the procedure. The Practitioner reopened the patient’s right facial incision, and two bleeding vessels were found in the “subauricular” neck flap. The haematoma was evacuated, and the wound closed in layers.
4. The patient’s post-operative course, from July 2022 to March 2023 featured alleged excessive bruising and swelling, “lumps under neck” and “pixie ears”. Professor Deva described “pixie ears” as “an uncommon complication following face/neck lift surgery where the earlobe, neck junction is distorted and pulled downwards”. On the following page of his report, Professor Deva attached a picture showing what he considered to be a “pixie ear”.
5. Professor Deva recorded that “at the last post-operative consultation on the 11th of March 2023, the patient reported that the neck swellings had subsided but that her ear deformity had become worse and that there was still excessive loose skin under her neck”. Professor Deva considered that Patient H’s treatment “reinforces” two of the “common themes” that arose from review of Dr Mahadik’s other complaints, they being “deficiency in post-operative care” and “deficiency in operative technique related to specific cosmetic procedures”.
6. Professor Deva said that “As Dr Mahadik has now returned for further training and is no longer available to care for the patients treated at the Esmee Clinic, access to other practitioners for assessment and treatment should be put into place.” Under the heading “Pixie Ear Deformity” Professor Deva recorded his understanding of the nature and cause of pixie ear deformity. Relevantly for present purposes he suggested that practitioners who “perform face/neck lift surgery should be familiar with the surgical techniques to reduce the risk of this deformity as prevention is better than cure”. Professor Deva considered that factors which lead to pixie ear deformity included:
“1 Over resection of skin
2 Incorrect vector of pull for SMAS placation or Platysmaplasty
3 Disruption of the earlobe neck junction by incorrect placement of the scar
4 Failure to reduce tension on the ear/earlobe through use of deeper plane sutures and suspension of the neck skin flap and postauricular incisions”.
1. In a statement which became controversial during cross-examination, Professor Deva said that the “treatment of pixie ear deformity is not simple and may require extensive re-dissection of the face/neck lift flap to correct abnormal tension/vectors arising from previous facelift surgery. The use of local flap should only be used if there has been excessive over resection of skin as this can result in further visible and unsightly scarring”. Professor Deva concluded his report by saying that “It would be important to examine the clinical record and consent documents from the Esmee Clinic as well as pre and post-operative photographs to assess the degree of pixie ear deformity and the patient’s concern about excessive loose skin of her neck following her procedure”.
2. Professor Deva was cross-examined at length with respect to Patient H’s surgery. Professor Deva acknowledged (Tcpt, 24 July 2023, p 97) that he had not been informed that Patient H had withdrawn her complaint. He also confirmed that, when he prepared his report he had not been informed that the Practitioner had sent his full clinical records in relation to the patient to the Council. Professor Deva was asked “Did you ask for them, when it came to your attention that you did not have them?” Professor Deva replied “I did make a note saying that it would be important to examine the clinical record consent documents from the Esmay Clinic as well as – so that is my last sentence asking for those”.
3. Professor Deva was asked (Tcpt, 24 July 2023, p 98) with respect to his report “You are prepared to give an opinion as to ‘themes and/or deficiencies’ even in terms of deficiency of post-operative care in the absence of having Dr Mahadik’s clinical records?”. Professor Deva replied “So what I did have was the patient complaint which detailed – her main issue was the ears and also the fact that she couldn’t get onto his office and was concerned about the cost of revision surgery with another practitioner so I focused on those things. But also tied to the back of the previous report in terms of themes. So there was sufficient information in front of me based on what was given to be able to write this with the proviso that it would be important to look at the clinical notes”.
4. Professor Deva confirmed (Tcpt, 24 July 2023, p 100) that he prepared his report without “any clinical notes or clinical photographs”. Professor Deva was asked (Tcpt, 24 July 2023, p 102) “You say that pixie ear is an uncommon complication following face surgery what do you mean by uncommon?” Professor Deva replied:
“Well, it can occur and I have gone through in the rest of the report to give you more context and the references as to what pixie ear is how it can arise. And so if you have read through that, I have given the facts that lead to the pixie ear deformity, usually related to technical issues. And it can be minimised. So – and those of us that perform a reasonable number of facelift procedures, we are aware of those specific things to try and reduce that from occurring, which is why it is uncommon.”
1. Professor Deva was referred to the expression “ear deformity” in his report and asked “And that is an expression you say to describe what has occurred with the patient?” Professor Deva replied “I have said in my last sentence that I would need to look at photographs. I don’t have access to any photographs so it is very hard to know – this is relying on the patient complaining of pixie ears and Dr Mahadik’s response saying yes they were pixie ears, but I hadn’t seen the photographs so it is very hard for me to comment on.”
2. Professor Deva was asked (Tcpt, 24 July 2023, p 103) “Why did you use the word “ear deformity” in the absence of having seen any images post-operative or pre or post-operatively of this woman?” Professor Deva replied “This was taken directly from the patient’s complaint”.
3. In reliance upon the articles tendered by the Practitioner (A4) it was suggested to Professor Deva (Tcpt, 24 July 2023, p 104) that “Pixie ears or pixie ear deformity has not been objectively defined”. Professor Deva replied that he had given a description “quoted and referenced” in his report, the reference being to the article “Pixie Ear Deformity Following Facelift Surgery Revisited”. Professor Deva said that:
“All three references describe what the pixie ear deformity is and so I quote from that paper. Pixie ear deformity, just as a summary, to say that the ear and earlobe are not fixed anatomic structures so when you are performing a facelift, if there is excessive tension, traction or scarring, the junction between the earlobe and the neck can be distorted. And that specific deformity, pixie ear deformity arises when the normal junction of earlobe and neck is pulled downwards, distorted and disappears resulting in a stuck on or upward appearance. And I give you a photograph of what a pixie ear deformity looks like.”
1. Professor Deva was referred to the article upon which he relied and the statement in it that (Tcpt, 24 July 2023, p 105) “Although this deformity has been described clinically it has yet to be objectively defined”. Professor Deva said “So the purpose of this paper was to come up with a classification system. And essentially when you are talking about objective definition in clinical terms, it is measuring anatomic features. So they were coming up with a classification of various degrees of pixie ear, but to say it has not been objectively defined, I think confuses the objective of this paper.” Whether pixie ear deformity had been “objectively defined”, and whether “to date no objective criteria have been reported for its diagnosis” further explored during cross-examination of Professor Deva.
2. Professor Deva was referred (Tcpt, 24 July 2023, p 109) to the statement in one of the papers upon which the Practitioner relied that “pixie ear deformity is an unsightly though thankfully uncommon complication following rhytidectomy procedures”, a proposition with which Professor Deva agreed. Cross-examination of Professor Deva (Tcpt, 24 July 2023, p 110) revealed that quantifying the incidence of pixie ear deformity was “a matter of subjective opinion”.
3. It was suggested to Professor Deva (Tcpt, 24 July 2023, pp 111, 120) that “pixie ear deformity is not simple and may require extensive re-dissection of the face, neck lift flap etc?”, a proposition which Professor Deva appeared to agree with, stating “Mmm – hmm”. It was suggested to Professor Deva that there was an inconsistency in his evidence with respect to whether it is a “straightforward and simple procedure to correct pixie ear deformity”. Professor Deva replied (Tcpt, 24 July 2023, p 112) “So I think that it depends on what the cause is and the degree of the pixie ear deformity. So obviously for the milder deformity, the correction is simple. So for the more severe deformities, which may well be defined by their staging system, the treatment can be difficult and may require extensive re-dissection of the skin flap. It goes back to one of those – which of those four factors were volumed in generating the pixie ear deformity in the first place”.
4. On the second day of his cross-examination Professor Deva was referred to a number of photographs of Patient H’s surgery. It was suggested to Professor Deva (Tcpt, 25 July 2023, p 14) “You say, in essence, don’t you, that it is very difficult to comment in the absence of a clear photograph and in the absence of knowing the dates of the photograph, correct?” Professor Deva replied:
“A So – exactly. So the first point was that these photographs are not adequate for me to make (indistinct) because the fact that the hair is obscured?
Q But it is correct to say, isn’t it, Dr Deva that you were prepared in your report to give an opinion that Dr Mahadik has [sic] deficient in operative techniques related to this cosmetic – specific cosmetic procedure, you gave that opinion in the absence of seeing any photographs dated or otherwise, correct?
A Correct.
Q And do you stand by your evidence yesterday, Dr Deva that you have the capacity to act as an impartial expert witness in these proceedings?
A I do stand by that.”
1. Dr Curtin was not cross-examined in relation to his opinions with respect to Patient H’s treatment.
2. The Practitioner agreed (Tcpt, 5 February 2024, p 75) with Dr Curtin’s evidence that brow lifts “need to be approached with caution because the long term results can be unsatisfactory”. The Practitioner was asked what training in brow lifts he had received (Tcpt, 5 February 2024, p 76), to which he replied “I haven’t performed brow lifts in the public hospital apart from a variant called direct brow lift is [sic] doing a facial (not transcribable). The cosmetic brow lifts I have observed and assisted many of them with different surgeons, as I was assisting them over my time at Westmead if not before.” The Practitioner was not otherwise cross-examined with respect to his treatment of Patient H.
3. On the evidence before the Tribunal, and particularly having regard to the concessions made by Professor Deva in the cross-examination to which we have referred earlier, the Tribunal is unable to find that the surgical skills employed by the Practitioner with respect to Patient H were deficient. They may have been lacking, but the Council has not proved that they were. The Practitioner’s post-operative care of Patient H may also have been deficient, but the Tribunal does not find that it was.
4. Cross-examination of the Practitioner in relation to Patient H was limited. The Practitioner was asked (Tcpt, 5 February 2024, p 76) whether in his view Patient I had any “form of ear deformity or pixie ear”. The Practitioner reiterated his view that she did not and said that the “only hiccup” which the patient had after her surgery was that she had “some swelling which flared up and down in the, in the submandibular area on the right side” which lacked “systemic signs” just coming and going. The Practitioner said that when he saw the patient in March 2023 she said to him “Doctor, thanks for not doing anything. Everything has resolved”.
5. The patient did not give evidence in the proceedings. Other than making her complaint, all the patient has said was what was contained in her complaint the substance of which we have set out earlier. The Practitioner added that the patient then said “Look, what do you think about my right ear? It's not the same here” after which, having looked at the ear, the Practitioner said “Lisa, it was me who started this term” and “This is a deformity some people can get after a facelift. I don’t think you will have that because it has already been 9 months. But keep an eye. If that happens, then we will have to fix it. It’s a very minor procedure which takes about half an hour”. The Practitioner said that the patient said “I’m not even thinking in those lines” but that “just in case if you think, then we can do it”.
6. The evidence before the Tribunal is insufficient to enable us to make an adverse finding with respect to Patient H’s surgery. The Practitioner may have displayed less than the required level of surgical skill, but the evidence, or lack of evidence to which we have referred, establishes that to have been the case. If Dr Mahadik’s conduct with respect to Patient H was deficient, it was in relation to his inability to be contacted after March 2023. Why that was so is not difficult to understand having regard to the Practitioner’s professional status at that time. The Practitioner’s conduct with respect to Patient H does not advance the Council’s case with respect to the disputed conditions.
Patient I
1. The Council having conceded that there was “insufficient evidence for this patient to properly assess the extent of any risk to the patient”, and having not challenged the Practitioner’s version of the events surrounding her treatment conveyed by his solicitors on 11 October 2022, or what he said in his statement of 23 June 2023, it is unnecessary to refer to the evidence of the experts with respect to the complaint, which was understandably equivocal in any event.
Submissions of the parties
1. Having regard to the limited ambit of ultimate dispute between the parties, it is unnecessary to refer in full, or extensively to the submissions of the parties. That is not said critically of either party. On the contrary, the Tribunal commends Counsel for both parties on their successful endeavours to identify and refine the real issues which ultimately require determination in these proceedings.
2. Counsel for the Council submitted that proposed condition 1 requiring its approval before the Practitioner change the nature or place of his practice was appropriate in view of the Practitioner’s asserted uncertainty as to “precisely the nature of his practice that he is seeking to engage in in the future” and, not surprisingly perhaps “some uncertainties in his evidence, including his lack of familiarity with the new guidelines notwithstanding that they have been in place since July of last year”. Proposed condition 1 was submitted to go “hand in hand” with a Category C supervision condition, and also enable the Council to monitor where the Practitioner is working and to be on notice of that “particularly when his own evidence is is he is not exactly sure of what he will be doing”.
3. The Practitioner sought in lieu of the condition proposed by the Council that he be required “to advise the Medical Council of NSW in writing at least 7 days prior to changing the nature or place of business” of his practice. It ultimately emerged that the real issue relating to proposed condition 1 related more to the time implications than the substance of the condition proposed by either party. Inherent in either version of the condition is that the Practitioner will in future be lawfully practising his profession. In those circumstances, it is difficult to see on what basis the Council could reasonably refuse to approve any change in the nature or place of the Practitioner’s practice, unless they were changes which would be likely to excite the Council to invoke s 150 of the National Law.
4. The absence of any time constraint on the Council granting approval is also, as Senior Counsel for the Practitioner submitted, a matter which has potential practical implications. On balance, in all the circumstances, and particularly having regard to the findings which we have earlier recorded, the Tribunal is of the view that the Practitioner should be required to advise the Council in writing prior to changing the nature or place of his business, rather than first obtaining such approval. However, in order for the Council to consider whether it wished to take any action, pursuant to s 150 or otherwise, in response to the proposed changes, rather than 7 days, a period of 28 days prior notice would in the Tribunal’s view be reasonable, both for the Practitioner and the Council. It is difficult to imagine the Practitioner changing the nature or place of his practice on as little as 7 days’ notice, in any event. Conversely, a period of 28 days prior notice of such intended changes would provide the Council with a reasonable period in which to make any enquiries it wished to, or take any steps which it felt obliged to in the light of such enquiries.
5. With respect to condition 4 sought by the Council, which required the Practitioner to observe 5 phalloplasties performed by a registered specialist surgeon approved by the Council, it was submitted that the Practitioner’s evidence that there were only 2 such surgeons in Australia was based on the Practitioner having “only made limited enquiries” which were not recent in any event. Whilst that may be so, the absence of the names of any other Australian surgeons suggested to be potentially available for that purpose supports the Practitioner’s assertions.
6. It was submitted on behalf of the Council that there was a “clear need” for the Practitioner to have some observation with a surgeon who is conducting phalloplasties. The Council submitted that observation with a surgeon overseas would be very difficult for the Council to determine, either in terms of qualifications and experience or appropriateness whereas the Council has “access to greater understanding of surgeons within the Australian jurisdiction”.
7. Not surprisingly, the Practitioner relied significantly on his performance assessments and logbooks as well as his experience and demonstrated competence with respect to phalloplastic surgery. Senior Counsel for the Practitioner submitted with respect to disputed proposed condition 4 that the Tribunal should accept that there are “only really two surgeons in this country who do phalloplasties”, particularly on the basis that the Council has put forward no names or otherwise provided evidence to the contrary, other than as emerged from Exhibit R5 which recorded a search revealing names of surgeons who perform “penile surgery”, noting that such surgery can, but does not necessarily include and is not limited to cosmetic phalloplasty of the kind which the Practitioner has performed. The evidence before the Tribunal makes clear that, although potentially arguably best qualified to provide it, urologists tend not to perform phalloplastic surgery.
8. The Practitioner relied on his evidence, which the Tribunal accepts, that he has performed 80 cosmetic phalloplasties, 72 of which are confirmed by logbook evidence before the Tribunal. The Practitioner submitted that, in reality, he may have had as much, or more experience in phalloplasty as any surgeon currently practising in Australia. He may be right about that.
9. Senior Counsel for the Practitioner raised the question of “What precisely is it that Dr Mahadik would learn from the expert proffered in this appeal hearing?” and challenged the “utility and practicalities” of the proposed condition. Reliance was placed upon the absence of evidence of any “functional compromise post-operatively” on the part of Patients A and B, the phalloplastic surgery patients. The Practitioner submitted that a “more responsive condition would be that Dr Mahadik observe a Board certified plastic surgeon undertaking 5 cosmetic phalloplasties and provide the Medical Council with the name of the surgeon, registration status, date, time, place of surgery, details of procedure and reflections on each procedure observed, thereby enabling the Practitioner to fulfil the observation requirement sought by the Council in reliance upon surgery performed in the UK or the US”. It was submitted that the Council approving the overseas surgeon would be unnecessary, verification that the surgeon is a Board certified plastic surgeon in another country and/or in Australia being submitted to be sufficient to address the issue. That was particularly submitted to be so “because in large part the concern has been around preoperative assessment and the suitability and post-operative care and category supervision in the terms outlined in our submission would meet those concerns and the health and safety and protection of the public”.
10. In the course of exchanges between the Tribunal and Senior Counsel for the Practitioner the following occurred. The “chase” to which Dr Sheridan referred was a reference to exchanges with Counsel for both parties and the Tribunal during the course of the Practitioner’s cross-examination. Senior Member Sheridan said (Tcpt, 6 February 2024, p 58):
“SENIOR MEMBER SHERIDAN: So cutting back to the chase, what we’re here for, the conditions, I’d just like to say a few things and you could perhaps help my thinking. What I’m saying is my thoughts, it’s still in (the) process of happening and it’s not my final views or the views or my colleagues, but nevertheless, in terms of the issue you’ve raised with regard to timeliness of Council decisions, I agree that delay may potentially be procedurally unfair and even verging in [sic] punitive to a practitioner if it takes too long and prevents them from earning a reasonable income or practising their career. So I’m of the mind that maybe we should (be) looking at timeframes for various decisions to be made or various points of contact with the Council to happen.
MATHUR SC: There’s no argument against that and we take no issue with time periods.
SENIOR MEMBER SHERIDAN: The other issue is we definitely do not want to go anywhere near the general versus specialist registration for performance of cosmetic procedures or make any comment whatsoever on the need for an FRACS to perform cosmetic procedures that would be a bad place for us to go.
MATHUR SC: And I think we are on all fours on that point.
SENIOR MEMBER SHERIDAN: We would laude the attempts to obtain an FRACS as an indication of making effort.
MATHUR SC: And I think for Dr Mahadik it’s not –
SENIOR MEMBER SHERIDAN: And that’s as far as we would ever go.
MATHUR SC: Yes and
SENIOR MEMBER SHERIDAN: It would be wrong of us to do otherwise.
MATHUR SC: And you have evidence before you that it has been Dr Mahadik’s desire to take that path as far back as 2016.
SENIOR MEMBER SHERIDAN: The other issue is what area we need to focus on in terms of safety of the community and performance improvement with Dr Mahadik. My understanding of the evidence we have received points not to technical skills but to non-technical skills of surgery. Therefore the issue of learning how to do phalloplasties better may be quite mute [sic] now. … Indeed we need to concentrate on improvement and being sure that an improvement has stuck in these non-technical skills such as preoperative assessment, post-operative care, all the stuff we talked about. I’m not seeing a lot of evidence. Even though we’re not experts on that particular procedure we are surgeons and we can see where the technical issues are or are not in play and I don’t think they’re in play.
MATHUR SC: No and the preoperative care can come from any surgical practice.
SENIOR MEMBER SHERIDAN: So I think an assessment, cumulative with a performance review for a Category C supervision by an appropriately trained and approved surgeon is enough. But, and this is where I take some exception, I think there is a need for a timeframe around that so we don’t leave an open ended supervision order forever and that we do say that, you know, there is a time period involved with that and also I do think that a summit [sic] of assessment, which would be a Council based assessment, performance assessment, still remains a very reasonable thing to suggest, notwithstanding what you’ve told us. We can say that we want a Council based assessment and the Council based assessments can be very specific as to what the assessors, the panel is asked to look at. So we would be asking the panel to look at non-technical skills for a review of note taking, management, preoperative management, evidence that things have improved and that they are continuing to improve and there’s a really big effort has been made so that the Council can be comfortable that the areas that have been of concern have now been addressed and that would be the end of the process. And again we could put a timeframe around that.”
1. Senior Counsel for the Practitioner replied:
“And in response to both, the timeframe in relation to Category C supervision we would submit should be for a period of 12 months. That seems to be a reasonable period in which to assess a practitioner’s practice however the Tribunal could give consideration to a lesser period of time given that ---
SENIOR MEMBER SHERIDAN: Or a longer period of time.
MATHUR SC: Or a longer, but 12 months is certainly in our submission at least a point in time where, as a first starting point. If at the end of 12 months and in the context of 12 months of supervision reports there really is a need for an additional period of time, that will be clear, but it may also be to the contrary.
SENIOR MEMBER SHERIDAN: That may be clear at a performance assessment or it may be clear from the supervisor’s reports, hopefully not.
MATHUR SC: Yes if the Tribunal is minded to impose a performance assessment we would welcome a time period around that. …
SENIOR MEMBER SHERIDAN: But we can dictate Council based versus performance based practice based I should, couldn’t we?
MATHUR SC: Yes.”
1. In subsequent exchanges with the Tribunal (p 61) Senior Counsel for the Practitioner appeared to accept that the imposition of Category C supervision from the time the Practitioner commences private practice, in any capacity, would be appropriate.
2. In submissions in reply (Tcpt, 6 February 2024, p 63) Counsel for the Council reiterated that the Council did not accept that the evidence did not give cause for concern about the Practitioner’s skills, referring to the evidence with respect to particularly Patients A, B, C and F in that regard. It was submitted that the
Consideration
1. As we have indicated at the outset of these reasons, the issues which ultimately require the Tribunal’s determination are limited in number, but not in complexity. Exhibit X1 recorded the final position of each party. We have earlier set out the substance of that document.
2. The first contentious condition requiring determination is whether, as the Council seeks, the Practitioner should obtain its approval before changing the nature or place of his practice, or whether, as the Practitioner sought, the Practitioner must advise the Council in writing prior to changing the nature or place of his practice. Although, as recorded earlier, it is difficult to see how the Council could reasonably refuse to grant approval to such changes, other than in circumstances which would be likely to incline it to take action pursuant to one or more provisions of the National Law, no timeframe is suggested to attach to the approval process. Nor are the criteria for granting or refusing approval identified.
3. On balance, and having regard to the Tribunal’s findings with respect to the nine patients whose surgery gave rise to these proceedings, it is in our view adequate to protect the health and safety of the public, which consideration overarches the exercise of the Tribunal’s functions, and having regard to the restraint which is appropriately invoked when the power conferred by s 150 of the National Law is exercised, to require the Practitioner to advise the Medical Council in writing at least 28 days prior to changing the nature or place of his practice. Such a condition is unambiguous and requires the Practitioner to reveal information which would enable the Council to determine whether it perceives there to be a risk to the health and safety of the public if the Practitioner changes the nature or place of his practice, and, if it does, take such action as it considers appropriate.
4. The next issue requiring determination relates to proposed condition 2(c)(ii). The condition relates to the information to be contained in supervision reports which, it is agreed are appropriate, to be provided. The Council sought that “a summary of the details of discussion, review and feedback are to be included in supervision reports in accordance with the Council approved format”. The Practitioner opposed any condition of that kind.
5. It is not in contest that the Practitioner should discuss upcoming theatre lists for cosmetic surgery procedures with his Council approved supervisor, and confer with respect to patient selection and appropriateness of procedures, and include theatre lists with the monthly supervision reports as an index. It is not in contest that at each supervision meeting the Practitioner review and discuss his practice with his approved supervisor, with particular emphasis on patient selection, operative technique, clinical decision making, medical records, post-operative care and complications. In those circumstances, the need for supervision reports providing the detail sought by the Council is questionable. It is relevant that any supervisor approved by the Council will have read the Tribunal’s reasons for its decision. As suggested during the hearing, it is unlikely that a supervision report would not contain information about any aspect of the review and discussion of the Practitioner’s practice which his supervisor considered gave rise to any concerns.
6. We are inclined to agree with the Practitioner that the disputed reporting condition would potentially impose a heavy onus on any supervisor and potentially disincline appropriate supervisors from agreeing to fulfil that role. In view of the Tribunal’s findings with respect to the particular areas in which the Practitioner’s skills require improvement, it is likely that only a limited number of specialist practitioners might assume that role in any event. As was discussed during the hearing, the potential for a report in the terms sought by the Council being so brief as to be meaningless on the one hand, or becoming an “essay” on the other militates against imposing this condition. Conversely, the condition sought by the Practitioner provides no requirement for reporting on the extensive conditions which are agreed should attach to the Practitioner’s registration unless the supervisor considers it necessary to do so.
7. In our view, an appropriate condition would provide that a statement that the Practitioner is adequately complying with the conditions attaching to his registration, expressing any concerns which the supervisor has in that regard should be provided in supervision reports. That condition would not operate in isolation in view of the ambit of the requirement for mentoring and the clinical records which must be included in supervision reports.
8. The Council sought as a condition of the Practitioner’s supervision that he not undertake any cosmetic procedures until a supervisor has been approved by the Council. The Practitioner did not oppose that condition in substance but, reasonably in our view, sought that it be qualified so as to provide that approval be provided within a specified time i.e., 6 weeks after the names of proposed supervisors being provided by the Practitioner.
9. Essentially for the reasons advanced by Senior Counsel for the Practitioner, the Tribunal is satisfied that a condition in the terms sought by him would be appropriate and avoid, as was discussed during the hearing, the risk of the Practitioner being unable to practice and earn an income for a potentially lengthy time. That is not to suggest bad faith on the part of the Council, but simply the reality that, in the absence of any time constraints with respect to approval of a supervisor, the potential for the process to drag on is considerable, and can readily be avoided by the imposition of a six week period. We do not understand the Council to suggest that compliance with such a timeframe would not be achievable, or be unduly burdensome for the Council.
10. Condition 4 sought by the Council, which relates to the Practitioner observing 5 phalloplasties performed by an Australian registered specialist surgeon or specialist plastic surgeon requires consideration in the light of the evidence and the exchanges with Counsel for the parties in closing submissions. The Tribunal accepts that the condition sought by the Council with respect to observation of phalloplasties may not be able to be complied with, or be unable to be complied with within a reasonable timeframe.
11. Notwithstanding the criticisms of the evidence of the Practitioner in that regard, it is not insignificant that the Council was unable to suggest the name of any Australian registered surgeon who performs cosmetic phalloplastic surgery. The Tribunal’s findings with respect to the deficiencies in the Practitioner’s care of the two patients whose phalloplastic surgery was considered in these proceedings are relevant in this context. The Tribunal has not found the Practitioner’s phalloplastic surgical skills to have been deficient. The concerns related to the selection, pre-operative procedures and post-operative care of the patients. Observation of phalloplastic surgery would potentially have limited likelihood of addressing those issues. Mentoring is likely to have greater utility in that context.
12. The Tribunal considers the most effective practical resolution of this disputed condition to be the imposition of a condition that, within 12 months of the Tribunal’s orders the Practitioner observe 5 phalloplasties performed by an accredited specialist surgeon or plastic surgeon, during which the Practitioner actually or virtually fully observes the surgeon undertake the phalloplastic surgical procedures during the entire episode of the surgery and, within 4 weeks of completion of the observation sessions, provides a report from the surgeon to the Medical Council of New South Wales outlining the details of each surgical procedure he observed, the time taken by such procedure and the Practitioner’s observations of and learning from the surgery. The Practitioner having suggested that he observe UK or US registered surgeons performing phalloplastic surgery addresses most, if not all, of the Council’s legitimate concerns, and, in the Tribunal’s view, best deals with this issue.
13. The Medical Council of NSW should be authorised to provide to any surgeon nominated by the Practitioner a copy of the Tribunal’s decision and the conditions which are imposed on the Practitioner’s registration. The cost of observation and provision of the surgeon’s report being borne by the Practitioner.
14. The last condition sought by the Council, that the Practitioner “undergo a performance assessment” is in the Tribunal’s view, largely for the reasons discussed with Senior Counsel for the Practitioner and Counsel for the Practitioner in final submissions, an order that the Practitioner undergo a Medical Council based assessment. As we understand to ultimately emerge, uncontroversially, the conditions to be attached to the Practitioner’s registration should commence from the date on which the Practitioner commences private practice, and continue for 12 months thereafter.
Orders
1. That the appeal is allowed.
2. That pursuant to s 159C(1)(c) of the Health Practitioner Regulation National Law (NSW) (National Law) the decision of the Medical Council of New South Wales of 4 November 2022 is set aside and it is ordered that the registration of Parag Jayant Mahadik (Practitioner) be subject to the conditions hereunder for twelve (12) months commencing on the date on which the Practitioner commences private practice on a full or part-time basis:
1. To advise the Medical Council of New South Wales in writing at least twenty-eight (28) days prior to changing the nature or place of the Practitioner’s practice.
2. To practice under Category C supervision when undertaking or performing any cosmetic surgery procedures in accordance with the Medical Council of NSW’s Compliance Policy – Supervision (as varied from time to time) and as subsequently determined by the appropriate review body:
(a) the Council’s approved supervisor must be either:
(i) a registered Specialist surgeon with the Medical Board of Australia who has cosmetic surgery experience; or
(ii) a registered Specialist Plastic Surgeon with the Medical Board of Australia;
(b) the Practitioner is not required to be under category supervision for the following:
(i) non-invasive procedures: injectables, laser treatment, skin treatments, threads or skin cancer treatments;
(ii) upper eyelid blepharoplasties;
(iii) general plastic or reconstructive surgery;
(c) prior to each fortnightly supervision meeting the Practitioner must forward their upcoming theatre list to the Council approved supervisor for review and discussion:
(i) the Practitioner is to discuss the upcoming theatre lists for cosmetic surgery procedures with the Council approved supervisor with respect to patient selection and appropriateness of procedure;
(ii) a statement that the Practitioner is adequately complying with the conditions attaching to his registration and any concerns which the Council approved supervisor has in that regard are to be included in supervision reports;
(iii) the theatre list must be included with monthly supervision reports as an appendix;
(d) at each supervision meeting the Practitioner is to review and discuss his practice with his approved supervisor with particular focus on:
(i) patient selection (including preoperative assessment and consent);
(ii) operative technique;
(iii) clinical decision making;
(iv) medical records;
(v) post-operative care;
(vi) complications (including unplanned return to theatres, intraoperative and post-operative complications, and infections);
(e) to authorise the Medical Council of NSW to provide the approved supervisor(s) with a copy of the decision which imposed this condition;
(f) not to undertake any cosmetic surgery proceedings until a supervisor has been approved by the Medical Council of NSW, such approval to be provided within six weeks of the name/s of the supervisor/s being provided by the Practitioner (except for the procedures excluded by condition 2(b));
(g) no cosmetic procedure is to be performed unless the Practitioner has first discussed it with his supervisor at a supervision meeting (except for the procedures excluded by condition 2(b)).
3. Within 7 days of the end of each calendar month, the Practitioner is to provide the Medical Council of NSW with records of all procedures performed in the last month. The records must include the following:
(a) the patient’s full name and date of birth;
(b) the date and time of each procedure;
(c) all MBS/Medicare item numbers;
(d) the name and nature of the surgical procedure;
(e) the location of the surgical procedure; and
(f) any complications arising as a result of the procedure (and specifically advising of any unplanned return to theatre and/or post-operative infection.
4. Within 12 months the Practitioner is to have observation sessions observing 5 phalloplasties performed by a specialist surgeon registered and approved by the relevant authority in the United Kingdom or the United States of America:
(a) the Practitioner must be physically or virtually present in theatres and directly observing the overseas specialist surgeon undertaking the phalloplasty surgical procedure(s) during the entire episode of surgery;
(b) within 4 weeks of the completion of the observation sessions, the Practitioner is to provide a report to the Medical Council of NSW outlining the date, the name of the overseas specialist surgeon who performed the phalloplastic surgery which he observed, the location at which such surgery was undertaken, details of the surgery, its duration and any other information relevant to the surgery;
(c) details of what the Practitioner learnt from his observation of the sessions, and how that will impact his practice (including how the Practitioner will incorporate his learnings into future practice);
(d) the Practitioner is to authorise the Medical Council of NSW to approach the overseas specialist surgeon to provide his or her own report to the Council with respect to the surgery observed by the Practitioner and, if applicable, any concerns, discussions, feedback or other observations regarding the sessions and the Practitioner’s progress with phalloplasty;
(e) the Practitioner is to authorise the Medical Council of NSW to provide any overseas specialist surgeon with a copy of the Tribunal’s decision imposing this condition on the Practitioner’s registration and any other relevant report;
(f) the Practitioner is responsible for any costs incurred in relation to the period of observation and any reports pursuant to this condition.
5. The Practitioner is to authorise and consent to any exchange of information between the Medical Council of NSW and Medicare Australia for the purpose of monitoring compliance with these conditions.
6. The Practitioner is to undergo a Performance Assessment with a Council appointed assessor.
1. That the costs of these proceedings are reserved.
2. Pursuant to cl 7 of Sch 5D of the National Law, the publication of the names of any patient referred to in the proceeding is prohibited.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 39,589 |
nsw_caselaw:19100c4269c9309c3c2b6543 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-19 00:00:00 | R v Weldon [2024] NSWDC 313 | https://www.caselaw.nsw.gov.au/decision/19100c4269c9309c3c2b6543 | 2024-08-04T23:51:53.240549+10:00 | District Court
New South Wales
Medium Neutral Citation: R v Weldon [2024] NSWDC 313
Hearing dates: 22 March 2024, 8 April 2024, 22 April 2024, 19 July 2024
Date of orders: 19 July 2024
Decision date: 19 July 2024
Jurisdiction: Criminal
Before: ANDERSON SC DCJ
Decision: (1) The offender is convicted of each of the two offences before the Court.
(2) With respect to the disqualification period for driving, you are disqualified from driving for a period of 18 months for each offence.
(3) There being no other appropriate penalty, you are sentenced to an aggregate term of imprisonment for a period of 2 years and 4 months pursuant to s 53A of the Crimes (Sentencing Procedure) Act.
(4) Pursuant to s 7(1) of the Crimes (Sentencing Procedure) Act, the sentence imposed upon you is to be served by way of an intensive correction order. The sentence will commence today, 19 July 2024, and end on 18 November 2026.
(5) You must attend the Sydney City Community Corrections office within seven days.
(6) The standard conditions of this order will apply:
(a) You must not commit any offence.
(b) You must submit to supervision and guidance of the Community Corrections service for as long as that service deems necessary or desirable but not exceeding the period of the term of this order I have placed upon you. You are to obey all reasonable directions of that service, including any direction or instructions to undertake examination, assessment, therapy, treatment, counselling or urinalysis whilst under its supervision and guidance.
(7) The following additional conditions will apply:
(a) There is a curfew which will apply between the hours of 9pm and 5am each day for a period of 6 months, commencing today, expiring 18 January 2025. You must be at your home during those hours except on evenings where you are attending Alcoholics Anonymous meetings.
(b) You are to perform community service for 200 hours.
(c) You are to abstain from alcohol.
(d) You are to abstain from any prohibited or restricted drugs or substances except for medication lawfully prescribed to you by a registered medical practitioner.
(e) You are to continue your counselling services with Ms Leontios (or an alternative psychologist) for as long as those psychologists deem it necessary and at a frequency determined by them for either the term this order is in place or for as long as they consider necessary.
Catchwords: CRIMINAL – sentence – driving occasioning grievous bodily harm – failing to stop and assist in circumstances of causing grievous bodily harm – intensive corrections order
Legislation Cited: Crimes (Sentencing Procedure) Act 1999
Crimes Act 1900
Cases Cited: R v Whyte (2002) 55 NSWLR 252
Stanley v Director of Public Prosecutions [2023] HCA 3
Category: Principal judgment
Parties: Office of The Director of Public Prosecutions (Crown)
Dean Weldon (Offender)
Representation: Counsel:
Mr G Kidd (Crown)
Ms T Evers (Offender)
Solicitors:
Office of The Director of Public Prosecutions (Crown)
O’Brien Winter Partners (Offender)
File Number(s): 2022/172083
JUDGMENT
1. The offender is before the court for two offences.
2. The first of those offences is an offence under s 52A(3)(c) of the Crimes Act, the offence of dangerous driving occasioning grievous bodily harm. The second offence is that under s 52AB(2) of the Crimes Act, the offence of failing to stop and assist in circumstances of causing grievous bodily harm.
3. Each offence attracts a maximum period in custody of 7 years and there are no standard non-parole periods for either offence. There is an automatic licence disqualification period of three years and a minimum disqualification period of 12 months for each offence.
4. The offender pleaded guilty on 5 July 2023. As a result of that early guilty plea, he is entitled to a discount of 25 per cent on the sentence I would otherwise have imposed.
Procedural history
1. This matter was initially listed before me on 22 March 2024, at the District Court in Newcastle. At that time, I received submissions from the parties and evidence from both the offender and his friend, Mr John Power. At the offender’s request, the hearing was adjourned so that further submissions could be made in response to the Crown submissions which had been served late. There was another listing of the matter on 4 April 2024.
2. The matter was then listed before me on 22 April 2024 for the pronouncement of sentence. However, on 19 April 2024, my chambers received an application to reopen the proceedings on the basis of new evidence the Crown had received in response to an aspect of the evidence which the offender had given during the sentence hearing on 22 March 2024. That evidence went to the circumstances of the offender attending at the Denman police station on 12 June 2022 and informing police of his involvement in these offences.
3. On 22 April 2024, I determined that the Crown was entitled to lead further evidence on this point, and I received oral evidence today from a witness I will refer to again shortly, Mr Tony Hiriaki. I am now required to resolve a factual dispute regarding the circumstances in which the offender attended the police station on 12 June 2022. I will deal with that matter first.
Factual dispute
1. A court may not take facts into account in a way that is adverse to the interests of the offender unless those facts have been established beyond reasonable doubt. The offender bears the burden of proving on the balance of probabilities matters which are submitted in his favour or her favour. In some cases, it is not possible to ascertain everything that is relevant, especially where an offender chooses not to offer any evidence on the plea. Some disputed issues of fact cannot be resolved one way or the other.
2. I heard evidence today from Mr Tony Hiriaki who was with the offender during the afternoon that he had been at the Denman Hotel drinking with friends on 11 June 2022. He had been a member of the offender’s party, seeing him on and off over the course of that afternoon, sometimes seeing him drinking and sometimes seeing him playing pool.
3. Importantly though for the matters before the court, his evidence was that he saw the offender at about 6.30am to 7.00am on the morning of 12 June 2022, that is, the morning after the incidents which are before the court. He gave evidence that he saw the offender sitting on the end of a bed at the home they were staying at near Denman. They discussed the incident briefly, but Mr Hiriaki’s evidence was that the offender was largely silent. Mr Hiriaki’s evidence was that he raised the need for the offender to immediately attend the police station about the incident. He said to him words to the effect of, “If you don’t fucking go, I’m going to throw you down the stairs and fucking drag you there.” Further, that he told the offender to take some identification to the police station. Mr Hiriaki’s evidence was that he went to the police station with the offender in a car driven by a third person.
4. The Denman Police Station at that time was unmanned. Mr Hiriaki stated that he spoke to an officer at another station via intercom system and told them that they were at the Denman Station in connection with an incident that had happened around Rosemont Drive the night before. Mr Hiriaki’s evidence was that he needed to say this to the officer because the offender was unable or unwilling to articulate a reason and was, in his words, mumbling. He stated they waited at Denman Police Station and eventually three police cars from Muswellbrook Police Station attended. His evidence was that he stood next to the offender while the offender spoke to the police, but he then later moved away and stood elsewhere.
5. That is a brief summary of the evidence that Mr Hiriaki has given.
6. Mr Weldon gave evidence this morning. He also gave evidence when the matter was first before the court. I will start by referring to the evidence he gave on 22 March 2024. This is at page 7 of the transcript, commencing at line 26, where he was asked this by his counsel, Ms Evers:
Q. The following day did you attend the police station voluntarily?
A. I did, yes.
Q. To your knowledge, had anyone advised the police who had in fact been the driver?
A. Not to my knowledge, no.
Q. Why did you attend the police?
A. Because it was the right thing to do, to present myself and own up to my actions.
Q. How did you feel about what you’d done by leaving the scene?
A. I was ashamed of myself, disgusted by what I’d done, absolutely mortified.
1. During cross-examination, he was asked this question at transcript page 14, commencing at line 45:
Q. When you got back to where you were staying that evening, why didn’t you contact the police there and then?
A. I was terrified and I think - I knew what I done was absolutely horrific and by leaving I knew that I made it worse.
Q. The next day you present to police and you were charged?
A. Yes, correct. I don’t think I was charged the following day, no.
Q. Certainly the following day you bring to the authorities’ attention that you were the driver involved in that collision?
A. Correct.
1. Mr Weldon’s evidence today was that, having spoken to his friend, Mr Power, upon him returning home after the incident, that it was made clear to him that he had no choice but to go to police and confess his involvement. His evidence today was that he had spoken to Mr Hiriaki and that he had no choice but to speak to police and intended to do so, but at the time that Mr Hiriaki spoke to him, early that morning, he had simply not acted upon that desire.
2. Mr Weldon’s evidence was that at the time of the conversation with Mr Hiriaki his memory was hazy and that he felt a mix of emotions, including emotions of shame and guilt. His evidence was that while he spoke to Mr Hiriaki his decision to go to the police was not one that was made because he had spoken to Mr Hiriaki, but rather one that he had decided to do himself. In fact, in his recollection, while he had spoken to Mr Hiriaki, it was simply about the mechanism of how one goes about turning yourself in to police. His evidence was that Mr Hiriaki suggested that he do so in Maroubra in Sydney, where they lived, rather than in Denman.
3. The offender’s evidence was that he attended the police station at Denman voluntarily and that he did so because he was ashamed, disgusted and mortified with his conduct.
4. Having heard the further evidence today, my conclusion is that both versions of Mr Weldon and Mr Hiriaki can sit together to a large degree. I accept Mr Weldon’s evidence that he was in shock, that his memory was hazy, but that he knew what he had to do. However, the fact that his memory of these events was hazy, in his own words, does make me query how good his memory is of the events that he described in his evidence.
5. The reality is that at the time he had the conversation with Mr Hiriaki he had not gone to police. However, that is very different from not intending to do so. It is not surprising that upon learning of the incident and seeing the offender sitting on the bed that Mr Hiriaki confronted him about why he had not already gone to the police station.
6. I accept that Mr Hiriaki is telling the truth that he said something to the offender in order to get him motivated to go and speak to police there and then and not waiting any further. Given Mr Weldon’s state of mind at the time, in my view, he has simply forgotten that Mr Hiriaki was the person who urged him to attend at that point in time. I accept that it was this action by Mr Hiriaki that got the offender moving. However, I also accept the evidence of the offender that Mr Hiriaki suggested going to police at Maroubra. In my view, this makes sense, as it was where they both lived and there was no reason why the offender would have that specific memory unless it was true. It does not assist him or detract from his evidence in any way. Mr Weldon’s evidence on this point has the ring of truth. It also has the ring of truth that the offender spoke to Mr Hiriaki for advice, being that he was older and, unlike the offender, more likely to know Australian police procedure.
7. Ultimately, they went to Denman Police station. Once at Denman, there are different versions of who spoke to police and explained the situation. In this instance, I accept the offender spoke to police without prompting from Mr Hiriaki. I am not making that finding because I believe Mr Hiriaki is making things up; far from it. I found him to be an honest witness and there is no reason for him to lie. However, while being honest, I do not accept he was entirely accurate. I say this because of the body worn video that was tendered before the court.
8. The body worn video demonstrates that when they arrive at Denman, Mr Hiriaki and a friend were standing some distance away. It did not show him near the offender, contrary to the evidence that he gave in court. Instead, he was about 20 metres away. The impression Mr Hiriaki gave in his evidence was that not only did he effectively drag the offender to Denman, but that he then had to stand next to him while the offender spoke to police and made his confession. That recollection of events is inconsistent with the body worn video.
9. The body worn video demonstrates Mr Weldon standing by himself, talking to the two officers. The offender’s demeanour appeared to be co-operative: he answered police questions and agreed to participate in the record of interview that was recorded at Muswellbrook sometime later that day. I did not see the presence of three police cars.
10. On that basis, my finding is that offender needed Mr Hiriaki to insist that he spoke to police immediately but, once committed to that course, he made full admissions regarding his involvement in the incident.
Facts
1. The offender was born on 19 June 1993, making him almost 29 years of age at the time this incident occurred. The victim was 20 years of age at that time. The offender, the victim and a mutual friend and others were visiting the Hunter Valley from Sydney over the weekend of 11 June 2022. The three men and their other friends attended at the Denman Hotel. Between 4.23pm and 8.37pm the offender was recorded on the hotel’s closed-circuit television drinking what is described in the facts as eight and a half schooners, which I assume was beer. The facts are silent as to whether the offender was continuing to drink alcohol after 8.37pm, but the facts reveal that he remained at the hotel after that time, as an incident which is not described occurred later in the evening, but it resulted in the hotel staff asking him to leave. This occurred sometime between 10:00pm and 11:00pm.
2. The offender, the victim and their friend left the hotel and went to the carpark with the victim going to the driver’s side door of the offender’s Mitsubishi Colt motor vehicle. The offender said to him, “It’s my car, give me the keys or I’ll slap ya”. The victim handed over the car keys to the offender. The offender got into the driver’s seat. Their friend sat in the passenger’s seat and both the offender and the friend fastened their seat belts. The victim did not.
3. The offender began driving the vehicle towards the farmhouse that they were staying at for the weekend. He was initially driving at what is described as a normal speed. However, he took a wrong turn and began to drive more recklessly, driving at about 75 kilometres per hour, which at the time was about 25 kilometres above the recommended speed limit for that portion of the road.
4. As he was driving, the offender approached a right-hand bend near a railway crossing. The car drifted to the left. It then left the roadway and drove into a ditch, at which point the offender lost control. The car hit three guide posts and a small warning sign, before mounting a raised bitumen section of the road, colliding with the front left side of a railway signal post. The car became airborne and collided with a small wire fence, landing upside down with such force that its front grille was torn off and the left front wheel ripped away.
5. The vehicle stopped 35 metres away from the end point of the skid mark from which it had left on the road. The victim was found about 30 metres from the car. These are the facts relevant to count 1.
6. A nearby resident heard the sound of the collision and called triple-0. As to the offender’s friend, he got out of the car with just a cut to his nose; the offender was apparently uninjured. As fire and rescue services were arriving at the scene, the offender fled and returned to where they had been staying. His decision to leave the scene before police attended is count 2.
7. The victim was airlifted from the scene and taken to Royal North Shore Hospital. He suffered and continues to suffer a large number of injuries resulting from this incident. The most significant injuries was to his spinal cord, leading to his permanent paraplegia. The victim had a displaced shattered fractured right collar bone and fractures to his neck and back. He suffered a bilateral pulmonary contusion to his left and right ears, fractures to his sternum, a fracture to his clavicle and other lacerations. The victim is now paralysed from the chest down and requires ongoing 24-hour care. I appreciate that not all the injuries are relied upon to support the grievous bodily harm element of the offence. I have, however, listed the full extent of the injuries to illustrate they are varied and significant. Grievous bodily harm encapsulates a wide range of injuries, based on both seriousness and permanency. The injuries are significant.
8. As the offender was not on the scene at the time the emergency services arrived, his blood alcohol reading was not detected. Subsequent expert evidence estimates the offender’s blood alcohol reading at the time of the incident would have been in the range of 0.148 grams per 100 mils and 200 grams per 100 mils, with the most likely blood alcohol calculation placing him around 0.174 grams, which would place him in the high range for PCA offences. The victim’s blood alcohol reading was also taken and that was at 0.139 grams of alcohol in 100 mil of blood. That is in the mid-range for PCA offences.
9. The offender ultimately presented to Muswellbrook Police Station the following day and participated in an electronically recorded interview, where he admitted being the driver of the car and having been at the Denman Hotel for five hours before the incident. He admitted to drinking alcohol but told police he did not feel drunk. He also admitted leaving the scene of the collision before police arrived. I have also considered the fact that I have found that it was Mr Hiriaki who insisted that he speak to police that morning, but that, once committed to the course of doing so, he spoke to police willingly and co-operated and made admissions regarding his involvement in both count 1 and count 2.
Sentencing principles applicable to offence
1. There are certain sentencing principles applicable to an offence of this nature. In the case of R v Whyte (2002) 55 NSWLR 252 (‘Whyte’), there is a guideline judgment for offences of dangerous driving under s 52A of the Crimes Act. There is no dispute as to its application in this case. In the judgment, the court said, at [204]:
“A frequently recurring case of an offence under s 52A has the following characteristics:
1. Young offender.
2. Of good character with no or limited prior convictions.
3. Death or permanent injury to a single person.
4. The victim is a stranger.
5. No or limited injury to the driver or the drive’s intimates.
6. Genuine remorse.
7. A plea of guilty of limited utilitarian value.”
1. Where the offence is of the character described above, his Honour former Chief Justice, Spigelman CJ, with whom the other members of the court agreed, said, at [214]:
“A custodial sentence will usually be appropriate, unless the offender has a low level of moral culpability, as in the case of momentary inattention or misjudgment.”
1. The Chief Justice also said, in reference to the “typical case” described above, at [229]:
“Where the offender’s moral culpability is high, a fulltime custodial head sentence of less than three years in a case of death and two years in the case of grievous bodily harm would not generally be appropriate.”
1. The reference to “moral culpability” in these passages is now regraded as part of the objective seriousness of the offence. A number of factors were identified in Whyte which aggravate the objective seriousness of an offence. These are set out at [216] to [217] of the judgment, being:
1. The nature and extent of the injuries inflicted.
2. The number of people put at risk.
3. The degree of speed.
4. The degree of intoxication or of substance abuse.
5. Erratic or aggressive driving.
6. Competitive driving or showing off.
7. Length of the journey during which others were exposed to the risk.
8. Ignoring warnings.
9. Escaping police pursuit.
10. Failing to stop.
1. The factors in the guideline judgment are not a checklist but merely describe a typical case. They do not circumscribe this Court’s sentencing discretion. Further, the sentence noted in the guideline judgment is not a starting point nor is it prescriptive, but merely a guide post or reference for me as the sentencing judge.
Objective seriousness
1. The objective seriousness of an offence is to be assessed without reference to matters personal to a particular offender or class of offenders. It is to be determined wholly by reference to the nature of the offending. Applying the considerations of Whyte, I make the following observations and findings:
1. The offender was 29 years old, which I do not regard as making him a young offender.
2. The offender is a person of good character with no previous driving offences or other criminal offences.
3. The offending caused permanent injury to a single person who was known to the offender.
4. There were no injuries to the offender.
5. I accept that he has shown genuine remorse.
6. He has entered an early guilty plea, which entitles him to a discount of 25 per cent on his sentence.
1. With respect to the aggravating features referred to in Whyte, I note the following:
1. The injuries to the victim in this matter were life changing.
2. Three peoples’ lives in the car were put at risk but no members of the public were put at risk.
3. The speed was 50 per cent higher than the speed limit at that time on that road, but at 75 kilometres per hour it would not be considered excessive.
4. There was a significant degree of intoxication, over three times the legal limit.
5. The length of the journey appears to be relatively short.
6. There was a failure to stop and render assistance but this is a discrete offence for which the offender has been prosecuted, so I am not going to take it into account as an aggravating consideration for count 1.
1. I have taken each of those matters into account in assessing the objective seriousness. Clearly one of the most significant aggravating features in this matter is the terrible lifechanging injuries sustained to the victim. Another critical consideration is the offender’s blood alcohol reading.
2. With respect to the second offence, being the offender’s failure to assist, the offender was clearly aware of the incident and his evidence was that he knew that there had been some injury sustained to his friend, although he did not know the extent of it. His evidence in court was that he believed he may have actually killed the victim and that he panicked and that he recognised running from the scene was something that he should not have done.
3. His conduct made it impossible for police to obtain a blood alcohol reading for him at the time and in the short term the police did not know who was responsible. His evidence demonstrated an awareness that by fleeing the scene he not only avoided arrest but avoided police taking a breath test and an accurate blood alcohol reading. However, I do note he did not leave the scene until he was aware that emergency services were on their way and that the other passenger in the car was remaining on the scene. Those facts mitigate his conduct.
4. It was submitted on his behalf by his counsel Ms Evers, that for reasons I will shortly detail, his moral culpability should be reduced but it does not reduce the objective criminality of his conduct. I place on the record that it is not required of me to actually place on a spectrum from less serious to most serious where this matter falls on a range of objective seriousness.
Aggravating features
1. I have considered s 21A subs 2 of the Crimes (Sentencing Procedure) Act and the aggravating features set out therein. The Crown does not press any of those features apply in this case, given that the considerations that may normally apply under that section have already been picked up in the guideline judgment to the degree they are relevant.
Subjective material
1. I will now deal with the subjective material which has been placed before the Court. Exhibit A includes several items relied upon by Mr Weldon. That includes a letter from a psychologist, Maria Leontios dated 29 March 2024. There is a pre-sentence psychological assessment report by Ms Paige Cornell dated 28 August 2023. There is an apology letter by Mr Weldon. There is a letter to the Court by Mr Zane Biddell, who is the victim. There are a series of character references including from Marion Glover, Katie Parry, Cian Lynch, Jane Watson and Reece Williams. There is also a letter from the Maroubra Medical Centre and a letter from Mr John Keogh.
2. There was also a series of other documents provided to the Court which forms part of exhibit C, tendered today. They are a further letter from Mr Keogh, a letter from Jane Watson, another report from the psychologist, a letter from Ellie Hannoun, and a letter from a person at Alcoholics Anonymous.
3. I have also taken into account the Sentencing Assessment Report that was provided to the Court which was written on 20 March 2024 as well as a report by Dr Christopher Lennings which was tendered on the offender’s behalf on the last occasion as exhibit 4.
4. The offender also gave evidence in court. He expressed his remorse for his conduct on the night and described his actions in fleeing the scene, as being a combination of fear and cowardice in the context of him fleeing from the scene.
5. He described the devastating effect that this incident has had on the victim. He spoke of his recognition of the fact that he had a significant problem with alcohol and had taken steps to deal with it, including abstaining from drinking, attending Alcoholics Anonymous meetings and also a psychologist. His decision to stop drinking alcohol started in December 2023. He began seeking treatment with a psychologist on 10 February 2024 and attended his second Alcoholics Anonymous meeting at the time this matter was first before the Court.
6. All of this positive conduct appeared 18 months after the offence and shortly before the matter was listed for a hearing on 22 March 2024. I indicated some cynicism about this to the parties when the matter was before the Court. However, I note that the offender has continued this treatment, as demonstrated by exhibit C. He continues to attend Alcoholics Anonymous meetings and now has a role of responsibility with that organisation in his local area. He has also continued to see his psychologist who he has now seen her 22 occasions. He is to be congratulated for this commitment to his rehabilitation.
7. The offender gave evidence that he was employed and a further letter was placed before the Court which forms part of exhibit C which states that he has recently been promoted and is now in the role of being a site supervisor, managing eight staff members.
8. Mr Weldon, in my view, gave powerful and truthful evidence. He recognised the seriousness of his conduct and did not seek to downplay it. He recognises the lifelong and tragic outcome that he has inflicted on his friend, the victim in this matter. I accept the expressions of remorse for the victim and his expression of remorse in committing these offences.
Report from Ms Paige Cornell, Psychologist
1. The offender also called evidence from his friend John Power who is his flatmate. Mr Power spoke of the offender struggling with alcohol for some time prior to this incident occurring and to the offender frequently drinking too much alcohol. He spoke of the offender feeling suicidal after the event and that he too had noticed the offender had taken steps to improve his life, including abstaining from alcohol.
2. The report from Ms Paige Cornell, psychologist, is important. It sets out some of the background of the offender. He was born in Ireland and was an only child. His parents separated when he was young and his mother re-partnered a few years later. The offender’s stepfather lived with them for a short time but they also later separated.
3. The offender noted that his birth father struggled with problematic alcohol use which resulted in him being unpredictable and inconsistent in his conduct. His father often unexpectedly arrived at the house and would verbally abuse his mother. The offender reported feeling scared of his father and stood up to him at around the age of 14 in order to protect his mother. The offender and his father had minimal contact until his father died in 2018. The offender recalled blaming himself for his father’s behaviour.
4. The offender spoke highly of his mother and had a close bond with her. He reported that they were financially disadvantaged and lived in social housing. He said to the psychologist that his mother would work two to three jobs at a time and that she would be out of home for long periods and that that led him to be particularly self-sufficient and also caring for his stepsister. Except for his father, the offender did not describe a family history of substance abuse, criminal behaviour or mental health difficulties.
5. He completed high school and continued to college and studied construction management for a year. He found that the transition from his earlier education which had been taught in Irish to being taught in English in the post-school education somewhat difficult. He did not complete that course but instead undertook a course in sports management. He started working full-time at around the age of 19 or 20.
6. He moved to Australia for a fresh start. The offender reported that he is now settled in Australia and plans to stay here. He reported his employment had been terminated a few times in Australia due to poor work performance and nonattendance, associated with his problematic alcohol use.
7. The offender stated that he first drank alcohol at 14 and would drink every few weeks with friends. At around the age of 17 he would binge drink “a fair bit”, although he perceived it was in accordance with cultural norms. At around the age of 25 when his father died, his frequency of alcohol use increased to daily. He reported drinking around 13 standard drinks per weekday which increased on the weekend. When his father died in 2018, he reported drinking persistently throughout the weekends. The offender identified that he was using alcohol to manage his emotional state. The offender reported he intended to reduce his alcohol when he moved to Australia but, rather than being able to reduce it, he in fact drank more. He reported drinking approximately ten standard drinks per day on weekdays and up to 30 drinks per day on weekends.
8. The offender explained that the two people he was with on 11 June 2022, the victim and their friend, were friends he had made at a pub in Sydney during late 2021. The psychologist’s report stated:
“Mr Weldon explained that he would not typically drive after drinking alcohol, though he felt he had no option in this case due to a lack of other transport options in the area.”
1. It is worth remembering here that the offender had insisted on driving in circumstances where the victim had indicated he could drive.
2. The offender acknowledged that his use of alcohol was problematic. He reported he would often not attend work due to being affected by alcohol. His friends would complain that he was hard to deal with when he was intoxicated, and he believes himself that he was a nuisance and tended to say stupid things and become more impulsive. He told the psychologist, Ms Cornell, that he was offered assistance by his mother and friends to address his alcohol use, but he refused these offers.
3. The offender reported ceasing alcohol use approximately seven weeks prior to being interviewed by Ms Cornell. He apparently had one lapse the week before the interview which he claims provided further motivation for him to remain abstinent. The offender described himself to the psychologist as a shy person and that he typically used alcohol to make friends and to be a different version of himself. He stated that he feels terrible that he was responsible for the harm that he caused to the victim. In the psychologist’s opinion, he demonstrated significant remorse and a comprehensive understanding of the significant and life-altering impacts the victim will experience and has experienced as a result of this tragic scenario. He stated that he is now trying to do his best by taking responsibility and owning up to his actions.
4. The offender reported symptoms associated with anxiety, depression and post-traumatic stress disorder, in the view of the psychologist. He noted his mental health deteriorating after the death of his father and even further deteriorating after the death of a friend in Ireland. Prior to moving to Australia, he reported that his friends and family would often, in his words, “walk on eggshells” around him and were constantly checking up on him. He found this difficult to manage. After moving to Australia, he was able to avoid his negative emotions, as his peers were unaware of his history.
5. He reported witnessing a fatal car crash in his early twenties. He also reported experiencing some post-traumatic stress type symptoms that was further exacerbated following this incident. The offender reported drinking more frequently and heavily following the incident. His psychological wellbeing has, apparently, deteriorated significantly, in the opinion of the psychologist. This impacted his functioning and interpersonal relationships, concentration and performance at work and further impacting the quality of his sleep. He reported experiencing psychosomatic symptoms such as chest pains, likening the experience to a heart attack. He also reported experiencing increased anxiety and hypervigilance in social situations. He further reports experiencing distressing dreams associated with the incident, as well as intrusive memories of the event, resulting in him feeling as though the incident were reoccurring.
6. Ms Cornell concluded that the offender meets the criteria for a Major Depressive Disorder and Alcohol Use Disorder from approximately 2018, including at the time this incident occurred. Ms Cornell stated that because of his poor coping with these depressive symptoms, the offender developed a problematic pattern of alcohol use, ultimately leading to an untreated alcohol use disorder. She refers to the offender demonstrating a deterioration in his functioning over years prior to the offences due to poor coping with the loss of his father and also the major depressive disorder which he had at the time. She found that he has struggled to regulate and manage these feelings, resulting in the avoidance of those feelings by the use of his alcohol.
7. Ms Cornell found these conditions led to the offender’s decision to drive under the influence, driving recklessly and to flee the scene of the incident. She said this happened in the context of disinhibition associated with alcohol intoxication and impulsive decision-making without consideration for the consequences of his actions. Ms Cornell states that his actions also need to be understood in the context of experiences of bullying, social difficulties and a history of engaging in behaviours motivated by the desire to be accepted by his peers. The operation of his offending is by way of poor decision-making, wanting to be perceived positively by his peers, alcohol intoxication and a lack of consequential reasoning.
8. These factors, in the opinion of Ms Cornell, are superimposed on a greater functioning issue associated with poor mental health status. It is her opinion that the offences occurred because of an alcohol use disorder in the context of unresolved grief and a major depressive disorder. She concluded that his mental health condition would deteriorate significantly if he was admitted into custody due to the separation from his supports and exposure to harsh custodial conditions. She stated that the offender has a history of suicidal ideation which is likely to be exacerbated in custody.
9. Ms Cornell also concluded that the offender will profit from treatment and benefit from understanding his symptoms and the development of effective coping strategies. She noted that he has good family support and generally engages in prosocial lifestyle and that he was motivated to engage in treatment. I will return to those conclusions shortly.
10. With respect to the report from the psychologist Maria Leontios, Ms Leontios began seeing the offender in order to address his anxiety, depression and grief. In her view he was committed to continuing the counselling and this has been demonstrated by the fact that he has continued to see her up to date. He has now seen Ms Leontios 22 times.
11. The Court was also provided with a report from psychologist Dr Lennings dated 26 March 2024. This report addressed the issue of delay between the offence and the offender taking steps to actually stop drinking permanently, engaging with Alcoholics Anonymous and a psychologist. Dr Lennings report states that people with substance abuse issues often take a significant amount of time before seeking treatment and that some people in fact never do. He concluded that the offender’s delay in seeking treatment was neither unusual nor unexpected.
12. I accept that evidence, but it also seems to the Court that the biggest motivator in the offender deciding to deal with his alcohol abuse problem was not the fact that his drink driving had rendered his friend a paraplegic but rather his impending sentence date.
13. The letters placed before the Court demonstrate that the offender is someone who has struggled with alcohol in the past but who is now taking responsibility for his problem. It seems obvious that the offender’s problematic drinking was well known to his family and friends. I note that the authors of the psychological reports were not called to court for cross-examination and that there was no submission made that I should reject their findings.
14. The Court also had before it the Sentencing Assessment Report dated 20 March 2024. It described the offender as someone who is a low risk of reoffending and as someone who is suitable for community service work of up to 21 hours a month.
15. I regard the offender’s subjective case and mental health issues as supporting the amelioration of sentence and lessening moral culpability.
Mitigating factors
1. With respect to the mitigating factors set out at s 21A(3) of the Crimes (Sentencing Procedure) Act 1999, I accept that he is a person who has good prospects of rehabilitation, particularly if he continues to abstain from alcohol. He is remorseful. I have considered the fact that he has pleaded guilty. Of some significance, given the nature of the charges, he has no prior criminal history, nor any road traffic offences.
2. I note that in accordance with s 21A(5AA) of the Crimes (Sentencing Procedure) Act 1999, in determining the appropriate sentence for an offence, self-induced intoxication of an offender at the time of the offence is not to be considered as a mitigating factor.
Mental illness
1. An offender’s mental illness may be relevant on sentence. Where there is a causal connection established, mental illness may affect both the assessment of moral culpability and objective seriousness. The nature of the impairment, the nature of the circumstances of the offence and the degree of the connection must all be considered. I have taken the offender’s mental health into account as part of his strong subjective case and to better understand why it was that he found himself to be an alcohol abuser.
2. I accept that it would make a custodial sentence harsher, but I do not find that it reduces the importance of specific or general deterrence. Specific deterrence remains of high importance because the offender must understand the connection between his alcohol abuse and the incident. I also do not find that it reduced general deterrence. Sentences such as the one I am about to impose are important reminders to the community at large that drink driving is a crime and it would make no sense for a sentence to be mitigated because the offender suffers from depression which he has self-medicated through alcohol, the very thing that has caused the incident to occur.
3. The offender’s moral culpability includes consideration of his personal circumstances, including circumstances which may affect his capacity to reason, appreciate the wrongfulness of his actions or control his conduct. Ms Cornell’s report makes it clear that the offender was out drinking with two friends who collectively made the decision not only to drive in the offender’s car to the hotel but to then drive it back to the house while intoxicated, believing, as the offender told Ms Cornell, that they had little option to do, given the limited transport in the area. The offender arrived at the hotel at 4.30pm. He had drunk at least eight schooners, potentially more, and was asked to leave the pub for some unspecified reason at about a time when he had a blood alcohol concentration of approximately 0.174.
4. There are occasions where matters personal to an offender may impact on the assessment of objective gravity of the offence, but those occasions require more than a simple or indirect causal connection between the relevant subjective feature of the case and the offending. The argument put by the offender here is that he had a deprived childhood, major depression and alcohol dependence which led to the offending. Whilst I accept this had an impact on his moral culpability, I am unable to accept that it reduces the objective seriousness of his criminality. The offence at s 52A(3)(a) of the Crimes Act is a consequence-driven offence with no mental element. I do not accept that the decision to drink and drive was a reflection of childhood deprivation or any mental health issues. To accept such a proposition in circumstances where the offence has been made more objectively serious because of his high level of intoxication would be inconsistent, in my view, with the decision of Whyte.
Rehabilitation
1. Rehabilitation is a central issue in this matter. The offender must remain ready to engage with treatment. Based on his conduct since December 2023, his attendance at Alcoholics Anonymous meetings and with the psychologist Ms Leontios, he has, in my view, good prospects of rehabilitation. The evidence before the Court demonstrates that once he put his mind to it, he has been able to deal with the alcohol abuse issues and I note that he has continued to attend those meetings up to date.
2. I have also taken into account the various comparable cases and JIRS statistics provided to the Court by Ms Evers. I have considered them, but I note the sample sizes are particularly small and, as the parties accepted, statistics are a blunt tool as they say nothing about the objective criminality or the subjective features of the particular offender. I do note though, that the JIRS sentencing statistics indicate that for all offenders who committed offences under s 52A(3)(c), that is the dangerous driving occasioning grievous bodily harm, of the 49 cases recorded since September 2018, 2% of those cases received community correction orders, 43% received intensive correction orders and 55% full-time custody. The figure for people receiving an intensive correction order is higher when those people with no prior record. The figure rises to 53%, but the sample is only 17.
3. I have also had consideration to the 12 comparable cases referred to the Court, by Ms Evers, but I will not set them out in detail.
Totality
1. When there is more than one offence, questions of accumulation and concurrency and the question of totality must be given effect. In the exercise of totality, I take into consideration the degree of connection between the offending, both in time and type, but I am very conscious that there are two discrete offences here and both require discrete punishment.
Victim Impact Statement
1. I have also taken into account the victim impact statement that was provided in this case by the victim. The victim impact statement and the accompanying photos were powerful evidence before the Court. The letter from Mr Biddell set out the ongoing devastation this incident has brought to him. To his credit, he ends his letter with the statement that he does not have any ill feelings towards anyone stemming from this incident. I note that the fact that Mr Biddell bears no grudge towards the offender is not relevant to the determination of sentence. The victim impact statement is a matter I have taken into account via s 3A(g) of the Crimes (Sentencing Procedure) Act.
Determination
1. I am conscious of the statement in Whyte that a custodial sentence will usually be appropriate unless the offender has a low level of moral culpability, as in the case of someone who has demonstrated momentary inattention or misjudgement. Although Ms Evers submitted that the offender’s conduct could fall into that category, I do not accept that submission. This conduct was more than momentary inattention or misjudgement.
2. Having considered all possible alternatives, I am satisfied that no penalty other than imprisonment is appropriate pursuant to s 5(1) of the Crimes (Sentencing Procedure) Act. Ms Evers, also accepted that the s 5 threshold had been crossed.
3. Ms Evers submitted that the rehabilitation of the offender is critical and that having now commenced the process of trying to live without drinking and abusing alcohol, a disruption of the regime of rehabilitation he has commenced via the combination of Alcoholics Anonymous meetings and sessions with his psychologist would occur if I was to impose a full-time custodial sentence. Ms Evers’ submission was that, having commenced the path of rehabilitation, a full-time custodial sentence would risk throwing that good work away.
4. There is clearly a tension between the considerations in s 3A of the Crimes (Sentencing Procedure) Act between rehabilitation and general deterrence. Both are of critical importance in this matter. The offender has had the benefit of an extra period between the first sentencing hearing and today, and he continues to participate in his rehabilitation, and he has continued to do so, which is to his significant credit.
5. I have considered s 66(1) of the Crimes (Sentencing Procedure) Act and given paramount consideration to the question of community safety. When considering community safety, the Court must assess whether the making of an order or serving the sentence by way of full-time detention is more likely to address the offender’s risk of reoffending, as per s 66(2). The sentencing court is to assess the possible impacts of an ICO or full-time imprisonment on the offender’s risk of re-offending, to look forward to the future possible impacts of an ICO or full-time imprisonment. I adopt the forward-looking approach referred to with respect to community safety referring to in the joint judgment of the High Court in Stanley v Director of Public Prosecutions [2023] HCA and the assessment of community safety as the paramount consideration, together with the subordinate considerations in s 66(3) of the Crimes (Sentencing Procedure) Act.
6. Given the particular issues I have outlined regarding the offender’s alcohol abuse and the steps he has already taken to address them in the community, I accept Ms Evers’ submission that serving the sentence by way of full-time detention is unlikely to address his risk of re-offending and will in fact interrupt that rehabilitation he has undertaken. In my view, community safety will be enhanced by having the offender in the community, working and sober. I am satisfied that the risk of the offender reoffending in a manner such as this may affect community safety, community safety will be improved by his rehabilitation being completed.
7. In my view, community safety would be better reduced by the imposition of an intensive correction order rather than full-time imprisonment because he is now seeking treatment for his alcohol abuse. He has good prospects of rehabilitation and he is unlikely to be before the Court again. Critically, he is employed, and he has prosocial relationships. All of those matters are of the utmost importance to the Court. However, I do intend to place conditions on the offender which are designed to ensure his ongoing rehabilitation and the protection of the community.
8. One of the orders I am going to impose is a curfew. I am going to do this for two reasons. Firstly, because the curfew will limit to some degree the offender’s ability to attend licensed premises for long hours and be tempted to drink any alcohol. Secondly, because I want it to act as a reminder for as long as it is in force that, but for the fact that he has begun seeking help for his alcohol abuse and for the persuasive advocacy of Ms Evers on this point, he would have been serving a period of time actually in gaol.
9. The indicative sentences I would impose are as follows:
1. For the offence of dangerous driving occasioning grievous bodily harm, a period of two years and eight months imprisonment, discounted by 25% for the plea of guilty, leaving a total term of two years.
2. With respect to count 2, the offence of failing to stop and assist after vehicle impact occasioning grievous bodily harm, I nominate a sentence of 12 months, discounted by 25% for the plea of guilty, leaving a total term of nine months.
3. I intend to impose an aggregate sentence of two years and four months. I will order that the sentence be served by way of an intensive correction order with a series of conditions attached to it.
ORDERS
1. I make the following orders:
1. The offender is convicted of each of the two offences before the Court.
2. With respect to the disqualification period for driving, you are disqualified from driving for a period of 18 months for each offence.
3. There being no other appropriate penalty, you are sentenced to an aggregate term of imprisonment for a period of 2 years and 4 months pursuant to s 53A of the Crimes (Sentencing Procedure) Act.
4. Pursuant to s 7(1) of the Crimes (Sentencing Procedure) Act, the sentence imposed upon you is to be served by way of an intensive correction order. The sentence will commence today, 19 July 2024, and end on 18 November 2026.
5. You must attend the Sydney City Community Corrections office within seven days.
6. The standard conditions of this order will apply:
1. You must not commit any offence.
2. You must submit to supervision and guidance of the Community Corrections service for as long as that service deems necessary or desirable but not exceeding the period of the term of this order I have placed upon you. You are to obey all reasonable directions of that service, including any direction or instructions to undertake examination, assessment, therapy, treatment, counselling or urinalysis whilst under its supervision and guidance.
1. The following additional conditions will apply:
1. There is a curfew which will apply between the hours of 9pm and 5am each day for a period of 6 months, commencing today, expiring 18 January 2025. You must be at your home during those hours except on evenings where you are attending Alcoholics Anonymous meetings.
2. You are to perform community service for 200 hours.
3. You are to abstain from alcohol.
4. You are to abstain from any prohibited or restricted drugs or substances except for medication lawfully prescribed to you by a registered medical practitioner.
5. You are to continue your counselling services with Ms Leontios (or an alternative psychologist) for as long as those psychologists deem it necessary and at a frequency determined by them for either the term this order is in place or for as long as they consider necessary.
Mr Weldon, let me make this very clear to you. If you fail to comply with any of the terms of this order, further sanctions may be imposed upon you by the Commissioner of Corrective Services or the State Parole Authority. Those sanctions may include a formal warning, they may include more stringent conditions or it may include the revocation of this order. If this order is revoked, you may be required to serve all or some of this term of custody in gaol.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 9,235 |
nsw_caselaw:190fc928ef3c693789025f01 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Griglio v Chief Commissioner of State Revenue [2024] NSWCATAD 212 | https://www.caselaw.nsw.gov.au/decision/190fc928ef3c693789025f01 | 2024-08-04T23:52:18.373402+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Griglio v Chief Commissioner of State Revenue [2024] NSWCATAD 212
Hearing dates: On the papers
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Administrative and Equal Opportunity Division
Before: E A MacIntyre, Senior Member
Decision: The assessment under review is revoked and remitted to the Respondent for determination in accordance with these reasons.
Catchwords: ADMINISTRATIVE LAW - administrative review - assessment - objection - review by Civil and Administrative Tribunal
STATE TAXES - surcharge purchaser duty - whether applicant a “foreign person” - whether applicant “ordinarily resident” in Australia - whether continued presence in Australia subject to any limitation as to time imposed by law – bridging visa
STATE TAXES - interest - market rate - premium rate - penalties - remission - remission of part of interest - discretion - reasonable care
Legislation Cited: Administrative Decisions Review Act 1997 (NSW)
Civil and Administrative Tribunal Act 2013 (NSW)
Duties Act 1997 (NSW)
Foreign Acquisitions and Takeovers Act 1975 (Cth)
Taxation Administration Act 1996 (NSW)
Treasury and Revenue Legislation Amendment Act 2023 (NSW)
Cases Cited: Azam Mohammed & Sarah Azam v Chief Commissioner of State Revenue [2023] NSWCATAD 38
Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126
Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19
Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238
Commissioner of Taxation v Ryan (2001) 201 CLR 109
Faytrouni v Chief Commissioner of State Revenue [2023] NSWCATAD 26
Findlay v Chief Commissioner of State Revenue [2023] NSWCATAD 80
Fleuren v Chief Commissioner of State Revenue [2024] NSWCATAD 177
Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216
Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249
Guimaraes v Chief Commissioner of State Revenue [2024] NSWCATAD 95
Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218
Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67
Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215
Li v So [2019] VSC 515
Molyneux and Vermeesch v Chief Commissioner of State Revenue [2011] NSWADT 117
O'Neill Tyres Gateshead Pty Ltd & Cessnock Tyres Pty Ltd v Chief Commissioner of State Revenue [2020] NSWCATAD 314
Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227
Shah v Chief Commissioner of State Revenue [2022] NSWCATAD 311
Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317
RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue 2004 NSWADT 64
Touma v Chief Commissioner of State Revenue [2012] NSWADT 2
Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261
van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283
Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222
Category: Principal judgment
Parties: Massimo Griglio and Christina Lee Griglio (Applicants)
Chief Commissioner of State Revenue (Respondent)
Representation: Solicitors:
Lyubicic and Associates (Applicants)
Crown Solicitor (Respondent)
File Number(s): 2023/00465798
Publication restriction: None
REASONS FOR DECISION
1. This is an application for review of a decision of the Chief Commissioner of State Revenue (the “Respondent") to assess surcharge purchaser duty, interest and penalties. The Respondent's submission is that the applicant, Massimo Griglio (“the Applicant”) is liable for surcharge purchaser duty, interest and penalties. The Respondent considers that the liability for surcharge purchaser duty arises because the Applicant was a foreign person at the time liability to duty arose. The Applicant considers that he should be relieved of that liability because he relied on professional advice and did not believe that he was liable. The Applicant also relies on the proposition that assessing duty is unfair and there was a long delay in the assessment. He also disagrees with the assessment of interest and penalties.
Background
1. The Applicant is an Italian citizen. Christina Lee Griglio is an Australian citizen.
2. The Applicant arrived in Australia in December 2018. On 26 March 2020, he applied for a Partner subclass 820 Visa. On the same date, the Applicant was granted a Bridging A Visa. His Bridging A Visa took effect on 9 November 2020 once the Applicant’s previous Temporary Skills Shortage Visa had ended.
3. The Bridging A Visa allowed the Applicant to remain in Australia lawfully while his application for a Partner subclass 820 Visa was being considered. The Bridging A Visa would end if the Applicant’s application for a Partner subclass 820 Visa was granted. The Bridging A Visa would also end after a specified period of time if the Applicant’s application for a Partner subclass 820 Visa was invalid, refused, withdrawn or otherwise had an outcome from a merits review decision.
4. The Applicant and Christina Lee Griglio married on 7 November 2020. They entered into a contract for the purchase of a house in New South Wales (“Property”) on 29 December 2020.
5. They retained the services of licenced conveyancers to act for them on the purchase of the Property. The conveyancing firm they used was run by two brothers. The conveyancers gave evidence that they identified the purchasers by their NSW driver’s licences.
6. The Applicant's evidence was that he explained to the conveyancer that he was not an Australian citizen and supplied to the conveyancer his visa that was current at the time. He also told the conveyancer that he was in the process of applying for a Partner subclass 820 Visa. He understood from his migration agent that it was “granted or was about to issue”. The Applicant said that at no time was he informed of surcharge purchaser duty applying to foreign persons.
7. One of the conveyancers also gave evidence that he had rung up RevenueNSW on at least two occasions and was told that “as long as the visa had the word “indefinite” then this gave it a permanent resident classification”. The Respondent, for his part, said that he had no records of such advice. The Respondent also provided evidence of detailed information on his website about how surcharge purchaser duty was levied, including Revenue Ruling G 009.
8. On 30 January 2021, the Applicant completed a “Purchaser/Transferee Declaration” (Form ODA 070 I) in respect of the purchase of the Property. This is a form that is completed and lodged to obtain assessments of duty. The Applicant declared in the Purchaser/Transferee Declaration that he was the holder of a subclass 820 visa. He also described his rights of residency as “indefinite”.
9. On 30 January 2021, a notice of assessment issued assessing the contract for sale of the Property as being liable for transfer duty of $48,275. No foreign interest in the Property had been declared and no surcharge purchaser duty was assessed.
10. Settlement of the contract occurred on 9 February 2021 and the Applicant’s title to the Property was registered on that date together with that of his wife as joint tenants.
11. On 23 February 2021, the Applicant was granted a Partner subclass 820 Visa. The length of stay permitted under this visa was for such time until notification that a subclass 801 visa had been decided or the application was withdrawn. On 1 June 2021, the Applicant was granted a Partner subclass 801 Visa. The length of stay allowed under this visa was indefinite from the date of each arrival.
12. The Applicant said that had he known about surcharge purchaser duty, he would have waited the extra 2 weeks in order to complete the purchase of the Property, at a time when he had a visa allowing him indefinite residency and was no longer a foreign person. Alternatively, he would have looked at the option of just purchasing the property in his wife’s name.
13. Following an investigation by the Respondent, on 30 August 2023, the Respondent issued a duties notice of assessment in the amount of $65,559.70. This amount was made up by surcharge purchaser duty of $46,000, penalty of $9,200 and interest of $10,359.70 (“Assessment”).
14. On 12 October 2023, an objection to the Assessment was lodged on behalf of the Applicant. On 8 November 2023, the Respondent disallowed the objection.
15. By application made on 22 November 2023, the Applicant seeks review by the Civil and Administrative Tribunal (“Tribunal”) of the Respondent’s decision disallowing his objection.
16. Evidence was given by the two brothers running the firm of conveyancers the Applicant and his wife used. The first brother gave evidence by affidavit sworn on 21 March 2024. From 2003, he had practised as a licenced conveyancer. His evidence was that there was an office policy that whenever property was bought by a purchaser who was not an Australian citizen, a procedure was in place for review of the matter by a number of people in the office. However, in the case of the purchase of the Property, his evidence was that the procedure was not implemented. This was because the “cooling off” period under the contract for sale of the Property expired on the day the office reopened in the new year, being 18 January 2021. His evidence also was that his office “failed in every way to explain to Massimo his exposure to surcharge duty”. The other brother provided evidence by way of a separate affidavit sworn on 21 March 2024. In that affidavit, he stated that he had “failed my clients”, “failed to properly review Massimo’s visa” and that “Massimo had no reason to be aware of the surcharge duty”.
Applicant’s rights of review
1. Where duty has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) (“Administration Act”), allows rights of objection to a taxpayer dissatisfied with an assessment. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act). On the facts at hand, that determination happened on 8 November 2023.
2. A taxpayer who is dissatisfied with the decision made upon the Respondent’s determination of an objection, may apply to the Tribunal for an administrative review under the Administration Act of the decision of the Chief Commissioner of State Revenue. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.
3. The onus of proving his case lies with the Applicant (s 100(3) of the Administration Act).
4. The Tribunal, dealing with the taxpayer’s application, may do one or more of the following under s 101 of the Administration Act:
“(a) confirm or revoke the assessment or other decision to which the application relates,
(b) make an assessment or other decision in place of the assessment or other decision to which the application relates,
(c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid,
(d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision,
(e) make any further order as to costs or otherwise as it thinks fit.”
Consideration
1. Three matters arise for consideration. They are whether;
1. surcharge purchaser duty is payable
2. penalties can be assessed; and
3. interest can be assessed.
Surcharge purchaser duty
1. The Duties Act 1997 (“NSW”) (“Duties Act”) charges duty on “dutiable transactions” (s 8). The list of “dutiable transactions” that can be charged with duty includes an “agreement for the sale or transfer of dutiable property” (s 8(1)(b)(i)). “Dutiable property” includes “land in New South Wales” (s 11(1)(a)). That the contract for sale of the Property was a dutiable transaction was not in dispute.
2. Duty is applicable at the general rate set out in Division 2 of Part 3 of the Duties Act. The amount of duty assessed at the general rate was $48,275. That assessment is not in dispute.
3. However, in addition to duty assessed at the general rate, further duty may apply to a dutiable transaction in certain cases. Further duty is chargeable on an agreement for the sale or transfer of “residential related property” to a “foreign person” (s 104L of the Duties Act). That duty is called “surcharge purchaser duty”. What is in dispute is, first of all, whether surcharge purchaser duty is assessable on the contract for the sale of the Property.
4. “Residential related property” relevantly includes “residential land” in New South Wales (s 104K(a)). That the Property was “residential land” was not in dispute. Therefore, in the matter presently before the Tribunal, a liability for surcharge purchaser duty arises if the Applicant was a "foreign person" at the relevant time.
5. A preliminary question arises. That question is at what point in time must a person be a “foreign person” for surcharge purchaser duty to apply. Section 104J sets out the basis for determining that question. If the person is a “foreign person” when a liability for duty charged by Chapter 2 on the transaction arises, that person is taken to be a “foreign person”. In the case of an agreement for sale or transfer of dutiable property, liability will arise when the agreement is “entered into” (s 104N). The rules set out in s 12 of the Duties Act then must be applied to determine when an agreement is “entered into” (s 104Q). Those rules fix the relevant time as the time when the contract was “first executed”. A contract made by acceptance of an offer contained in an instrument is taken to be “first executed” when the offer is accepted (s 295(2)). On the evidence, this occurred on 29 December 2020.
6. It follows that if as at 29 December 2020, the Applicant was a “foreign person”, surcharge purchaser duty applies. A further consequence of first execution on that date is that any surcharge purchaser duty was required to have been paid within three months after that date (s 104W). The question, therefore, is whether the Applicant was a “foreign person” as at 29 December 2020.
7. The applicable definition of "foreign person" is contained in Chapter 2A of the Duties Act. Section 104J in Chapter 2A provides that a "foreign person" means a person who is a "foreign person" within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth ("FATA"), as modified by section 104J of the Duties Act. Section 4 of the FATA relevantly defines a "foreign person" as an individual not "ordinarily resident" in Australia. Section 5 of the FATA goes on to provide as follows:
“Meaning of ordinarily resident
(1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:
(a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and
(b) at that time:
(i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law; or
(ii) the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law”.
1. The Applicant was not an Australian citizen on 29 December 2020. Section 5 of the FATA sets out two requirements that a person who is not an Australian citizen needs to satisfy in order to be “ordinarily resident” in Australia. Firstly, the individual in question must have actually been in Australia during 200 or more days in the period of 12 months immediately preceding the time at which ordinary residency is tested. Secondly, the individual must be in Australia at the time their status is tested and their continued presence in Australia must not be subject to any limitation as to time imposed by law. Both of these requirements must be satisfied for the Applicant to prove that he was “ordinarily resident” in Australia (Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216).
2. There was no dispute that the Applicant had actually been in Australia during 200 or more days in the period of 12 months immediately preceding the relevant date. The question is whether he relevantly satisfied the second requirement under s 5 of the FATA. There was no question that he was in Australia on 29 December 2020. What remains to be decided is whether his continued presence in Australia was not subject to any limitation as to time imposed by law.
3. The Respondent's submission was that the Applicant did not satisfy the second requirement under s 5 of the FATA, as at the contract date, namely 29 December 2020. This was because the Applicant’s continued presence in Australia was subject to a limitation as to time imposed by law. That limitation was found in the terms of the Bridging A Visa which governed his presence in Australia as at 29 December 2020. It was a temporary visa and did not give the Applicant a right of residence that was indefinite.
4. The character of a temporary visa fell for consideration in Li v So [2019] VSC 515. Croft J held that the holder of a temporary visa was a person whose presence in Australia was subject to a time limit imposed by law. His Honour, at [95] to [96], said:
“The plaintiff argues that s 30(2) of the Migration Act 1958 (Cth) provides three possible bases by which a temporary visa may be limited: the holder may remain during a specified period; or until a specified event happens; or while the holder has a specified status. Whilst the first of these three conditions may be said to impose a time limit, the second and third do not: the “specified event” may not happen, and the “specified status” may never change.
…..
I do not accept the plaintiff’s submission regarding the appropriate characterization of s 30(2)(a) of the Migration Act 1958 (Cth). I consider all three conditions contemplated by s 30(2)(a) render the holder of a temporary resident visa “a person whose present in Australia is subject to a time limit imposed by law”. Irrespective of the precise event which terminates the holder’s right to remain in Australia, all three conditions render the holder subject to a temporal limitation. Such is inherent in the very nature of a “temporary resident visa”.
1. The Tribunal has in a number of cases followed this reasoning, considering rights under certain kinds of temporary visas. In Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67, Currie SM said, at [45]-[46]:
“The only available proper and reasonable construction of the material … is that:
(1) there are two distinct classes of visa, namely the Class 309 visa and the Class 100 visa;
(2) only the Class 100 visa is a “permanent visa” within the meaning in section 30 of the Migration Act, because only that type of visa allows a person to remain in Australia indefinitely; and
(3) if a person holds a class 309 visa it is only upon conversion of that visa into a class 100 visa that the person becomes entitled to remain in Australia indefinitely and therefore to be holding a visa which is a “permanent visa “ within the meaning of section 30. The 309 Visa does allow the holder to remain in Australia, but only while the holder has a specified status (the holding of that visa) or until a specified event happens; namely until the Minister or the Department decides the holder’s permanent Partner (migrant) visa (subclass 100) application or the application is withdrawn
Mr Hashim held only a 309 Visa. He was not entitled to stay indefinitely in Australia”.
1. In van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283, Gatland SM said, considering rights under a bridging visa:
“ … the decisions in Li and Hashim are authorities for the proposition that Mr van der Zanden’s presence in Australia was subject to a limitation as to time – that limitation being when a specific event happened, being the determination or withdrawal of his visa application.
It is clear from its title and the bridging visa grant notice which was before the Tribunal in these proceedings that the bridging visa was provided to Mr van der Zanden while his application for a different visa was being determined. On a fair reading of the visa and the grant notice the visa was subject to a limitation as to time. The authorities which are set out above are consistent with this finding”.
1. The Tribunal has followed the approach taken in Hashim and van der Zanden in numerous other cases (Azam Mohammed & Sarah Azam v Chief Commissioner of State Revenue [2023] NSWCATAD 38; Shah v Chief Commissioner of State Revenue [2022] NSWCATAD 31; Guimaraes v Chief Commissioner of State Revenue [2024] NSWCATAD 95).
2. The visa presently in issue is a Bridging A Visa. The Bridging A Visa ends if the Applicant’s application for a Partner subclass 820 Visa is granted. The Bridging A Visa would also end after a specified period of time if the Applicant’s application for a Partner subclass 820 Visa was invalid, refused, withdrawn or otherwise had an outcome from a merits review decision. In other words, the Applicant’s presence in Australia was subject to a limitation as to time. That limitation was the time when a specific event happened, being the grant of a Partner subclass 820 visa or any of the other events described above. His Bridging A Visa, as matters transpired, came to end when he obtained his Partner subclass 820 Visa on 23 February 2021.
3. It follows that the Applicant was not ordinarily resident in Australia at the time the contract was made (29 December 2020), nor at the time the transfer of the Property occurred on completion of that contract (9 February 2021). In circumstances where between the dates of exchange and completion, a purchaser ceases to be a foreign person, a right to a refund of surcharge purchaser duty may be available under section 104ZF. These circumstances did not arise because as at the date of completion, the Applicant’s presence in Australia continued under a Bridging A Visa. He therefore remained a “foreign person” at the time of transfer.
4. The Applicant asked for a waiver of surcharge purchaser duty. The Applicant however did not make any submissions explaining why, under the Duties Act or the Administration Act, such a waiver should be granted. It is well established that there is no discretion under the Duties Act or the Administration Act for the Respondent or the Tribunal to grant an exemption from surcharge purchaser duty where the statutory criteria for levying that duty are met (Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238, at [30]; van der Zanden, at [43]).
5. As regards questions of fairness of the outcomes under a taxation law, the High Court in Commissioner of Taxation v Ryan (2001) 201 CLR 109 said:
“But the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any “policy” or “general intention” unless that policy or intention is to be found reflected in the provisions of the Act. Appeals to general notions of “fairness” or “justice” do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted.”
1. The Tribunal has applied this principle in numerous cases, confirming that there is no discretion to relieve a taxpayer of a tax liability on grounds of unfairness (Findlay v Chief Commissioner of State Revenue [2023] NSWCATAD 80, at [31] and the cases referred to there; Volpatti v Chief Commissioner of State Revenue [2007] NSWADT 222; Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261; Faytrouni v Chief Commissioner of State Revenue [2023] NSWCATAD 26, at [48]-[50]; see also Fleuren v Chief Commissioner of State Revenue [2024] NSWCATAD 177).
2. The consequence of the Applicant remaining a foreign person at the time the contract for the sale of the Property was executed and as at the date of the transfer of the Property at completion of that contract is that the assessment of surcharge purchaser duty stands and is affirmed.
Interest
1. In circumstances where a tax liability has not been discharged within the required three month period referred to at [28] above, a tax default arises. The Respondent submitted that the tax default in the present matter, allowed him to assess interest on the unpaid surcharge purchaser duty from that date until the surcharge purchaser duty was paid. Interest of $10,359.70 was assessed.
2. The Respondent can assess interest at both the market rate and the premium rate (s 21 and 22 of the Administration Act). He has done so. The Assessment included interest calculated at both rates.
3. The Respondent, however, has certain powers to remit interest (s 25 of the Administration Act). That power is discretionary. The Chief Commissioner may issue guidelines setting out how interest must be remitted. If guidelines are issued, interest must be remitted only in accordance with the guidelines.
4. The Respondent sets out in Practice Note CPN 024 (“CPN 024”) how he will exercise his powers of remission. Relevantly, it provides as follows:
“When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid.
The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only.
……..
Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to):
a. being honest and forthright when dealing with the Chief Commissioner
b. cooperation with the Chief Commissioner
c. the default is attributable to calculation errors
d. making diligent efforts to understand and comply with the law
e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer's obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits
f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements
g. applying any relevant revenue rulings in good faith
h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling
i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability
j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party.
Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration.
Note: Remission of the premium rate will only occur in special circumstances”.
1. Bathurst CJ in Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 (“Downer EDI”) considered the reach of the power in s 25 of the Administration Act to remit interest. His Honour did not think there was a limit on the power of the Chief Commissioner to remit interest in s 25 of the Administration Act. The Applicant relies on what the Court of Appeal said, in submitting that there are no limits on the power to remit interest, to support his claim for remission of interest.
2. Each of the components of interest assessed requires consideration. Those components are made up of interest assessed at the market rate and interest assessed at the premium rate. The rationale for the market rate of interest is described as follows in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 and why it should be waived only rarely, at [60]:
“In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank’s Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The Tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation”.
1. In circumstances where there was no fault on the part of the Respondent including contribution to any default, I find no grounds for remission of the market rate, absent any exceptional circumstances that could change the general position. On the evidence before the Tribunal, I find no such circumstances. It follows that the Respondent’s assessment of interest at the market rate should stand and is affirmed.
2. The purpose of the premium rate of interest differs from that of the market rate of interest. While the market rate compensates the Chief Commissioner for the time value of money that is paid late, the premium rate of interest extracts from the taxpayer something more. It is in the nature of a penalty (Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [443] per Emmett AJA). That difference informs the different approaches to remission of each kind of interest. While remission of interest assessed at the market rate should be rare, the circumstances in which interest assessed at the premium rate can be remitted are not as restrictive, even if they may need to be “special circumstances”.
3. The Respondent submitted that determining whether remission of the premium rate component is justified involved the question of whether or not the taxpayer took reasonable care to comply with his obligations. There is no express requirement in s 25 for considerations of “reasonable care” to be taken into account in determining whether to remit interest (unlike in the case of s 27 applying to the remission of penalties as discussed below). The Respondent’s guidelines, however, state that “taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements” will be a matter that goes to whether remission should be made.
4. That taking reasonable care is a relevant consideration in determining whether or not interest at the premium rate should be assessed, alongside various other considerations, is well accepted. What “reasonable care” to comply with taxation obligations means has been described as follows in Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227, following RVO Enterprises Pty Ltd ATF the R M O'Mara Family Trust v Chief Commissioner of State Revenue 2004 NSWADT 64, at [95]:
"In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other enquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law."
1. The relevance of taking and acting on advice was described as follows in Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215, at [113]:
"Reasonable care" is an objective test, but the particular (and subjective) circumstances relevant to the taxpayer are to be considered in applying the test. It requires that the taxpayer exercise the care that a reasonable person would be likely to have exercised in the circumstances of the taxpayer. See FCT v Traviati (2012) 205 FCR 136; [2012] FCA 546 per Middleton J at [36] and [70]. Taking advice on the operation of relevant provisions can amount to reasonable care for the purposes of s 27: The Smith's Snackfood Case at [96-100]. In my view, simply hiring or relying on an accountant to prepare returns or assuming that an adviser would review returns, is not of itself a "taking advice" on the operation of relevant provisions: cf Snowy Hydro Ltd v Commissioner of State Revenue [2010] VSC 221; (2010) 79 ATR 118 at [81-82]; on appeal, Commissioner of State Revenue (Vic) v Snowy Hydro Ltd [2012] VSCA 145 at [170], [171]”.
1. The decision of Richmond J in Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249 (“Golden Age”) is also relevant in considering remission of the premium rate of interest, having regard in particular to its penal character. His Honour held, in accordance with the decision in Downer EDI, that s 25 of the Administration Act, conferred on the Commissioner a broad discretionary power which is not subject to any limit. He sent on to say, at [99]-[104];
“Section 25 of the TAA, both before and after its re-enactment, confers on the Commissioner (and on the Court standing in the place of the Commissioner under s 101) a broad discretionary power which is not subject to any limit: Chief Commissioner of State Revenue v Downer EDI Engineer Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 at [151].
In the case of an unconfined discretionary power of this nature, the considerations which are relevant to its exercise are determined by reference to the subject matter, scope and purpose of the relevant statute, including the particular provision conferring the discretion: Sanctuary Lakes Pty Ltd v Commissioner of Taxation (2013) 212 FCR 483; [2013] FCAFC 50 at [227] per Griffiths J (Edmonds J agreeing); Giris Pty Ltd v Federal Commissioner of Taxation ([1969] HCA 5; 1969) 119 CLR 365 at 384 per Windeyer J.
In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19, the Appeal Panel observed at [60]-[61] that the market rate component is intended to compensate the Commissioner for not having the benefit of the tax payment from the time it was due, and so approximates the ordinary lending interest rates, whereas the premium rate is a form of penalty which operates as a disincentive to taxpayers to delay tax payments. The view that the premium component is penal in nature has been accepted in later decisions, see eg. Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [443] per Emmett AJA.
In my view it is necessary to approach the remission question by recognising that the premium component is penal in nature and serves the purpose of both imposing a penalty and deterring taxpayers from delaying payment of duty in what is essentially a self-assessment regime. Consequently, the culpability of the taxpayer in failing to pay the duty liability by the due date is an important matter in the exercise of the discretion.
………
In Incise Technologies, the Appeal Panel identified (reflecting a submission made by the Commissioner in that case) four cumulative criteria which are relevant to the exercise of the discretion under s 25:
(1) All principal tax that is owing and not in dispute has been fully paid;
(2) There has been cooperation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;
(3) Such cooperation has occurred prior to any investigation being commenced by the Commissioner or, at the very least, within a reasonable time after the request for information had been made by the Commissioner; and
(4) There has been no wilful default by the taxpayer in not paying tax on time”.
The Appeal Panel noted in Incise Technologies at [63] that the first of these criteria could be clarified to be “all principal tax that has been assessed and is not in dispute has been fully paid at the time of the request for remission of interest” and that while they were all relevant and appropriate matters for consideration, they were not exhaustive. That the four criteria are not exhaustive has been confirmed in subsequent cases, eg. Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [179] and Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 at [105]- [106]”.
1. The Court in Golden Age affirms the approach to remission set out in the earlier cases and concludes that it was appropriate to remit the premium component in full, in circumstances where all four of the above criteria were satisfied. The taxpayer was found to have taken reasonable care. The taxpayer had sought advice from a firm of solicitors and acted upon that advice. Non-payment of tax had occurred as a result of an oversight by the advisor.
2. The Respondent’s submission is that no remission of premium interest should occur. His submission is that the mere fact that the Applicant engaged a conveyancer to act for him on the purchase of the property is not sufficient to establish that he took reasonable care. In the Respondent’s view, the Applicant had to establish that he provided instructions about his residency status, sought advice in respect of surcharge purchaser duty and relied on any such advice that was provided.
3. The Respondent submitted that on the evidence this had not happened. The evidence establishes that the Applicant stated in the Purchaser/Transferee Declaration, provided to the Respondent that he had a subclass 820 visa. He also described his rights of residency as “indefinite”. Factually, this was clearly not the case at the time the Purchaser/Transferee Declaration was made. The evidence also establishes that the Applicant told the conveyancer that he was in the process of applying for a Partner subclass 820 Visa and that he understood from his migration agent that it was “granted or was about to issue”.
4. However, merely believing that a subclass 820 visa had been “granted or was about to issue” is not a sufficient basis for concluding that the visa had actually been issued. That visa did not issue until some 7 weeks after the date of the Purchaser/Transferee Declaration.
5. Whether the erroneous statement made in the Purchaser/Transferee Declaration was a result of the provision of wrong instructions as to the factual background or some other error is not clear on the face of the evidence. Whatever the circumstances, that statement was wrong. As a result, I am unable to find, on the balance of probabilities, that the Applicant has discharged the onus of proof to show that reasonable care was taken. I do not consider that the Applicant’s reliance on professional advice, of itself, amounts to taking reasonable care, in circumstances where a wrong statement was made to the Respondent on a matter that was fundamental to assessment of duty. I am able to distinguish the facts of Golden Age from those of the present case on the basis that in Golden Age, no factually erroneous information was provided to the Respondent.
6. The conveyancers accepted that there was a failure and assume full responsibility for that failure. To the extent that the lack of reasonable care was attributable to the conveyancers, I do not think that these can be circumstances assisting the Applicant. Parliament could not have intended that simply leaving matters in the hands of advisors could, of itself, be sufficient to establish that reasonable care was taken and allow a taxpayer to escape a liability for interest, especially where there has been a clear failure to make correct disclosure to the Respondent.
7. Where reasonable care was not exercised, this is sufficient grounds for not remitting in full the interest assessed at the premium rate. In these circumstances, I do not need to consider other relevant grounds for remission (see [54] above).
8. The Respondent therefore was acting within his powers in assessing premium interest, subject to the matters considered at [77]-[92] below as to quantum.
Penalties
1. The Respondent’s power to assess penalty tax arises under s 26 of the Administration Act. It is imposed in addition to interest. The Administration Act expressly provides that the imposition or remission of interest is not relevant to the imposition or remission of penalty (s 33(2); see also s 25(4)).
2. The amount of penalty payable for a tax default is relevantly set at a default rate of 25% of the amount of tax unpaid (s 27).
3. The Respondent has the power to make certain variations to the amount of penalty tax. He may increase the amount of penalty tax in certain circumstances based on the degree of culpability of the taxpayer that are not presently relevant. The Respondent in addition has the power to reduce the amount of penalty tax by 20% if, after the Respondent informs the taxpayer that an investigation relating to the taxpayer is to be carried out and before it is completed, the taxpayer discloses to the Respondent, in writing, sufficient information to enable the nature and extent of the tax default to be determined (s 29).
4. A penalty of $9,200 was imposed on the Assessment in addition to interest. The penalty rate applied was 20%. The reduction in penalty from the default rate of 25%, according to the Respondent’s submission, reflected the fact that the Applicants cooperated with the Respondent during the investigation.
5. The Respondent may determine that no penalty tax is payable in respect of a tax default, if satisfied that the taxpayer or a person acting on behalf of the taxpayer, took “reasonable care” to comply with the taxation law (s 27(3)). The Respondent did not use his powers to remit penalty tax in its entirety. The Applicant considers that he should have done so, submitting that the power had no relevant limits. He also relied on the fact that he had sought specialist advice.
6. The Court of Appeal in Downer EDI considered that the power of remission was not limited either expressly or by necessary implication by the mandatory reductions required by sections 28 and 29 of the Administration Act. Bathurst CJ said:
“ …. it does not seem to me that the power in s 33 of the TAA to remit penalty tax “in such circumstances as the Chief Commissioner considers appropriate” is limited either expressly or by necessary implication by the mandatory reductions required by ss 28 and 29. These mandatory reductions are a relevant matter for the Commissioner to take into account in considering whether to exercise the power to remit in s 33 but they do not limit that power.
As the Chief Commissioner pointed out, in Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue Ward CJ in Eq stated at [301] that except in special circumstances, the general discretion under s 33 should not be exercised beyond the limits in ss 27(3) and 29 when the circumstances giving rise to a remission under s 27(3) of the TAA had not been made out. However that was a matter of discretion not power”.
1. The Respondent decided not to remit the entire penalty because in the Respondent submission, the taxpayer had not taken reasonable care. The Respondent, in particular, noted that he could take into account both whether the taxpayer or an advisor for the taxpayer took reasonable care, by reason of s 27(3).
2. The Respondent relied on the following statement made in O'Neill Tyres Gateshead Pty Ltd & Cessnock Tyres Pty Ltd v Chief Commissioner of State Revenue [2020] NSWCATAD 314, at [56]-[57]:
“Underlying the provisions of section 27 of the TAA is a self-evident policy of promoting compliance with taxation laws by the imposition of penalty tax for failure to comply. That the penalty tax can be increased under section 27(2) for intentional disregard by the taxpayer, or decreased under section 27(3) in order to recognise reasonable care to comply, supports the policy objective by giving the Commissioner the “stick” of penalty tax, to sanction intentional non-compliance, and the “carrot” of remission, to promote sincere and careful (albeit unsuccessful) attempts at compliance.
For taxpayers to escape penalty tax by the simple expedient of delegating to professional advisers management of their payroll tax affairs would undermine this policy. It is precisely to exclude such an anomalous outcome that section 27(3)(a) includes the reference to persons “.. acting on behalf of the taxpayer”. The purpose is clear: the compliance sins of the delegate are to be visited on the taxpayer. There is obviously an element of judgment to be exercised in individual cases, in deciding whether a particular case is one of wholesale delegation or merely one where the taxpayer professional advice in order to assist in compliance. In the case of Cessnock and Bayrond, the Tribunal is satisfied that it is the former rather than the latter”.
1. The Respondent relied on the evidence of one of the conveyancers who “conceded that he did not take reasonable care”, acknowledging that he was aware that the Applicant’s residency status is a paramount factor when deciding whether surcharge purchaser duty is applicable. He acknowledged that he failed to properly review the Applicant’s visa and adequately advise the Applicant that he would be subject to surcharge purchaser duty. The Respondent further submitted that there were no special circumstances warranting a remission of the penalty tax of the kind contemplated in Downer EDI.
2. The question of whether or not reasonable care within the meaning of s 27 has or has not been taken is a question of law to be determined by the Tribunal. The Tribunal must do so on the basis of the evidence placed before it and not on an opinion proffered by a witness as to whether or not reasonable care was taken. Any concession by the conveyancer that he did not take reasonable care therefore does not determine the matter.
3. Nevertheless, on the evidence before the Tribunal, I find that the taxpayer or a person acting on behalf of the taxpayer did not take reasonable care. It has been accepted by the Applicant that the statement made in the Purchaser/Transferee Declaration that the Applicant was not a foreign person was incorrect. That incorrect statement resulted in surcharge purchaser duty not being assessed as it should have been. In light of the matters set out at [60] above regarding that incorrect statement and its consequences, I find that the Applicant has not proved, on the balance of probabilities, that reasonable care was taken. Accordingly, the Respondent’s assessment of penalty tax is affirmed.
4. Whether the failure to take reasonable care was by the taxpayer or the conveyancers acting on his behalf should not in the circumstances of the case, affect the refusal to exercise discretion to remit penalties (Touma v Chief Commissioner of State Revenue [2012] NSWADT 2, at [50]).
5. The Respondent submitted that he had reduced the penalty from 25% to 20% because the Applicants cooperated with the Respondent during the investigation. I find that the Respondent was correct in his decision to do so.
Delays in investigation and issue of Assessment
1. The assessment of transfer duty at the general rate was made on 30 January 2021. Following investigation by the Respondent, the Assessment of surcharge purchaser duty, interest and penalty tax did not issue until 30 August 2023. The period between the dates of the two assessments was two and a half years.
2. The Applicant submitted that delays on the part of the Respondent in issuing the Assessment are grounds for remission of the interest levied at the premium rate and penalty. He relied on the decision in Molyneux and Vermeesch v Chief Commissioner of State Revenue [2011] NSWADT 117. In that case, the premium component and penalty tax were remitted in full. The reasons for the remission included a long delay before the issue of an assessment.
3. The Respondent, on the facts of that matter, relied on an alleged non-disclosure of facts to justify his assessment. The dispute in that case was over matters of valuation. The position of the Respondent was that the provision by the taxpayer of a particular valuation that he questioned was a failure to fully disclose relevant “facts”. The Administrative Decisions Tribunal found that what was in dispute were opinions as to value and not facts. There was therefore no situation of a non-disclosure of “facts”.
4. The circumstances of Molyneaux can be distinguished from the facts of the present case. That was a case where a dispute over matters of opinion, namely valuation, had arisen. Remission was allowed in full where there had been no failure to disclose facts. In the present case, there has been an incorrect statement of fact as to the residency status of the Applicant. This was a matter of fundamental importance that determined whether or not surcharge purchaser duty was assessable. As a result, an assessment of interest at the premium rate and penalty are appropriate, on the basis of there being a failure to disclose relevant facts.
5. However, this does not end the matter. Interest assessed at the premium rate is levied at the rate of 8% annually. Because it runs annually, the amount of that interest will increase over time. Time taken on the part of the Respondent in an investigation and issuing an assessment could, as a result, increase the amount of interest assessed at the premium rate. This has occurred in the present case.
6. The Tribunal cannot and should not prescribe timeframes within which the Respondent must investigate a matter and reach an assessment. It is accepted that the time the Respondent needs may vary depending on a great many factors, including the complexity of the matter. However, where an increase in the amount of premium interest is the result of time taken by the Respondent in undertaking an investigation and issuing an assessment, I do not think that the correct outcome is for the Applicant to bear that cost, other than to the extent that he has been responsible for the delays. There is no evidence that the Applicant is responsible for the relevant delay.
7. The Respondent is already compensated for the time value of money where the relevant surcharge purchaser duty was not paid on time, by assessment of interest at the market rate. If delay in assessing tax will result in increases in the interest calculated at the market rate, that increase merely has the effect of maintaining the time value of the underpaid tax. There appears to be no reason, however, why the Respondent should automatically be able to collect premium interest, to the extent that accrual of interest at the premium rate is the result of delay, where the Applicant is not at fault for the delay. I do not think Parliament intended that interest at the premium rate should necessarily run indefinitely as a result of the time taken by the Respondent to reach an assessment of tax, where the taxpayer neither has control over the time taken nor is at fault for delay. Having regard to the penal nature of interest assessed at the premium rate, I accept that there may be instances where premium interest could be assessed regardless of delay by the Respondent, if the degree of culpability of the taxpayer warrants such an outcome. I do not think that this is such a case.
8. The evidence of the Applicant and the conveyancers, in my opinion, establishes that there was no wilful non-compliance. There was, however, a failure to take reasonable care. These circumstances assist me in reaching the conclusion that a remission of part of the interest assessed at the premium rate is warranted, if s 25 allows partial remission.
9. Section 25 of the Administration Act provides that the Respondent “may remit interest”. Whether this power of remission allows only remission of the entirety of the interest assessed or may permit part of the interest to be remitted remains to be considered. Section 25 as it currently stands came into force from 1 February 2024 as a result of amendments made by the Treasury and Revenue Legislation Amendment Act 2023 (NSW) (“Amending Act”). The former version of the provision in force before the amendments came into effect, expressly allowed for remission of interest “by any amount”. Section 25 in the form it took from 1 February 2024 no longer contains these words.
10. The explanatory notes accompanying the Amending Act said that the amendment to s 25 “re-enacts a power of the Chief Commissioner to remit interest and includes a new power for the Chief Commissioner to issue guidelines about how interest must be remitted”. There is nothing in the explanatory notes to indicate that the scope of s 25 was to be narrowed so that it no longer allowed the remission of interest “by any amount” and only allowed for remission of interest in its entirety. Indeed, if that was the intention, s 25, as it stands from 1 February 2024, would require an “all or nothing” approach, where remission of both interest assessed at the premium rate and at the market rate, is the only way in which the power of remission could be used. It could be expected that if a material change of this nature were intended, some statement to this effect may have been made in the explanatory notes.
11. The fact that the explanatory notes simply refer to an intention to “re-enact” s 25, in my opinion, indicates that there was no intention to limit the scope of the power to remit interest so that it could only be remitted in its entirety. Richmond J in Golden Age, considering the ambit of s 25 after the amendment, indicated that he “proceeded on the basis that there is no relevant change at the present time in the nature of the discretion conferred by that section”, other than in one respect which is not presently relevant, although his Honour did not make his remarks in relation to the matter at issue, namely whether interest may be remitted in part only.
12. Understood in its ordinary meaning as “money paid regularly at a particular rate for the use of money lent” (Oxford Dictionary Online), each amount so accruing may be understood to be ”interest”, as well as the total balance owing at a particular time. So understood, I am of the opinion that the powers of remission of “interest” may apply to parts of the total accrued, such as interest accrued during a particular period, or to the entire amount of interest accrued.
13. CPN 024 says that the Respondent may “remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only” (emphasis added). In other words, the Respondent says that he may relevantly remit interest “by any amount”, rather only being able to remit all of it. The date of CPN 024 (June 2022) precedes the effective date of the amendments to s 25 made by the Amending Act. However, it is described as being “current” as at the present date. For the reasons set out above, I am in agreement with the Respondent’s position as set out in CPN 024.
14. The Court in Golden Age, says that the factors it and the earlier cases set out going to the powers of remission are not exhaustive. Delays and the circumstances of those delays, that impact on the amount of interest assessed, in my opinion, can be taken into account as a relevant matter. However, “special circumstances” are required to relieve a taxpayer from obligations to pay interest at the premium rate. The Applicant is not relieved of liability in the present case and remains liable to pay interest assessed at the premium rate but should not be liable for the full amount assessed for the reasons given above.
15. The Assessment does not identify the specific amount of interest assessed at the premium rate. As a result, I am unable to quantify the amount to be remitted. The amount of interest assessed at the premium rate to be remitted should be 75% of the amount assessed at the premium rate. I consider that a remission of this order fairly takes into account the impact of delays for which the Applicant was not responsible.
16. The Respondent submits that the cause of delay was wrong information being provided by the Applicant. I accept that this was the cause of an assessment of duty that wrongly excluded surcharge purchaser duty. However, delays that subsequently ensued in investigating the matter and reaching an assessment were, in my opinion, within the control of the Respondent and not the Applicant. While the Respondent may need time to carry out his duties to collect tax and may be compensated for the time cost of late payment thought an assessment of interest at the market rate, I do not think that the Applicant should bear the entire costs arising from delays over which it has no control. For the reasons stated at [82]-[83] above, this is not a case where such an outcome can be justified.
17. Both interest assessed at the premium rate and penalties are penal in nature. However, the amount of penalty, unlike interest at the premium rate, does not vary depending on the time taken to investigate the matter and reach an assessment. Delay therefore should not be a matter, on the facts of the case, that goes to impugning the Respondent’s assessment of penalty. That assessment stands for the reasons set out at [73] – [75] above.
Conclusions
1. For the reasons set out above:
1. the assessment of surcharge purchaser duty is affirmed
2. the assessment of penalty is affirmed
3. the assessment of interest at the market rate is affirmed
4. the decision to assess interest at the premium rate is set aside and remitted to Respondent for determination in accordance with these reasons.
Orders
1. The Assessment is revoked and remitted to the Respondent for determination in accordance with this decision.
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 10,047 |
nsw_caselaw:190ec5fb559efd0f9971740b | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-26 00:00:00 | R v Parkes (No 3) [2024] NSWSC 910 | https://www.caselaw.nsw.gov.au/decision/190ec5fb559efd0f9971740b | 2024-08-04T23:52:18.429718+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: R v Parkes (No 3) [2024] NSWSC 910
Hearing dates: 16 July 2024
Date of orders: 26 July 2024
Decision date: 26 July 2024
Jurisdiction: Common Law
Before: N Adams J
Decision: For the offence of murder the offender is sentenced to:
(1) Imprisonment for a term of 31 years to commence on 14 February 2022 and expire on 13 February 2053.
(2) The non-parole period is 21 years and 6 months to commence on 14 February 2022 and expire on 13 August 2043. The offender will be eligible for parole on 13 August 2043.
I note that the effective total head sentence (having regard to the sentence already served) from 14 August 2020 is 32 years and 6 months and the effective non-parole period is 23 years.
(3) Pursuant to s 25C of the Crimes (High Risk Offenders) Act 2006 (NSW), the offender is advised of the existence of that Act and of its application to the offence of which he has been convicted. His legal representatives are requested to advise him of the implications of that Act to him.
Catchwords: SENTENCE – MURDER – offender found guilty at trial – joint criminal enterprise – where not possible to find offender committed physical act causing death beyond reasonable doubt or that co-offender did on balance of probabilities – no remorse – no discount for assistance – totality – reasonable prospect of rehabilitation – hardship in custody related to former OMCG membership – custody throughout COVID-19 pandemic – mental health – special circumstances
Legislation Cited: Crimes (High Risk Offenders) Act 2006 (NSW), s 25C
Crimes (Sentencing Procedure) Act 1999 (NSW), ss 30(E)(1), s 30E(3), 44(2), s 54B, 61(1)
Crimes Act 1914 (Cth), ss 18(1)(a), 20(1)(b)
Cases Cited: Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37
Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29
Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25
Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39
Park v R [2019] NSWCCA 105
R v Henry (1999) 46 NSWLR 346; [1999] NSWCCA 111
R v Isaacs (1997) 41 NSWLR 374
R v Simpson (2001) 53 NSWLR 704; [2001] NSWCCA 534
The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54
Category: Sentence
Parties: Rex (Crown)
Benjamin Troy Parkes (Offender)
Representation: Counsel:
D Robinson (Crown)
N Steel (Offender)
Solicitors:
Solicitor for Public Prosecutions (NSW) (Crown)
Legal Aid Commission of New South Wales (Offender)
File Number(s): 2021/95786
Publication restriction: Nil.
REMARKS ON SENTENCE
1. Najma Carroll was 33 years old when she was murdered. As a child she was gifted academically, attending the opportunity class at Woollahra Public School and gaining admission to Sydney Girls High School where she attained an UAI of 92.6. She excelled at sport and gained admission to the University of Sydney to study physiotherapy. Despite her obvious successes, all was not what it seemed.
2. When Ms Carroll was in her early 20s, she disclosed to her mother that she had been subjected to severe emotional abuse by a male family member for years as a teenager which had left her traumatised. She was at that time consuming such large quantities of Nurofen Plus to dull her emotional pain that she developed bleeding stomach ulcers. When she entered her first drug rehabilitation centre she was introduced to heroin by an older man. She went on to struggle with heroin addiction for the rest of her short life.
3. In late June 2020, Ms Carroll met Benjamin Parkes, then aged 44 years old, and Robert Sloan (also known as “Pockets”), then aged 57 years old. Both men were residing at the Hunts Hotel in Casula. They were both drug dealers and users with criminal histories. Both also had previous associations with Outlaw Motor Cycle Gangs (“OMCG”). Less than three weeks after meeting these men, Ms Carroll was killed by one or the other of them pursuant to a planned agreement to do so.
4. On 29 January 2024, Mr Sloan pleaded guilty to Ms Carroll’s murder on the basis of being part of a joint criminal enterprise with Mr Parkes to kill her. He will be sentenced on 2 August 2024. Mr Parkes pleaded not guilty to Ms Carroll’s murder. His trial commenced before me and a jury on 19 February 2024. On 3 April 2024, the jury returned a verdict of guilty. Mr Parkes now stands to be sentenced for Mr Carroll’s murder.
5. It is necessary for me to determine the facts upon which Mr Parkes is to be sentenced consistent with the verdict of the jury. [1] I may not take facts into account in a way adverse to the interests of Mr Parkes unless they are established beyond reasonable doubt, whilst it is sufficient if facts that are favourable to him are established on the balance of probabilities. [2] If I am unable to find facts to either of those standards I do not propose to do so. [3]
6. In addition to determining the facts in relation to which Mr Parkes is to be sentenced, I am required to identify and consider all other factors relevant to the sentence and ultimately make a value judgment as to what is the appropriate sentence given all the factors in the case. [4]
7. The maximum penalty for the offence of murder is life imprisonment. [5] The standard non-parole period (“SNPP”) for murder is 20 years imprisonment. [6] The Crown did not contend that this is a matter in which I would impose the maximum penalty of life imprisonment.
Facts
1. The Crown case at trial comprised a significant body of evidence against Mr Parkes. It included CCTV footage, telephone intercepts, surveillance device recordings, direct evidence from witnesses including of admissions, bank and hotel records, and DNA and other forensic evidence. The CCTV evidence in particular clearly established that Mr Parkes and Mr Sloan were the last two people to see the deceased alive, that the three of them travelled to remote bushland near Menai at 3:30am in the morning of 14 July 2020 in two vehicles, that the two men left without Ms Carroll or her vehicle and that her burned body and vehicle were found in that area two weeks later.
2. The sole issue at trial was whether Mr Parkes was part of a joint criminal enterprise with Mr Sloan to kill Ms Carroll or whether, as he contended, he was taken by surprise by Mr Sloan’s actions and was simply an accessory after the fact to her murder. Mr Parkes’ defence relied almost solely on his own statements to others, police and the jury. For reasons that will become obvious, I am ultimately unable to accept any assertion made by Mr Parkes unless it is supported by other evidence.
3. Having considered the evidence at trial, I propose to sentence Mr Parkes on the following facts.
4. As at May 2020, Ms Carroll was unemployed and staying with friends. COVID-19 lockdown measures were in place. The Federal Government had recently implemented policies aimed at assisting persons who were struggling financially due to the lockdown, including permitting persons to withdraw up to $10,000 from their superannuation fund twice. Ms Carroll took advantage of this policy.
5. On 1 May 2020, Ms Carroll withdrew $10,000 from her superannuation fund. On 1 June 2020, she rented a white 2018 Hyundai from “No Birds Car Rental” at Artarmon. The vehicle was due to be returned on 8 June 2020 but on that day a man known to her took the vehicle and never returned it. She kept renewing the lease weekly.
6. On 26 June 2020, Ms Carroll used some of her super funds to purchase a blue 2000 Mercedes SUV [7] (“the Mercedes”) for $3,700. Later that night, she checked in to the Hunts Hotel at Casula to reside for a while. She was allocated room number 313. She met Mr Parkes for the first time shortly after checking in to the hotel. Mr Parkes had commenced residing in room 261 of the Hunts Hotel on 17 June 2020.
7. On 29 June 2020, three days after she checked into the hotel, Mr Parkes drove Ms Carroll to the St George Bank at Carnes Hill where she withdrew an additional $8,500 in cash from her super fund. As I will later explain, this event is relevant to the motive for her murder and I am satisfied she gave this money to Mr Parkes.
8. The following day, on 30 June 2020, Mr Sloan checked in to the Hunts Hotel. He was allocated room number 263 which was two doors down from Mr Parkes. Almost immediately, the two men became close associates. Mr Parkes was at that time supplying crystal methylamphetamine (otherwise known as “ice”) and other illicit drugs. His upline supplier, Witness H, [8] resided at 54A Rosford Street, Smithfield. Mr Sloan began supplying prohibited drugs for Mr Parkes and Mr Parkes paid for Mr Sloan’s hotel room. On 1 July 2020, Ms Carroll moved from room 313 downstairs to room 259 so all three of them resided in the same corridor.
9. There were CCTV cameras in the corridor where Ms Carroll, Mr Parkes and Mr Sloan were staying which recorded the doorways to the three rooms and the comings and goings of the three of them. Their three hotel rooms were on the ground floor with balconies extending into the carpark, near to the ground. The carpark was also covered by a number of CCTV cameras such that the comings and goings of the three individuals via their balconies, either from or into the carpark or from or into each other’s rooms, was also recorded. Accordingly, the CCTV footage provided the jury with a comprehensive picture of the movements of these three people and their interactions during this time.
10. In the following two weeks until her death on 14 July, Ms Carroll spent time with Mr Parkes and Mr Sloan. There was regular phone contact among the three of them and they were frequently seen in each other’s company. Her name was entered into Mr Parkes’ mobile telephone as “Naj driver”. She drove Mr Sloan around when he was selling drugs for Mr Parkes.
11. The Crown case was that both Mr Sloan and Ms Carroll worked for Mr Parkes. Mr Parkes denied this and instead contended that he sold them drugs and they had their own separate drug business which he had nothing to do with. For reasons I will later explain, I am satisfied that Mr Parkes was the principal in the drug business and that Mr Sloan, and to a lesser extent Ms Carroll, worked for him.
12. On 3 July 2020, Ms Carroll and Mr Sloan drove to Fairfield Police Station. She informed police that her hire car had been stolen soon after she rented it, but she had delayed reporting it to police due to fear of being intimidated by the thief. Whilst at the police station, the rental company tracked the vehicle to the Sydney CBD and subsequently attended the location and took possession of the vehicle. Mr Sloan did not go into the station, but I am satisfied that he knew that Ms Carroll had reported the actions of someone she knew to police.
9 July 2020
1. Witness H gave evidence that Mr Parkes would purchase large amounts of ice from him for on-sale. They had a good relationship and Mr Parkes referred to him as “Vos” as he was Vietnamese and his “boss”. On 9 July 2020, Mr Parkes and Witness H left Sydney to drive to Western Australia for the purpose of supplying prohibited drugs to a client of Witness H’s.
2. Mr Parkes asked if he could borrow Ms Carroll’s vehicle for the trip. His evidence at trial was that it was because his Toyota HiLux was too closely associated with him, and he wished to avoid attention. Whilst he was away, Mr Sloan stayed in Mr Parkes’ room (to save money) and he and Ms Carroll continued to sell prohibited drugs and spend time together.
3. At 12:47am on 9 July 2020, Ms Carroll was captured by CCTV exiting her room. I am satisfied that no injuries can be seen on her face at that time. At 3:14am, Mr Sloan was captured by the carpark CCTV cameras climbing over the balcony of his room and entering Ms Carroll’s room via her balcony. At 4:04am, Mr Sloan was captured by the hallway CCTV cameras exiting Ms Carroll’s room and returning to his own room.
4. The next time Ms Carroll is captured by CCTV cameras leaving her room, at 9:49 am on 9 July, there is a visible bruise on her right eye. Ms Carroll later sent a picture of this injury to Mr Parkes by text message, and it was his evidence at trial that she told him that Mr Sloan had awoken her in the early hours of 9 July and punched her in the face. Despite this, on 9 July 2020, Mr Sloan and Ms Carroll were seen shopping together. I am satisfied based on the CCTV, the photo, the subsequent telephone records of calls on 10 July 2020 from Ms Carroll to Mr Parkes, and Mr Parkes’ evidence that Mr Sloan assaulted Ms Carroll that night. The motive for doing so remains unclear.
5. Meanwhile Mr Parkes and Witness H were still on their way to Western Australia. On 10 July 2020, shortly before 2:00am, they arrived at the South Australian border. They were stopped by police and unable to proceed further due to recently implemented COVID-19 travel restrictions. Police searched the Mercedes and located $17,380 in cash but did not locate the drugs said by Mr Parkes and Witness H to be hidden beneath the centre console. Police seized the cash. The police wore body worn cameras. Police observed a baseball bat in the back seat and a yellow 20L plastic jerry can in the boot of the vehicle during the search. When Mr Parkes and Witness H were refused entry to South Australia, they drove back to Sydney. Witness H gave evidence that Mr Parkes was very angry and upset about losing the money. I accept that evidence. I do not accept Mr Parkes’ claim that he was not concerned about losing that amount of money.
The plan to kill Ms Carroll
1. In the early hours of 11 July 2020, Mr Parkes and Witness H arrived back in Sydney. At around 11:30am, following directions by Mr Parkes, Mr Sloan caught a taxi from outside the Hunts Hotel to Bringelly where he met up with Witness H and Mr Parkes. Witness H’s memory of that meeting is that Mr Parkes wanted to teach Mr Sloan a lesson for assaulting Ms Carroll. [9] Mr Parkes’ explanation for this meeting is that he and Witness H had decided that the Mercedes would have to be burned as it may implicate him and Witness H in drug dealing. He suggested that it was Witness H’s idea. Witness H disputed that evidence. I reject Mr Parkes’ account that this meeting was to look for places to burn Ms Carroll’s Mercedes. It was denied by Witness H, and, in any event, Mr Parkes’ case that he only ever intended to burn Ms Carroll’s car (and not kill her) was clearly rejected by the jury given the verdict.
2. At 11:58am, Ms Carroll telephoned Mr Parkes. That would appear to be the last outgoing message or call made by her on her mobile telephone.
3. At 12:50pm, on 11 July, Ms Carroll paid $120 to extend her stay at the hotel. This was captured on CCTV. Clearly, as at that time it was her intention to continue to reside at the hotel.
4. At about 4:00pm Mr Sloan returned to the Hunts Hotel driving Ms Carroll’s Mercedes. The CCTV footage depicts him unpacking that vehicle including removing a baseball bat and the yellow jerry can and placing them on the balcony to Mr Parkes’ room.
5. About an hour later, Mr Parkes returned to the Hunts Hotel driving his Toyota HiLux. He is depicted walking over to Ms Carroll and having a conversation with her. He then enters her room via the external balcony.
6. Mr Sloan subsequently attended the reception and checked in for a 7-night stay. He was allocated room 254, in the same hallway as the rooms of Mr Parkes and Ms Carroll.
7. At about 6:12pm, Mr Parkes knocked on Ms Carroll’s door and spoke with her. She went back into her room. He waited for her in the corridor and three minutes later he knocked on her door again. She opened the door and appeared to leave her room in a hurry with an overnight bag, a small black bag and items of clothing. She was wearing white socks with no shoes which she was carrying under her arm. Mr Parkes placed a “Do not disturb” sign on Ms Carroll’s door. They both then entered Mr Parkes’ room.
8. Ms Carroll is later depicted exiting Mr Parkes’ room at 7:27pm. That was the last time she was at the Hunts Hotel, and it is the last image of her alive. She took an overnight bag and a small plastic bag with her but left her suitcase and the remainder of her belongings behind in her room. The clothes she is wearing in the CCTV footage are the same that she was wearing when her body was discovered. She also left her Mercedes at the hotel.
9. At about 7:30pm, Mr Parkes and Ms Carroll left the Hunts Hotel in his Toyota HiLux. They had dinner with Witness H and his girlfriend in Cabramatta. After dinner, Mr Parkes drove Ms Carroll to Witness H’s house. He asked Witness H and Witness K (Witness H’s flatmate) if she could stay there in their converted garage for a while and if they could keep an eye on her. They agreed.
10. Mr Parkes remained at Witness H’s residence until 3.30am the next morning when he returned to the Hunts Hotel alone. He gave evidence at trial that he left Ms Carroll there because she took heroin and was too drugged for him to take her with him when he left as he had to do two or three drug deals on his way home. This was proved to be a lie during cross-examination as the CCTV shows he went straight home. Nor does it explain why she took an overnight bag with her. Further, neither Witness K nor Witness H suggested that Ms Carroll was too drug affected to leave. Their evidence is that she stayed because Mr Parkes asked whether she could. Mr Parkes also suggested another reason that she stayed there was to avoid Mr Sloan. This is also difficult to accept given that Mr Parkes took Mr Sloan to Witness H’s house the following day, presumably to buy more drugs to sell.
11. The Crown case, which I accept, is that Mr Parkes removed Ms Carroll from the Hunts Hotel that night to isolate her because he had already planned to kill her. I am satisfied of this beyond reasonable doubt.
12. Up until 11 July 2020, there had been frequent phone activity among the three of them. After leaving Ms Carroll at Witness H’s, there was no telephone contact between Ms Carroll and either of Mr Parkes or Mr Sloan ever again, although there was a missed call from Mr Parkes to her telephone number that day. It seems inconceivable that Ms Carroll would not have used her phone during this two to three day period if she had it with her. Although Witness K gave evidence of seeing her on a phone during that time, this is inconsistent with the phone records. Given that it was Mr Parkes who drove her there, I am satisfied that Mr Parkes must have taken it from her when he left.
Sunday 12 July 2020
1. The following morning, CCTV recorded Mr Sloan walking past Ms Carroll’s room and noticing that the cleaners were outside her room. He looks concerned. He walks a few steps before stopping, turning around, and looking in the direction of the door to Ms Carroll’s room. I accept that by that stage Mr Sloan knew that Ms Carroll had not returned to the hotel and that fact was to be concealed.
2. At about 12:20pm, Mr Sloan paid cash to renew the three rooms: for himself Ms Parkes and Ms Carroll. I am satisfied that he did this at the direction of Mr Parkes to obscure the fact that Ms Carroll had been removed from the hotel.
3. The CCTV footage depicted a great deal of people coming and going from Mr Parkes room that day. He had an escort friend of his, Parisah Khandchar, in his room that morning at which time his ex-wife paid a surprise visit with their three children. The CCTV depicts Ms Khandchar leaving and Mr Sloan to be assisting her to leave without Mr Parkes’ family running into her. Mr Parkes’ ex-wife then left the children with Mr Parkes. She later returns. She then leaves with one of the children and returns with take away food. At all times, Mr Sloan is close by and assisting Mr Parkes when required. At times during the course of this day, Mr Sloan is seen to do Mr Parkes’ laundry, drive Ms Khandchar’s car so as to disguise her presence at the hotel, assist Mr Parkes’ ex-wife and son into the hallway with the food and to carry the son’s bag. The CCTV footage shows that Mr Sloan was doing odd jobs for Mr Parkes throughout the day.
4. At 6:05pm, Mr Parkes is depicted escorting his ex-wife and three children from the premises down the corridor when he stops outside Ms Carroll’s room. He then takes them in there for about 15 minutes until 6.20pm. When they leave, Mr Parkes’ ex-wife is seen to be carrying a pink speaker or radio that clearly belonged to Ms Carroll.
5. At trial, Mr Parkes provided an elaborate explanation for the removal of Ms Carroll’s speaker. He alleged that his daughter requested that item and so he asked another person to buy it for him for his daughter. He alleged that this person provided him with a bag with second-hand designer items, including the pink speaker, that Ms Carroll had seen the speaker in his room and borrowed it and that he was simply taking his property back. I reject that account.
6. I am satisfied that Mr Parkes’ removal of Ms Carroll’s pink speaker is further evidence that he knew she would never return to the hotel as he had already planned to kill her.
7. Whilst Mr Parkes was in the room with family, Mr Sloan entered briefly at 6.10pm and then returned after Mr Parkes’ family had gone. The two men remained in Ms Carroll’s room from 6:26pm until 6:50pm. At that time, Mr Sloan is seen to climb over her balcony and walk in the direction of Mr Parkes’ room carrying a bag. He returns to her room 30 seconds later without the bag. This is further evidence of property being removed from the deceased’s room.
8. The two men left the Hunts Hotel together at about 9:05pm and drove in Mr Parkes’ HiLux to Witness H’s residence. They arrived there at 10:56pm and remained there for under two hours before they returned to the Hunts Hotel together in the HiLux just after midnight.
Monday 13 July 2020
1. At about 1:30am, Mr Parkes returned to Witness H’s residence in his HiLux. He remained there until about 8:15am in the morning.
2. At about 8:55am, Mr Sloan touched the “Do Not Disturb” sign on the door handle to Ms Carroll’s room. At about 9:15am and 9:35am, he paid for his, Mr Parkes’ and Mr Carroll’s room for another night in cash.
3. Mr Parkes returned to the Hunts Hotel at 2:32pm that afternoon. At about 4:20pm, he left again. He arrived at Witness H’s house at about 5:20pm.
4. Mr Sloan left the hotel in Ms Carroll’s Mercedes at about 3:00pm. He returned at 8:04pm and reversed the Mercedes so that the boot was closest to Ms Carroll’s balcony. He is later seen to enter Ms Carroll’s hotel room via the balcony and remove all of her remaining possessions. He drove away in her vehicle at about 8:30pm. I am satisfied that he did so by arrangement with Mr Parkes as part of the joint criminal enterprise to kill Ms Carroll.
5. Shortly after 9:00pm, Mr Parkes and Witness H left Witness H’s residence at Smithfield and travelled to Potts Point. They attended the Vegas Hotel. Witness H gave evidence that he was meeting someone to purchase a large quantity of drugs from him and he wanted Mr Parkes there for his protection. [10] Mr Parkes agreed that was why he was there. They arrived at the Vegas Hotel at 10:00pm. Prior to that, at 9:35pm, Mr Sloan telephoned Mr Parkes and they spoke for about 2 minutes and 38 seconds.
6. Meanwhile, at 10:56pm, Mr Sloan and a young male, Witness A, returned to the Hunts Hotel together in the Mercedes. They had just met. They left again at 11:27pm and returned at 12:30am.
Tuesday 14 July 2020
1. At 1:17am, Mr Parkes telephoned Mr Sloan who did not answer. The CCTV footage shows he was in Kings Cross with Witness H. He telephoned Mr Sloan again at 1:18am and twice at 1:33am. All calls were unanswered. Witness H gave evidence, and Mr Parkes agreed, that the person they were meeting to purchase drugs from was late.
2. At 1:42am, Mr Parkes telephoned Mr Sloan. The duration of this call was 2 minutes and 54 seconds. Mr Parkes’ phone connected to a cell tower in Macleay Street, Kings Cross. Mr Parkes can be seen on CCTV walking out of the Vegas Hotel at Potts Point talking on his phone. Mr Sloan was in his room at the Hunts Hotel at the time. Witness A was also present. At the conclusion of the call from Mr Parkes, Mr Sloan told Witness A that he had to go. Witness A offered to accompany Mr Sloan. Mr Sloan declined the offer.
3. I am satisfied that this conversation concerned collecting Ms Carroll from the Witness H’s garage and driving her to the bushland in Menai where they intended to kill her.
4. At 1:48am, Mr Parkes called Witness K (Witness H’s flatmate). The duration of the call was 2 minutes and 45 seconds. Mr Parkes was still in Kings Cross. Witness K gave evidence that he received this call from Mr Parkes at “around 9 o'clock at night, just before midnight” but I accept that this is an error in memory and his evidence pertained to the 1:48am call. Witness K’s evidence was that during this phone call Mr Parkes asked him “if the girl was still there”, to “just make her stay at the house, don’t let her leave”, that “Pockets would be coming to pick up the girl” [11] and to move Mr Parkes’ car from the driveway onto the street. [12] At about 1:55am, Witness K moved a car from the driveway so that Mr Sloan could reverse up the driveway and collect Ms Carroll.
5. I pause here to note that Witness K gave evidence that Ms Carroll stayed in the converted garage during her time at their home and that she took some heroin during her stay. On one occasion she ate a steak dinner with them. There is no suggestion that Witness K or Witness H forced her to remain there. Although the inference is that she stayed there because Mr Parkes told her to. There is no evidence of this.
6. At 2:00am, Mr Sloan left the Hunts Hotel driving Ms Carroll’s Mercedes. He was alone. At 2:29am, he arrived at Witness H’s residence. He reversed the vehicle into the driveway. Mr Sloan called Witness K and asked him to open the garage door. Witness K used the remote to open the garage door. Ms Carroll got into the car. Witness K gave evidence that Mr Sloan called him again and told him to close the garage door. Mr Sloan then drove Ms Carroll’s car towards Sandy Point. I pause again to note that CCTV footage of Witness H’s home depicted Mr Sloan collecting Ms Carroll. Although that footage was not available by the time of the trial, Witness H gave evidence of seeing this.
7. At 2:47am, the Mercedes was captured on the Memorial Avenue, Liverpool (at the intersection of Bathurst Street) heading in a generally easterly direction.
8. At about 2:59am, Mr Sloan and Ms Carroll arrived at the entrance to secluded bushland which could be accessed from Heathcote Road, Sandy Point. It was an area well-known to Mr Parkes. A number of Fairfield City Council garbage trucks travelled down that road. They all had CCTV cameras on their vehicles. Ms Carroll’s Mercedes was captured in that parked position between 3:11am and 3:36am.
9. Mr Sloan made a number of telephone calls during that time. I am satisfied that he was waiting for Mr Parkes. At 2:59am, Mr Sloan called Mr Parkes twice. Both calls were not answered. There is no evidence as to what Ms Carroll was doing during this time, what she must have been thinking or whether she felt free to go.
10. At 3:10am, Mr Parkes left Potts Point driving his HiLux. Witness H gave evidence that Mr Parkes left before the transaction was finished which meant that Witness H had to find his own way home. He was annoyed by this.
11. At 3:16am, Mr Sloan called Mr Parkes. The duration of the call was 43 seconds.
12. At about 3.32am, CCTV footage captured Mr Parkes stopping at a service station at Moorebank to purchase 12 litres of high-octane 98 petrol. The HiLux he was driving was diesel-powered. He used the same yellow jerry can he had with him when he went to South Australia. I am satisfied that he purchased this petrol to burn Ms Carroll’s Mercedes and possibly her body as well. Mr Parkes then exited the service station onto Heathcote Road and drove across the M5 overpass in the direction of Sandy Point.
13. Mr Parkes arrived at Sandy Point and met up with Mr Sloan who had been waiting for him with Ms Carroll in her Mercedes for about half an hour.
14. After Mr Parkes arrived at about 3:40am, both cars drove into the bushland which was accessed via a track from Heathcote Road. This is established from the CCTV footage which shows that the vehicles were no longer seen in that position after that time.
15. There will always remain uncertainty as to precisely what happened next. It is clear that Ms Carroll was killed shortly thereafter and that the only other people present at the time were Mr Parkes and Mr Sloan, but neither Mr Sloan nor Mr Parkes admit that they did the physical acts which caused her death.
16. Mr Parkes’ evidence at trial was largely consistent with what he said in his ERISP. [13] He had made arrangements with Mr Sloan to burn the Mercedes in the White Rock area and he purchased the petrol in order to do that. His evidence was that when he drove up Heathcote Road, he saw Mr Sloan on the other side of the mound that runs along the road. He drove straight over the top of the mound in his HiLux and flashed his high beams to let Mr Sloan that it was him. They drove through the bush with him keeping a gap of about 25 metres. When Mr Sloan stopped the car at the end of the clearway, he stopped 20 to 25 metres behind him. He did not want to park too close because he knew they would be burning the car.
17. Mr Parkes’ evidence was that he had no idea Ms Carroll would be with Mr Sloan.
18. Despite the fact that it was pitch black Mr Parkes’ version was that he could tell that something “erratic” was happening in the car. The first time he realised there was someone with Mr Sloan was when Mr Sloan opened the door on his side, and he could see that somebody was in the passenger seat. He described how Mr Sloan got out of the car with a metal baseball bat in his hand and ran towards the back of the car while Ms Carroll did the same on the passenger side. Mr Parkes had by then turned on his high beams and could see them. He described that when Ms Carroll got around the back she appeared “almost like a dear in headlights…like stunned”, that she put her both hands up in the air, and that Mr Sloan then hit her in the head three times in quick succession. He described how Ms Carroll collapsed and fell backwards at which time Mr Sloan hit her “erratically” for a further 10 to 15 times in the head whilst standing “directly over the top of her” and “screaming obscenities, calling her a dog”.
19. Mr Parkes’s version continued that Mr Sloan then threw the baseball bat towards the driver’s side, grabbed Ms Carroll by both wrists and dragged her behind the Mercedes out of his direct sight. As Mr Sloan was dragging Ms Carroll around, Mr Parkes opened his driver’s side door and stood on the side step looking over his roof top. Mr Parkes’ evidence was that Mr Sloan then went to the rear of Mr Parkes’ car to get the jerry can with petrol which he then poured on Ms Carroll’s body and started the fire. His evidence was that he knew what Mr Sloan was doing, without being able to see it.
20. Mr Parkes’ version was that Mr Sloan then put the jerry can in the Mercedes, picked up the bat and started to drive away from the body. He followed him down the track into the bush for another 500 metres when Mr Sloan stopped the car and poured petrol over it with Mr Parkes staying back 20 to 25 metres. When Mr Sloan could not find a lighter Mr Parkes “jumped out” of his car and lit the Mercedes with his cigarette lighter. They then left in Mr Parkes’ car.
21. The jury verdict shows that this account was clearly rejected. It is not difficult to see why. There were a number of problems with it.
22. First, on Mr Parkes’ version he did not get out of his car prior to Ms Carroll’s death, and she was assaulted in the Mercedes as soon as both cars stopped. Three smoked cigarette butts were later found in the bushland only metres from where Ms Carroll’s body was found. All three butts were on the ground next to each other. Ms Carroll’s DNA was linked to one of those cigarette butts. This evidence establishes that she must have got out of the car at some time before her death and either smoked three cigarettes herself or smoked one or more with Mr Sloan and/or Mr Parkes.
23. Secondly, there is an inherent implausibility in Mr Parkes’ account that he was able to see the events he described take place in the middle of the night while remaining in his own vehicle.
24. Thirdly, Mr Parkes gave some answers in cross-examination at trial for the first time that were clearly recent inventions. He gave other answers inconsistent with his ERISP. These matters impacted on his credibility.
25. Fourthly, Mr Parkes told a number of lies to police. In his evidence in court, he admitted to doing so. Some of the lies were relied upon by the Crown at trial as consciousness of guilt. This also impacted on his credibility.
26. Fifthly, it beggars belief that Mr Parkes would abandon Witness H in the middle of a high level drug deal and help Mr Sloan burn a car. The burning of a car could wait but the murder could not, given that the intended victim had already been lured to the scene.
27. Sixthly, I am satisfied that the motive for Ms Carroll’s death can be attributed to Mr Parkes and that he was senior to Mr Sloan in the drug business. These are further factors casting doubt on Mr Parkes’ account.
28. Finally, as I will explain shortly, Mr Parkes was recorded concocting what he would say to police when interviewed by them.
29. I completely reject Mr Parkes’ version of events. I am unable to be satisfied beyond reasonable doubt who out of Mr Sloan or Mr Parkes physically killed Ms Carroll. Nor am I able to be satisfied on the balance of probabilities that Mr Sloan physically killed Ms Carroll. That is because the only evidence to establish this comes from Mr Parkes and I do not consider him to be a witness of truth. What is clear is that Ms Carroll was beaten to death. Her body was set alight in a crevice behind a large rock. Testing of the soil where her body was found revealed that there was petrol in the soil. Her Mercedes was driven a distance away and burned out as well. Although she was probably killed with the baseball bat, there was no direct evidence of that beside Mr Parkes’ account.
Events after the murder
1. After killing Ms Carroll, both men travelled back to the Hunts Hotel in Mr Parkes’ HiLux. They arrived back at 4:59am.
2. As soon as he arrived at the Hunts Hotel, Mr Parkes contacted an escort/girlfriend, Witness D, and arranged for her to attend the Hunts Hotel. When she arrived at the hotel Mr Parkes arranged for her to assist him by cleaning the clothes and shoes they were wearing at the time of the murder.
3. Witness A had remained in Mr Sloan’s room that night. He gave evidence that Mr Parkes entered Mr Sloan’s room and gave directions as to the disposal of evidence. At some stage, Mr Parkes told Witness A that he was the “boss of Pockets”. [14] He picked up the clothes and shoes from the floor in Mr Sloan’s room and placed them in the bag. He went with Mr Parkes to wash his car which was covered in mud at a nearby service station that day.
4. Later in the day on 14 July 2020, Mr Parkes, Mr Sloan and Witness A attended Witness H’s home. Witness A stayed in the car. Witness H gave evidence that during this interaction, and after Mr Sloan had left, Mr Parkes told him that Mr Sloan had killed Ms Carroll with a baseball bat. [15] Witness H gave evidence that the following exchange took place:
“Parkes said ‘He was shaking and he is a wuss.’ I said, ‘Do you mean you guys killed her?’ Parkes said, ‘Yeah.’ When he said this he smiled.’”
1. Witness H gave evidence that Mr Parkes told him that Ms Carroll “knew too much” about his drug supply business. Witness H gave evidence that Mr Parkes said that the murder was to protect Witness H. I accept this evidence.
2. Later, on 15 July 2020, Mr Parkes and Witness A met three men from Wollongong who had travelled up to purchase drugs at a service station. At one point on their way to the Hunts Hotel, Mr Parkes stopped near a charity clothing bin and took the bag containing the clothing removed by Witness A from Mr Sloan’s room and placed it in the charity bin. Witness A gave evidence that as they were turning out of the service station Mr Parkes grabbed “a pencil case or a make-up case and launched it out the window” saying to Witness A, “That’s how you get shit done”. [16] One of the men from Wollongong, Mr McLaughlin, also gave evidence that as they followed Mr Parkes’ vehicle, he saw Mr Parkes chuck something out the window.
3. On 18 July 2020, Mr Sloan checked out of the Hunts Hotel. On 20 July 2020, Mr Parkes checked out of the Hunts Hotel.
4. After the murder, both men continued to supply prohibited drugs together, but their relationship started to break down. Mr Parkes stayed with Witness H for some time and then at his ex-partner’s property at Rossmore.
5. Ms Carroll’s body was found by a bushwalker on 29 July 2020. Her burned out Mercedes was located nearby. Her head, jaw bone and first cervical vertebrae were found skeletonised in 62 fragments. Her injuries were consistent with blunt force trauma. There were three possible impact sites identified at the left side of the frontal bone, the right temporal bone and the left parietal bone. The lack of soot deposition in the airways and a lack of elevated carbon monoxide levels indicated that she was already deceased when her body was burnt by fire. A tattoo on her back had been cut off from her skin.
6. On 3 August 2020, police organised an “emu line” to search the area where Ms Carroll’s body was found for further evidence. This was a very large and visible operation. On that day, Mr Parkes drove to the general area of the crime scene with a girlfriend and took a “selfie” in his Toyota HiLux driving on dirt tracks in the area. This photo was later found time stamped on his phone. Although, Mr Parkes gave evidence at his trial that his presence in the area was a coincidence, I do not accept that to be the case.
7. In early August 2020, police obtained telecommunications intercept warrants to monitor the communication of Mr Parkes and Mr Sloan.
8. Around 7 August 2020, the relationship between Mr Parkes and Mr Sloan deteriorated further. A number of text messages and intercepts were tendered and played at the trial. Mr Parkes contended that the relationship broke down because Mr Sloan knew that Mr Parkes was a witness to the murder he committed. Having listened to the relevant recordings, I am satisfied that the relationship broke down over the drug supply business and Mr Parkes believing that Mr Sloan was disrespecting him.
9. A number of intercepted calls were also played at trial between Mr Parkes and other purchasers or runners of his. For example, on 14 August 2020 Mr Parkes described himself as “a witness” to Witness J and told him that Mr Sloan was “a fuckin’ loose cannon” and “a psychopath” and that he watched him “kill a twenty-something year old girl…with a baseball bat.” Similarly, he told Adam Hellman that Mr Sloan was “a dead set paranoid cunt …almost a schizo” and that he had “seen [Mr Sloan] do something that could put … him away for twenty years. I watched him do it, bro. I’m the only witness to it.”
10. These recordings were relied upon by Mr Parkes to support the finding that Mr Sloan was the person who physically killed Ms Carroll. As I have already explained, I am ultimately unable to accept anything Mr Parkes said unless it was supported by other evidence.
11. Mr Parkes spoke about the murder to a number of people during this time. Mr McLaughlin gave evidence that sometime in August he attended Mr Parkes’ Rossmore property and that Mr Parkes told him that a girl had “fucked up” and that Mr Parkes and Mr Sloan had to “get rid of her.” Mr Parkes told Mr McLaughlin that the girl had been “hit in the back of the head with a baseball bat” by Mr Sloan. [17]
12. On 14 August 2020, Mr Parkes was arrested in relation to an unrelated matter. He was refused bail and has remained in custody since that time.
Admissions by Mr Parkes in custody
1. Sometime after entering custody Mr Parkes arranged for a person he had met, Witness I, with whom he had mutual friends, to share a cell with him. Unfortunately for Mr Parkes, Witness I contacted police offering to assist them in relation to any admissions made by Mr Parkes about the murder. Police spoke to Witness I on 29 September 2020 but they did not take him up on his offer because they did not consider him to be a reliable witness. Despite this, police obtained a surveillance device warrant which was placed in the cell. Unbeknown to both men, their conversations from 1 October 2020 to 10 December 2020 were recorded.
2. The recorded conversations reveal that the two men decided to concoct a false story for police, namely that they had known each other for a while and that Witness I was staying at the Hunts Hotel at the time of the murder. [18] They concocted a false story for Mr Parkes to tell police that after he and Mr Sloan returned to the Hunts Hotel on the morning of 4 July 2020, Witness I heard Mr Sloan threaten Mr Parkes in relation to him being a witness to the murder committed solely by Mr Sloan. This false account could be easily disproved by the CCTV footage and hotel records.
3. During this time, Mr Parkes spoke with his mother by telephone. As with all gaol calls, it was recorded. His mother (who was the registered owner of the HiLux Mr Parkes was driving on the night of the murder) told Mr Parkes that police had CCTV footage of him purchasing petrol in the early hours of 14 July. After that, Mr Parkes and Witness I are heard discussing what to say to police about that. Shortly after that, Mr Parkes came up with the story that he only went there to burn the car. He also came up with the explanation that it was connected with the stop at the South Australian border. That conversation went like this:
“BP: … So, I have to somehow explain to them, yeah, why I knew to get from Kings Cross to Heathcote. So I been racking my brain, thinking what do I explain to them. The best I can come up with is; I was stopped in her car on the border, where they searched it.”
1. There were numerous other such conversations including one in which Mr Parkes poses the question to Witness I:
“Yeah, how did I know she was going to be there?”
Mr Parkes’ ERISP
1. Mr Parkes was interviewed by police on 7 December 2020. He told police that he was an eyewitness to the murder of Ms Carroll, and that he had been wanting to talk to police for a while to share the information that he had. He told police that he witnessed the murder through the windscreen of his blue HiLux, with his high beams on. He gave an account similar to the one he gave at trial. He gave it in considerable detail. He also provided the false account about Witness I.
2. Mr Parkes told police that Mr Sloan was a business associate, and that Ms Carroll was a friend, or an associate. He told them that Ms Carroll was “technically” the driver for Mr Sloan. He also told police that Mr Sloan was aware that Ms Carroll made a statement to police about a car she had rented that had been stolen. He said that following this report Mr Sloan was “not a fan of hers anymore” and “used to call her all sorts of names” including “dog”. Notwithstanding that change in attitude, Mr Parkes told police that Mr Sloan still required Ms Carroll to drive him around and complete errands.
3. Mr Parkes had told police that he was worried about the details of Ms Carroll’s Mercedes being put into the computer and concluded that the car needed to be disposed of with some urgency. He told police that the disposal of the car was Witness H’s idea. Mr Parkes said that sometime in between him getting back from South Australia and at the time of the murder, Mr Parkes and Mr Sloan had agreed to burn the car at White Rock, because it was a place that they both knew.
4. Police were not able to complete this interview with Mr Parkes as he discontinued it. He subsequently declined to take part in a second ERISP on 10 December 2020. He was charged with the murder on 10 April 2021.
Motive
1. Two motives for the murder were identified by the Crown.
2. The first motive relied upon the evidence of Witness H that Mr Parkes told him that Ms Carroll was killed because she knew too much about Witness H’s drug business. Tied in with this motive was a concern that if she had already reported the theft of her hire car to police, she would have no compunction in reporting their drug dealing to police.
3. The second motive turns on who Ms Carroll gave the $8,500 she withdrew from her super account to. The Crown case was that Ms Carroll gave that money to Mr Parkes and he did not want to give it back, especially after losing over $17,000 at the South Australian border. As I have already noted, Mr Parkes accepted that the money was used to buy drugs from Witness H but stated that that was an arrangement between Mr Sloan and Ms Carroll and had nothing to do with him.
4. I am satisfied that Ms Carroll agreed to invest in Mr Parkes’ drug business to make some money. Witness H gave evidence that Mr Parkes complained to him that Ms Carroll wanted her money back, knew too much about the drug dealing and had gone to the police about a stolen car. His evidence was that Mr Parkes wanted to keep the money, especially after losing money at the border.
5. Motive is not an element of the offence of murder. There was no requirement for the Crown to establish one. Despite this, I am satisfied that the motive would appear to be a combination of the two motives identified by the Crown. I am also satisfied that at the time of the murder, Mr Sloan worked for Mr Parkes and looked up to him and that both men were users of high amounts of ice. The CCTV footage shows that both of them rarely slept during this time. In that criminal milieu, Mr Parkes decided that Ms Carroll had to be killed and recruited Mr Sloan to assist him.
Proceedings on sentence
1. At the proceedings on sentence on 16 July 2024, the Crown tendered the Crown bundle which included Mr Parkes’ criminal history and his custodial record, and a victim impact statement from Ms Carroll’s mother, Anne Carroll.
2. Mr Parkes relied on the report of Alison Cullen, psychologist, dated 12 July 2024, the affidavit of his sister, Amber Louise Hunter affirmed on 12 July 2024, and the affidavit of Alen Sahinovic, the offender’s solicitor, annexing a copy of the offender’s Corrective Services New South Wales file.
3. The offender did not give evidence on sentence nor call any witnesses.
4. Both counsel for the Crown and Mr Parkes provided helpful written submissions on sentence which were supplemented orally in court on 16 July 2024.
Finding of objective seriousness
1. The Crown submitted that the offending falls well above the middle of the range of objective seriousness but that it does not fall within the terms of s 61(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) (“Sentencing Act”) that mandates imposition of a life sentence. In particular, the Crown relied upon the following factors: that the intention was to kill Ms Carroll, that there was a degree of planning, the motive, and the circumstances of Ms Carroll’s death. There is some evidence that a baseball bat was used, given that there was a baseball bat in the car.
2. Although Mr Parkes conceded that the offending falls in the middle of the range of objective seriousness, he disputed that it could be assessed as being more serious than that. It was submitted that the factors usually associated with such a finding were not present. Those factors included “gratuitous cruelty, contract killings, causing death in a way likely to cause excruciating pain or agony or particularly doing so in order that the process of dying occurs over an extended period or where the victim might have had undue time to contemplate the terror of what was coming.” [19]
3. Although it is not mandatory to position the objective seriousness relevance of an offence along any notional range, it seems to me that there is benefit in doing so in murder cases given the maximum penalty of life, the SNPP of 20 years, and the lengthy sentence to be imposed.
4. I would assess this murder as being above the mid-range of objective seriousness but not substantially so. The murder was planned, occurred in company as part of a joint criminal enterprise and in the context of criminal activity, namely drug dealing. It also included a financial motive. I am satisfied that Mr Parkes agreed to isolate the deceased for days before her death. She was then taken to remote bushland where she had no chance of escape and bashed to death. It is not known which of the two offenders removed her identifying tattoo with a knife. I have not found that to be an aggravating factor. Rather, it shows the steps taken to cover the murder.
5. The fact that I am to sentence Mr Parkes on the basis of being part of a joint criminal enterprise to murder Ms Carroll, rather than as a principal offender, does not reduce its seriousness. I am satisfied that on the facts in this case the murder is not less serious because I cannot be satisfied who physically killed Ms Carroll. Even had I been satisfied on the balance of probabilities that Mr Sloan had killed her, that does not reduce Mr Parkes’ criminality given that I am satisfied beyond reasonable doubt that it was Mr Parkes’ idea to kill Ms Carroll in the first place for the reasons I have already stated.
Victim impact statement
1. The Crown tendered a victim impact statement from Ms Carroll’s mother, Anne Carroll, which she read to the court. Section 30E(1) of the Sentencing Act provides that when a victim impact statement is tendered in relation to an offence, the court must consider this statement and may make any comment on the statement that the court considers appropriate. The Crown did not rely on s 30E(3) of the Sentencing Act.
2. Ms Carroll’s mother described her shock at first hearing of her daughter’s tragic death. Her life has changed dramatically since the day police contacted her to inform her that the badly burned body of a young woman found in remote bushland was her daughter.
3. Ms Carroll’s mother described how unimaginable and difficult it was for her burying her daughter and how this abnormal and unforeseen event has turned her life “upside down” and it would never again “right itself”. She told the court how the “horrific murder of a son or daughter is not something that one ‘gets over’ but that “one gradually learns to integrate the emotional pain into one’s much-changed life and cope as best one can.” She described how since her daughter’s death she is no longer able to work and support herself independently and is in receipt of a disability support pension. She suffers from complex grief disorder the symptoms of which include sleep and appetite disturbances, nightmares, difficulty with concentration, fatigue, forgetfulness, and anxiety.
4. Ms Carroll’s mother described how since her daughter’s murder she lives a life of solitude and prefers to stay at home as she is constantly on guard and fearful of sudden movements of people, loud noises, or erratic behaviour around her.
5. She described how her daughter was a high achiever until the grip of drug addiction and how her daughter’s attempts to overcome that addiction resulted in periods where she was able to have a steady employment and “enjoy [a] loving relationship”, but her addiction made her vulnerable and she placed her trust in the wrong men.
6. As is often observed in sentencing matters involving the death of a person, no sentence that I might impose could adequately reflect the loss of a dear family member. Nor can any sentence possibly assuage the grief of those who were close to the deceased. On behalf of the Court, I extend my sincere condolences to the family and friends of Najma Carroll.
Mr Parkes’ subjective case
1. Mr Parkes’ subjective case was largely put before the court through Ms Cullen’s report. Mr Parkes provided her with a detailed account of his childhood and private life up until his arrest in 2020.
2. Mr Parkes was born in 1978 and is currently 46 years old. He is one of two children. His sister Amber Hunter provided an affidavit in support of her brother. Although he had a bad relationship with her as a child and teenager, they have reconciled as adults. His parents separated when he was 11 years old. He described his father as “absent” and “a pretty heavy alcoholic”.
3. After his parents separated, Mr Parkes lived with his mother and his sister lived with his father. He told Ms Cullen that he witnessed verbal domestic violence between his parents and between his father and stepmother. Both of his parents re-partnered. He argued with his mother’s new partner, who moved in when he turned 14 and during his HSC year he had to live with his father.
4. Many years later, Mr Parkes’ father moved in with him so that Mr Parkes could care for him, and he died soon after in August 2015 from “cardiac issues and emphysema” at the age of 62 or 63. They had reconciled by the time of his death.
5. Mr Parkes completed the HSC and worked in a variety of jobs including as an apprentice mechanic and auto electrician, in roadworks and traffic control, and factory work. He then transitioned into the trucking industry. He described being terminated or quitting jobs “more than 10 times”. He described having personality clashes with co-workers. He has relied on Centrelink on occasions. He did not return to the workforce after he was released from custody in 2018. Rather, he took drugs and lived a transient lifestyle.
6. Mr Parkes has five children. His oldest child is a son from his first significant relationship when he was 22 years old. Mr Parkes cared for him until the child turned 13 and chose to live with his mother. When he was 27 years old, Mr Parkes met his wife and they had three children together who are now aged 15, 13 and 11 years old.
7. Shortly after the birth of his first daughter Mr Parkes joined the Rebels OMCG Bringelly chapter. He and his “best mate” opened a chapter in Ingleburn. He was “right hand” to the president. He claims to have only been a member for four years. His father had hung out with a different OMCG but never joined and Mr Parkes stated he joined the Rebels to “stick it up my dad”. He explained that he also joined because of his discontent with his wife and the dysfunction of his marriage.
8. Mr Parkes’ relationship with his wife ended in 2015 because she wanted him to change and “be someone he wasn’t”. He described it as becoming “very toxic”. They separated after his father died.
9. Shortly before his arrest in 2020, Mr Parkes was in a brief relationship with a woman who had a child to him in January 2021. Mr Parkes did not discover he was the father until 18 months later. He has not had contact with the child for the past 12 months and intends to cease contact with her as he believes that would be less detrimental to her.
10. Mr Parkes has not had any contact with any of his five children since being incarcerated in 2020. He stated it is too painful to have his children in his mind, so he does not have photos of them in his cell.
Drug and alcohol history
1. Mr Parkes does not drink and reported a strong aversion to alcohol intoxication because of his parents. He commenced smoking cannabis at age 16 and continued until he was 32 years old. He built a tolerance where he would not get “stoned” from his $100 a day habit. He used cocaine daily when he was a member of the Rebels OMCG. When he ceased work, he moved to “ice” as it was cheaper.
2. Following his father’s death in 2015, Mr Parkes’ ice use escalated. From then on, he used 3.5g a day. He described that when he uses ice, “I could do anything. I didn’t feel like a different person, I was more sharp and to the point.” He maintained he was able to eat and sleep whilst using methylamphetamine but recognised he could drop 25kg (in weight) a month.
Criminal history
1. The applicant’s criminal offending commenced in 2012 with offences of driving and not giving particulars in relation to property damage. He was fined. In 2014, he was fined for speeding, not producing his licence and resisting or hindering police. In 2016, he received a s 9 bond in relation to stalking/intimidation and contravening an apprehended violence order (“AVO”). This was in relation to his ex-wife. He was placed under supervision for a period of two years.
2. In 2017, Mr Parkes received his first term of imprisonment of 14 months with a non-parole period of 4 months in relation to a further contravention of his AVO against his ex-wife and using a carriage service to threaten serious harm. In relation to the later offences, he was released on a recognisance [20] for a period of 10 months. He was also called up in relation to the s 9 bond he received in 2016 and placed on a further s 9 bond with a further period of supervision of 15 months.
3. In 2018, he was sentenced to an aggregate sentence of imprisonment for 2 years commencing on 1 June 2018 and concluding on 31 May 2020 with a non-parole period of 12 months concluding on 31 May 2019 in relation to threatening a person with intent to influence a witness, and stalk or intimidate with intent to cause fear or physical harm. These offences pertained to a neighbour. He was also called up in relation to the breaches of his earlier s 9 bonds and sentenced to a current custodial term in relation to them.
4. In 2020, Mr Parkes was fined in relation to being in custody of a knife in a public place and traffic offences. He was also disqualified from driving.
5. Relevantly to the commencement date of the sentence I am required to impose, in 2021, whilst on remand for the murder charge, Mr Parkes was sentenced in relation to a robbery in company to imprisonment of 3 years and 6 months commencing on 14 August 2020 and concluding on 13 February 2024 with a non-parole period of 2 years and 4 months concluding on 13 December 2022. In 2022, he was sentenced in relation to supply prohibited drug charges. He received a fixed term of 5 months imprisonment to commence on 14 August 2020 and expire on 13 January 2021. He was sentenced for other less serious charges at that time for which he received a community correction order.
6. The Crown submitted that his record shows he has a history of violence towards women. I do not propose to aggravate the sentence on that account, but it was common ground that his record means that he is disentitled to any leniency.
Mental health
1. Mr Parkes was diagnosed with Attention Deficit Hyperactivity Disorder (ADHD) as a child for which he was medicated. He ceased medication when he was 18 as the understanding at that time was that it was a childhood disorder. He has not been medicated or otherwise treated for it since then. Ms Cullen performed tests on Mr Parkes and confirmed that he meets the diagnostic criteria for a combined presentation of ADHD (both inattention and hyperactivity/impulsivity), a persistent depressive disorder and a severe amphetamine type stimulant use disorder. She also noted that his criminal history suggests an antisocial personality disorder.
2. Ms Cullen further noted that Mr Parkes experienced a chronology of accumulative losses from 2014. While she found that none of these traumas would satisfy the criteria for Post-traumatic Stress Disorder, she indicated that the accumulation of these stressors qualified him for “Other Specified Trauma-and-Stressor Disorder”.
3. Ms Cullen observed that, notwithstanding that Mr Parkes maintains that he is not responsible for the murder, his co-morbid underlying mental health issues undoubtedly influenced his decision making with respect to his plan to burn the victim’s car. The difficulty with this finding by Ms Cullen is that the jury rejected Mr Parkes version that he only ever intended to burn Ms Carroll’s car.
4. It was not contended on Mr Parkes’ behalf that there is any causal connection between any disorders suffered by Mr Parkes and his offending behaviour. [21] It was, however, submitted that, based on Ms Cullen’s report, I would find that Mr Parkes will have significant hardships in the custodial setting due to his conditions. I accept that submission.
5. As for his physical health, Mr Parkes acknowledges being overweight and that there is a history of cardiac issues in his family. Despite this, he told Ms Cullen that he is “healthier in gaol”.
Hardships in custody
1. In addition to Mr Parkes suffering more onerous conditions in custody due to his ADHD and the other matters identified by Ms Cullen, there are two further bases upon which I find that his sentence should be ameliorated due to additional hardships in custody.
2. First, Mr Parkes has been threatened and assaulted in custody due to his former membership of the Rebels OMCG. Material tendered on his behalf shows that he has been moved around and threatened everywhere he has been placed. The Governor has stated that he is “out of placement options”. Documents produced by Corrective Services NSW confirm that he is a very high risk of threat and that he will be assaulted if put in the main prison.
3. Secondly, he was arrested on 14 August 2020 and remained in custody throughout most of the COVID-19 pandemic. It is well known that inmates suffered more onerous conditions of custody than usual during that period, and this is a further basis upon which to ameliorate his sentence.
Moral culpability
1. Although the detailed report of Ms Cullen identified certain aspects of Mr Parkes childhood as being unhappy, it was understandably not suggested that the Bugmy [22] principles apply. Similarly, as stated above, it was not suggested that his moral culpability should be reduced for any of the matters stated by Ms Cullen in her report nor was it suggested that Mr Parkes’ moral culpability should be reduced for any other reason.
2. It seems to me that one of the main explanations for Mr Parkes’ conduct was the very high amounts of ice he was using at the time of the offence in the context of serious drug dealing in which anti-social behaviour appears to have been normalised. It is well-established that drug addiction is not a mitigating factor [23] capable of reducing an offender’s moral culpability.
Remorse
1. The Crown submitted that no finding of remorse could be made given Mr Parkes’ sustained denial of guilt and absence of any evidence of the acceptance of responsibility. It was further submitted that his expression of remorse to the psychologist is based on a “false premise” that he played no role in Ms Carroll’s murder and was only an accessory after the fact to the murder.
2. I am willing to accept that Mr Parkes feels sorry for Ms Carroll’s family, as most people unconnected with her death would, but I am not satisfied that he is remorseful for his conduct because he continues to deny any involvement in the killing beyond being an accessory after the fact.
Prospects for rehabilitation/Risk of re-offending
1. The Crown submitted that no positive finding could be made about Mr Parkes’ prospects of rehabilitation given his denial of guilt. Although as a matter of general principle an offender with no contrition often lacks insufficient insight to achieve positive rehabilitation, other factors must also be considered in assessing this factor.
2. Ms Cullen performed the LSI-R actuarial assessment tool and Mr Parkes was placed just within the “Low-Moderate Risk” needs with approximately 31% chance of recidivism. His score was heavily loaded on past static factors.
3. Mr Parkes is now 48 years old. He will be receiving a lengthy prison sentence and will be significantly older by the time he is released. That is a matter that will reduce his prospect of reoffending. Further, Ms Cullen described him as having insight into his criminogenic needs. She opined that should his ADHD and co-morbid trauma and depression be treated there are no identifiable factors that would otherwise destabilise his prospects for rehabilitation.
4. Although any prediction as to Mr Parkes’ prospects of rehabilitation must be guarded, it seems to me that, considering his age upon release, if he was able to remain drug-free, he does have reasonable prospects of rehabilitation.
5. I note that Ms Cullen observed that “weight can confidently be given to his self-disclosures, as he does not typically manage his impression to others”. I had the opportunity to observe Mr Parkes give evidence. I also observed him in his ERISP and listened to numerous recordings of him speaking with others. Whether or not Mr Parkes typically manages his impression to others, he certainly did not give a good impression as a witness. Overall, I am prepared to accept his account he gave to Ms Cullen and the Crown does not contend otherwise.
Totality
1. Mr Parkes has been in custody since 14 August 2020 (3 years 11 months and 12 days), on remand for murder since 7 April 2021 (3 years, 3 months and 19 days), and in custody solely in relation to this offence since 13 February 2024 (5 months and 13 days).
2. As I have already indicated, he served other sentences from 14 August 2020 until 12 February 2024. Although these offences were all unrelated, they were all committed at around the same time when Mr Parkes was residing at the Hunt’s Hotel and consuming large quantities of ice.
3. It was submitted on his behalf that given that the robbery in company offence occurred within a month of the offence of murder, the murder sentence should be backdated so that it is partially concurrent with the sentence for the robbery in circumstances where police could have arrested him earlier given that he was a prime suspect.
4. The Crown did not submit other than that the proper application of the totality principle requires me to commence Mr Parkes’ sentence on a date after 7 April 2021 and before 13 December 2022. I propose to adopt that course.
Discount for assistance/offer to plead to less serious offence
1. It was submitted on behalf of Mr Parkes that there should be some reduction in sentence pursuant to s 22A of the Sentencing Act. That section provides that a court may impose a lesser penalty having regard to the degree to which the administration of justice has been facilitated by the manner in which the trial was conducted. Section 22A is a discretionary provision.
2. The jury trial commenced on 19 February 2024 and proceeded until 3 April 2024. It is to be accepted that the trial was run efficiently. Objections were taken to various parts of the evidence, and I had to rule accordingly. Some witnesses had to be recalled for further questions to be put to them which caused further delay. The difficulty for Mr Parkes was that the evidence that he and Mr Sloan were the only two people at the murder scene was overwhelming. His only defence was to seek to raise a reasonable doubt as to why he was present at the scene of the murder with Mr Sloan.
3. Given what Mr Parkes told police in his ERISP, it was not open to him to challenge matters to which he had already admitted. It seems to me that the fact that his defence was somewhat confined flowed from the overwhelming objective evidence as to Mr Parkes’ movements provided by the CCTV footage, telephone records and other objective evidence and his own admissions to police that he was present; albeit made in an attempt to portray himself as a witness rather than as a perpetrator.
4. Overall, I am not satisfied that the administration of justice was facilitated by Mr Parkes approach to this trial such as to warrant any amelioration in this matter on that basis.
5. Similarly, I am not satisfied that the sentence should be ameliorated on account of Mr Parkes’ offer to plead guilty to the less serious charge of an extended joint criminal enterprise to murder to intimidate Ms Carroll in which he contemplated damage to her motor vehicle by fire, and which he also foresaw that Mr Sloan might intentionally cause really serious bodily injury to Ms Carroll. He was found guilty of more serious criminality.
Special circumstances
1. It was submitted on behalf of Mr Parkes that the court should find special circumstances [24] and vary the statutory ratio in order to ameliorate the additional hardship the offender may face when serving his sentence in custody in future. That submission was made on the basis that much of his sentence may be served in protection making it more onerous for him.
2. It is important to note that a finding of special circumstances need not be based exclusively, or primarily, on the fact that it is desirable for an offender to be subjected to an extended period of supervision on parole. The scope of the considerations relevant to the determination of “special circumstances” must encompass the full range of issues which are relevant to the determination of the minimum period of actual incarceration without hope of release on parole. [25]
3. I have already found that there are three bases upon which Mr Parkes has and/or will suffer harsher custodial conditions than the average inmate. I propose to reduce the non-parole period relative to the head sentence on that basis such that the ratio of the sentence I will impose for the murder is 69% (rather than 75%) and the effect of ratio, having regard to his time in custody since 14 August 2020 is about 70%.
Conclusion
1. Finally, I have considered the objective seriousness of the offence, Mr Parkes’ subjective case generally and the other findings I have already referred to, to arrive at what I consider to be an appropriate sentence for this serious offence.
Orders
1. For the offence of murder, Benjamin Parkes, I convict you and sentence you as follows:
1. Imprisonment for a term of 31 years to commence on 14 February 2022 and expire on 13 February 2053.
2. The non-parole period is 21 years and 6 months to commence on 14 February 2022 and expire on 13 August 2043. The offender will be eligible for parole on 13 August 2043.
3. I note that the effective total head sentence (having regard to the sentence already served) from 14 August 2020 is 32 years and 6 months and the effective non-parole period is 23 years.
4. Pursuant to s 25C of the Crimes (High Risk Offenders) Act 2006 (NSW), the offender is advised of the existence of that Act and of its application to the offence of which he has been convicted. His legal representatives are requested to advise him of the implications of that Act to him.
*******
Endnotes
1. R v Isaacs (1997) 41 NSWLR 374 at 377-378.
2. The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54 at [27] (per Gleeson CJ, Gaudron, Hayne and Callinan JJ).
3. Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29 at [64] (per French CJ, Bell, Keane and Nettle JJ).
4. Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [51] per McHugh J; confirmed by the Court in Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [26].
5. Crimes Act 1900 (NSW) s 18(1)(a).
6. Table behind s 54B Crimes (Sentencing Procedure) Act 1999 (NSW).
7. NSW registration CV98SR.
8. A number of witnesses at the trial were given pseudonyms. Although they were referred to by their names before the jury, non-publication orders prevent publication of their names.
9. Tcpt, 13 March 2024, p 678(13).
10. Tcpt, 27 February 2024, p 348(34-39).
11. Tcpt, 27 February 2024, pp 375-377.
12. Tcpt 27 February 2024, p 380(26-27).
13. Electronically Recorded Interview with a Suspected Person, on 7 December 2020.
14. Tcpt, 27 February 2024, pp 396(33), 398(4).
15. Tcpt, 26 February 2024, p 306.
16. Tcpt, 27 February 2024, p 401(43).
17. Tcpt, 28 February 2024, p 423(44-49).
18. By sheer coincidence Witness I did in fact stay at the Hunts Hotel a few days prior to the murder.
19. Park v R [2019] NSWCCA 105 at [36] per Harrison J (as his Honour then was).
20. Crimes Act 1914 (Cth) s 20(1)(b).
21. Tcpt, 16 July 2024, p 26(34).
22. Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37.
23. R v Henry (1999) 46 NSWLR 346; [1999] NSWCCA 111 at [273] (Wood CJ at CL).
24. Crimes (Sentencing Procedure) Act 1999 (NSW) s 44(2).
25. R v Simpson (2001) 53 NSWLR 704; [2001] NSWCCA 534 at [57].
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 13,146 |
nsw_caselaw:190fcc04a16d179340e31c89 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Goldcoral Pty Ltd (Receiver and Manager Appointed) v Richmond Valley Council [2024] NSWLEC 77 | https://www.caselaw.nsw.gov.au/decision/190fcc04a16d179340e31c89 | 2024-08-04T23:52:18.490234+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: Goldcoral Pty Ltd (Receiver and Manager Appointed) v Richmond Valley Council [2024] NSWLEC 77
Hearing dates: 3-6, 11-14 June 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Class 1
Before: Preston CJ
Decision: (1) The appeal is upheld.
(2) Development consent is granted to development application DA 2015/00096 for a concept proposal for the subdivision of land at 240 Iron Gates Drive, Evans Head, being Lot 163 in DP831052 and Lots 276 and 277 in DP755624, and a detailed proposal for Stage 1 of the development, subject to conditions, as stated in the development consent annexed and marked as ‘Annexure A’.
Catchwords: ENVIRONMENT AND PLANNING – Consent development application – concept proposal for residential subdivision and detailed proposal for first stage – prior unauthorised works for different subdivision – whether development consent can be granted to amend and use some unauthorised works – mapped coastal wetlands on land – subdivision of whole land but not part of land mapped coastal wetlands – whether development is designated development – applicable environmental planning instrument – current instrument provides for designated development – whether accrued right for application of former instrument – impact on Koala – whether land is a potential koala habitat or a core koala habitat – no development on either habitat – impact on Wallum Froglet – no development in habitat – impact on littoral rainforest – whether sufficient buffer width to protect – use of neighbouring land for native title rights – impact on – whether sufficient buffer to protect – Aboriginal cultural heritage sites – cultural landscape, midden and burial site – impact on – development will not diminish cultural landscape – no development on midden or burial site
ENVIRONMENTAL PLANNING INSTRUMENTS – saving and transitional provisions – development application lodged under former instruments - former instruments had savings provisions – current instruments do not have saving provisions – operation of Interpretation Act – whether saves accrued right to have development application determined under former instruments
Legislation Cited: Biosecurity Act 2015 (NSW)
Community Land Development Act 2021 (NSW)
Conveyancing Act 1919 (NSW), ss 88B, 195
Environmental Planning and Assessment Act 1979 (NSW), ss 1.5, 4.10, 4.15, 4.16, 4.22, 4.46, 8.7
Interpretation Act 1987 (NSW), ss 5, 30
Land and Environment Court Act 1979 (NSW), s 39
National Parks and Wildlife Act 1974 (NSW), s 90
Public Roads Act 1902
Roads Act 1993 (NSW), s 138
Rural Fires Act 1997 (NSW), s 100B
Water Management Act 2000 (NSW), s 90
Environmental Planning and Assessment Regulation 2021 (NSW), cl 37
Richmond Valley Local Environmental Plan 2012
State Environmental Planning Policy (Biodiversity and Conservation) 2021
State Environmental Planning Policy (Coastal Management) 2018
State Environmental Planning Policy (Koala Habitat Protection) 2019
State Environmental Planning Policy (Koala Habitat Protection) 2020
State Environmental Planning Policy (Koala Habitat Protection) 2021
State Environmental Planning Policy No 14 – Coastal Wetlands
State Environmental Planning Policy No 44 – Koala Habitat Protection
State Environmental Planning Policy No 71 – Coastal Protection
State Environmental Planning Policy (Resilience and Hazards) 2021
Biosecurity (Invasive Ant Carriers) Control Order 2023
Cases Cited: BGP Properties Pty Limited v Lake Macquarie City Council (2004) 138 LGERA 237; [2004] NSWLEC 399
Bandjalang People No 1 and No 2 v Attorney
General of NSW [2013] FCA 1278
Bandjalang People No 3 v Attorney General of NSW [2021] FCA 386
CK Design Pty Ltd v Penrith City Council (No 2) [2022] NSWLEC 97
Lorenzato v Burwood Council [2017] NSWLEC 1269
Iron Gates Developments Pty Ltd v Richmond-Evans Environmental Society Inc (1992) 81 LGERA 132
Kouflidis v Salisbury City Corporation (1982) 29 SASR 321; 49 LGERA 17
Nalor Pty Ltd v Bankstown City Council (1980) 2 NSWLR 630
Oshlack v Iron Gates Pty Ltd (1997) 130 LGERA 189
Oshlack v Iron Gates Pty Ltd [1997] NSWLEC 89
Oshlack v Richmond River Shire Council and Iron Gates Development Pty Ltd (1993) 82 LGERA 222; [1993] NSWLEC 3
Oshlack v Richmond River Shire Council (1994) 82 LGERA 236
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Ralph Lauren Pty Ltd v New South Wales Transitional Coastal Panel (2018) 235 LGERA 345; [2018] NSWLEC 207
Richmond-Evans Environmental Society Inc v Iron Gates Developments Pty Ltd, unreported Land and Environment Court, No 40158 of 1991, Bannon J, 20 December 1991
Sofi v Wollondilly Shire Council (1975) 2 NSWLR 614
The Dubler Group Pty Ltd v Minister for Infrastructure, Planning and Natural Resources (2004) 137 LGERA 178; [2004] NSWCA 424
Wilson v Iron Gates Pty Ltd, unreported Land and Environment Court No 40172 of 1996, Stein J, 2 December 1996
Category: Principal judgment
Parties: Goldcoral Pty Ltd (Receiver and Manager Appointed) (Applicant)
Richmond Valley Council (First Respondent)
Simone Barker (Second Respondent)
Representation: Counsel:
P Tomasetti SC and A Hemmings (Applicant)
M Astill (First Respondent)
L Sims (Second Respondent)
Solicitors:
Corrs Chambers Westgarth (Applicant)
Wilshire Webb Staunton Beattie Lawyers (First Respondent)
King & Wood Mallesons (Second Respondent)
File Number(s): 2022/279591
Publication restriction: NIL
JUDGMENT
Mapping the real issues in dispute
1. This planning appeal is an illustration of T.S. Eliot’s poetic observation in The Hollow Men that “between the idea and the reality… falls the Shadow.” The applicant, Goldcoral Pty Ltd (Receiver and Manager Appointed) (Goldcoral) has appealed under s 8.7(1) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) against the refusal of the Northern Regional Planning Panel, on behalf of the consent authority, Richmond Valley Council (the Council), of a development application that sets out concept proposals and detailed proposals for the first stage of residential subdivision (the development) of land at 240 Iron Gates Drive, Evans Head (the land).
2. The land proposed to be developed for the residential subdivision is legally described as Lots 276 and 277 in DP 755624. To the west of Lots 276 and 277 is Lot 163 in DP 831052. The only development for which consent is now sought on Lot 163 is the demolition of the existing house and other structures on that lot. In between Lot 276 and Lot 163 is a Crown Road Reserve. No development is now proposed in the Crown Road Reserve. Together, these lots and reserve have an area of about 72 hectares.
3. The development is controversial and has had a long history. From at least 1988, various owners of the land have lodged development applications proposing residential subdivision of the land. In 1988 and 1993, the Council granted two development consents for residential subdivision and construction of the necessary access road. Those development consents have been challenged in litigation by community members and organisations opposed to the development of the land and neighbouring land. Some of that litigation has been successful, others not. That litigation is summarised in Richmond-Evans Environmental Society Inc v Iron Gates Developments Pty Ltd, unreported, Land and Environment Court, No 40158 of 1991, Bannon J, 20 December 1991; Iron Gates Developments Pty Ltd v Richmond-Evans Environmental Society Inc (1992) 81 LGERA 132; Oshlack v Richmond River Shire Council and Iron Gates Developments Pty Ltd (1993) 82 LGERA 222; Oshlack v Richmond River Shire Council and Iron Gates Developments Pty Ltd (1994) 82 LGERA 236; Wilson v Iron Gates Pty Ltd, unreported, Land and Environment Court, No 40172 of 1996, Stein J, 2 December 1996; Oshlack v Iron Gates Pty Ltd (1997) 130 LGERA 189; Oshlack v Iron Gates Pty Ltd [1997] NSWLEC 89; Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11.
4. The previous land owners carried out development on the land purportedly in accordance with the development consents, although the lawfulness of the work was disputed. The development included constructing an access road from Evans Head township to the site, named Iron Gates Drive, and erecting a bridge over a creek for the access road, extensive clearing of the land and earthworks, and construction of internal roads and stormwater and sewage infrastructure for the residential subdivision. The previous land owners then encountered financial troubles and ceased carrying out the development. The development was abandoned. Much of the areas cleared for the residential subdivision naturally re-vegetated.
5. The current land owner Goldcoral has proposed a new residential subdivision, partly in the areas of the abandoned subdivision. That is the development the subject of the current development application and the appeal to this Court. The community remains opposed to any residential subdivision of the land. This time the Council has joined the community in opposing the proposed development of the land. The Council defended on the appeal the Panel’s decision to refuse development consent. A traditional owner of Country of which the land is a part, Ms Simone Barker, is also opposed to the development. Ms Barker applied to be and was joined as a respondent to the appeal.
6. The Council’s, Ms Barker’s and the community’s opposition are founded on ideas about the development proposed in the amended development application, the environment affected by the development, and the law applicable to assessing the development application, which are not reflective of the reality of the development, the environment and the law. Thus, my reference to T.S. Eliot’s observation that there is a shadow between the idea and the reality. The shadow may be dispersed by shining a light to illuminate the reality of the development, the environment and the law. Let me explain.
7. The idea of the development is founded and framed by the excessive and allegedly unlawful developments carried out on the land by the previous land owners, as well as the more extensive and less environmentally sensitive development originally proposed by Goldcoral in the development application first lodged in 2014. Those developments, and their perceived unacceptable environmental impacts, are seared in the memory of the Council, Ms Barker and the community.
8. The reality is that none of those developments is now being proposed by Goldcoral. Goldcoral has amended the development application to propose a residential subdivision that is less extensive and confined to areas of the land that have been previously cleared, many times and over many decades, so as to avoid significant impact on environmentally and culturally sensitive areas of the land.
9. The idea of the environment is founded and framed on conceptions of what the environment might have been at the time those previous developments were proposed and carried out. Those conceptions may have been idealized – the environment was conceived to be more pristine and ecologically intact than it really was. Regrettably, the carrying out of those previous developments continued a transformation of the environment that had begun over 40 years before.
10. The reality is that the northern and eastern parts of the land were extensively sand mined in the mid-1960s to the mid-1970s. This involved the total clearance of all vegetation on those parts of the land, the dredging of those parts of the land for sand, and afterwards the re-grading and revegetation of the land in the late-1970s with plant species not representative of the diversity of the pre-existing vegetation communities.
11. These revegetated areas in the northern and eastern parts of the land were again totally cleared and extensive earthworks undertaken for the previous residential subdivision in the mid-1990s. The roads, stormwater and sewage infrastructure, and drainage channels were constructed at this time. A photograph presumably taken from an aeroplane or helicopter in the mid-1990s shows the significant extent of earthworks involved in constructing the roads and drainage channels in the northern and eastern parts of the land. Two aerial photographs taken after the works had been completed show the northern and eastern parts of the land totally cleared north of the triangular-shaped area of littoral rainforest, except for a small island of vegetation in the north. The second aerial photograph, dated as 1998, shows the cleared areas as being grassed. The first aerial photograph shows the cleared areas as exposed sand or earth, so is likely to have been taken in 1996-1997 before the second photograph in 1998. After the development was abandoned and the Court ordered the land to be remediated in 1997, regrowth vegetation in the northern and eastern parts of the land is evident in the 2012, 2013, 2018 and 2022 aerial photographs. These highly disturbed northern and eastern parts of the land are proposed to be developed by Goldcoral for the northern area of the residential subdivision.
12. The southern and western parts of the land have long been cleared for agriculture. A 1958 aerial photograph shows these areas as having been already cleared, except for the two areas where the littoral rainforest still exists today. The cleared areas, including the hill to the west, are where Goldcoral proposes the southern area of the residential subdivision. Both a 1977 and a 1980 aerial photograph show evidence of ploughed furrows in the cleared southern and western parts of the land, as well as the early stages of revegetation of the sand mined areas in the northern and eastern parts of the land.
13. The 1998 aerial photograph shows the southern and western parts of the land to be grassland, presumably for grazing. By this time, Iron Gates Drive had been constructed providing access to the land. The internal road bisecting the two areas of littoral rainforest had been constructed, as well as a road travelling southwest to northeast following the alignment of the existing electricity powerline. To the west of the powerline, there is evidence of earthworks on the hill in the western part of the land. The aerial photograph taken in around 1996-1997, depicting the exposed areas in the northern and eastern parts of the subdivision, clearly shows the two access roads, one bisecting the littoral rainforest and the other following the powerline, as well as extensive earthworks on the hill in the western part of the land, with the earth in that area being totally exposed. The photograph presumably taken from an aeroplane or helicopter in the mid-1990s also shows the earthworks and excavation on the hill having commenced. The aerial photographs in 2012, 2013, 2018 and 2022 show the southern and western parts of the site being maintained as totally cleared and grassed areas.
14. The idea of the law is founded and framed by a misconception that the strategic planning law does not provide for and facilitate the residential subdivision of the land. The long history of zoning of the land for residential purposes is overlooked in the opposition to any development of the land for the very residential purposes for which the land has been zoned.
15. The reality is that since at least 1983 the land has been zoned to permit development for residential purposes. Under Richmond River Local Environmental Plan No 3, which commenced in 1983, the land, including the areas of the land now proposed for residential subdivision (within Lots 276 and 277 and Lot 163), was zoned 2(d) Residential, 3(c) Neighbourhood Business, 9(a) Tourist and 6(c) Open Space.
16. Pursuant to that environmental planning instrument, the Council granted development consent on 20 October 1988 for the subdivision of the land in four stages to create 610 residential allotments, a four-hectare lot for tourist development, a six hectare lot for a neighbourhood centre, a 20 hectare lot for open space, and seven lots totalling 8.5 hectares for public reserves. On 19 July 1990, the Council granted development consent for the construction of an access road between Wattle Street, Evans Head and the land (Lot 277) through the wetlands. This became Iron Gates Drive. On 27 September 1991, the land for the access road was gazetted as a public road under the Public Roads Act 1902 (NSW).
17. The replacement Richmond River Local Environmental Plan 1992, which commenced in 1992, zoned the relevant areas of the land (within Lots 276 and 277 and Lot 163) Residential 2(v) Village. As the development consent granted in 1988 had lapsed, the Council granted another development consent on 22 March 1993, pursuant to the 1992 environmental planning instrument. The development consent was for 110 residential lots, plus reserves for active open space and environmental protection. On 4 June 1993, an alternative route for the access road, which differed from the route shown in the 1991 Gazette, was gazetted as a public road. Iron Gates Drive is in this alternative gazetted route.
18. The next environmental planning instrument, Richmond Valley Local Environmental Plan 2012 (RVLEP), zoned the relevant areas of the land (within Lots 276 and 277 and Lot 163) R1 General Residential, C2 Environmental Conservation and C3 Environmental Management. This is the current environmental planning instrument. Goldcoral’s proposed residential subdivision is within the R1 General Residential zone and the littoral rainforest conservation area is within the C2 Environmental Conservation zone. No development on the land is proposed in the C3 Environmental Management Zone. There is a splay in the north-eastern corner of the area zoned R1 General Residential at the interface with the C2 Environmental Conservation zone. That splay coincides with an area mapped as coastal wetlands under successive State environmental planning policies, being State Environmental Planning Policy No 14 – Coastal Wetlands (SEPP 14), State Environmental Planning Policy (Coastal Management) 2018 (Coastal SEPP) and State Environmental Planning Policy (Resilience and Hazards) 2021 (RAH SEPP). The area mapped as coastal wetlands under these instruments is within the C2 Environmental Conservation zone under RVLEP and does not intrude into the R1 General Residential zone.
19. The proposed subdivision and later development for residential purposes of the land zoned R1 General Residential are consistent with the objectives of the zone. As I have noted, the land has long been zoned for residential purposes to provide for the housing needs of the community. The land, although separated from the Evans Head township, has been identified as being a suitable location for residential development. The proposed development realises this strategic planning objective. The proposed conservation of the littoral rainforest and other environmentally sensitive areas on the land zoned C2 Environmental Conservation and C3 Environmental Management is consistent with the objectives of these zones. The consistency of the proposed development with the objectives of these three zones is a matter to be considered when determining the development application, under cl 2.3(2) of RVLEP.
20. The strategic planning objective promoting residential development of the land, reflected in the zoning of the land as R1 General Residential under RVLEP, has continued since 2012 in subsequent strategic planning documents of both State Government and the Council.
21. The NSW Department of Planning and Environment’s North Coast Regional Plan 2036, published in 2016, identifies the Iron Gates land as an “Urban Growth Area” in the Richmond Valley local government area: Figure 17. The Plan’s stated purpose is to provide “an overarching framework to guide subsequent and more detailed land use plans, development proposals and infrastructure funding decisions.”: p 4.
22. The Council’s Local Strategic Planning Statement: Beyond 20-20 Vision, published in May 2020, sets a 20-year planning vision for the Richmond Valley local government area. The Statement identifies one of the “several potentially large developments proposed at Evans Head” as “the Iron Gates subdivision (with potentially 174 residential lots)”: p 16. The Statement reproduces, as Figure 15 of the Statement, Figure 17 from the North Coast Regional Plan 2036, which identifies the Iron Gates land as an Urban Growth Area. The Statement records the need to construct Stage 2 of the upgrade of Evans Head’s STP to meet the additional demand from future urban growth areas, including the “potential subdivision at the Iron Gates (174 lots).”: p 34.
23. The Department of Planning and Environment’s North Coast Regional Plan 2041, published in 2021, sets a 20-year strategic planning framework for the North Coast region. It represents a five-year review of the region’s strategic planning settings since the North Coast Regional Plan 2036, published in 2016: p 6. The Plan continues to identify the Iron Gates land as an Urban Growth Area: Figure 22. The Plan states that one of the land use planning strategies is to “direct growth to identified urban growth areas”: p 61.
24. The Council’s Richmond Valley Growth Management Strategy, published in April 2023, states its purpose to be “to support and guide the growth of both residential and employment land in the Richmond Valley”, including at Evans Head. The Strategy identifies the Iron Gates land as one of the areas of growth of residential land at Evans Head, noting: “There is existing land zoned for residential purposes at Iron Gates.”: p 29.
25. This long history of zoning the Iron Gates land for residential purposes and continuing to identify the land as an Urban Growth Area to meet the demand for residential development at Evans Head needs to be given weight in determining the development application for the subdivision of the land for residential purposes. In BGP Properties Pty Limited v Lake Macquarie City Council (2004) 138 LGERA 237; [2004] NSWLEC 399 at [117]-[118], McClellan CJ said:
“In the ordinary course, where by its zoning land has been identified as generally suitable for a particular purpose, weight must be given to that zoning in the resolution of a dispute as to the appropriate development of any site. Although the fact that a particular use may be permissible is a neutral factor (see Mobil Oil Australia Ltd v Baulkham Hills Shire Council (No 2) 1971 28 LGRA 374 at 379), planning decisions must generally reflect an assumption that, in some form, development which is consistent with the zoning will be permitted. The more specific the zoning and the more confined the range of permissible uses, the greater the weight which must be attributed to achieving the objects of the planning instrument which the zoning reflects (Nanhouse Properties Pty Ltd v Sydney City Council (1953) 9 LGR(NSW) 163; Jansen v Cumberland County Council (1952) 18 LGR(NSW) 167). Part 3 of the EP&A Act provides complex provisions involving extensive public participation directed towards determining the nature and intensity of development which may be appropriate on any site. If the zoning is not given weight, the integrity of the planning process provided by the legislation would be seriously threatened.
In most cases it can be expected that the Court will approve an application to use a site for a purpose for which it is zoned, provided of course the design of the project results in acceptable environmental impacts.”
1. McClellan CJ did qualify this statement of general principle where the zoning was imposed many years ago and may no longer reflect contemporary standards, saying at [119]:
“However, there will be cases where, because of the history of the zoning of a site, which may have been imposed many years ago, and the need to evaluate its prospective development having regard to contemporary standards, it may be difficult to develop the site in an environmentally acceptable manner and also provide a commercially viable project.”
1. This qualification is not applicable to the Iron Gates land. The appropriateness of the zoning of the land for residential purposes has been re-assessed continuously since 1983 when the land was first zoned for residential purposes by Richmond River Local Environmental Plan No 3. As I have earlier recorded, the residential zoning of the land was affirmed in 1992 by the Richmond River Local Environmental Plan 1992 and in 2012 by RVLEP. The land continues to be identified as an urban growth area to meet the demand for residential land: in 2016, by the NSW Government’s North Coast Regional Plan 2036; in 2020, by the Council’s Local Strategic Planning Statement: Beyond 20-20 Vision; in 2021, by the NSW Government’s North Coast Regional Plan 2041; and in 2023, by the Council’s Richmond Valley Growth Management Strategy. These continuing re-assessments of the suitability of the land for development for residential purposes have had regard to contemporary standards and the capability of the land to be developed for those purposes in an environmentally acceptable manner.
2. This illumination of the reality of the development, the environment and the law disperses the shadow darkening the Council’s, Ms Barker’s and the community’s ideas about the development, the environment and the law. When this is done, the development proposed in the amended development application can be seen to be environmentally acceptable and able to be approved subject to appropriate conditions. Each of the issues raised by the Council and Ms Barker, and the concerns raised by the community, can be adequately addressed.
3. I will structure these reasons for judgment as follows. First, I will explain the development that is now proposed in the amended development application and for which development consent is sought. Second, I will address the principal contested issues raised by the Council and Ms Barker as to why development consent ought not to be granted for that development. For those issues which raise a legal issue, I will explain the law that is applicable and its meaning and application. For those issues which concern an impact on the environment, I will describe the environment that is likely to be affected, and how that impact is to be mitigated to be acceptable. Third, I will summarise the other concerns raised by the community on the appeal and explain how those concerns have been addressed satisfactorily. Fourth, I will address the contested conditions of consent. Fifth, I will conclude by outlining the development consent that should be granted and the conditions of consent that should be imposed.
The proposed development
1. The development proposed by Goldcoral has undergone many changes, a criticism the community makes. But the Court’s task on the appeal is to consider and to determine the development application in its final form, howsoever that final form might have been reached.
2. The Court’s duty under s 4.16(1) of the EPA Act, exercising the consent authority’s function on the appeal, is to determine the development application as finally amended. An applicant may, at any time before a development application is determined, amend the development application. There is a statutory process for amending a development application under cl 37 of the Environmental Planning and Assessment Regulation 2021 (NSW). This involves applying to the consent authority for its agreement to the proposed amendment, but if it is not agreeable to the proposed amendment, the Court may allow the amendment exercising its power under s 39(2) of the Land and Environment Court Act 1979 (NSW) (the Court Act). This is the process Goldcoral has followed. The final amendment was made towards the end of the hearing of the appeal. The Council did not oppose that amendment. The development application as finally amended is the application the Court must determine.
3. The Court’s duty under s 4.15(1) of the EPA Act, exercising the function of the consent authority, is to take into consideration the matters in that subsection “as are of relevance to the development the subject of the development application.” This is the development application as finally amended.
4. I emphasise this point, that the Court must consider and determine the development application as finally amended, because much of the opposition of the Council, Ms Barker and the community appeared to be based on earlier proposals for the development of the land. In the case of the community, their opposition was forged in the campaigns over the last three and a half decades to stop any development of the land. That is understandable. But for the opposition to be relevant to the current proposal, it must be reframed to focus on the development proposed in the development application as finally amended. Likewise, many of the issues raised by the Council and Ms Barker in their Statements of Facts and Contentions lost potency and cogency when the development application was amended to address these issues. It is important, therefore, to describe the development now proposed in the development application as finally amended.
5. The development application as finally amended remains a concept development application under s 4.22 of the EPA Act. Goldcoral had requested the development application when first lodged to be treated as a concept development application, under s 4.22(3) of the EPA Act. Goldcoral maintained that request with its subsequent amendments of the development application, including the final amendment at the hearing.
6. As s 4.22(1) of the EPA Act provides, a concept development application sets out concept proposals for the development of a site, and for which detailed proposals for the site or separate parts of the site are to be the subject of a subsequent development application or applications. A concept development application for staged development may also set out detailed proposals for the first stage of development.
7. Goldcoral’s concept development application sets out both concept proposals for the development of the land and detailed proposals for the first stage of the development. The concept proposals are for:
1. the subdivision of the land; provision and upgrade of infrastructure; and upgrade of Iron Gates Drive;
2. part of the land to be subdivided as a community title scheme under the Community Land Development Act 2021 (NSW);
3. the use of part of the land zoned R1 General Residential under RVLEP identified as “Stage 1” for:
1. residential development comprised of dwelling houses and dual occupancy development;
2. open space purposes associated with the residential development;
3. a community building for use by residents and visitors during times of flood and fire emergency and for other facilities, subject to any necessary development consent; and
1. land zoned C2 Environmental Conservation to be set aside and managed into the future to retain and enhance ecological values of existing and proposed vegetation.
1. The detailed proposals for the first stage of the development involve:
1. demolition of existing buildings, roads, and stormwater and sewage infrastructure present on the land;
2. subdivision of the land into 126 lots comprising:
1. 123 lots subdivided into a community scheme established under the Community Land Development Act 2021 comprising:
* one community property lot (Lot 1) containing the land retained and managed for conservation purposes and the community building; and
* 122 community development lots, being 121 individual residential allotments (Lots 2 - 122) and one residue lot (Lot 123) for future subdivision (to be the subject of a further development application); and
1. the following lots not forming part of the community scheme:
* one public open space lot (Lot 147);
* one sewer pump station (Lot 148);
* one residue lot (Lot 142); and
* public roads including stormwater infrastructure;
1. construction of internal roads and stormwater, water, sewage and other infrastructure;
2. vegetation management works on part of the community property, including vegetation removal and retention, environmental protection works, and ongoing environmental management;
3. bulk earthworks;
4. upgrades to Iron Gates Drive; and
5. provision of upgrades to water and sewer infrastructure in Iron Gates Drive as required.
1. Goldcoral does not seek consent for any development with respect to Stage 2 of the subdivision; that is to be the subject of a subsequent development application. Construction of dwellings on the subdivided lots, construction of the community building and embellishment of the proposed open space areas would also be the subject of subsequent development applications.
2. Pursuant to s 4.23(2) of the EPA Act, the making and approval of a concept development application in respect of land satisfies a requirement of an environmental planning instrument for the preparation of a development control plan before any particular or kind of development is carried out on any land. In this case, cl 18 of State Environmental Planning Policy No 71 – Coastal Protection (SEPP 71) required a master plan before the grant of development consent on land within a residential zone if the land is in a sensitive coastal location. The Iron Gates land to be subdivided is in a residential zone (General Residential R1 under RVELP) and a sensitive coastal location under SEPP 71, as the land is located within 100m of the mean high water mark and is within 100m of coastal wetlands identified under SEPP 14: see paragraphs (a) and (g) of the definition of “sensitive coastal location” in s 3(1) of SEPP 71. By virtue of cl 95(2) of Schedule 1 of the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017, the requirement of cl 18 of SEPP 71 for a master plan before the grant of a development consent is to be construed as a requirement for a development control plan under the former s 74D of the EPA Act. So construed, s 4.23(2) of the EPA Act operates to cause that requirement for a development control plan to be satisfied by the making and approval of a concept development application in respect of the land. Goldcoral’s concept development application serves this purpose.
3. Goldcoral will also be required to obtain other statutory approvals to carry out the development. Under s 4.46(1) of the EPA Act, the development proposed by Goldcoral in the development application is integrated development as, in order for the development to be carried out, it requires development consent and one or more of the following approvals:
1. a bush fire safety authority pursuant to s 100B of the Rural Fires Act 1997 (NSW) for the subdivision of bush fire prone land for residential purposes;
2. a water supply work approval pursuant to s 90 of the Water Management Act 2000 (NSW);
3. an Aboriginal heritage impact permit pursuant to s 90 of the National Parks and Wildlife Act 1974 (NSW); and
4. an approval under s 138 of the Roads Act 1993 (NSW) for works carried out on a public road (Iron Gates Drive).
1. The concept proposal plan, depicting and describing the concept proposal and community title subdivision, is reproduced below.
2. As I have noted, these concept proposals and detailed proposals were amended a number of times to address issues raised by the Council and Ms Barker and concerns raised by the community. Amongst these amendments were:
1. the contraction of Stage 2 of the development to the hill in Lot 276 to the west of proposed Lots 115 – 122, with the area in the southwest of the land (within Lot 276 and Lot 163) formerly proposed to be part of Stage 2 becoming a future investigation area. This removed conflicts with, and impacts on, a midden and koala feed trees in that area formerly proposed to be developed as Stage 2;
2. the expansion of vegetated buffer areas along the interfaces of the two littoral rainforest areas with the proposed roads and residential development. This reduced the ecological impacts of the development on those conservation areas;
3. the expansion of the vegetated buffer area to the south of proposed Lots 90-109, in the southern area of the residential subdivision. This reduced the impacts of the development on nearby areas of land to the south and the waters of Evans River used by the traditional owners of Country for the exercise and enjoyment of their native title rights;
4. the establishment and inclusion within the road reserve of the roads within the subdivision to be dedicated to the Council of bioretention basins. This overcame an issue of the future maintenance of the bioretention basins by the community association; and
5. the change from a Torrens title subdivision to a community title subdivision. This overcame an issue of the future establishment and ongoing maintenance of community property for conservation purposes and the community building.
1. These amendments to the development application have significantly reduced the principal contested issues on the appeal.
The principal contested issues
1. Although the amendments of the development application reduced the issues raised by the Council in its Statement of Facts and Contentions and Amended Statement of Facts and Contentions, the Council still pressed two legal issues and two merit issues. The two legal issues were:
1. development consent cannot be granted for unauthorised works already constructed and not proposed to be removed under the amended development application (contention 1 – unauthorised works issue); and
2. development consent cannot be granted because the proposed development is designated development under cl 2.7 of RAH SEPP (Contention 2 – designated development issue).
1. The two merit issues were:
1. the proposed development has not been designed to mitigate and minimise significant environmental impacts, including impacts to the littoral rainforest, Koala habitat, Wallum Froglet habitat and coastal wetlands (contentions 3, 4, 9, 10 and 12 – ecology issues); and
2. the proposed development is not consistent with the desired future character of the locality and does not incorporate a subdivision layout and design that minimises impacts on the sensitive environmental and cultural areas within and adjacent to the land (contentions 9 and 11 – character and layout issues).
1. The Council did not press the other contentions raised in its Amended Statement of Facts and Contentions filed on 23 May 2024 (the last version filed by the Council).
2. Ms Barker pressed two contentions:
1. the proposed development will have an unacceptable impact on the exercise and enjoyment of native title rights on land and waters near the land (contention 1 – impact on native title rights issue); and
2. the proposed development will have an unacceptable impact on the Aboriginal cultural values of the land and surrounding areas (contention 2 – impact on Aboriginal cultural heritage issue).
1. I will deal with the Council’s two legal issues first, the Council’s two merit issues next, and Ms Barker’s two issues finally.
The unauthorised works issue
1. Goldcoral proposes to remove nearly all of the roads and stormwater and sewage infrastructure constructed by the previous land owners purportedly in accordance with the previous development consents. Goldcoral proposes to construct new roads and new stormwater and sewage infrastructure on the land. Only two of the previous infrastructure works on the land will remain. The first is the stretch of internal road bisecting the two areas of littoral rainforest on the land. Some works are proposed to be carried out on this small stretch of road, but these have been kept to a minimum to avoid harming the rainforest on either side of the road. The retention of this existing internal road and carrying out of works on the road have not been opposed by the Council on ecology grounds – it is clearly the most ecologically sensitive approach.
2. The second work that will remain is an unformed drainage channel constructed by the previous land owners running inside the north-eastern edge of the northern area of littoral rainforest. This was referred to as the western drainage line. After the previous land owners abandoned the previous subdivision, native vegetation (largely Acacias) has regrown in and beside the drainage channel. Goldcoral proposes to enhance the revegetation of the area in and around the drainage channel to provide a vegetated buffer between the residential subdivision to the north and the littoral rainforest. The parties’ ecologists agreed that the drainage channel should be retained within the littoral rainforest buffer and revegetated: Revised Terrestrial Ecology, Aquatic Ecology and Arboriculture Joint Expert Report (Ecology Joint Expert Report), p 3. Again, the retention and revegetation of this drainage channel is not opposed by the Council on ecology grounds.
3. Goldcoral also seeks to use the existing road, Iron Gates Drive, and the bridge over the creek, which were constructed under the previous development consents. Goldcoral proposes some works to upgrade the road and signage. If necessary, Goldcoral will undertake other works to upgrade the bridge and the sewage and water pipes that run along the road and over the bridge. The Council raised no issue with the works proposed for the road and bridge, subject to there being a structural safety assessment of the bridge, which can be appropriately conditioned in any grant of development consent.
4. Nevertheless, the Council raised a technical legal issue. The Council contended that the internal road and drainage channel constructed by the previous land owners on the land and the public road and infrastructure works on Iron Gates Drive were unlawful. The Council did not seek to prove the unlawfulness of these works on this appeal, but was content to rely on the previous litigation for that purpose. If those works were unlawful, the Council contended that Goldcoral should gain no advantage from those unlawful works. The Council relied on what I said in Ralph Lauren Pty Ltd v New South Wales Transitional Coastal Panel (2018) 235 LGERA 345; [2018] NSWLEC 207 at [128] (Ralph Lauren), citing what King CJ said in Kouflidis v Salisbury City Corporation (1982) 29 SASR 321 at 324; 49 LGERA 17 at 20 that: “The unlawful user of the land should gain no advantage from having established an unlawful use. Any argument based either directly or indirectly upon the unlawful use should be firmly rejected.” The Council submitted that to the extent that Goldcoral seeks to leave and use the internal road and drainage channel on the land and the road, bridge and infrastructure on Iron Gates Drive, it is seeking to gain an advantage from these unlawful works. That should not be permitted.
5. The Council’s argument is misguided. There is no legal principle that development consent cannot be sought to carry out development to erect a building (which includes a structure) or to carry out works that would amend a building or works that are unlawful, and then to use in the future the new or amended building or works. That was recognised in Ralph Lauren at [128]. Contrary to the Council’s contention, development consent can be granted to the development proposed by Goldcoral to carry out works to upgrade the stretch of internal road through the littoral rainforest, to revegetate and use for conservation purposes the existing drainage channel in the littoral rainforest and to upgrade and use the road, bridge and infrastructure on Iron Gates Drive.
6. The granting of development consent for these works and uses does not allow Goldcoral to gain advantage “from having established an unlawful use”. As a matter of fact, Goldcoral did not establish the unlawful use either on the land or on the now dedicated public road, Iron Gates Drive. The works on the land were carried out by the previous owners of the land. Goldcoral purchased the land with those works already constructed. The previous land owners constructed Iron Gates Drive and the Council erected the bridge over the creek, and the road and bridge were dedicated as a public road. Moreover, Goldcoral is not making any argument based either directly or indirectly upon the unlawful use of the works on the land or Iron Gates Drive. The argument that consent be granted for Goldcoral’s proposed development is not dependent for its success on the unlawfulness of the works on the land or Iron Gates Drive.
7. The Council’s counterfactual argument does not assist. The Council submitted that had the previous land owners complied with this Court’s orders made in Oshlack v Iron Gates Pty Ltd [1997] NSWLEC 89 on 4 July 1997 to remediate the drainage channel, the drainage channel would no longer exist so as to provide the basis for the proposed development. Maybe, maybe not. But it does not matter. Goldcoral is not seeking to take advantage of the drainage channel as a drainage channel, but rather as a revegetated area that can serve as a buffer to protect the littoral rainforest. This is the same purpose that would have been served if the drainage channel had been removed and revegetated in accordance with the Court’s orders.
The designated development issue
1. The Council noted that “designated development” for the purposes of the EPA Act includes development that is declared to be designated development by an environmental planning instrument: s 4.10(1) of the EPA Act. The RAH SEPP is an environmental planning instrument that declares specified development to be designated development: cl 2.7(2).
2. The Council’s contention that the proposed development is designated development depends on the RAH SEPP applying to the development. The RAH SEPP is in force, having commenced on 1 March 2022. On the Coastal Wetlands and Littoral Rainforests Area Map under the RAH SEPP, part of the land (within Lot 277) is identified as “coastal wetlands”. This area of coastal wetlands is within the area of the land zoned C2 Environmental Conservation under RVLEP. The land proposed for the residential subdivision is wholly within the R1 General Residential zone, which is to the south and east of the land zoned C2 Environmental Conservation and the area identified as coastal wetlands under the RAH SEPP.
3. Nevertheless, the Council contended that development will still be carried out on land identified as coastal wetlands because one of the lots of the land, Lot 277, will be subdivided under the community title subdivision to create residential lots to the south of the area identified as coastal wetlands. The Council contended that the subdivision of the land is “development” as defined in s 1.5(1)(b) of the EPA Act. Subdivision is defined in s 6.2(1) of the EPA Act to mean “the division of land into 2 or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition”, and by s 6.2(2) of the EPA Act, subdivision of land includes the “procuring of the registration in the Office of the Registrar-General of…a plan of subdivision within the meaning of section 195 of the Conveyancing Act 1919” (NSW). The Council noted that these definitions make clear that subdivision of land does not require the carrying out of works on land; merely dividing land by drawing of lines on a plan of subdivision that is registered can suffice. On this basis, by subdividing Lot 277, Goldcoral is carrying out development for the purposes of the EPA Act.
4. The Council submitted that cl 2.7(2) of the RAH SEPP declares that development to be designated development. Clause 2.7(2) provides that development for which consent is required by cl 2.7(1), other than development for the purpose of environmental protection works, is declared to be designated development. Subsection (1) provides that the development specified in the subsection may be carried out on land identified as “coastal wetlands” only with development consent. One of the developments specified in (d) is “any other development”. The Council submitted that subdivision falls within this category of any other development. Therefore, the subdivision of land identified as coastal wetlands is designated development.
5. The Council submitted that the consequence is that development consent cannot be granted to the subdivision as the development application was not accompanied by an environmental impact statement and the statutory procedures for public notice and consultation for designated development have not been complied with.
6. Goldcoral contested the Council’s argument that the development is designated development for three reasons. First, Goldcoral’s development application is to be assessed under SEPP 14 and SEPP 71, which do not declare the proposed development to be designated development, rather than RAH SEPP. Second, even if RAH SEPP does apply to Goldcoral’s development application, no part of the land identified as “coastal wetlands” under RAH SEPP will be subdivided – the boundaries of the lots shown on the plan of subdivision are outside of the area identified as “coastal wetlands.” The boundary between the residential allotments and the area mapped as coastal wetlands follows the splay at the interface of the R1 General Residential zone and the C2 Environmental Conservation zone, which coincides with the boundary of the area identified as coastal wetlands. Third, the subdivision of the land without carrying out any works on the land does not involve the carrying out development “on land” within the area mapped as coastal wetlands.
7. I find that Goldcoral’s proposed development is not designated development, for the three reasons advanced by Goldcoral.
8. First, Goldcoral, as the applicant who made the development application at a time when the former environmental planning instruments of SEPP 14 and SEPP 71 were in force, has a right to have its development application determined under those instruments. That right is founded on s 5(6) and s 30(2)(b) and (d) of the Interpretation Act 1987 (NSW).
9. Goldcoral lodged the development application on 27 October 2014. At that time, SEPP 14 was in force. Clause 7(1) of SEPP 14 restricted a person carrying out specified development on land to which SEPP 14 applied without development consent. The land to which the policy applied was land “outlined by the outer edge of the heavy black line on the map”: cl 4(1) of SEPP 14. The map outlined as coastal wetlands a slither in the north-eastern part of the land within Lot 277. The adjoining land to the east was largely mapped as coastal wetlands under SEPP 44, with only a narrow strip of coastal wetlands encroaching across the common boundary with the land. The southernmost encroachment into the land of the mapped coastal wetlands formed the splay that later became the interface between the R1 General Residential zone and the C2 Environmental Conservation zone under RVLEP.
10. The development specified in cl 7(1) of SEPP 14 as requiring consent was to clear land to which the policy applied, construct a levee on that land, drain that land or fill that land. Clause 7(3) of SEPP 14 declared development for which consent is required by cl 7(1) to be designated development for the purposes of the EPA Act. The development proposed by Goldcoral does not involve carrying out on the land outlined as coastal wetlands on the SEPP 14 map any of the developments specified in cl 7(1) as requiring consent. Hence, Goldcoral’s proposed development was not declared by SEPP 14 to be designated development.
11. SEPP 71 also applied to the land at the time Goldcoral lodged its development application in 2014. The land proposed to be developed is in the “coastal zone” as defined in s 3(1) of SEPP 71. As the land is located within 100m of the mean high water mark and is within 100m of coastal wetlands identified under SEPP 14, the land is also located within a “sensitive coastal location” as defined in s 3(1) of SEPP 71. SEPP 71 did not contain provisions prescribing any development in the coastal zone or a sensitive coastal location as designated development.
12. On 3 April 2018, the Coastal SEPP repealed and replaced SEPP 14 and SEPP 71. The Coastal SEPP had a savings provision, cl 21(1), which provided:
“The former planning provisions continue to apply (and this Policy does not apply) to a development application lodged, but not finally determined, immediately before the commencement of this Policy in relation to land to which this Policy applies.”
1. The term “former planning provisions” was defined in cl 21(4) to include SEPP 14 and SEPP 71. The phrase “finally determined” refers to a development application finally determined by any court on appeal, including this Court: CK Design Pty Ltd v Penrith City Council (No 2) [2022] NSWLEC 97 at [42], [43], [50], [51].
2. As a consequence of this saving clause, SEPP 14 and SEPP 71 continued to apply, and the Coastal SEPP did not apply, to Goldcoral’s development application.
3. On 1 March 2022, RAH SEPP repealed and replaced the Coastal SEPP. Clause 2.7 of the RAH SEPP regulated the carrying out of development on land identified as “coastal wetlands” on the Coastal Wetlands and Littoral Rainforests Area Map. Development specified in cl 2.7(1) can only be carried out on that land with development consent. Clause 2.7(2) declares development for which consent is required by cl 2.7(1) to be designated development for the purposes of the EPA Act.
4. The RAH SEPP did not save all of the provisions of the Coastal SEPP. The provisions of the Coastal SEPP were generally transferred into Chapter 2 of the RAH SEPP, but the savings provision in cl 21(1) of the Coastal SEPP was not transferred: Schedule 3, cl 1(1) of the RAH SEPP. This lack of transfer of cl 21(1) of the Coastal SEPP to Chapter 2 of the RAH SEPP is the basis for the Council’s argument that the provisions of RAH SEPP, and not the former planning provisions of SEPP 14 and SEPP 71, apply to Goldcoral’s development application.
5. Goldcoral, however, relies on the provisions of the Interpretation Act, s 5(6) and s 30(2)(b) and (d), as continuing to apply the former planning provisions of SEPP 14 and SEPP 71 to Goldcoral’s development application. Section 5(6) of the Interpretation Act provides that “the provisions of sections…30… that apply to a statutory rule also apply to an environmental planning instrument.” SEPP 14 and SEPP 71 are both environmental planning instruments. Section 30(2) of the Interpretation Act provides:
“(2) Without limiting the effect of subsection (1), the amendment or repeal of an Act or statutory rule does not affect—
(a) the proof of any past act or thing, or
(b) any right, privilege, obligation or liability saved by the operation of the Act or statutory rule, or
(c) any amendment or validation made by the Act or statutory rule, or
(d) the operation of any savings or transitional provision contained in the Act or statutory rule.”
1. Goldcoral submitted that the effect of s 30(2)(b) and (d) is that the repeal of the Coastal SEPP by the RAH SEPP did not affect, first, the operation of the savings provision in cl 21(1) of the Coastal SEPP and, second, the accrued right under cl 21(1) of the Coastal SEPP that the former planning provisions of SEPP 14 and SEPP 71 continue to apply to Goldcoral’s development application. That an applicant for development consent can have such an accrued right was established by the Court of Appeal’s unanimous decision in The Dubler Group Pty Ltd v Minister for Infrastructure, Planning and Natural Resources (2004) 137 LGERA 178; [2004] NSWCA 424 (Dubler).
2. I agree with Goldcoral that s 30(2)(b) and (d) of the Interpretation Act operate to save Goldcoral’s accrued right under cl 21(1) of the Coastal SEPP to have its development application determined under the former planning provisions of SEPP 14 and SEPP 71, and not the provisions of RAH SEPP. Although the Council sought to distinguish the decision in Dubler on the basis that the accrued right in that case was under the former s 34(4)(b) of the EPA Act, I find the reasoning of the Court to be equally applicable to the equivalent provision in s 30(2) of the Interpretation Act.
3. The “right” saved by cl 30(2)(b) of the Interpretation Act was not a right that arose from Goldcoral making the development application. A development application is to be determined by a consent authority, and a court on appeal, on the basis of the law that is applicable at the time of determination of the development application: Sofi v Wollondilly Shire Council (1975) 2 NSWLR 614 at 622 and Nalor Pty Ltd v Bankstown City Council (1980) 2 NSWLR 630 at 634-635. Rather, the right saved by s 30(2)(b) of the Interpretation Act was the right that accrued by the operation of the savings provision of cl 21(1) of the Coastal SEPP. That savings provision created the right of Goldcoral, as the applicant for development consent, to have the development application determined under the former planning provisions of SEPP 14 and SEPP 71. This is the right “saved by the operation of” cl 21(1) of the Coastal SEPP. Once that right accrued, the operation and effect of s 30(2)(b) and (d) of the Interpretation Act was that the repeal of the Coastal SEPP by the RAH SEPP did not affect the right saved by, and the operation of, cl 21(1) of the Coastal SEPP to have the development application determined under the former planning provisions of SEPP 14 and SEPP 71, and not the current provisions of the RAH SEPP: see Dubler at [26], [30], [36], [38].
4. The consequence is that the development proposed by Goldcoral is not designated development for the purposes of the EPA Act. The provisions of the RAH SEPP that do declare specified development to be designated development do not apply to Goldcoral’s development application. The provisions of SEPP 14 and SEPP 71, which do apply to Goldcoral’s development application, do not declare the development proposed by Goldcoral to be designated development.
5. If contrary to the first reason the provisions of the RAH SEPP, and not the former planning provisions of SEPP 14 and SEPP 71, apply to Goldcoral’s development application, cl 2.7 of the RAH SEPP nevertheless does not operate to declare the development proposed by Goldcoral to be designated development. Goldcoral does not propose to carry out on the land any of the developments specified in cl 2.7(1)(a), (b) or (c) of the RAH SEPP. The Council did not contend to the contrary. Rather, the Council contended that Goldcoral is proposing to carry out “any other development”, the phrase in cl 2.7(1)(d) of the RAH SEPP, and the proposed subdivision is any other development. The proposed development is, the Council’s argument runs, therefore development for which consent is required by cl 2.7(1) and hence declared to be designated development by cl 2.7(2) of the RAH SEPP.
6. I reject the Council’s argument for two reasons. The first is that the proposed subdivision does not involve the division of that part of the land identified as coastal wetlands under the RAH SEPP into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition. The boundaries of the proposed subdivision run along, but not inside, the outer edge of the line on the Coastal Wetlands and Littoral Rainforest Area Map under the RAH SEPP identifying the coastal wetlands that encroach slightly into the eastern part of the land (Lot 277). Whilst this effects a subdivision of Lot 277, it does not subdivide that part of Lot 277 that is “land identified as ‘coastal wetlands’… on the Coastal Wetlands and Littoral Rainforests Area Map.” That part of Lot 277 identified as coastal wetlands remains intact, not divided.
7. The second reason for rejecting the Council’s argument is that, although subdivision of land is development as defined in s 1.5(1) of the EPA Act, the mere subdivision of land by the procuring of the registration in the Office of the Registrar-General of a plan of subdivision without undertaking any physical work on the land, such as the carrying out of a work, does not involve the carrying out of development “on land.” Each of the development for which consent is required by cl 2.7(1) of the RAH SEPP is development that is “carried out on land.” The procuring of the registration of a plan of subdivision might involve the subdivision of land, which is development, but that subdivision is not “carried out on land.”
8. To carry out development on land involves doing something on the land. That is evident with the development specified in paragraphs (a) to (c) of cl 2.7(1) – they all involve physical work on the land with attendant impacts on the land and its vegetation. The catch-all category of “any other development” in paragraph (d) of cl 2.7(1) is no different. Development other than the developments specified in paragraphs (a) to (c) must also be “carried out on land”. The mere procuring of the registration of a plan of subdivision in the Office of the Registrar-General does not involve the carrying out of any development on land.
9. For these two reasons, even if the RAH SEPP were to apply to Goldcoral’s development application, cl 2.7 of the RAH SEPP does not declare the development proposed in the development application to be designated development.
The ecology issues
1. The Council raised, in contentions 3, 4, 9, 10 and 12 of the Amended Statement of Facts and Contentions, many ecology issues, but by the close of the hearing only pressed the following issues:
1. development consent cannot be granted to the development application to carry out development on the land, on which there is a core koala habitat, as there is no plan of management prepared in accordance with Part 4 of the State Environmental Planning Policy (Biodiversity and Conservation) 2021 (Biodiversity SEPP) that applies to the land (the Koala issue);
2. the impact of the development on habitat of the Wallum Froglet, an endangered species (the Wallum Froglet issue); and
3. the inadequacy of the buffer to the littoral rainforest to protect it from edge effects (the littoral rainforest buffer issue).
The Koala issue
1. The Koala issue raises both a legal question and a factual question. The legal question is which environmental planning instrument applies to Goldcoral’s development application. The factual question is how the applicable environmental planning instrument applies.
2. Starting with the legal question, the Council contended that the provisions of Chapter 3 of the Biodiversity SEPP apply, while Goldcoral contended that the former provisions of State Environmental Planning Policy No 44 – Koala Habitat Protection (SEPP 44) apply. The issue joined between the parties is the operation and effect of s 30(2) of the Interpretation Act in saving an accrued right to have the development application determined under the provisions of SEPP 44. Consistent with my determination of the similar question raised by the designated development issue, I agree with Goldcoral’s submission that the applicable environmental planning instrument is SEPP 44, not Chapter 3 of the Biodiversity SEPP.
3. SEPP 44 was in force on 27 October 2014 when Goldcoral lodged its development application for consent to carry out development on the land. For reasons I will explain later, Part 2 of SEPP 44 applied to land within the Richmond Valley local government area, including the land.
4. State Environmental Planning Policy (Koala Habitat Protection) 2019 (SEPP Koala 2019) repealed and replaced SEPP 44 on 1 March 2020. SEPP Koala 2019 applied to land in the Richmond Valley local government area (cl 5(1) and Schedule 1). Clause 15 saved the application of SEPP 44 to Goldcoral’s development application. Clause 15 provided:
“A development application made, but not finally determined, before the commencement of this Policy in relation to land to which this Policy applies must be determined as if this Policy had not commenced.”
1. State Environmental Planning Policy (Koala Habitat Protection) 2020 (SEPP Koala 2020) repealed and replaced SEPP Koala 2019 on 30 November 2020. SEPP Koala 2020 applied to land within the Richmond Valley local government area (cl 5(1) and Schedule 1). SEPP Koala 2020 did not contain a savings clause saving any development application made but not finally determined before the commencement of SEPP Koala 2020.
2. State Environmental Planning Policy (Koala Habitat Protection 2021) (SEPP Koala 2021) amended SEPP Koala 2020 on 17 March 2021. SEPP Koala 2021 applied to the Richmond Valley local government area (cl 6 and Schedule 1). SEPP Koala 2021 did have savings and transitional provisions. Schedule 3 had the effect that SEPP Koala 2020 (as amended) still applied to some local government areas, including Richmond Valley, but only to land zoned RU1 Primary Production, RU2 Rural Landscape and RU3 Forestry, none of which apply to the land here. Clause 18 was the conventional savings clause providing that a development application made but not finally determined before SEPP Koala 2021 commenced was to be determined as if the policy had not commenced.
3. The Biodiversity SEPP came into force on 1 March 2022 and transferred SEPP Koala 2020 to Chapter 3 and SEPP Koala 2021 to Chapter 4 of the Biodiversity SEPP. Because of these transfers of the provisions of SEPP Koala 2020 and SEPP Koala 2021, which had savings and transitional provisions, the Biodiversity SEPP did not have its own savings and transitional provisions.
4. The effect of s 30(2)(b) and (d) of the Interpretation Act is to save the right that accrued under cl 15 of SEPP Koala 2019 for Goldcoral’s development application to be determined under the provisions of SEPP 44, not SEPP Koala 2019, and the repeal of SEPP Koala 2019 by SEPP Koala 2020 and the transfer of SEPP Koala 2020 to Chapter 3 of the Biodiversity SEPP did not affect that right. The reasoning in Dubler is equally applicable to this accrued right.
5. The result is that Goldcoral’s development application is to be determined under the provisions of SEPP 44, to which I now turn.
6. Part 2 of SEPP 44 applies to land in a local government area listed in Schedule 1 (one of which is Richmond River); land in relation to which a development application has been made (which Goldcoral had made); and land that has an area of more than 1 hectare, whether or not the development application applies to the whole, or only part, of the land (Goldcoral’s land is about 72 hectares). Part 2 of SEPP 44 therefore applies to the land.
7. Part 2 of SEPP 44 sets out three steps that a consent authority must follow in determining a development application for development on land to which Part 2 of SEPP 44 applies. Step 1 is to decide whether the land is a potential koala habitat. Clause 7(1) of SEPP 44 provides:
“Before a Council may grant consent to an application for consent to carry out development on land to which this Part applies, it must satisfy itself whether or not the land is a potential koala habitat.”
1. The term “potential koala habitat” is defined in cl 4 to mean “areas of native vegetation where the trees of the types listed in Schedule 2 constitute at least 15% of the total number of trees in the upper or lower strata of the tree component.” Schedule 2 lists ten koala feed tree species. The consent authority is restricted in how it satisfies itself as to whether land is a potential koala habitat. Clause 7(2) provides that a consent authority “may satisfy itself as to whether or not land is a potential koala habitat only on information obtained by it, or by the applicant, from a person who is qualified and experienced in tree identification.” This restriction ensures accurate identification of whether in any area of native vegetation on the land the trees are of the types listed in Schedule 2. If the consent authority is satisfied that land is not a potential koala habitat, it is not prevented by SEPP 44 from granting consent to the development application. If the consent authority is satisfied that the land is a potential koala habitat, it must comply with cl 8 of SEPP 44, which sets out the second step.
2. Step 2 is to decide whether the land is a core koala habitat. Clause 8(1) of SEPP 44 provides:
“Before a council may grant consent to an application for consent to carry out development on land to which this Part applies that it is satisfied is a potential koala habitat, it must satisfy itself whether or not the land is a core koala habitat.”
1. The term “core koala habitat” is defined in clause 4 of SEPP 44 to mean “an area of land with a resident population of koalas, evidenced by attributes such as breeding females (that is, females with young) and recent sightings of and historical records of a population.” The consent authority is restricted in how it satisfies itself as to whether or not land is a core koala habitat. Clause 8(2) provides:
“A council may satisfy itself as to whether or not land is a core koala habitat only on information obtained by it, or by the applicant, from a person with appropriate qualifications and experience in biological science and fauna survey and management.”
1. If the consent authority is satisfied that the land is not a core koala habitat, it is not prevented by SEPP 44 from granting consent to the development application. If the consent authority is satisfied that the land is a core koala habitat, it must comply with cl 9, which sets out the third step.
2. Step 3 is to decide whether development consent can be granted in relation to land that is a core koala habitat. Clause 9(1) provides:
“Before a council may grant consent to a development application for consent to carry out development on land to which this Part applies that it is satisfied is a core koala habitat, there must be a plan of management prepared in accordance with Part 3 that applies to the land.”
1. Part 3 of SEPP 44 sets out the requirements for preparation (cl 11), consultation (cl 12) and approval (cl 13) of a plan of management. Of importance to the Council’s argument is the requirement in cl 13(2) that a plan of management prepared by a person other than the Council, such as the applicant for development consent, has no effect unless it is approved by the Council and by “the Director” (now the Planning Secretary).
2. The Council argued that cl 9(1) and cl 13(2) of SEPP 44 operate to prevent the Court from granting consent to Goldcoral’s development application. Although Goldcoral has prepared a Koala Plan of Management, that plan is not prepared in accordance with Part 3 of SEPP 44, and is therefore of no effect, because it has not been approved by the Council and the Planning Secretary. The Council accepted that the Court, under cl 39(2) of the Court Act, could exercise the Council’s power of approval under cl 13(2) of SEPP 44, but the Court could not exercise the Planning Secretary’s power of approval under cl 13(2) of SEPP 44. Goldcoral’s Koala Plan of Management therefore has no effect as it has not been approved by, at least, the Planning Secretary.
3. Goldcoral contested the Council’s submission that the Court is precluded by cl 9(1) and cl 13(2) of SEPP 44 from granting consent to the development application. It advanced two reasons. First, Goldcoral submitted that the land on which the development is now proposed to be carried out does not contain a core koala habitat as defined in cl 4 of SEPP 44. The only location where the parties’ experts considered there was an area of native vegetation that was a potential koala habitat, as defined in cl 4 of SEPP 44, was in the south-western corner of the land (primarily in Lot 163 but extending partly into Lot 276): see Supplementary Terrestrial Ecological Assessment, p 90. This is where there are trees of the types listed in Schedule 2 of SEPP 44 (feed tree species) under three of which some koala faecal pellets have been found: Supplementary Terrestrial Ecological Assessment, pp 57-58. Although the parties’ ecologists agreed in the Ecology Joint Expert Report (p 3) that this area of native vegetation was a core koala habitat, as defined in the Biodiversity SEPP, Goldcoral contested this conclusion.
4. Goldcoral submitted that this area of native vegetation, even if it be a potential koala habitat, is not a core koala habitat as defined in SEPP 44. The experts have not paid proper regard to the terms of the definition of “core koala habitat”. Goldcoral submitted that the evidence does not establish that the area of native vegetation has a resident population of koalas, evidenced by breeding females (that is, females with young) and recent sightings of and historical records of a population. The observation of faecal pellets at three feed trees might evidence use of the area by some koalas, but not a resident population of koalas. That was accepted by Mr McArthur in his Supplementary Terrestrial Ecological Assessment (November 2023), where he noted that, based on prior assessment of the level of koala activity/usage over the land, “a resident/sedentary population was not present on the site at the time” (p 21 and p 57).
5. In any event, Goldcoral submitted that the development application as finally amended no longer proposes to carry out the residential subdivision in this area of the land. All of that area is now within a “future investigation area”. The only remaining development in the vicinity of, but not within, that area of native vegetation for which consent is sought is the demolition of the existing house and structures (which are on Lot 163). That demolition will have no effect on the native vegetation, including koala feed trees, in the vicinity.
6. I find that cl 9(1) and cl 13(2) of SEPP 44 do not preclude the Court granting consent to the development application as finally amended, for the reasons advanced by Goldcoral.
7. The first reason is that, notwithstanding that Part 2 of SEPP 44 applies to the whole of the land in relation to which a development application is made, the three-step decision-making process under SEPP 44 focuses attention on any area of native vegetation on that land which is a potential koala habitat and a core koala habitat. That is evident, first, by the definition of “potential koala habitat” requiring there to be an area of native vegetation with trees meeting the type and number requirements in the definition of “potential koala habitat” - a cleared area of land can never meet that definition; second, by a core koala habitat needing first to be a potential koala habitat, by the operation of cl 8(1), and as a consequence a core koala habitat must also be an area of native vegetation; and third, by the use of the indefinite article “a” before “potential koala habitat” in cl 7 and cl 8 of SEPP 44 and before “core koala habitat” in cl 8 and cl 9 of SEPP 44, indicating that one or more areas of a potential koala habitat or a core koala habitat may occur on the land, but the land as a whole does not thereby become a potential koala habitat or a core koala habitat – only the area or areas within the land that meet the definitions of potential koala habitat and core koala habitat.
8. In this case, the only area of native vegetation that might be a potential koala habitat is in the south-western corner of the land, primarily in Lot 163 but partly extending into Lot 276. The experts agreed that this area of native vegetation has the required type and number of koala feed tree species to be a potential koala habitat: see Ecology Joint Expert Report, p 3. Once the area of native vegetation is considered under cl 7(1) of SEPP 44 to be “a potential koala habitat”, the second step is to decide whether the area is “a core koala habitat” under cl 8(1) of SEPP 44. However, the requirement to be satisfied as to whether or not the land is a core koala habitat is only engaged if the development application seeks consent “to carry out development on land… that it is satisfied is a potential koala habitat” (cl 8(1)). That is to say, the development application must seek consent to carry out development in the area of native vegetation on the land that the consent authority is satisfied is a potential koala habitat.
9. In this case, Goldcoral no longer seeks consent to carry out any development on land that is a potential koala habitat. The final amendment of the development application removed any proposal for residential subdivision in the area of native vegetation that is a potential koala habitat. All of the area of native vegetation that is a potential koala habitat is now within the “future investigation area”. The only development in the vicinity of, but not within, that area of native vegetation for which Goldcoral still seeks development consent is the demolition of the existing house and structures on Lot 163. The demolition would involve the carrying out of development on land, but not on land that is “a potential koala habitat.”
10. As a consequence, the restriction on granting consent in cl 8(1) of SEPP 44 is not engaged and there is no requirement for the Court to satisfy itself whether or not the land is a core koala habitat.
11. If, however, it is necessary under cl 8(1) of SEPP 44 for the Court to satisfy itself whether or not the area of the land that is a potential koala habitat is a core koala habitat, I am not satisfied that the area of native vegetation in the south-western corner of the land, which is a potential koala habitat, is a core koala habitat. The evidence before the Court is insufficient to establish that that area of native vegetation on the land meets the definition of “core koala habitat” in cl 4 of SEPP 44. The presence of a small number of koala faecal pellets beneath three trees of a feed tree species in the area might establish that koalas have used the area, but that falls short of establishing that there is “a resident population” of koalas in the area. That is the test required by the definition of “core koala habitat”. Mr McArthur found “the level of koala activity/usage over the subject site was ‘low’ and…the level of use by the koala is likely to be transitory”: Supplementary Terrestrial Ecological Assessment, p 91. Low, transitory use of the land by koalas is not consistent with there being a resident population of koalas on the land.
12. Furthermore, the definition requires a resident population of koalas to be evidenced by attributes such as “breeding females (that is, females with young) or recent sightings of and historical records of a population.” No evidence was adduced of breeding females in the area. Although there was some evidence of sightings of and historical records of individual koalas, these sightings and records were outside of this area of native vegetation on the land and in many instances were far removed from the land: Supplementary Terrestrial Ecological Assessment, p 91. Moreover, they were not recent sightings of and historical records of “a population” of koalas, as distinct from individual koalas.
13. On this evidence, I am satisfied, for the purposes of cl 8(1) of SEPP 44, that the land is not a core koala habitat. As a consequence, by dint of cl 8(3), the Court is not prevented by SEPP 44 from granting consent to Goldcoral’s development application.
14. This conclusion means that there is no need for compliance with cl 9 of SEPP 44. The restriction in cl 9(1) on granting consent to carry out development on land that the Court is satisfied is a core koala habitat unless a plan of management prepared in accordance with Part 3 has been approved, is not engaged.
The Wallum Froglet issue
1. Habitat of the Wallum Froglet, an endangered species, occurs on the eastern side of the land. A drainage channel, constructed by the previous land owners when carrying out the previous residential subdivision, runs along the common boundary of Lot 277 with the adjoining land to the east. The northernmost extent of the channel is where the splay between the R1 General Residential zone and the C2 Environmental Conservation zone starts. Goldcoral proposes to remove the channel and construct new drainage infrastructure in its place. The Council raised concern about this removal and replacement of the existing channel.
2. The Council’s terrestrial ecologist, Mr M Hallinan, considered that the drainage channel, since being constructed then abandoned, has regenerated with wetland vegetation, which provides confirmed forage habitat and potential breeding habitat, especially in the northern portion of the channel. Goldcoral’s terrestrial ecologist, Mr A McArthur, considered the channel contains, at most, potential forage habitat: Ecology Joint Expert Report, p 3. Mr McArthur, on his numerous visits to the land, only recorded the Wallum Froglet calling in a natural depression to the north of the northernmost extent of the drainage channel beyond the splay: Supplementary Terrestrial Ecological Assessment, Figure 13 after p 54. Goldcoral’s aquatic ecologist, Dr J Thorogood, considered the channel contained neither forage habitat nor breeding habitat for the Wallum Froglet, as a result of it being “a straight, V-shaped channel that is frequently subject to eutrophication due to poor drainage and restricted tidal flushing.”: Ecology Joint Expert Report, p 11. Dr Thorogood considered that not only does the channel provides a hostile environment that would inhabit breeding, any tadpoles that might occur would be subject to predation by fish entering from the southern end of the channel where it meets the Evans River: see Waterway and Coastal Ecology Report, p 18.
3. The parties’ experts agreed that there is foraging and breeding habitat to the north of the channel on the land and to the east of the land on the adjoining land, in the areas identified as coastal wetlands under the Biodiversity SEPP and zoned C2 Environmental Conservation under RVLEP. These areas of habitat will not be disturbed, as no development is proposed in any coastal wetlands or land zoned C2 Environmental Conservation. The parties’ engineers agreed with the assessment in the Hydrogeological Impact Assessment that “groundwater was not adversely affected by the development proposal”: Joint Expert Report on Flooding, Essential Services, Stormwater, Groundwater and Earthworks, p18. The construction of the replacement drainage channel will not have any unacceptable impact on groundwater dependent ecosystems, such as the coastal wetlands: Hydrogeological Impact Assessment, p 33. Indeed, Mr McArthur considered that the replacement drainage channel may “assist with reducing drawdown of the water from the SEPP 14 wetland area”: Supplementary Terrestrial Ecological Assessment, p 12.
4. I find that the proposed residential subdivision, including the removal and replacement of the existing drainage channel, will not affect the Wallum Froglet or its habitat on the land or adjoining land. The only potential effect would be if there was habitat in the existing drainage channel. I accept the evidence of Dr Thorogood and Mr McArthur that there is neither breeding nor foraging habitat in the existing drainage channel. The replacement of that channel will not, therefore, affect any habitat of the Wallum Froglet. The areas of breeding and foraging habitat are to the north and east of the drainage channel, in areas of the land and the adjoining land that will not be developed.
The littoral rainforest buffer issue
1. The Council raised as an issue the width of the buffer to be provided to the littoral rainforest on the land to protect it from edge effects. The Council’s terrestrial ecologist, Mr Hallinan, considered a minimum 15m buffer to the littoral rainforest, including a 5m wide, densely planted zone of native rainforest tree, shrub and ground cover, would be required: Ecology Joint Expert Report, p 4 and Supplementary Report Clarifying Joint Expert Witness Report (25 May 2024), p 1. Goldcoral’s terrestrial ecologist, Mr McArthur, considered it was sufficient to provide a 15m buffer, measured from the outermost, surveyed, littoral rainforest trees, within which a 5m buffer of retained and revegetated native rainforest vegetation could be established: Ecology Joint Expert Report, p 4. Mr McArthur’s overlaid the tree survey on the mapped littoral rainforest areas: Supplementary Terrestrial Ecological Assessment, p 42 and Figures 9A - 9C. Mr McArthur’s measurement of 15m from the surveyed littoral rainforest trees accords with the maximum tree protection zone under Australian Standard - Protection of trees on development sites AS 4970-2509: Supplementary Terrestrial Ecology Assessment, p 74. Mr Hallinan disputed the applicability of this Australian Standard, as it is intended to protect individual trees on development sites, not a vegetation community such as the littoral rainforest endangered ecological community on the land.
2. In the end, this disagreement between the parties’ ecologists was more of academic interest than practical consequence. Goldcoral’s final amendment of the development application provides at least a 15m buffer to the littoral rainforest, as Mr Hallinan had recommended, in nearly all locations. That was evidenced by the amended plan showing the concept rehabilitation areas and the four cross-sections showing the width of the buffer at those cross sections. The concept rehabilitation areas, as finally amended, were approved by the parties’ bushfire experts as providing appropriate bushfire protection.
3. The concept rehabilitation areas plan depicts the littoral rainforest, labelled ‘Regeneration Area’ and coloured dark green; a ‘Revegetation Area - Littoral Rainforest’ surrounding on the outside the littoral rainforest ‘Regeneration Area’ and coloured light green; an additional rehabilitation area outside the ‘Revegetation Area - Littoral Rainforest’ on most sides, labelled ‘Bushfire IPA Standards’ and coloured mustard yellow; and in three locations a ‘Drainage Reserve’ on the outside of either the Revegetation Area - Littoral Rainforest or the Bushfire IPA Standards area. Cumulatively, these areas surrounding and outside of the littoral rainforest Regeneration Area provide greater than 15m separation between the littoral rainforest and the roads in the residential subdivision, there always being a road separating the vegetated areas and the residential allotments.
4. This is demonstrated by the four cross-sections. Cross-section A is over the proposed new road to the south of the northern area of littoral rainforest, around where Lot 90 is proposed. Running from north to south, the section depicts from the littoral rainforest Regeneration Area, a 15m littoral rainforest buffer zone comprising 6m of dense rainforest plantings and 9m of Bushfire IPA minimum Asset Protection Zone (APZ), and then a 15m road reserve.
5. Cross-section B is over the proposed new road to the north-east of the northern area of littoral rainforest, around where Lot 29 is proposed. Running from south-west to north-east, the section depicts the littoral rainforest Regeneration Area, a 21m littoral rainforest buffer zone comprising 12m of retained/revegetated western drain (this is the drain constructed for the previous subdivision, which the ecologists agreed should be retained as it has naturally regenerated) and 9m of Bushfire IPA minimum APZ, and then a 15m road reserve.
6. Cross-section C is over the proposed new road to the north of the Crown foreshore reserve along Evans River and to the south of the southern area of the residential development, around where Lot 99 is proposed. Running from south to north, the section depicts from the boundary with the Crown foreshore reserve, a 40m setback from the Crown foreshore reserve comprising 17m of retained native vegetation and a 23m littoral rainforest buffer zone with dense rainforest plantings, and then a 7m bioswale and 12m road reserve.
7. Cross-section D is over the proposed new road to the west of the southern area of the littoral rainforest, around where Lot 92 is proposed. Running from east to west, the section depicts from the littoral rainforest Regeneration Area, a 14m littoral rainforest buffer zone with dense rainforest plantings, and then a 4m bioswale and 15m road reserve.
8. The concept rehabilitation areas plan and these cross-sections demonstrate that a buffer zone to the littoral rainforest of around 15m or more will be provided, with an even greater separation between the residential development and the littoral rainforest. I consider these buffers are of sufficient width to provide adequate protection for the littoral rainforest from edge effects. Edge effects can still occur no matter how wide the buffer. Seeds of weed species can be blown in or deposited by birds and animals in the littoral rainforest regardless of the buffer width. The littoral rainforest will need to be managed on an ongoing basis as a conservation area, including weed removal and ongoing plantings of rainforest species. Having a buffer of sufficient width is one management tool to conserve the littoral rainforest, but it should not be viewed as the only conservation management tool. The ongoing management of the littoral rainforest as a conservation area will be required by the conditions of consent.
The character and layout issues
1. The Council’s final merit issues were that the proposed development is not consistent with the desired future character of the locality and does not incorporate a subdivision layout and design that minimise impacts on the sensitive environmental areas and areas of cultural significance within and adjacent to the land. The Council noted that cl 6.6(4)(a) of RVLEP requires development consent not to be granted unless the consent authority is satisfied that “the development is designed, sited and will be managed to avoid any significant adverse environmental impact.”
2. The Council’s town planner, Ms C Brown, acknowledged that the land has been historically zoned to permit residential development and is currently identified in the North Coast Regional Plan 2041 (Department of Planning and Environment 2022) as an Urban Growth Area and the Iron Gates subdivision is identified as one of severally potentially large developments in Evans Head. Ms Brown accepted that parts of the land are suitable for and able to accommodate residential development. The issue was what level of development can be undertaken without adversely impacting sensitive areas of ecological value and cultural significance. Ms Brown considered that the design and layout of the development proposed originally, and before the development application was finally amended, unacceptably impacted environmentally and culturally sensitive areas on the land: Town Planning Joint Expert Report, pp 19-20.
3. Goldcoral’s town planner, Mr M Oliver, and urban designer, Mr N Dickson, disagreed with Ms Brown. They said the design and layout of the development are consistent with the zoning of the land, not only currently under RVLEP but also historically in a series of environmental planning instruments and strategic planning documents since the early 1980s, including the recent Richmond Valley Local Strategic Planning Statement (Richmond Valley Shire Council 2020) and North Coast Regional Plan 2041. Mr Oliver and Mr Dickson considered that the design and layout of the development do respect, and do not unacceptably impact, the environmentally and culturally sensitive areas on the land: Town Planning Joint Expert Report, p 21. No development is proposed in these areas, including the littoral rainforest. Development is only proposed in areas that are already cleared or were cleared.
4. As with the littoral rainforest buffer issue, this disagreement between the parties’ planners became largely academic when the development application was finally amended to reduce further the impact of the development on the environmentally and culturally sensitive areas of the land. The ecological and cultural impacts were reduced by deleting the proposal for Stage 2 of the residential development to be in and around the area of native vegetation that is a potential koala habitat and the midden, an area of Aboriginal cultural heritage value. The area previously proposed for residential development is now a future investigation area, requiring re-assessment of the appropriateness of any residential development in that area.
5. The ecological impacts on the littoral rainforest were reduced by increasing the buffers around the littoral rainforest, as I have earlier explained. The apprehended impacts of the development on the Wallum Froglet have been assessed and found not to be substantiated. The habitat of the Wallum Froglet is removed from the footprint of the development.
6. The potential impacts of the development on neighbouring land uses, of exercising and enjoying native title rights on lands and waters to the south of the land, have been mitigated by dense plantings between the development and the Crown foreshore reserve, as I explain below when dealing with Ms Barker’s contentions.
7. The extensive cut and fill previously proposed in the area of the residential subdivision on the hill to the west, has been reduced. On the lower lying parts of the site, significant volumes of fill still need to be imported to protect residential development from flooding impacts. But this is required for any residential development of these areas of the land and is a necessary consequence of the continuing zoning of the land for residential purposes.
8. These amendments to the design and layout further reduced the impacts of the development on the environmentally and culturally sensitive areas on the land from what the previous design and layout already had achieved. The development already was designed to be located in the areas of the land that are currently cleared or historically have been cleared for the prior activities of agriculture, sand mining and residential subdivision. All of the areas of environmental and cultural value have been avoided.
9. In these circumstances, I am satisfied that the development as finally amended is designed, sited and will be managed to avoid any significant adverse environmental impact, thereby meeting cl 6.6(4)(a) of RVLEP.
Impact on native title rights issue
1. Ms Barker’s first contention was that the proposed development would have an unacceptable impact on the traditional owners of Country exercising and enjoying their native title rights on land and waters to the south of the land.
2. Ms Barker is a Bandjalang woman of the Bundjalung nation. The Bandjalang people enjoy the benefit of native title rights and interests in lands and waters near to the land. Those rights and interests were upheld by the Federal Court in Bandjalang People No 1 and No 2 v Attorney General of NSW [2013] FCA 1278 and Bandjalang People No 3 v Attorney General of NSW [2021] FCA 386. The native title rights and interests are held in trust by the Bandjalang Aboriginal Corporation Prescribed Body Corporate. Ms Barker is a listed member of that corporation.
3. The native title rights and interests recognised by the Federal Court include the following non-exclusive rights:
a. the right to hunt, fish and gather the traditional natural resources of the Consent Determination Area for non-commercial personal, domestic and communal use;
b. the right to take and use waters on or in the Consent Determination Area;
c. the right to access and camp on the Consent Determination Area;
d. the right to do the following activities on the land:
i. conduct ceremonies;
ii. teach the physical, cultural and spiritual attributes of places and areas of importance on or in the land and waters; and
iii. to have access to, maintain and protect from physical harm, sites in the Consent Determination Area which are of significance to the Bandjalang People under their traditional laws and customs.
1. The lands on which the Federal Court found these native title rights and interests exist, and which could be potentially affected by the development, are to the south of the land, largely on the southern side of Evans River. The waters on which the Federal Court found these native title rights and interests exist include the Evans River.
2. Ms Barker is concerned that the development of the land may impact the exercise and enjoyment of native title rights and interests, largely by reason of visual impacts and acoustic impacts.
3. Goldcoral has sought to mitigate the visual and acoustic impacts in two ways. First, Goldcoral deleted the proposal for Stage 2 of the residential subdivision in the south-western corner of the land, an area which might be able to be seen and heard from the lands and waters to the south. Second, Goldcoral proposes planting a dense screen of vegetation between the southern area of the residential subdivision and the Crown foreshore reserve. Cross-section C on the concept rehabilitation areas plan shows there will be, at that location, a 40m setback from the Crown foreshore reserve, comprising 17m of retained native vegetation and a 23m buffer zone with dense rainforest plantings. This densely vegetated buffer will supplement the already dense vegetation in the Crown foreshore reserve. The Crown foreshore reserve adjacent to the land varies between 23.25m at its narrowest to 41.79m at its widest, with an average width of 28.3m. The combined width of the densely vegetated buffer screening the development from the lands and waters to the south is therefore around 68m. This exceeds the 50m buffer Ms Barker sought to avoid unacceptable impacts on native title rights and interests.
4. The result will be that the residential subdivision will be visually and acoustically screened from the lands and waters to the south, mitigating unacceptable impacts on the exercise and enjoyment of native title rights and interests in those areas.
Impact on Aboriginal cultural heritage issue
1. Ms Barker’s second contention was that the proposed development will have an unacceptable impact on the Aboriginal cultural values of the land and surrounding areas. Ms Barker identified three impacts: first, on the significant cultural landscape of the Dirruwung (Goanna) Story; second, on the midden in the southwest corner of Lot 276; and third, on a burial site in the vicinity of the hill in the west of the land. I will explain each.
2. Ms Barker’s account of the Dirruwung (Goanna) Story is that the interaction between two mythical beings, the Goanna and the Snake, created the landforms of the Evans River itself and the land either side of the river, including Snake Island, through to where the river meets the sea at Evans Head, including Goanna Headland. On this account, the Story is embodied in a broad cultural landscape, which Ms Barker says includes the land.
3. Ms Barker explained that the traditional belief of the Bandjalang people is that the Goanna protects them and their fear is that the Goanna could be scared away, and the Snake will return, if the landscape in which the story is embodied is disturbed. This concern, as explained by Ms Barker, is not specific to the land proposed to be developed by Goldcoral – it applies to the whole of the Evans River catchment, from the headwaters to the sea. And it is not specific to the development proposed by Goldcoral – any development of land in the broad cultural landscape could have the effect feared.
4. Goldcoral’s archaeologist and anthropologist, Mr Muhlen-Schulte, acknowledged the significance of the Story but considered the proposed development will not diminish the Story:
“The proposed development (project area) is a significant distance west of the loci of this story on the Evans Head headland (Dirawong) and north of the Snake Island within the Evans River.
There is no activity associated with the proposed development within the project area which could impact the landscape which represents The Goanna and The Snake, nor will it diminish the stories [sic] importance or relevance nor impact the Bandjalang Peoples’ interdependency with this landscape and dreaming story”: Aboriginal Cultural Heritage and Native Title Report, pp 13-14.
1. Whilst I acknowledge and respect that this Story is the traditional belief of the Bandjalang People, as articulated by Ms Barker, I do not accept that it demands the refusal of consent under the EPA Act for any development of any land within the broad cultural landscape embodying the Dirruwung (Goanna) Story. As Mr Muhlen-Schulte explained, the land proposed to be developed by Goldcoral is not said to embody any particular attribute of the Story or the Goanna or the Snake, such as the geomorphological features of Goanna Headland or Snake Island. There is no particular aspect of the development proposed that impacts to a greater extent on the broad cultural landscape. The proposed subdivision of the land for residential purposes is not intrinsically incompatible with the cultural landscape. Moreover, as I have found when dealing with the ecology issues, the development is designed, sited and will be managed to avoid any significant adverse environmental impact. Insofar as the cultural landscape is, in part, formed and framed by the environment of that landscape, this avoidance of significant adverse environmental impact should mitigate adverse cultural heritage impacts.
2. Ms Barker’s second concern was the potential impact of the development on a midden in the southwestern corner of the land. The midden is partly on Lot 276 and partly on the Crown foreshore reserve, extending down to the Evans River. The Iron Gates midden, as described in AHIMS13-1-0204, was assessed in the Aboriginal Cultural Heritage Assessment Report as having moderate to high significance. The parties’ Aboriginal cultural heritage experts agreed that there is uncertainty as to the extent of the midden and recommended further investigation by subsurface testing of the midden and the surrounding sensitive landform of the Evans River beach ridge plain.
3. The development originally proposed Stage 2 of the residential subdivision to be near and to the north of the midden. Ms Barker contended that the investigation recommended by the Aboriginal cultural heritage experts should be undertaken before development consent for Stage 2 is granted and that Stage 2 should be designed to incorporate a suitable buffer to protect the full extent of the midden and any other archaeological deposits that might be discovered within the surrounding sensitive landform.
4. To avoid potential impact on the midden, Goldcoral amended the development application to delete the proposed Stage 2 of the residential subdivision near the midden and instead proposed a future investigation area. This allows the investigation recommended by the Aboriginal cultural heritage experts to occur to assess whether any development can appropriately be carried out in the area. In these circumstances, the development as now proposed will not have an impact, let alone an unacceptable impact, on the midden.
5. Ms Barker’s third concern was of the potential impact of the development on a burial site in the vicinity of the hill in the west of the land. The hill is in Lot 276 but rises to the west across the Crown Road Reserve into Lot 163. The part of the hill in Lot 276 is cleared and has been excavated and had earthworks undertaken as part of the carrying out of the previous residential subdivision. The part of the hill in the Crown Road Reserve and in Lot 163 is forested.
6. Ms Barker said she is aware of a burial site in the vicinity of the hill. Ms Barker said that as a woman, she was culturally not allowed to go near the burial site as it is considered men’s business, but she has been told of its approximate location by her father. Initially, Ms Barker thought the burial site was on the part of the hill in Lot 276, between Stages 1 and 2 of the residential subdivision. At the hearing, however, Ms Barker marked the photograph taken around 1996/1997, which showed earthworks and excavation in this part of the hill in Lot 276, to show the burial site to be in the undisturbed forested land to the west in Lot 163.
7. Mr Muhlen-Schulte queried the likelihood of a burial site being on the hill, which has hard rocky ground making burial difficult. He said: “Burial sites in Australia are generally found in soft sediments, (ie sandy loam or sand) rock shelters or tree stumps and close to waterways”: Aboriginal Cultural Heritage and Native Title Report, p 27. The hill has none of these attributes.
8. I find that the proposed development will not impact on any burial site in the vicinity of the hill. First, if there is a burial site, Ms Barker’s settled location of the site is to the west of Lot 276, in the forested and undisturbed land in Lot 163, which is removed from the proposed development. The burial site will not be impacted. Second, the likelihood of a burial site on the hard, rocky ground of the hill is low. I accept Mr Muhlen-Schulte’s evidence in this regard. Third, if contrary to the above there was a burial site in the cleared area of the hill in Lot 276, it would likely have been destroyed by the extensive excavation and earthworks in that area which were undertaken for the previous residential subdivision.
9. For these reasons, I find that the proposed development will not have an unacceptable impact on Aboriginal cultural heritage on the land.
The community’s concerns
1. As I have earlier noted, individuals and community organisations have been opposed to residential development on the land since the late 1980s. This opposition continues with respect to the current proposal. A bundle of written objections by members of the public to Goldcoral’s development application was tendered. Five people gave evidence at the start of the hearing on site and their written speaking notes were tendered, as was Dr P Ashley’s later email to the Court. The matters raised in the objections overlapped with the issues raised by the Council and Ms Barker, but also ranged wider. I will group the objectors’ concerns by topic and explain how they have been addressed satisfactorily.
Legal concerns
1. The objectors raised similar issues to the Council that development consent cannot be granted because:
1. the proposed development relies on unlawful clearing and works;
2. the proposed development is designated development;
3. the RAH SEPP applies to the development application but has not been complied with; and
4. a Koala Plan of Management is required under SEPP 44 as the development is on land that is a core koala habitat but has not been prepared and approved.
1. I have dealt with these legal issues earlier in the judgment. In summary, I have found the proposed development does not impermissibly rely on unlawful clearing or works; the proposed development is not designated development; the RAH SEPP does not apply to the development application; and a Koala Plan of Management is not required as no development is proposed in a core koala habitat.
Merit issues
1. The objectors raised the following issues that overlapped with the Council’s and Ms Barker’s issues:
1. the ecological impacts of the development have not been adequately addressed;
2. the unacceptable impacts on koalas; and
3. the unacceptable impacts on Aboriginal cultural heritage.
1. I have dealt with these issues earlier in the judgment. In summary, the proposed development, as finally amended, is designed, sited and will be managed to avoid any significant adverse environmental impact, including on the littoral rainforest endangered ecological community, threatened species including the Wallum Froglet and Oxleyan Pygmy Perch, and coastal wetlands;
2. Amendments to the development application enhance the width and plantings of the vegetated buffers to the littoral rainforest and Crown foreshore reserve. The bushfire experts have agreed that the design and siting of the enhanced vegetated buffers are compatible with protection for bushfire risk. No additional clearing of native vegetation will be required beyond that identified in the finally amended development application.
3. As finally amended, no residential development is proposed on land in either a potential koala habitat or a core koala habitat. The area with a potential koala habitat is now in a future investigation area. The development application proposes measures to mitigate impacts on koalas. A Vegetation and Fauna Management Plan, required to be prepared and amended by conditions of consent, will incorporate measures to protect koalas. A condition of consent will not allow future residents to keep dogs and cats in the residential subdivision, preventing dog and cat attacks on koalas. Vehicle speeds in the residential subdivision will be low (40kph), minimising vehicle strikes. Koala friendly awareness is proposed through strategic signage in the residential subdivision.
4. The objectors raised other merit issues that the Council had raised in earlier Statements of Facts and Contentions but did not press once the issues were satisfactorily addressed by the expert evidence. These include:
1. Flooding impact on neighbouring land: The Council’s contention relating to flooding was resolved between the parties’ flood experts. The development has been designed having regard to the most up-to-date flood modelling available, including making allowance for climate change. The experts agreed, in the Engineering Joint Expert Report, p 2, that the development:
“is located within a region of low velocity flood water and that the proposed filling is located offline from the main river channel flows. The resultant outcome of the development produces no impact to the existing flood regime within the vicinity of the site.”
1. Flooding impact on the development site: The flood experts agree that the proposed development has been designed and sited and will be managed to be compatible with existing site flood characteristics and the flood hazard of the land: Engineering Joint Expert Report, p 2. The experts agree that “the amended concept engineering plans now appropriately provide road and building floor levels which are consistent with the Richmond Valley Flood Study inclusive of climate change allowances”: Engineering Joint Expert Report, p 2. The proposed development will not cause material offsite impacts or increase risk to life from flooding: see Flood Assessment and Flood Emergency Response Plan, p 42. The flood experts agree that the proposed development incorporates appropriate measures to manage risk to life from flood, including evacuation of the site via Iron Gates Drive and a proposed Emergency Shelter within the development site in the event that residents are not able to evacuate: Engineering Joint Expert Report, p 3.
2. Impacts of climate change on flooding: The flood experts agreed that the proposed development has been designed and sited to be consistent with the Richmond Valley Flood Study 2023, inclusive of climate change allowances: Engineering Joint Expert Report, p 2. The experts agreed that: “The amended site levels and engineering design as documented appropriately considers climate change and projected changes to flood levels and behaviour”: Engineering Joint Expert Report, p 3.
3. Inappropriate community refuge building: The proposed community refuge building will serve as both a flood refuge and bushfire refuge. The building is designed to have a minimum building floor level of RL 7.60m AHD, above the nominated Probable Maximum Flood (PMF) level of 7.56m AHD, consistent with the Richmond Valley Flood Study: see Engineering Joint Expert Report, p 3. The parties’ bushfire experts agreed that the proposed development mitigates bushfire risk to an acceptable level. The bushfire experts agreed that although the community refuge building would not “form part of the core bushfire protection measures” (other measures do that), it is beneficial to provide the refuge “as a redundancy option to provide a failsafe option”: Bushfire Joint Expert Report, p 11.
4. Insufficient sewer infrastructure capacity: The proposed development will produce 7.7L/S of peak wet weather flows. The Evans Head Augmentation Strategy Report prepared by GHD (2010) estimated a greater catchment flow of 9.4L/S of peak wet weather flows from the Iron Gates estate. The development flows will therefore not exceed the planned flows. Further, the pump station proposed to be used, EHPS-02, underwent a pump upgrade in 2008 to allow a flow of 20.8L/S, including planned flows of 9.4L/S from the Iron Gates estate and 11.4L/S from the local catchment: see Engineering Services and Civil Infrastructure Report, Appendix D, Sewer Network Capacity Assessment, pp 1-2. The parties’ engineering experts agreed that historical allowances were made in the sewer network planning for the connection of development flows from the site and that augmentations may be required to be undertaken downstream of pump station EHPS-02 to facilitate the servicing of the development upon finalisation of the development yield and resultant outflows: Engineering Joint Expert Report, p 10. This recommendation is included in the conditions of consent.
5. Disjointed urban sprawl: Although the Iron Gates site is separated by coastal wetlands from the Evans Head township, the site has been zoned for residential purposes since 1983 and is identified as part of the housing strategies of both the Council and the NSW Government for development for residential purposes, notwithstanding this known separation.
6. Insufficient public amenities: The town planning experts agreed that the proposed open space at Lot 147 (for a park) is suitably sized to meet the needs of the residents of the future community in terms of passive open space and children’s playground: Town Planning Joint Expert Report, p 24. The proposed community building will serve as a community centre providing facilities at times when it is not needed for a flood or fire refuge.
7. Impact on coastal wetlands: The proposed development will not adversely impact the groundwater of adjoining coastal wetlands. The Hydrogeological Impact Assessment found that “expected groundwater drawdown caused by the proposed development will not create any unacceptable impact on nearby properties, groundwater bores or groundwater dependent ecosystems”: p 33. The proposed development will not cause pollution of the Evans River: “Directed away from sensitive receptors and meeting required standards through appropriate ‘treatment trains’, stormwater will not adversely impact the receiving environment. That is, water quality within watercourses, and key fish habitat, both on-site and within the Evans River, will be protected through implementation of the SWMP [Stormwater Management Plan] and the provision of set-backs to the estuarine wetlands of the Evans River”: Waterway and Coastal Ecology Report, p 26. Natural estuarine processes and the ecosystem health (including water quality) of the Evans River will not be impacted by the development: Waterway and Coastal Ecology Report, p 28.
8. Inconsistent with Coastal Development Guidelines: The proposed development has been designed having regard to the Coastal Design Guidelines for NSW prepared by the Urban Design Advisory Service (February 2003). There is, however, no current law requiring a development application to be consistent with the Guidelines.
9. Sand fly infestation: The land contains limited suitable on-site breeding habitat for biting insects. The incorporation of open-space buffers between potential breeding areas and residential allotments makes it unlikely that biting insects will have a significant impact on future residents of the residential subdivision: see Biting Insect Management Plan. The Council withdrew its contention regarding mosquito control.
10. Road and traffic impacts: The traffic generated by the proposed development is within the capacity of the existing external road network: Statement of Environmental Effects (22 November 2023), p 56. Traffic management measures are proposed to manage the increased traffic generated by the development, including:
1. upgrades to Iron Gates Drive, including a widening of the sealed carriageway outside of the mapped coastal wetlands, resealing of the existing sealed road pavement, and specific line-marking and signage treatments;
2. installation of slow points at the entrance of those parts of Iron Gates Drive that intersect the mapped coastal wetlands to ensure a reduction in traffic speeds in these ecologically sensitive areas: Statement of Environmental Effects, p 39 and Engineering Joint Expert Report, p 8;
3. installation of speed calming devices on Iron Gates Drive, required by a condition of consent;
4. reorientation of the intersection of Wattle and Cypress Streets to accommodate the increased traffic from the development;
5. upgrade of the intersection of Woodburn Street and Wattle Street to accommodate construction traffic, required by a condition of consent; and
6. installation of a Basic Right (BAR) turn facility at the entrance to the site: see Engineering Joint Expert Report, p 8 and Attachment B.
1. Land use conflict with RAAF’s Evans Head Air Weapons Range: The original development application was referred to the Department of Defence. In response, the Department recommended design specifications for future dwellings constructed on the site. The current development application for the residential subdivision does not seek consent for dwelling construction. The design specifications for dwellings recommended by the Department of Defence can be addressed in future development applications for dwelling construction.
1. Some objectors also raised concerns about procedural matters, including:
1. Impacts of Stage 2 development: The development application is a concept development application seeking approval of concept proposals for the residential subdivision of the land and detailed proposals for Stage 1 of the development. Stage 2 cannot be carried out until a subsequent development application for Stage 2 is lodged and approved. The impacts of Stage 2 will be assessed then. The concept development application, as finally amended, has reduced the area identified for Stage 2 to be a small area on the hill to the west above the Stage 1 residential subdivision. The area in the south-western corner of the land previously proposed for Stage 2 is now identified as a future investigation area. Any development proposed in this area will need to be investigated and its impacts assessed.
2. Amendment of development application: Goldcoral’s development application, originally lodged in 2014, has been amended numerous times in the following decade, including the final amendment at the hearing. Amendment of a development application is not only legally permitted, but appropriate to address concerns of the consent authority and the community. In the case of Goldcoral’s development application, the amendments have resulted in the proposed development being designed, sited and managed to avoid significant adverse environmental impact. The Council and the community have had an opportunity to comment on the amendments to the development application.
3. Public participation at the site visit: The hearing of the appeal commenced at the entrance to the Iron Gates land. The hearing was open to the public. Members of the community who objected to the development gave evidence at the on-site hearing. Afterwards, I undertook an inspection of the site accompanied by representatives of Goldcoral and the Council and by Ms Barker, as well as their respective legal representatives and experts. The main purpose of the site inspection was to identify features of the development and the site and to explain the issues that need to be determined by reference to those features. Formal evidence was not given at the site inspection; the evidence was given on the following days at the hearing in the Ballina Court House and in Sydney at the Land and Environment Court. Partly due to this purpose of being a site inspection and not a formal hearing, and partly because the site is private land with occupier’s liability issues, members of the public were not invited to attend the site inspection. This was appropriate in the circumstances. The public have otherwise been permitted to attend the hearing in court or remotely through the Court-provided audio-visual link.
1. This account of the community’s concerns and how they have been addressed satisfactorily supports the conclusion that it is appropriate to grant development consent, subject to conditions, to the development proposed in the development application as finally amended. I now turn to the issues concerning the conditions of consent that should be imposed.
Conditions of consent
1. The parties reached substantial agreement on the conditions of consent. The conditions proposed by Ms Barker were agreed to, with minor wording changes, by Goldcoral and the Council and have been included in the conditions of consent. Consequently, Ms Barker took no issue with Goldcoral’s proposed conditions.
2. The conditions proposed by Ms Barker and agreed to by Goldcoral and the Council involved:
1. Consultation to identify culturally significant trees on Iron Gates Drive: A condition was proposed to implement Recommendation 5 of Mr Muhlen-Schulte in his Aboriginal Cultural Heritage Assessment Report (ACHAR):
“Consultation with any Registered Aboriginal Parties identified in the ACHAR, who wish to participate in the consultation, and any other Bandjalang people who may wish to participate, is required prior to any works commencing on Iron Gates Drive in relation to the identification of culturally significant trees. Should any culturally significant trees be identified they should be inspected by a qualified arborist prior to engineering plans being prepared and a construction certificate being issued for those works in accordance with Recommendation 5 of the ACHAR.”
1. Cultural induction and cultural material finds procedure: A condition was proposed to implement Mr Muhler-Schulte’s Recommendations 6, 7 and 8:
“The Applicant is to develop an Aboriginal Cultural Heritage Management Plan in consultation with any Registered Aboriginal Parties identified in the ACHAR, who wish to participate in the consultation, and any other representative of the Bandjalang people who may wish to participate, that provides for:
i. induction for machine operators undertaking initial ground disturbance in Aboriginal cultural heritage, in accordance with Recommendation 6 of the ACHAR; and
ii. protocols for unexpected finds of Aboriginal objects and human remains, in accordance with Recommendations 7 and 8 of the ACHAR.”
1. Cultural interpretation: A condition was proposed to implement Mr Muhler-Schulte’s Recommendation 3. The detailed landscape plans submitted for approval with the subdivision works certificate application are to show:
“How they have been developed in consultation with Traditional Owners and have had regard to Aboriginal knowledge, story and history, in accordance with Recommendation 3 of the Aboriginal Cultural Heritage Assessment Report prepared by ALICH Group dated 1 May 2024 (ACHAR)”.
1. Prohibition on dogs and cats: A condition was proposed requiring an instrument under s 88B of the Conveyancing Act 1919 (NSW) to include a “prohibition on the keeping of dogs or cats” to protect native fauna in the area.
1. The conditions on which Goldcoral and the Council disagreed fell into eight categories.
2. The first is whether the road reserves containing the internal estate roads and bioretention swales, and the public open space in proposed Lot 147 (the proposed public park) should be dedicated to the Council or retained and managed by the community association. Goldcoral proposes to dedicate those lands to the Council; the Council proposes conditions requiring the concept plan and the plan of community title subdivision to be amended to include proposed Lot 147 and all internal estate roads and bioswales to form part of Lot 1, the community property lot.
3. The Council’s opposition to the internal estate roads being dedicated was primarily based on the roads including the bioswales, although it faintly advanced another reason that a community title subdivision is usually responsible for the internal estate roads. This other reason is unpersuasive. The Council was prepared to accept dedication of the internal estate roads when Goldcoral proposed a Torrens title subdivision. The Council’s opposition to dedication of the roads opportunistically arose when Goldcoral proposed community title subdivision to address a concern the Council had raised about the inappropriateness of a Torrens title subdivision for the provision and on-going maintenance of the community building and land for conservation purposes. The change in title of the subdivision effected no change in the internal estate roads. If the roads were appropriate to be dedicated under a Torrens title subdivision, they are equally appropriate to be dedicated under a community title subdivision.
4. I return to the Council’s primary reason for opposing the dedication of the road reserves, which is that they include the proposed bioswales. The Council submitted that it is ill-equipped to manage the bioswales, for six reasons:
1. Bioswales take up considerably less land than a traditional drainage basin, but require significantly higher maintenance costs.
2. The Council has identified nine gross pollutant traps within the proposed bioswales, which will require regular cleaning, likely quarterly at least.
3. The Council does not currently manage any bioswales. It anticipates a tractor with a long arm will be required to clean the bioswales, but the Council does not presently own this piece of equipment.
4. The ongoing costs associated with cleaning are significant.
5. In other sites in the local government area whether there are gross pollutants traps, but not bioswales, only three gross pollutant traps can be cleaned a day.
6. The waste cleaned from the gross pollutant traps must be disposed of as trade waste, which incurs another cost to the entity responsible for cleaning the bioswales.
1. Goldcoral submitted that councils all around the State accept the dedication and management of public roads and drainage and stormwater facilities. The bioswales – the abbreviation of bioretention swales – may have a different name, but they are not different in function to a stormwater detention basin. They may be linear in shape rather than rectangular but they serve the same function of protecting environmentally sensitive lands and waters. In this case, the bioswales protect the littoral rainforest, Crown foreshore reserve, coastal wetlands and the Evans River. As the Council concerned, it accepts the dedication of and manages stormwater detention basins in the local government area, in whatever design and form are those basins. The proposed bioswales might be different in design and form to the stormwater detention basins the Council has accepted in the past, but as they serve the same function, there is no reason in principle for the Council not to accept them and manage them as it does for all other stormwater detention basins it has accepted.
2. Goldcoral submitted that, in relative terms, the Council has far greater knowledge, experience and equipment to manage the bioswales than the community association will ever have. The proper ongoing management and maintenance of the bioswales is important in the public interest to protect environmentally sensitive lands and waters. The Council is in a far better position to do this than a committee of lay people living in the community of the residential estate.
3. Goldcoral acknowledged that the Council’s management and maintenance of the bioswales will involve cost, but so does the management and maintenance of all the stormwater detention basins and other drainage and stormwater infrastructure with respect to which the Council has responsibility. For new infrastructure with a different design, the Council may need to upgrade its equipment and upskill its staff to manage and maintain the new infrastructure. But that is not unexpected or unreasonable.
4. Goldcoral submitted that, pursuant to conditions of consent, the Council will have the opportunity to assess and approve the detailed designs and the operation and maintenance plans for the proposed gross pollutant traps and bioswales, and hence will have control over the design of and be prepared to operate and maintain the bioswales.
5. Likewise, Goldcoral submitted, if waste is encountered in cleaning the bioswales that needs to be disposed of as trade waste, the Council has existing waste facilities that can receive that waste. Again, such waste can be expected to be encountered from time to time in all of the stormwater detention basins and infrastructure that the Council already manages.
6. I agree with Goldcoral, for the reasons it advanced, that the bioswales, whilst different in form, are not different in function to the stormwater detention basins and infrastructure the Council already manages and maintains. The Council is better placed to manage and maintain the bioswales than the community association, thereby better ensuring the protection in the public interest of environmentally sensitive lands and waters. I reject the Council’s proposed conditions opposing the dedication of the internal estate roads with the bioswales, and accept Goldcoral’s proposed conditions.
7. The Council also opposed the dedication of Lot 147, which is the proposed public park. Its reason was tenuous. The Council said it does not have the financial, human and material resources to manage and maintain the local open space and parks which it currently has, and is considering disposing of existing parks. In these circumstances, the Council submitted it cannot accept and manage an additional local park. I reject this reason.
8. The management of local public parks is a fundamental responsibility of local government. If the Council is not coping with the management of existing public parks, it needs to improve its performance. Discriminating against the residents of one neighbourhood – the residents of the proposed residential estate on the land – by not accepting and managing a local park for those residents is not equitable. Goldcoral will establish all of the facilities in and landscape the park before dedicating it to the Council. The Council only has to maintain the park afterwards.
9. Second, the Council proposed, in Schedule A, a deferred commencement condition requiring a structural safety assessment of the existing bridge on Iron Gates Drive. Goldcoral agreed with the condition requiring the structural safety assessment of the bridge, but submitted the condition should be an operational condition not a deferred commencement condition. Goldcoral included the condition in Schedule B, Part C as a condition (condition 4) that must be complied with prior to subdivision work on the land commencing.
10. I agree with Goldcoral that the condition can be an operational condition that must be complied with prior to subdivision work commencing. The reason the Council gave for imposing the condition, which Goldcoral accepts, is:
“To determine the condition, structural and serviceability, of the Iron Gates Drive bridge particularly for the demands imposed on the existing bridge by the significant heavy vehicle truck movements during the importation of the site filling and construction. Should the bridge require a rebuild or upgrade or widening to meet current standard for load limits that involves filling of land and/or vegetation removal that requires an approval under SEPP Resilience and Hazards then this is to be obtained prior to the works commencing, and that any rectification or reconstruction works are identified and completed appropriately.”
1. This appropriate purpose and timing of the structural assessment of the bridge can be achieved by requiring compliance before any subdivision work commences on the land; it does not need to be done before the consent operates. The significant heavy vehicle truck movements during the importation of the site filling and construction will only commence once subdivision work commences. Hence, it is sufficient that the condition must be complied with before subdivision work commences.
2. Third, the Council proposed a condition regulating the importation of red fire ants. Goldcoral opposed the condition. I consider the condition is unnecessary. The Council’s condition amounted to an instruction to comply with the law, including the Biosecurity (Invasive Ant Carriers) Control Order 2023. All of the requirements of the proposed condition are requirements of that order or the Biosecurity Act 2015 (NSW) under which the order was made. Nothing is to be gained by a condition of consent requiring compliance with existing law.
3. Fourth, the Council proposed that the Bulk Earthworks Plan, which Goldcoral is required to submit to the Council, include “Details demonstrating that no more than 149,217 cubic metres of fill material will be imported to the site.” Goldcoral accepted the condition requiring the submission of a Bulk Earthworks Plan, but opposed the plan demonstrating that no more than 149,217 cubic metres of fill material will be imported to the site. I reject the Council’s proposed amendment to the condition. Goldcoral will be required by the conditions of consent to carry out the development in accordance with the approved plans, including the Bulk Earthworks Plan. These plans detail the location and the maximum filling level of fill material imported to and placed on the site. These plans fix the amount of fill material that can be imported to the site. It is unnecessary to specify a maximum volume.
4. Fifth, the Council proposed, in two conditions fixing the hours of work, to limit the hours of work on Saturdays to 1pm, while Goldcoral sought 4pm. I accept that site work should be permitted to continue to 4pm on Saturdays. The land is separated from the township of Evans Head and work onsite will not adversely affect the amenity of residents in Evans Head.
5. Sixth, the Council proposed a condition requiring Goldcoral to submit to the Council, prior to the issue of a subdivision works certificate, written confirmation that the Flood Emergency Response Plan was forwarded to the NSW State Emergency Service for review. Goldcoral opposed the addition of the words “for review”. The Council agreed to delete those words. With this deletion, the condition was agreed.
6. Seventh, the Council proposed that the s 88B instrument under the Conveyancing Act 1919 (NSW) required to be created include a restriction “prohibiting certain development types including childcare facilities, family day care, tourist or visitor accommodation such as short-term holiday rentals and Air BnBs.” Goldcoral opposed that restriction, submitting that a s 88B instrument should not prohibit otherwise permissible land uses. The use of land within the residential estate for any of those land uses will require a development application to be made, which will allow the Council to assess the proposed use on its merits. I agree with Goldcoral that this condition to effect a private zoning by way of a s 88B instrument that limits what the public zoning under RVLEP allows, is inappropriate.
7. Eighth, the Council sought for the Vegetation and Fauna Management Plan to be amended to include certain matters concerning koalas. The Council had originally sought a condition requiring the conservation lands in the community lot (proposed Lot 1) to be managed in accordance with the approved Koala Plan of Management. The reference to the “approved” Koala Plan of Management was included consistent with the Council’s argument that development was being proposed on land in a core koala habitat and therefore required an approved Koala Plan of Management. I have earlier rejected this argument: an approved Koala Plan of Management is not required. On this basis, there is no warrant for the Council’s proposed condition that the conservation lands in the community property are managed in accordance with an approved Koala Plan of Management.
8. In this circumstance, the Council’s alternative argument was that the Vegetation and Fauna Management Plan, which is required by another condition of consent, should be amended to include certain matters that would otherwise have been in the approved Koala Plan of Management. These matters are to require biennial koala activity monitoring and koala activity monitoring after fire. Both measures were recommended in Goldcoral’s draft Koala Plan of Management, which was prepared when Stage 2 of the residential subdivision was proposed in the vicinity of a potential koala habitat.
9. Goldcoral submitted that now it has deleted Stage 2 of the residential subdivision in that area, there is no justification for incorporating these previous recommendations in the Vegetation and Fauna Management Plan. Goldcoral submitted these, now unnecessary, requirements have no sufficient nexus with the development proposed, citing Lorenzato v Burwood Council [2017] NSWLEC 1269.
10. I agree with the Council that the Vegetation and Fauna Management Plan should incorporate the requirements previously recommended in Goldcoral’s draft Koala Plan of Management to undertake biennial koala monitoring and koala monitoring after fire. It may be accepted that Goldcoral’s terrestrial ecology consultant recommended such monitoring when Goldcoral proposed Stage 2 of the residential subdivision in the vicinity of a potential koala habitat, and that Goldcoral has now deleted the proposed Stage 2 in that area. But there still is evidence of koalas using that area. The ecological experts agreed that koalas may range elsewhere on the land, in search of food. Such use of the land now proposed for the residential subdivision may not cause the land to be classified either as a potential koala habitat or a core koala habitat. But such classification is not the only reason to require monitoring of koala activity. The Koala is a vulnerable fauna species that is found on the land and surrounding land and ought to be the subject of monitoring and management under the Vegetation and Fauna Management Plan. In these circumstances, the monitoring requirements have a sufficient nexus to the proposed development.
Conclusion and orders
1. For the reasons I have given, each of the contentions raised by the Council and Ms Barker, and the concerns expressed by the community, has been adequately addressed. The comprehensive conditions of consent will mitigate unacceptable environmental impacts of the development. The carrying out of the proposed residential subdivision will change the environment of the land, but such change has been planned for over 40 years. The land has long been zoned for residential purposes. The current proposal is consistent with, although less ambitious than, the strategic planning and prior approvals for residential development on the land.
2. The Court orders:
1. The appeal is upheld.
2. Development consent is granted to development application DA 2015/00096 for a concept proposal for the subdivision of land at 240 Iron Gates Drive, Evans Head, being Lot 163 in DP831052 and Lots 276 and 277 in DP755624, and a detailed proposal for Stage 1 of the development, subject to conditions, as stated in the development consent annexed and marked as ‘Annexure A’.
**********
Annexure A
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 22,600 |
nsw_caselaw:1910613988e22c389876e4ed | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | BSM Holdings Pty Ltd v Valuer-General of New South Wales; Omaya Investments Pty Ltd v Valuer-General of New South Wales [2024] NSWLEC 79 | https://www.caselaw.nsw.gov.au/decision/1910613988e22c389876e4ed | 2024-08-04T23:52:18.546234+10:00 | Land and Environment Court
New South Wales
Medium Neutral Citation: BSM Holdings Pty Ltd v Valuer-General of New South Wales; Omaya Investments Pty Ltd v Valuer-General of New South Wales [2024] NSWLEC 79
Hearing dates: 22, 23, 24, 26 April 2024, further written submissions 7, 13, 20 May 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Jurisdiction: Class 3
Before: Pain J
Decision: The Court orders:
(1) In proceeding 2021/329948 (4 Clarence Street Strathfield) the appeal is upheld and the land valuation determined in the amount of $2,135,000.
(2) In proceeding 2021/329950 (32 Cooper Street Strathfield) the appeal is upheld and the land value determined in the amount of $2,066,000.
(3) In proceeding 2021/329949 (27 Cooper Street Strathfield) the appeal is dismissed.
(4) In proceeding 2021/329951 (2 Leicester Avenue Strathfield) the appeal is dismissed.
(5) In proceeding 2021/329952 (24 Leicester Avenue Strathfield) the appeal is upheld and the land value determined in the amount of $1,250,000.
Catchwords: APPEAL – land valuation appeals – whether land values of multiple lots in Strathfield triangle too high – comparable sales selection in light of agreed valuation method – adjustment of comparable sales
Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), s 7.11
Valuation of Land Act 1916 (NSW), ss 6A, 37, 40
Canada Bay Local Environmental Plan 2013 (NSW)
State Environmental Planning Policy (Infrastructure) 2007 (NSW), cll 86, 87
Cases Cited: Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245
Capuano v Roads and Maritime Services [2018] NSWLEC 59
Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184
Housing Commission of NSW v Falconer [1981] 1 NSWLR 547
Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25
Leice Pty Ltd v City of Canada Bay Council [2021] NSWLEC 1627
Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426
Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; [1955] HCA 13
Spencer v Commonwealth (1906) 5 CLR 418; [1907] HCA 82
The Trust Company Ltd v Minister Administering the Crown Lands Act 1989 (2012) 211 LGERA 158; [2012] NSWLEC 73
Texts Cited: A Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press)
Macquarie Dictionary (online ed, accessed July 2024)
Category: Principal judgment
Parties: BSM Holdings Pty Ltd (Applicant, 2021/329948-49, 329951-52)
Omaya Investments Pty Ltd (Applicant, 2021/329950)
Valuer-General of New South Wales (Respondent)
Representation: Counsel:
T S Hale SC (Applicants)
L Waterson (Respondent)
Solicitors:
C J Boyd Solicitors (Applicants)
Crown Solicitor’s Office (Respondent)
File Number(s): 2021/329948, 2021/329949, 2021/329950, 2021/329951, 2021/329952
Valuation of Land Act 1916 (NSW)
Planning controls
Town planning evidence
Achievable GFA
Finding on GFA
Development timing
Finding on development timing
Valuation evidence
Step 1: Determine rate per m2 of GFA for residential flat building development on precincts 1 and 8
Valuers’ comparable sales evidence
Consideration of comparable sales
a. Comparability of Mr Hill sale 1 within Strathfield triangle and sales 2-5 outside Strathfield triangle
Finding – Mr Hill sales comparable
b. Mr Garnsey sales 2, 3 and 6 comparable
Appropriate adjustments of relevant comparable sales
(i) Adjustments of Mr Hill sale 1
(ii) Adjustments of Mr Hill sales 2-5
(iii) Mr Garnsey sales 2, 3 and 6 adjustments
Overall conclusion on adjustments of comparable sales
Step 2: Multiply rate per m2 of GFA by achievable GFA for each relevant parcel
Step 3: Further adjustments
(i) Applicable discount rate for precinct 1
Finding
(ii) Allowance for future Cooper Street realignment – precinct 8
Finding
Overall conclusion
Orders
JUDGMENT
1. The Applicants have appealed under s 37 of the Valuation of Land Act 1916 (NSW) (VL Act) against the disallowance by the Valuer-General (VG) of objections to the determination for the 2019 valuation year of the land value of five parcels of land located in the area of Strathfield known as the ‘Strathfield triangle’ (collectively, the relevant parcels). The land value of each relevant parcel is to be assessed as at 1 July 2019 for the 2019 valuing year. I thank Acting Commissioner Davidson for his assistance in this matter. The Court went on a view of the relevant parcels and most of the comparable sales with the parties and experts.
2. The Applicants have the onus of proving their case, s 40(2) of the VL Act. Under s 40(1) the Court can confirm, revoke, make another decision or remit a matter to the VG.
3. The issued values and the parties’ contentions as to the amount of the land values are as follows:
4 Clarence 32 Cooper 2 Leicester 27 Cooper
Street (2021/329948 BSM Holdings) Street Avenue Street
(2021/329950 Omaya Investments) (2021/329951 BSM Holdings) (2021/329949 BSM Holdings)
Issued Land Value $2,470,000 $3,180,000 $3,300,000 $4,650,000
Applicants $970,000 $940,000 $2,280,000 $2,450,000
Valuer-General $2,490,000 $2,415,000 $4,885,000 $6,375,000
1. An appeal was also lodged in relation to 24 Leicester Avenue. The land value agreed by the valuers for 24 Leicester Avenue was $1,250,000, which is below the issued land value of $2,300,000. It is therefore agreed between the parties that the appropriate orders for proceeding 2021/329952 should be that the appeal is allowed and the land value be determined as the agreed amount. The order I make will reflect the agreement between the parties and the land value of 24 Leicester Avenue will not be subject to any further consideration.
2. The Applicants seek determinations of land value that are lower for four properties that remain in contention as identified in the above table. The VG seeks orders confirming the issued values for 4 Clarence Street, 2 Leicester Avenue and 27 Cooper Street which would mean these three appeals are dismissed. The VG seeks a determination for 32 Cooper Street that is lower than the issued value but higher than the amount sought by the Applicants.
Valuation of Land Act 1916 (NSW)
1. Section 6A of the VL Act provides as follows:
Part 1 Preliminary
6A Land value
(1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner’s predecessor in title had not been made.
(2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that—
(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used,
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made.
(3) Notwithstanding anything in subsection (1), in determining the land value of any land, being land in relation to which, at the date to which the valuation relates, there was a water right—
(a) the land value shall include the value of the right, and
(b) it shall be assumed that the right shall continue to apply in relation to the land.
(4) For the purpose of determining the value of a water right, the value of any water secured by, or referable to, that right is to be ignored.
1. The hypothetical, unencumbered fee simple of the land is to be valued, see Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; [1955] HCA 13 at 623 (Dixon CJ, McTiernan, Webb, Fullagar, Kitto JJ). Any improvements on the land being valued are not to be valued.
2. A bona-fide seller under s 6A(1) of the VL Act is aware of all matters affecting the market. The market is ‘assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property’, Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 (Kenny) at [50] (McHugh J). In Spencer v Commonwealth (1906) 5 CLR 418; [1907] HCA 82 (Spencer) Griffith CJ at 432 stated the value of land as at what point ‘would a [purchaser] desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’. Factors impacting land value include the land’s situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood of a rise or fall in the amount which one would otherwise be willing to fix as the value of the property, Kenny at [49] citing Spencer at 441 (Isaacs J).
Planning controls
1. The relevant parcels are all within an area known as the Strathfield triangle. The Canada Bay Local Environmental Plan 2013 (NSW) (CBLEP) and Strathfield Triangle Development Control Plan 2014 (STDCP) which commenced on 30 May 2014 are relevant controls. The City of Canada Bay Development Contributions Plan for the Strathfield Triangle 2014 (contributions plan) and the Strathfield Triangle Public Domain Plan 2014 (public domain plan) also apply to the relevant parcels.
2. The town planners agreed that under the CBLEP each of the relevant parcels is zoned R4 High Density Residential except for part of 27 Cooper Street which is zoned SP2 Infrastructure (Local Road). Part of Cooper Street is to be acquired by Canada Bay Council (the council) and realigned and used as a public road. The CBLEP establishes a minimum lot size of 1,500m2 for residential flat buildings. The area of each relevant parcel was agreed by the town planners to be 505.9m2 for 4 Clarence Street, 490.5m2 for 32 Cooper Street, 1,062m2 for 27 Cooper Street and 556.4m2 for 2 Leicester Avenue. The area of each relevant parcel falls below the threshold for residential flat buildings in the Strathfield triangle.
3. The STDCP contains detailed controls for various matters including height of buildings, setbacks and access arrangements. The amalgamation pattern at map 8 of the STDCP is relevant. Eight amalgamation precincts are identified. Under cl 3.7 of the STDCP redevelopment of land generally requires amalgamation with other parcels in the same precinct in accordance with the specified amalgamation pattern.
4. The parcels 4 Clarence Street and 32 Cooper Street are two of the eight lots in precinct 1. They do not share a boundary. The parcel 4 Clarence Street is at the north of the precinct and 32 Cooper Street is to the south. Their development potential is tied to their ability to be amalgamated with the other six lots, which are in different ownership.
5. The parcels 27 Cooper Street and 2 Leicester Avenue are both in precinct 8 which contains nine lots. The parcel 2 Leicester Avenue is a single lot. The parcel 27 Cooper Street contains four lots. The development of precinct 8 in the STDCP identifies the future realignment of Cooper Street. Only three of the lots in 27 Cooper Street are within precinct 8. The northern lot is zoned SP2 Infrastructure (Local Road) for the purposes of the realignment of Cooper Street. All the lots in precinct 8 are in the same ownership (or related entities). Part of the future development in the STDCP involves the creation of a road known as Leicester Lane running parallel with Leicester Avenue and behind numerous properties fronting Leicester Avenue. The following figure identifies much of the above information.
Figure 5G – Amalgamation Strathfield triangle DCP prepared by BBC consulting planners for the Applicants
1. Generally the state of knowledge and the condition of the parcels and surrounding lots at 1 July 2019 are relevant.
2. Mr Chambers the Applicants’ town planner stated that as at 1 July 2019 the council had not taken any action since the commencement of the STDCP in 2014 to implement infrastructure improvements or acquire land reserved for public purposes within the Strathfield triangle under planning documents in the STDCP, contributions plan and public domain plan. This was not in dispute between the parties.
Town planning evidence
1. In the joint planners’ report dated 15 March 2024 the town planners reached substantial agreement about the characteristics of the parcels. They agreed that the development potential of each of the relevant parcels is dependent upon the ability to be amalgamated with other lots within the precincts in the amalgamation pattern specified in the STDCP. Two remaining issues were:
1. The gross floor area (GFA) that the hypothetical vendor/purchaser as at 1 July 2019 would be advised could be achieved on precincts 1 and 8; and
2. In relation to precinct 8 allowance for time delay until the realigned Cooper Street would be acquired and constructed by the council, or some alternate form of permanent access would become available so as to enable precinct 8 to be developed.
Achievable GFA
1. No floor space ratio (FSR) controls for land in the Strathfield triangle exist. The town planners differed as to how they calculated the achievable GFA on each of the relevant parcels. The town planners agreed that the achievable GFA could be determined using the ‘site area apportionment method’ whereby the achievable GFA for the whole of the precinct was determined which could then be apportioned based on the site area of the relevant parcels (the valuers’ approach also). Their results were as follows:
Property Haskew Estimated Precinct Average GFA Apportioned to Individual Properties Chambers Estimated Precinct GFA Apportioned to Individual Properties
4 Clarence Street 2,276.55m2 2,681.27m2
32 Cooper Street 2,207.2m2 2,597.53m2
27 Cooper Street 3,287.9m2 4,249.6m2
2 Leicester Avenue 3,060.2m2 3,258.01m2
1. The Applicants also provided the average GFA for 4 Clarence Street of 2,478.91m2, for 32 Cooper Street of 2,402.39m2, for 27 Cooper Street of 3,768.75m2 and for 2 Leicester Avenue of 3,159.11m2 based on the calculations of Mr Haskew the VG’s town planner and Mr Chambers the Applicants’ town planner.
Mr Chambers
1. Mr Chambers derived his GFA from a report prepared in 2019 by architects retained by the council for the purpose of reviewing the Strathfield triangle planning controls (GSA report). He adopted the architects’ FSR/GFA estimates for precincts 1 and 8 with some adjustments to precinct 8 as the architects considered a larger area for that precinct. The architects calculated GFA using a building efficiency ratio of 83%.
2. In his primary report dated October 2022 Mr Chambers stated his advice to the hypothetical purchaser would be to retain a skilled architect to work up a concept/sketch design to identify a potential development yield. Mr Chambers acknowledged that while the council was in the process of preparing a planning proposal to change the planning controls within the Strathfield triangle, as at 1 July 2019 no information regarding this review was publicly available. He opined that had a hypothetical purchaser made enquiries of the council as to the likelihood of and timeframe for a planning proposal they would have been advised that:
* development activity in the Strathfield triangle has stagnated;
* the existing controls are going to be reviewed;
* an analysis of the Strathfield triangle is to be undertaken involving studies of land economics, urban design and traffic;
* a report on progress prepared by council officers is likely to go to council by the end of the year;
* if council resolves to support the planning proposal, council will need to seek a gateway determination to permit the planning proposal to be exhibited;
* the process could take years; and
* the planning proposal once prepared, and once exhibited post gateway determination may not proceed.
1. In his supplementary report dated June 2023 Mr Chambers reiterated his prior opinion that accurate estimation of GFA yield should be undertaken by a skilled architect. He noted that the GSA report estimated a ‘reasonably realistic FSR potential’ under the existing controls which created a benchmark to assess and quantify any potential changes to the controls. Mr Chambers opined that the hypothetical purchaser would have been able to discuss likely GFA/FSR yields with the council and it was likely the advice would have been consistent with the estimations in the GSA report which he applied.
2. I note that Mr Chambers was not cross-examined on GFA.
Mr Haskew
1. Mr Haskew calculated building envelope areas (BEA) for the footprint of each level permitted by the STDCP. He calculated BEA by taking the ‘Assumed Building Footprint’ in map 6 of the STDCP and from that derived building envelopes having regard to the ‘Height of Buildings Map’ and STDCP building heights using geographic information system software. Mr Haskew then converted the BEA to GFA using the formula GFA=BEAx70% which is a ‘rule of thumb’ conversion rate set out in the relevant apartment design guide.
2. In the joint planners’ report Mr Haskew acknowledged that ‘architectural plans should be expected to be a more accurate method of predicting achievable GFA. This is primarily because in practice, it is frequently the case that compliant residential flat building designs can achieve better than 70% GFA efficiency’. Mr Haskew would ‘advise a hypothetical prudent purchaser that his estimates are a worst case scenario and it is reasonably likely that careful architectural design could achieve a higher GFA efficiency’. Mr Haskew noted that he had not seen the ‘architectural plans relied on by [Mr Chambers]’. [I note that during the hearing it was clarified that Mr Haskew’s reference to ‘architectural plans’ was likely intended to mean the GSA report which did not contain such plans].
3. In oral evidence, Mr Haskew confirmed that had the hypothetical purchaser sought his advice on 1 July 2019 as to the GFA that could be obtained for precincts 1 or 8 he would have carried out the same calculations as above in [23]. He stated that the hypothetical vendor/purchaser, if made aware that the council was undertaking a review of planning controls, would approach the council to inquire into how existing planning controls may change in the future. Mr Haskew confirmed that he had since been shown the GSA report used by Mr Chambers and believed the GSA report was to inform the council as to whether a planning control proposal was needed. Mr Haskew opined that whether the hypothetical vendor/purchaser would be informed of the contents of the GSA report would not depend on the discretion of an individual officer but on the council’s consideration of confidentiality in the documents.
Applicants’ submissions
1. The Court would adopt the lesser of the two GFA values (Mr Haskew’s values) as a vendor would be conscious of the uncertainty surrounding the potential GFA achievable and thus would take the conservative approach. In the event the Court does not accept this approach, an average of the two approaches should be adopted.
2. Mr Chambers’ approach was that he would advise a hypothetical purchaser to retain skilled and experienced architects to work up a concept design to identify a potential development yield. That advice from an architect was not obtained. In his supplementary report Mr Chambers suggested another way to assess achievable GFA would be to ask the council whose advice would be consistent with the GSA report. However as at 1 July 2019 no information about the proposed planning controls was publicly available and the council officers were likely to have advised only in the most general of terms. Whether or not the council advice would include the information based upon the GSA report is a matter of speculation.
3. It should also be noted that in commenting on Mr Chambers’ evidence above in [24], Mr Haskew was under the misapprehension that Mr Chambers’ advice was based on architectural plans. The references by Mr Haskew to a ‘worst case scenario’ are not suggesting that his estimates are a worst case compared with Mr Chambers’ estimates, but that his estimates ‘are a worst case scenario and it is reasonably likely that careful architectural design could achieve a higher GFA efficiency’ than the 70% GFA efficiency that he adopted. The analysis carried out by Mr Haskew who prepared a first-hand analysis using his own expertise is to be preferred.
Valuer-General’s submissions
1. Mr Chambers’ achievable GFA for each relevant parcel should be adopted. The Applicants’ primary position to adopt the lesser of the two values does not explain or justify why the hypothetical vendor, who must be assumed to be not anxious to sell, would opt to take a conservative approach based on Mr Haskew’s ‘worst case’ planning scenario. The Applicants’ primary and alternative positions do not pay attention to the whole of Mr Haskew’s advice which includes his ‘worst case’ concession and the fact that Mr Chambers’ advice is based on a report specifically undertaken for the Strathfield triangle. In reply, whether or not the GSA report was publicly available is beside the point given Mr Chambers’ evidence that the advice provided by the council to a purchaser or vendor about development yields would likely have been consistent with the GSA report and that a concept design carried out by a skilled and experienced architect would have shown a similar FSR/GFA to the GSA report.
Finding on GFA
1. At issue is consideration of what the prudent hypothetical vendor and purchaser would be advised for the potential GFA underpinning the valuation of the relevant parcels. Such parties can be assumed to undertake prudent inquiries on matters relevant to their assessment of land value.
2. Neither town planner had strong if any criticism of the other’s methodology summarised above in the town planners’ evidence. Mr Chambers’ approach on behalf of the Applicants resulted in a higher GFA than Mr Haskew’s approach on behalf of the VG, reflecting their different methodologies. The higher the GFA adopted the higher the ultimate land value that will be derived by the valuers. The prudent hypothetical purchaser who approached the council for advice as Mr Chambers did could be assumed to receive the GSA report, which applied an 83% building efficiency ratio. While not publicly available in the sense of being released to the public by the council, its provision to Mr Chambers suggests that it was not likely to be regarded as confidential as at 1 July 2019 so that prudent inquiries of the council would be likely to result in it being provided to a hypothetical vendor/purchaser. Given its greater accuracy that should be the basis for the GFA calculation used by the valuers. Accordingly I do not accept that Mr Chambers’ approach is speculative and I consider it is likely to be that of the hypothetical vendor.
3. Regarding the Applicants’ alternative position that an average of Mr Haskew and Mr Chambers’ approaches should be adopted, the practice of averaging is generally regarded as unsound, see A Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press) at 153-154. I do not consider such an approach should be adopted.
4. Accordingly the GFA calculations of Mr Chambers should be applied by the valuers as the appropriate step in their calculation of land value.
Development timing
1. The town planners were aware that the valuers assumed it would take 10 years to amalgamate precinct 1. The town planners agreed that public road access timing for the realignment of Cooper Street was relevant to development timing of precinct 8. Mr Garnsey the Applicants’ valuer allowed an additional 5 years for public road access to be available in precinct 8. The town planners disagreed about the advice they would provide to a hypothetical prudent purchaser concerning the time which should be expected for public road access to occur for precinct 8.
Mr Chambers
1. Mr Chambers supported Mr Garnsey’s estimate of five years for road access. Mr Chambers noted Mr Garnsey’s evidence that precinct 8 required new road access and no work had started on either Leicester Lane or the realignment of Cooper Street. The STDCP came into effect in May 2014 and nothing had happened since. No land had been acquired by the council to build the new section of Cooper Street and none of the land for Leicester Lane had been dedicated. Mr Chambers believed Mr Garnsey’s timeframe seemed reasonable as it remained uncertain as at 1 July 2019 that these works would be undertaken in the foreseeable future.
2. In oral evidence Mr Chambers agreed that the realignment of Cooper Street is ‘works in kind’ under the contributions plan so that it is capable of being an offer by an applicant for development to provide road works in the SP2 Infrastructure (Local Road) zoned land as full or partial payment of s 7.11 contributions pursuant to the Environmental Planning and Assessment Act 1979 (NSW). Mr Chambers was asked whether, on the assumption that owners of the Cooper Street realignment would be entities associated with the purchaser of precinct 8, the purchaser could make an offer to the council to dedicate some or all the realignment and build some or all the road in lieu of s 7.11 contributions. Mr Chambers agreed that they could, but that they would not as it would not be appropriate because the contributions collected by the council fell far below the costs of works including the acquisition of Cooper Street and the developer of precinct 8 would expect to be fairly compensated for doing the work itself. Mr Chambers stated it would be highly unlikely that a developer would obtain development consent for precinct 8 unless the council acquired the land and completed the realignment of Cooper Street.
3. Mr Chambers was asked whether it would be possible for the developer to have something short of a full realignment, such as a driveway or temporary access road, rather than dedicate the whole of the land and build the whole realignment. Mr Chambers believed that while this was technically possible, he did not think it would be possible for the driveway to intersect with Leicester Avenue, a classified road. He could not foresee any road in that location other than a road which met the specifications in the public domain plan and the STDCP for an intersection. Mr Chambers stated he was aware of the development consent obtained by his client on precinct 8 in 2021 where the Court granted a development application (DA) on a temporary basis when there was not any access off the realigned Cooper Street, see Leice Pty Ltd v City of Canada Bay Council [2021] NSWLEC 1627 (Leice).
Mr Haskew
1. Mr Haskew considered that no additional delay should be allowed for road access to precinct 8 as road access was to be provided by way of acquisition using s 7.11 contributions funding. Part of 27 Cooper Street in precinct 8 is zoned SP2 Infrastructure (Local Road) and the STDCP contemplated acquisition by the council to construct a new alignment of Cooper Street which would provide access to precinct 8. Mr Haskew considered that development consent for precinct 8 could not be reasonably withheld because the Cooper Street realignment had not yet been completed and the council would be obliged to deliver these public purpose works.
2. In oral evidence, Mr Haskew agreed that as at June 2019 the expectation would be that land listed for compulsory acquisition by the council for the realignment of Cooper Street would not be acquired in the next few years. Mr Haskew agreed that as at June 2019 the council had not sought dedication of land in lieu of s 7.11 contributions for laneway construction parallel to Leicester Avenue and the widening of Cooper Street. Mr Haskew believed this was because there were no development approvals triggering dedication of the land. He was not aware of any DAs being lodged prior to 2019. Mr Haskew agreed that given the lack of development in the Strathfield triangle he expected that the council’s contributions fund in 2019 did not allow for all public purpose works to be constructed in that year. Asked if the council would not have the funds to pay the difference between the value of the land dedicated and the s 7.11 contributions in the event the land was more valuable than the contributions, Mr Haskew stated he was not able to provide his opinion without conducting further investigations.
3. Mr Haskew agreed that as at June 2019 there had been zero development within the Strathfield triangle since the adoption of the contributions plan and the STDCP. When pressed on whether as at June 2019 it would be anticipated that there would be any development in the Strathfield triangle in the near future, Mr Haskew stated that there was no evidence to the contrary and the planning controls allowed for development to occur.
Applicants’ submissions
1. The focus must be the state of knowledge of the assumed hypothetical parties as at 1 July 2019 and not subsequent events. The hypothetical vendor/purchaser would, in determining the purchase price for land in precinct 8, be cautious and assume a period of five years for access from the realigned Cooper Street to be available in addition to the agreed 10 years.
2. As at 1 July 2019, the STDCP had been in effect for five years. The council had done nothing in terms of the acquisition of land for the realigned Cooper Street or the other public domain works the subject of acquisition under the contributions plan. Nor had it done anything with respect to the public domain works for dedication in lieu of s 7.11 contributions. The hypothetical purchaser as at 1 July 2019 would have been aware of the decision in Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245. That decision, in relation to 38-42 Leicester Avenue Strathfield, established that there were significant commercial risks involved in purchasing land within the Strathfield triangle for the purpose of development upon the assumption that the council would carry out the public works required in the STDCP and the contributions plan.
3. The advice to the hypothetical vendor/purchaser would have been that it could not be known when the realigned Cooper Street would be acquired and developed by the council so as to permit development of the precinct in accordance with the STDCP, the contributions plan and the public domain plan nor could it be known what the prospects were of obtaining development of precinct 8 without the realigned Cooper Street.
4. The grant of development consent in 2021 in respect of precinct 8 in Leice is relevant only to the extent that it confirms a foresight. The difficulty and complications of temporary access are exemplified by, inter alia, condition 96 of that consent. The reference to this consent in cross-examination was subject to objection on the ground of relevance as it postdates the base date of 1 July 2019. In any event it would tend to support Mr Chambers’ assessment and not Mr Haskew’s because that consent when analysed is clearly impaired and largely uncommercial for the following reasons:
1. The consent provides for a ‘temporary’ access arrangement. The hypothetical buyer would have to allow for the fact that the completed building would only be accessible through a temporary driveway and that sometime in the future, the council may or may not acquire the land to extend Cooper Street;
2. That future acquisition and major disruption, the timing of which is entirely uncertain, would have to be factored in and recorded on title as some form of covenant;
3. The impacts of that future change upon the hypothetical development would be unknown, including whether there would be any future costs for the owners corporation of the building to bear; and
4. Therefore each apartment sold in that hypothetical development would have to disclose this to purchasers and each purchaser would no doubt discount their interest accordingly.
1. Evidence of future events is admissible to prove a foresight, Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 (Falconer) at 558B (Hope JA). In Falconer it was accepted that a prudent purchaser properly advised would have anticipated a significant rise in building costs, at 558F-G. In the present case, there is no evidence about any expectation of temporary or alternative access at the base date. This is not a case of hindsight to confirm a foresight. The submission by the VG that at 1 July 2019 a hypothetical vendor/purchaser of precinct 8 would likely have been told by the council about alternative access is pure speculation.
2. The VG led no evidence which directly countered Mr Chambers’ oral evidence, which is compelling and should be accepted.
Valuer-General’s submissions
1. Mr Haskew’s opinion is that there would be no delay in obtaining development consent on account of the realignment of Cooper Street. The new alignment of Cooper Street is to be constructed over land comprising part of 27 Cooper Street and the adjoining parcel to the east. The parcel to the east is also owned by a company associated with the Applicants. Thus, just as there is agreed to be no adjustment for delay in amalgamating precinct 8 because the purchaser will own all the parcels in the precinct following the hypothetical sale, neither is an adjustment warranted for delay in constructing the new alignment of Cooper Street as the purchaser will own or have access to all the parcels on which the new road is to be constructed.
2. Mr Chambers' oral evidence was that the precinct 8 consent granted in 2021 did not require access to be provided from the realigned Cooper Street but that temporary access from Cooper Street was approved. Although the consent was granted after 1 July 2019, it is evidence of what the hypothetical vendor/purchaser of precinct 8 would likely have been told by the council on the valuation date about alternative access. This directly relates to (and contradicts) Mr Chambers’ expectation that alternative access would be highly unlikely. On either basis, the Court is able to have regard to the 2021 consent, see Falconer at 558B, Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 at [35]-[41].
3. The evidence supports the conclusion that the vendor/purchaser of precinct 8 on 1 July 2019, having considered the issue of alternative access and after making enquiries to the council, would have expected that some form of alternative access to the realigned Cooper Street would likely be approved. The fact that entities associated with the Applicants owned the land for the Cooper Street realignment would provide flexibility for the purchaser to self-provide the alternative access.
4. In reply, Mr Garnsey agreed that a purchaser of precinct 8 would have considered whether there were any alternatives for access other than via the realigned Cooper Street. It strains credulity to suggest that the purchaser, having considered alternatives, would not have approached the council about them.
Finding on development timing
1. At issue is whether Mr Garnsey’s allowance of an additional five years for road access for precinct 8 is warranted based on the town planners’ evidence. The same or related entities owned all the land in precinct 8 as at 1 July 2019. Given the lack of progress on medium density residential development in the Strathfield triangle for several years the Council did not have s 7.11 contribution funds to spend on public access being the realigned Cooper Street as provided in the STDCP. The prudent hypothetical purchaser would not assume the provision of public access.
2. Given the whole of the land in precinct 8 was in one ownership would the prudent hypothetical purchaser assume they had an ability to manage access on a temporary basis across part of precinct 8? The VG argues that such a prudent purchaser of the whole of precinct 8 would be likely to consider that alternative access arrangements would be able to be made in any DA lodged with the council. That foresight is confirmed by the Applicants’ successful grant of development consent in 2021 in Leice for a medium residential development which includes temporary access arrangements across part of precinct 8. While after the relevant date of 1 July 2019, consideration of such matters is permissible if this confirms a foresight, rather than simply operating in hindsight, as held in Falconer at 558B. This was essentially acknowledged by Mr Garnsey in oral evidence when he agreed that a purchaser of precinct 8 would have considered the possibility of alternative access arrangements. The Applicants’ submissions above in [44(a)]-[44(d)] that the consent conditions for its development consent were impaired and largely uncommercial appear to be counter intuitive given that the Applicants sought to obtain that development consent. The submissions are largely assertions in any event, and not obviously supported by the development consent conditions to which I was referred.
3. No allowance for development timing in relation to precinct 8 is warranted.
Valuation evidence
1. In his primary report, Mr Garnsey accumulated sales of individual lots zoned R4 High Density Residential the same as the Strathfield triangle in an adjacent locality. Sale 1 is now excluded as not comparable. Sales 2-6 were purchased for amalgamation into development sites for residential flat buildings upon achieving 1,500m2 of total area. His analysed land values follow:
1) Sale 2 was adjusted from $2,350,000 to $2,250,00 by deducting $100,000 for the added value of the cottage.
1) Sale 3 was adjusted from $2,520,000 to $2,420,000 by deducting $100,000 for the added value of the cottage.
1) Sale 4 was adjusted from $2,660,000 to $2,560,000 by deducting $100,000 for the added value of the cottage.
1) Sale 5 was adjusted from $2,320,000 to $2,220,000 by deducting $100,000 for the added value of the cottage.
1) Sale 6 was adjusted from $2,700,000 to $2,600,000 by deducting $100,000 for the added value of the cottage.
1. The resultant rate of potential GFA for the sales, if amalgamated, ranged from $2,079/m2 to $2,619/m2.
2. Mr Garnsey was instructed to undertake his valuation of the relevant parcels based on the Applicants’ town planner’s opinion of the achievable GFA on an amalgamated precinct basis. Mr Garnsey adopted a GFA rate for the amalgamated parcels of $1,870/m2. This rate was then adjusted down by -15% reflecting lack of development consent, as this was the midpoint of a normal ‑10% to -20% range based on the likely complexity of achieving the development. He adopted an adjustment of -10% for the Strathfield triangle ‘ghetto effect’, reflecting the number of vacant fenced out lots, dilapidated dwellings, and rubbish in the streets with no clear timeline as to when the precinct will be developed. A further negative adjustment, for proximity to the railway, was applied reflecting his observation that developers apply a ‘dealing with government’ discount to sites adjoining infrastructure as concurrence from a government authority slows down and complicates the development process. Mr Garnsey applied an adjustment of -15% for precinct 1. With a total adjustment of -40% he derived a rate of $1,100/m2 for precinct 1. He applied an adjustment of -10% for precinct 8 for railway proximity. With a total adjustment of -35% he derived a rate of $1,200/m2 for precinct 8.
3. These rates were then applied to the GFA for each parcel (based on total GFA of the precincts divided by the site area of the individual parcel as a percentage of the total site area). The relevant parcels in precinct 1 were then further adjusted by 10% per annum (pa) for 10 years to reflect the agreed timeframe required to achieve amalgamated ownership of this precinct. The relevant parcels in precinct 8 were discounted by 10% pa for five years to reflect the time required to achieve the realignment of Cooper Street.
4. In his primary report Mr Hill accumulated sales zoned R4 High Density Residential under the CBLEP, B2 Local Centre under the Burwood Local Environmental Plan 2012 (BLEP) and B4 Mixed Use under the BLEP, Strathfield Local Environmental Plan 2012 (SLEP) and Auburn Local Environmental Plan 2010 (ALEP) purchased for development of residential flat buildings or mixed use residential, all currently under development or completed except for Sale 1. Mr Hill then analysed land values as follows:
1) Sale 1, zoned R4 High Density Residential under the CBLEP, was adjusted from $11,010,000 to $10,755,000 to account for a delayed settlement.
2) Sale 2, zoned B2 Local Centre under the BLEP, was adjusted from $4,900,000 to $4,505,000 by adding a demolition cost of $50,000 and deducting the added value of an existing DA by $245,000, reflecting 5% of sale price.
3) Sale 3, zoned B4 Mixed Use under the BLEP, was adjusted from $31,500,000 to $31,400,000 by adding a demolition cost of $260,000 and deducting the added value of rental for 6 months of $360,000.
4) Sale 4, zoned B4 Mixed Use under the SLEP, was adjusted from $13,200,000 to $12,185,000 by adding a demolition cost of $302,700 and deducting the added value of an existing DA by $1,320,000, reflecting 10% of sale price.
5) Sale 5, zoned B4 Mixed Use under the ALEP, was adjusted from $24,000,000 to $23,000,000 by adding a demolition cost of $200,000 and deducting the added value of an existing DA by $1,200,000, reflecting 5% of sale price.
1. The resultant rate of potential GFA for the sales ranged from $1,610/m2 to $1,821/m2 for sales 1, 2, 4 and 5 with sale 3 standing out with a rate of $3,307/m2.
2. Mr Hill then adjusted the analysed rates for location, size, shape, access and views by comparing them directly to both precinct 1 and precinct 8, selecting an appropriate GFA rate from the range resulting from those adjustments. From this, Mr Hill adopted a GFA rate of $1,915/m2 for the parcels in precinct 1 and $2,000/m2 for the parcels in precinct 8. These rates were then applied to the GFA for each parcel as advised by the VG’s town planner based on the contribution of individual parcels to the development potential of each precinct based on the planning controls (ultimately a different approach was taken by the town planners in the lead up to the hearing).
3. The relevant parcels in precinct 1 were then further adjusted by 7.5% pa for 10 years to reflect the time required to achieve an amalgamated ownership of this precinct. The land values of the relevant parcels in precinct 8 were discounted by 25% to reflect the overall risk in the amalgamation of the parcels with adjoining land and achieving DA approval on the total amalgamation pattern. Mr Hill opined ‘the hypothetical vendor of the subject land therefore could not expect to achieve, nor would the adjoining owner be expected to pay, full value for this land parcel and that a discount must apply’.
4. The valuers agreed in joint conferencing that the operative assumptions for determining the land value of the land are those in s 6A(1) of the VL Act. The valuers agreed that the highest and best use of each individual parcel was as part of a residential flat building development following the amalgamation of the precinct in which they were located. The agreed method was as follows:
1. Step 1: determine a rate per m2 of GFA for residential flat building development on the whole of the relevant precinct (i.e. either precinct 1 or precinct 8) as if that precinct were an amalgamated parcel, by analysing and adjusting comparable sales;
2. Step 2: multiply this rate by the appropriate achievable GFA for the relevant parcel determined as a proportion of the precinct GFA referrable to the land area of each relevant parcel;
3. Step 3: make further adjustments to this amount including an adjustment to account for delay in achieving amalgamation of the relevant precinct (based on an estimated time for amalgamation to occur and discount rate).
1. The town planners’ respective calculations were much closer when the site apportionment method was used. Mr Garnsey adopted the GFA calculations of the VG’s town planner Mr Haskew, while Mr Hill adopted the GFA calculations of the Applicants’ town planner in the joint planners’ report.
2. Mr Garnsey maintained his adjustment to sales for ghetto effect and proximity to the railway. He added adjustments for location, size, shape, access, and views, consistent with Mr Hill, while abandoning his adjustment for lack of development consent. He explained he altered his analysis and adjustments to homogenise the valuers’ adjustment table as much as possible. While this increased his adjustments to between -50% and -60% for his sales, his adopted GFA rate remained the same. His adjustments for time to amalgamate precinct 1 and achieve the realignment of Cooper Street for precinct 8 remained the same.
3. Mr Hill maintained his adjustment for location, size, shape, access, and views. He addressed Mr Garnsey’s adjustments for ghetto effect and proximity to railway and applied no adjustment for these. His adopted GFA rate remained the same. His adjustments for time to amalgamate precinct 1 and for risk of amalgamation in precinct 8 remained the same.
4. While agreeing on the method to be used, there was dispute between the valuers broadly as follows:
1. Step 1: identification of comparable sales:
1. the comparability of Mr Hill’s sales;
2. the comparability of Mr Garnsey’s sales;
3. the appropriate adjustments to be made to the relevant comparable sales;
1. Step 2: the appropriate achievable GFA (determined by the town planners’ evidence considered earlier); and
2. Step 3: firstly, the appropriate overall discount rate and, secondly, the discount period if any for public road access of realigned Cooper Street in precinct 8.
Step 1: Determine rate per m2 of GFA for residential flat building development on precincts 1 and 8
Valuers’ comparable sales evidence
1. The valuers selected, analysed and adjusted their comparable sales in both their primary reports and in the joint valuers’ report dated 26 March 2024. No common sales were selected by the valuers.
Mr Garnsey’s sales
1. Following joint reporting Mr Garnsey calculated the analysed GFA of each comparable sale and then made adjustments to apply it to the parcels in each precinct as set out previously.
2. Sale 2 at 1 Derowie Street Homebush was purchased with a contract date of 5 May 2017 for $2,350,000. It had an area of 481m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,082.25m2 (based on a FSR of 2.25:1). It was purchased by a related entity to that which purchased 3 and 5 Derowie Avenue and the adjoining properties at 3, 4 and 6 Kanoona Avenue, resulting in a total of six lots in the same ownership. DA 2016/134 was lodged on 17 August 2016 and determined on 15 November 2016 for the erection of a five storey residential flat building on the property at 1-5 Derowie Avenue. The DA has not been progressed as was evident on the view.
3. Sale 3 at 8 Kanoona Avenue Homebush was purchased with a contract date of 14 March 2017 for $2,520,000. It had an area of 462m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 924m2 (based on a FSR of 2:1). Sale 6 at 12 Kanoona Avenue Homebush was purchased with a contract date of 11 March 2016 for $2,700,000. It had an area of 583m2 and was zoned R4 High Density Residential with a potential GFA identified as 1,166m2 (based on a FSR of 2:1). Sales 3 and 6 were the subject of DA 2016/124.1, together with 10 Kanoona Avenue, for demolition of the existing structures and construction of a seven storey residential flat building. The DA was lodged on 15 September 2016 and approved on 1 February 2017. On 17 May 2023, DA 2023/60 was lodged for the demolition of existing structures, lot consolidation and construction of a residential flat building with a 90 place childcare centre on the ground floor. Since the new DA was lodged, 12 Kanoona Avenue has sold.
4. Sale 4 at 5 Hillcrest Street Homebush was purchased with a contract date of 17 February 2017 for $2,660,000. It had an area of 441m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,102.5m2. Sale 5 at 7 Hillcrest Street Homebush was purchased with a contract date of 16 December 2016 for $2,320,000. It had an area of 441m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,102.5m2. Sales 4 and 5 are adjoining properties purchased by a related entity to the owner of the adjoining 3 Hillcrest Avenue. The combined areas of the three properties may be insufficient to achieve the minimum 1,500m2 for residential flat development. No DA has been sought for such development since the purchase of these properties.
5. Sales 2-6 were selected as they were near the Strathfield triangle and were all zoned R4 High Density Residential under the CBLEP, the same as the relevant parcels. All sales were of smaller lots which required future amalgamation with next door sites to enable development as residential apartment buildings. Some sales were relied on because the VG’s contractor had referred to these in the review of the Applicants’ objection.
6. The analysed GFA rate for each sale was adjusted (noting different analysis by each valuer depending on his approach to valuing houses on the sale lots). Mr Garnsey deducted $100,000 for houses adding value to a lot as these potentially provided an income stream. (Mr Hill made no adjustment for houses).
7. I find below that Mr Garnsey’s sales 2, 3 and 6 are comparable and therefore only refer to these here. For precinct 1 Mr Garnsey made adjustments for location (nil), size (-35%), shape (-10%), access (nil for sale 2 or 5% for sales 3 and 6), views (10%), ghetto effect (-10%) and railway proximity (-15%). His total adjustments were -60% for sale 2, -55% for sale 3 and -55% for sale 6. Mr Garnsey’s adjusted GFA rate was $1100/m2 for precinct 1.
8. Similar adjustments were made in relation to precinct 8 except for railway proximity (-10%). Mr Garnsey’s total adjustments were -55% for sale 2, -50% for sale 3 and -50% for sale 6. His adjusted GFA rate was $1200/m2 for precinct 8.
Mr Hill’s sales
1. In his primary report, Mr Hill relied upon five sales. Sale 1 at 38-42 Leicester Avenue Strathfield located in the Strathfield triangle was purchased with a contract date of 30 June 2015 for $11,010,000. Leicester Avenue is categorised as a main road for the purposes of the Roads Act 1993 (NSW) and is a very busy street. Sale 1 had a developable GFA of 5,905.8m2 and was zoned R4 High Density Residential under the CBLEP with a maximum height of 25m. DA 2016/0429 was lodged on 1 November 2016 for demolition of the existing structures and construction of an eight storey residential flat building. The application was subsequently refused by the council and ultimately the NSW Court of Appeal arising from difficulties in achieving access over neighbouring land. Consequently, the development has not proceeded.
2. Sale 2 at 319-329 Liverpool Road Strathfield was purchased in separate transactions with contract dates of 18 February 2019 and 8 March 2019 for $4,900,000. It had an area of 1,220.3m2 and was zoned B2 Local Centre under the BLEP with a developable GFA of 2,689.6m2 and a maximum height of 20m. Half the site (319-323 Liverpool Road) was sold with existing DA 2018/48.1. An amendment was lodged and approved after the sale dates for demolition of existing improvements and the construction of a six storey mixed use development which was being built when seen on the view.
3. Sale 3 at 15-19 Clarence Street Burwood was purchased with a contract date of 24 April 2019 for $31,500,000. It had an area of 3,165m2 and was zoned B4 Mixed Use under the BLEP with a developable GFA of 9,495m2 and a maximum height of 30m. DA 26/2019 was lodged on 18 March 2019 for demolition of existing improvements and construction of a part nine, part 10 storey residential flat building which has occurred.
4. Sale 4 at 218 Parramatta Road Homebush was purchased with a contract date of 28 February 2018 for $13,200,000. It had an area of 3,027m2 and was zoned B4 Mixed Use under the SLEP with a developable GFA of 7,567.5m2 and a maximum height of 20m. The property was sold with DA 2016/96 lodged on 22 December 2016 for demolition of the existing structures and construction of a six storey mixed use development which has occurred.
5. Sale 5 at 18-24 Railway Street Lidcombe was purchased with a contract date of 6 October 2017 for $24,000,000. It had an area of 2,284m2 and was zoned B4 Mixed Use under ALEP with a developable GFA of 11,420m2 and a maximum height of 32m. DA 423/2016 was lodged on 30 September 2016 and approved on 20 March 2018 after the settlement date of 7 December 2017. The DA approved the demolition of existing structures and construction of an 11 storey mixed use building which has occurred.
6. The five sales relied upon by Mr Hill were selected as they were residential unit site sales purchased as ready to be utilised for that use being amalgamated sites. Mr Hill considered his sale 1 to be the best evidence as it was in the Strathfield triangle.
7. For precinct 1 Mr Hill made adjustments for location (5% for sale 1, 10% sales 2 and 5, -20% sale 3 and 15% for sale 4), size (-15% for sale 1, -20% for sale 2 and -10% sales 3-5), shape (nil for sales 1, 3-5, 10% for sale 2), access (5% for sales 1, 3, 10% for sale 2 and -5% for sales 4 and 5), views (10% for sales 1, 2 and 4, -10% sale 3 and nil for sale 5). He made no adjustments for ghetto effect and railway proximity. His total adjustments were 5% for sale 1, 20% for sale 2, -35% for sale 3, 10% for sale 4 and -5% for sale 5. Mr Hills’s adjusted GFA rate was $1915/m2 for precinct 1.
8. Similar adjustments were made in relation to precinct 8 for location, size, shape, ghetto and railway proximity. He made different adjustments for access (10% for sales 1 and 3, 15% for sale 2, nil for sale 4 and -10% for sale 5), and views (10% for sales 1, 2 and 5, -5% for sale 3 and 15% for sale 4). His total adjustments were 10% for sale 1, 25% for sale 2, ‑25% for sale 3, 20% for sale 4 and nil for sale 5. Mr Hills’s adjusted GFA rate was $2000/m2 for precinct 8.
Mr Garnsey on Mr Hill’s sales
1. Mr Garnsey engaged with the sales relied upon by Mr Hill in the joint valuers’ report to the extent of adjusting those sales under the headings as agreed by the valuers. He accepted Mr Hill’s analysed land values as at the 2019 valuing year, applying his own adjustments. Mr Garnsey considered there were no reliable sale transactions relevant to the base date of 1 July 2019 within the Strathfield triangle which would assist the Court. Mr Garnsey did not consider Mr Hill’s sale 1 to be appropriate for determining the land value of the relevant parcels. Mr Garnsey considered Mr Hill’s sales 2-5 to be appropriate for determining the land value of the relevant parcels. He did caution they were all in a different zone to the Strathfield triangle. Mr Garnsey’s total adjustments for precinct 1 were sale 1 (-35%), sale 2 (-25%), sale 3 (-60%), sale 4 (-30%), sale 5 (-20%). Similar adjustments were made for precinct 8 except for railway proximity resulting in total adjustments for sale 1 (-30%), sale 2 (-20%), sale 3 (-55%), sale 4 (-25%), sale 5 (-20%).
2. As adjusted precinct 1 showed a GFA rate by Mr Garnsey of $1,127-$1,323/m2. Precinct 8 showed a GFA rate of $1,208-$1,611/m2.
Mr Hill on Mr Garnsey’s sales
1. Mr Hill engaged with sales 2, 3, and 6 selected by Mr Garnsey, determining his own analysed land value as at the 2019 valuing year (not deducting $100,000 for house value) and applying his own adjustments to the relevant parcels.
2. Mr Hill did not consider Mr Garnsey’s sale 2 to be a preferred sale as the property sold with development consent for erection of a residential flat building on 1 (sale property), 3 and 5 Derowie Street, which has not been acted on in the 7.5 years since being approved in November 2016. Residential houses remain on the land.
3. Mr Hill did not consider Mr Garnsey’s sales 3 and 6 to be preferred sales evidence. These properties were the subject of a DA in 2016, lodged prior to sale 3 and after sale 6, followed by another DA lodged in 2023. The parcel 12 Kanoona Avenue (sale 6) has since been transferred to another party.
4. Mr Hill did not consider Mr Garnsey’s sales 4 and 5 to be comparable, opining they were residential cottage sales not considered comparable for multilevel residential use. Since they transacted in December 2016 and February 2017 there has been no activity to suggest the properties were purchased for residential unit development.
5. For precinct 1 Mr Hill’s total adjustment across Mr Garnsey’s sales 2, 3 and 6 was -5%. His adopted GFA rate range was $2,063-$2,591/m2. For precinct 8 Mr Hill’s total adjustment across Mr Garnsey’s sales 2, 3 and 6 was also -5%. His adopted GFA rate range was $2,063‑$2,591/m2. The higher values are partly due to Mr Hill not deducting $100,000 for house value and not making any adjustment for ghetto effect or railway proximity which would have resulted in a substantially lesser rate.
Oral evidence
1. In oral evidence, it was put to Mr Garnsey that his sales were parts of future amalgamated parcels. Mr Garnsey agreed. It was also put to Mr Garnsey that because his sales were parts of future amalgamated parcels that Mr Hill’s sales were ‘an inherently more reliable starting point to determine the value of the amalgamated [precinct] 1 and [precinct] 8’ and that because his adjustments to Mr Hill’s sales were of a ‘significantly lower magnitude’ than those he applied to his own sales Mr Garnsey’s own sales were ‘an inherently more unreliable starting point’. Mr Garnsey agreed with both contentions.
2. Mr Garnsey stated his sales should be relied on as they are the ‘same sort of product’ as the precincts, including because they are near the Strathfield triangle, have similar zoning and are in a similar situation of being consolidated for development in an R4 High Density Residential zone. Sales in the Homebush area have been used previously by valuers as benchmarks to apply to the Strathfield triangle.
3. When asked about the significance of his sale 2, as an example, Mr Garnsey responded he focused on sales more temporal to 1 July 2019.
4. Mr Garnsey selected sales which were more reflective of the current situation of the parcels in the Strathfield triangle. He then adjusted them to reflect the size difference between the sales and the amalgamated precincts as if ready to develop as envisaged by step 1 of the valuation exercise agreed by the valuers.
5. Mr Hill agreed that sale 1 was his main sale. It was put to him that that the purchaser assumed that access could be obtained to the site for the purpose of development to which Mr Hill agreed. It was further put that the assumption that access could be obtained to the site for the purpose of redevelopment would not be reflected in the price as at 1 July 2019 to which Mr Hill agreed. He confirmed, however, that in his view the price paid for sale 1 reflected what a developer would pay on the assumption that they would have no access problems. It was also put to Mr Hill that the sale price would only be considered excessive in hindsight, after the access issues arose, to which Mr Hill agreed. Mr Hill opined it was a good sale because the purchase was made on the assumption that there were no access problems, and the block could be developed in line with the apartment design guide.
Applicants’ submissions
1. The submission that Mr Garnsey’s sales are not truly comparable should be rejected based on the principles in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 (Maurici). Given Mr Garnsey’s sales were parts of future amalgamated parcels and Mr Hill’s sales were of actual amalgamated parcels, Mr Garnsey was only referring to Mr Hill’s sales as a starting point. These circumstances are in a very different category to Maurici where the valuer relied on sales of vacant land and ignored reasonably contemporaneous sales of comparable improved land contrary to s 6A of the VL Act.
2. The valuation methodology adopted by Mr Hill and accepted by Mr Garnsey is not to value the lots by direct comparison with comparable sales. The first step was to determine a rate per m2 on the whole of the two amalgamated precincts as if each of those precincts were an amalgamated parcel. This was the starting point from which the adjustments were to be made. The comparable sales of both Mr Hill and Mr Garnsey establish an assumed state of amalgamation and readiness for development which did not accord with the true circumstances of precinct 1 as at 1 July 2019, which at that point had not been amalgamated and was not capable of being developed for the highest and best use.
3. Mr Garnsey considered that his sales 2-6 were more reliable than Mr Hill’s sales 2-5. It was also clearly to be inferred that Mr Garnsey’s sales 2-6 were acquired for amalgamation and development as residential flat buildings. Mr Garnsey’s sales 2-6 are more comparable to the actual circumstances of the relevant parcels as at the base date than Mr Hill’s sales 2-5, having regard to the zoning of the relevant parcels and their locality.
4. Mr Hill’s comparable sales 1-5 were capable of being developed without any further amalgamation. In that sense they were not sales that were comparable to the relevant parcels. Consistently with the chosen methodology they were sales to establish an assumed state of affairs for the purpose of the valuation modelling.
5. On the basis that Mr Garnsey’s sales are of greater assistance than Mr Hill’s sales 2-5 there can be no basis for the submission that Mr Garnsey has ignored a principle of the assessment of value or did not proceed rationally, as the terms are used in Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 and set out with apparent approval in Maurici at [18].
Valuer-General’s submissions
1. As the Applicants emphasised, Mr Garnsey’s sales were all properties purchased as sites ‘to be amalgamated’ and which, due to their small size, were unable to be developed with residential flat buildings on a stand-alone basis i.e. without amalgamation. Mr Garnsey agreed in oral evidence that his sales were in essence ‘parts of a future amalgamated parcel’. ln contrast, like precincts 1 and 8, Mr Hill's sales were all part of larger parcels capable of, and purchased for, development as residential flat buildings without further amalgamation. This is accepted by the Applicants and Mr Garnsey. Sale 1 is the most comparable sale selected by Mr Hill.
2. Importantly, Mr Garnsey accepted in oral evidence that Mr Hill's sales were an inherently more reliable starting point to determine the value of precincts 1 and 8. Conversely, he also accepted that his sales were an inherently more unreliable starting point compared to Mr Hill’s sales which was reflected in the large total adjustments (either -55% or ‑60%) he made from his sales. The large nature of these adjustments demonstrates their lack of comparability, see The Trust Company Ltd v Minister Administering the Crown Lands Act 1989 (2012) 211 LGERA 158; [2012] NSWLEC 73 at [99], Capuano v Roads and Maritime Services [2018] NSWLEC 59 at [32].
Consideration of comparable sales
1. In Maurici, McHugh, Gummow, Kirby, Hayne and Callinan JJ commented at [18] that ‘sales to be treated as comparable sales need to be truly comparable’. The identification of comparable sales is informed by the agreed valuation methodology adopted by the valuers, steps 1-3 set out in [62] above. The first step is to consider each precinct as an amalgamated parcel and the comparable sales are to assist in that scenario.
a. Comparability of Mr Hill sale 1 within Strathfield triangle and sales 2-5 outside Strathfield triangle
1. Mr Hill considered his sale 1 as the most comparable sale for step 1. It is located in the Strathfield triangle and was a sale in June 2015 of an amalgamated precinct intended to be developed for residential apartments. He identified it as a property that was marketed properly and purchased by a developer for multi storey residential development. In oral evidence, he considered it to be a good sale because it was purchased on the assumption there were no access problems and that the entirety of the precinct could be developed in line with the apartment design guide for the Strathfield triangle.
2. Mr Garnsey in the joint valuers’ report considered Mr Hill’s sale 1 should be treated with caution due to events which occurred after the purchase in June 2015. A DA was refused by the council in November 2016, and by the Court in July 2019. Mr Garnsey from discussions with the Applicants and a review of court cases believed the consent was refused in part as the owner of the adjoining land did not consent to access over that land, which was zoned RE1 Public Recreation and would provide for the future creation of Leicester Lane. Mr Garnsey was further advised by the Applicants that the purchase was made on the assumption that access was to be provided by the council through the acquisition of the adjoining land. This had not occurred likely because no s 7.11 contributions in the Strathfield triangle had been received due to stalled development of this area.
3. In oral evidence, Mr Garnsey accepted that the sale price was paid for sale 1 assuming there were no access difficulties. He also conceded that for the purpose of step 1, which was to determine the GFA rate that would be paid at a point in time when there is no impediment to developing the whole of the precinct, it would be the perfect sale.
4. Mr Hill’s sales 2-5 provided support to his analysis of sale 1, accepting they had different zoning. In oral evidence Mr Garnsey accepted these sales were comparable, albeit noting they had different zoning.
Finding – Mr Hill sales comparable
1. The VG submitted there is no basis to treat sale 1 with caution. The purchase price was struck before any access difficulties crystallised and thus Mr Garnsey accepted in oral evidence that it reflected the market value of a site in the Strathfield triangle with no access difficulties. He also accepted that the sale price was only ‘excessive’ in hindsight. Accordingly, the sale is a reliable guide to the value of the precincts. I agree but the same observation also applies to Mr Garnsey’s sales 2, 3 and 6, as discussed below. Both valuers confirm sale 1 occurred on the assumption that access was available and that the inability to develop, due to lack of access, was a fact only revealed in hindsight. For those reasons, and due to the location within the Strathfield triangle, I consider it is highly suitable for use as a comparable sale.
2. Mr Hill’s sales 2-5 outside the Strathfield triangle are for amalgamated blocks which have been developed since purchase for residential apartment buildings with some mixed use. While they are in different zoned areas, that zoning permits the type of development also permitted within the Strathfield triangle. They are generally close to the Strathfield triangle and can also be considered as generally comparable, providing support to the application of sale 1.
3. Mr Hill’s sales are all properties purchased as development sites that have commenced or been completed since the sale occurred, other than his sale 1. They are suitable for comparison to precincts 1 and 8 envisaged by step 1 of the agreed valuation approach.
b. Mr Garnsey sales 2, 3 and 6 comparable
1. Mr Garnsey’s sales 2, 3 and 6 provide useful comparability if considered as making up part of amalgamated parcels permitted by the development approvals of which they form a part rather than as individual parcels, as he intended. This is consistent with the agreed valuation approach for the relevant parcels. Mr Garnsey’s sales 2, 3 and 6 are located close to the Strathfield triangle in Homebush with the same zoning. They are smaller sites purchased with the intention to develop, evidenced by adjoining ownerships and DAs made prior to sale 2 and subsequent to sales 3 and 6. That the developments have not progressed does not prevent reliance on them, in the same way that Mr Hill’s sale 1 has also not progressed. The initial intention of the purchaser makes them suitable for comparison if considered as a part of the overall GFA of a development site. The total GFA for those potential development sites was identified in evidence as 3,000m2 for sales 3 and 6, and 3,375m2 for sale 2. Mr Garnsey made a large size adjustment of -35% to render the sales comparable to the larger precincts. The site areas for each potential amalgamated development site would exceed the minimum area of 1,500m2 required to permit a residential flat building. This falls between the GFA of Mr Hill’s sales 1 (5,905.8m2) and 2 (2,689.6m2) confirming the comparability of Mr Garnsey’s three sales.
2. Contrary to the VG’s submission, Mr Garnsey’s agreement in cross‑examination that Mr Hill’s amalgamated parcels were more comparable given the agreed methodology does not completely remove the relevance of Mr Garnsey’s sales. As the Applicants submitted, they do reflect the circumstance of the relevant parcels, are close by with the same zoning and can be considered as purchased with the intention they would amalgamate with next door lots, the reason for their selection by Mr Garnsey.
3. Mr Garnsey’s analysed land value for his sales, arrived at by deducting the added value of the cottages still standing, is appropriate given their continuing use. Mr Garnsey’s sales 2, 3 and 6 are able to be applied as relevant comparable sales.
Appropriate adjustments of relevant comparable sales
1. Both valuers adjusted the various sales to account for differences between the sales and the precincts. The level of total adjustments differed for precinct 1 and precinct 8. Mr Hill adjusted for location, size, shape, access and views. In addition, Mr Garnsey adjusted for ‘ghetto effect’ and railway proximity to varying degrees for both precincts.
(i) Adjustments of Mr Hill sale 1
1. The analysed land value adopted by Mr Hill for sale 1 is accepted as the appropriate starting point. Mr Garnsey did not provide an alternate analysed land value for Mr Hill’s sales. As sale 1 is presented by Mr Hill as the most comparable sale the adjustments made for that will be considered first. No adjustment was made for ‘ghetto effect’ for that sale by Mr Garnsey.
Location
1. Mr Hill applied an adjustment of 5% for location. In oral evidence he opined the sale location to be slightly inferior due to its proximity to Paramatta Road and frontage to a busy thoroughfare Leicester Avenue. He considered that precincts 1 and 8 would be more pleasant to live in than the location of the sale.
2. Mr Garnsey applied no adjustment for location. In oral evidence he opined he did not consider the locations of precincts 1 and 8 to be quieter compared to the sale location due to the noise impact of Cooper Street and the railway corridor. He did concede there would be more traffic on Leicester Avenue than on Cooper Street and that Mr Hill’s adjustment was appropriate for a resident who would rather be on Cooper Street than Leicester Avenue.
Finding
1. I find Mr Hill’s argument more persuasive. While precinct 8 also has frontage to Leicester Avenue, it was noticeable during the view of the relevant parcels and sale 1 that the relevant parcels, once developed, would be more pleasant locations to live than the sale property. Sale 1 faces directly onto Leicester Avenue which is very busy. I accept Mr Hill’s location adjustment of 5% for both precincts.
Size
1. Mr Hill applied an adjustment of -15% for size. In his primary report and in oral evidence he opined that the developable GFA of the two precincts being larger than the sale warranted a lower GFA rate due to economies of scale. He did not explain precisely how that was calculated.
2. Mr Garnsey applied an adjustment of -20% for size. He did not explain how this was calculated in the joint valuers’ report or in oral evidence but appeared to adopt a similar rationale to Mr Hill.
Finding
1. The valuers agreed the adjustment for size was subjective, Mr Hill adding the importance of consistency in applying adjustment for size. Neither adjustment was more compelling than the other and as this was Mr Hill’s sale, I will adopt his adjustment for size of -15%.
Shape
1. Mr Hill made no adjustment for shape for either precinct. He considered the amalgamation patterns of the precincts did not affect their development potential. In oral evidence he added that the precincts were quite large, and that the hypothetical developer would be able to undertake a development quite readily and easily and not be confined or disturbed by the land shape.
2. Mr Garnsey applied an adjustment for shape of -10% for both precincts. In oral evidence, he referred to the irregular shapes of the lots in the precincts as not rectangular and stated that in his experience sites that have an irregular shape will attract higher construction costs than sites with a regular rectangular building. Mr Garnsey also referred to the Applicants describing to him solar access being problematic in the triangle due to the precinct shapes. Mr Garnsey conceded he was not an expert on solar access and did not have the expert advice of a quantity surveyor.
Finding
1. Precinct 1 is an irregularly shaped site in the sense that it is not rectangular. It is a large site. Precinct 8 while irregular is less so and is an even larger site. Both valuers essentially rely on their experience in forming their opinions about whether additional costs for developing on irregular sites should be factored in. I accept that there may be additional cost issues when developing such irregular sites, more so for precinct 1 than for precinct 8. I will accept the opinion of Mr Garnsey that -10% adjustment for precinct 1 is warranted. I consider the adjustment for precinct 8 should be -5%, reflecting that it is not as irregular as precinct 1 and is a larger site than precinct 1.
Access
1. Mr Hill applied an adjustment of 5% for precinct 1 and an adjustment of 10% for precinct 8. In oral evidence, Mr Hill described precinct 8 as an island block which he considered superior to both sale 1 and precinct 1. Both valuers agreed precinct 1 had two street frontages. Mr Hill considered precinct 8 had three usable frontages and good vehicular access from the realigned Cooper Street. The existing Cooper Street will become a bicycle and pedestrian thoroughfare, creating an island block separated from all other properties. Mr Hill referenced light access and good vehicle access becoming available from the Cooper Street realignment.
2. Mr Garnsey applied an adjustment of 5% for access for both precincts. In oral evidence, he opined that precinct 8 will have two street frontages due to the realignment of Cooper Street, but only one access off the realigned Cooper Street would exist as no access would be permitted off Leicester Avenue. He referred to the redundant part of Cooper Street becoming vacant land which may be incorporated into precinct 8.
Finding
1. The valuers agreed on a 5% adjustment for access to precinct 1 which is accepted.
2. The land currently occupied by Cooper Street was considered by both valuers when explaining their individual adjustments for access to precinct 8. Mr Hill applies a level of amenity provided by multiple frontages along with access for development. Mr Garnsey limited his adjustment to the vehicular access available from one street only. The valuers disagreed on the future use of the existing Cooper Street but both scenarios put forward by the valuers would add value to precinct 8.
3. I prefer the approach of Mr Hill. Access can have a broad definition. The amenity adopted by Mr Hill included adjustments for features not covered by other sale adjustments. The future use of the existing Cooper Street either as a bicycle and pedestrian path or added in some way to the amalgamation area of precinct 8 should be considered. Accordingly the appropriate adjustment for precinct 8 is 10%.
Views
1. Mr Hill applied an adjustment of 10% for views for both precincts. He considered the views of sale 1 to be limited as future development is restricted to seven storeys, lower than that of the two precincts. Views would be limited by surrounding multi storey development which is only available to the south and east over the residential houses along Leicester Avenue.
2. Mr Garnsey applied an adjustment of 5% for views for both precincts. In oral evidence, he agreed that both precincts 1 and 8 will have unobstructed views to the west due to their height. He conceded the adjustment for views between sale 1 and the two precincts could be between 5% and 10%.
Finding
1. Mr Hill’s adjustment of 10% was based on the precincts having views less constrained by surrounding development and enhanced due to the greater permissible height. Mr Garnsey agreed that the views afforded to the precincts is superior to sale 1 due to the height achievable and agreed the adjustment lies between 5% and 10%. Based on the above, I accept Mr Hill’s adjustment of 10%.
Railway proximity
1. Mr Garnsey made an adjustment on the basis of both precincts being adjacent to a railway of -15% for precinct 1 and -10% for precinct 8. The adjustment reflected his opinion that building near a railway (within 25m) requires concurrence from Transport for New South Wales (TfNSW) under the State Environmental Planning Policy (Infrastructure) 2007 (NSW) (Infrastructure SEPP). He based his adjustment on his experience in valuing development sites adjoining rail corridors and quantity surveyors placing a heavy loading on estimated development costs. In oral evidence he opined that in his experience there is a loading on construction costs, sometimes up to 30%, for development sites abutting railway lines. No evidence was provided to support his opinion as it was considered commercial in confidence. His general observation was that developers apply a ‘dealing with government’ discount to sites adjoining infrastructure due to concurrence slowing and complicating the development process.
2. Mr Hill considered the process of gaining DA approval for a large scale development requires consent from various authorities and the 25m zone adjoining the railway affects only a small portion of the western boundaries of both precincts, the impact being negated by the general building setbacks in the design requirements of the STDCP. In his view such an adjustment is considered when adjusting for location. He based his locational adjustments on his own experience and a review of suburb comparison median unit sales from Realestate.com. In cross-examination Mr Hill agreed that he did not have experience dealing with railway authorities. When asked about cll 86 and 87 of the Infrastructure LEPP he did not consider any adjustment was warranted.
Parties’ submissions
1. The Applicants submitted that the parcels in precinct 1 and precinct 8 are adjacent to the railway. It was common ground that as at 1 July 2019, cll 86 and 87 of the Infrastructure SEPP would apply to development on those precincts. Mr Hill’s evidence that there would be no impact from cll 86 and 87 of the Infrastructure SEPP should be rejected. It is noted that Mr Hill admitted in cross-examination that he had little experience in dealing with the application of cll 86 and 87.
2. The VG submitted that Mr Garnsey gave no explanation of the basis for the railway adjustment in his primary report. His reasoning first appeared in the joint valuers’ report. Mr Garnsey agreed with Mr Hill that it would take around 12-18 months to obtain a consent for the development of precincts 1 and 8. This would involve liaison with many third parties which would be undertaken in parallel and any delay in obtaining concurrence would only arise if the time taken extended beyond that period. Insofar as the adjustment was based on an increase in costs, the lack of supporting detail means the Court would not be persuaded that the adjustment is warranted. In the alternative, for the same reasons, the Court would considerably reduce the magnitude of Mr Garnsey’s adjustments of -10% and -15%.
Finding
1. The VG did not dispute concurrence was required. There were two elements to the adjustment made by Mr Garnsey, increased cost of development and time delay. The cost evidence of Mr Garnsey was generic with no detail provided on estimated construction costs. Mr Garnsey and Mr Hill agreed that it would take 12-18 months to obtain consent for these types of projects and would involve liaison with many authorities and inquiries with each authority would be undertaken in parallel. As the VG submitted, delay in concurrence from TfNSW would only require adjustment if the delay extended beyond a 12-18 month period.
2. Clause 86 of the Infrastructure SEPP refers to development that involves the penetration of land to a depth of at least 2m below existing ground level on land within 25m (measured horizontally) of a rail corridor. The clause requires that a consent authority must not grant consent to such development without the concurrence of the chief executive officer of the rail authority of the rail corridor. It also requires that written notice to TfNSW must be given within seven days of a DA being lodged. Subclause (5) states the consent authority may grant development consent after 21 days has passed since notice is given and the chief executive officer has not granted or refused to grant concurrence. Both parties referenced the conditional development approval granted in Leice for precinct 8. It is noted in that judgment at [17] that the concurrence from the railway authority took some 12 months from notification to concur.
3. While observing that the information before the Court suggests different timeframes for obtaining concurrence from TfNSW, I am satisfied the 12-18 month timeframe for making enquiries with a range of government authorities would be highly likely to include concurrence being obtained from the rail authority and would not further delay consideration of any DA by the consent authority. I do accept that achieving that concurrence may require additional works and therefore cost that would not otherwise be required resulting in an adjustment to most of the sales evidence. In the absence of any evidence of what works may be required, I will allow an adjustment of -5% for both precincts on that basis.
Application of Mr Hill sale 1
1. Mr Hill’s adjustments have been generally accepted, with some additional adjustments for shape and railway, resulting in a total adjustment of -10% for precinct 1 and 0% for precinct 8. This results in a GFA of $1,639/m2 for precinct 1 and $1,821/m2 for precinct 8.
(ii) Adjustments of Mr Hill sales 2-5
1. I will now consider what adjustments are appropriate for Mr Hill’s sales 2-5.
Location
1. The valuers made different adjustments to Mr Hill’s sales 2-5 for location for both precinct 1 and precinct 8.
2. Mr Hill applied adjustments of 10% for sales 2 and 5, and 15% for sale 4 when compared to the precincts, opining that the Strathfield triangle is a preferred residential location. He applied an adjustment of -20% for sale 3 as he considered sale 3 to be in a preferred residential location when compared to the precincts.
3. Mr Garnsey applied adjustments of 5% for sale 2 and 10% for sales 4 and 5, while applying an adjustment of -10% for sale 3. He did not adjust for location in his primary report and did not explain his adjustment in the joint valuers’ report. No additional evidence in relation to the location of these sales was presented in oral evidence.
Finding
1. Mr Hill provided a rationale for his adjustments for location applicable to his sales 2-5 based on residential desirability, consistent with his approach for sale 1. Mr Garnsey did not explain his adjustments for location for sales 2‑5. As Mr Hill’s adjustments appear reasonable I will accept Mr Hill’s adjustments as appropriate.
Size
1. Mr Hill applied adjustments for size of -20% for sale 2 and -10% for sales 3-5 when compared to both precincts. As for sale 1, Mr Hill considered the developable GFA of the two precincts to be larger than the sales, warranting a lower GFA rate due to economies of scale.
2. Mr Garnsey applied adjustments of -25% for sale 2 and -15% for sales 3-5 consistently when compared to both precincts.
Finding
1. In oral evidence the valuers agreed the size adjustment was subjective, Mr Hill confirming the importance of consistency. Mr Garnsey’s sale 2 and Mr Hill’s sale 2 are broadly similar in size and should therefore have a similar adjustment made. I will adopt an adjustment for size of -25% consistent with Mr Garnsey’s adjustment. Mr Hill’s adjustment of -10% for sales 3 and 5 is accepted as appropriate. For sale 4 I will adopt an adjustment of -12.5% reflecting its size falling between sale 1 and sale 3. These adjustments are made for both precincts.
Shape
1. Mr Hill made no adjustment for shape for both precincts except for sale 2 where he applied an adjustment for shape of 10% for both precincts. He considered the boomerang shape of the sale 2 land did affect development potential compared to the precincts.
2. Mr Garnsey applied an adjustment for shape of -10% for both precincts except for sale 2 where he made no adjustment for shape for both precincts. He provided no rationale for shape adjustments in the joint valuers’ report. The same oral evidence referred to above in [122]-[123] in relation to sale 1 applies here.
Finding
1. As found in relation to sale 1, when considering the assumed building footprints provided in annexure A of the joint planners’ report, I prefer the opinion of Mr Garnsey in relation to precinct 1. The dimensions of the building footprint presented would be considered as potentially challenging compared to a regular shaped building that may not be overcome by the area of the site in the eyes of a hypothetical purchaser. Some allowance on this basis is necessary. In relation to precinct 8, the building footprint on a large site would appear to present less challenge to a hypothetical party than precinct 1. I accept a -10% adjustment made by Mr Garnsey for sales 3-5 as regular blocks for precinct 1 and adopt a -5% adjustment for precinct 8 for the same sales. No adjustment is made for sale 2.
Access
1. Similar to sale 1, the valuers agreed on the adjustment for access for precinct 1. I will accept their adjustments of 10% for sale 2, 5% for sale 3, and -5% for sales 4 and 5.
2. When applying adjustments for precinct 8 Mr Hill made an adjustment for sale 2 to 15% and for sale 3 to 10%. I note that his adjustment for sale 5 was increased to -10% incorrectly. Sale 5 was altered from -5% to no adjustment. The difference in the adjustments between the precincts was not fully explained in his primary report or the joint valuers’ report. Mr Garnsey’s adjustments were consistent with those he applied for precinct 1.
Finding
1. The land currently occupied by Cooper Street has been considered by both valuers when explaining their individual adjustments for access. As already considered above the view of Mr Hill includes a level of amenity provided by frontages along with access for development. Mr Garnsey limited his adjustment to vehicular access that would be available from one street only. For the same reasons as for sale 1 above in [151] I adopt Mr Hill’s adjustments. I note that the adjustment made by Mr Hill for sale 5 appears to be an error, deducting a further -5% to the adjustment applied to precinct 1 rather than adding 5% consistent with the approach for the other four sales. I will make no adjustment consistent with the above reasoning.
Views
1. Mr Garnsey and Mr Hill were consistent in their adjustment of sales 2-5 for views compared to precinct 8. They applied an adjustment of -5% for sale 3 and adjustments of 10% for sales 2 and 5 and an adjustment of 15% for sale 4. I will accept the adjustments for view applicable to precinct 8 as agreed.
2. Mr Hill made adjustments for precinct 1 of 10% for sales 2 and 4 and an adjustment of -10% for sale 3 while making no adjustment for sale 5. Mr Hill linked the adjustment for views with development heights permitted for the sale properties compared to that permitted for the individual amalgamation patterns of precincts 1 and 8. This approach was maintained in oral evidence.
3. Mr Garnsey made an adjustment for views compared to precinct 1 of 10% for sales 2 and 5, and 15% for sale 4 with an adjustment of -5% for sale 3. He did not explain his view adjustments in the joint valuers’ report. In oral evidence his answers were restricted to sale 1.
Finding
1. Mr Hill provided an explanation for his adjustments for views for precinct 1 which was lacking for Mr Garnsey’s adjustments. I will accept the adjustments made by Mr Hill for precinct 1.
Ghetto effect
1. Mr Garnsey made a -10% adjustment to the four sales all located outside the Strathfield triangle for both precincts, reflecting what he referred to as the ‘Strathfield triangle ghetto effect’. In the joint valuers’ report, he explained the ghetto effect as follows:
“At the time of my inspection, which I acknowledge is after the relevant date of 1 July 2019, the number of vacant fenced out sites, dilapidated dwellings and rubbish in the streets with no clear timeline as to when the precinct will be developed as no developments are underway, in my opinion warrants a discount for this factor.”
1. Mr Hill stated that precinct 1 is surrounded by a mixture of residential houses and several multi storey mixed use and residential unit developments while precinct 8 looks out to residential housing. It was his view that neither precinct looked into nor adjoined a ‘ghetto’.
Finding
1. I prefer the view of Mr Hill that no such adjustment is warranted. The Macquarie Dictionary (online ed, accessed July 2024) defines a ghetto as ‘an area of a city in which a minority group lives in conditions of poverty, overcrowding and social repression’. This is not a definition which reflects an area awaiting development in the Strathfield triangle that had been stalled for multiple reasons. Step 1 of the agreed valuation approach is based on the assumption of amalgamated precincts ready to develop. An adjustment based on ‘no clear timeline as to when the precinct will be developed’ is not warranted.
Railway proximity
1. The effect of proximity to the railway line was considered above in relation to sale 1 and the adjustments adopted of -5% for precincts 1 and 8 are also adopted for sales 2-4 of Mr Hill. Neither valuer adjusted for railway proximity for sale 5 which I adopt.
Application of Mr Hill sales 2-5
1. Accepting a certain level of subjectivity is warranted in adjusting for location and size, these sales are accepted as providing support to the GFA rates resulting from the analysis of sale 1.
(iii) Mr Garnsey sales 2, 3 and 6 adjustments
1. I will now consider the appropriate adjustments for Mr Garnsey’s sales 2, 3 and 6.
Location
1. The valuers made different adjustments to Mr Garnsey’s sales 2, 3 and 6 for location for precinct 1 and precinct 8.
2. Mr Garnsey made no adjustment for all three sales for location in his primary report. No additional evidence in relation to the location of these sales was presented in oral evidence and there was no explanation in his written evidence. Mr Hill applied adjustments of 5% for all three sales, opining the Strathfield triangle is a preferred residential location.
Finding
1. Mr Hill provided a rationale for his adjustments for location based on residential desirability, consistent with his approach for his sales. Mr Garnsey did not explain his nil adjustment for location. I will accept Mr Hill’s adjustments.
Size
1. Mr Garnsey applied adjustments of -35% for all three sales when compared to precincts 1 and 8 reflecting the much smaller size of these sales compared to precincts 1 and 8.
2. Mr Hill applied adjustments for size of -20% for all three sales when compared to both precincts. Consistent with his approach in relation to his sales Mr Hill considered the larger developable GFA of the two precincts warranted a lower GFA rate due to the economies of scale, although he did not explain how that was calculated.
Finding
1. As explained above in [111], [148], the analysis of Mr Garnsey’s sales should be treated consistently with the adopted valuation approach step 1 as part of a larger development parcel for comparison with the precincts. I will adopt a -25% adjustment consistent with the agreed valuation methodology in step 1.
Shape
1. Mr Garnsey applied an adjustment for shape of -10% for both precincts. He did not explain his adjustment in the joint valuers’ report or in oral evidence other than as set out for Mr Hill’s sale 1 above in [123].
2. Mr Hill made no adjustment for shape for both precincts. His rationale on shape generally is set out above in [122], [149].
3. For the reasons set out above in [124], [151] for shape adjustments made to Mr Hill’s sales, I accept -10% adjustment made by Mr Garnsey for precinct 1 and adopt a -5% adjustment for precinct 8.
Access
1. Mr Garnsey made no adjustment for access for sale 2 and 5% for sales 3 and 6 for both precincts. Mr Hill made no adjustment for all three sales adjusted in relation to both precincts.
Finding
1. No clear rationale for the adjustment for access for the three Garnsey sales is provided by either valuer. I consider access for these sale properties to be similar to that of the relevant parcels in precinct 1, suggesting nil adjustment made by Mr Hill to Mr Garnsey’s three sales is appropriate for precinct 1. I will adopt Mr Garnsey’s 5% adjustment of his sales for precinct 8 as the access for precinct 8 is superior to Mr Garnsey’s sales.
Views
1. Mr Garnsey and Mr Hill both adjusted the three sales by 10% for views and this adjustment is accepted.
Ghetto effect
1. Mr Garnsey made a -10% adjustment to the three sales located outside the Strathfield triangle for ‘ghetto effect’. For the reasons set out above in [161], the adjustment of sales for ghetto effect is not accepted.
Railway proximity
1. The effect of proximity to the railway was considered above in relation to Mr Hill’s sale 1 in [139] and the adjustments of -5% for precincts 1 and 8 were adopted for sales 1-4. For the same reasons the same adjustments are also adopted for the three sales of Mr Garnsey.
Application of Mr Garnsey sales 2, 3 and 6
1. The rates of GFA for precinct 1 derived from the sales relied upon by Mr Garnsey are $1,559/m2 for sale 2, $1,673/m2 for sale 6 and $1,964/m2 for sale 3 when adjusted. The GFA rates for precinct 8 are $1,767/m2 for sale 2, $1,896/m2 for sale 6 and $2,226/m2 for sale 3 when adjusted.
2. Mr Garnsey’s sales 2 and 6 provide general support for Mr Hill’s sale 1 after all sales are adjusted as set out above. Sale 3 appears to be well outside the possible range.
Overall conclusion on adjustments of comparable sales
1. Based on the foregoing, the adjustment of sales applied to precinct 1 resulted as follows:
1. Mr Hill’s sale 1 had a total adjustment of -10% and the derived rate of $1,639/m2.
2. Mr Hill’s sale 2 had nil adjustment and the derived rate of $1,675/m2.
3. Mr Hill’s sale 3 had a total adjustment of -50% and the derived rate of $1,654/m2.
4. Mr Hill’s sale 4 had a total adjustment of -7.5% and the derived rate of $1,489/m2.
5. Mr Hill’s sale 5 had a total adjustment of -15% and the derived rate of $1,712/m2.
6. Mr Garnsey’s sale 2 had a total adjustment of -25% and the derived rate of $1,559/m2.
7. Mr Garnsey’s sale 3 had a total adjustment of -25% and the derived rate of $1,964/m2.
8. Mr Garnsey’s sale 6 had a total adjustment of -25% and the derived rate of $1,673/m2.
1. Mr Hill’s sale 1 is in the Strathfield triangle and is subject to the same development controls as precinct 1, making the adjustment of this sale less subjective than the other sales. Sale 1 is the best comparable sale for precinct 1 and is adequately supported by Mr Hill’s sales 2 and 5, and Mr Garnsey’s sales 2 and 6.
2. The adjustment of sales applied to precinct 8 resulted as follows:
1. Mr Hill’s sale 1 had nil adjustment and the derived rate of $1,821/m2.
2. Mr Hill’s sale 2 had a total adjustment of 5% and the derived rate of $1,759/m2.
3. Mr Hill’s sale 3 had a total adjustment of -35% and the derived rate of $2,150/m2.
4. Mr Hill’s sale 4 had a total adjustment of 7.5% and the derived rate of $1,731/m2.
5. Mr Hill’s sale 5 had a total adjustment of 5% and the derived rate of $2,115/m2.
6. Mr Garnsey’s sale 2 had a total adjustment of -15% and the derived rate of $1,767/m2.
7. Mr Garnsey’s sale 3 had a total adjustment of -15% and the derived rate of $2,226/m2.
8. Mr Garnsey’s sale 6 had a total adjustment of -15% and the derived rate of $1,896/m2.
1. Mr Hill’s sale 1 in the Strathfield triangle is subject to the same development controls as precinct 8, making the adjustment of this sale less subjective than the other sales. Mr Hill’s sales 1, 2, 4 and 5 required the least total adjustment. The adjusted rate for Hill sale 1 is below the midpoint of the adjusted rates for those sales. Mr Garnsey’s sales 2 and 6 also provide support for that rate.
2. Based on the foregoing a rate of $1,639/m2 of GFA is adopted for precinct 1. A rate of $1,821/m2 of GFA is adopted for precinct 8.
Step 2: Multiply rate per m2 of GFA by achievable GFA for each relevant parcel
1. As set out above in [17] there was agreement between the town planners that the achievable GFA for each of the relevant parcels could be determined and then apportioned based on the site area of the relevant parcels as a proportion of the site area of the whole of the precinct.
2. In adopting the agreed approach apportioning GFA for the relevant parcels as a proportion of the whole of the precincts’ GFA Mr Garnsey adopted the method used by Mr Haskew while Mr Hill adopted the method used by Mr Chambers. I have found above in [33] that the GFA calculation of Mr Chambers should be applied, as Mr Hill did. The hypothetical vendor should be assumed at 1 July 2019 as likely to receive the advice from the council which Mr Chambers did. The applicable GFA figures are:
Precinct 1
4 Clarence Street
GFA 2,681.27m2
GFA rate $1,639
Resulting Land Value $4,397,283
32 Cooper Street
GFA 2,597.53m2
GFA rate $1,639
Resulting Land Value $4,257,352
Precinct 8
27 Cooper Street
GFA 4,249.6m2
GFA rate $1,821
Resulting Land Value $7,738,522
2 Leicester Avenue
GFA 3,258.01m2
GFA rate $1,821
Resulting Land Value $5,932,836
Step 3: Further adjustments
1. The valuers agreed additional adjustments for step three of the valuation methodology such as a discount rate for the agreed period of 10 years to develop precinct 1 for the valuation date of 1 July 2019 was appropriate. The valuers disagreed (i) the appropriate discount rate to apply for 10 years for precinct 1 and (ii) the appropriate allowance if any for the time assumed to be taken for the Cooper Street realignment in precinct 8.
(i) Applicable discount rate for precinct 1
1. The valuers agreed that for precinct 1 a time delay of 10 years to allow for the consolidation of the entirety of that precinct is appropriate. The valuers applied a different discount rate to reflect the amount the hypothetical purchaser would pay in 2019 knowing they would not be able to develop and obtain a return for 10 years.
2. Mr Garnsey adopted a discount rate for the agreed 10 years of 10% pa. His reasoning was based on his experience of development sites having a real discount range of 10% to 20% and the lower end should apply to the amalgamation risk. Mr Garnsey did not refer to specific development sites. In oral evidence, he justified the 10% rate as reflective of developer margins pricing in reward and risk. He stated a developer expects a return between 10% and 20%. He detailed a number of risks associated with undertaking a development. He stated ‘the range is obviously higher when you haven’t got a development approval and then it moves down through the process when you get a DA down towards 10% at the end.’ In his view a developer would seek a minimum of 10% pa, the lower end of the reward and risk margin they would expect for undertaking a development elsewhere.
3. Mr Hill adopted a discount rate for the agreed 10 years of 7.5% pa which he considered more than reasonable due to subdued financial markets for investment and borrowing at the time, reflected in the Reserve Bank of Australia cash rate falling to 1% and borrowings for homeowners of real estate falling to 5% pa.
4. The Applicants submitted that Mr Hill’s adoption of the bank rate of 7.5% did not reflect the investment opportunity foregone. That the bank rate would safely match guaranteed funds on deposit cannot reflect the risk allowance of a highly speculative investment like property development.
5. The VG submitted Mr Garnsey’s reasoning did not identify any specific development sites and was based generally on his experience.
Finding
1. I do not accept Mr Garnsey’s discount rate of 10%. His rate reflects the profit and risk margin a developer applies as a percentage of the total development cost, including land purchase, when undertaking a development. That amount is then deducted along with all development costs to determine how much to pay for the land. The land values as determined in steps 1 and 2 of the agreed methodology considered sales which already reflected this profit and risk margin. At best this discount rate would be considered a double dip. If a developer sought this return they would seek out sites ready for development such as the five sale properties identified by Mr Hill.
2. I prefer Mr Hills’ discount rate of 7.5% as it better reflects a return that would be expected for holding the land as a passive investment until the time when the precinct is amalgamated and the development can proceed. The hypothetical purchaser could be an entity hoping to be the ultimate developer or a land banker/investor seeking a windfall in 10 years’ time that will reflect a reasonable return for that period. Mr Hill’s rate of 7.5% pa would be considered a high return for a passive investment in 2019 and it does factor in a suitable level of risk.
(ii) Allowance for future Cooper Street realignment – precinct 8
1. The valuers agreed that no discount was required to reflect the timeframe to amalgamate precinct 8 as the Applicants and associated entities own all the parcels within the precinct. Both valuers agreed a discount for risk of not getting public road access was applicable for the precinct.
2. Mr Garnsey applied an additional discount rate of 10% pa over a further 5 years, based on the same reasoning used in relation to precinct 1, to reflect a timeframe to allow the council to acquire the land to construct the east-west realignment of Cooper Street, to enable the development of precinct 8 to proceed.
3. Mr Hill applied a flat 25% discount of the market value of the land reflecting an overall risk in the amalgamation of the subject and adjoining lands and achieving DA approval on the total amalgamation pattern.
Applicants’ submission
1. In relation to precinct 8, as at 1 July 2019 access from the realigned Cooper Street would not be seen by the hypothetical purchaser as being available for five years and it was unlikely there would be any alternate means of access. Mr Hill assumed that the hypothetical purchaser would consider there would be no delay to any access and adopted no discount. That development consent has subsequently been granted to the Applicants for the whole of precinct 8 allowing for temporary access is irrelevant as that occurred after 1 July 2019.
Valuer-General’s submission
1. Mr Hill’s opinion was that alternative access should be assumed to be available without delay. Mr Chambers’ evidence was that the precinct 8 consent granted in 2021 did not require access to be provided from the realigned Cooper Street as temporary access from Cooper Street was approved. The fact that entities associated with the Applicants owned the realignment land would provide flexibility for the purchaser to provide alternative access. On this basis Mr Garnsey’s adjustment should be rejected.
2. While not making any adjustment for delay on account of the realigned Cooper Street, Mr Hill nevertheless made an adjustment of -25% of the market value of the land to account for the perceived bargaining power of the likely purchaser of the relevant parcels in precinct 8 (being an entity associated with the Applicants) in relation to the hypothetical vendor. That adjustment, which is favourable to the Applicants, should be adopted.
Finding
1. Precinct 8 which is inclusive of the land to be acquired for the realignment of Cooper Street is already in one ownership. The precinct has a wide frontage to existing Cooper Street facilitating development access. These factors combined afforded a prospective developer the ability to seek approval for development on the basis of temporary access. Such access was not available to the purchaser of sale 1 as their frontage was to a classified road and the owner of the adjoining land refused access. Mr Garnsey’s approach is rejected.
2. Mr Hill applied a flat 25% discount for market value for perceived bargaining power the hypothetical purchaser would have over the hypothetical vendor. Such an approach does not reflect a transaction between two parties willing to trade but not anxious. It also does not consider the actual situation of the relevant parcels as at 1 July 2019. The parcel 27 Cooper Street includes the land to be acquired by the council for the Cooper Street realignment. It is likely the purchaser would seek to control that land. It is unlikely the council would allow fragmentation of the site in any DA.
3. In 2019 there was little risk that development consent for precinct 8 would be refused due to lack of access as temporary access was achievable. A discount is appropriate to reflect that initial access would be temporary and require alteration after the Cooper Street realignment is achieved. Mr Hill’s discount rate is probably overly generous to the Applicants but I nevertheless adopt it given his extensive experience as a valuer. The issued land values of the two relevant parcels in precinct 8 are confirmed as not being too high if a 25% discount of the land value is applied.
Overall conclusion
1. The parties also made submissions about the operation of the onus of proof in s 40(2) of the VL Act. The VG submitted that the Applicants had failed to discharge their onus because Mr Garnsey admitted in oral evidence that Mr Hill’s sales were more comparable than his so that the Applicants failed to discharge their onus regardless of Mr Hill’s evidence. As the evidence I have accepted includes finding that some of Mr Garnsey’s sales are comparable the basis for that submission falls away. It is unnecessary to resolve the parties’ submissions on the operation of s 40(2) of the VL Act in the circumstances as they evolved during the hearing and in light of the valuation evidence I have accepted and applied.
2. The application of the appropriate adjustment rate results in the following land values applicable for 1 July 2019 for the relevant parcels as follows:
Precinct 1
4 Clarence Street
Land Value $4,397,283
Years 10
Discount % over 10 years 7.5%
Calculation $2,133,535
Adopted Land Value $2,135,000 (rounded)
1. The issued land value of $2,470,000 is too high in appeal 2021/329948 and the land value should have been $2,135,000 at the relevant valuation date of 1 July 2019.
32 Cooper Street
Land Value $4,257,352
Years 10
Discount % over 10 years 7.5%
Calculation $2,065,641
Adopted Land Value $2,066,000 (rounded)
1. The issued land value of $3,180,000 in appeal 2021/329950 is too high and the land value should have been $2,066,000 at 1 July 2019.
Precinct 8
27 Cooper Street
Land Value $7,738,522 -25% discount for development risk
Calculation $5,803,891
Adopted Land Value $5,803,900 (rounded)
1. The land value of $5,803,891 is higher than the issued land value. The issued land value of $4,650,000 is not too high and it is confirmed, meaning that appeal 2021/329949 should be dismissed.
2 Leicester Avenue
Land Value $5,932,836 -25% for development risk
Calculation $4,449,627
Adopted Land Value $4,450,000 (rounded)
1. The land value of $4,449,627 is higher than the issued land value. The issued land value of $3,300,000 is not too high and it is confirmed, meaning that appeal 2021/329951 should be dismissed.
2. No submissions on costs have been made. The appropriate order at this stage in relation to costs if any will be discussed with the parties.
Orders
1. The Court orders:
1. In proceeding 2021/329948 (4 Clarence Street Strathfield) the appeal is upheld and the land valuation determined in the amount of $2,135,000.
2. In proceeding 2021/329950 (32 Cooper Street Strathfield) the appeal is upheld and the land value determined in the amount of $2,066,000.
3. In proceeding 2021/329949 (27 Cooper Street Strathfield) the appeal is dismissed.
4. In proceeding 2021/329951 (2 Leicester Avenue Strathfield) the appeal is dismissed.
5. In proceeding 2021/329952 (24 Leicester Avenue Strathfield) the appeal is upheld and the land value determined in the amount of $1,250,000.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 18,779 |
nsw_caselaw:190fc4a61765733192f73e78 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Random Primer Pty Ltd v The Owners Corporation Strata Plan 533 [2024] NSWSC 919 | https://www.caselaw.nsw.gov.au/decision/190fc4a61765733192f73e78 | 2024-08-04T23:52:18.571749+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Random Primer Pty Ltd v The Owners Corporation Strata Plan 533 [2024] NSWSC 919
Hearing dates: 3-5 July 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Equity - Real Property List
Before: Williams J
Decision: See Orders at [88].
Catchwords: LAND LAW – Easements – Right of Way – Full and free right for every person entitled to an estate or interest in the dominant tenement, and every person authorised by them, to go, pass and repass at all times and for all purposes, with or without vehicles, to and from the dominant tenement - Whether the defendant (servient owner) is infringing the right of the plaintiff (dominant owner) to enjoy the easement according to its terms and free of substantial interference by the servient owner, by refusing to consent to the plaintiff making a development application in respect of the dominant tenement – Where defendant’s consent is required because the proposed development also relates to the right of way – Whether the plaintiff’s use of the right of way following the proposed development would be excessive – Whether the plaintiff’s proposed development would unreasonably interfere with the defendant’s reasonable use of the servient tenement – Held: Defendant, in its capacity as the owner of the servient tenement, ordered to provide written consent to the making of the development application by the plaintiff
Legislation Cited: Conveyancing Act 1919 (NSW) s 181A, sch 8 pt 1
Environmental Planning and Assessment Act 1979 (NSW) ss 4.12, 4.15, 4.16, 8.7, 8.10, 8.14, div 8.3, pt 4
Environmental Planning and Assessment Regulation 2021 (NSW) ss 23, 29
Land and Environment Court Act 1979 (NSW) ss 17, 34, 39
Cases Cited: Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245
Berryman v Sonnenschein [2008] NSWSC 213
Botany Bay City Council v Remath Investments No 6 Pty Ltd (2000) 50 NSWLR 312; [2000] NSWCA 364
Finlayson v Campbell (1997) 8 BPR 15,703
Hare v Van Brugge (2013) 84 NSWLR 41; [2013] NSWCA 74
Hinkler Ave 1 Pty Ltd v Sutherland Shire Council [2023] NSWCA 264
Lowe v Kladis (2018) 19 BPR 38,599; [2018] NSWCA 130
New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26
Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324
Timpar Nominees Pty Ltd v Archer [2001] WASCA 430
Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528; [2007] HCA 45
117 York Street Pty Ltd v Proprietors of Strata Plan No. 16123 (1998) 43 NSWLR 504
Texts Cited: M Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press)
Category: Principal judgment
Parties: Random Primer Pty Ltd (ACN 642 883 707) (Plaintiff)
The Owners Corporation Strata Plan 533 (Defendant)
Representation: Counsel:
Mr P Tomasetti SC with Mr J Y Li (Plaintiff)
Mr J Doyle with Mr C Honnery (Defendant)
Solicitors:
CKSD Lawyers (Plaintiff)
Connor & Co Lawyers (Defendant)
File Number(s): 2023/423449
Publication restriction: N/A
Judgment
Introduction
1. The plaintiff in these proceedings seeks an order requiring the defendant, as the owner of land burdened by a right of way benefitting the plaintiff’s land, to consent to the making of a development application by the plaintiff in respect of the proposed development of a residential apartment building on the plaintiff’s land. For all of the reasons explained below, I have determined that the plaintiff is entitled to the order sought. In coming to that conclusion, I have considered all aspects of the parties’ written and oral submissions, irrespective of whether they are expressly referred to in these reasons.
Salient facts
1. The plaintiff is the registered proprietor of the land at 186 Pacific Highway, Roseville (No. 186).
2. The plaintiff’s land shares a common boundary with the defendant’s land at 184 Pacific Highway, Roseville (No. 184).
3. Currently, a two-storey building containing two residential dwellings, and a separate structure containing a double garage and carport, are erected on No. 186. A residential apartment building containing 14 dwellings with garaging is erected on No. 184. The defendant is the owners corporation of the strata scheme in respect of that apartment building.
4. No. 184 and No. 186 were created by the registration of DP501158 in 1963. No. 184 was Lot 2 and No. 186 was Lot 1 in that deposited plan. By memorandum of transfer J305349, which was also registered in 1963, the owners of the land at that time transferred Lot 2 and retained Lot 1 for themselves:
“RESERVING nevertheless to the transferors as appurtenant to the residue of the land in Certificate of Title Volume 5071 Folio 26 (being now Lot 1 in the said Deposited Plan 501158) a right of carriageway over that part of Lot 2 in the said Deposited Plan delineated ‘Right-of-way” (15ft wide)’.”
1. It is common ground that, by operation of s 181A and Part 1 of Schedule 8 to the Conveyancing Act 1919 (NSW), that easement confers on the owners of Lot 1 (No. 186):
“Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass, and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement of any such part thereof.”
1. The location of Lot 1 (No. 186) and Lot 2 (No. 184) relative to the Pacific Highway, and the location of the right of way over Lot 2 (No. 184) is shown in DP501158:
1. A driveway has been constructed on the part of No. 184 (Lot 2) that is subject to the right of way. That driveway runs from the Pacific Highway along the side of the residential apartment building that was constructed on No. 184 (Lot 2) after the subdivision that was effected by the registration of DP501158. Three of the garages in that building face directly onto that driveway. A further five garages face directly onto a driveway that wraps around the rear of the building (furthest from the Pacific Highway), leading to a further driveway that has been constructed on the other side of the residential apartment building on No. 184 along or adjacent to its boundary with No. 182 Pacific Highway. Neither the wrap around driveway nor the driveway along or adjacent to the border with No. 182 are the subject of the easement which is in issue in these proceedings.
2. On 9 November 2022, the plaintiff lodged a development application in respect of No. 186. The development application was assigned no. 466/22.
3. Some of the documents comprising the development application were subsequently revised and reissued in response to various matters raised by the consent authority, Ku-ring-gai Council. As things presently stand, the development application comprises:
1. portal lodgement report;
2. letter from Visionata Architects dated 12 October 2022 enclosing the development application;
3. geotechnical investigation report dated 18 August 2021;
4. survey plans dated 24 January 2022;
5. revised architectural plans dated 19 May 2023;
6. submission requesting variation to development standards in respect of the minimum lot area and width dated October 2022;
7. submission requesting variation to development standards in respect of the maximum building height dated May 2023;
8. photomontage;
9. Design Verification Statement pursuant to s 29 of the Environmental Planning and Assessment Regulation 2021 (NSW) dated 30 May 2023;
10. BASIX stamped drawings dated 2 June 2023;
11. updated NatHERS and BASIX Assessment dated 2 June 2023;
12. structural statement dated 13 June 2023;
13. civil engineering drawings dated 17 August 2022together with revised civil engineering drawings dated 31 May 2023;
14. consultant’s letter dated 28 January 2022 concerning issues raised by the Council in relation to water management;
15. Sydney Water letter dated 6 October 2022 concerning approval of wastewater design;
16. plumber’s inspection report dated 1 February 2022 concerning existing stormwater drainage easement and accompanying photographs;
17. Solar Access Assessment dated 18 August 2022;
18. shadow diagrams dated 18 August 2022;
19. Acoustic Assessment Report dated 30 May 2023;
20. revised landscape plans dated 25 May 2023;
21. letter from landscape architect dated 25 May 2023 responding to issues raised by the Council;
22. site waste minimisation and management report dated 18 August 2022;
23. Statement of Environmental Effects dated October 2022;
24. Statement of Environmental Effects dated May 2023;
25. Construction Traffic Management Plan (Revision 7) dated 30 May 2023;
26. revised Access Review Report dated 22 May 2023; and
27. Transport Assessment Report prepared by Arc Traffic & Transport dated 26 August 2022 (the Arc Transport Report).
1. The development application proposes the demolition of the existing buildings on No. 186 and the construction of a new residential apartment building containing eight dwellings and a lower ground floor car parking area with eleven car parking spaces. It is proposed that vehicular access between the Pacific Highway and the car parking area will be via the existing driveway on No. 184 that is subject to the right of way in favour of No. 186, and that the driveway will be widened by the construction of the additional section described below.
2. The Arc Transport Report states that there will be no change to the existing driveway. However, the revised architectural plans dated 19 May 2023 provide for the construction on No. 186 of a new bitumen roadway abutting the existing driveway for a length of approximately nine metres leading up to the intersection of the driveway with the Pacific Highway, trimmed by a rollover kerb to the footpath. The plans indicate that this will require the removal of some sandstone edging that is presently within the existing easement. This proposed new roadway, which is approximately one metre wide, is also depicted in the revised landscape plans dated 25 May 2023. It was referred to by the parties to these proceedings as the “passing bay”, and I will adopt that terminology. It will have the effect of widening the existing driveway, by extending it onto the plaintiff’s land, at and near the intersection between the driveway and the Pacific Highway.
3. The development application does not include any report updating the Arc Transport Report to take into account the proposed passing bay. The Development Assessment Report prepared by Ku-ring-gai Council in respect of the development application states that the passing bay will need to be the subject of a “reciprocal” right of way to be created burdening No. 186 for the benefit of No. 184. I infer that the Council assessed a “reciprocal” right of way as necessary because, as the defendant submitted, it is implicit in the inclusion of the passing bay in the most recent iterations of the plans that traffic on the driveway will be managed in a way that requires drivers of vehicles exiting No. 184 or No. 186 to the Pacific Highway to cross over the boundary onto No. 186 into the passing bay, from which position they will turn onto the Pacific Highway.
4. Each of the parties adduced evidence from expert transport planners in these proceedings. It is common ground between those expert witnesses that the design of the passing bay should facilitate the passing of two light vehicles simultaneously entering onto the driveway from the Pacific Highway and exiting the driveway to the Pacific Highway. Ms Marshall-Evans – the expert witness called by the defendant – is of the opinion that the current proposed design of the passing bay does not accommodate this without the removal of garden beds, letter boxes, hedges, established gardens and walls on the driveway, but the removal of those structures does not form part of the development application. It is common ground between the experts that those structures associated with No. 184 encroach on the existing right of way, meaning that its full width is not currently available for its full length. Mr Brodie – the expert witness called by the plaintiff – is of the opinion that any future driveway design should be afforded the full width of that right of way.
5. It is implicit in the analysis undertaken by the expert witnesses that the existing driveway does not accommodate the passing of two light vehicles simultaneously entering onto the driveway from the Pacific Highway and exiting the driveway to the Pacific Highway. Indeed, Mr Jude Pavlovic, the owner of an apartment within No. 184, gave evidence confirming this. Mr Pavlovic deposed that he has experienced and observed instances in which a vehicle exiting onto the Pacific Highway comes into conflict with a vehicle seeking to enter onto the driveway from the Pacific Highway at the same time. There is no evidence of any collisions resulting from such conflicts to date. Mr Pavlovic asserted that this is a “significant issue” during the AM and PM peak periods. Mr Pavlovic also gave evidence of the need for cars travelling in opposite directions on the driveway to give way to one another by one car reversing back down the driveway to allow the other car to pass, as there is inadequate space for two cars to pass one another.
6. The Arc Transport Report estimated that the number of vehicle trips generated by No. 186 would be “essentially unchanged” by the proposed development. Ms Marshall-Evans and Mr Brodie have formed a different opinion. It is common ground between them that the existing building at No. 186 generates 1 vehicle trip in both the AM and PM peak periods, and that the proposed development will generate an increase of 3.3 vehicle trips in both the AM and PM peak periods (resulting in a total of 4.3 vehicle trips being generated by No. 186 in the AM and PM peak periods).
7. It is also common ground between Ms Marshall-Evans and Mr Brodie that the pedestrian sight distance is less than required by the relevant Australian Standard, that the proposed development should include a design for the access from No. 186 to the Pacific Highway that complies with that Australian Standard, and that safety along the length of the driveway should be enhanced by recommendations of a traffic management plan. The non-compliance with the pedestrian sight distance requirement is an existing problem, caused by the width of the existing driveway at its intersection with the Pacific Highway and the obstruction created by hedges on No. 184 and No. 186 abutting both sides of the driveway at that point. The proposed passing bay will require the removal of the hedge on the No. 186 side of the driveway, but the development application does not include any proposal for the removal of the hedge on the No. 184 side.
8. It is also common ground between Ms Marshall-Evans and Mr Brodie that there should be a pedestrian pathway separate from the driveway that is available for use by all pedestrians to access No. 186 and No. 184 from the Pacific Highway, and vice versa.
9. Part 4 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) provides for development assessment and consent.
10. Section 4.12(1) provides:
“(1) A person may, subject to the regulations, apply to a consent authority for consent to carry out development.”
1. The Environmental Planning and Assessment Regulation 2021 (the EPA Regulation) provides:
“23 Persons who may make development applications
(1) A development application may be made by –
(a) the owner of the land to which the development application relates; or
(b) another person, with the written consent of the owner of the land.
(2) The consent of the owner of the land is not required for a development application made by a public authority or for public notification development if the applicant complies with subsections (3) and (4).
(3) The applicant must give notice of the application –
(a) to the owner of the land before the application is made, or
(b) by publishing, no later than 14 days after the application is made, a notice in a newspaper circulating in the area in which the development will be carried out.
(4) If the applicant gives notice under subsection 3(b), the applicant must also, no later than 14 days after the application is made –
(a) if the applicant is a public authority – publish the notice on the public authority’s website, or
(b) for public notification development – arrange for the consent authority to publish the notice on the NSW planning portal.”
…”
1. It is common ground between the parties that clause 23(1)(b) of the EPA Regulation concerns consent to the making of a development application, as opposed to consent to the proposed development that is the subject of the development application.
2. In Part 4 of the EPA Act, s 4.16 relevantly provides:
“(1) General A consent authority is to determine a development application by—
(a) granting consent to the application, either unconditionally or subject to conditions, or
(b) refusing consent to the application.”
1. As I have already mentioned, the plaintiff lodged the development application that is the subject of these proceedings on the New South Wales planning portal on 9 November 2022. At that time, the plaintiff took the view that the development application related only to No. 186, and that it was not necessary for the owner of No. 184 to consent to the making of the development application under clause 23(1)(b) of the EPA Regulation.
2. In the course of its consideration of the development application, the Council informed the plaintiff that it considered that the development application also relates to No. 184. The plaintiff then wrote to the defendant on 15 September 2023 seeking its consent to the making of the development application 466/22.
3. It is common ground between the parties that, contrary to the view initially taken by the plaintiff, s 4.12 of the EPA Act and clause 23(1) of the EPA Regulation require the defendant’s written consent to the making of development application 466/22. I proceed on that basis.
4. The defendant contends that, in addition to obtaining the defendant’s consent to make the development application, the plaintiff was required by clause 23(3) of the EPA Regulation to notify the defendant of the development application before the application was made in accordance with clause 23(3)(a), or to publish a notice in accordance with clause 23(3)(b). The defendant complains that the plaintiff did neither of these things, and did not seek the defendant’s consent to the making of the development application at any time prior to 15 September 2023.
5. I reject the defendant’s contention that clause 23(3) of the EPA Regulation required the plaintiff to notify the defendant of this development application before it was made or to publish a notice in compliance with clause 23(3)(b) within 14 days after making the development application. I accept the plaintiff’s submission that clauses 23(3) and (4) apply only to development applications in respect of which the owner of the land is not required to consent to the making of the development application by reason of clause 23(2). Reading clause 23 as a whole, it is clear that clauses 23(3) and (4) relate to notification of development applications made by a public authority or in respect of public notification development. In those cases, clause 23(2) absolves the applicant from obtaining the consent of the owners to whose land the development application relates, but only if the applicant notifies those owners of the application either in accordance with clause 23(3)(a) or in accordance with clause 23(3)(b) and clause 23(4). In all other cases, including the present case, the making of the development application requires the consent of the owner of land to which the development application relates. It is not sufficient for the applicant to merely notify the owner of the development application.
6. The defendant did not accede to the plaintiff’s request for its consent to the making of the development application.
7. Identification of the land to which a development application relates, and the owners whose written consent to the making of the application is required by clause 23(1) of the EPA Regulation, is part of the process of a consent authority’s determination of the development application. A development application that is not accompanied by the written consent of the owner of land to which the development application relates is incomplete and ineffective to engage the consent authority’s power to grant consent to the development application. That is, owner’s consent is an essential prerequisite to the exercise of that power by the consent authority. [1]
8. On 18 September 2023, Kur-ring-gai Council refused consent for the proposed development for reasons that included that the defendant’s consent to the making of the development application had not been provided. The Council’s letter to the plaintiff notifying it of that determination stated:
“Owner’s consent has not been provided in accordance with Section 23(1) of the Environmental Planning & Assessment Regulation 2021.
Particulars:
(a) Section 23(1) of the Environmental Planning and Assessment Regulation 2021 requires the written consent of the owner of the land to which the development application relates to.
(b) The subject site benefits from vehicular access over a Right of Way (ROW) located on the adjoining property at 184 Pacific Highway, Roseville. Vehicular access for the proposed development is proposed via the existing ROW driveway.
(c) The ROW is not wide enough to cater for the increased number of vehicles from the proposed development in accordance with Australian Standard AS2890.1. The proposed development includes the widening of the ROW through the provision of a passing bay on the subject site abutting the ROW. Creation of a reciprocal ROW for residents of 184 Pacific Highway to use the passing bay is also proposed.
(d) Therefore, in accordance with Section 23(1) of the Environmental Planning and Assessment Regulation 2021, the development application also relates to the adjoining land of 184 Pacific Highway and written consent from the owners of 184 Pacific Highway is required.
(e) Consent from the owner of 184 Pacific Highway has not been provided.”
1. Further reasons for the Council’s refusal of consent related to issues concerning stormwater management, the Building Sustainability Index, landscape design, visual privacy impacts for No. 184 and No. 188 Pacific Highway, and car parking and vehicular access.
2. Division 8.3 of the EPA Act provides for appeals to the Land and Environment Court from decisions of consent authorities under Part 4 of the EPA Act.
3. Section 8.7 relevantly provides:
“(1) An applicant for development consent who is dissatisfied with the determination of the application by the consent authority may appeal to the Court against the determination.”
1. Section 8.10(1)(a) relevantly provides that an appeal may only be made within six months after the date on which the decision appealed from is notified.
2. In the present case, the Council notified the plaintiff of its refusal of development consent on 22 September 2023. On 15 March 2024, the plaintiff commenced appeal proceedings in the Land and Environment Court of New South Wales (the LEC) pursuant to s 8.7 of the EPA Act. Those proceedings fall within the Class 1 jurisdiction conferred on the LEC by s 17 of the Land and Environment Court Act 1979 (NSW) (the LEC Act). It is convenient to refer to them as the Class 1 proceedings.
3. In the Class 1 proceedings, the LEC has all of the functions and discretions which the Ku-ring-gai Council had under s 4.16 of the EPA Act to determine the development application by granting consent unconditionally, granting consent subject to conditions, or refusing consent. The “appeal” in respect of the Council’s refusal of development consent is by way of rehearing. Fresh evidence may be adduced. [2]
4. Compliance with clause 23(1) of the EPA Regulation is a jurisdictional prerequisite that must be satisfied in order to engage the power of the LEC to determine the development application by granting consent, either in accordance with any agreement reached by the parties after a conciliation conference under s 34 of the LEC Act, or following a contested hearing. However, as the plaintiff submitted and the defendant accepted, substantial compliance with clause 23(1) may be achieved by the provision of the defendant’s written consent to the making of the development application at any time prior to the determination of the development application by the LEC. [3]
The proceedings in this Court
1. On 22 November 2023, the plaintiff commenced the present proceedings in this Court seeking an order that the defendant, in its capacity as the owner of the servient land at No. 184, provide its written consent to the making of development application 466/22. [4]
2. The plaintiff invokes the jurisdiction of this Court to enforce its rights and ancillary rights conferred by the easement.
3. The principles applicable to the exercise of that jurisdiction may be summarised as follows:
1. the dominant tenement owner is entitled to use a right of way in a manner that is authorised by the terms of the easement, without unreasonably interfering with the rights of the servient tenement owner or with the use of the right of way by any other dominant owner with an easement over the same land. Even where the grant of the right of way is expressed to be for all purposes, it must not be used so as to unreasonably interfere with the lawful use of the land by the servient tenement owner and any others having rights over the land; [5]
2. the dominant owner has a right to enjoy the right of way free from substantial interference by the servient owner, together with such ancillary rights as are reasonably necessary for the dominant owner’s exercise or enjoyment of the rights expressly granted; [6]
3. whether interference by a dominant or servient owner with the rights of the other constitutes substantial interference is a question of degree which requires a common sense judgment in light of the circumstances of each case; [7]
4. the dominant owner’s ancillary rights include the right to obtain the written consent of the servient owner to the dominant owner making a development application where the servient owner’s consent is legally necessary in order for the application to be made by the dominant owner, and refusal of such consent would infringe the dominant owner’s right to enjoy the easement according to its terms and free of substantial interference by the servient owner; [8]
5. in New South Wales, the servient owner’s consent is legally necessary for the dominant tenement owner to make a development application that relates to the servient tenement; [9]
6. a servient owner’s refusal of its consent that is legally necessary for the dominant owner to make a development application will infringe the dominant owner’s right to enjoy the easement where, relevantly, the dominant owner’s increased use of the right of way that would result from the proposed development: [10]
1. would not be excessive, such that it is not authorised by the terms of the easement, properly construed; and
2. would not unreasonably interfere with the use of the servient tenement by the servient tenement owner or by other persons with a right of way over the same land;
1. thus, the concept of reasonable use applies to both the dominant and servient owners. As Barrett JA said in Hare v van Brugge: [11]
“Each of them – the servient owner and the dominant owner – must exercise a degree of restraint in relation to an easement site. Neither may exercise his or her rights (the rights arising from the easement, in the case of the dominant owner, and the rights incidental to ownership of the burdened fee simple, in the case of the servient owner) in a way that interferes unreasonably with the enjoyment of the other's rights. The necessary restraint does not, however, require one party to desist altogether from exercising some part of the totality of the party's rights so as to leave the field entirely clear for the other party. …
… All that obligations of reasonable use compel is that there should not be use inconsistent with the reasonable needs of the other party also to use the servient tenement.”
1. questions of whether a dominant owner’s proposed development would unreasonably interfere with the use of the servient tenement by the servient owner are not to be determined simply on the basis that the proposed development is necessary to allow the dominant owner to fully exploit its right of way, regardless of the extent to which the development will interfere with the servient owner’s rights. The impact on the dominant owner if the proposed development cannot proceed is a relevant consideration on the question of reasonableness, but it is not decisive; [12] and
2. the servient owner’s consent to the dominant owner making the development application does not preclude the servient owner from opposing the granting of development consent by the relevant consent authority.
1. If this Court grants the mandatory injunction sought by the plaintiff requiring the defendant to provide its written consent to the making of development application 466/22, then, for reasons that are explained in more detail below, the LEC’s jurisdiction to determine the development application in the Class 1 proceedings will include jurisdiction to determine the development application by granting consent, either unconditionally or subject to conditions. [13] Of course, it will remain open to the LEC to determine the development application by refusing consent.
Issues
1. As the Court of Appeal held in Lowe, the ancillary right of the dominant owner to require the servient owner to consent to the making of a development application raises two separate, but related, questions: [14]
“(i) Is the proposed use of the carriageway by the dominant owner excessive, such that it is not authorised by the terms of the easement and is therefore unlawful?
(ii) Does the proposed development by the dominant owner unreasonably interfere with the reasonable use of the servient tenement by the servient owner (or by persons entitled to a right of carriageway over the same land)?”
1. If either of those questions are answered affirmatively in the present case, then the defendant will not be infringing the plaintiff’s rights in respect of the easement by refusing to consent to the making of the development application.
Outline of the parties’ submissions
1. The plaintiff submitted that the use of the driveway that will result from the proposed development is not excessive, noting that the easement expressly confers on the plaintiff as the dominant owner a full and free right to go, pass, and repass over the driveway to and from the dominant tenement, at all times and for all purposes. The plaintiff further submitted that the proposed development does not unreasonably interfere with the reasonable use of the servient tenement by the defendant, emphasising that safety issues relating to the exit of vehicles from the Pacific Highway onto the driveway, and the entry of vehicles from the driveway onto the Pacific Highway, are matters for the consent authority and are not relevant to questions of unreasonable interference. The plaintiff submitted that the defendant’s refusal to provide its written consent to the making of the development application is therefore substantially interfering with the plaintiff’s enjoyment of its rights under the easement. The plaintiff accepted that the defendant’s provision of written consent for the making of the development application would not constrain the defendant in any way from opposing the granting of development consent on such grounds as the defendant may choose to mount its opposition to the proposed development.
2. The defendant submitted that the Court should not grant the mandatory injunction requiring it to provide written consent to the making of the development application for four reasons.
3. First, the defendant submitted that the development application is materially inconsistent, incorrect, misleading and confusing. In oral submissions, counsel for the defendant went so far as to describe the development application as “incoherent”. It was submitted that the development application fails to describe the proposed development sufficiently for the Court to understand what is the substance of the development application that the Court is being asked to order the defendant to consent to.
4. Somewhat inconsistently with that submission, the defendant also submitted as part of its designated first reason that the proposed development is unworkable because the passing bay proposed to be constructed on the plaintiff’s land is of insufficient width to allow two cars to pass one another. It was submitted that the defendant is entitled to refuse to consent to the making of a development application that is “deficient” or “won’t work”.
5. The plaintiff submitted that inconsistencies between some of the documents comprising the development application were the result of the revision of certain plans and other documents to address issues that had been raised by the Council during its assessment of the application, that this was a common occurrence in development application processes, and that the inconsistencies identified by the defendant did not entitle it to refuse to consent to the making of the development application. The plaintiff further submitted that the defendant is not entitled to refuse to consent to the making of the development application on the basis that it disagrees with certain contents of the documents comprising the development application, which the defendant characterises as inaccurate or misleading. The plaintiff submitted that the defendant is entitled to raise all of those matters in opposition to the granting of development consent, after it consents to the making of the development application.
6. The second reason advanced by the defendant was that the development application is for a development that would increase traffic over the driveway to an extent that would constitute excessive user and/or an unreasonable interference with the defendant’s rights in respect of the driveway on its land. The defendant submitted that this was demonstrated not by the experts’ assessment of the increase in the number of vehicle trips over the driveway that will be generated by the proposed development, but by the very fact that the plaintiff itself has recognised that the increased traffic will require a widening of the driveway where it joins the Pacific Highway, and has therefore incorporated the passing bay into the development application.
7. The third reason advanced by the defendant was that the proposed development would unreasonably interfere with its own reasonable use of the servient tenement by managing the increased vehicular traffic on the driveway that is the subject of the easement in a way that requires all vehicles travelling along the driveway towards the Pacific Highway (including vehicles driven by occupants of and visitors to No. 184) to leave the driveway on No. 184 (the servient tenement) and pass onto the proposed passing bay on No. 186. It was submitted that the terms of the easement do not contemplate that the occupants of and visitors to the servient tenement would be precluded from using any part of the driveway on the servient tenement. It was submitted that the defendant is therefore not infringing the plaintiff’s rights under the easement by declining to consent to the making of the development application in respect of a development that would preclude the defendant from using that part of the driveway on its land for vehicles travelling in the direction of the Pacific Highway.
8. The defendant also submitted that the proposed development would unreasonably interfere with its own reasonable use of the servient tenement by requiring pedestrians passing between the apartment building on No. 184 and the Pacific Highway to use a pedestrian pathway to be constructed on No. 186, rather than using the existing driveway on No. 184. Moreover, the defendant complained that the development application does not explain how pedestrians using that proposed pathway would access No. 184 from the pathway. The revised landscape plans show landscaping along the edge of the pathway that the defendant submitted would effectively preclude pedestrians from accessing No. 184 from the proposed pathway. It was submitted that the terms of the easement do not contemplate that the occupants of and visitors to the defendant’s land would be precluded from using any part of the driveway on the servient tenement. It was submitted that the defendant is therefore not infringing the plaintiff’s rights under the easement by declining to consent to the making of the development application in respect of a development that would preclude the pedestrian residents of and visitors to No. 184 from using the existing driveway on the defendant’s land to access the Pacific Highway.
9. The defendant emphasised that both the proposed passing bay and the proposed pedestrian pathway will require new, enduring property rights to be conveyed from the plaintiff by way of easements over those parts of its land for the benefit of the defendant’s land. The defendant submitted that no such easements can be created or registered without its consent, and that it cannot be compelled to consent. It was submitted that the question whether the defendant will consent to those proposed easements must be resolved before the defendant could be ordered to consent to the making of the development application. Counsel for the defendant submitted that the development application process would otherwise be “moot” because, ultimately, the defendant would not consent to the transfer of the easements for its benefit that are required to implement the proposed development.
10. The defendant submitted in opening that, insofar as the proposed easements concern the passing bay, resolution of the question whether the defendant will consent to the proposed easements requires this Court to resolve the issues raised by the defendant about the proposed passing bay design, which it contends presents an obvious and clear safety risk. The defendant further submitted that, as a matter of discretion, this Court should not order the defendant to consent to the making of the development application that raises such safety risks. In closing submissions, however, counsel for the defendant expressly abandoned any suggestion that this Court should adjudicate issues of public safety in these proceedings. In my opinion, that concession was correctly made. [15]
11. As I have already mentioned, the plaintiff submitted that the proposed development would not give rise to excessive user or unreasonable interference by the plaintiff with the defendant’s use of the servient tenement. The plaintiff accepted that the defendant cannot be compelled to accept the transfer of new easements benefitting No. 184 over those parts of No. 186 that are shown in the revised architectural and landscape plans as the passing bay and pedestrian pathway. The plaintiff submitted that uncertainty about whether the defendant will accept those proposed transfers does not entitle the defendant to refuse to consent to the making of the development application, and does not constitute a reason for this Court declining to order the defendant to provide that consent if it is otherwise satisfied that such an order should be made. The plaintiff accepted that the defendant is entitled to raise any objections to the proposed new easements in opposition to the granting of development consent. The plaintiff also accepted that one potential outcome of the development application is that the LEC, exercising the powers of the consent authority in the Class 1 proceedings, might grant development consent conditional upon the defendant consenting to the transfer of the proposed easements and the registration of those easements. If the defendant then refused to consent, it would be incumbent on the plaintiff to apply to modify that condition if it wished to proceed with the development for which consent had been granted.
12. The fourth reason advanced by the defendant was that the development application is incomplete and ineffective because it was made without the defendant’s consent that is required by clause 23(1) of the EPA Regulation. It was submitted that the plaintiff therefore lacks the status of an “applicant”, and that there has been no “determination” of any development application, within the meaning of s 8.7 of the EPA Act. It follows, in the defendant’s submission, that the Class 1 proceedings were not “lawfully commenced”. Whilst the defendant accepted that the plaintiff’s development application would become effective if the defendant were now to provide its consent to the making of the application, and that this would confer on the plaintiff the status of an “applicant” within the meaning of s 8.7 of the EPA Act, the defendant submitted that the plaintiff then would need to commence fresh Class 1 proceedings. The defendant submitted that the plaintiff was out of time to do so because more than six months has passed since the date on which the plaintiff was notified of the Council’s refusal of development consent. Counsel for the defendant suggested that, if the defendant now provided its consent to the making of the development application, that would “in some way revive” the decision made by the Council to refuse development consent, so that there would be a determination from which the plaintiff could appeal under s 8.7 of the EPA Act. However, it was submitted that this “revival” would occur retrospectively, with the consequence that the six month limitation period under s 8.10 of the EPA Act commenced to run on 22 September 2023 and has already expired. It was submitted that this problem renders the present proceedings futile because, if this Court were to order the defendant to provide written consent to the making of the development application, the plaintiff would be time-barred from commencing fresh Class 1 proceedings appealing against the Council’s refusal of consent for the proposed development. It is implicit in these submissions that the defendant contends that the existing Class 1 proceedings must be dismissed by the LEC for want of jurisdiction.
13. In response to those submissions of the defendant, the plaintiff relied on the judgments of the Court of Appeal in Botany Bay v Remath and Al Maha.
14. This is a convenient point at which to record that the plaintiff objected to the evidence of Mr Pavlovic, and the expert evidence of Ms Marshall-Evans, on the grounds of relevance. The plaintiff nevertheless adduced Mr Brodie’s expert evidence responding to Ms Marshall-Evans’ report, and relied on the joint report of the two experts. The evidence to which the plaintiff objected was admitted subject to relevance. As will become apparent below, the evidence of Mr Pavlovic, Ms Marshall-Evans and Mr Brodie has been relevant to delineating between existing public road safety issues on the one hand, and questions of whether the proposed development would result in excessive use of the easement or unreasonable interference with the defendant’s rights on the other hand. That distinction has been relevant to the disposition of many of the defendant’s grounds of opposition to the relief sought by the plaintiff in these proceedings in accordance with the applicable principles summarised at [42] above.
Consideration and determination
1. It is convenient to structure my consideration of the issues according to the four reasons advanced by the defendant for opposing the plaintiff’s claim for relief, starting with the second and third grounds of opposition which are directly relevant to the issues to be determined as articulated by the Court of Appeal in Lowe. [16]
2. As to the second ground, [17] I accept the plaintiff’s submission that the starting point for considering questions of alleged excessive use by a dominant owner, or unreasonable interference by a dominant owner with the servient owner’s use of the servient tenement, is the rights conferred by the easement, properly construed.
3. The easement is to be construed in accordance with the language of the easement itself, without reference to extrinsic evidence of the kind that might be relevant to the construction of a contract, but having regard to the physical features of the dominant and servient tenements. [18] In the present case, the easement confers “full and free right … to go, pass, and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement of any such part thereof”. Those very wide words are not to be read down by reference to the purpose for which the dominant tenement was used at the date of the grant of the easement. [19]
4. It was submitted on behalf of the defendant that, having regard to the configuration of the dominant and servient parcels of land as at the date of the grant of the easement, which has not changed, the easement should not be construed as excluding the servient owner from using the area of its land over which the easement was granted. The plaintiff did not submit otherwise.
5. As referred to at [42] above, the requirement to avoid substantial interference applies to both the dominant and servient owners, requiring each of them to exercise some restraint. The question whether or not particular conduct of one constitutes unreasonable interference with the rights of the other requires a common sense judgment in all the circumstances of the case.
6. I reject the defendant’s submission that the incorporation of the proposed passing bay into the plaintiff’s development application demonstrates that the proposed development will generate an increased level of traffic using the driveway that will constitute excessive user or unreasonable interference by the plaintiff with the defendant’s rights in respect of No. 184. The revised architectural plans included in the development application show that the passing bay does not extend along the whole of the length of the driveway. It is to be constructed on the defendant’s land adjacent to the existing driveway for a distance of only nine metres over that part of the driveway closest to its intersection with the Pacific Highway. I infer from this that the object of the passing bay is not to facilitate the use of the whole of the driveway by the existing traffic together with the 3.3 additional vehicles from No. 186 that Ms Marshall-Evans and Mr Brodie estimate will use the driveway in the AM and PM peak periods if the proposed development proceeds. Rather, I infer that the object of the passing bay is to address existing public road safety issues that arise when a vehicle seeking to turn into the driveway from the Pacific Highway needs to wait stationary on the Pacific Highway to give way to a vehicle that is simultaneously seeking to exit from the driveway onto the Pacific Highway, as described in Mr Pavlovic’s evidence. Those public road safety issues arise from the existing width of the driveway, rather than the level of use of the driveway. The evidence in these proceedings does not establish that the instances of conflict between vehicles exiting and entering the driveway to and from the Pacific Highway would be likely to increase by the generation of an additional 3.3 vehicle movements from No. 186 in the AM and PM peak periods. That would depend inter alia on whether the estimated additional 3.3 vehicle movements were all trips in the same direction in each of the AM and PM peak periods. For those reasons, and having regard to the very wide terms of the easement granted to the plaintiff, the incorporation of the passing bay into the design of the proposed development application says nothing about whether those additional 3.3 vehicle movements in the AM and PM peak periods will result in excessive user or unreasonable interference with the defendant’s rights in respect of No. 184. As the plaintiff submitted, the public road safety issues raised by the defendant are matters for the consent authority in determining the development application, and are not matters for this Court in determining the present proceedings. [20]
7. Counsel for the defendant expressly disavowed any suggestion that the Court should determine whether or not the increase of 3.3 vehicle movements in the AM peak and in the PM peak, which the parties’ experts agree would be generated by the proposed development (resulting in No. 186 generating a total of 4.3 vehicle trips in the AM and PM peak periods), would constitute excessive user or a substantial interference with the defendant’s rights as the servient owner.
8. As to the defendant’s third ground of opposition, [21] I do not accept that the proposal that the defendant will have rights to use part of the plaintiff’s land for the purpose of vehicular and pedestrian access between No. 184 and the Pacific Highway per se entitles the defendant to refuse to consent to the plaintiff making the development application. The defendant submitted that the present case is analogous to Lowe, in which the Court of Appeal held that the owner of land to which the development application related was entitled to refuse consent to the making of the development application. I do not consider that Lowe is relevantly analogous to the present case. As the plaintiff submitted, the respondent’s proposed development in Lowe would have interfered with the appellant’s rights as servient owner of parts of the land to which the respondent’s development application related, and also with the appellant’s rights as the dominant owner under an easement in respect of other parts of the land to which the development application related. The Court of Appeal’s decision in Lowe turned on the facts of that particular case. The task of the Court in the present case is to address the questions articulated by the Court of the Appeal to the facts concerning development application 466/22. [22]
9. The question that arises from the proposed passing bay in the present case is whether it would constitute an unreasonable interference with the defendant’s rights as the servient owner for vehicles exiting No. 184 onto the Pacific Highway to be required to use part of No. 186 in order to make way for vehicles entering from the Pacific Highway and travelling to No. 184 or No. 186. My common sense judgment in all the circumstances of this case is that this would not amount to unreasonable interference. Indeed, in the absence of any evidence that the proposed development would increase instances of conflict between entering and exiting vehicles, the proposal may amelioriate the existing public road safety issues discussed at [65] above. Whether the proposal has this effect, and whether it ameliorates those issues sufficiently and in a manner that complies with relevant Australian Standards, are matters for the consent authority. However, the evidence adduced in these proceedings does not establish that a requirement for vehicular traffic emanating from No. 184 to use the passing pay in one direction of travel would unreasonably interfere with the defendant’s use of the servient tenement.
10. The question that arises from the proposed pedestrian pathway is whether it would constitute an unreasonable interference with the defendant’s rights by requiring pedestrians travelling to and from No. 184 to use the proposed pathway on No. 186, rather than using the existing driveway on No. 184. My common sense judgment in all the circumstances of this case is that this would not constitute unreasonable interference. The availability of the pathway must improve safety for pedestrians compared to the existing scenario in which pedestrians share the driveway with vehicles. I reject the defendant’s submission that the landscape design will effectively preclude pedestrians from No. 184 using the pathway. The revised landscape plans included in the development application show a hedge running along the length of the pathway, which effectively requires pedestrians to enter onto and exit from the pathway via a gravel path that joins the driveway almost immediately opposite one of the entries into the existing residential apartment building on No. 184. Thus, the proposed hedge controls the manner in which pedestrians travelling to and from No. 184 will use the pathway, but does not preclude them from using the pathway.
11. I accept that the defendant cannot be compelled to accept a transfer and registration of new easements that would grant enduring legal rights for the benefit of No. 184 to use the proposed passing pay and pedestrian pathway. All that is in issue in the present proceedings is whether the defendant should be compelled to consent to the making of the development application. If development consent is granted by the LEC in the Class 1 proceedings on conditions that require the registration of such new easements, and if the defendant maintains its present resistance to accepting the benefit of such easements, then that may have consequences of the kind outlined in the plaintiff’s submissions referred to at [56] above. I reject the defendant’s submission that the development application process will necessarily be rendered “moot” if it is not prepared to accept a transfer of new easements relating to the passing bay and pathway.
12. For all of the reasons at [61] to [70] above, the evidence adduced in these proceedings does not establish that the proposed development would result in excessive use of the easement by the plaintiff dominant owner, or would result in unreasonable interference by the dominant owner with the defendant servient owner’s use of No. 184.
13. It is convenient to return to the defendant’s first ground of opposition, [23] in support of which counsel for the defendant made lengthy submissions articulating numerous overlapping complaints about alleged inconsistencies, inaccuracies, and misleading or confusing elements of the development application. The substance of those complaints may be summarised as follows:
1. the description of vehicular access in the ARC Transport Report, and the plans depicted in Figures 2 and 3 of that report, do not provide for the passing bay and do not assess compliance of the design incorporating the passing bay with the relevant Australian Standards;
2. the width of the passing bay is inadequate to allow two light vehicles to pass simultaneously over the driveway as expanded by the passing bay, and that gives rise to uncertainty as to whether or not this problem will be solved by “losing further area within the development site” or by “significant changes to … structures within the way and … structures outside of the way but within the defendant’s land”;
3. the statement in the Arc Transport Report that the vehicle trips generated by No. 186 would be “essentially unchanged” by the proposed development, which the defendant submitted is inaccurate because it is contrary to the opinion of Ms Marshall-Evans and Mr Brodie that the proposed development will generate an increase of 3.3 vehicle trips in both the AM and PM peak periods; [24]
4. the statement in the Arc Transport Report that the development proposal includes a “new shared path between the main entry foyer and Pacific Highway allowing for safe pedestrian movements” is inconsistent with the revised landscape plans issued on 25 May 2023, which the defendant submitted shows that the pedestrian pathway to be constructed on No. 186 leading from the Pacific Highway to the entry foyer of the proposed new residential apartment building is separated from No. 184 by a hedge running along the length of the pathway; and
5. the development application includes a Statement of Environmental Effects dated October 2022 and a further Statement of Environmental Effects dated May 2023, which creates inconsistency and confusion because it is not clear whether one supersedes the other.
1. As to (1) and (2) above, it is tolerably clear from reading the development application as a whole that the design of the proposed development has evolved since the ARC Transport Report was issued on 26 August 2022 to include the passing bay shown in the revised architectural plans issued on 19 May 2023 and the revised landscape plans issued on 25 May 2023. I therefore reject the submission that the absence of any reference to the proposed passing bay in the ARC Transport Report is a material inconsistency or inaccuracy, or that the development application is misleading or confusing by reason of the evolution that is apparent from a comparison of the ARC Transport Report and the revised architectural plans. As I have already observed, it is clear from the defendant’s submissions concerning the alleged inadequacy of the passing bay that it is in no doubt that the development application is for a proposed development that includes the passing bay. [25]
2. As the plaintiff submitted, it is for the consent authority to assess the impact of the proposed passing bay on safety issues generated by vehicles entering from and exiting to the Pacific Highway. These issues are generated by the existing driveway, as I have explained at [16] above. It is for the consent authority to assess whether or to what extent they may be exacerbated by any increased vehicular movements on the driveway resulting from the proposed development, the adequacy or inadequacy of the proposed passing bay to address those issues, and any conditions that might be imposed on development consent (if granted) to address any inadequacies found by the consent authority. [26]
3. As the plaintiff submitted, it is not to the point that the expert witnesses called by both parties in these proceedings have opined that the passing bay is inadequate, or that its design is less than optimum. [27] The LEC, exercising the functions of the consent authority, will be required by s 4.15 of the EPA Act to consider the likely impacts of the proposed development and the suitability of the site for the proposed development, including the issues to which I have referred immediately above. The LEC will do so by reference to such evidence as may be adduced in the Class 1 proceedings. The defendant’s complaints about the fact that the development application does not include a revised transport report addressing those issues, and its contentions that the passing bay is inadequate, are matters that it can propound in opposition to the development application in the Class 1 proceedings. The plaintiff accepted that the defendant would be entitled to participate in the Class 1 proceedings in order to ventilate its objections to the proposed development, and the defendant made no submission to the contrary.
4. Those reasons are sufficient to dispose of the defendant’s submission that it is entitled to refuse to consent to the making of a development application that is “deficient” or “won’t work”. [28] That is merely the defendant’s opinion about a public road safety issue which is for the consent authority to consider in the process of determining the development application.
5. For those reasons, applying the principles that I have summarised at [42] above, the matters raised by the defendant in (1) and (2) above are not matters that entitle the defendant to refuse to consent to the plaintiff making the development application in respect of a proposed development that it has not been established will generate excessive use of the easement burdening the defendant’s land or result in substantial interference with the defendant’s use of its own land. [29]
6. As to (3) above, the statement in the Arc Transport Report that the vehicle trips generated by No. 186 would be “essentially unchanged” by the proposed development, is in the nature of an opinion or estimate. As the defendant submitted, that opinion or estimate was informed, in part, by the Arc Transport Report treating the three garages at No. 184 that face directly onto the driveway as the only garages at No. 184 from which vehicles use the driveway. The expert witnesses called by the parties in these proceedings have formed a contrary opinion that the proposed development will generate an increase in the use of the driveway by 3.3 vehicle trips in the AM and PM peak periods. That opinion is informed by the expert witnesses having regard to the five garages at No. 184 that face onto the driveway at the rear of the building, which is connected to the driveway in issue in these proceedings that leads to the Pacific Highway. The experts agreed that the transport analysis should be undertaken on the basis that eight garages at No. 184 (not three) use that driveway. Contrary to the defendant’s submissions, I consider that the question whether to include in the analysis the five garages at the rear of No. 184 that have access to the driveways on both sides of the building is a matter about which experts might reasonably differ.
7. The defendant submitted that the statement in the Arc Transport Report was material, and that it would “count against” the defendant’s objections to the proposed development on the ground that it would increase traffic. However, the consent authority is not bound by that statement. Nor will it be bound by any alternative opinion put forward by the plaintiff or by the defendant or any other objector. As I have already said, the LEC, exercising the functions of the consent authority, will be required by s 4.15 of the EPA Act to consider the likely impacts of the proposed development and the suitability of the site for the proposed development, and will do so by reference to such evidence as may be adduced in the Class 1 proceedings. Refusal by the defendant servient owner to consent to the plaintiff making this development application, which will increase the use of the easement to a level that has not been shown to be excessive or to constitute substantial interference with the defendant’s rights, on the basis that the defendant disagrees with opinions that have been expressed in reports submitted by the plaintiff as part of the development application, is an infringement of the plaintiff’s rights to enjoy the easement according to its very wide terms free of substantial interference by the defendant. If the defendant maintains its opposition to development consent being granted, it will be entitled to put the contrary expert opinions on which it relies before the LEC in opposition to the development proposal during the Class 1 proceedings.
8. As to (4) above, I do not consider that there is any inconsistency between the Arc Transport Report and the revised landscape plans in relation to the pedestrian pathway. As I have already explained, the revised landscape plans depict a hedge along the length of the pathway that, together with a gravel path that connects the pathway and the existing driveway, will control the route of pedestrians between No. 184 and the pathway. The revised landscape plans are not inconsistent with the pathway being used by residents of No. 184, and the description of the pathway as a shared pathway in the Arc Transport Report is not inconsistent with the revised landscape plans. Any complaints that the defendant may have about the route that pedestrians traveling to and from No. 184 must take via the gravel path in order to use the pathway may be addressed to the consent authority. Such complaints do not entitle the defendant to withhold consent for the plaintiff to make the development application for this proposed development, which has not been established in these proceedings to result in excessive use of the easement burdening the defendant’s land, or substantial interference with the defendant’s use of the servient tenement.
9. As to (5) above, I reject the defendant’s submission that the inclusion of the October 2022 Statement of Environmental Effects and the May 2023 Statement of Environmental Effects in the development application creates any inconsistency, or that the development application is misleading or confusing by reason of both documents having been included. A cursory review of the two documents confirms that the October 2022 document has been superseded by the May 2023 document, which refers to the most recent iteration of the architectural and landscape plans that were issued in May 2023. By way of example only, section 4 of the October 2022 document states that the existing driveway that is the subject of the easement is to be utilised for vehicular access between the proposed residential apartment building and the Pacific Highway. Section 4 of the May 2023 document states that the existing driveway “with widening located within the development site” is to be utilised for that purpose. The widening is plainly a reference to the passing bay that has been incorporated in the May 2023 architectural and landscape plans, as referred to at [73] above. The principles summarised at [42] above do not entitle the defendant to refuse to consent to the plaintiff making this development application on the basis that the development application includes two Statement of Environmental Effects documents, one of which obviously supersedes the other. [30]
10. For all of those reasons, the defendant’s five complaints about the development application, whether considered individually or as a whole, do not entitle the defendant servient owner to refuse to consent to the plaintiff dominant owner making the development application.
11. I reject the defendant’s submission that it is “reasonable” for the defendant to refuse to consent to the making of the development application on basis that the Arc Transport Report includes superseded plans that do not show the passing bay, has “the wrong number of garages in it” and engages “reasoning about the trip generation [that] is patently wrong”. I repeat my observations at [73] to [77] above concerning the Arc Transport Report. For the reasons there explained, I reject the submission that the report is “wrong” in relation to the number of garages referred to, or in its trip generation analysis. Contrary to the defendant’s submissions, the development application, considered as a whole, describes the proposed development sufficiently for the defendant and for the Court to understand what is the development application for which the defendant is asked to provide its consent to under clause 23(1) of the EPA Regulation. In circumstances where it has not been established that the proposed development will result in excessive use of the easement or substantial interference by the plaintiff dominant owner with the defendant’s use of the servient tenement, the defendant is infringing the plaintiff’s rights under the easement by refusing to consent to the plaintiff making the development application. The test is not one of “reasonableness” of the servient owner’s adverse reaction to the contents of the development application.
12. I also reject the defendant’s submission that this Court should decline to exercise its discretion to order the defendant to consent to the making of the development application “that it doesn’t want to consent to because it’s wrong and misleading”. For all of the reasons I have explained in relation to the defendant’s five complaints, the development application, understood as a whole, is neither “wrong” nor “misleading”. Nor is the development application “incoherent”, as the defendant had earlier submitted. The development application merely raises issues that are the subject of differing expert opinions that have been expressed in the Arc Transport Report and in the evidence of Ms Marshall-Evans and Mr Brodie in these proceedings. As I have explained earlier in these reasons, there was ultimately a measure of agreement between Ms Marshall-Evans and Mr Brodie about some of those issues, but that does not support the defendant’s submissions purporting to characterise the Arc Transport Report as “misleading” or “false”.
13. It remains to address the defendant’s fourth ground of opposition, which it raised as a reason why it submitted that this Court should decline to grant the relief sought by the plaintiff as a matter of discretion on the basis that it would be futile to grant that relief, even if the Court were otherwise satisfied that the plaintiff’s ancillary rights under the easement entitled it to an order requiring the defendant to consent to the making of the development application. [31]
14. I was initially attracted to the defendant’s submission that the development application, absent the defendant’s written consent required by clause 23(1) of the EPA Act, was ineffective to engage the Council’s power to make any determination in respect of the development application. Indeed, that submission emerged during oral closing submissions in response to questions that I put to counsel for the defendant. However, on reflection, Hinkler Ave and Al Maha establish that the Council’s power to determine the development application was engaged, and the Council did make a “determination” within the meaning of s 8.7 of the EPA Act in refusing consent on 22 September 2023. As referred to at [31] above, Preston CJ of LEC explained in Al Maha that the identification of the land to which the development application relates is part of a consent authority’s determination of a development application. Unlike many other requirements for a development application under the EPA Act and EPA Regulation, any non-compliance with the requirement to provide written consent to the making of the development application from the owner of land to which the development application relates is likely to become apparent to the consent authority only after it has commenced its substantive process of determining the development application. It is for that reason that the Court of Appeal held in Al Maha that the owner’s consent to the making of the development application is an essential prerequisite to the exercise of the consent authority’s power to grant consent to the development application. Al Maha was cited with approval as authority for that proposition by the Court of Appeal in Hinkler Ave. It is necessarily implied in the Court of Appeal’s decision in Al Maha that the Council had jurisdiction to refuse development consent on the grounds that the owner of land to which the development application relates had not provided written consent to the making of the development application, that this constituted a “determination” and conferred on the party who had made the development application without the owner’s consent the status of an “applicant” within the meaning of s 8.7 of the EPA Act, and that the LEC had jurisdiction to hear and determine a Class 1 appeal from that determination, albeit that jurisdiction for the LEC to grant consent for the development will only be engaged if and when the owner provides consent to the making of the development application. If that consent is not forthcoming prior to the conclusion of the Class 1 proceedings, the LEC will be bound to determine the development application by refusing consent. [32] As the plaintiff submitted, that is consistent with the long line of authority referred to by the Court of Appeal in Botany Bay v Remath. [33]
15. It therefore seems to me that the LEC has had jurisdiction to determine the development application in the Class 1 proceedings from the time that those proceedings were commenced. I am not persuaded that any limitation issue concerning the Class 1 proceedings will arise if the defendant now provides its written consent to the making of the development application, either voluntarily or pursuant to an order made by this Court. I therefore reject the defendant’s submission that such an order would be futile.
16. Even if I had considered that the defendant’s submissions raised doubts about the jurisdiction of the LEC in the existing Class 1 proceedings, I would have held that it was not appropriate for this Court to determine in these proceedings that the LED lacked jurisdiction, for the purpose of considering whether to decline on discretionary grounds to grant relief in these proceedings to which the plaintiff is otherwise entitled for the reasons that I have explained above. The LEC has jurisdiction to determine for itself whether or not it has jurisdiction in respect of any particular proceedings, and I would not have considered it appropriate to effectively usurp that jurisdiction of the LEC in respect of the existing Class 1 proceedings. [34]
Conclusion and orders
1. For all of the foregoing reasons, the order of the Court is as follows:
1. Order that the defendant, in its capacity as the owner of the servient land known as 184 Pacific Highway, Roseville, New South Wales, which is affected by the right of carriageway easement created by registered dealing J305349, provide its written consent to the making of development application 466/22.
1. I will hear the parties in relation to costs.
**********
Endnotes
1. Hinkler Ave 1 Pty Ltd v Sutherland Shire Council [2023] NSWCA 264 (Hinkler Ave) at [101]-[131] (especially at [111] and [114]) (Preston CJ of LEC); Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245 (Al Maha) at [85]-[98] (Preston CJ of LEC, Leeming JA agreeing).
2. LEC Act, s 39(3); EPA Act, s 8.14; Al Maha at [74]-[76] (Preston CJ of LEC, Leeming JA agreeing).
3. Al Maha at [95]-[98] (Preston CJ of LEC, Leeming JA agreeing); Botany Bay City Council v Remath Investments No 6 Pty Ltd (2000) 50 NSWLR 312; [2000] NSWCA 364 (Botany Bay v Remath) at [5]-[7] (Stein JA, Handley JA agreeing).
4. A claim for damages included in the summons filed by the plaintiff is no longer pressed.
5. Lowe v Kladis (2018) 19 BPR 38,599; [2018] NSWCA 130 (Lowe) at [101]-[107] (Sackville AJA, Meagher and White JJA agreeing); Berryman v Sonnenschein [2008] NSWSC 213 (Berryman) at [19] (Einstein J).
6. Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528; [2007] HCA 45 (Westfield) at [23] (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ); Lowe at [96] (Sackville AJA, Meagher and White JJA agreeing).
7. Finlayson v Campbell (1997) 8 BPR 15,703 (Finlayson) at 15,706-15,707 (Young J); Lowe at [91]-[95] (Sackville AJA, Meagher and White JJA agreeing) and the authorities there referred to.
8. Lowe at [97]-[98] (Sackville AJA, Meagher and White JJA agreeing); see also 117 York Street Pty Ltd v Proprietors of Strata Plan No. 16123 (1998) 43 NSWLR 504 (117 York Street) at 521-522 (Hodgson CJ in Equity); Berryman at [16] (Einstein J).
9. EPA Act, s 4.12; EPA Regulation, cl 23.
10. Lowe at [97]-[100] (Sackville AJA, Meagher and White JJA agreeing), referring to Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324 (Sertari).
11. (2013) 84 NSWLR 41; [2013] NSWCA 74 (Hare) at [25]-[26] (Macfarlan JA and Tobias AJA agreeing).
12. Lowe at [127] (Sackville AJA, Meagher and White JJA agreeing).
13. See [85]-[87] below.
14. Lowe at [100] (Sackville AJA, Meagher and White JJA agreeing).
15. Sertari at [23] (Handley AJA, Tobias and McColl JJA agreeing).
16. See [44]-[45] above.
17. See [51] above.
18. Westfield at [35]-[45](Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ) ; Hare at [16]-[18] (Barrett JA, Macfarlan and Tobias JJA agreeing); Lowe at [87]-[90] (Sackville AJA, Meagher and White JJA agreeing).
19. Ibid; see also Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 at [37] (Kennedy J, Wheeler and Pidgeon JJ agreeing).
20. Sertari at [23] (Handley AJA, Tobias and McColl JJA agreeing).
21. See [52]-[55] above.
22. See [44] above.
23. See [48]-[49] above.
24. See [17] above.
25. See [49] above.
26. See Sertari at [23] (Handley AJA, McColl and Tobias JJA agreeing).
27. See [15]-[19] above.
28. See [49] above.
29. See [42] above; see also Sertari at [23] (Handley AJA, Tobias and McColl JJA agreeing).
30. See [42] above; see also Sertari at [23] (Handley AJA, Tobias and McColl JJA agreeing).
31. See [57] above.
32. Hinkler Ave at [101]-[131] (Preston CJ of LEC); Al Maha at [85]-[98] (Preston CJ of LEC, Leeming JA agreeing).
33. Botany Bay v Remath at [5]-[7] (Stein JA, Handley JA agreeing).
34. New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26 at [31] (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ); M Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press), ch 2.5.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 12,678 |
nsw_caselaw:190fd4359e9176c75736e04b | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Saltalamacchia v Zamagias [2024] NSWCA 184 | https://www.caselaw.nsw.gov.au/decision/190fd4359e9176c75736e04b | 2024-08-04T23:52:18.595399+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Saltalamacchia v Zamagias [2024] NSWCA 184
Hearing dates: 01 July 2024
Decision date: 01 August 2024
Before: Payne and Kirk JJA at [1];
Price AJA at [7]
Decision: (1) Appeal allowed.
(2) The orders of Ainslie-Wallace ADCJ in the District Court of NSW on 13 December 2023 are set aside.
(3) The matter be remitted to the District Court for a retrial on liability only before another judge to be allocated by the Chief Judge of the District Court.
(4) Order that the respondent pay the appellant’s costs of the appeal.
Catchwords: APPEALS – motor vehicle accident – whether primary judge erred in rejecting appellant’s evidence – whether factual error involved a finding contrary to incontrovertible facts – whether the matter should be remitted for retrial in the District Court
Legislation Cited: Supreme Court Act 1970 (NSW), s 75A
Uniform Civil Procedure Rules 2005 (NSW), r 51.53
Cases Cited: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22
Lee v Lee (2019) 266 CLR 129; [2019] HCA 28
Lichaa v Boutros [2021] NSWCA 322
Mastronardi v State of New South Wales [2007] NSWCA 54
Palmer v Clarke (1989) 19 NSWLR 158
Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9
Category: Principal judgment
Parties: Antoinette Marie Saltalamacchia (appellant)
Billy Zamagias (respondent)
Representation: Counsel:
Mr D O'Dowd (appellant)
Mr B Dooley SC with Mr C Hickey (respondent)
Solicitors:
Hall & Wilcox (appellant)
AJB Stevens Lawyers (respondent)
File Number(s): 2023/00464967
Publication restriction: Nil
Decision under appeal Court or tribunal: District Court of New South Wales
Jurisdiction: Civil
Citation: [2023] NSWDC 553
Date of Decision: 13 December 2023
Before: Ainslie-Wallace ADCJ
File Number(s): 2021/00334329
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
1. On 22 May 2018, Billy Zamagias (the respondent) was injured when the vehicle he was driving came into collision with a vehicle being driven by Antoinette Saltalamacchia (the appellant) at a T-intersection where Access Road meets Hoxton Park Road, a main arterial road. The intersection was governed by a set of traffic signals. The respondent was travelling east on the transit way (T-way) in a lane in the centre of Hoxton Park Road reserved for buses and associated vehicles. He was entitled to drive in that lane. The respondent’s case was that as he was driving through the intersection, a white “B” signal was displayed, giving him right of way to continue straight and when he crossed the line into the intersection, a car to his left in the right-hand turn lane turned directly in front of him, colliding with his vehicle.
2. The appellant’s case was that she had been stationary in the right-turn lane facing east on Hoxton Park Road, as she was intending to turn right into Access Road. The right-hand arrow turned green and she proceeded to turn right. The collision occurred.
3. The issue at trial was which of the two drivers disobeyed a traffic control signal. The primary judge resolved that issue in favour of the respondent, awarding him substantial damages.
The appellant appealed on liability only and contended that the primary judge erred in finding that the appellant had turned right against a red arrow. In particular, the appellant submitted that an examination of the accounts given by the appellant and her brother, Mr Halwagy, who was in the passenger seat of her car, to a police officer shortly after the accident incontrovertibly supported her version of events.
A notice of contention was filed by the respondent arguing that the primary judge when rejecting parts of Mr Halwagy’s evidence as to a purported conversation with the respondent ought to also have found that the balance of Mr Halwagy’s evidence was unreliable.
The Court (Price AJA, Payne and Kirk JJA agreeing, with additional observations), allowing the appeal, held:
1. The primary judge’s reasons for not accepting the evidence of the appellant and Mr Halwagy as to how the accident happened amount to an error of fact and falls within the category of error identified in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 as involving a finding contrary to incontrovertible facts.
2. This case involved two competing versions of events where, in the absence of other objective or contemporaneous evidence, the contest falls to be determined solely by conclusions on reliability and credit of the witnesses. The absence of any independent evidence casting light on that factual question makes this case an unusual one which cannot justly be resolved on the transcript.
3. There is no merit in the respondent’s notice of contention. It was open to her Honour to conclude that, even though she did not accept Mr Halwagy’s account of the respondent’s apology, the balance of his evidence was not rendered unreliable.
4. The matter is remitted to the District Court for a retrial before another judge to be allocated by the Chief Judge of the District Court. As there was no challenge to the assessment of damages, the retrial should be limited to the issue of liability, with the intent that if such liability is established then the damages assessed by the primary judge should be awarded.
Judgment
1. PAYNE and KIRK JJA: We agree with the orders proposed by Price AJA for the reasons his Honour gives along with the following.
2. This Court is conducting an appeal by way of rehearing pursuant to s 75A of the Supreme Court Act 1970 (NSW) and thus “a judgment of the appellate court is required both on the facts and the law”: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [29]. The Court “may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires”: s 75A(10).
3. The Court is empowered to order a retrial. New trials have been described as “an evil and a deplorable result, to be avoided wherever possible”: Palmer v Clarke (1989) 19 NSWLR 158 at 164 (Kirby P, citations omitted). A new trial increases costs, delays resolution, and cuts across the aim of finality. Thus the rules provide that the Court must not make such an order unless it appears to the Court that some substantial wrong or miscarriage has been occasioned: UCPR, r 51.53(1).
4. This case raises an archetypal dispute of fact: was the relevant traffic light green or red? As Price AJA has explained, in this matter the only real evidence on point consists of witness testimony. The absence of any independent evidence casting light on that factual question makes this case an unusual one. The question of whether the plaintiff-respondent has discharged his onus of proof turns solely on whether his account is accepted in preference to that given by the defendant-appellant and her brother (Mr Halwagy), which depends upon findings of reliability and credit. The primary judge found the evidence of the plaintiff to be sufficiently reliable and credible to be accepted. Her Honour expressly rejected part of Mr Halwagy’s evidence, relating to his account of what was said at the hospital on the night of the accident. But her Honour did not otherwise make findings that the remainder of his evidence and the evidence of the appellant was not credible or reliable; indeed, she suggested to the contrary at [51]. Nor did she say anything to suggest that she doubted the reliability or credibility of the appellant except to the extent that she regarded “the statements of the [appellant] and her brother made immediately after the accident to be a more accurate reflection of what happened” (at [53]). That reasoning was based on a misunderstanding of the evidence, as Price AJA has explained.
5. The High Court has indicated that beyond factual findings likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence, “in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge”: Warren v Coombes (1979) 142 CLR 531 at 551; [1979] HCA 9 quoted in Fox v Percy at [25] and in Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. As the words “in general” indicate, the appellate court will not always be in such a position.
6. This is one such unusual case. Here, there are two competing versions of events where, in the absence of other objective or contemporaneous evidence, the contest falls to be determined solely by conclusions on reliability and credit. The primary judge’s only conclusion on that front was afflicted by error. Given the nature of the evidence in this case this Court is not in a position to make such findings itself. On the existing record in this Court, it would be open to say in the circumstances that the respondent has failed to discharge his onus. But that would not be just as he has not hitherto had – and this Court cannot now provide – a full and fair determination of his case on the evidence. A substantial wrong or miscarriage has been occasioned. There should be a retrial on the issue of liability.
7. PRICE AJA: This is an appeal from a judgment of Ainslie-Wallace ADCJ (the primary judge) in the District Court of New South Wales. Billy Zamagias (the respondent) was injured on 22 May 2018 when the vehicle he was driving came into collision with a vehicle being driven by Antoinette Saltalamacchia (the appellant) at the intersection of Hoxton Park Road and Access Road in Cartwright, New South Wales. The issue at trial was which of the two drivers disobeyed a traffic control signal. The judge resolved that issue in favour of the respondent, awarding him substantial damages.
8. The appellant appeals against her Honour’s judgment. There is no appeal against the quantum of the damages awarded.
Background facts
Location
1. The collision occurred at about 2:30pm at a T-intersection where a side street called Access Road meets Hoxton Park Road, a main arterial road in South Western Sydney, from the south side of the main road. The intersection is governed by a set of traffic signals.
2. In the easterly direction, Hoxton Park Road has two ordinary traffic lanes and one right-turn lane, where motorists wishing to turn right into Access Road wait for a green arrow to be displayed on the traffic signals, allowing them to do so. To the right-hand side of that right-turn lane there is a transit way (T-way) reserved for buses and associated vehicles, which runs down the centre of Hoxton Park Road. The T-way is a single carriageway with two lanes: one for buses travelling east and one for buses travelling west. In order for motorists to turn right from Hoxton Park Road into Access Road, they must turn in front of the T-Way and in front of the traffic on Hoxton Park Road travelling west, both of which will be stopped by the traffic signals.
3. The T-way traffic lights display a white “B” signal meaning “go”, which then turns amber and red to stop traffic on the T-way.
4. Evidence was adduced before the primary judge of the phasing of the traffic signals which govern the intersection by the tender of a letter from the Senior Networks Operations Officer for Transport NSW. As at the date of the accident, there were four phases to control traffic, three of which were summarised by the judge at J[4]-[7]:
[4] … Relevantly, in phase “A”, a green round signal is displayed for all eastbound (and westbound) traffic on Hoxton Park Road, a red arrow displayed for the right hand turn and a white B for the T-way lane.
[5] In the T-way lane, there is one light, an illuminated “B”, which is white when the T-way lane has right of way, and turning amber before turning red to stop traffic on the T-way. When the B light on the T-way is white, traffic in the right hand turn lane beside it has a red arrow.
[6] Phase “B” displays a green round signal, a green arrow and a red B sign. If a pedestrian wishes to cross the road, the eastbound light is red and the right turn arrow is green. After 12 seconds, the red light changes to green.
[7] Phase “C” permits traffic from Access Road to move onto Hoxton Park Road and in that event all other signals are red.
1. The “D” phase is a repeat of the “B” phase movement.
2. The normal sequence of operation of the lights was described in the letter as the “A” phase followed in turn by “B” and “C” phases. However, “B” and “C” phases are only introduced “if a vehicle or pedestrian demand has been received. If no demand is received, then either/all phases may be skipped in any cycle. Consequently, any combination including ‘A’ phase is possible”. The letter further described “the amount of green time each phase received” as being subject to traffic volume. The range for the cycle was “from 42 seconds to 140 seconds” and would constantly vary between these two parameters “subject to vehicle volumes and traffic density at this and adjacent sites”. Notwithstanding this, “each phase is terminated by 4 seconds of amber signal, followed by 2 seconds of red signal (‘C’ phase is 3 seconds) before the next phase is introduced”.
3. In addition to her Honour’s summary of phase “A”, the letter disclosed that in phase “A”:
Pedestrian movement is permitted across Access Road subject to push button demand. If the pedestrian feature has been demanded by the push button on post 10 then a left turn red arrow will be displayed to westbound traffic for a period of six seconds at the commencement of the phase after which time the arrow is extinguished. If the pedestrian feature has been demanded by the push button post 11 then a left turn red arrow will be displayed to westbound traffic for a period of 12 seconds at the commencement of the phase after which time the arrow is extinguished. All other movements are held on a red signal.
1. A copy of the signal design layout of the intersection was enclosed with the letter.
The collision
1. At approximately 2:30pm, the respondent was driving a white Hyundai iLoad van in an easterly direction on Hoxton Park Road towards Liverpool in the T-way. He was entitled to drive in that lane.
2. The respondent’s case was that as he was driving through the intersection, a white “B” signal was displayed and when he crossed the line into the intersection, a car to his left in the right-hand turn lane, turned directly in front of him. He swerved to avoid the car but the collision occurred.
3. The appellant was driving a white Volkswagen sedan with her brother in the passenger seat. The appellant’s case was that she had been stationary in the right-turn lane facing east on Hoxton Park Road, as she was intending to turn right into Access Road. The appellant had stopped at the lights as the right-turn arrow was red when she arrived at the intersection. The right-hand arrow turned green and she proceeded to turn right. The collision occurred.
4. The respondent’s contention was that the “A” phase of the traffic signals was operative when he proceeded through the intersection whereas the appellant’s contention was that the “B” phase was in operation.
5. Both parties contend that they had right of way. They could not both be right. As the primary judge observed:
The only way a car travelling in an easterly direction can turn right onto Access Road was with a green arrow from Hoxton Park Road, which would have the effect of stopping the traffic heading west along Hoxton Park Road and also stopping the traffic in the T-way heading east by showing a red B sign.
The evidence in the District Court
1. The following summaries of evidence before the primary judge do not include the evidence in the trial relating to the injuries the respondent suffered in the accident as quantum is not in issue on appeal.
The respondent’s evidence
1. The respondent gave evidence that at the time of the accident, he was employed with Transit Systems Australia which provided around the clock diesel repair support for transit systems. He had started work at about 5am which was the morning shift. The morning shift was from 5am to 2pm.
2. At about 1:30pm, he was told to proceed to the Liverpool Interchange to perform diesel work on a bus. He drove on Hoxton Park Road which went to Liverpool. As he approached the intersection of Hoxton Park Road and Access Road, he observed the traffic lights. When asked what he observed about the traffic lights, he replied: [1]
Traffic lights and a white “B”, which gives right-of-way for the buses, and a red arrow.
1. He then proceeded through the intersection on the T-way, at which point he collided with the appellant’s car.
2. Following the collision, he was taken by ambulance to Liverpool Hospital. He remained in hospital for approximately three or four days and was informed he had suffered a fracture to his C2 vertebrae.
3. He recalled that the mother and brother of the appellant came to see him in the hospital ward. They came to the left-hand side of the bed. He recalled the brother saying words to the effect of: “it could’ve been worse if [I] didn’t grab the steering wheel”. [2] He did not recall the brother saying anything else. The respondent did not say anything to either of them.
4. In cross-examination, the respondent agreed that, for the collision to have occurred in the way he described, the appellant would have had to turn right into the T-way against a red arrow, and that she would have “found herself in the westbound lane of Hoxton Park Road in conflict with traffic that was heading west on Hoxton Park Road”, that is, she would have had to turn into potentially oncoming traffic both in the T-way and the opposite side of the road. [3]
5. The respondent rejected the proposition that he “made a mistake about what the traffic lights were permitting [him] to do”. [4] He further rejected the suggestion that he was tired at the time of the collision having worked a nine-hour shift. The respondent denied that he had apologised to Mr Halwagy for the accident. [5]
Mrs Zamagias’ evidence
1. The respondent’s mother, Mrs Joanne Zamagias, gave evidence that on the night of the accident she and her husband visited their son at Liverpool Hospital. She said that the appellant’s mother and Mr Halwagy came in to see how the respondent was. When asked, “did they say anything to you”, Mrs Zamagias replied:
They come in and see how is Billy. She say “How is he?” I said, “In the moment, it’s not very good – wouldn’t know”. And then the mother say and the brother say, “Probably worse if I’m not – taking the steering wheel. Probably worse”. [6]
1. Mrs Zamagias’ evidence was that the respondent said nothing at all during that conversation.
2. In cross-examination, she described her son not talking because he was not allowed to move. She denied that the respondent said to Mr Halwagy words to the effect, “Sorry about the accident”. [7]
The statements made to Constable Benitez
1. Constable Carlos Benitez attended the scene of the accident on 22 May 2018. He did not give evidence before the primary judge. A digitally recorded interview between an insurance investigator and the police constable on 28 June 2019 was tendered. During the interview, Constable Benitez read onto the record statements from the appellant, the respondent and Mr Halwagy which were recorded in his police notebook.
2. The statement of the appellant taken by Constable Benitez on 27 May 2018 was as follows:
So, the [appellant’s] version was obtained on Sunday the 27th of the 5th, 2018. It’s – start with my question. “About 2:40am [sic] on Tuesday the 22nd of May 2018, at the intersection of Hoxton Park Road and Access Road, Cartwright, were you, Antonette Holloway [sic], the driver of vehicle registration [blocked out], involved in a collision with a motor vehicle, registration [blocked out]?” The answer was, “Yes”. Question: “Tell me what happened”. Answer: “I was – I was driving on Hoxton Park Road. My brother was my passenger. On the intersection of Access Road, I stopped on the red light. I was on the right-turn lane. I was talking to my brother, Gabriel, about my fiancé losing his job. After a few seconds, Gabriel gave me a nudge with his elbow and said, “Lights are green”. I started turning, keeping an eye out on the driver’s side corner of my car. As I was turning, I heard Gabriel say, “Shit!” as he grabbed me and pulled me towards him. A split-second later, I heard a bang and see a car flipping.” Question: “I’m going to ask you further questions. You don’t have to do or say anything. Anything you do or say will be recorded and used as evidence in court. Do you understand that?” Answer: “Yes”. Question: “Did you check what colour the traffic light was?” Answer: “Yes.” Question: “What did you see?” Answer: “Green solid to go straight, green arrow to go right, and a red B.” Question: “Did you check or right [sic] before starting to turn?” Answer: “To my right. Yes.” Question: “What did you see?” Answer: “Opposite, a car stopped, Red Rooster and Peppers [sic].” Question: “Did you look towards the T-way?” Answer: “No.” “Behind?” “No.” Question: “Is it fair to say that [you] weren’t paying attention on the road?” Answer: “No. I was talking to my brother, but when the car started to turn, I was paying full attention.”
1. The statement of Gabriel Halwagy taken by Constable Benitez on 27 May 2018 was as follows:
So, on My [sic] the 27th – on the 27th of May 2018, Gabriel Halwagy made a statement. Stated that he was the – he was there, seated on the front passenger seat of vehicle one. As the traffic arrow turned green on vehicle one, started – vehicle one started turning. Gabriel saw a white van travelling at speed towards vehicle one. As a result, Gabriel Holloway [sic] placed his right arm around driver one in attempt to protect the driver. And, which – and with his left hand, took hold of the steering wheel and turned it left. Gabriel states the front nearside wheel of vehicle two collided with the front of – side of vehicle one. As a result of the collision, vehicle two rolled two or three times and came to a rest on its roof. On – early in June 2018, police received blood alcohol certifications for both drivers with negative results.
1. The statement of the respondent taken by Constable Benitez on 13 November 2018 was as follows:
So, this was taken on Tuesday the 13th of the 11th, 2018. “I am Constable Benitez, attached to the Green Valley Police Station. About 2:35pm on the 27th of May 2018, at – at the intersection of Hoxton Park Road and Access Road, Cartwright, were you the driver of a motor vehicle, registration [blocked out] … involved in a collision with motor vehicle [blocked out] …?” Answer: “I was in the white van.” Question: “Tell me what happened.” Answer: “I was driving along the T-way towards Liverpool. As I reached the intersection, I saw a traffic light showing a white B, giving me right of way. As I was on the intersection, I saw, from my left, the refuel. I saw a little white car turning onto my path. I swerved to avoid it. No time – no time to hit the brakes. Then I felt a hit on the side of the van, and I – and I braced myself. The van started flipping.”
The COPS entry
1. A record from the NSW Police Force’s Computerised Operational Policing System (COPS) database created on 19 June 2018 states the following:
On 27 May 2018, Antoinette Halwagy [the appellant] … attended Green Valley Police Station and provided a drivers version and a statement in regards to the motor vehicle accident.
DRI-1, Antoinette Halwagy, stated on her version that she was parked and made a right turn onto Access Road when indicated by the traffic light. Prior to making the right turn she checked the traffic light which showed a green solid to go straight, green arrow to turn right and a red “B”.
DRI-1 proceeded by looking towards Access Road and saw cars stopped as well as the Red Rooster store and the Pepe’s [sic] sign. When asked by police, DRI-1 stated that she did not look towards the T-Way which is also located to her right.
The appellant’s evidence
1. The appellant’s account of what she did prior to the collision is advanced in the following evidence that she gave in examination-in-chief: [8]
Q: When you approached the lights, what did you do?
A: Stopped at the lights.
…
Q: What caused you to stop?
A: The lights were red. … the lights that’s furthest to the left indicates for the straight, so going ahead. They were green. Then the lights in the middle, from memory, is – it has the lights to go straight and the lights to turn right, the arrows to turn right, the arrow to turn right. And then the next set of lights is the bus lane lights. So, my lights to turn right was red, but to go straight was green, and we were stopped at those lights because it was red. I was the first car at the intersection. Stopped there for a few moments, and then once they turned green, I looked left and right and that’s when I proceeded to turn right.
Q: Whilst you were stopped at the intersection, what were you doing?
A: Talking to my brother about my fiancé at the time wanting to quit his job.
Q: Do you recall how long you were waiting at the lights?
A: A few moments. No longer than a minute.
Q: What then happened?
A: So, the lights turned green, which meant the bus lane turned red. It wasn’t – the B wasn’t white anymore. And then I looked left and right as what I would normally do at an intersection, started turning right and then the crash just happened.
…
Q: At that particular time, did you make any observations about the traffic coming in the opposite direction?
A: They were all stopped, the traffic. So, the cars that were on the opposite direction were all stationary.
…
Q: When you were having that conversation with your brother, was anything said when the lights turned green?
A: He’s like, “We can go”. And I looked, I’m like, “Sorry we’re just so into the conversation of my husband quitting just before getting married”.
Q: So, you started to turn right?
A: Right. Yes.
Q: What did you then experience?
A: So, basically once we turned, right, my brother called out, “Shit”. And then as soon as the impact happened, my eyes just locked on the window being cracked. And then we were steering to the left so we don’t end up underneath the van, because the van was flipping.
Q: When you said “we were steering” –
A: Yes. So, I was holding it with both hands, trying to veer the car to the left, but if you see the pictures of the impact –
Q: But what was your brother doing at the time?
A: He tried to assist me to pull it to the left as well, because the car got stuck veering to the right.
…
Q: Having regard to that intersection, in your experience are there any occasions when you can turn right when the light doesn’t show a green filter arrow?
A: No. It has to always show the green arrow. It does not black out.
1. In cross-examination, the appellant recounted that she was discharged from hospital on the night of the accident and voluntarily went to the police station on the following day and told her side of the story. She was unable to agree or disagree that she had given her statement to Constable Benitez on 27 May 2018. She said she was not charged by police. Her account of what occurred at the intersection was challenged by the respondent’s counsel in the following exchange: [9]
Q: What can then happen after getting a red round and a red arrow is that the red round can turn into a green round. That’s correct, isn’t it?
A: Yes.
Q: What I want to suggest to you is that on the day of the accident when you approached the intersection, you had both a red round and a red arrow.
A: No, it was a green round to go straight, and it was a red arrow to turn right. That’s why I was stopped at the intersection while the cars on my left-hand side were continued driving. … I stopped because my red arrow light to turn right was red, and the solid circle was green to go straight. That’s why I had stopped.
Q: What I suggest to you is that whilst waiting there, the only thing that caused you to turn right was being nudged by your brother to say that the light had turned green.
A: No, I looked up, the lights turned green, the oncoming traffic on the opposite side … they stopped at those lights – were red. I looked left and right as I normally do at the intersections, and then I proceeded driving right.
1. The appellant denied that the only thing that caused her to turn right was her brother’s prompt, and further denied that she “did not see the light turn green”. [10]
2. On the topic of being distracted, the appellant gave the following evidence in cross-examination: [11]
Q: If I want to suggest to you that, in fact, it was more than that and that you actually told the police officer, Benitez, that your husband actually was losing his job.
A: No, he was not losing his job.
Q: What I want to suggest to you was that in that conversation with your brother, you became distracted.
A: No. Not at all. Not at all.
Q: You became distracted and then he nudged you and said “You’ve got the lights”, and then you immediately began to turn right.
A: I did not immediately begin to turn right. I literally looked up, looked at my arrow, was green, and then I proceeded to turn.
1. The appellant was cross-examined about her brother’s actions. On this topic the appellant’s evidence included the following: [12]
Q: During the course of the collision, your brother grabbed the wheel of the car and steered it away. Is that correct?
A: He was, like, holding me cause I remember he was trying to protect me as his sister. And he was helping me also –
Q: Steer the wheel?
A: – pull. Steer the wheel, holding me, I – I’m literally in – in the middle of a shock that I had an accident. But I do recall trying to pull the car to the left because I didn’t want to end up underneath the van.
Q: And he was helping you pull the car to the left?
A: He was holding me. I can’t – like I said, I can’t tell you exactly – it was five years ago – whether or not he was physically holding me or the wheel. But he was next to me, and he was protecting his sister.
1. She confirmed that her memory of the phasing of the lights and the events leading up to the crash was “perfect”. [13]
Mr Halwagy’s evidence
1. The appellant’s brother, Mr Gabriel Halwagy, who was the passenger in the front seat of the car driven by the appellant, gave evidence that as they approached the intersection with Access Road, the round light for ongoing traffic was green and “our one came to a red light” so they stopped at the intersection to turn right. [14]
2. He said he was chatting with his sister at the time “about her husband’s workstyle”. When asked whether something happened to the traffic lights, he replied: [15]
A: Yep, as I turned up, I’ve seen that the traffic lights – go green. And I nudged my sister, and she pretty much went ahead with it. And as we were turning right into Pep’s Autos, I’ve seen on the corner of my eye that there was a van coming on the T-way intersection. And he pretty much just knocked over the righthand side, and as then I was grabbing my sister, and my lefthand side was turning the lefthand side of the steering wheel trying to steer away.
1. Mr Halwagy gave evidence that the traffic on the other side of the intersection was at a standstill.
2. He said that, on the night of the accident, he “[took] it upon [himself] to go and see how the other driver was”. [16] In the hospital, Mr Halwagy said the respondent “apologised to him”, and said “everything was all good” and words to the effect of “I’m sorry, mate, for what happened”. [17]
3. It was suggested in cross-examination that this conversation was a recent invention. [18] Mr Halwagy agreed that he did not tell the police about the apology when interviewed on 27 May 2018. He explained that he did not do so “because I wouldn’t think it would be relevant for me to tell him that, and it was nothing to do with the crash at the time of the accident”. [19]
4. On the topic of talking to his sister and nudging her, he gave the following evidence in cross-examination: [20]
Q: You were talking about her husband.
A: Yep.
Q: His job situation.
A: Yep.
Q: What you say then is your sister began to do a right-hand turn once she got the arrow. Is that correct?
A: Once I did tell her that the arrow did go green.
…
Q: Your sister then began to turn right? Is that correct?
A: Not immediately, no, because I nudged her and I told her, “Look, the green’s –“ like, the light went green and that’s when she started turning right.
Q: And that’s when it happened, the accident, after you nudged her and she started turning right, correct.
A: Well, if you say so, yeah.
1. And further: [21]
Q: What I want to suggest to you is, in fact, you had a red round, and you had a red arrow. Do you agree with that or disagree with that?
A: I disagree with that.
Q: Furthermore, what I suggest to you is that you did give your sister a nudge, and say the lights turned green.
A: Yep.
Q: But you’d been confused and you’d actually seen the round light turn green, and as a result of that, your sister began to take the turn without looking at the light.
A: Sorry, as I mentioned again, the red round – the red round was green and the red – the arrow was red at the time. And when I did nudge her, the arrow turned green and the round was still green.
Q: So you reject the proposition I put to you that there was a red round, there was a red arrow.
A: I object, yes.
Q: I want to also suggest to you that when you nudged her, you’d been mistaken and you’d only seen the round green whilst there was still a red arrow. You disagree with that?
A: I disagree with that.
The reasons of the primary judge
1. The primary judge did not accept Mr Halwagy’s account of the respondent apologising for the accident. Her Honour accepted the respondent’s and his mother’s evidence that the respondent gave no reply to what Mr Halwagy had said. Her Honour went on to say:
[47] Counsel for the Plaintiff argued that if it was found that this conversation did not take place, it renders the whole of Mr Halwagy’s evidence unreliable, and I would, therefore, not accept his account of how the accident occurred. I do not accept that submission. Mr Halwagy’s evidence in other respects is broadly consistent with his sister’s account and their accounts to the police shortly after the accident. That I do not accept the conversation occurred does not, in my view, render the balance of his evidence unreliable.
1. The primary judge noted that the respondent denied he was tired when driving to the Liverpool bus depot because it was the end of his shift and observed there was no evidence to suggest that he was. Her Honour noted it was not suggested to the respondent that he was speeding or distracted when he drove through the intersection with the white “B” light.
2. The primary judge did not accept the evidence of the appellant and Mr Halwagy as to how the accident happened. Her Honour said:
[51] While the Defendant said in her evidence that when her brother nudged her and told her the light was green, she looked left, right and in that time observed that the cars travelling west on Hoxton Park Road were stopped, and that while she could not remember her brother taking hold of the steering wheel, her recollection of the phasing of the lights was “perfect”, it is clear from her statements that the perfection of her recollection accrued over time. However, in my view, the probability is that she is incorrect.
[52] I regard the statements of the Defendant and her brother made immediately after the accident to be a more accurate reflection of what happened, and importantly, her answer to the police officer that she did not look at the T-way light when she started to turn.
[53] I am satisfied that it is more probable that the Defendant’s conversation with her brother caused her to be distracted while waiting for the light to turn green, and that she turned right when nudged by her brother, turned in error, not seeing that the arrow remained red.
1. The primary judge found that the respondent did not travel through the intersection against the red “B” light and was not responsible for the accident. Her Honour said:
[55] It follows that I find it is more probable than not that the accident occurred through the Defendant and her brother being distracted, and she turning right on his mistaken view that the right hand turn was green and turned in front of the Plaintiff’s van that had right of way. The Defendant thus failed to pay proper regard to the traffic signal and breached her duty of care to the Plaintiff, which was the cause of the accident.
Appeal
1. By notice of appeal, the appellant advances seven grounds of appeal:
1. The primary judge erred in finding that the appellant turned right against a red arrow.
2. The primary judge erred in making findings that were not available on the evidence or which were contradicted by evidence which was irrefutably established.
3. The primary judge failed to provide any or any adequate reasons for the findings which were pivotal to her decision including the ultimate finding that the arrow facing the appellant was red.
4. The primary judge erred in her conclusion that the accident occurred by reason of the appellant and her brother having been distracted and her turning right on his mistaken view that the right-hand turn arrow was green and had turned in front of the respondent’s van that had the right of way (J[55]).
5. The primary judge erred in her finding that the respondent did not travel through the intersection against the red B-light and was not, therefore, responsible for the accident (J[54]).
6. The primary judge erred by failing to consider or to have any or any adequate regard to the uncontradicted evidence which proved the phasing of the traffic lights, which evidence established that:
1. for the respondent to have a white B signal, the traffic travelling in the same direction as the respondent on Hoxton Park Road must have a green round signal, and those turning right must have had a red arrow;
2. based on the uncontradicted evidence of both the appellant and her brother that the vehicles which had been travelling in the opposite direction on Hoxton Park Road in opposing lanes were stopped, the light phasing only permits this to occur when:
1. the appellant has a green right-turn arrow; or
2. vehicles travelling in the street into which the appellant [turned] intending to turn right into Hoxton Park Road have a green signal which permits them to turn right onto Hoxton Park Road (across and in front of the appellant and the T-Way lane).
1. Neither circumstance described in (a) or (b) above permit a white B signal for the respondent in the T-Way.
1. The primary judge failed to have any or any adequate regard to the evidence that the respondent:
1. gave his first account of the accident to the police about the circumstances of the accident more than four months after the accident after he had returned from Greece; and
2. had arrived at work before 5:00 am on that day, and had been working for at least 9 hours before the subject accident, which the appellant contended suggested that he was tired at the time of the accident and consequently made a mistake as to what the traffic lights displayed as he approached the intersection.
Notice of contention
1. The respondent filed a notice of contention, which states:
1. The primary judge when rejecting the evidence of Mr Halwagy as to the purported conversation (apology) by the respondent did not occur, but this did not render the balance of his evidence unreliable, [ought] to have found:
1. the balance of his evidence was unreliable; and/or
2. the evidence of the purported apology was given because Mr Halwagy had formed the view that the accident was caused by the appellant when she drove her vehicle contrary to a red traffic arrow.
Submissions on appeal
Appellant’s submissions
1. The appellant’s submission that the primary judge erred in finding that she had turned right against a red arrow focused on her Honour’s reasons at J[51] to J[53], quoted at [53] above. The appellant submitted that an examination of the accounts given by the appellant and Mr Halwagy to the police officer incontrovertibly supported the appellant’s version of events, including her oral testimony.
2. The appellant contended that the primary judge misdirected herself as to the importance and effect of the evidence of the statements recorded in the police notebook and mistakenly formed the view that the appellant had not told the police officer that she looked at the T-way light before she started the turn. It was pointed out that the appellant’s statement to the police officer also included that she observed stationary vehicles in the opposing westbound lanes. The appellant referred to her answer in cross-examination that she observed the traffic in the opposite direction were all stopped and stationary.
3. It was submitted that in contradistinction to the primary judge’s reasons, the appellant’s early account was entirely consistent where she described that the lights she observed when approaching the intersection as being green. This description of the lights was consistent with phase “A” of the traffic signals. The respondent contended that the operative phase when she commenced her turn was phase “B” without pedestrian involvement.
4. The appellant submitted that the primary judge’s decision was “irremediably flawed”.
5. A further argument was that a second erroneous finding arises from the primary judge’s satisfaction that the appellant’s conversation caused her to be distracted and she turned right in error when nudged by her brother.
6. The appellant submitted that the respondent’s counsel’s argument at trial that the appellant and Mr Halwagy mistook the red eastbound lane round light changing from red to green for the red turning arrow turning red to green had no basis. The appellant argued that if there was an eastbound red round light and it changed to green (after 12 seconds), the right-turn arrow would already have been green and would continue to be green when the red round light changed to green.
7. A further argument was that the primary judge did not engage with the evidence of the appellant or Mr Halwagy to the effect that the vehicles on the opposite side of Hoxton Park Road were at a standstill (consistent with a green arrow being displayed to the appellant).
8. The appellant contended that the primary judge ought to have found that the respondent had disobeyed a red “B” signal and had caused the accident, or alternatively found that the respondent had not discharged his onus of proving that the appellant had breached her duty of care.
9. In oral submissions, Mr O’Dowd, the appellant’s counsel, told this Court that the appellant did not cavil with the proposition that Mr Halwagy let the appellant know that the arrow had turned green, but the appellant looked up and saw the green arrow and red “B” light. Mr O’Dowd was critical of the emphasis being placed on the nudge and the appellant starting her turn without looking at the lights.
10. Mr O’Dowd, who also was the appellant’s counsel in the hearing before the primary judge, accepted that the respondent was not cross-examined at all about his speed. He accepted there was no evidence at all of the speed that the respondent was travelling. Mr O’Dowd also accepted there was no cross-examination of the respondent as to his distance from the traffic lights when he first saw the white “B” signal. Mr O’Dowd pointed out that the appellant did not bear the onus of proof.
11. Another submission made by Mr O’Dowd was that the appellant’s first account of the accident was given either four or five days afterwards whereas the respondent’s first account was given some six months later, after he had returned from his holiday in Greece.
Respondent’s submissions
1. The respondent submitted that a likely scenario was that the appellant had come to a stop during the “C” phase and then when “A” phase commenced, her passenger observed the green round signal and she commenced driving without observing the red arrow. In the alternative, the appellant was distracted during the “A” phase and looked up and saw a green round signal and proceeded while there was a red arrow.
2. The respondent pointed out that in the “A” phase, if there has been pedestrian demand from pushbutton post 10, then a left red arrow would be displayed for westbound traffic for 6 seconds, or if pushbutton post 11 was activated, then the traffic would be held for a period of 12 seconds. This meant that traffic would be held in the right-hand lane opposite the Red Rooster store and Pep’s Auto Spares store.
3. The respondent referred to inconsistencies in the accounts given by the appellant and Mr Halwagy in their evidence and their statements given to police. The respondent contended that the observation of the vehicles being stationary (if that be correct at all) was of a car stopped at Red Rooster and Pep’s Auto Spares. This was consistent with vehicles in the left-hand turn lane on Hoxton Park Road being stationary before attempting to turn into Access Road.
4. The respondent argued that the appellant’s submissions ignored the fundamental proposition that the primary judge accepted the respondent’s version of events. Furthermore, the submissions ignored the basic finding that the appellant was inattentive.
5. In oral submissions, Mr Dooley SC for the respondent agreed that the appellant’s case was that the traffic signals turned from phase “A” to phase “B”, whereas the respondent’s case was phase “C” to phase “A”. Mr Dooley helpfully provided this Court with a colour-coded aide memoir depicting the phasing of the traffic lights.
6. As to the findings made by the primary judge adverse to the appellant, Mr Dooley described these findings as “a little in error”. [22]
Consideration
1. Having reviewed the evidence given in the District Court and the reasons of the primary judge, it is plain that her Honour’s reasons for not accepting the evidence of the appellant and Mr Halwagy as to how the accident happened amount to an error of fact. Her Honour at J[52] regards “the statements of the Defendant and her brother made immediately after the accident to be a more accurate reflection of what happened, and more importantly her answer to the police officer that she did not look at the T-way light when she started to turn”.
2. The primary judge detailed at J[20]-[27] the appellant’s account to Constable Benitez on 27 May 2018. As there were no statements in evidence made to police “immediately after the accident”, her Honour was undoubtedly referring to the statements taken by Constable Benitez which I have quoted at [34]-[36] above. In the appellant’s statement, the following appears:
Q: Did you check what colour the traffic light was?
A: Yes.
Q: What did you see?
A: Green solid to go straight, green arrow to go right, and a red “B”.
1. The primary judge had summarised this part of the statement at J[24]:
The officer asked the Defendant whether she checked the colour of the traffic light and the Defendant said, “Yes,” and added that it was green to go straight ahead, a green arrow and the B light was red.
1. Contrary to what was stated by the primary judge at J[52], the appellant told the police that she looked at the traffic light when she started to turn. The primary judge was plainly aware of the answers the appellant gave to the police officer. It is difficult to understand how this evidence appears to have been overlooked in the conclusion that her Honour reached.
2. In Mr Halwagy’s statement taken by Constable Benitez, the following appears:
As the traffic arrow turned green on vehicle one, started – vehicle one started turning.
1. The testimony of the appellant and Mr Halwagy before the primary judge was essentially consistent with the statements taken by Constable Benitez. There was no factual basis for drawing a distinction between their evidence in court and their police statements. Her Honour’s factual error was material and affected the conclusion that she reached.
2. Whilst I am mindful of the restraint on appellate interference in a trial judge’s finding of fact based on credibility of witnesses, her Honour’s factual error falls within the category identified in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [29] as involving a finding contrary to incontrovertible facts.
3. Grounds 2 and 3 of the appeal are established. It is unnecessary to reach a conclusion on the remaining grounds in which the assertions of error are far from clear.
4. There is no merit in the respondent’s Notice of Contention. It was open to her Honour to conclude that, even though she did not accept Mr Halwagy’s account of the respondent’s apology, the balance of his evidence was not rendered unreliable.
5. There are now two courses open to this Court. Either this Court reaches its own conclusion on liability upon a review of the whole of the evidence, or the matter should be remitted for a retrial in the District Court on liability only.
Should the matter be remitted to the District Court?
1. In Fox v Percy, the plurality (Gleeson CJ, Gummow and Kirby JJ) emphasised the desirability of an appellate court finalising a matter. Their Honours said at [29]:
In some, quite rare, cases, although the facts fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable" or "contrary to compelling inferences" in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must "not shrink from giving effect to" its own conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process. (Footnotes omitted)
1. However, the plurality recognised that there will be occasions when matters of credibility are critical. Their Honours observed at [31]:
Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. (Footnotes omitted)
1. In Mastronardi v State of New South Wales [2007] NSWCA 54, the matter was remitted for a new trial in the District Court. The primary judge had made a number of factual errors in reaching the conclusion that he could not be satisfied of the accuracy and truth of the evidence given by the plaintiff. Basten JA (Ipp and Campbell JJA agreeing) said at [81]:
Given the requirement under [Supreme Court Rules 1970 (NSW)] Pt 51 r 23 for a court to be affirmatively satisfied that “some substantial wrong or miscarriage” has been occasioned, it is possible that a different result could obtain in demeanour-based assessments where the appellate court discerns error, but is unable to say whether a correct assessment could or would have led to a different result. That is precisely the kind of case where a new trial is a relevant option. It would mean that a new trial could rarely be obtained if the question of injustice is to be assessed by reference to the ultimate outcome of the case.
1. In Lichaa v Boutros [2021] NSWCA 322, an appeal was upheld and the matter was remitted for a new trial in the District Court. Rein J (Macfarlan and Gleeson JJA agreeing) held that the primary judge’s reasons for rejecting the appellant’s claim in respect of defects failed to adequately explain why the primary judge rejected the expert evidence called by the appellant or preferred the expert evidence called by the respondent. Rein J said at [57]-[58]:
Counsel for Ms Lichaa conceded that if the Court accepts the inadequate reasons ground then it would be difficult for this Court to itself determine the outcome …
Rule 51.53 of the UCPR provides that the Court must not order a new trial on any ground “unless it appears to the Court that some substantial wrong or miscarriage has been thereby occasioned”. Neither party suggested that r 51.53 was in its terms inapplicable to an appeal from a District Court judge sitting without a jury: cf the doubts expressed by Kirby and Callinan JJ in Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [53]; Mastronardi v State of New South Wales [2007] NSWCA 54 at [74]-[75]. I am persuaded that a substantial wrong or miscarriage has occurred and the judgment under appeal ought be set aside and the matter referred back to the District Court for a rehearing.
1. Mr O’Dowd, in oral submissions, invited this Court to form its own view whereas Mr Dooley submitted that if this Court concluded that the ultimate result depended upon findings of credibility and reliability, then the matter should be remitted preferably before a different judge.
2. In the present case, there is no objective evidence which renders either the case for the appellant or the case for the respondent to be glaringly improbable or fanciful. If this was the case, such as it was with the skid marks in Fox v Percy, I would have no difficulty reaching a conclusion on the transcript.
3. The parties’ arguments about the phasing of the traffic signals do not provide objective support for either case. Any combination of the sequential operation of the traffic signals was possible.
4. My analysis of the respective cases of the parties on the transcript is that they are evenly balanced. I am unable to determine where the truth lies on the transcript alone. The respondent’s evidence was that he drove through the intersection with the white “B” light. As the primary judge observed at J[48]:
The [respondent] denied he was tired when driving to the Liverpool bus depot because it was at the end of his shift, and there is no evidence to suggest that he was. It was not suggested that he was speeding or that he was distracted by anything going on around him.
1. On the other hand, the appellant’s evidence, which is supported by Mr Halwagy, was that she commenced her turn when she saw the right-hand arrow turn green and a red “B”. Although the appellant and Mr Halwagy gave evidence of cars being stationary on the opposite side of the road, neither of them gave evidence of the lane or lanes that those cars were in. Their evidence of the stationary cars could be consistent with phase “A” with pedestrian demand activated or phase “B”.
2. I have concluded that the nature of the factual dispute is such that it cannot be justly resolved on the transcript. This is a case which will ultimately be determined on findings as to credibility and reliability of witnesses. Whilst a further trial on the issue of liability is unfortunate, the oral evidence will likely be confined to the respondent, his mother, the appellant, and Mr Halwagy. A retrial will not be lengthy.
3. As the parties have had a trial which has been tainted by material factual errors, the case has not been considered according to law. It appears to me that a new trial must be ordered pursuant to Uniform Civil Procedure Rules 2005, r 51.53(1) as a substantial miscarriage has been occasioned.
4. As there was no challenge to the assessment of damages, the retrial should be limited to the issue of liability, with the intent that if such liability is established then the damages assessed by the primary judge should be awarded.
Costs and orders
1. No submissions were made by the parties that there should be any order other than the costs of the appeal should follow the event. I would make that order.
2. The appellant seeks a further order that the respondent pay the appellant’s costs of the proceedings before the primary judge. I do not propose to make that order. It is far from certain that the appellant will be successful in the retrial. The costs of the original trial will be in the discretion of the District Court on remitter.
3. The orders I propose are:
1. Appeal allowed.
2. The orders of Ainslie-Wallace ADCJ in the District Court of NSW on 13 December 2023 are set aside.
3. The matter be remitted to the District Court for a retrial on liability only before another judge to be allocated by the Chief Judge of the District Court.
4. Order that the respondent pay the appellant’s costs of the appeal.
Endnotes
1. Tcpt, 23 October 2023, p 22.
2. Tcpt, 23 October 2023, pp 41-42.
3. Tcpt, 23 October 2023, p 56.
4. Tcpt, 23 October 2023, p 57.
5. Tcpt, 23 October 2023, p 58.
6. Tcpt, 24 October 2023, p 75.
7. Tcpt, 24 October 2023, pp 75-76.
8. Tcpt, 24 October 2023, pp 79-80.
9. Tcpt, 24 October 2023, pp 85-86.
10. Tcpt, 24 October 2023, p 83.
11. Tcpt, 24 October 2023, p 88.
12. Tcpt, 24 October 2023, p 93.
13. Tcpt, 24 October 2023, p 94.
14. Tcpt, 24 October 2023, p 101.
15. Tcpt, 24 October 2023, p 101.
16. Tcpt, 24 October 2023, p 103.
17. Tcpt, 24 October 2023, pp 103-104.
18. Tcpt, 24 October 2023, pp 104, 107.
19. Tcpt, 24 October 2023, p 107.
20. Tcpt, 24 October 2023, p 109.
21. Tcpt, 24 October 2023, p 111.
22. Tcpt, 1 July 2024, p 30.
Amendments
01 August 2024 - paragraph numbers amended.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 10,422 |
nsw_caselaw:190fc015a7f3e68cc1d507ec | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Turnbull v Fleming [2024] NSWSC 918 | https://www.caselaw.nsw.gov.au/decision/190fc015a7f3e68cc1d507ec | 2024-08-04T23:52:43.821981+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Turnbull v Fleming [2024] NSWSC 918
Hearing dates: 4-6 March 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Equity - Succession & Probate List - Probate
Before: Williams J
Decision: Proceedings dismissed.
Catchwords: SUCCESSION — Executors and trustees — Duties – Liability to account – Wilful default – Held: Plaintiff beneficiaries’ claims for the taking of an account on wilful default basis, or equitable compensation in respect of alleged wilful defaults, dismissed.
SUCCESSION – Construction, validity and operation of clause in will excluding liability of executor for loss – Where defendant executor was the testator’s solicitor who drafted the will - Whether clause void or unenforceable by reason of presumed undue influence - Held: Presumption of undue influence does not apply in probate context – Whether liability for “loss” in the context of the exclusion clause includes liability to account on a wilful default basis – Held: yes – Whether exclusion clause is void on the basis that it is repugnant or contrary to public policy because it excludes liability for breach of executor’s irreducible core obligations – Held: No, the clause, properly construed, does not exclude liability for breach of irreducible core obligations of honesty and good faith.
Legislation Cited: Trustee Act 1925 (NSW) s 85
Cases Cited: Alexander v Perpetual Trustees WA Limited (2004) 216 CLR 109; [2004] HCA 7
Armitage v Nurse [1998] Ch 241; [1997] EWCA Civ 1279
Austin v Austin (1906) 3 CLR 516; [1906] HCA 5
Bartlett v Barclays Bank Trust Co Ltd (Nos 1 & 2) [1980] 1 Ch 515
Bird v Bird (No. 4) [2012] NSWSC 648
Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; [1965] AC 694
Crossman v Sheahan (2016) 115 ACSR 130; [2016] NSWCA 200
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111
Fell v Fell (1922) 31 CLR 268; [1922] HCA 55
Grace v Grace [2012] NSWSC 976
Halfhide v Beaven [2003] NSWSC 1207
Juul v Northey [2010] NSWCA 211
Lang v The Queen (2023) 413 ALR 389; [2023] HCA 29
Leerac Pty Ltd v Fay [2008] NSWSC 1082
Ludwig v Jeffrey (No. 4) (2021) 394 ALR 360; [2021] NSWCA 256
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23
Marley v Rawlings [2015] AC 129; [2014] UKSC 2
Meehan and Others v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22
Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65
Ramage v Waclaw (1998) 12 NSWLR 84
Re Atkinson, deceased [1971] VR 612
Re Charteris [1917] 2 Ch 379
Re Speight [1883] 22 Ch D 727
Schwanke v Alexakis [2024] NSWCA 118
Spillane v Hall [2013] NSWSC 229
Tschirn v Australian Executor Trustees Ltd [2016] SASC 149
Wright v Stevens [2018] NSWSC 548
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15
Texts Cited: G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis)
J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)
P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters)
Category: Principal judgment
Parties: Regina Turnbull (First Plaintiff)
Hans Brooks (Second Plaintiff)
Erna Barbara Van Luin (Third Plaintiff)
Julieann Deline Groat (Fourth Plaintiff)
Elizabeth Mary Fleming as executor of the Estate of Thomas John Brooks, late of Woodlands (Defendant)
Representation: Counsel:
Mr N Allan (Plaintiffs)
Mr S Chapple SC with Mr D Yazdani (Defendant)
Solicitors:
Boom Lawyers (Plaintiffs)
Wotton + Kearney (Defendant)
File Number(s): 2022/32155
Publication restriction: N/A
Judgment
Introduction
1. These proceedings concern the estate of the late Thomas John Brooks, who died on 26 December 2018 (the deceased).
2. The deceased is survived by:
1. his daughter Julieann Groat, who is a child of the deceased’s first marriage with Marilyn Brooks;
2. his daughter Sonya Afflick, who is a child of his second marriage with Maria Brooks;
3. his daughter Tanya Brooks, who is also a child of the deceased’s second marriage;
4. his stepson Hans Brooks;
5. his stepdaughter Barbara Van Luin; and
6. his stepdaughter Regina Turnbull.
1. The deceased executed a will dated 24 February 2017, under which he appointed his solicitor, Ms Elizabeth Fleming, as his executor and trustee. Ms Fleming is the principal of the firm Elizabeth Fleming & Associates (EFA).
2. According to the inventory of property attached to Ms Fleming’s application for probate, the deceased owned the following assets at the time of his death:
1. real property at 35 Dunns Creek Road, Woodlands, New South Wales, with an estimated value of $995,000 (the Woodlands property);
2. real property at 32 Lagoon Street, Moruya, New South Wales, with an estimated value of $375,000 (the Moruya property);
3. real property at Dolphin Avenue, Batemans Bay, New South Wales on which a motel business was trading under the name the Hanging Rock Family Motel, with an estimated value of $2,200,000 (the motel property);
4. shares in TJ Brooks Pty Limited with an estimated value of $622,000, of which $600,000 was attributed to the value of the Hanging Rock Family Motel business that the company operated from the motel property (the motel business);
5. cash of $425,265.10 in various bank accounts;
6. eleven motor vehicles with a total estimated value of $109,500; and
7. shares in Tansony Investments Pty Ltd, which operated a painting business, with an estimated value of $3,000.
1. By clause 5 of his will, the deceased requested his trustee to take note that his daughter, Ms Van Luin, had built a house on the Woodlands property at her own expense, and that the house was “not to be included as part of my assets, but it is to be separately valued and treated as her asset”.
2. By clause 6 of the will, the deceased directed his trustee to discharge any mortgage debt secured against certain property of his brother-in-law, Johannes Pieter Slinger.
3. By clause 7 of the will, the deceased authorised, empowered and directed his trustee to finalise the transfer of the property at 50 Dunns Creek Road, Woodlands, to his daughter, Ms Afflick, at no cost to her, if that transfer had not been finalised prior to his death. That transfer was in fact finalised in May 2017, prior to the death of the deceased.
4. By clause 8 of the will, the deceased gave the residue of his estate to his trustee to pay all debts, legacies, funeral and testamentary expenses and any death, estate or succession duties, and to hold the balance equally for such of his children and stepchildren who survive him by 30 days.
5. Clause 9 of the will provides:
“My Trustee may, on such terms and for such purposes as my Trustee thinks appropriate, without being liable for loss:
(a) sell;
(b) postpone the sale of;
(c) lease;
(d) borrow, give a guarantee and mortgage; and
(e) manage,
the whole or any part of my estate.”
1. As I have mentioned, the deceased died on 26 December 2018. On 11 January 2019, this Court made orders granting to Ms Fleming special letters of administration ad collingenda with specific powers, including to continue to operate and manage the motel business and to undertake any works in relation to the motel business or the motel property as required by Eurobodalla Shire Council. Probate was granted to Ms Fleming on 5 June 2019.
2. The deceased’s estate has largely been administered.
3. A clearing sale of the deceased’s vehicles, farming equipment, painting business equipment and other chattels was conducted by Elders Limited (Elders) on instructions from Ms Fleming on 6 July 2019.
4. The motel property and motel business were sold as a going concern on 20 January 2020 for $2,550,000.
5. Ms Fleming arranged for the mortgage debt secured against Mr Slinger’s property to be paid, and the mortgage to be discharged, on 12 July 2020.
6. On 14 September 2020, Ms Fleming paid the sum of $172,861 out of the deceased’s estate to Ms Van Luin, being the estimated value of the house built by Ms Van Luin on the Woodlands property.
7. In about January or February 2021, the Woodlands property was sold to Ms Turnbull for $1,200,000.
8. On 16 March 2021, the Moruya property was sold for $375,000 to Hans Brooks.
9. Ms Fleming has paid interim distributions to the beneficiaries totalling $3,300,000 to date. Those distributions were paid on 19 November 2020, 24 February 2021, 15 April 2021 and 30 March 2022.
10. Ms Fleming tendered the accounts of her administration of the deceased’s estate for the period from 26 December 2018 to 30 June 2022, together with primary records such as receipts, invoices, settlement statements for the sale of properties, bank statements, and a bank reconciliation statement. As at the date of the hearing, Ms Fleming continued to hold $454,764.73 to be distributed to the beneficiaries after completion of tax returns.
Overview of the claims and defences
1. These proceedings were commenced on 3 February 2022. The plaintiffs are the deceased’s three stepchildren – Ms Turnbull, Mr Brooks, and Ms Van Luin – and the deceased’s daughter from his first marriage, Ms Groat. Ms Fleming is the defendant.
2. In their amended statement of claim filed on 3 March 2023, the plaintiffs claim:
1. a declaration that clause 9 of the will is void or unenforceable;
2. an order for the taking of an account on a wilful default basis;
3. alternatively, an order that Ms Fleming pay equitable compensation for the alleged breaches of duty on which the plaintiffs rely as instances of wilful default; and
4. orders revoking the grant of probate to Ms Fleming on 5 June 2019 and granting letters of administration to Ms Lisa Stone, solicitor, or to a qualified solicitor approved by the plaintiffs, and vesting the deceased’s estate in the administrator so appointed.
1. The alleged instances of wilful default on which the plaintiffs rely fall into three categories:
1. acting imprudently in the sale of the motel property and motel business in January 2020, including by selling the motel in a compressed time frame and without obtaining an up to date valuation report, resulting in a sale at a price that the plaintiffs allege was below the market value by approximately $400,000 (the motel claim);
2. acting imprudently in delegating to Elders the sale of grain stored in silos on the Woodlands property immediately prior to the clearing sale in July 2019, resulting in the grain being sold at a price that the plaintiffs allege was almost $10,000 less than its market value (the grain claim);and
3. failing to recover stockyards that had been in use at the Woodlands property, which were removed and relocated to the neighbouring property of Ms Afflick and her husband in early 2020 (the stockyards claim).
1. In relation to each of these alleged defaults, the plaintiffs contend that Ms Fleming acted so imprudently as to display a want of honesty and good faith.
2. The precise terms of the orders sought by the plaintiffs for the taking of an account, as articulated at the hearing, are:
1. an order for an account to be taken by a Registrar of the Court on a wilful default basis, limited to such of the alleged wilful defaults referred to above that may be found to be established following the hearing before me, with a direction that the account be charged with the specific amount of the loss that the Court has found flowed to the estate by reason of the default;
2. an order that an account be taken otherwise in common form but with liberty to the Registrar to certify any further instances of wilful default identified in the taking of the account; and
3. an order that Ms Fleming pay to the plaintiffs such amount as may be determined to be due on the taking of the account.
1. Alternatively, the plaintiffs invite the Court to order Ms Fleming to pay equitable compensation in lieu of an order for the taking of accounts if the Court considers that equitable compensation is a form of relief that can make good the losses to the estate from the alleged wilful defaults without the need to subject the parties to the cost and delay of the process of taking an account.
2. Ms Fleming denies each allegation of wilful default, and therefore denies that she is liable to account on a wilful default basis or to pay equitable compensation.
3. If and to the extent that any of the alleged instances of wilful default are established, it will become necessary to determine whether clause 9 of the will is valid and enforceable. If so, then further questions arise from the parties’ submissions about the proper construction of clause 9 and its application in the circumstances of this case.
4. Presumed undue influence arising from the solicitor and client relationship between Ms Fleming and the deceased is the sole basis on which the plaintiffs contend that clause 9 of the will is void or unenforceable.
5. If clause 9 is not void or unenforceable by reason of presumed undue influence, then the plaintiffs contend that, properly construed, the words “without being liable for loss” in clause 9 of the will do not extend to liability for an equitable debt that arises from an obligation to account to the beneficiaries, or liability to pay equitable compensation as a remedy selected by the Court as a more efficient means of giving effect to such an obligation to account on a wilful default basis in circumstances where the defaults and the value of the assets of which the estate has thereby been deprived are known. The plaintiffs contend that clause 9 of the will therefore does not apply to any of the alleged instances of wilful default.
6. If the words “liable for loss” are construed as including a liability of the kind referred to immediately above, contrary to the plaintiffs’ submissions, then the plaintiffs contend that clause 9 of the will is void for repugnancy to the concept of a trust, or on the basis that it is contrary to public policy, because it impermissibly seeks to exclude the core obligations of an executor and trustee. This contention was not pleaded, but no objection was taken on behalf of Ms Fleming.
7. Ms Fleming submits that presumed undue influence does not apply in the probate context.
8. Ms Fleming further submits that the irreducible core obligations of an executor and trustee are honesty and good faith. Clause 9 of the will, properly construed, does not exclude liability for breach of those core obligations, and is therefore neither repugnant nor contrary to public policy. Ms Fleming further submits that the “loss” to which clause 9 applies does not include liability for “substitutive” compensation that is payable in order to discharge an obligation to account for any unauthorised disbursement of trust funds or assets. The remedy of equitable compensation in those circumstances is not dependent on any loss being established beyond the fact of the unauthorised disbursement. Ms Fleming submits that the plaintiffs’ claims in the present case are claims for “loss” in the “restorative” sense rather than the “substitutive” sense. That is to say, the plaintiffs seek to have restored to the trust the value that they contend would have been obtained but for Ms Fleming’s alleged failure to act in accordance with the requisite diligence and care in selling the motel property and business, in selling the grain, and her failure to recover the stockyards. Ms Fleming therefore contends that, if and to the extent that the plaintiffs establish the alleged instances of wilful default (which Ms Fleming denies), clause 9 is a complete answer to the plaintiffs’ claims.
9. In reply, the plaintiffs submit that the irreducible core obligations of an executor are not limited to honesty and good faith, and extend to the duty of diligence and prudence.
10. If and to the extent that the alleged instances of wilful default are established and liability for such default is not excluded by clause 9 of the will, Ms Fleming asks the Court to relieve her from personal liability pursuant to s 85 of the Trustee Act 1925 (NSW) on the basis that she acted honestly and reasonably and ought fairly to be excused. The plaintiffs deny that Ms Fleming acted honestly and reasonably in relation to the sale of the motel property and business, the sale of the grain, and the recovery of the stockyards.
11. The plaintiffs did not make any submissions in support of their claim for orders revoking the grant of probate to Ms Fleming and granting letters of administration to Ms Stone, or another, solicitor. Nor did the plaintiffs tender any consent of Ms Stone, or any other solicitor, to be appointed as administrator of the deceased’s estate. Those claims for relief are therefore taken to have been abandoned.
The duties of executors and trustees and liability to account on a wilful default basis
1. It is convenient to begin with a summary of the legal principles relating to the scope and content of the duties owed by executors and trustees, and the circumstances in which an executor and trustee becomes liable to account on a wilful default basis.
2. An administrator is required to administer the deceased estate for the benefit of the beneficiaries in accordance with the will. [1]
3. It is uncontroversial that the principal duties of an executor are to identify and get in the assets of the deceased’s estate, to pay the deceased’s expenses and liabilities, to pay the legacies given by the will, and to distribute the residue of the estate in accordance with the will. The executor holds the assets of the estate for the purpose of carrying out the functions of administration, and not for the executor’s own benefit. [2]
4. The law requires executors to adhere to the same standards as are required of trustees in carrying out their duties. Executors and trustees are required to act prudently and properly in the management of the estate as a whole. The standard of prudence required is that of an ordinary prudent person or, in the case of an executor or trustee acting in a professional capacity, the minimum standard required of persons acting in that profession. The executor’s conduct is to be assessed against the standard objectively. As both the plaintiffs and the defendant emphasised in the present case, that is a factually sensitive inquiry which must be undertaken having regard to the circumstances in which the defendant carried out her duties. [3] The duty to act prudently and properly is also referred to as a duty of diligence and prudence, or a duty of diligence and care. The standard of prudence is sometimes referred to as a standard of care. However, the duty owed by executors and trustees, and the standard that they are required to meet, are not to be confused with the similarly named duty and standard of care that are relevant to common law actions for negligence. [4]
5. The discharge of the duty to identify and get in the assets of the estate may require the executor to enforce, by legal proceedings if necessary, any right, title or interest of the deceased in specific assets, provided that the estate has sufficient assets to fund such legal proceedings or the beneficiaries indemnify the executor for the costs of such proceedings. [5]
6. Contrary to the submissions made on behalf of the plaintiffs, the executor’s duty to get in assets does not require the executor to commence proceedings to recover property if the estate has sufficient funds to cover the executor’s costs of the proceedings, or the beneficiaries indemnify the executor in respect of those costs. In support of that submission, the plaintiffs relied on the following passage from the judgment of Doyle J in Tschirn v Australian Executor Trustees Limited: [6]
“While accepting that this duty will on occasion extend to commencing legal proceedings in order to recover assets or monies said to form part of the deceased estate, the authorities also recognise, at least where those proceedings are likely to be controversial or contested, that the executor is not bound to use their own funds to pursue those legal proceedings. If there are no trust assets from which to fund the proceedings, and no indemnity from a beneficiary or beneficiaries is forthcoming, then it would generally be appropriate for the executor to refrain from commencing the contemplated proceedings. …”
1. That passage does not support the plaintiffs’ submission that, if the estate has sufficient funds to cover the costs of the proceedings, then the executor’s duty to get in the assets necessarily requires the executor to commence the proceedings. The executor’s duty to get in the assets is to be exercised prudently in accordance with the standards discussed above. [7] The question whether it is prudent to commence proceedings to recover property claimed by the estate will depend on all the circumstances. Relevant factors include the nature and value of the relevant property, the nature and strength of the competing claims to the relevant asset, the level of risk attending the proposed proceedings, and the likely cost to the estate if the proceedings are unsuccessful.
2. If in doubt about whether to commence proceedings to prosecute the estate’s claim to specific property in all the circumstances, it is open to an executor to seek judicial advice about whether they would be justified in commencing proceedings. [8] Indeed, it may be prudent to do so. [9] However, the executor is not under any legal obligation to seek judicial advice. [10] If the executor does not commence the relevant proceedings, and a beneficiary contends that the executor is under a duty to do so, that beneficiary may sue the executor to compel them to protect the beneficiary’s interest in the estate. Alternatively, if there are special circumstances, the beneficiary may commence proceedings in their own name against the defendant to prosecute the estate’s claim to the particular asset, joining the executor and other beneficiaries as additional defendants. [11]
3. I accept the plaintiffs’ submission that the standard of care required of an executor selling assets for the purpose of administration is the standard described by Barrett J (as his Honour then was) in Halfhide v Beaven: [12]
“44. … the standard of care to be exercised by an administrator in effecting a sale for purposes of administration may be regarded as the equivalent of that expected of a trustee exercising a power of sale, although considerations relevant to the competing interests of classes of beneficiaries will not intrude in the case of a legal personal representative. The standard of care includes the exercise of diligence in inviting competition and in pursuing a course of conduct of the kind that an ordinary prudent person would apply in managing his or her own affairs. Formulations based on a supposed duty to ‘obtain the best price’ or ‘not to sell at an undervalue’ must, I think, be approached with care. Such absolutes tend to be illusory. The emphasis is on responsible, methodical and prudent behaviour undertaken according to an informed appreciation of the subject matter and the market environment in which it is to be sold. …”
1. Importantly, as Barrett J stated in that case, the beneficiaries’ right to have the deceased’s estate properly and duly administered does not entail a right to determine how, for what price or to whom a sale is made. [13]
2. The office of executor is a personal one which cannot be delegated. However, an executor cannot do everything themselves in the administration of the estate. An executor may engage agents where it is in the ordinary course of business to use others to do the work that the agent is engaged to do, and provided that the executor runs no needless risk in doing so. The executor must exercise care to select an agent who is suitable and competent in the relevant field, and in supervising the work undertaken by the agent. [14]
3. Beneficiaries of a deceased estate are entitled to an account in common form. An account on the basis of wilful default may be ordered at the suit of a beneficiary who establishes at least one instance of wilful default. Not every breach of trust is a wilful default. In an accounting context, wilful default means “a passive breach of trust, an omission by a trustee to do something which, as a prudent trustee, he ought to have done – as distinct from an active breach of trust, that is to say something which the trustee ought not to have done”. [15] The underlying concept is that “through breach of trust the trustee has failed to obtain for the trust that which would have been obtained if the trustee’s duties had been discharged”. [16] Examples include the failure by an executor or trustee to get in an asset of the estate or the trust, or the sale of an estate or trust asset at an undervalue (resulting in the estate or trust not receiving the full value of the asset). It is not necessary to demonstrate conscious wrongdoing on the part of the executor or trustee in order to establish wilful default. [17]
4. In the taking of an account on the basis of wilful default, the executor must account not only for the assets that have actually been received, but also for assets that would have been received if the executor had properly discharged their duties. [18]
5. A court will only order an account on the basis of wilful default where the default that constitutes the basis of the application is proved, and gives rise to a prima facie inference that other defaults have occurred albeit that they are not yet known. [19] As the plaintiffs submitted, where there are only a few likely instances of default, an account on the basis of wilful default may be limited to those instances. As I have already mentioned, the plaintiffs submitted that, where a limited number of wilful defaults, and the value of the assets not received by the estate as a result of those defaults, have been proved at trial, the Court may order equitable compensation as an alternative and more efficient means of the executor making good that lost value rather than making an order for the taking of an account on the wilful default basis.
Salient facts
1. The deceased died on 26 December 2018.
2. By 7 January 2019, Ms Fleming was gathering information concerning the deceased’s estate, and was preparing an urgent application to the Court for a grant of special letters of administration, primarily for the purpose of enabling her to continue the operation of the motel business pending a grant of probate.
3. As I have already mentioned, the Court made an order on 11 January 2019 granting special letters of administration ad collingenda with specific powers, including to operate and manage the motel.
4. Ms Afflick had been managing the motel business since about 1997, reporting directly to the deceased who participated in all decisions relating to the business. Ms Afflick worked together with Ms Robyn Bell, who managed the motel business at nights and on weekends. Ms Afflick and Ms Bell continued to manage the motel after the death of the deceased, reporting to Ms Fleming. Ms Fleming attended the motel to monitor its management, and to inspect specific problems or issues that Ms Afflick and Ms Bell drew to her attention from time to time.
5. Those problems included a problem with the sewage disposal system at the motel property, which Ms Afflick drew to the attention of Ms Fleming.
6. Ms Afflick gave evidence that the motel was serviced by two septic systems. From about 2002, sewage failed to drain away from the motel consistently. Ms Afflick had to attempt to clear the pipes using a mop and a hose on a weekly basis. If that did not succeed, a local plumber – Mr Martin Green – was called to clear the blockage using an electric eel. Both septic systems were affected by these blockages. Ms Afflick understood that the problem was caused by the age of the pipes and the infiltration of tree roots into the pipes, based on advice from Mr Green, and based on her own observations when attempting to clear the pipes herself. However, Ms Afflick also agreed in cross-examination that the blockages that required her to clear the pipes manually with a mop and hose were principally caused by people flushing foreign objects down the toilets. Ms Afflick gave evidence that Mr Green’s assistance was required on a regular basis, although she cannot now recall the precise frequency. Ms Afflick recalled occasions on which sewage flooded into some of the motel rooms. On one such occasion, the flooding was so extensive that all flooring and furniture in the affected rooms had to be replaced.
7. Ms Fleming gave evidence that she and Ms Afflick sought advice from Mr Green about what was required to rectify the problem. Mr Green advised that the motel would need to be closed in order to carry out the necessary work, because the toilets could not be flushed while the work was in progress.
8. Ms Fleming and Ms Afflick gave conflicting evidence about past subsidence of parts of the floors in some of the units in the motel.
9. Ms Afflick gave evidence that the flooring in part of two motel rooms had “collapsed” in about spring 2015, and had never been repaired because the deceased thought that the repairs would be too costly. It was Ms Afflick’s understanding that the “collapse” had occurred because “the flooring piers had sunk in”. There is no evidence of the basis of Ms Afflick’s understanding.
10. In her affidavit sworn on 4 August 2022, Ms Fleming deposed that Ms Afflick advised her that there had been “subsidence issues with floors in the family units” in the past, that the affected floors had been rebuilt, including retiling and repainting the affected units.
11. There is no evidence of any recurrence of floor subsidence in any of the motel units at any time after the occasion referred to by Ms Afflick in 2015. Ms Fleming deposed that no subsidence issues have arisen during her administration of the deceased’s estate to date. In cross-examination, however, Ms Fleming described floor subsidence as a “continuing process” at the motel property, meaning that it happened “regularly, as in every three or four years”. Ms Fleming also asserted that it was “wet under that set of units”.
12. Ms Fleming’s evidence does not disclose any source of information about subsidence issues at the motel other than Ms Afflick. I reject Ms Fleming’s evidence given in cross-examination that subsidence issues were a “continuing process” occurring every three or four years as inconsistent with Ms Afflick’s evidence, and inconsistent with Ms Fleming’s own affidavit. It was my impression at the time that Ms Fleming gave that evidence in cross-examination that she was overstating the subsidence “issue” in response to being challenged about her evidence that she considered subsidence to be an issue or potential issue affecting the value of the motel when she sold it for $2,550,000 in December 2019, being less than the value ascribed to the motel property and business by the valuation report that she had received in April 2019 to which I refer below, and less than the selling price estimated by the sales agent that she engaged in October 2019.
13. On 6 February 2019, Ms Fleming engaged a local valuer, Mr Wayne Riches of Riches Property Valuations, to value the Woodlands property and the Moruya property. At Mr Riches’ suggestion, Ms Fleming engaged Opteon Property Group Pty Ltd (Opteon) as a specialist valuer to value the motel property and business. Ms Fleming had used Opteon’s services previously and had been satisfied with their work.
14. In cross-examination, Ms Fleming initially said that she engaged Opteon to value the motel property and business solely for probate purposes, and not for the purposes of identifying the value of the motel property and business with a view to sale. I reject that evidence, which is inconsistent with the objective facts that, as recorded in the contemporaneous documents and as Ms Fleming accepted in cross-examination, she was interviewing real estate agents and brokers in February and March 2019 with the intention of appointing one of them to conduct the sale of the motel property and business, and her intention at that time was to sell the motel without trading it for any material length of time if possible.
15. On 14 February 2019, Ms Fleming obtained from the deceased’s accountant, Ms Rhonda Elliott, financial statements for the motel business operated by TJ Brooks Pty Limited for the 2016 to 2018 financial years and for the period 1 July 2018 to 31 January 2019. The financial statements recorded net profits of $151,992 for the 2016 financial year, $60,630 for the 2017 financial year, $118,148 for the 2018 financial year, and $102,004 for the seven-month period to 31 January 2019. Ms Fleming caused the financial statements to be provided to Mr Gregory Mason, the valuer at Opteon who was undertaking the valuation of the motel property and business.
16. Mr Mason inspected the motel property on 22 February 2019, and prepared a valuation report that Opteon issued on 10 April 2019. Mr Mason valued the motel property and business at $2,825,000 as a going concern on a “walk in walk out” basis or, alternatively, $2,200,000 for the motel property and $600,000 for the motel business, as at 22 February 2019. Mr Mason opined that the existing use of the property as a motel was its highest and best use.
17. The report noted the strengths of the site as including its location within a growing coastal region, and its proximity to the Catalina Country Club. Noted weaknesses included the potential presence of asbestos in some buildings and the need for some repair works to be undertaken in the short to medium term. The report identified the necessary repairs as being new roofing and some external cladding repairs for the northern wing of the motel (comprising rooms 16 to 20), and repairs to soffit lining and new gutters and downpipes for the western wing of the motel (comprising rooms 7 to 15). The report stated that a preliminary allowance of $15,000 for those works had been incorporated in the valuation as representing the discount to market value that a prudent purchaser would allow for the cost of those works. However, the report emphasised that Mr Mason had not been provided with quotes or expert reports concerning the works.
18. The report recommended that audited financial statements, a building inspection report, and an asbestos report be provided to Mr Mason for review. There is no evidence that any such documents were provided to him, although an asbestos register was later prepared, as referred to below.
19. The report noted that the motel business had been managed by Ms Afflick since approximately 2002, and that it appeared to be well managed. The report stated that any decrease in the quality of management could quickly lead to a decline in trade.
20. Mr Mason opined that the tariff rates at the 27-room motel of between $70 and $120 per night during the off-peak season and between $120 and $160 per night during the peak season appeared to be at below market rates when compared with tariffs charged by other low to mid-range accommodation facilities in Batemans Bay and other nearby coastal towns on the South Coast. Mr Mason opined that “slightly higher tariff rates could be achievable", but also calculated that the motel business was achieving a slightly above average occupancy rate for the area and attributed this to the lower tariff level. The report stated that, in order to maintain and improve occupancy levels, the motel owner would need to monitor ongoing competition from approximately 27 other motels or accommodation options in the Batemans Bay area, and to implement an upgrade and refurbishment program for the motel property.
21. In valuing the motel property and business as a going concern, Mr Mason applied a capitalisation of net profit methodology, supported by a direct comparison methodology.
22. Mr Mason explained the capitalisation methodology in the following terms:
“The capitalisation method is based on the concept that for income producing assets the price a prospective purchaser will be prepared to pay will be based on (amongst other things) the level of income and the return required for the investment of capital.
The capitalisation method is commonly used as the primary valuation method to determine the Market Value of income producing assets such as leased properties and going concerns or specialised assets.
Under the capitalisation of net profit, the net profit after adjustments is divided by the percentage return (known as the capitalisation rate) required by prospective purchasers in the market to arrive at the Capitalised Value assuming the asset was being operated under good average management.
Capital adjustments may be made to the Capitalised Value, for example to reflect:
* Capital expenditure required to sustain the income;
* Lost earnings during a period of change to the operation of the business in order to achieve the adopted net profit;
* The added value of other non-incoming [sic] producing assets (e.g. surplus land).”
1. Mr Mason then referred to the evidence of sales of nine motel properties during the period from February 2017 to March 2019 in Batemans Bay, Batehaven, Mollymook, Narooma, Bega, Queanbeyan and Braemar, which indicated a range of market yields between 5.27 per cent and 14.0 per cent for properties that he considered to be similar properties. The properties that Mr Mason considered most comparable to the subject motel property had yields between 7.8 per cent and 11.87 per cent. Mr Mason opined that, based on that market evidence, the appropriate capitalisation rate for the motel property was 9.5 per cent. He then applied that capitalisation rate to an “adopted sustainable net profit figure” for the motel business of $270,000 per annum – $151,852 more than the net profit of $118,148 recorded in the financial statements for the 2018 financial year. [20] That “adopted sustainable net profit figure” represented 48.6 per cent of trading revenue, whereas net profits actually achieved by the motel business since the 2016 financial year, according to the financial statements provided to Mr Mason, represented between 10.8 per cent and 29.0 per cent of revenue. He arrived at the “adopted sustainable net profit figure” by adjusting actual expenses downwards to achieve the “adopted sustainable net profit figure” which he considered to be in line with unspecified “industry benchmarks” for a motel business of comparable size. However, he emphasised that this was not presented as a projection of the trading performance of the motel business. The capitalised value of the motel property and business, based on the “adopted sustainable net profit figure” of $270,000 and a capitalisation rate of 9.5 per cent, was $2,842,105, from which Mr Mason deducted $15,000 for the repair works described at [66] above before rounding down by a further $2,105 to arrive at a value of $2,825,000.
2. Mr Darren Austin, a certified practising valuer called by the plaintiffs as an expert witness, explained that the process of reducing the actual expenses of a business in order to achieve a net profit figure to be applied in estimating the value of the business using the capitalisation methodology is known as “adding back” or “add-backs”. Mr Austin gave evidence that the objective is to remove one-off or non-recurring expenses, depreciation expenses, and any private financing expenses from the calculations. Mr Austin gave evidence that, with small motel businesses, the usual practice was to remove or “add back” all wages paid to the owners, leaving only the expense of wages paid to additional employees, in order to remove the variability that would otherwise result from the wide range of practices amongst owners in the level of salaries paid to themselves.
3. The sale prices of the nine motel properties referred to in Mr Mason’s report represented between $61,538 and $243,333 per room. For the purpose of the direct comparison methodology, Mr Mason adopted a rate per room of $105,000 for the subject motel property and business, being very similar to a rate per room of $105,263 achieved for the sale of a 19-room motel in Batemans Bay in February 2017. The $105,000 room rate for the motel property and business with 27 rooms translated to an estimated market value of $2,835,000, which Mr Mason rounded down to $2,825,000 in line with the estimated value derived from the capitalisation methodology.
4. Mr Mason’s report described the marketability of the motel as at 22 February 2019 as “good”, and described the market as “more buoyant in recent times” and the market direction as “steady to slightly increasing in both sale prices and volumes”. Mr Mason estimated the selling period for the motel as between three and six months, assuming proper marketing and a realistic asking price.
5. Section 18 of Mr Mason’s report provided the following more detailed commentary on the state of the market:
“The motel industry remains in a relatively buyout [sic] position in NSW as stable economic growth and general commercial/leisure optimism have led to a steady improvement in the tourist trading conditions, particularly along the South Coast. The positive business outlook has improved market optimism for motels and with low bank interest rates assisting to underpin demand, the favourable economic conditions should continue to influence the market. The demand for well-located coastal motels should remain a popular form of investment to a range of investors, especially those motels and tourist type facilities that offer longer term re-development or expansion opportunities.
This position has been boosted by increasing levels of overseas tourist visitations to regional areas including the South Coast which is reported to be one of the most popular holiday regions in NSW. The domestic tourist industry has stabilised over the last two years with steady growth in visitation and revenue to most motels. The increase of inbound tourists is expected to continue strengthening the non-metro motel industry as regional promotions gain traction from overseas guests.
Relative to the general real estate market in the local area, the most recent 18-24 month period appears to have improved across all property sectors. Agents have been reporting a higher level of leasing demand for both retail and commercial property within the Batemans Bay CBD, with a number of leases having been signed with national retailers, in addition to a number of strong commercial sales taking place within the area. This has been supported by the strong residential market and the overall confidence is reflected in a number of developments that are either underway in the area, such as ‘Wharf on Clyde’ mixed use strata unit complex and ‘Gold Golf Links Drive’ apartments. Despite the improving market conditions since the mid-2000s, it would now appear that residential market is showing signs of softening, with fewer enquiries as reported by local agents. This is a result of the weakened Sydney, Canberra and Wollongong markets, reflective of an uncertain lending climate. Whilst agents have reported softened conditions within the residential sector, evidence of this has not yet reached the commercial or development market, however may be expected”
1. The report stated that Mr Mason’s valuation was current for a period of “90 days from the date of valuation, or such earlier date if you become aware of any factors that have any effect on the valuation.” The 90-day period expired on about 22 May 2019.
2. Mr Mason’s report made no mention of the sewage drainage problems at the motel property referred to at [54]-[56] above.
3. Ms Fleming left it to Ms Afflick to show Mr Mason around the motel property for the purpose of his inspection and valuation, and Ms Afflick did not tell him about the problems with the septic system. According to Ms Afflick, Mr Mason did not ask about such issues, and she did not volunteer any information.
4. After receiving Mr Mason’s valuation report on or about 10 April 2019, Ms Fleming conducted two further interviews in May 2019 with real estate agents for potential appointment to act on behalf of the estate in selling the motel property and business. No agent was appointed until October 2019. [21]
5. As I have already mentioned, this Court granted probate of the will of the deceased on 5 June 2019.
6. On 12 March 2019, Mr Riches issued his valuation report in respect of the Woodlands property. Mr Riches’ estimate of the market value of the property was $995,000, excluding the stockyards and ramp in use on the property, and three steel silos, on the basis that they were chattels. It will be recalled that Ms Afflick and her husband own and farm the adjacent property at 50 Dunns Creek Road. [22]
7. Ms Fleming had engaged Elders in early June 2019 to conduct the clearing sale of the deceased’s chattels, including furniture, farming tools and equipment, painting equipment and sporting goods, at the Woodlands property. The chattels offered for sale included the three silos, which Mr Riches’ valuation of the Woodlands property had excluded on the basis that they were chattels, and triticale grain contained in those silos. In her affidavit sworn on 4 August 2022, Ms Fleming deposed that she decided to engage Elders because of their expertise in the agricultural and rural sales market and sector. Ms Fleming considered that Elders were reputable, qualified, experienced and competent sales agents. The plaintiffs did not adduce any evidence impugning Elders’ reputation, qualifications, experience or competence for this engagement.
8. On or about 17 June 2019, Ms Fleming informed the beneficiaries about the clearing sale, which was scheduled for 6 July 2019, and of their right to bid on any items on the basis that they would be able to deduct the purchase price from their share of the final distribution of the estate, rather than paying for the items.
9. The clearing sale was advertised online and in several local newspapers. Ms Fleming gave evidence that she relied on Elders to undertake the sale diligently, and to “obtain the best price on the day, as is the custom with clearing sales”.
10. In her affidavit sworn on 4 August 2022, Ms Fleming deposed that, from the time of the deceased’s death, two of the three silos on the Woodlands property had been empty, and one silo had been partly filled with grain. Ms Fleming had observed during her inspection of the Woodlands property that “grain was only being released from one silo”, and that this grain had been affected by weevils. In cross-examination, Ms Fleming explained that this was based on her observation that there was grain on the ground under only one of the three silos. Ms Fleming deposed that the grain remained in that silo until it was sold, and that it was therefore not possible for her to inspect the amount of the grain in that silo that “remained viable for sale” notwithstanding the weevil infestation. In cross-examination, Ms Fleming said that whether the weevil infestation would reduce the price for which the grain could be sold would depend on prospective purchasers’ proposed uses for the grain.
11. Ms Fleming gave evidence that Mr Dhugald McDowell of Elders told her on or about 17 June 2019, during the process of preparing for the clearing sale, that the silo would need to be emptied prior to sale so that the purchaser would be able to collect it on the day of the sale. Mr McDowell said to Ms Fleming that Elders would therefore sell the grain prior to the clearing sale. On 17 June 2019, Ms Afflick sent an email to Ms Fleming informing her of a similar conversation that Ms Afflick had with Mr McDowell:
“I was talking to Dhugald this morning about the grain that is in the silos and he knows a man that might be interested in it weavels and all Pre sale, So it is more appealing as a buyer of the silos. Are you happy with this?”
1. Shortly before the clearing sale, Elders sold the deceased’s triticale grain in two lots. Lot 1 was sold to Mr Wayne Williams for $2,068 including GST and Lot 2 was sold to Lakeview Pty Ltd for $1,577.40 including GST. It is common ground that the grain was sold at a price of $150 per tonne. In cross-examination, Ms Fleming gave evidence that she relied on Elders to “deal with” the clearing sale and get all items removed from the Woodlands property. When asked whether she relied on Elders to decide the price for which items were to be sold, and the purchasers to whom they were to be sold, Ms Fleming answered affirmatively, saying that she assumed that Elders would do their best to get the highest price because they were working on commission. In the case of the grain sale, Ms Fleming said that it was equally important to empty the silo in advance of the clearing sale so that the silo could be sold and removed by the purchaser on the day of the sale. Ms Fleming gave evidence that this was important because people come “from far and wide” to a clearing sale, and they want to be able to organise transport for the items they purchase on the same day that they purchase them. All three silos were in fact removed from the Woodlands property on the day of the clearing sale.
2. On 20 June 2019, Ms Turnbull wrote to Ms Fleming in the following terms:
“It is my understanding that my late father had a considerable amount of grain stored at his property at Dunns Creek Rd. I was wondering what happened to this grain & I have since found out that this grain was sold for $150.00 per tonne.
I am a partner in the largest rural supply business in the area, this business regularly buys & sells bulk gain. My sister July [sic] & her husband own one of the biggest cropping property’s at Rankin Springs. We both find it astounding that you did not think to consult us before selling this grain.
My husband Robert & Julys [sic] husband Peter, both with over thirty years’ experience in selling & assessing grain both inspected a large sample of this grain & both found it to be in excellent condition apart from some slight weevil damage.
I have customers who have been paying well over $500 per tonne for grain for the last six months who would have jumped at the chance to buy this grain for a minimum of $400 per tonne. I had the contacts, the means & equipment to dispose of this grain for the maximum benefit of the estate. Yet you chose to ignore our expertise & sell this grain for $150 per tonne.
July [sic] & Peter are currently heavily affected buy [sic] the current drought & are desperate for feed for livestock. They also would have jumped at the chance to purchase this grain.
I do not know who is advising you, but your arrogance & failure to consult with all the beneficiaries of my late fathers’ estate has cost us considerable money.
As executor & trustee of my late father’s estate you have complete control over the dispersal of that estate. You also have a legal obligation to gain the maximum benefit possible from this estate for all the beneficiaries of this estate. You will be held accountable for any failure to meet this legal obligation.
My advice to you is, start talking to us.”
1. Ms Turnbull and her husband, Mr Robert Turnbull, operate a business known as Turnbull’s Fuel & Produce. According to Mr Turnbull’s evidence, Turnbull’s Fuel & Produce was one of the largest grain suppliers in the Eurobodalla Shire in mid-2019. Triticale grain was unavailable in that area in mid-2019 due to drought conditions experienced since about 2017. Turnbull’s Fuel & Produce was purchasing barley as a substitute for triticale grain, which it was on-selling to customers at a price of about $400 per tonne (excluding GST and haulage costs). Triticale grain was preferred to barley as a livestock food because it is more dense in carbohydrates and protein. Mr Turnbull gave evidence, which was not challenged in cross-examination, that he would have had no difficulty finding a buyer for triticale grain in mid-2019 for at least $400 per tonne (excluding GST). Mr Turnbull did not inspect the grain in the silos on the Woodlands property, but gave evidence that he did inspect some grain from those silos that had been delivered to one of his customers, and some grain left in a few buckets on the Woodlands property on the day of the clearing sale. Mr Turnbull described the grain that he inspected as having been treated for slight weevil damage. Ms Turnbull gave evidence that the grain had been chemically treated for weevils a few years prior to the clearing sale. It is not clear whether Mr Turnbull’s opinions about the ease with which he could have found a buyer for triticale grain, and the price for which he could have sold such grain, in mid-2019, applies to triticale grain that been treated for weevil damage. Mr Turnbull’s opinions were admitted into evidence without objection.
2. I assume that, where Ms Turnbull refers to “July” in her 20 June 2019 letter to Ms Fleming, she means to refer to Ms Julieann Groat. There is no evidence that Ms Groat “jumped” at that chance to purchase the grain at any time after Ms Turnbull says that Ms Groat’s husband inspected a sample of the grain, or after becoming aware of the clearance sale through EFA’s letter to her solicitors dated 17 June 2019. Ms Groat did not give evidence of any inspection of the grain conducted by her husband, who was not called to give evidence at all.
3. Ultimately, 204 lots of chattels were sold at the clearance sale at the Woodlands property on 6 July 2019, raising a total sum of $196,149 (excluding GST). Lots 1 and 2 comprised the triticale grain, which had been sold prior to the clearance sale as explained above. Lots 196 and 197 comprised the three silos, which were sold for a total sum of $14,600. Lots 198, 199 and 200 comprised the deceased’s ewes, lambs, and alpaca, which were sold to Ms Afflick.
4. From at least 1 August 2019, Ms Fleming was making arrangements to sell the Moruya and Woodlands properties, including liaising with the beneficiaries throughout August and September 2019 in relation to Mr Brooks’ offer to purchase the Moruya property for the valuation price and competing offers from Ms Afflick and Ms Turnbull to purchase the Woodlands property. Ms Turnbull ultimately made the highest bid for the Woodlands property at $1,370,000 on 1 October 2019 – considerably more than the $995,000 valuation. Ms Fleming accepted Ms Turnbull’s bid after Ms Afflick indicated that she would not make a higher offer.
5. Throughout the bidding process for the Woodlands property, Ms Afflick continued to manage the motel business with the assistance of Ms Bell, reporting to Ms Fleming. The sewage problems persisted, and were the subject of various telephone conferences between Ms Fleming and Ms Afflick, including on 9 September 2019.
6. In about early October 2019, Ms Afflick and Ms Bell told Ms Fleming that they intended to resign from their management positions in the motel business. They told Ms Fleming that they wished to spend Christmas with their respective families, rather than working at the motel, for the first time in many years. Ms Fleming attempted to arrange replacement managers, but was unable to find anyone who was available during the forthcoming Christmas period. Ms Fleming was anxious to persuade Ms Afflick and Ms Bell to stay because she considered that, without replacement managers, she would need to close the motel during the busy Christmas and summer peak period, which would result in loss of revenue. Ms Fleming ultimately persuaded Ms Afflick and Ms Bell to stay on until the sale of the motel was completed, on the basis of her assurances to Ms Afflick and Ms Bell that a sale was imminent.
7. On 8 October 2019, Ms Fleming conducted further interviews with real estate agents and brokers as candidates to act for the estate in selling the motel property and business. Ms Fleming chose to engage Mr Russell Rogers of Resort Brokers Australia Pty Ltd (Resort Brokers) because she considered him to be reputable, qualified, experienced and competent to broker the sale of the motel property and business, he had 10 years experience in the motel and caravan sector and specialist knowledge of the local area where he had several other properties listed for sale, and he was available to show prospective purchasers through the motel property. The plaintiffs did not adduce any evidence challenging or impugning Mr Rogers’ reputation, qualifications, experience or competence to act as the selling agent for the motel property and business.
8. Ms Fleming signed the agency agreement with Resort Brokers on 14 October 2019, appointing them as her agents for the sale of the motel property and business on an expressions of interest basis. The agreement stated:
“Agent’s opinion as to current estimated selling price (or price range) (including GST, if any) $3,000,000 - $3,300,000 (this opinion is not to be construed as a valuation)”
1. The agent’s appointment was exclusive for a period of three months from 10 October 2019 to 10 January 2020, and the agent’s fee was 4.4 per cent of the sale price (including GST).
2. There is no evidence explaining the delay of approximately four months between the grant of probate on 5 June 2019, and Ms Fleming’s appointment of the selling agent for the motel property and business in October 2019. As I have mentioned earlier in these reasons, Ms Fleming had commenced interviewing prospective agents as early as February 2019. [23] In cross-examination, Ms Fleming said that she thought that Mr Rogers was “clutching at straws” when he expressed the opinion recorded in the agency agreement that the estimated selling price range for the motel was between $3,000,000 and $3,300,000. Ms Fleming denied that she was sceptical of Mr Rogers’ advice, and denied that she dismissed his advice, but said that she regarded it simply as “somebody else’s interpretation of what the motel is worth”. I do not accept Ms Fleming’s denial that she was dismissive or sceptical of Mr Rogers’ opinion about the estimated selling price of the motel. It is both dismissive and sceptical to describe that opinion as “clutching at straws”. Ms Fleming did not have any other “interpretation” available to guide her about the value or selling price of the motel property and business. By October 2019, Mr Mason’s valuation was no longer current. [24] According to her evidence in cross-examination, Ms Fleming did not turn her mind to that, and did not consider requesting Mr Mason to update his valuation.
3. On the same day as signing the agency agreement, Ms Fleming provided Mr Rogers with contact details for the Secretary of the Club Catalina, which Ms Fleming knew was interested in considering purchasing the motel. Ms Fleming also authorised Mr Rogers to contact Ms Elliott to obtain the financial statements for the motel business and to contact Ms Afflick to arrange marketing photography and any other information that he required in relation to the motel.
4. The financial statements provided to Mr Rogers included the financial statements for the motel business for the 2019 financial year, which had not been completed at the time of Mr Mason’s valuation. Those financial statements recorded revenue of $592,822 and net profit of $122,141. The “Financials” page of the information memorandum that Mr Rogers prepared for the motel property and business recorded the net profit of the business for the 2019 financial year as $310,590 – an increase of $188,449 from the net profit recorded in the financial statements for the 2019 financial year. The “add-backs” that Mr Rogers applied in order to more than double the net profit from $122,141 to $310,590 were recorded in a separate page entitled “Add-backs – Calculations Sheets”.
5. The information memorandum described the motel having been “constantly maintained to a very high standard” and as being in good condition, affording an incoming purchaser a choice of leaving the motel in its current state or refurbishing to “take it to the next level”. The motel was marketed as a business that would benefit from a “hands-on operator”, and as offering prospective purchasers and operators “a great lifestyle with upside potential”. The evidence does not disclose whether prospective purchasers were informed about, or otherwise became aware of, the sewerage problems in the course of the marketing campaign. Indeed, it is not clear whether Mr Rogers was aware of those problems, and he was not called to give evidence in these proceedings.
6. Ms Fleming reviewed and approved the information memorandum before it was published on Resort Brokers’ website on 18 October 2019.
7. Ms Afflick sent an email to Ms Fleming that same day formally resigning as manager of the motel. According to her contemporaneous time records, Ms Fleming then went back to the drawing board in order to try to find new people to run the motel.
8. Ms Fleming sent an email to Mr Rogers at 5:04pm that afternoon requesting him to:
“…please forward me your plan for the matter from now to anticipated settlement (say Friday 20 December).”
1. Mr Rogers responded at 5:12pm:
“I will get back to you with how I plan to get the property under contract with settlement for 20th Dec, Look forward to discussing on Monday & tweak if need be”
1. It was put to Ms Fleming in cross-examination that she had requested a plan to achieve sale and settlement by 20 December 2019 because that was the last day before EFA’s office closed for the Christmas break. Ms Fleming denied that this was the reason, and said that the time frame for the sale process was driven by the fact that the managers had resigned. I accept this aspect of Ms Fleming’s evidence. It is consistent with the objective facts that Ms Fleming signed an agency agreement on 14 October 2019 granting Mr Rogers an exclusive agency for a period of three months, and her requirement for a sale to be completed by 20 December 2019 was first communicated to Mr Rogers after Ms Afflick had confirmed her resignation, having earlier explained to Ms Fleming that she wished to spend Christmas with her family.
2. On the morning of 21 October 2019, Mr Rogers sent an email to Ms Fleming, stating:
“With the listing for Hanging Rock, we now have it up on our website and all the associated websites that head office use. We have emailed 75 prospective buyers with the property information and have also had 20 enquiries over the weekend. We will now email all agents in our company that we have this amazing new listing. As we do a massive amount of conjunctions within our company, We will also be emailing Eshots out to our data base. We also target the people who have enquired within our company on similar properties, Also our developers on our data base that we think would have in interest especially our Canberra Guys. The other thing we are organising is an add in the Town & country section & the local classifieds in the Bay.”
1. I infer that Mr Rogers’ 21 October 2019 email constituted his plan to get the motel property and business under contract with settlement occurring on 20 December 2019, as there is no evidence of any other such plan.
2. Mr Rogers sent a further email to Ms Fleming on the afternoon of 21 October 2019 advising that they would require an asbestos register and a current fire safety statement.
3. On 22 October 2019, Mr Rogers sought Ms Fleming’s feedback on a draft of the advertisement to be placed in the Town & Country section of the Batemans Bay Post that had been foreshadowed in his 21 October 2019 email. Ms Fleming gave evidence that the motel property and business were advertised for sale on domain.com, in local newspapers, and in the Town & Country section of all south east coast newspapers and in Canberra.
4. On 23 October 2019 at 11:56 am, Mr Rogers sent an email to Ms Fleming advising that:
“…I have a verbal offer of $2.2 m from David MacLachlan from Batemans Bay. He is the fellow I think I told you about who did up both Lincoln Downs and the Quays motel and on sold them. Nice to have something on the table!”
1. Ms Fleming responded at 12:03 pm:
“Thank you. It’s a start.”
1. Mr Rogers replied at 6:21 am on 24 October 2019:
“Yes certainly is a good start from a genuine buyer. I am taking him through at 11.30 today”
1. On 24 October 2019 at 5:00 pm, Mr Rogers sent an email to Ms Fleming inquiring about the property boundaries of the motel.
“Please find attached six maps aerial photo.
We are just a little concerned about where the boundary might go.
Have you any documentation confirming there is no encroachments.
As you can see by the aerial it appears the BBQ area may be encroaching.
It also appears the sign at the front may be off title also.”
1. Mr Rogers sent a further email to Ms Fleming at 12:41 pm on 25 October 2019, referring to a discussion between them earlier that day and stating:
“Great to understand more about the encroachment.
I have had a long chat to David MacLachlan this morning.
He has asked we come back to him with a counter offer on his $2.2 million.
I feel strongly that he is the best buyer so far.
He has bought 1 property from me already & and I have sold him out of 2 properties.
As we have some issues with encroachment, asbestos & general work needing to be done.
He is the sort of person that will likely not muck us around.
Even if we get another buyer or the Club I feel we will have surveyors, valuers, building inspectors all likely to slow down the sale & drag it on to the new year.
If we can get him to a price every body is happy with I feel he is likely our buyer”
1. The evidence does not shed any light on what, if any, information Ms Fleming was able to provide to Mr Rogers in order for him to “understand more about the encroachment”. In cross-examination, Ms Fleming acknowledged that she did not have, and did not obtain, a survey plan for the motel property. Ms Fleming nevertheless asserted that she knew that there were encroachments because “I’d done my own investigations” and “I know the property”, and “I could see from SIX Maps and Google Maps exactly where the problem was”. Ms Fleming is not a surveyor.
2. On 25 October 2019, Ms Fleming approved an advertisement prepared by Resort Brokers to be placed in a publication known as “Informer”.
3. On 25 October 2019, Mr Rogers reported to Ms Fleming on his discussions with Club Catalina concerning their potential interest in the motel:
“Spoke to Guy Chapman from the club.
They are thinking no more than 2 mill for the Motel
Made it clear it will be over 2 mill !
I expect to know more next week,
Clearly cannot move quickly, as the next step for them if they were interested, would be to employ a consultant to do a study & report from them.
Unlikely they will be our buyers.”
1. On 28 October 2019, Ms Fleming discussed various issues concerning the motel, including possible relief managers, with Ms Afflick.
2. On 28 October 2019, Mr Rogers chased Ms Fleming for her instructions concerning the preparation of an asbestos register for the motel property, and for her instructions concerning the response to Mr MacLachlan’s offer of $2,200,000.
“…Would you like me to get a proper quote from him with his licence details? Have you thought about an answer for David Maclachlan with his $2.2 million offer?...”
1. Ms Fleming replied to Mr Rogers by email on 29 October 2019, instructing him to proceed to engage his suggested contractor to prepare the asbestos register. In relation to Mr MacLachlan’s offer, Ms Fleming stated:
“In relation to David I suggest that we should attempt to get a bit more out of him. The beneficiaries would not be happy with that offer. He may say that is all there is…if that is the case we could go back to him. Sonya tells me that Bernie Basevie (not sure on spelling) is still very interested. That may be worth a phone call.”
1. Mr Rogers responded later that morning confirming that he would proceed with the asbestos register, and stating:
“I have been talking constantly to Bernie Basevi since we went live with the property.
He is working hard with the bank & finance brokers to see what he can do.
He is very interested, used to own the Braidwood Colonial motel.
David I will go back to & see if he will give us a better offer.”
1. On 29 October 2019, Cappello Rowe Lawyers, who were acting for Ms Groat, wrote to EFA noting that Ms Groat was “of the opinion that the communication between the executrix and beneficiaries is unacceptably inadequate”. The letter asked what steps had been taken to market the motel, and whether the beneficiaries would be consulted “as regards any prospective interest in the motel and be given the opportunity to also bid on this property/business”. In her affidavit affirmed on 15 September 2022, Ms Groat deposed that she instructed her solicitors to send that letter after she saw an advertisement for the sale of the motel in October 2019, which she did not consider depicted the best features of the motel. In that affidavit, Ms Groat deposed that “I was prepared to buy it, rather than see it sold below market”. Ms Groat also deposed that, if she had known of the proposed sale price of $2,550,000, “my husband and I would have been prepared to pay at least as much as the contract price” and “I would have instructed my solicitor to take whatever steps were legally possible to prevent this sale”.
2. There is a tension between Ms Groat’s evidence that she and her husband would have purchased the motel, on the one hand, and her evidence that she would have taken legal advice about preventing the sale to Mr MacLachlan, on the other hand. To the extent that Ms Groat’s affidavit suggests that she was ready, willing and able to purchase the motel in October 2019, that is inconsistent with her evidence in the same affidavit that, although she contacted Mr Rogers at the time and asked how much the motel was selling for, she did not then communicate to Mr Rogers any interest in purchasing the motel, and she did not ever make any offer to purchase the motel.
3. These inconsistences are compounded by Ms Groat’s evidence in cross-examination, when Ms Groat emphasised that she was not interested in buying the motel at that time, but that, if she had been told that the motel was to be sold for a price less than its probate value, “we would have stopped the sale and had a think about it or else we would have gone in and discussed managing it”. Ms Groat did not shed any light on what might have come from having “a think about it”.
4. It is not clear how Ms Groat would have been able to satisfactorily manage the motel. Ms Groat asserted that she and her husband were prepared to relocate to Batemans Bay to manage the motel until a permanent manager could be engaged and trained, leaving their son and daughter-in-law to manage alone the farm that the four of them had been working together. However, according to Ms Groat’s own evidence, she had not worked at the motel since 1986 – 32 years prior to the death of the deceased. Ms Groat had helped with the running of the motel after she first left school at age 15 from about 1977 to about 1980, and she had managed the motel for a period of about three years from about 1983 until 1986.
5. Ms Turnbull also gave evidence that she would have offered to assist in managing the motel if she had known that Ms Afflick and Ms Bell had resigned. Ms Turnbull deposed that she would have been “quite happy” to manage the motel for a year or more, leaving Mr Turnbull to manage Turnbull’s Fuel & Produce alone. Ms Turnbull deposed that Mr Turnbull would have been content with this arrangement. However, there is no evidence about whether Ms Turnbull had the requisite experience and skills to manage the motel from late 2019. Ms Turnbull deposed that she had managed the motel “earlier in my life”, but she did not identify when or for how long she had done so. As I have said earlier in these reasons, Ms Afflick had been managing the motel since 1997. I therefore infer that Ms Turnbull had no experience in managing the motel business for at least 20 years prior to the death of the deceased.
6. All of the beneficiaries knew that the deceased’s assets included the motel property and business. I infer that the beneficiaries understood from the terms of the will that the motel property and business would need to be sold in order for the deceased’s estate to be distributed to them in accordance with the will. [25] The sale of the motel was advertised. Ms Groat saw the advertisement in October 2019, and gave evidence in cross-examination that she probably told her siblings that the motel was being advertised for sale at that time. Ms Groat was not interested in purchasing the motel, as I have explained above. Ms Turnbull confirmed in cross-examination that she had not made any offer to purchase the motel. There is no evidence that any other beneficiary expressed any interest in purchasing the motel property and business.
7. On 31 October 2019, Mr Rogers reported to Ms Fleming:
“I have spoken to David & he will not increase his offer from $2.2 mill at this stage.
Really wants a number from us to get the ball rolling.
Bernie Basevi had the broker say no.
I have referred him to our specialist Motel finance broker as ordinary brokers do not understand our industry & do not deal direct with the bankers who specialise in funding motels.
Have you organised the fire safety statement?
Do you need any help with that?
I am working hard with all our other buyers to see if we can get another player!”
1. Mr Rogers sent a further update to Ms Fleming on 1 November 2019:
“I spoke to Guy Chapman yesterday from the Golf Club.
They had a directors meeting yesterday & seem to be still interested in Hanging Rock.
Guy asked to see a copy of the valuation that has been done.
I think that would be fine at this stage as it demonstrates where the market price is.”
1. Ms Fleming’s office emailed a copy of Mr Mason’s valuation report to Mr Rogers later that day.
2. On 3 November 2019, Mr Rogers sent an email to Ms Fleming stating:
“I have another inspection pencilled in for the 9th Nov with another Indian. All the people we are sending out info to appear to be slow moving might buy types. I would like if possible to now use the valuation to sell off. Supply the valuation to the genuine qualified buyers. I always like to use a valuation when the time is right as it demonstrates true market value. Not just a figure our vendor is hoping for! May be an idea to also put a price or price range.”
1. On 4 November 2019, Ms Afflick informed Ms Fleming that she had found people to step in as relief managers of the motel until a sale could be completed.
2. The deceased’s daughter, Ms Tanya Brooks, sent an email to Ms Fleming on 4 November 2019 asking “when [do] you anticipate the finalisation of dads estate”.
3. Ms Fleming replied:
“I intend to write to all beneficiaries of the estate this week to advise them exactly the estate is up to & when a distribution is likely.”
1. There is no evidence that any such update letter was sent to the beneficiaries during that week or, indeed, at any time prior to 31 January 2020. [26]
2. On 4 November 2019, Ms Fleming and Mr Rogers discussed the strategy for the sale of the motel, Mr MacLachlan’s offer of $2,200,000, and the valuation of $2,825,000. They agreed that Mr Rogers would provide a copy of Mr Mason’s valuation report to Mr MacLachlan and ask him to make his best offer. Mr Rogers advised Ms Fleming that Mr MacLachlan was able to move quickly and that there “would be no mucking around WIWO”.
3. On 6 November 2019, Mr Rogers advised Ms Fleming by email that:
“I have been talking to David MacLachlan this afternoon and I have been able to get a verbal offer for $2.5M with a settlement on or before the 20th of Dec.
1. On 7 November 2019, Mr Rogers advised Ms Fleming by email at 11:42 am that Mr MacLachlan had increased his offer to $2,550,000. Mr Rogers attached to his email a Heads of Agreement for the sale of the motel to Mr MacLachlan. Ms Fleming replied at 1:15pm that day:
“Thank you Russell. Very good work.
I have attached the Agreement signed by me & look forward to confirmation that you receive an identical Agreement signed by David.”
1. Mr MacLachlan signed the Heads of Agreement on 8 November 2019 and paid a deposit of $5,000. The Heads of Agreement recorded the purchase price of $2,550,000 and settlement date of 20 December 2019. The “Special Conditions” section of the Heads of Agreement provided:
“This offer is conditional upon;
1) Vendor will provide full details of any service agreement in place (e.g. referral groups, sign rental, utility agreements)
2) An exchange of contracts in the form acceptable to both parties as soon as possible
3) In the event that the contact [sic] is not exchanged all monies paid by the Purchaser shall be refunded
4) No formal legal relations are created between the parties upon the signing of this Heads of Agreement and the parties acknowledge and agree that legal relations will on [sic] be created upon signing and exchange of contracts for sale
5) The vendor agrees to allow the purchaser an exclusive period of 30 days from the date of this agreement to get contracts exchanged unconditionally”
1. Special conditions 2, 3, 4 and 5 were consistent with Resort Brokers’ standard form of Heads of Agreement which Ms Fleming had reviewed shortly after engaging Resort Brokers.
2. The plaintiffs tendered a valuation report of Mr Darren Austin, who estimated the market value of the motel property and business as a going concern as at 7 November 2019 as $2,950,000. Mr Austin’s report states that he arrived at this valuation using the capitalised net profit methodology, checked against a value said to be derived from a direct comparison of the room rate reflected in sales of other motel and resort properties.
3. Mr Austin had available to him the financial statements for the motel business for the 2019 financial year which, as I have mentioned above, recorded revenue of $592,822 and net profit of $122,141. After “add-backs”, Mr Austin reduced the expenses of the motel business from $472,853 to $303,980.29, resulting in an adjusted net operating profit of $286,019 – an increase of $163,878 from the net profit of $122,141 recorded in the financial statements for the 2019 financial year.
4. Most of Mr Austin’s “add-backs” related to wages, which Mr Austin reduced by more than half from $176,824 to $82,782, with corresponding reductions to superannuation. The report does not disclose any basis for characterising the wages that Mr Austin “added back” as wages payable to an owner. Mr Austin’s report expressly stated that he had not had the benefit of discussions with the operator, or the operator’s accountant, and that he had “had to accept to some degree adjustments made by the previous valuer and the selling broker in adjusting the figures to find the true trading position”. However, it is not clear how Mr Austin was able to accept, or form any view about, any specific “add-backs” made by Mr Mason. Mr Mason’s report did not itemise the “add-backs” totalling $114,129. Mr Austin’s report does not discuss which of the broker’s “add-backs” he accepted. A comparison between Mr Austin’s report and Mr Rogers’ “Add-backs Calculations Sheets” document discloses that the categories of costs added back by Mr Rogers and Mr Austin do not wholly align and, to the extent that they do align, the amounts added back by Mr Rogers differ from the amounts added back by Mr Austin, with the exception of three categories – hire purchase charges, legal fees and travelling expenses – which collectively account for approximately 5 per cent of the total sum added back by Mr Austin. In cross-examination, Mr Austin gave evidence that brokers and valuers did not necessarily agree on “add-backs”, and that brokers were probably more aggressive than valuers in “adding back” costs because they wanted to achieve a higher sale price. Mr Rogers’ “add-backs” were indeed more aggressive than Mr Mason’s “add-backs”. Mr Austin’s add-backs, whilst not quite as aggressive as those made by Mr Rogers, were also more aggressive than those made by Mr Mason. [27] As I have said, Mr Austin’s report does not disclose the reasons underpinning each of his “add-backs”.
5. For the purpose of the capitalised net profit methodology, Mr Austin applied a capitalisation rate of 9.75 per cent to his adjusted net operating profit of $286,019. For the purpose of the direct comparison methodology, Mr Austin applied a room rate of $110,000. Mr Austin described both the 9.75 per cent capitalisation rate and the $110,000 room rate as having been “gleaned from analysis of the known sales evidence at the time”.That “known sales evidence” comprised ten sales during the period from September 2017 to October 2019 in diverse locations throughout New South Wales, ranging from the north coast (Lismore, Coffs Harbour, and Newcastle), to inland locations (Bathurst, Mittagong, and Cooma), to the south coast (Wollongong, Jamberoo, Mollymook, and Batemans Bay). In cross-examination, Mr Austin acknowledged that the market for motels in Wollongong, Newcastle, Cooma and Bathurst is very different to the market in Batemans Bay where the motel property and business are located. These market differences were not acknowledged or addressed in Mr Austin’s report.
6. As Mr Austin acknowledged in cross-examination, his report does not explain how he arrived at a capitalisation rate of 9.75 per cent or a room rate of $110,000 based on those ten sales, which indicated yields of between 6.5 per cent and 16.7 per cent, and room rates of between $76,750 and $346,000. The two sales that indicated yields closest to the 9.75 per cent adopted by Mr Austin for the subject motel were: (1) a 43 room resort in Jamberoo with annual revenue of $825,000 and net operating profit of $405,825 that sold for $4,400,000 in September 2017, indicating a yield of 9.22 per cent and a room rate of $102,000; and (2) a 26 room motel in Batemans Bay with an annual revenue of $1,073,000 and net operating profit of $496,000 which sold for $4,814,000, indicating a yield of 10.3 per cent and a room rate of $185,000. The two sales that indicated room rates closest to the $110,000 adopted by Mr Austin for the subject motel were: (1) the 43 room resort in Jamberoo to which I have already referred, the sale price for which indicated a room rate of $102,000; and (2) a 34 room motel in Newcastle with an annual revenue of $735,000 and net operating profit of $402,000, which sold in December 2018 for $3,700,000, indicating a room rate of $109,000 and a yield of 10.9 per cent. Mr Austin described each of these three motels as superior to the subject motel. The report contains no information about how Mr Austin “gleaned” his yield of 9.75 per cent and his room rate of $110,000 for the subject motel from those three sales, or any of the other sales referred to in his report.
7. Mr Austin estimated the market value of the motel property and business at $2,950,000 based on his adjusted net profit figure of $286,019 and the capitalisation rate that he adopted of 9.75 per cent. That estimate carries no weight in the absence of any explanation of the reasons underpinning Mr Austin’s adjusted net profit figure of $286,019 and in the absence of any explanation of his reasons for adopting a yield rate of 9.75 per cent. Mr Austin’s evidence therefore does not provide a sufficient basis for the Court to make any finding on the balance of probabilities about the value of the motel property and business as a going concern as at 7 November 2019 (being the date of the Heads of Agreement), and as at 6 December 2019 (being the date on which contracts were exchanged). If objection had been taken to the admissibility of Mr Austin’s report, I would have rejected it on the basis that his opinions expressed therein were not supported by reasoning sufficient to demonstrate that the opinions are the product of the application of his specialised knowledge as a valuer to the observed and assumed facts and data referred to in his report. [28]
8. Even if Mr Austin’s opinions had been supported by reasons demonstrating a connection between the opinions and his specialised knowledge, there would have been a further reason why his report did not provide a sufficient basis for the Court to determine the value of the motel property and business as a going concern at the relevant times in November and December 2019. Mr Austin was not provided with any information about the sewerage and drainage problems at the motel which caused motel rooms to be flooded with sewage from time to time. [29] In cross-examination, Mr Austin said that prospective purchasers would certainly take that matter into account in deciding whether to make an offer for the motel and, if so, at what price. Mr Austin said that it was beyond his expertise to quantify the effect of that matter on the market value of the motel, without information about the cost of the work necessary to rectify the problem.
9. On 11 November 2019, Ms Fleming signed a letter from EFA replying to Cappello Rowe’s letter of 29 October 2019. In relation to the motel, the letter stated:
“1. The motel is currently being advertised on an ‘expressions of interest basis’, the period for potential purchasers to express interest is still open. The broker responsible for marketing the property is Russell Rogers of Resort Brokers (resortbrokers.com.au).
2. There has been considerable interest in the motel.”
1. In cross-examination, Ms Fleming agreed that she had endorsed the contents of the letter before signing it on behalf of EFA.
2. The letter endorsed and signed by Ms Fleming was misleading, in that it failed to mention that Ms Fleming had signed the Heads of Agreement for the sale of the motel to Mr MacLachlan for the price of $2,550,000. In cross-examination, Ms Fleming denied that she had intentionally concealed this information from the beneficiaries. She denied that she was concerned at this time about how she had handled the sale of the motel, and that she withheld information about the Heads of Agreement and the price because she wanted the sale to be completed before revealing it to the beneficiaries as a fait accompli. However, Ms Fleming did not offer any explanation for her failure to inform Cappello Rowe of the Heads of Agreement and sale price, both of which must have been fresh in her mind when she signed the 11 November 2019 letter, other than to point to the possibility that the letter might have been drafted prior to 7 November 2019. This possibility does not explain Ms Fleming’s failure to update the letter when she reviewed it, endorsed its contents, and signed it on 11 November 2019. I find that Ms Fleming did intentionally withhold information about the Heads of Agreement from Cappello Rowe because, as the cross-examiner put to her, she preferred not to disclose to the beneficiaries that she had entered into the Heads of Agreement which effectively precluded her from entertaining any other offer for a period of 30 days, during which Mr MacLachlan was at liberty to decide whether or not he would proceed to exchange contracts at a price of $2,550,000, which was less than the value of the motel property and business according to the inventory submitted by Ms Fleming with her application for probate.
3. On 13 November 2019, Mr Rogers forwarded to Ms Fleming the asbestos register that had been prepared for the motel, together with supporting photographs. The report identified certain asbestos items at the motel, all of which were coated and in good condition and were located were in inaccessible areas. Ms Fleming replied to Mr Rogers, stating: “I think it is a pretty good report really”.
4. On 26 November 2019, Boom Lawyers, the solicitors for Ms Turnbull, wrote to EFA requesting an update in relation to the motel:
“Our client enquires as to the progress and possible sale of the motel. Has any price been agreed upon? Has there been any exchange of Contracts?”
1. There is no evidence that EFA responded to that inquiry.
2. On 2 December 2019, Mr Rogers sent an email to Ms Fleming informing her that Mr MacLachlan was delaying the exchange of contracts for the sale of the motel:
“Just a quick email to confirm your instructions as David MacLachlan is now not doing what he inferred he would re fast exchange etc.
Also insisting on some sort of approval for the sign outside the property boundary!
I will now go back to my buyers to say this property looks like it may not proceed with our current buyer.
Ask them would they like to inspect and or look at a contract?
Look forward to your confirmation on the above.”
1. Ms Fleming replied:
“I suggest that you contact the other prospective purchasers & simply ask them if they are still interested in an inspection on the basis that exchange has not occurred yet.
I do not consider that we can provide them with a contract until next Monday (to allow the exclusion period to elapse)”
1. Mr Rogers responded:
“I will take your good advice.
Hopefully common sense will prevail & David will realise WIWO is with the sign as is, as we all agreed on the day of inspection.”
1. On 4 December 2019, Mr Rogers informed Ms Fleming that Mr MacLachlan had confirmed that he was definitely proceeding with the purchase of the motel property and business. Contracts were exchanged on 6 December 2019.
2. In her affidavit sworn on 4 August 2022, Ms Fleming deposed that the price of $2,550,000 paid by Mr MacLachlan appeared to her to be the best price available for the motel property and business in November and December 2019, and that the other parties who had expressed interest were discussing land value only with a view to demolishing the motel and redeveloping the land. Ms Fleming understood that the prices contemplated by those other parties were considerably lower than Mr MacLachlan’s offer of $2,550,000. Ms Fleming deposed that she considered that she was acting in the best interests of all beneficiaries by accepting Mr MacLachlan’s offer and exchanging contracts for the sale of the motel property and business for a total price of $2,550,000. In paragraph 75 of her affidavit sworn on 4 August 2022, Ms Fleming deposed that the factors that she considered in deciding to exchange contracts at that price on 6 December 2019 included the following:
“75.1 The property had gone to market and the market had indicated what the value of the property was at the time of the sale;
75.2 Mr Rogers was a reputable, qualified, experienced and competent agent to sell the Motel Property and Motel Business;
75.3 Mr Rogers had undertaken appropriate efforts to market and sell the Motel Property and Motel Business;
75.4 Mr Rogers recommended that I accept the sale price for the Motel Property and Motel Business of $2,500,000 in total. I relied on Mr Rogers’ skill and experience as an agent to sell the Motel Property and Motel Business and advise on the market price;
75.5 Mr Rogers was appointed to act on commission. I believed Mr Rogers acted to maximise the sale price achieved of the Motel Property and Motel Business at the time;
75.6 a motel is a reasonably specialised property and business to purchase, meaning that there are not many willing and able purchasers available. There were several other similar businesses for sale in the Bateman’s Bay area at the time;
75.7 the regional area of Bateman’s Bay where the Motel Property and Motel Business are located means there are not many willing and able purchasers available;
75.8 the Motel Property and Motel Business were advertised in spring, as the tourist business in Bateman’s Bay was leading up to its peak season of summer. I considered that this was a favourable time to sell, when a beachside Motel would be most attractive to a potential purchaser;
75.9 the Opteon valuation;
…
75.11 the issues with the Motel Property and Motel Business … which were not taken into account in the Opteon valuation;
75.12 my role to secure the assets of the Estate, sell the assets as appropriate and ultimately distribute the proceeds of sale to the beneficiaries pursuant to the Will;
75.13 I considered the best interests of the beneficiaries;
75.14 I was mindful to arrange the prompt sale of the Motel Property and Motel Business however I was not an anxious seller;
75.15 the manager and weekend manager of the Motel Business had informed me of their intentions to resign, effective in mid-December 2019. I considered that if the Motel Business was not sold shortly, new managers were required and it would not likely perform as well financially with newly employed managers during the peak season;”
1. Paragraph 75 of Ms Fleming’s affidavit is not based on any contemporaneous note made by Ms Fleming of the matters that she took into account in deciding to exchange contracts to sell the motel property and business for $2,550,000. Ms Fleming did not make any such note at the time.
2. In relation to paragraphs 75.1 to 75.5 of Ms Fleming’s affidavit, the plaintiffs did not adduce any evidence impugning Mr Rogers’ reputation, qualifications, experience and competence to act as the selling agent for the motel property and business, as I have stated earlier in these reasons. Nor did the plaintiffs adduce any evidence that calls into question Mr Rogers’ approach to the marketing of the motel property and business for sale in the period up to the date of execution of the Heads of Agreement on 7 November 2019. It is true, as Ms Fleming emphasised in cross-examination, that the offer of $2,550,000 from Mr MacLachlan was the only offer on the table at the time that Ms Fleming decided to enter into the Heads of Agreement on 7 November 2019. I infer from special condition 5 of the Heads of Agreement that the motel property and business ceased being advertised for sale, and ceased being marketed to other prospective purchasers, after that date. As the plaintiffs’ submissions emphasised, the active marketing campaign lasted only 20 days, from the publication of the information memorandum on 18 October 2019 to the execution of the Heads of Agreement on 7 November 2019.
3. I reject Ms Fleming’s evidence in paragraph 75.4 of her affidavit. There is no contemporaneous evidence of any express recommendation from Mr Rogers to accept Mr MacLachlan’s offer of $2,550,000. In cross-examination, it emerged that Ms Fleming merely assumed that Mr Rogers had made such a recommendation. Ms Fleming said that “it must be true” that Mr Rogers had recommended that she accept $2,550,000 “because I accepted the price”. [30] The contemporaneous documentary evidence shows that Ms Fleming required Mr Rogers to market the motel property and business for sale with a view to a sale being completed by 20 December 2019. Mr Rogers’ strategy included targeting prospective purchasers on Resort Brokers’ database, and Mr MacLachlan was one such prospective purchaser with whom Mr Rogers had previous dealings. Mr Rogers formed the view from about 25 October 2019 that Mr MacLachlan was a genuine buyer who would not “muck around”, and no other “players” were emerging from the “slow moving might buy types” who were expressing some interest in the motel but who Mr Rogers assessed as being “likely to slow down the sale & drag it on to the new year”. There is no evidence that Ms Fleming considered relaxing her requirement that a sale be completed by 20 December 2019, even after 4 November 2019 when Ms Afflick identified relief managers to manage the motel pending completion of the sale. It was in the context of that time constraint that Mr Rogers deployed the Opteon valuation to drive up Mr MacLachlan’s offer from $2,200,000 to $2,550,000 between 3 and 7 November 2019, notwithstanding the absence of any offer from any other prospective purchaser at that time. [31] On the basis of that contemporaneous evidence, I find that any recommendation made by Mr Rogers to Ms Fleming in relation to Mr MacLachlan’s $2,550,000 offer did not rise above advice that this was the best offer he had been able to extract from the only bidder at the time, who would commit to settlement by 20 December 2019, and who Mr Rogers believed would not “muck around”. For completeness, I note that I would not have been inclined to accept Ms Fleming’s evidence that she relied on Mr Rogers to advise in relation to market price, in any event. As I have recorded earlier in these reasons, Ms Fleming gave evidence in cross-examination dismissing Mr Rogers’ opinion about the estimated selling price of the motel set out in the agency agreement. [32]
4. I am not satisfied on the balance of probabilities that Ms Fleming held the views set out in paragraphs 75.6 and 75.7 of her affidavit when she executed the Heads of Agreement on 7 November 2019, or when she exchanged contracts on 6 December 2019. Ms Fleming gave inconsistent evidence in cross-examination about her state of mind at those times. Before being directed specifically to paragraphs 75.6 and 75.7 of her affidavit in cross-examination, Ms Fleming said that she “had no idea whether there were many willing and able purchasers” for the motel. Upon being shown paragraphs 75.6 and 75.7, Ms Fleming changed her evidence, saying that she thought there were not many willing and able purchasers because there had been several businesses similar to the motel advertised for sale for long periods of time in the Batemans Bay area at the time. Ms Fleming maintained that she had personal knowledge of such businesses, although she did not know the terms and conditions on which they were being advertised for sale. Paragraphs 75.6 and 75.7 of Ms Fleming’s affidavit are contrary to Mr Mason’s valuation report, on which she also claims to have relied in paragraph 75.9 of her affidavit. Mr Mason’s report stated that the market was buoyant with increasing demand. Ms Fleming did not ask Mr Mason for clarification about this, despite the contrary opinion that she claims to have held.
5. The first part of paragraph 75.8 of Ms Fleming’s affidavit misstates the true position. As I have explained above, the true position is that the motel had been advertised for only 20 days, commencing from the middle of spring.
6. Ms Fleming claims in paragraph 75.9 of her affidavit to have had regard to Mr Mason’s valuation when deciding to exchange contracts for the sale of the motel property and business for $2,550,000 – almost $300,000 less than the market value according to Mr Mason as at 22 February 2019. It became clear in cross-examination that Ms Fleming contended that she had concerns that Mr Mason’s report overstated the value of the motel property and business because it did not take into account issues and potential issues referred to in paragraph 75.11 of Ms Fleming’s affidavit. Ms Fleming claimed in cross-examination that she knew that those issues or potential issues would adversely affect the value of the motel property and business. Ms Fleming sought no advice from Mr Mason about whether or to what extent his opinion about the value would be affected by those issues or potential issues, prior to executing the Heads of Agreement and exchanging contracts. Nor did Ms Fleming request an updated valuation report from Opteon. The valuation report dated 10 April 2019 was no longer current by November 2019.
7. Ms Fleming gave inconsistent evidence in cross-examination about when she says her concerns about Mr Mason’s valuation developed. When defending her conduct in authorising Mr Rogers to show the Opteon report to Mr MacLachlan in early November 2019, Ms Fleming gave evidence that she did not have any “misgivings” about the report at that time. When it was later put to Ms Fleming that, until that time, she had regarded Mr Mason’s valuation as indicating the value of the motel property and business for the purpose of sale, Ms Fleming gave evidence that she had held her claimed concerns from 10 April 2019 when the valuation report was issued right up until the motel was marketed for sale commencing in October 2019.
8. The “issues” referred to in paragraph 75.11 of Ms Fleming’s affidavit are the following “repairs, potential works and/or potential issues” for the motel property and business that Ms Fleming described in paragraph 38 of that same affidavit, namely:
1. remedial repairs to stairs and door thresholds required by Eurobodalla Shire Council;
2. the sewage problems described at [54]-[56] above;
3. the asbestos register prepared by Mr Phil Summerfield on the instructions of Mr Rogers in about November 2019;
4. a potential need to demolish the motel’s barbeque area, associated gardens, a sign, and a fence, which Ms Fleming deposed had been erected on land owned by the Eurobodalla Shire Council as “can be seen on survey maps”;
5. subsidence;
6. the need to replace “commercial laundry equipment” at the motel which had ceased to operate in about November 2019, and which Ms Fleming chose not to replace pending sale because she considered that it was more economical to outsource the motel’s laundry on a short-term basis; and
7. painting works that Ms Fleming approved to prepare the motel for sale.
1. With the exception of the sewage problems, the issues or potential issues referred to in paragraph 75.11 of Ms Fleming’s affidavit were either non-existent by November 2019, or did not affect or potentially affect the value of the motel, for the following reasons.
2. Contemporaneous documentary evidence records that the Eurobodalla Shire Council had inspected the motel property on or about 27 February 2019 and found that the remedial works had been satisfactorily completed. As Ms Fleming acknowledged in cross-examination, she was aware in February 2019 that the work had been completed. There is no evidence of any outstanding or pending remedial works to meet Council requirements as at 6 December 2019.
3. The asbestos register prepared by Mr Summerfield did not identify anything that required attention, as Ms Fleming acknowledged in cross-examination. Ms Fleming described asbestos as a potential issue only in the sense that it might, hypothetically, become an issue requiring attention in the future. [33]
4. As referred to at [117] above, Ms Fleming did not obtain or have available to her any survey plans for the motel. The evidence does not establish that there was any encroachment issue, or even a potential issue.
5. The evidence referred to at [57]-[61] above does not establish that there was any ongoing issue with subsidence at the motel property.
6. Ms Fleming’s cross-examination revealed that the alleged “issue” relating to replacement commercial laundry equipment involved nothing more than the replacement of one dryer. Ms Fleming accepted in cross-examination that the need to replace the dryer did not affect the value of the motel, or her consideration of the price for which the motel should be sold.
7. Ms Fleming conceded in cross-examination that the painting, which had been carried out prior to the sale of the motel in order to prepare it for sale, did not affect the value of the motel.
8. With the exception of the sewage issues, I therefore reject Ms Fleming’s evidence that she considered the alleged issues or potential issues referred to in paragraph 75.11 of her affidavit in deciding to exchange contracts for the sale of the motel property and business for the price of $2,550,000 on 6 December 2019.
9. Having regard to the inconsistencies in Ms Fleming’s evidence referred to at [167] above, I am not satisfied on the balance of probabilities that, before executing the Heads of Agreement and exchanging contracts, Ms Fleming turned her mind to the question of whether and to what extent the sewage problems affected the value of the motel property and business. If she had turned her mind to that question, the prudent course would have been to ask Opteon to update Mr Mason’s valuation report, making such allowance as he considered appropriate for the sewage problems and for any change in the relevant market conditions since the 22 February 2019 valuation date. According to Mr Austin’s evidence, that would have required Ms Fleming to obtain a quotation for the works required to rectify the sewage problems and furnish that quotation to Mr Mason for consideration. [34] Ms Fleming did not take that course.
10. I reject Ms Fleming’s evidence in paragraph 75.14 of her affidavit that she was not an anxious seller. On the basis of the evidence referred to at [95]-[107] above, I find that Ms Fleming was anxious to complete the sale of the motel property and business before Christmas due to the resignations of Ms Afflick and Ms Bell. That allowed approximately two months after the motel was first advertised for sale on 18 October 2019 to identify a purchaser, exchange contracts for sale, and complete the contract. That is a very short period of time compared to the three to six month selling period advised by Mr Mason, which I understand to refer to the period that he considered was a realistic time frame for the exchange of contracts. [35] It is plain from Ms Fleming’s evidence in cross-examination that, when Ms Afflick informed her on 4 November 2019 that she had identified replacement managers for the motel business, Ms Fleming did not pause to consider whether that alleviated the need to sell the motel in time for completion to occur prior to 20 December 2019. Ms Fleming gave the following evidence:
“Q. The only idea in your mind was to get it sold before the end of the year.
A. The only idea in my mind was to get it sold before the managers who knew the property well, and knew how to run it, disappeared in a puff of smoke.
Q. Before you had entered into the Heads of Agreement, rather than you knowing there had been a puff of smoke, you knew that there were people in position to carry on in the management of the motel. Yes?
A. I knew that there were people who were not as experienced in running a motel, who could step in so that the property could be sold as a going concern.
Q. Did you interview them?
A. No, I didn't interview them. I was pleased that Sonia had found somebody else because I had been trying to find other people.
Q. How do you know if they were less experienced than Sonia?
A. Because they had worked at the motel previously.
Q. Sonia elected to appoint people that she knew from prior experience, knew how to run the motel.
A. People who would step in under her guidance, initially, and then under the guidance of the purchaser.
Q. Well let's just be straight about it, ma'am. You had no real reservations about the new managers coming in.
A. I didn't care, so long as there were managers there on the ground when the settlement took place, so that the property could be sold as a going concern.
Q. The issue of management did not pose, in this case, any time pressure when it came to selling the motel, did they? Or did it?
A. The managers leaving did create a time pressure.
Q. It was solved before you sold it.
A. I beg your pardon?
Q. The issue had been solved before you entered into the heads of agreement.
A. It had been solved so that it could be sold as a going concern, yes.
Q. You didn't have to enter into the heads of agreement on 7 November, did you, because of management issues?
A. I can't remember the time frame when the – when the replacement managers were appointed.”
1. Ms Fleming’s own contemporaneous file note identifies that Ms Afflick advised her on 4 November 2019 that she had found relief managers. On the basis of that file note, and Ms Fleming’s evidence in cross-examination set out above, I reject Ms Fleming’s evidence in paragraph 75.15 of her affidavit. At the time when Ms Fleming executed the Heads of Agreement on 7 November 2019, and when she exchanged contracts for the sale of the motel property and business on 6 December 2019, Ms Afflick – the experienced manager – had sourced relief managers for the motel, and Ms Fleming had made no inquiries about those relief managers that would have enabled her to form the opinion that their appointment was likely to adversely affect the financial performance of the motel during the forthcoming peak season.
2. EFA’s office was closed between 20 December 2019 and 6 January 2020. During that period, the south coast of New South Wales was affected by bushfires, which destroyed fences and sheds on the Woodlands property, and killed and injured livestock. On 3 January 2020, Ms Turnbull wrote to Ms Fleming in the following terms:
“Its been over twelve month’s and due to your want of total control over my fathers estate without any communication with and lack of compassion for his family, we did not have the opportunity to go and try and save our family home in the bushfire but also it’s contents including family heirlooms, photo albums, my grandfather’s paintings ect [sic] when are you going to grow a heart and let us all go in and sort through OUR FAMILY possessions”
1. The livestock that were destroyed and injured in the bushfires had been purchased by Ms Afflick at the clearing sale on 6 July 2019. Ms Afflick had not moved the livestock to her neighbouring property at 50 Dunns Creek Road prior to the bushfires. At the time Ms Fleming had accepted Ms Turnbull’s offer to purchase the Woodlands property in early October 2019, Ms Afflick had indicated to Ms Fleming that she would remove the livestock and the stockyards from the Woodlands property prior to settlement of the sale of that property to Ms Turnbull. [36]
2. After the bushfires, Mr and Ms Afflick destroyed the livestock that had been badly injured, and Ms Fleming arranged for the livestock to be buried on the Woodlands property. According to Ms Fleming’s evidence, Ms Afflick transferred the stockyards from the Woodlands property to her neighbouring property at 50 Dunns Creek Road in early January 2020 because there was no further use for them at the Woodlands property, and Ms Afflick had a use for them on her own property.
3. On 31 January 2020, EFA wrote to beneficiaries advising that the sale of the motel had been completed on 21 January 2020, and referring also to the sale of the Moruya and Woodlands properties. This was the first time that any beneficiary had been advised that the motel had been sold. It will be recalled that, despite receiving requests for updates throughout November 2019, Ms Fleming had not informed the beneficiaries that she had entered into a Heads of Agreement to sell the motel for $2,550,000, or that she had exchanged contracts for sale at that price. Ms Fleming’s only communication with the beneficiaries in relation to the sale of the motel since early November 2019 had been the misleading letter to Ms Groat’s solicitors on 11 November 2019. [37] EFA’s letter of 31 January 2020 advised beneficiaries about the fact of the sale, which had settled on 20 January 2020, without mentioning the sale price. Ms Fleming denied that the sale price was omitted from the 31 January 2020 letter because she was conscious that the beneficiaries might be disappointed about the sale price. I reject that denial. Ms Fleming offered no other explanation for omitting the sale price from her 31 January 2020 letter, the stated purpose of which was to update the beneficiaries in relation to the administration of the deceased’s estate. It is highly probable that Ms Fleming thought that the beneficiaries would be disappointed by the sale price being less than the valuation in her inventory of property, and thought that they might complain about that discrepancy. I find that Ms Fleming omitted the motel sale price from her 31 January 2020 letter for those reasons.
4. Ms Fleming’s consciousness of the beneficiaries’ likely reaction to the sale price is revealed by the somewhat defensive terms in which she later disclosed the sale price to them on 11 March 2020. In a letter sent to each of Ms Turnbull, Ms Groat and Mr Books on that date, EFA wrote:
“The Hanging Rock Family Motel was sold on 21 January 2020 for the total sum of $2,550,000.00, we note that the valuation for Probate was $2,825,000.00 but it became evident that there were ongoing problems with the infrastructure of the motel which meant that the sale price was considered appropriate. The settlement funds are currently being held in a controlled money account associated with our Trust Account. At this stage we are unable to effect an interim distribution of these funds as there is an outstanding personal injury claim which the insurance company is failing to acknowledge liability at this time. Once we have reached a resolution in this regard, we will attend on you further in relation to the possibility of an interim distribution.”
1. Ms Turnbull’s solicitors, Boom Lawyers, replied on 19 March 2020. They sent a letter to EFA expressing concern that any “ongoing problems with the infrastructure” of the motel referred to in EFA’s 11 March 2020 letter which had impacted adversely on the sale price were due to a failure by Ms Fleming to maintain the motel capital improvements since the death of the deceased.
2. In the same letter, Boom Lawyers raised a complaint by Ms Turnbull that the stockyards had been removed from the Woodlands property at some time after her inspection of the property on 1 October 2019. According to Ms Fleming’s evidence, Ms Turnbull had asked her at a meeting on 27 February 2020 why the stockyards had been moved to Ms Afflick’s property. Ms Fleming told Ms Turnbull that she understood that the stockyards belonged to Ms Afflick and her husband, but that she would look into the matter further. Ms Turnbull disputes that Ms Fleming told her on 27 February 2020 that she understood that Mr and Ms Afflick owned the stockyards. According to Ms Turnbull, Ms Fleming simply said that she would look into the matter. Nothing turns on this dispute about the precise terms of the conversation between Ms Fleming and Ms Turnbull on 27 February 2020. Boom Lawyers’ letter to EFA dated 19 March 2020 stated:
“Our client submits that and did raise with the executrix orally that the steel cattle yards should be returned. The submissions in relation to the steel cattle yard are as follows:
i) The steel cattle yards were purchased by the late Thomas John Brooks from his own funds. Indeed, a number of adults in conversation with the late Thomas John Brooks were informed by the late Thomas John Brooks as to his spruiking and boasting regarding the purchase of those steel cattle years and in particular a low price for which he was able to purchase the same. Indeed, the late Thomas John Brooks did inform Robert Turnbull that he did purchase those steel cattle yeards and was able to purchase the same at a lesser price than what Robert Turnbull had previously indicated to the late Thomas John Brooks he could purchase cattle yards.
ii) The steel cattle yards were a fixture to the property at 35 Dunns Creek Road when the agreement to purchase the property had been made back in October 2019.
Thus, in accordance with all other fixtures to the land (including the main house) the steel cattle yards should be treated as a fixture and thus included in the conveyancing transaction as a fixture and forming part of the overall conveyancing transaction.
It is again requested the steel cattle yards be returned as soon as possible.
Indeed, our client inspected the property on 1st October 2019 and the steel cattle yards were a fixture to the property as at that date and when negotiations were concluded in relation to the purchase price.”
1. Contracts for the sale of the Woodlands property to Ms Turnbull had not been exchanged at this stage. Ms Fleming contemplated that a Deed of Family Arrangement would be entered into in order to allow Ms Turnbull to deduct the purchase price or part thereof from the proceeds of her distribution from the deceased’s estate in due course.
2. EFA responded to Ms Turnbull’s solicitors by letter dated 27 March 2020. In relation to the motel, EFA’s letter stated:
“We note that your comments in relation to your client’s notification of the sale of the motel. We advised your office of the relative settlement by way of letter dated 31 January 2020 (enclosed for your reference) we note that this letter was successfully delivered by email (please find enclosed email delivery receipt). Further the infrastructure issues affecting the property was both the presence of asbestos in several rooms and the location of the internal drainage under some rooms to a septic tank which requires regular maintenance. Neither of these issues are attributable to the maintenance of the property, but rather decisions made during the initial construction process. Further we advise that the Resident Manager and On-site manager had resigned prior to the sale. Given the experience of these individuals and crucial nature of their positions, the probability existed that the Estate may have faced further liabilities resulting out of untrained staff operating the motel during the most busy period of the year.”
1. In relation to the stockyards, EFA’s letter stated:
“With respect to the steel cattle yards we note that they have incorrectly been identified as fixtures. Transportable steel cattle yards are erected on their own relative weight, as such they are more appropriately classified as chattels. We are instructed that the transportable steel yards are not the property of the Estate, as such chattels not the property of the vendor could not possibly form part of a purported agreement to sell the property.”
1. According to Ms Fleming’s affidavit sworn on 4 August 2022, the deceased’s accountant advised her in about May 2020 that she had no record and no recollection of the deceased having purchased stockyards for the Woodlands property. At about the same time, Ms Afflick, told Ms Fleming that she had purchased the stockyards approximately ten years earlier, and that she was willing to provide a statutory declaration to that effect.
2. A statutory declaration was made by Ms Afflick’s husband, Mr Dean Afflick, on 3 July 2020. Mr Afflick declared that:
“… the steel cattle yards and ramp located on Thomas John Brooks’ property at 35 Dunns Creek Road, Woodlands at the time of his passing on December 26th 2018 were payed [sic] for and owned by myself.”
1. Mr Afflick gave a more expansive account of his acquisition of the stockyards in his affidavit sworn on 23 September 2022, and in cross-examination. Mr Afflick gave evidence that Ms Afflick had purchased the stockyards from a store in Braidwood on behalf of the deceased in about 2005. Mr Afflick had assisted the deceased to collect the stockyards from the store in Braidwood where he had purchased them, and to assemble them on the Woodlands property where they were used for both the deceased’s livestock and Mr and Ms Afflick’s livestock. Some time later – Mr Afflick can no longer recall whether it was months or a couple of years after the stockyards were purchased – Mr Afflick told the deceased that he needed some mobile stockyards to contain the livestock on his own property and to use in his business which involved doing work on other small farms. The deceased and Mr Afflick agreed that Mr Afflick would purchase the stockyards from the deceased, and Mr Afflick paid the agreed price to the deceased in cash. Mr Afflick can no longer recall the amount of the agreed price. Mr Afflick then moved half of the stockyards to the property that he owns with Ms Afflick, and left the other half on the Woodlands property because some of Mr Afflick’s sheep were grazing on the Woodlands property. Mr Afflick deposed that he had told Ms Fleming prior to the clearing sale that he owned the stockyards. In cross-examination, Mr Afflick maintained that he had paid the deceased for all of the stockyards, including the ones that he had left on the Woodlands property.
2. Ms Fleming gave evidence that, in July 2020, she was satisfied that the stockyards were owned by Mr and Ms Afflick, having considered the questions raised by Ms Turnbull through her solicitors, the information provided by Ms Afflick, the statutory declaration made by Mr Afflick, and Ms Fleming’s view that the stockyards were not fixtures.
3. As I understand Ms Fleming’s evidence, contracts for the sale of the Woodlands property to Ms Turnbull were exchanged in January or February 2021. The purchase price was reduced to $1,200,000. The stockyards were not included as a fixture in the contract for sale. Mr Turnbull gave evidence attributing the reduction in the sale price to $1,200,000 to the bushfire damage to the property. Neither party suggested that there was any connection between the exclusion of the stockyards and the reduction in the price.
4. Ms Groat gave evidence that, after the motel property and business were purchased by Mr MacLachlan in January 2020, the motel was refurbished and rebranded and offered for sale in April 2021 at a price of $4,700,000. It was ultimately sold as a going concern in about March 2022 for a price of $4,550,000. Neither party submitted that this price achieved for the refurbished and rebranded motel in March 2022 was indicative of the market value of the motel in November or December 2019 in the condition that the motel was then in.
5. It is plain from the substance and tone of the affidavits sworn or affirmed by the plaintiffs in these proceedings, and from the tone of the correspondence that Ms Turnbull and Ms Groat have sent to Ms Fleming, either directly or through their respective solicitors, that the plaintiffs feel aggrieved by certain alleged conduct of Ms Afflick, and by their perception that Ms Fleming has conducted herself as administrator and executor in a manner that has favoured Ms Afflick over the other beneficiaries. In particular, several of the plaintiffs gave evidence that they observed, or were informed by their siblings, that Ms Afflick was able to access the deceased’s residence on the Woodlands property, and to come and go from that property as she pleased, whereas the plaintiffs were denied access to the residence other than for the purpose of inspecting the deceased’s personal items under supervision of Ms Fleming or one of her employed solicitors in order to nominate any personal items that they wished to retain. Ms Groat gave evidence that Ms Fleming did not interact with her or the other plaintiffs, and appeared disinterested when introduced to Ms Groat, on the day of the clearing sale on the Woodlands property. By contrast, Ms Groat observed Ms Fleming to be acting in a friendly manner towards Ms Afflick and members of Ms Afflick’s immediate family. Ms Groat deposed that she and her siblings felt very disheartened by this. Several plaintiffs gave evidence to the effect that Ms Afflick had taken sole possession of the deceased’s ashes, had buried them in a location selected by Ms Afflick without the consent of the plaintiffs, and without even notifying the plaintiffs. It is not necessary for me to make findings about these allegations, which were not put to Ms Afflick or Ms Fleming in cross-examination. As I have explained earlier in these reasons, the plaintiffs’ claims in these proceedings require them to prove one of the three alleged instances of wilful default, including that Ms Fleming has failed to realise or obtain for the estate value that would have been obtained but for the wilful default. [38]
6. It will be recalled that the three alleged instances of wilful default are:
1. the motel claim, concerning the allegations that Ms Fleming acted imprudently in the sale of the motel property and business in January 2020, including by selling in a compressed time frame and without obtaining an up to date valuation report, resulting in a sale at a price that the plaintiffs allege was below the market value by approximately $400,000;
2. the grain claim, concerning the allegations that Ms Fleming acted imprudently in delegating to Elders the sale of the grain stored in the silos on the Woodlands property immediately prior to the clearing sale in July 2019, resulting in the grain being sold at a price that the plaintiffs allege was almost $10,000 less than its market value; and
3. the stockyards claim, concerning the allegations that Ms Fleming failed to recover the stockyards that had been at the Woodlands property, and which were removed and relocated to Mr and Ms Afflick’s property.
1. For the reasons explained immediately below, the plaintiffs have failed to establish any of those alleged wilful defaults. It follows that the proceedings must be dismissed.
The motel claim
Outline of the parties’ submissions
1. It was submitted on behalf of the plaintiffs that Ms Fleming failed to discharge her duties as executor in respect of the sale of the motel property and business with the prudence and diligence that is required of a solicitor acting as executor in all the circumstances of this case, by:
1. failing to follow Mr Mason’s recommendations to enhance the value of the motel by increasing the tariff rates;
2. requiring the selling agent, Mr Rogers, to market the motel for sale with a plan to have the sale settled by 20 December 2019, after inexplicably delaying the appointment of a selling agent and the commencement of the marketing campaign for four months after the grant of probate; and
3. selling the motel only 20 days after first advertising it for sale and at a price that was almost $300,000 less than its value estimated by Mr Mason and approximately $500,000 less than the price range estimated by Mr Rogers in circumstances where Ms Fleming had not obtained an updated valuation report, after inappropriately binding herself to that sale at that price by the terms of the Heads of Agreement before contracts had been exchanged, and without even contacting the beneficiaries to inquire whether they might be interested in purchasing the motel property and business for more than that price.
1. The plaintiffs submitted that this was compounded by Ms Fleming’s failure to release Mr Rogers from her requirement that a sale be settled by 20 December 2019 after 4 November 2019 when Ms Afflick identified relief managers to step in and manage the motel pending completion of the sale. It was submitted that this would have allowed more time for Mr Rogers to endeavour to generate further interest in the motel from genuine buyers in the market, in circumstances where Mr Mason had previously advised that the selling period for the motel would likely be between three and sixth months, and Mr Rogers’ firm had negotiated an exclusive agency for a period of three months. It was submitted that Ms Fleming ignored Mr Mason’s advice about the selling period and ultimately accepted Mr MacLachlan’s offer on 7 November 2019 simply because that was the only possible way of having a sale completed by 20 December 2019. It was submitted that, in accepting that offer and entering into the Heads of Agreement, Ms Fleming imprudently closed off the possibility of entertaining any better offer that might be received for a period of up to 30 days thereafter, during which period Mr MacLachlan was under no obligation to exchange contracts.
2. It was submitted that the Court should not accept Ms Fleming’s evidence that she had concerns about the veracity of Mr Mason’s valuation at the time that she made the decision to sell to Mr MacLachlan for $2,550,000, and that the concerns that she now claims to have had were merely an “after the fact rationalisation” of that decision. It was submitted that Ms Fleming did not, in fact, have any legitimate reason to be concerned about the veracity of Mr Mason’s valuation when she entered into the Heads of Agreement and when she later exchanged contracts for the sale of the motel for $2,550,000. Alternatively, it was submitted that if Ms Fleming had held those concerns (which the plaintiffs deny), the prudent response to those concerns would have been to obtain an updated valuation report.
3. The plaintiffs placed particular emphasis on Ms Fleming’s failure to inquire about whether the beneficiaries were interested in bidding for the motel, in circumstances where Ms Groat’s solicitors had specifically asked Ms Fleming in their letter of 29 October 2019 whether beneficiaries would be given the opportunity to bid on the motel property and business. [39] It was submitted that Ms Fleming’s failure to reply to that letter until 11 November 2019, and the misleading substance of that response, demonstrated that Ms Fleming had failed to act diligently in inviting competition for the motel property and business. [40] Counsel for the plaintiffs submitted that the potential for the selling price to be increased by reason of interest amongst the beneficiaries is demonstrated by the sale of the Woodlands property to Ms Turnbull for more than the valuation after Ms Fleming elicited competing bids for that property from Ms Afflick and Ms Turnbull.
4. The plaintiffs further submitted that Ms Fleming’s conduct in relation to the motel, considered as a whole, displayed such a want of prudence as to constitute bad faith, and that her belated and misleading response on 11 November 2019 to Ms Groat’s solicitors’ inquiry made on 29 October 2019 demonstrates that bad faith. [41]
5. The plaintiffs submitted that Ms Fleming’s failure to act with the requisite degree of prudence and diligence had resulted in a failure to obtain for the benefit of the estate the full value of the motel property and business. The plaintiffs relied on Mr Austin’s report as evidencing that the value at the relevant time was $2,950,000, and that the value lost to the estate by reason of Ms Fleming’s default was therefore $400,000.
6. It was submitted on behalf of Ms Fleming that she was personally engaged in ensuring that the motel was advertised publicly and that it was actively marketed to a wide audience, including by reviewing and approving Mr Rogers’ information memorandum, by approving the placement of advertisements and by providing Mr Rogers with the contact details of persons known to her as potential purchasers of the motel. It was further submitted that Mr Rogers, as Ms Fleming’s agent, did take appropriate steps to market the motel, including emailing 75 prospective buyers when the motel was first listed for sale. Senior counsel for Ms Fleming submitted that the plaintiffs’ contention that Ms Fleming’s efforts to sell the motel property and business were inappropriately focussed on a single prospective purchaser, being Mr MacLachlan, is incorrect.
7. Senior counsel for Ms Fleming emphasised that there was no point during the email correspondence between Mr Rogers and Ms Fleming during the marketing campaign in which Mr Rogers indicated that he needed more time to sell the motel, or that there was a prospect of achieving a better price if he had more time. It was submitted that any suggestion that the motel might have been sold at a price greater than the $2,550,000 paid by Mr MacLachlan is mere speculation. It was further submitted that not accepting Mr MacLachlan’s offer on 7 November 2019 would have carried the risk of losing Mr MacLachlan as a potential purchaser and not receiving a better offer or, indeed, any other offer after a longer marketing campaign.
8. It was submitted on behalf of Ms Fleming that she acted prudently and diligently in selling the motel property and business, informed by Mr Mason’s valuation but also taking into account the following matters in deciding to accept Mr MacLachlan’s offer of $2,550,000:
1. the recommendation of Mr Rogers as a reputable, qualified and experienced selling agent;
2. that the motel had gone to market and no comparable offers had been made;
3. that the motel was being advertised for sale at the most optimum time to sell such a property and business;
4. the specialised nature of the asset;
5. structural and titling issues associated with the motel that Mr Mason’s valuation had not taken into account;
6. the imminent departure of two managers of the motel; and
7. Ms Fleming’s obligation to realise the assets of the estate in a timely manner, referring to the prima facie expectation that executors should get in the assets, pay the debts, administer the estate and distribute the funds to beneficiaries within one year of the testator’s death, and to correspondence received from beneficiaries from about February 2019 onwards inquiring as to the progress of the administration of the estate.
1. It was submitted that prudence did not require Ms Fleming to obtain an updated valuation because a valuation is not “bankable” and the decision facing Ms Fleming was driven by the reality that Mr MacLachlan was the only prospective purchaser to have made any offer by 7 November 2019, and that his best offer was $2,550,000. Irrespective of the value that might be ascribed to the motel in any updated valuation report, obtaining an updated report would not have changed that reality, and would not have changed the nature of the decision to be made by Ms Fleming in deciding whether to accept the $2,550,000 offer or hold out for a better offer with the risks that this entailed. However, senior counsel for Ms Fleming accepted that it would have been prudent for Ms Fleming to obtain an updated valuation report in order to make a fully informed decision about whether to market the motel for a period of up to six months as Mr Mason had suggested in an attempt to elicit a better offer, or whether to accept the best offer of $2,550,000 following a marketing campaign of only 20 days.
2. In relation to the duration of the marketing campaign, it was submitted on behalf of Ms Fleming that she had genuine concerns about the availability of managers for the motel, without which the motel would have to be closed and could not be sold as a going concern, which Mr Austin had identified as the highest and best value of the land. It was submitted that the replacement managers that Ms Afflick identified on 4 November 2019 were relief managers only, who were able to step in on an interim basis until the sale of the motel was completed. [42] Thus, it was submitted that the appointment of those relief managers did not allay Ms Fleming’s concerns that the motel might be without managers if the sale process was extended for any material period of time beyond Christmas 2019.
3. It was submitted that both Mr Mason’s valuation and Mr Austin’s valuation were flawed because they did not take into account the sewerage problems at the motel, in addition to the other issues and potential issues identified by Ms Fleming in her evidence. [43] It was submitted that the evidence before the Court simply does not establish how those matters might have impacted on the value of the motel property and business. In addition, it was submitted that Mr Austin’s valuation evidence was flawed because there was no basis for the wages “add-back” calculated by Mr Austin in arriving at the adjusted net profit figure on which his valuation opinion was based. For those reasons, it was submitted that the plaintiffs have failed to establish that Ms Fleming committed any wilful default in respect of the sale of the motel which resulted in loss of value to the estate.
Consideration and determination
1. I reject the plaintiffs’ submission that Ms Fleming failed to act with the requisite prudence and diligence by failing to increase the tariff rates charged by the motel. The submission misstates Mr Mason’s advice, which was that slightly higher tariff rates could be achievable, but that this may affect the motel’s occupancy rate which was slightly above average for the area on account of the lower tariff rates that were actually being charged. Mr Mason emphasised that maintaining and improving occupancy levels at increased tariff rates would require an upgrade and refurbishment program. [44] There is no evidence of the likely cost of such a program, compared to the potential increase in revenue that might have flowed from increasing tariff rates. The evidence therefore does not establish that a prudent executor in all the circumstances would have increased the tariff rates.
2. In my opinion, however, Ms Fleming did fall short of the standard of prudence and diligence in selling the motel property and business.
3. I accept the submission made on behalf of Ms Fleming that the evidence does not disclose any deficiency in the steps taken by Mr Rogers to advertise and market the motel property and business during the period from 18 October to 7 November 2019, or in Ms Fleming’s supervision of and involvement in those steps. However, Ms Fleming acted imprudently by stipulating a very short time frame for that marketing campaign, contrary to Mr Mason’s advice, and by maintaining that stipulation even after Ms Afflick had sourced relief managers to manage the motel pending completion of the sale, without Ms Fleming making any inquiries about whether those relief managers were willing and able and had the necessary experience to competently manage the motel for the duration of a longer marketing campaign. That was imprudent because the only offers received during the very short marketing campaign were from one potential purchaser, and the amounts of those offers were materially below the amount of Mr Mason’s valuation – being the only valuation that Ms Fleming had to rely on – and even further below Mr Rogers’ estimated selling price. Mr Rogers’ reports to Ms Fleming at the time indicated that there were other potential buyers for the motel, but that they were not in a position to move quickly and that the sale process would likely extend into 2020 if they were to pursue offers from those potential buyers. Ms Fleming did not even ascertain whether any beneficiary was interested in purchasing the motel, notwithstanding that one beneficiary had specifically asked whether they could bid. Ms Fleming chose instead to enter into the Heads of Agreement locking in the benefit of a $2,550,000 price for Mr MacLachlan for a period of 30 days, during which Ms Fleming did not have the benefit of a binding contract for sale to Mr MacLachlan yet was precluded from accepting any better offer that might be received for the motel. Ms Fleming’s evidence did not explain her reasons for agreeing to that provision in the Heads of Agreement, which was plainly for the benefit of Mr MacLachlan and to the detriment of the estate.
4. For the reasons explained at [160] to [177] above, I do not accept Ms Fleming’s evidence that she had concerns about the veracity of Mr Mason’s valuation at the time that she made the decision to sell to Mr MacLachlan for $2,550,000, including by reason of the “issues” and “potential issues” referred to in paragraph 75.11 of Ms Fleming’s affidavit sworn on 4 August 2022, which I have found were non-issues with the exception of the sewage issue. Ms Fleming had no basis for forming any view about the impact of the sewage issue on the value of the motel, even if she had turned her mind to that issue before accepting Mr MacLachlan’s offer, which I have found that she did not.
5. I reject the submission made on behalf of Ms Fleming that Mr Rogers recommended that she sell the motel for the $2,550,000 sum offered by Mr MacLachlan. As I have said at [163] above, any recommendation made by Mr Rogers to Ms Fleming in relation to that offer did not rise above advice that this was the best offer he had been able to extract from the only bidder at the time, who would commit to settlement by 20 December 2019, and who Mr Rogers believed would not “muck around”. Contrary to the submissions made on behalf of Ms Fleming, it is not to the point that there is no evidence of Mr Rogers having communicated to her that he needed more time to sell the motel, or that there was a prospect of achieving a better price if he had more time. Ms Fleming had made clear to Mr Rogers that she required the sale to be completed by 20 December 2019, and there is no evidence that Mr Rogers had any reason to believe that this was open for negotiation.
6. I accept the submission made on behalf of Ms Fleming that there was a risk that any extension of the marketing campaign period might have resulted in the loss of Mr MacLachlan’s offer, without any better, alternative offer being received from any other prospective purchaser. In my opinion, however, the existence of that risk did not warrant Ms Fleming simply accepting Mr MacLachlan’s offer. As senior counsel for Ms Fleming ultimately accepted, the prudent course in all the circumstances would have been to obtain an updated valuation report for the motel property and business, and to rely on that report to make an informed decision whether to accept Mr MacLachlan’s offer or whether to extend the marketing campaign.
7. In my opinion, Ms Fleming’s failure to inquire of the beneficiaries whether they were interested in purchasing the motel was but one aspect of her course of conduct which, as a whole, failed to meet the standards of prudence and diligence required of an executor in all the circumstances. I do not consider that it has the significance which the plaintiffs’ submissions attributed to it. I reject the plaintiffs’ submission that the sale of the Woodlands property to one of the beneficiaries for a price in excess of the valuation of that property demonstrates that there was potential to achieve a better price for the motel by issuing a special invitation to beneficiaries to bid for the motel. The evidence does not establish that any of the beneficiaries were potential bidders for the motel, as I have explained at [124] to [129] above.
8. Contrary to the submission made on behalf of Ms Fleming, the amount of Mr MacLachlan’s offer made during the compressed marketing campaign for the motel does not constitute evidence of the fair market value of the motel. I reject the submission that the compressed marketing period was required in order for Ms Fleming to realise the assets of the estate in a timely manner. To the extent that Ms Fleming was desirous of completing the sale of the motel by the end of the first executor’s year, it was her failure to even begin marketing the motel for sale until mid-October 2019 that required a compressed marketing campaign.
9. Contrary to the plaintiffs’ submission, I do not consider that Ms Fleming’s conduct, considered as a whole, amounts to bad faith. As I have found at [107] above, Ms Fleming held a genuine concern that the sale should be completed before the resignations of Ms Afflick and Ms Bell took effect. For the reasons I have explained above, Ms Fleming did not act with the requisite prudence and diligence in failing to reconsider the marketing campaign period after the relief managers were identified on 4 November 2019 having regard to all of the circumstances to which I have referred above.
10. As explained earlier in these reasons, the plaintiffs’ claims require them to demonstrate that, through her breach of duty in relation to the sale of the motel, Ms Fleming has failed to obtain for the estate the value that would have been obtained if she had discharged her duties. [45] The plaintiffs have failed to establish this. The plaintiffs relied on Mr Austin’s report as evidencing that the market value of the motel property and business as at 7 November 2019 and 6 December 2019 was $2,950,000, and that the value lost to the estate by reason of Ms Fleming’s breach of duty in relation to the motel was therefore $400,000. For the reasons explained at [143] to [149] above, Mr Austin’s opinion concerning the market value of the motel at those times carries no weight. Nor does Mr Mason’s opinion about the value of the motel in February 2019 provide a sufficient basis for making any finding on the balance of probabilities about the market value of the motel, with the sewage problems that Mr Mason did not take into account, some ten or eleven months later in November and December 2019.
11. For those reasons, the plaintiffs have failed to establish the alleged wilful default in respect of the sale of the motel property and business.
The grain claim
Outline of the parties’ submissions
1. The plaintiffs submitted that Ms Fleming committed a wilful default in relation to the sale of the grain stored on the Woodlands property by delegating to Elders the decision to sell the grain prior to the clearing sale in order to have the silos empty and available for sale and removal by the purchaser on the day of the clearing sale, and by delegating to Elders the decision about the price at which the grain was to be sold. Counsel for the plaintiffs submitted that Ms Fleming “had no idea about the circumstances in which the grain was sold”, that she failed to exercise any oversight over the sale of the grain, and that it was “simply unacceptable” to determine that the grain should be sold before the auction because the silos needed to be empty on the day of the clearing sale, which involved the “sacrifice [of] one asset for another”.
2. Relying on the admitted fact that the grain was sold for $150 per tonne and Mr Turnbull’s evidence that he would have had no difficulty finding a buyer for triticale grain for at least $400 per tonne, [46] the plaintiffs submitted that the grain was sold at an undervalue of $250 per tonne. The plaintiffs submitted that the volume of grain sold could be determined by dividing the total sale price recorded by Elders in respect of the two lots of grain by the sale price of $150 per tonne. [47] The resulting volume could then be multiplied by the shortfall of $250 per tonne in order to arrive at the value lost to the estate by reason of the sale of the grain at $150 per tonne.
3. Senior counsel for Ms Fleming did not disagree with this approach to calculation, but did not accept the premise of the calculation that there has been a wilful default in respect of the sale of the grain. It was submitted that Ms Fleming had acted prudently and appropriately in engaging Elders to conduct the clearing sale, and in accepting their advice that the grain should be sold before the clearing sale in order to facilitate the sale and removal of the empty silos on the day of the clearing sale, particularly in circumstances where the silos were sold for a total sum of $14,600, [48] which is greater than the shortfall calculated by the plaintiffs in respect of the grain. It was submitted that Ms Fleming had not been challenged about her appointment of Elders to conduct the clearing sale, that Elders had been charged with selling hundreds of items and that, as a matter of reality, an executor needing to clear a rural property of chattels in order to realise those assets and to prepare the property itself for sale, is acting under certain constraints in order to achieve the objective of clearing the property in a timely way. Senior counsel for Ms Fleming also referred to the contrast between the evidence of Mr Turnbull and Ms Fleming about the extent to which the grain had been damaged by weevils. [49]
Consideration and determination
1. It is convenient to note at the outset that the plaintiffs’ calculation of the shortfall between the total price for which Elders sold the grain at $150 per tonne, and the total price that would have been realised if it had been sold at a price of $400 per tonne, is wrong. The amount of the shortfall is approximately $5,500, [50] not $9,706 as the plaintiffs submitted.
2. The plaintiffs have failed to establish that Ms Fleming committed a wilful default by engaging Elders to sell the chattels on the Woodlands property, including the grain, in order to clear the property, by accepting Elders’ advice to sell the grain prior to the day of the clearing sale in order to facilitate the sale and removal of the silos on the day of the clearing sale, and by relying on Elders to determine the price at which the grain would be sold under those circumstances.
3. As Ms Fleming submitted, the plaintiffs did not seek to impugn Elders’ reputation, qualifications, experience or competence to act as Ms Fleming’s agent for the clearing sale. [51]
4. I accept Ms Fleming’s evidence that it is customary with clearing sales of this kind for the vendor’s agent to have authority to fix the price at which each of the many items is to be sold. [52] The plaintiffs did not adduce any evidence to the contrary.
5. In my opinion, Ms Fleming’s conduct in engaging Elders to conduct the clearing sale, and her reliance on Elders to determine the prices for which items were to be sold based on their experience and having regard to Ms Fleming’s dual objectives of realising the value of the items and clearing the Woodlands property for sale, [53] was in accordance with the ordinary course of business for rural clearing sales. There is no evidence to suggest that Elders’ appointment involved any needless or unacceptable risk. The evidence establishes that Ms Fleming supervised Elders’ work. Specifically, Elders sought Ms Fleming’s instructions in relation to their recommendation to sell the grain prior to the day of the clearing sale, and explained to her the reasons for that recommendation. Ms Fleming gave those instructions after forming her own view that Elders’ reasons were sound. Ms Fleming had engaged Elders on terms which incentivised them to achieve the best price that they could in the circumstances for the grain and, indeed, the other items to be sold at the clearing sale. [54] Ultimately, the silos sold for a total price that was materially greater than the total price for which the plaintiffs contend that the grain could have been sold. This was an agency, not a delegation of Ms Flemings’ duties to Elders. Ms Fleming gave Elders a scope of authority that was consistent with the ordinary course of business for rural clearing sales, and approved a strategy proposed by Elders of selling one of the sale items (the grain) in advance in order to maximise the prospects of selling the more valuable silos on satisfactory terms on the day of the clearing sale. I reject the submission made by counsel for the plaintiffs that this was “simply unacceptable”.
6. I also reject counsel’s submission that Ms Fleming “had no idea about the circumstances in which the grain was sold”, and that she failed to exercise any oversight over the sale of the grain. That submission is contrary to the evidence to which I have referred above, and should not have been made in those terms.
7. Mr Turnbull’s evidence does not provide a sufficient basis to find on the balance of probabilities that this particular grain, which had been affected by weevils to some extent, could have been sold for a price of $400 per tonne. As I have said earlier in these reasons, it is not clear whether Mr Turnbull’s opinions about the ease with which he could have found a buyer for triticale grain, and the price for which he could have sold such grain, applied to triticale grain that had been damaged by weevils. [55]
8. For those reasons, the plaintiffs have failed to establish the alleged wilful default in respect of the sale of the grain.
The stockyards claim
Outline of the parties’ submissions
1. The plaintiffs submitted that Ms Fleming breached her duties as executor by failing to commence proceedings for the recovery of the stockyards, in circumstances where there were competing claims to the stockyards and there were sufficient assets in the estate to cover the costs of such proceedings. The plaintiffs contend that Ms Fleming simply accepted Ms Afflick’s word about the stockyards and took the matter no further, and that “it was not for the executor to place herself into the position of judge as to the merits one way or another of the competing claims with respect to that property, unless it was absolutely plain to see that the claims being made that the stockyards belonged to [the deceased] were without foundation, and they weren’t.”
2. The plaintiffs submitted that the Court need not decide the ownership of the stockyards in these proceedings, and need not be troubled with questions concerning the value of the stockyards about which the plaintiffs adduced no evidence. It was submitted that these questions could be determined during the accounting process that the Court will order if it is satisfied of the alleged wilful defaults in relation to the motel sale and the grain sale.
3. It was submitted on behalf of Ms Fleming that she had made inquiries about the ownership of the stockyards, following which she had been satisfied that they had not been owned by the deceased or formed part of the Woodlands property. It was submitted that Ms Fleming would have been justifiably criticised if she had spent estate funds in commencing legal proceedings to determine the ownership of the stockyards, which counsel for the plaintiffs accepted would have a nominal value, rather than forming her own view about the matter after making those appropriate inquiries.
Consideration and determination
1. The stockyards claim is, in truth, a dispute between vendor and purchaser. Ms Turnbull, who purchased the Woodlands property, contended that the stockyards were part of that property. The vendor, Ms Fleming, disputed that contention. That dispute arose before contracts for the sale of the Woodlands property were exchanged. Ms Turnbull entered into the contract knowing that the stockyards were no longer affixed to the property, assuming (without deciding) that they were once fixtures forming part of that property. There is no evidence that the price for which the Woodlands property was sold to Ms Turnbull was reduced by reason of the stockyards having been removed. [56] As I have already mentioned, there is no evidence of the value of the stockyards, or even that they had any material value. Thus, there is no evidence that Ms Fleming’s failure to commence proceedings to pursue a claim to the stockyards on behalf of the estate resulted in a loss to the estate. On the contrary, as the defendant submitted, it is likely that the costs of any such proceedings would have quickly overtaken any value that the stockyards may have. It would not have been prudent for Ms Fleming to commence such proceedings, and I reject the plaintiffs’ submission that she was obliged to do so in the circumstances of this case. That submission was founded on an erroneous understanding of the applicable principles. [57] I also reject the plaintiffs’ submission that Ms Fleming simply relied on the word of Ms Afflick without investigating the ownership of the stockyards further. The evidence is to the contrary. [58]
2. For those reasons, the plaintiffs have failed to establish that Ms Fleming committed any breach of duty in failing to commence proceedings to recover the stockyards. Even if the plaintiffs had established the alleged breach of duty, their proposal that the stockyards claim be considered as part of a wilful default accounting process would not have been available in circumstances where the plaintiffs have failed to establish the other alleged wilful defaults.
Construction and validity of clause 9 of the will
1. I now turn to the issues raised by the parties in relation to the construction, validity and operation of clause 9 of the deceased’s will, which I address for completeness although it is not strictly necessary to do so in light of my conclusions above that the plaintiffs have failed to establish any of the alleged wilful defaults.
2. I reject the plaintiffs’ submission that clause 9 of the will is void or unenforceable by reason of a presumption of undue influence arising from the solicitor and client relationship between Ms Fleming, who stands to benefit from the exclusion of liability under clause 9, and the deceased. The principles of undue influence differ in their application in probate from their application in equity. A person seeking to impugn a will, or a particular bequest or clause in a will, on the grounds of undue influence bears the onus of proving undue influence, in the sense of coercion, without the benefit of any presumption. [59]
3. That brings me to the proper construction of clause 9 and, in particular, the words “without being liable for loss”.
4. The object of construing clause 9, in the context of the will as a whole, is to ascertain and give effect to the intention of the testator. That intention is to be ascertained objectively on the basis of the language of the will and the meaning that it would have conveyed to a reasonable person with knowledge of the objective circumstances surrounding the testator at the time the will was made. [60]
5. The objective circumstances surrounding the testator at the time the will was made on 24 February 2017 were:
1. the testator’s assets included the motel property and the motel business, the Woodlands property and the Moruya property;
2. to the extent that those assets formed part of the testator’s estate at the time of his death, the administration of his estate in accordance with his will would require his executor and trustee to sell each of those assets, which were not the subject of specific bequests, in order to distribute the residue of his estate between his children and stepchildren in accordance with clause 8 of the will, after taking the necessary steps to give effect to his wishes and directions in clauses 5, 6 and 7 of the will;
3. the executor would need to decide whether it was prudent to continue to operate the motel business pending sale to facilitate the sale of the motel property together with the business as a going concern;
4. the executor would also need to decide whether it was prudent to lease any of the properties pending sale;
5. the terms on which the properties and motel business could be sold, and the timing of their sale, would be a product of many factors, including market conditions, the course of negotiations with prospective purchasers, and decisions made by the executor during those negotiations, many of which would require evaluative judgments, all of which gave rise to an inherent risk that the negotiations in respect of any specific asset might produce an outcome less favourable to the estate than that which would have been achieved if the executor had taken a different approach to the negotiations or had made different judgments; and
6. any decision by the executor to operate and manage the motel business for a period of time to facilitate the sale of that business as a going concern would carry an inherent risk of trading losses.
1. In my opinion, at the time the will was made, clause 9 would have conveyed to a reasonable person with knowledge of those circumstances that the executor was authorised to do any of the things in sub paragraphs (a) to (e) of clause 9 on such terms and for such purposes as the executor honestly thinks appropriate for the administration of the deceased’s estate for the benefit of the beneficiaries in accordance with the will. That reasonable person would not have understood the words “on such terms and for such purposes as my Trustee thinks appropriate” in clause 9 as effectively overriding the other terms of the will by authorising the executor to take actions of the kind described in subparagraphs (a) to (e) that were contrary to the terms of clauses 5 to 8 of the will. That reasonable person would have understood the word “appropriate” in the context of clause 9, and in the context of the will as a whole, as meaning “appropriate to administer the estate for the beneficiaries in accordance with the terms of the will”.
2. In my opinion, at the time the will was made, the words “without being liable for loss” in the context of clause 9 would have conveyed to that reasonable person that the executor was exonerated from any liability that she might otherwise have for any adverse financial impact on the estate – “loss” – flowing from her decisions made and actions taken in respect of the sale of any asset comprising part of the estate, or any other action falling within subparagraphs (a) to (e), within the scope of the authority that I have described above. That reasonable person would not have understood clause 9 to exclude the liability of the executor for such “loss” only if the beneficiaries sued to recover the “loss” in an action for damages for devastavit or equitable compensation for breach of duty, and not if the beneficiaries sued to have the executor restore to the estate that which had been lost by reason of that waste or breach by accounting on a wilful default basis, or by paying equitable compensation in respect of specific wilful defaults in lieu of the taking of an account on the wilful default basis.
3. For those reasons, I reject the plaintiffs’ submissions referred to at [29] above that the exclusion of liability for “loss” in clause 9 does not extend to a liability to account on a wilful default basis, or a liability to pay equitable compensation in order to restore to the estate an asset or the full value of an asset for which the executor would otherwise be charged if accounts were to be taken on a wilful default basis. The plaintiffs’ submissions were founded on the erroneous premise that the meaning of the word “loss” in clause 9 of the will was governed not by the principles of construction to which I have referred at [241] above, but by distinctions between the precise character of the different equitable remedies which are available for a breach of trust that constitutes a wilful default – being an omission to obtain something for the trust, as opposed to an unauthorised disbursement of trust funds or assets. [61]
4. For completeness, I note that the construction of clause 9 that I have explained at [243]-[244] above does not exclude liability for “substitutive” compensation payable in order to discharge a liability to account for an unauthorised disbursement or disposal of trust funds or assets. [62] The remedy of compensation in those circumstances would not be dependent on the estate suffering any “loss” beyond the fact of the unauthorised transaction. [63] Moreover, it is difficult to see how a disbursement of funds or assets of the estate that was not authorised by the terms of the will could be characterised as a transaction that the executor honestly thinks appropriate to administer the estate for the beneficiaries in accordance with the terms of the will. For the reasons I have explained above, clause 9 applies only to transactions of that character. The breaches of trust alleged in the present case are wilful defaults, and not unauthorised dealings with estate property.
5. It remains to consider whether clause 9, properly construed in the manner explained above, is void on the basis that it is repugnant or contrary to public policy.
6. The plaintiffs submitted that clause 9 was repugnant to the concept of a trust, and contrary to public policy, because it had been inserted in the will to “alleviate [the executor] from the core fiduciary obligation to duly administer the trust”. Referring to the judgments of the High Court in Maguire v Makaronis (Maguire) [64] and Youyang Pty Ltd v Minter Ellison Morris Fletcher (Youyang), [65] counsel for the plaintiffs submitted that, under Australian law, the irreducible core of obligations owed by executors and trustees that is fundamental to the concept of a trust includes the obligation to act prudently and properly (that is, to use due diligence and care) in the administration of the trust. It was submitted that clause 9 is repugnant and contrary to public policy because it is in “totally unqualified expansive terms” which purport to exclude liability for breach of the duty of diligence and prudence and, indeed, to exclude any liability whatsoever on the part of the executor, even for dishonesty and bad faith.
7. I reject the plaintiffs’ submissions for two reasons.
8. First, on the proper construction of clause 9 explained at [243]-[244] above, the scope of the exclusion is not “totally unqualified” and the clause does not purport to exclude liability of the executor for dishonesty and bad faith.
9. Second, I do not accept that the irreducible core of obligations of executors and trustees includes the obligations of diligence and prudence. The phrase “the irreducible core of obligation” stems from the judgment of Millett LJ in Armitage v Nurse. [66] His Lordship construed an exclusion clause in a settlement as excluding the trustee’s liability for constructive fraud or equitable fraud (as opposed to actual fraud or dishonesty) and as excluding liability for breach of trust in the absence of dishonesty. Millett LJ, with whom Hutchison and Hirst LJJ agreed, rejected a submission that the exclusion clause, so construed, was void or voidable on the grounds of repugnancy to the trust or public policy. His Lordship said: [67]
“I accept the submission made on behalf of [the beneficiary] that there is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by them which is fundamental to the concept of a trust. If the beneficiaries have no rights enforceable against the trustees there are no trusts. But I do not accept the further submission that these core obligations include the duties of skill and care, prudence and diligence. The duty of the trustees to perform the trusts honestly and in good faith for the benefit of the beneficiaries is the minimum necessary to give substance to the trusts, but in my opinion it is sufficient.”
1. His Lordship’s description of the irreducible core of obligations from which an executor or trustee cannot be exempted has been cited with approval and applied in Australia, including by Brereton J (as his Honour then was) in Leerac Pty Ltd v Fay (Leerac) [68] and by the New South Wales Court of Appeal in Crossman v Sheahan. [69]
2. Leerac concerned “non-contest clauses” contained in trust deeds, which provided that a beneficiary would be deemed not to be and never to have been a beneficiary under the trust, and would be incapable of taking any benefit under the trust and liable to repay any such benefit received, if they should at any time commence any action against the trustee in respect of any matter arising under or in relation to the trust “other than for wilful default” (which Brereton J construed in the context of the non-contest clauses as meaning dishonesty). The question was whether the non-contest clauses, properly construed, applied to proceedings in which a beneficiary sought to compel the due administration of the trust, and, if so, whether the non-contest clauses were valid. Brereton J recorded that much of the argument focussed on the relationship between the non-contest clause and an exoneration clause in each trust deed. Each exoneration clause provided that the trustee “shall not be liable or answerable or accountable hereunder for any loss not attributable to its own dishonesty, or the wilful commission by it of an act known to be a breach of trust …”.
3. Brereton J construed the non-contest clauses as applying only to actions asserting liability against the trustee for breach of trust, and not to actions to secure the due administration of the trust. [70] In case of any determination to the contrary in any appeal, his Honour proceeded to consider the question of validity of the non-contest clauses on the assumption that they applied to actions asserting liability against the trustee. In doing so, his Honour summarised the applicable principles in the following terms: [71]
“23. The position on the authorities can, I think, be summarised as follows: First, there is no general rule against the validity of conditions discouraging beneficiaries from taking proceedings to contest a Will, although there are some limits on this [Evanturel v Evanturel (1874) LR 6 PC 1; Cooke v Turner (1846) 15 M & W 727; (1846) 153 ER 1044; AN v Barclays Private Bank & Trust (Cayman) Ltd, [54]]. Secondly, however, where there can be seen in a statute conveying a beneficial right to make applications for provisions out of an estate an intention that such jurisdiction cannot be excluded by private arrangement — as, for example, under the testators family maintenance legislation — conditions which are calculated to deter the invocation of that jurisdiction are contrary to public policy and void [Leiberman v Morris (1944) 69 CLR 69; Barns v Barns [2003] HCA 9 ; (2003) 214 CLR 169; In the will of Gaynor [1960] VR 640 at 642–644 (O’Bryan J)]. This rule is based on discerning an (unexpressed) statutory policy against it being possible to contract out of the rights given by the relevant legislation [Leiberman v Morris; Smith v Smith (1986) 161 CLR 217 at 235 (Gibbs CJ, Wilson and Dawson JJ)]. Thirdly, a condition against the taking of any proceedings whatsoever having the effect of preventing any question of administration of a trust or Will, or securing the due administration of the trust or Will by the trustees, is too wide and will be void for ousting the jurisdiction of the Court, although one which merely discourages disputing the validity of the Will or trust will not offend that rule [Permanent Trustee Co v Dougall, 86–87]. Fourthly, a clause in a trust deed may validly exempt the trustee from obligations and liabilities other than those contained in that irreducible core of a trustee’s obligation — namely, to act honestly and in good faith. It is not contrary to public policy to exclude a trustee’s liability even for gross negligence, but it is to exclude liability for dishonesty or bad faith [Armitage v Nurse [1998] Ch 241 (CA)]
24. There is nothing irreconcilable about the observations of Harvey CJ in Eq in Permanent Trustee Co v Dougall and those of Millet LJ in Armitage v Nurse. The observations of Harvey CJ in Eq were to the effect that a condition against taking any proceedings whatever was too wide, as it would have the effect of preventing beneficiaries from securing due administration without limitation. Armitage v Nurse does not suggest that trustees may be exonerated from all obligations whatsoever, recognising that there is a reducible core of obligation to act honestly and in good faith from which they cannot be exempted.”
1. In Crossman, the Court of Appeal considered the alleged repugnancy of three exoneration clauses. The primary judge had accepted that exemption clauses cannot operate to avoid the core obligations of a trustee, and described those core obligations as including the obligation to pay and transfer trust property to the persons entitled thereto and not to deal with it for personal benefit, the obligation to exercise reasonable care and skill, the obligation to act honestly and in good faith, and the obligation to exercise diligence and prudence in the performance of the trustee’s duties and the exercise of the trustee’s discretions. [72] Ward JA, as the President of the Court of Appeal then was, observed that not all of those obligations identified by the primary judge fell within:
“307. … what have been described as the ‘irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by them which is fundamental to the concept of a trust’ (see Armitage v Nurse at 253 per Millett LJ; language adopted in Jacobs’ at [1620]). In particular, in Armitage v Nurse, Millett LJ (at 253) expressly rejected the submission that the trustee’s core obligations included the duties of skill and care, prudence and diligence (this being one of the obligations that the primary judge appears to have accepted as being a ‘core’ obligation).
308. In Armitage v Nurse, the minimum necessary to give substance to the trusts was said to be the duty of the trustee to perform the trusts honestly and in good faith (at 253–254). That, and the duty to adhere to the terms of the trust (see Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 at [32]), can readily be accepted as falling within the ‘irreducible core of obligations’ of the trustee…”
1. I accept the submission made on behalf of Ms Fleming that those passages from her Honour’s judgment reject the notion that the duty of diligence and prudence forms part of the irreducible core of obligations owed by executors and trustees. Basten and Payne JJA agreed with her Honour.
2. Contrary to the plaintiffs’ submissions, I am unable to discern from the judgments of the High Court in Maguire and Youyang any suggestion that the duty of diligence and prudence might be characterised as part of the irreducible core of obligations from which executors and trustees cannot be exempted. In Maguire, solicitors had breached fiduciary duties owed to their clients by entering into a mortgage between the clients (as mortgagors) and the solicitors (as mortgagee) in the absence of the clients’ informed consent to the solicitors’ interest in the transaction. In Youyang, trust moneys had been paid otherwise than in accordance with the terms of the trust. Neither of those cases concerned an alleged breach of the duty of diligence and prudence. No exclusion or exoneration clause was in issue. In obiter dicta in Youyang, the High Court referred disapprovingly to a suggestion by the English Court of Appeal and by the New Zealand Court of Appeal that equitable compensation for breach of a trustee’s duty of skill and care resembled common law damages, and that there is no reason in principle why common law rules governing causation, remoteness and measure of damages should not be applied by analogy. [73] I do not understand the High Court’s disapproval of that notion to speak to the question of the scope of the liabilities from which an executor or trustee may be exonerated by an express clause in the will or deed of settlement.
3. I am a bound to follow and apply the judgment of the Court of Appeal in Crossman referred to at [255]-[256] above.
4. For all of those reasons, clause 9 of the will, properly construed, is neither repugnant nor contrary to public policy. The clause is valid and enforceable. If the plaintiffs had established the alleged wilful defaults, it would have been necessary to consider whether clause 9 exempted Ms Fleming from liability to account to the estate for the value lost by reason of such defaults. I would have rejected the plaintiffs’ submission that clause 9 does not apply because Ms Fleming did not honestly believe that the steps that she took in selling the motel property and business and in selling the grain, and the terms on which she sold those assets, were appropriate. For all of the reasons explained at [211] to [221] and [225]-[231] above, the evidence does not establish a want of honesty in relation to the sale of the motel, and does not even establish a want of prudence in relation to the sale of the grain.
Relief from liability under s 85 of the Trustee Act
1. Ms Fleming’s claim for relief under s 85 of the Trustee Act does not arise for consideration.
Conclusion and orders
1. For all of the foregoing reasons, the orders of the Court are:
1. Proceedings dismissed.
1. I am not aware of any reason why the plaintiffs should not be ordered to pay Ms Fleming’s costs of the proceedings, but I will hear the parties in relation to costs.
**********
Endnotes
1. Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; [1965] AC 694 at 707 (Viscount Radcliffe, Lords Reid, Evershed, Pearce and Upjohn) (Livingston); Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 (Youyang) at [32] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ); G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [12.22].
2. Livingston at 707 (Viscount Radcliffe, Lords Reid, Evershed, Pearce and Upjohn); Juul v Northey [2010] NSWCA 211 (Juul) at [196] (McColl JA, Basten and Campbell JJA agreeing).
3. Re Charteris [1917] 2 Ch 379 at 388-389 (Swinfen Eady LJ); Re Speight [1883] 22 Ch D 727 at 739-740 and 762 (Jessel MR and Lindley LJ); Austin v Austin (1906) 3 CLR 516 at 525; [1906] HCA 5 (Griffith CJ, Barton and O’Connor JJ).
4. Youyang at [38]-[40] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).
5. Re Atkinson, deceased [1971] VR 612 at 615 (Gillard J); Tschirn v Australian Executor Trustees Limited [2016] SASC 149 at [58]-[59] (Doyle J).
6. [2016] SASC 149 at [59].
7. Juul at [196] (McColl JA, Basten and Campbell JJA agreeing).
8. Re Atkinson, deceased [1971] VR 612 at 615 (Gillard J); Tschirn v Australian Executor Trustees Ltd [2016] SASC 149 at [58]-[59] (Doyle J).
9. Juul at [197]-[199] (McColl JA, Basten and Campbell JJA agreeing).
10. Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [54]-[76] (Gummow ACJ, Kirby, Hayne and Heydon JJ); Ludwig v Jeffrey (No. 4) (2021) 394 ALR 360; [2021] NSWCA 256 at [82]-[84] (Emmett AJA, Meagher and Brereton JJA agreeing).
11. Alexander v Perpetual Trustees WA Limited (2004) 216 CLR 109; [2004] HCA 7 at [55] (Gleeson CJ, Gummow and Hayne JJ), approving Ramage v Waclaw (1998) 12 NSWLR 84 at 91-93 (Powell J, as his Honour then was) and the authorities there referred to; J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis) at [23-03]; G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [12.14]; see also Re Atkinson, deceased [1971] VR 612 at 616-617 (Gillard J); Bird v Bird (No. 4) [2012] NSWSC 648 at [15] and [124] (Rein J); Grace v Grace [2012] NSWSC 976 at [129] (Brereton J, as his Honour then was); Spillane v Hall [2013] NSWSC 229 at [23] (Sackar J).
12. [2003] NSWSC 1207 at [44].
13. Ibid at [45].
14. Re Speight (1883) 22 Ch D 727 at 762-764 (Lindley and Bowen LJ); G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [12.28]-[12.31].
15. Juul at [180] (McColl JA, Basten and Campbell JJA agreeing), referring to Bartlett v Barclays Bank Trust Co Ltd (Nos 1 & 2) [1980] 1 Ch 515 at 546 (Brightman LJ).
16. Juul at [181] (McColl JA, Basten and Campbell JJA agreeing), referring to Meehan and Others v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22 (Meehan v Glazier) at [65] (Giles JA, Sheller and Beazley JJA, as Her Excellency then was, agreeing).
17. Meehan v Glazier at [65]-[66] (Giles JA, Sheller and Beazley JJA agreeing); Juul at [180]-[195] (McColl JA, Basten and Campbell JJA agreeing).
18. Meehan v Glazier at [13]-[15] (Giles JA, with the concurrence of Sheller JA and Beazley JA, as Her Excellency then was).
19. Meehan v Glazier at [46] (Giles JA, Sheller and Beazley JJA agreeing); G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [12.49].
20. See [64] above.
21. See [96] below.
22. See [7] above.
23. See [63] and [80] above.
24. See [77] above.
25. See [5]-[8] above.
26. See [183] below.
27. See [64], [72] and [101] above.
28. Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21, especially at [41]-[43] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65 at [108] (Leeming JA, Payne and White JJA agreeing); Lang v The Queen (2023) 413 ALR 389; [2023] HCA 29 at [1]-[19] (Kiefel CJ and Gageler J, as the Chief Justice then was) and [428]-[437] (Jagot J).
29. See [54]-[56] above.
30. T143.3-144.20.
31. See [105]-[141] above.
32. See [99] above.
33. See [153] above.
34. See [149] above.
35. See [75] above.
36. See [92]-[93] above.
37. See [150]-[151] above.
38. See [20]-[49] above.
39. See [124] above.
40. See [150]-[151] above.
41. See [124] and [150]-[151] above.
42. See [134] above.
43. See [160] above.
44. See [69] above.
45. See [47] and [196] above.
46. See [90] above.
47. See [88] above.
48. See [92] above.
49. See [86] and [90] above.
50. See [88] above. Total actual sale price of $3,314 (excluding GST) at a price of $150 per tonne indicates a volume of approximately 22 tonnes. The shortfall of $250 per tonne therefore amounts to a total shortfall of approximately $5,500.
51. See [83] above.
52. See [85] above.
53. See [83]-[88] above.
54. See [87]-[88] above.
55. See [90] above.
56. See [93]-[94], [186]-[189] and [194] above.
57. See [40]-[43] above.
58. See [190]-[191] and [193] above.
59. Schwanke v Alexakis [2024] NSWCA 118 at [1] (Ward P) and [183]-[224] (Adamson JA).
60. Fell v Fell (1922) 31 CLR 268 at 273-276; [1922] HCA 55 (Issacs J); Marley v Rawlings [2015] AC 129; [2014] UKSC 2 at [17]-[26] (Lord Neuberger P, Lords Clarke, Sumption and Carnwath agreeing); Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111 at [23]-[24] (Stanley J, Kourakis CJ agreeing and Nicholson J also agreeing as to the principles of construction at [60]); Wright v Stevens [2018] NSWSC 548 at [177]-[185] (Hallen J) and the authorities there referred to; P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [31.20]-[31.40].
61. See [47] above.
62. See the defendant’s submissions at [32] above.
63. Crossman v Sheahan (2016) 115 ACSR 130; [2016] NSWCA 200 at [313] (Ward JA, as her Honour then was, Basten and Payne JJA agreeing).
64. (1997) 188 CLR 449; [1997] HCA 23 (Maguire).
65. (2003) 212 CLR 484; [2003] HCA 15 (Youyang).
66. [1998] Ch 241; [1997] EWCA Civ 1279.
67. Ibid at 253-254.
68. [2008] NSWSC 1082 (Leerac).
69. (2016) 115 ACSR 130; [2016] NSWCA 200 (Crossman).
70. Leerac at [13]-[21].
71. Ibid at [23]-[24] (my emphasis).
72. Crossman at [304]-[305] (my emphasis) (Ward JA, as the President of the NSW Court of Appeal then was).
73. Youyang at [36]-[40] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 31,200 |
nsw_caselaw:1910bf4fa329e488cd342bb1 | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | TT v The Diocese of Saint Maron, Sydney & SS (No 3) [2024] NSWSC 943 | https://www.caselaw.nsw.gov.au/decision/1910bf4fa329e488cd342bb1 | 2024-08-04T23:52:43.876986+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: TT v The Diocese of Saint Maron, Sydney & SS (No 3) [2024] NSWSC 943
Hearing dates: 14 – 25 August 2023, 17 – 19 June 2024, 21 June 2024
Date of orders: 1 August 2024
Decision date: 01 August 2024
Jurisdiction: Common Law
Before: Elkaim AJ
Decision: 1. Judgment for the plaintiff against the first and second defendants, jointly and severally, in the sum of $1,480,251.65.
2. The judgment sum is to be paid into court within 28 days and is to remain in court until further order.
3. The defendants are to pay the plaintiff’s costs of the proceedings.
4. All parties have leave to apply for a different costs order.
Catchwords: TORTS – intentional tort – claim of historical child sexual abuse – whether the second defendant groomed the plaintiff – whether on balance of probabilities the abuse by the second defendant in October 2005 occurred – held grooming had not been established – held incident of abuse in October 2005 occurred
EVIDENCE – sexual assault – complaint evidence in civil proceedings – delay in complaint – where detail of complaints is generally consistent
EVIDENCE – admissions – civil proceedings – whether letter offering counselling services amounted to an admission – held the letter was not an admission
NEGLIGENCE – vicarious liability – agent and principal – where vicarious liability arises in church context – where second defendant was a Sub-Deacon of the first defendant but not an employee – whether the position of power and intimacy and nature of the second defendant’s acts were connected to his role in the church – where abuse occurred whilst the second defendant was driving the plaintiff home in his car – discussion and application of Bird v DP [2023] VSCA 66 – held the first defendant is vicariously liable for the second defendants actions
DAMAGES – assessment of damages – historical child sexual assault – past and future economic loss – damages by way of buffer – past and future out of pocket expenses – future care and treatment – aggravated damages
Legislation Cited: Civil Liability Act 2002 (NSW), ss 3B(1), 5B, 18(1)
Evidence Act 1995 (NSW), ss 66(2), 140
Cases Cited: AA v PD [2022] NSWSC 1039
Bird v DP (2023) 69 VR 408; [2023] VSCA 66.
CCIG Investments Pty Ltd v Schokman [2023] HCA 21
CLH v KAG 2022 BCSC 994
Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm)
GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369
SR v Trustees of the De La Salle Brothers [2023] NSWC 66
TT v The Diocese of Saint Maron, Sydney & SS [2023] NSWSC 958
Category: Principal judgment
Parties: TT (Plaintiff)
The Diocese of Saint Maron, Sydney (First Defendant)
SS (Second Defendant)
Representation: Counsel:
Mr B Kelleher SC (First Defendant)
Ms A Campbell (First Defendant)
Mr T Hall (Plaintiff)
Solicitors:
The Law Offices of Professor Dion Accoto (Plaintiff)
Wotton Kearney (First Defendant)
Murphys Lawyers (Second Defendant)
File Number(s): 2018/347128
JUDGMENT
1. The plaintiff was born in 1990 in Australia. His family were and are devout members of the Maronite Catholic Church.
2. The first defendant is The Diocese of St Maron, Sydney which encompasses the St Joseph’s Maronite Catholic Church in Croydon (‘St Joseph’s’ or ‘the Church’).
3. The second defendant, SS, is a Priest. He came to St Joseph’s from Lebanon where he had been ordained as a Sub-Deacon on 8 December 2001. He was then ordained as a Deacon at St Joseph’s on 14 May 2005, and as a Priest on 6 May 2006.
4. The plaintiff alleges that he was sexually abused by the second defendant, beginning when he was 13 or 14 years of age and continuing through to a particular incident in October 2005.
5. The most recent pleading by the plaintiff is an amended statement of claim filed on 22 October 2021. In relation to the first defendant, this pleading states:
“32. The first defendant owed a duty to take reasonable care for the safety and welfare of the plaintiff when the plaintiff was engaged in church activities.
33. The first defendant breached its duty of care to the plaintiff as follows:
a) by reason of the failure of the first defendant to take reasonable care for the safety and welfare of the plaintiff, the plaintiff was subjected to a risk of harm, namely that of being sexually assaulted by the second defendant.
b) the risk of harm was foreseeable because it ought to have been known to the defendant.”
1. At [47] of the amended statement of claim the plaintiff alleges that:
“Additionally, or alternatively, the first defendant is vicariously liable for sexual abuse by the second defendant and the injury, loss and damage caused to the plaintiff.”
1. The allegation against the second defendant is one of direct sexual assault upon the plaintiff.
2. The plaintiff claims that he was psychiatrically injured by the conduct of the defendants. The heads of damages which he claims are non-economic loss, past and future economic loss, past and future medical expenses, and past and future domestic care. The last head, domestic care, was the subject of overall objection, the defendants having only been given notice of the claim on 4 August 2023.
3. As far as the applicable law is concerned, the parties agreed that the plaintiff’s allegations in negligence against the first defendant fall under the Civil Liability Act 2002 (NSW) (the CLA).
4. The allegations of sexual assault against the second defendant, including the assessment of damages, are to be decided at common law which would, in turn, encompass any vicarious liability of the first defendant. The only part the CLA would play is that there would not be an entitlement to interest on damages for past gratuitous domestic assistance (ss 3B(1) and 18(1)).
5. Both defendants denied the plaintiff’s allegations, saying that the sexual abuse never occurred. The defendants also challenged the extent of the plaintiff’s damages’ claim.
6. The second defendant, SS, was legally represented. His lawyers took little part in the case, appearing more in a protective capacity, especially when their client was giving evidence. The second defendant was actually called to give evidence by the first defendant. The second defendant was aware of the date for final submissions but took no part. I have assumed the second defendant has, to the extent applicable, adopted the submissions made by the first defendant.
7. I was informed, and there is reference to it in the tendered material, that the second defendant had gone to trial before a judge and jury in the District Court in May 2016 in relation to the plaintiff’s allegations of sexual abuse. He faced a single charge of assaulting the plaintiff, and at the time committing an act of indecency upon him in circumstances of aggravation. The charge related to the incident in October 2005 that I have referred to above. The second defendant was convicted and sentenced to a term of imprisonment. On 7 February 2018 the Court of Criminal Appeal set aside the conviction and entered a verdict of acquittal.
8. The parties recognised that the results of the criminal proceedings, both at first instance and on appeal, were not relevant to my consideration of the matter, which has proceeded on the basis that the plaintiff must prove his case on the balance of probabilities, rather than beyond reasonable doubt.
9. In relation to the standard of proof I think it appropriate to set out the following comments of Kiefel CJ, Gageler J (as his Honour then was) and Jagot J, after setting out s 140 of the Evidence Act 1995 (NSW), in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32, at [57]:
“Section 140(2)(c) of the Evidence Act reflects the position of the common law that the gravity of the fact sought to be proved is relevant to "the degree of persuasion of the mind according to the balance of probabilities". By this approach, the common law, in accepting but one standard of proof in civil cases (the balance of probabilities), ensures that "the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved".”
1. Unfortunately, the hearing needed to be conducted in two parts. This arose because of the plaintiff’s application, made on the second day of the hearing, to extend his quantum claim to include damages for gratuitous domestic care. For reasons that I gave on 15 August 2023 (TT v The Diocese of Saint Maron, Sydney & SS [2023] NSWSC 958), I allowed the application, but also adjourned the matter to permit the collection of expert evidence on the care claim. The adjournment came after taking as much evidence as was otherwise possible.
2. One of the regrettable aspects that arose from the application was that it was necessary to suspend the plaintiff’s cross-examination until the care claim could be properly dealt with. Also regrettable was that the matter could not proceed on the adjourned date of 20 November 2023 because the plaintiff’s solicitor (and advocate) fell seriously ill. The matter then resumed on 17 June 2024. Accordingly, the plaintiff’s evidence was taken both at the commencement of the hearing and also when the matter resumed on 17 June 2024.
3. I intend to go through what I consider are the important aspects of the evidence and then turn to the liability and damages questions that need to be answered. This course will involve some repetition when I refer back to parts of the evidence to answer the questions. I will make some findings in the course of commenting on the evidence.
The evidence
1. The plaintiff’s evidence was made up of a statement (Exhibit A), some additional oral evidence in chief, cross-examination, and re-examination. I do not propose to repeat every aspect of Exhibit A, although I think it important to set out what the plaintiff stated about the abuse at [21]-[27] of the statement:
“To the best of my recollection the first time something happened with [SS] was when I was attending the Maronite church retreat. I was about 13 or 14 years old. I remember waking up during the night to go to the kitchen and [SS] appeared. He took me for a walk outside and we sat in a grassy area between large rocks. While we sat on the grass [SS] held my hand then put his other hand on my penis on the outside of my clothing. This is the first time I recall any physical touching by [SS]. This at the time felt like an innocent quick half of a second and it didn't seem wrong at the time for me and him.
At the same retreat I recall a group photograph being taken, [SS] had his hand on my bottom while it was being taken.
After the retreat whenever I was in [SS’s] car, I always sat in the front passenger seat and [SS] would place his hand on my inner thigh. This happened several times. I was only ever in [SS's] car in relation to church activities. He was either dropping me home or driving me to a church related activity.
On one occasion in the car [SS] grabbed my hand and placed it on his penis over his clothes. I pulled my hand away. I remember trying hard to pretend these things didn't happen and I'm crazy. He was smart and knew internally I was soft, and I wouldn't speak up.
After the retreat [SS] often greeted me with a hug and then touched my crotch area. He would then say in Arabic 'kayf el baydoutt'. In English this translates to 'how are your balls?'. This usually occurred at St Joseph's church when we were preparing for mass.
[SS] would often stroke my bottom, wink at me, and blow me kisses. I recall having mixed feelings of confusion and feeling special. [SS] was very friendly. He made me feel special, like the chosen one. He would hold my hand, grope my bum, put his hand on my inner thigh and over my clothes playfully tickle my testicles. I normalised this behaviour but did not tell anyone.
When I was around 14, 15 years of age I recall being in the tabernacle of the church getting ready for 7pm mass and [SS] grabbed my penis. I smiled and moved away.”
1. In October 2005, the Church was the host for a ‘Relics Tour’ which lasted a few days and nights. The Plaintiff said in his statement that the following occurred during the tour, at [34]-[41]:
“[SS] asked my mother on the final night, more than once, if I could spend the night with him at the church, but my mother objected. What I mean by this is that, at the end of the mass, he would try and convince my mum. On the night I ended up sleeping, it was me who actually begged my mum to sleep there.
By the final night I was exhausted, and I was literally falling asleep as I stood. I waited for [SS] because he was going to give me a lift home. This was not uncommon, and my mother knew that I was with the priest, and someone would make sure l got home. My family were at the church every day, but they did not stay all night.
We closed everything up. [SS] and some other committee members were going to get some breakfast before [SS] drove me home. We frequently went to a Lebanese bakery that was close by. I cannot remember the name of it, but I remember the place we went to was closed. It was decided that we would go to the nearest McDonald's at Croydon on Parramatta Road. I remember we were trying to get breakfast before [SS] took me home. It was only me and [SS] in the car.
[SS] drove a dark green or dark blue RAV 4. I was in that car all the time. So that morning was no different other than I was really exhausted, almost dead to the world. We were driving for breakfast and suddenly he pulled over. At this stage I was seated in the front passenger seat. I had my seat just a little back and had fallen asleep.
When I woke up it was because I flinched as I felt pressure on my genital area. I froze and didn't want to open my eyes. I was scared. On a personal level, l was there but I was not there. What I felt was [SS] with his hand in my pants and he had a hold of my penis. The pants I was wearing had a shoestring at the top he couldn't get easy access or movement, he removed his hand from inside my pants and then grabbed hold of my penis from over the top of my trousers. I hate to admit this, and I felt sick, but my penis was aroused, and it was hard. My eyes were shut so I started squinting and could see [SS] with his hand leaning in towards me.
[SS] did not say anything. I could hear him breathing heavily as his hand went inside my pants again. He kept a tight hold of my penis and started to rub it up and down. He did this with his right hand. [SS] continued to do this until I ejaculated. I ejaculated all over the inside of my pants.
Nothing was said and he eventually stopped when he realised, I had ejaculated. He pulled up and sat back in his seat. I eventually opened my eyes completely and saw that we had ended up back on a street just past Acton Street, Croydon. [SS] had pulled over in a street just around the corner from the church. I don't know whether [SS] knew I was awake or not during the incident, but I know l was a statue, and my heart didn't even beat.
After he finished, with his hand he wiped himself on my pants on my thigh area because I had ejaculated inside my pants, and they were wet down the front.”
1. The cross-examination of the plaintiff, at least during the hearing in August 2023, concentrated on the background to the plaintiff’s involvement at the church, on his interactions with various persons in the church (including the second defendant) and a general scrutiny of the allegations being made by the plaintiff.
2. When the matter resumed on 17 June 2024, the cross-examination extended to the specific allegations of abuse that had been made by the plaintiff. Particular emphasis was placed on the events of the final day of the Relics Tour when the plaintiff alleges that, in the early hours of the morning, he was driven in the second defendant’s motor vehicle to a suburban location where he was abused.
3. The cross-examination was also directed at the plaintiff’s pre-abuse circumstances and those that he asserts have existed since the abuse. In general terms, the plaintiff’s allegation is that he was a happy young boy before the abuse, doing well at school and without any psychological problems. Since the abuse, on his case, he has had significant psychological problems which now leave him in a situation where he frequently requires rehabilitation, is entirely dependent on his mother for care and has become a gambling addict and a frequent user of alcohol and drugs.
4. In order to combat the plaintiff’s allegations about the changes he has experienced, the first defendant sought to maximise the plaintiff’s bad behaviour before the abuse and normalise his behaviour since the abuse. While the first defendant cannot be criticised for attacking all aspects of the plaintiff’s allegations, there was a degree of inconsistency in the approach of asserting the plaintiff was badly behaved before the abuse but well-behaved after it.
5. As a general statement, the plaintiff was an unsatisfactory witness. He was often argumentative, sometimes rude to the cross-examiner and frequently asserted that he could not remember many of the events that were put to him.
6. An unsatisfactory witness is not necessarily a dishonest witness. This is particularly the case where a witness is giving evidence about historic allegations and has since been plagued, whatever the cause, by addictions and the frequent and overconsumption of drugs and alcohol.
7. At the resumption of his evidence the plaintiff gave this evidence:
“Q. Equally it's part of your case that you've had a significant problem with drugs and alcohol since that time?
A. Definitely.
Q. Mainly marijuana, correct?
A. Over the last eight to ten months it's actually changed. I've been doing a lot of ice lately and …”
1. It is impossible for me to say if the plaintiff was under the influence of ICE or any other drug while he was giving evidence, but he certainly displayed an agitation and irritation that was perhaps consistent with consumption of ‘something’. One of the signs displayed by the plaintiff while in the witness box was a significant shaking of his legs. I note that Dr Klug refers to a “tremor of his legs” as being a characteristic of panic attacks.
2. The first defendant made much of minor inconsistencies in the plaintiff’s evidence. For example, different versions, as to detail, were put to the plaintiff in regard to complaints made to various persons. The plaintiff, again as an example, said that he and the second defendant had not gone to the bakery to discover it was closed, or to McDonald’s. However, he said to BT:
“I was sleeping at the church of the last night of the Relics, and it was early in the morning. [SS] told me that I’m taking you to get breakfast. I entered his car and we arrived at the location for breakfast, but it was closed. So, he said I’ll take you back to the church. While we were driving back, I fell asleep.”
1. The plaintiff told NB:
“(The plaintiff) said when he was in [SS’s] car on the way to get some food, he had fallen asleep. (The plaintiff) told me he woke up because [SS] was rubbing his private parts over his pants, but he pretended to be asleep.”
1. The history given to UT was:
“[SS] was taking me to breakfast in his car in the early hours of the morning. I was sleeping and he pulled over to the side of the road not far from the Church and McDonalds. I felt [SS’s] hand on my penis, and he began to masturbate me.”
1. The complaint made to Monsignor TN has the plaintiff being abused at McDonald’s, presumably in the car park:
“(The plaintiff) explained that while at McDonald’s he fell asleep in the front seat of the Priests car. (The plaintiff) said to me that he was woken up, but remained lying back still, when he felt a hand on his thigh … .”
1. It is important to note here that this being a civil proceeding, complaint evidence might be viewed in a different manner to a criminal proceeding. Section 66(2) of the Evidence Act 1995 (NSW) does not apply. However, no objection was taken to the complaint evidence. As just seen, the complaint evidence was used as a tool by the defendant to attack the credibility of the plaintiff. On the other hand, the complaint evidence can also be used by the plaintiff to show a consistency of complaint by the plaintiff and in turn can amount to some proof of what the plaintiff alleges. No limitation was sought by the defendant on the use to which the complaint evidence could be used.
2. This was the approach taken by Lee J in Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369. His Honour stated at [549]-[550]:
“This is a civil proceeding and so s 66(2) EA, applicable to complaint evidence, is not relevant. In this civil case, no objection was made as to the admissibility of any evidence of complaint or alleged prior consistent statements made by Ms Higgins, and I was not asked to exercise my discretion to limit the use of any such evidence under s 136 EA.
Hence the evidence of her contemporaneous representations to Ms Brown, Mr Payne, Mr Dillaway, Major Irvine, Mr O’Connor and, as we will see, the AFP on 1 April, can go beyond merely putting other post-incident conduct in proper context but can also be used to show consistency of conduct by Ms Higgins, some proof of the fact of what was asserted in the representations; in this way, the previous representations are relevant to the reliability of Ms Higgins in this aspect of her evidence.”
1. I agree that the complaint evidence contained differences in detail. However, the complaints were not all made at the same time and were sometimes made some years after the incident. I do not think the inconsistencies necessarily suggest dishonesty or fabrication. Identical complaints would have been hard to accept.
2. I also think it relevant that the abuse complained of, while obviously reprehensible, is not as egregious as might have been the case. A person making an allegation of sexual abuse could potentially go a lot further, in details of the abuse, than the description given by the plaintiff. I stress that this is no more than a minor factor to be considered.
3. There is another ‘pseudo-complaint’ which I think is relevant. This is the suicide note written by the plaintiff to his parents. It is not in evidence, but Dr Klug refers to it as follows:
“I note the suicide note written by (the plaintiff) which makes reference to the relevant abuse in the past.”
1. The plaintiff was also attacked on the simple impossibility of his allegations. In relation to grooming the following points were made:
1. The plaintiff had not made any allegations of grooming conduct other than in his statement in 2023 (Exhibit A). In particular, they were not included in his statement to the police in 2013 nor did he give evidence of them during the criminal trial. Importantly the statement (Exhibit 1D25), states:
“The actual incident was a one off incident.”
1. The plaintiff’s assertion that he only recalled the grooming incidents later, around 2016 or 2017, following eye movement desensitisation at a rehabilitation centre in Thailand was “uncompelling”. One of the difficulties with this assertion is that the plaintiff saw Dr Klug on 2 July 2018 and did not give a history of the pre-October 2005 incidents. In fact, the history included this statement:
“He enjoyed a secure childhood with good parenting and no other history of exposure to violence or abuse.” (Emphasis added)
1. The plaintiff’s allegations referred to him being in the second defendant’s motorcar on several occasions when the second defendant would “place his hand on my inner thigh”. I understand these allegations referred to a period when the plaintiff was 13 or 14 years old, therefore in 2003 or 2004. The difficulty is that the second defendant was on a learner’s licence from 26 March 2004 until 28 September 2004 and then on a provisional (‘Red Ps’) licence until 23 November 2005. The rules regarding learner drivers would have required the second defendant to have a licensed driver (an adult) in the motor vehicle with him.
2. Numerous incidents such as touching the plaintiff’s bottom or blowing him kisses were most unlikely because they were said to have occurred in locations where there would have been other persons about. These actions are fleeting and conceivably could occur notwithstanding the presence of other people.
3. The very first incident, said to have occurred at a retreat was unlikely because it was alleged to have occurred in a kitchen, separate from the sleeping area, and where it would have been most surprising that the second defendant was present.
1. I think the most important factor of those incidents just listed relates to the police statement. Referring to the October 2005 incident as a “one-off incident” is a plain statement that no other abuse had taken place. I would also add to this category of complaint, the discussion with Monsignor TN which occurred on 1 October 2013. A comprehensive record of the complaint was made (Annexure A to Exhibit 1D13) and contains no reference to any misconduct prior to October 2015.
2. I cannot discount the possibility of treatment releasing memories, but there is no expert evidence on this point and there is no evidence from the rehabilitation centre in Thailand to corroborate the emergence of the memories.
3. I intend to find that the plaintiff has not established the allegation of grooming. This conclusion might be seen as affecting the plaintiff’s credibility in respect of the October 2005 incident. I think that is an important element but not one that necessarily destroys his credibility. I think it is as likely that he invented the grooming as that the memory of it as a reconstruction which the plaintiff may genuinely believe. The latter suggestion becomes more credible bearing in mind that the plaintiff’s apparent memory arose during treatment, perhaps subconsciously affecting his belief in what he perceived as a memory of actual events.
Plaintiff’s functioning pre-abuse
1. I will now turn to the evidence concerning the plaintiff’s pre-abuse functioning, in particular at school. The plaintiff stated that “before the assault I performed well at school and had good grades”. The plaintiff was taken to his school records which indicated many acts of bad behaviour, leading to suspensions and a threat of expulsion. The plaintiff said he was a “good boy” before the abuse although he was also “cheeky”. The contents of the school reports suggest the plaintiff was not the model, if perhaps a little mischievous, student that he suggested. I have the impression the plaintiff, while perhaps achieving some reasonable grades, was also disruptive and often unruly. The plaintiff did suggest that perhaps the bad behaviour was somehow connected, subconsciously, to the grooming that he was being subjected to. As will be seen below, there is some support for this suggestion in the expert evidence.
2. Notwithstanding this support, the difficulty faced by the plaintiff is that the unruly behaviour highlighted by the reports precedes the alleged grooming. According to the amended statement of claim the grooming started in 2002. The plaintiff’s evidentiary statement says it started when he was 13 or 14 years of age. The starting date, on this basis, would be in the second half of 2003.
3. With these dates in mind, it is necessary to look at the reports. They are from Christian Brothers’ High School Lewisham (Exhibit 1D21). The plaintiff was in Year 5 in 2000. The reports for this year do have some positive elements. For example, he did quite well in literacy and very well in numeracy. But there was also this report of unsatisfactory conduct:
“(The plaintiff) has been thoroughly warned about acceptable behaviour, however he has consistently chosen to ignore it. I am very disappointed with (the plaintiff’s) attitude at the moment. Considering (the plaintiff) had a formal detention last Thursday, then I don’t think that he is learning his lesson.”
1. Again in 2001 there are some positive comments, but also some which contain reservations. At the end of the first semester his class teacher wrote:
“(The plaintiff) is a student who enjoys participating in all aspects of his schooling. He enjoys the social interactions and generally gets on well with others. (The plaintiff) is always happy to participate in class activities and discussions and I know that whatever the task he will give it a go.
In overseeing (the plaintiff’s) progress he shows signs of having a range of abilities that with nurturing and challenge will develop into unique talents. He has a great capacity to learn and to comprehend and often makes valuable contributions to class discussions. He demonstrates an ability to apply a range of thinking skills and can deal with abstract concepts.
The challenges for (the plaintiff) in his schooling are to be able to remain focused on his work and not to succumb to the temptation of being distracted. He also needs to take greater care in the preparation and presentation of his work. Far too often he doesn’t plan and organize his ideas and then he rushes his work decreasing his chance to fully comprehend and utilize his learning to its greatest potential.
If (the plaintiff) can apply himself fully to working harder at organizing and presenting his work then I believe that he will flourish as a student and establish himself in preparation for next year.”
1. In the first semester of 2002 the plaintiff seems to have performed slightly under the average for his class with comments ranging from “A capable student who has earned this pleasing result” to “More application is required for improvements in progress or results”. Notably in Catholic studies the plaintiff was “commended for his participation in class discussion”.
2. An interim report in Term 1 of 2002 has the plaintiff achieving satisfactory academic progress but in every subject except “PH/H/PE CORE” his behaviour is in the category of “Improvement Needed”.
3. A further interim report in 2003 suggests the plaintiff had a generally satisfactory academic progress but his behaviour again often fell into the “Improvement Needed” category. For example, his history teacher wrote:
“(The plaintiff) is capable of making a positive contribution to every lesson. However (the plaintiff) has a problem with his attitude and behaviour. He is often late to class and is easily distracted from his studies. The (plaintiff) is often very argumentative when corrected for disrupting the lesson.”
1. In May 2004, a teacher asked the principal to take action against the plaintiff after she had asked him to sit down, and he responded:
“I think you should shut the f*** up.”
1. In the same month a different teacher (in religious studies) made a note that:
“(The plaintiff) was very rude and insolent. He was displaying silly behaviour … He refused to leave the room. He was verbally abusive - challenging me.”
1. In November 2004 the plaintiff’s parents received a Student Demerit Slip which stated:
“Constant complaints from teachers about poor behaviour in class, disobeying instructions, not having a diary and rudeness, not working in class out of uniform again.”
1. The plaintiff’s parents responded “(the plaintiff) said I am very sorry and will not happen again.”
2. On 26 November 2004, in another demerit slip, it is said that the plaintiff:
“Put a piece of paper into overhead projector and set fire up.”
1. The plaintiff’s parents responded: “(The plaintiff) is sorry and will do better next year.”
2. In February 2005 the deputy principal wrote to the plaintiff’s parents stating:
“Your son (the plaintiff) was involved in an incident last week in which he engaged in unacceptable behaviour whilst on detention, which involved the use of threatening language to a teacher.”
1. On 4 March 2005 the principal wrote to the plaintiff’s parents:
“Your son (the plaintiff) was involved in an incident yesterday in which he engaged in unacceptable behaviour whilst at sport, which involve the use of highly inappropriate language.
I am writing to advise that he has been suspended from school effective immediately and has been withdrawn from classes today….
(The plaintiff) must understand that such instances of poor judgment will place his position at Christian Brothers in jeopardy.”
1. On 7 March 2005 a note was put in the plaintiff’s student file about disrespectful behaviour while on a school excursion. The following day the principal wrote to the plaintiff effectively threatening expulsion if the plaintiff’s behaviour did not improve:
“Mr Roberts also made it clear that if you seriously, wilfully or repeatedly breach the promises that you made this morning, then your enrolment at CBHS Lewisham may be terminated immediately.”
1. The school reports obviously contradict the plaintiff’s assertions about his pre-abuse performance at school. The plaintiff’s mother, in her statement (Exhibit L1) said the plaintiff was “smart and he was honest, and he showed respect.” The latter attribute seems to have often been absent at school. The plaintiff’s mother added that “He was a good student, and he was definitely loud and happy.” He certainly seems to have been “loud and happy”, but perhaps not as good a student as she suggests.
2. The overall impression I have from the school reports is that the plaintiff and his mother have somewhat glossed over the plaintiff’s behaviour before October 2005 and that the inappropriate behaviour extends to a period well before any possible act of grooming by the second defendant might have taken place.
Plaintiff’s conduct since leaving school
1. In relation to the plaintiff’s conduct since leaving school, his case is that since losing his job in 2017 with a security firm (SNP) he has not been able to work, he has found it difficult to leave the home, he has been wholly dependent upon his mother, and he has been dependent on assorted persons for finances.
2. The plaintiff said that when he did go out, he was in a “disassociated state”, sometimes effectively wandering, or driving, in a meandering fashion without purpose. He said he never wore a seatbelt because of the abuse that he had suffered while being in the motorcar with the second defendant. He said he was frequently stopped by the police for speeding and not wearing a seatbelt. It was put to him that this evidence was inconsistent with there being only one recorded charge of failing to wear a seatbelt in his driving record. He said this was because he had managed to persuade the police not to proceed on the seatbelt charge. They sympathised with him after he told them the reason for his not wearing the seatbelt.
3. Another apparent inconsistency highlighted by the first defendant was the plaintiff’s assertion of uncontrolled defecation. He said this happened frequently. It was pointed out to him that none of the institutions where he had spent time had any record of this condition. The plaintiff responded that the institutions provided a different environment than his bedroom and the Valium he was prescribed at the institutions assisted in preventing this condition. He said:
“Q. I want to put to you that on not a single occasion that you were in one of those facilities is there a record of you soiling the bed at night, is there?
A. Definitely not a record but it's definitely happened plenty of times. And I might add, I'm - I think Valium helps a lot with my brain and helping me with sleep and they did put me on - she tried me on a lot of crazy medications, which I kept refusing as much as I could but it's definitely a different environment than my bedroom.”
1. Somewhat surprisingly, the plaintiff does not receive any government assistance by way of social security payments or a disability pension. He said this was because he could not be bothered with the questions in the application process. I found this answer to be almost extraordinary, bearing in mind his persistent need for money for his gambling addiction and the purchase of illicit drugs. This was an example of the plaintiff’s obviously illogical evidence perhaps supporting his case rather than contradicting it.
2. The plaintiff’s mother confirmed his attitude to obtaining government assistance.
3. In respect of work, it was put to the plaintiff that he had received many supportive references and he had lasted in different places of employment for far longer than he had suggested. The first defendant posed the question of how he could obtain good references against his assertions that he could not hold a job for very long and was frequently dismissed for bad behaviour. The plaintiff responded that he would lie in respect of employment in order to obtain other jobs and that he was effectively bluffing his way into a new prospect of work.
4. The plaintiff’s assertions that he was housebound and entirely dependent on his mother for care were tested by outlining to him the various trips that he had undertaken, usually alone, and to distant destinations. The plaintiff was also cross-examined in detail about his expenditure, as revealed in the transactions with a CBA account.
Plaintiff’s travels
1. Starting with travel, the plaintiff accepted that he had travelled alone but said that he was generally travelling to a destination where he would be met on arrival and farewelled by a relative.
2. Exhibit 1D39(B) is a schedule of the plaintiff’s overseas travel. The first trip is to Lebanon in June 2009 for a month. The plaintiff would then have been 18 years of age. There are then 16 more trips, the last having been between 25 April 2024 and 13 May 2024 when the plaintiff went to Bali. The travel to Lebanon involved staying with relatives. During his two trips to the United States the plaintiff was either accompanied by family or stayed with his sister at the convent in Massachusetts. It is unclear why, and for how long the plaintiff visited Dubai and the United Arab Emirates. These may have been short trips associated with travel to other places. The plaintiff’s trip to Italy in May 2017 was to attend a friend’s wedding. I note that three days after returning from Italy the plaintiff was admitted to Concord Repatriation Hospital for four days.
3. There are seven trips to Thailand, presumably associated with rehabilitation treatment at ‘The Cabin’ Chiang Mai. There are some discrepancies, however. For example, the plaintiff travelled to Thailand from 3 June to 5 October 2017. His admission at The Cabin was from 5 July 2017 to 4 October 2017. He seems to have been in Thailand for about a month before going into the rehabilitation centre. But according to Exhibit 1D39(A), the plaintiff was in Concord Repatriation Hospital from 20 to 27 July 2017, a period during which the schedule of plaintiff’s travel (Exhibit 1D39(B)) suggests he was in Thailand. I note from the bank records (Exhibit 1D34) that on 12 June 2017 a transfer was made to The Cabin on the plaintiff’s CBA card.
4. It is also notable that immediately before leaving for Thailand the plaintiff had been at Concord Repatriation Hospital for a week.
5. The first defendant prepared the schedules of travel and hospital admissions, and no doubt used its best endeavours to ensure they were accurate. As stated, they are not accurate. The records were apparently produced from reliable documents emanating from the Department of Immigration and the various medical facilities. I do not know why there are discrepancies, but I do bear in mind the possibility of inaccuracies especially when having regard to the first defendant’s submissions concerning the plaintiff’s conduct.
6. There were some destinations, such as two trips in 2023 to Surfers Paradise, where the plaintiff was not being chaperoned by family. On the first trip, in February, he flew but on the second trip he drove to Surfers Paradise. The plaintiff said that he had attempted to go away as an act of rehabilitation, but he soon found himself on a “bender”, consuming copious amounts of drugs and alcohol, and gambling.
7. The plaintiff’s gambling seems to be through organisations such as Sportsbet which allow him to place wagers online, probably through an app.
8. The plaintiff seems to receive large sums of money, in particular from his mother. For example, when he was in Surfers Paradise in February 2023, he received $5,633 from her over an 11-day period. I have little doubt that the plaintiff has taken significant advantage of his parents, in particular his mother. He has obviously lied to her about where he has travelled and how he has used the money she has given him. She has unfortunately taken him at his word and not exercised greater control in providing him with funds.
9. I have already referred to Exhibit 1D39(A) which is the schedule of the plaintiff’s in-patient admissions in Australia. There have been 19 admissions between 20 December 2016 up to 6 November 2023. Most of the earlier admissions were to Concord Repatriation Hospital; most of the latter admissions are to St John of God Hospital in Richmond. There is one admission to Kedesh Rehabilitation service, two admissions to Lives Lived Well and one admission to the South Coast Private Hospital. Some of the admissions are fairly short but others are lengthy, such as the admission to St John of God Hospital from 3 June to 10 July 2022. I also note that the plaintiff was admitted to Concord Hospital on 23 March 2022 and then discharged to St John of God Hospital on 28 March 2022 where he remained for a month.
10. I observe here that the normality of the plaintiff asserted by the first defendant, through the plaintiff’s daily habits and travel, are significantly at odds with his medical history and in particular his frequent admissions to psychiatric and rehabilitation institutions. As seen above, a trip to Italy for a wedding may be seen as an act of significant independence but must be weighed against the plaintiff being admitted to hospital three days after his return.
Other witness evidence
1. The conclusions I have just expressed were reinforced during the oral evidence of the plaintiff’s mother (KU). KU was pressed in cross-examination to retract parts of her written statement (Exhibit L2) the suggestion being that the plaintiff is far more active and independent than asserted by both KU and the plaintiff. KU accepted that the plaintiff did go out from time to time, that he did visit shops and food outlets, but she was adamant that he preferred to be at home and spent most of his time at home. As to his periods out of Sydney, like the plaintiff, KU said that Sydney was a trigger for him and that he was happier, and more capable, outside of Sydney.
2. One of the trips about which questions had been asked, was the plaintiff’s trip to Bali earlier this year. According to the plaintiff he had been accompanied by SU, a relative in the 40 to 50 year age group. KU said there were two relatives bearing the same name, one who was close to the plaintiff’s age and the other who was about 65. The older relative was a real estate agent who KU could not contemplate as having accompanied the plaintiff on a “bender in Bali”.
3. KU was not aware that the plaintiff had gone to Bali; she thought he had gone to Thailand because this is what he told her.
4. KU confirmed the plaintiff’s opinion of his driving ability, stating that he was “reckless on the road”. She was not aware that he had driven to Surfers Paradise in July 2023, and she was clearly kept in the dark by the plaintiff about a lot of his activities. KU knew that her son smoked marijuana, but she did not know about his consumption of ICE. KU often did not know where he was, feeling that if he was away for some days, he was safer because he was outside of Sydney.
5. KU agreed that the plaintiff defecated in his bed from time to time although I had the impression this was not as frequently as suggested by the plaintiff.
6. KU conceded that the plaintiff had problems at school before October 2005. There was a suggestion by the plaintiff and Dr Klug that it was possible that these problems were occurring while he was being groomed by the second defendant. However, the suggestion would be inconsistent with my conclusion that the grooming has not been established.
7. It was put to KU that she had exaggerated her evidence in order to support the plaintiff. I think she was endeavouring to give her total support to the plaintiff, but I did not think she did so dishonestly. In particular I accept that she does provide an average of four hours per day in assistance to the plaintiff and has done so for some years. I also accept that she will continue to do so for as long as she is able.
8. Importantly no challenge was made to KU suggesting that the plaintiff’s complaints about the abuse were not made. KU was however challenged on her assertion about the conversation she alleges occurred on the evening before the abuse. According to her statement the second defendant had said that he would drive the plaintiff home and had added:
“He will be safe with me, you can trust me.”
1. It was suggested to KU that the conversation, in fact the whole incident, had not occurred. The first defendant sought to take advantage, in cross-examination, of the obvious confusion held by KU as to whether or not the plaintiff had slept over at the church on a night previous to the alleged conversation. I am satisfied that KU’s evidence, after clarification, was that the plaintiff had not spent a night at the church before the night (and early-morning) of the alleged abuse.
2. The plaintiff has made two trips to the United States to visit his sister (NU) who lives in Massachusetts. The first trip was with his family. The second, in June 2023, was made alone. NU is a sister in the Maronite Servants of Christ Light Community. She resides in a convent which has cloisters for the sisters upstairs and a guestroom on the ground floor. The guestroom is large enough for a maximum of two persons.
3. The plaintiff resided in the guestroom for about five weeks during his 2023 visit. During this time he tidied his room, although there was a cleaner available for some of the time. The plaintiff went out frequently at night, using an Uber service or he was driven by Sister NU.
4. As with other witnesses, Sister NU was not challenged on the detail of the complaints of abuse made by the plaintiff. Sister NU confirmed that there were three youth groups at the church when she attended, and she had actually taught at one of them. She said she knew KN. He was a teacher of the group for teenagers.
5. Sister NU first went to America in June 2005. She returned a year later. She became friendly with the second defendant she said:
“He was very active and worked hard to get things done in and around the Church. He was friendly towards me. At times he was playful with me.”
1. Sister NU returned to America in 2008. She took her first vows as a nun 2013 and her final vows when she became “married to Jesus” in 2017. She stated that it was in 2013, during a trip to Australia, that the plaintiff told her he had been abused by the second defendant. She said:
“I saw the emotion and tears in his eyes when he spoke to me and knew that it had affected (the plaintiff).”
1. Sister NU was an overwhelmingly impressive and honest witness. The first defendant said that Sister NU gave “compelling and frankly given evidence”.
2. Following the plaintiff’s evidence being suspended, the first witness called was KN. He is a devout Maronite Catholic, who is also a teacher and frequently delivers religious education. In around 2004 and 2005, KN gave talks to young persons on Saturday afternoons at the Church. These talks were often well attended, and KN seemed at pains to stress his contribution to their success.
3. In his statement KN describes an incident in 2011, which the plaintiff submitted, indicated the second defendant’s interest in other males. The incident is described as follows at [9]-[15]:
“I was standing in the Sacristy preparing to give Holy Communion.
[SS] walked into the Sacristy, and he said “Hello”.
[SS] placed his hand on my lower chest and caressed it.
This immediately made me feel uncomfortable and awkward.
[SS] then touched me a second time, near my stomach.
I then felt [SS’s] hand move lower.
I was uncomfortable with [SS] touching me this way and I instinctively pushed his hand away.”
1. KN’s statement also includes some complaint evidence. He states at [24]-[25]:
“After 2005, I did not see (the plaintiff) for many years. The next time I saw him was around 2010. I saw (the plaintiff) outside the Church. We discussed his disclosure relating to [SS].
I said words to the following effect, (the plaintiff), you are an adult now, you should go to the Police if something inappropriate has occurred with [SS]. You should submit your complaint to the Police and then speak to the Bishop as well.”
1. KN stated that he later spoke to Bishop CU and told the Bishop what the plaintiff had said to him.
2. The theme of the cross-examination was to undermine the credit of KN, to suggest that his evidence was biased against the defendants. This was said to arise from the Church hierarchy halting his progress from Sub-Deacon to Deacon. It was suggested to him that he had argued with the Bishop and had become angry about his lack of progress within the Church. He denied any ill will towards the church. He said he remained a devout Maronite Catholic and that he had not progressed because the then attitude of the Church in Australia was not to ordain married men.
3. KN was a loud and sometimes argumentative witness, but I did not think he was dishonest. He clearly valued his involvement with the Church, and I reject any notion that he would act with the intent of harming the Church.
4. The attack on KN’s credit was sought to be substantiated through the later evidence of Monsignor NZ, the first defendant’s Vicar General. According to Monsignor NZ, KN had acted in a violent way during an incident with Bishop BB. Monsignor NZ said he saw KN roughly deal with a gift that had been given to the Bishop (probably a box of cucumbers), rant and rave, and ultimately stomp on some religious garments.
5. KN denied he had acted in this way but did accept that there had been disagreements with the Bishop. As will be seen below, I was generally not impressed with the evidence of Monsignor NZ, but he did corroborate KN’s assertion that, at the time, the Church in Australia was not ordaining married men.
6. Another witness who was subjected to criticism, almost character assassination, from Monsignor NZ, was Father KB. Father KB had worked with the second defendant at St Joseph’s as his assistant.
7. The first statement tendered, as coming from Father KB (Exhibit C1), was unsigned and when read by Father KB was found to have some inaccuracies, leading to the preparation of a second statement (Exhibit C2).
8. In his second statement Father KB says he witnessed the second defendant “running the tips of his fingers along the chin line” of a young man. He also says that he “noticed that on several occasions [SS] was tactile with young men to an extent I considered abnormal”. I asked Father KB what he meant by tactile, and he said he meant that when young men were touched by the second defendant he allowed his hand to linger longer than necessary. He specifically said that the manner in which the second defendant physically interacted with adult males was not normal in either Lebanon or Australia.
9. Father KB records a conversation he had with Monsignor NZ sometime after the second defendant’s conviction but prior to the appeal decision. The conversation was as follows:
“Msgnr NZ: I told [SS] that you are an atomic weapon and that he should use you more in the parish.
Father KB: I found it distasteful the way [SS] kept hugging adolescent males, putting his head on their chest with a beatific smile on his face.
Msgnr NZ: Yes, I have told [SS] about this before, and told him that it is not appropriate”.
1. Monsignor NZ entirely denied the above conversation. His office was two doors away from that of Father KB. He even rejected the possibility of a casual conversation during the workday when the two men might have come across each other.
2. I prefer the evidence of Father KB. I have already made some comments about Monsignor NZ. I do not accept his evidence. He came across to me as an unswerving advocate for the Church, unwilling to countenance the possibility of one of their priests acting inappropriately.
3. Father KB’s statement also contains a conversation with KN, in which he says the latter told him that “on a few occasions, when I was wearing my jibbeh [SS] placed his hand on my genitals.” In his evidence KN did not recall this conversation, or SS placing his hand on his genitals. KN did however refer to SS touching him near his groin so that some confusion may have arisen in precisely what was said as between Father KB and KN. I do not think this inconsistency affects the credibility of either of these two witnesses.
4. Under cross-examination, Father KB said that he had been an assistant to SS and that there was friction between them. He felt that he was not being utilised sufficiently and that there were some issues with the Mass.
5. Father KB agreed that he did not like SS but said he had not made up his evidence and he bore no animus towards the second defendant. Having regard to his conversations with SS I do not find it the least bit surprising that Father KB did not like SS.
6. GT provided a statement (Exhibit D) and was cross-examined. He struck me as a young man doing his best to tell the truth and it seemed to me that he avoided embellishing the case when he had good opportunity to do so. This opportunity arose when he was cross-examined about the celebrations at the Church following the arrival of the Relics Tour from Lebanon in October 2005. It is to be remembered that it was during these celebrations that the plaintiff alleges the incident in the motor car occurred.
7. Under cross-examination, GT said that he too had been given a lift home, on a separate occasion during the celebrations by the second defendant. This fact is not included in his statement. When asked if anything had occurred on this occasion, thus being presented with an opportunity to make allegations against the second defendant, he said nothing untoward had happened.
8. In his statement, GT refers to many occasions when the second defendant would touch him on his thigh and on his leg. He was then about 13 or 14 years of age. He stated at [9]-[11]:
“When [SS] would touch my leg, he would often slide his hand from my thigh area towards my groin. When [SS] did this, I would push his hand away. I pushed it away because his actions made me uncomfortable, and his hand was entering an area where it didn’t belong, that is my genital area.
He will try and run his hand up my thigh during conversations. He would be talking and just do it without hesitation.
[SS] attempted to touch my penis and genitals on occasions. At the time I would push him away with my hands to stop him touching me there. I knew what he was attempting to do, and I knew it was wrong. I didn’t tell anyone as I felt like I could hold my own against it. I just felt I could deal with it myself.”
1. In his statement, GT also describes the complaint made to him by the plaintiff. He says that in about 2006 the plaintiff told him what the second defendant had done. The plaintiff had said:
“We were in his car and [SS] thought I was asleep, and he reached down and played with me until I came.”
1. Under cross-examination GT said he had been an altar boy from time to time, usually on Sundays for the 11:00am mass. GT would attend with his family. GT said the second defendant was a Deacon who was involved in the mass. GT described his duties, which included putting on white robes, lighting candles, preparing wine and water, and lighting incense and placing it in a container. GT said that he would get ready in the same room as the adult officials, and that dressing in a separate room only occurred at a later time.
2. GT said the arrival of the Relics Tour was very exciting. He went to the welcome ceremony where he was an altar boy. The plaintiff also took part. It was at this stage that GT gave evidence about being taken home by the second defendant. He said that the second defendant’s motor car was, he thought, a Daihatsu, it was dark coloured and looked like a RAV 4. Notably, the plaintiff described the vehicle in which he was assaulted as a RAV 4.
3. The first defendant tendered photographs of the plaintiff’s motor vehicle (Exhibit 1D7), a Daihatsu Terios, which appears to be a small SUV vehicle. The plaintiff also tendered photographs of a Toyota RAV 4 (Exhibit K), which to my inexpert observation looks at least similar in style to the Daihatsu.
4. GT was shown photographs to suggest the plaintiff’s continued involvement in church events. This was to counter the suggestion that the plaintiff alienated himself from the second defendant, and the Church, following the alleged assaults upon him.
5. GT said he was still friends with the plaintiff but saw him rarely. I reject any suggestion that his evidence was influenced by his ongoing friendship with the plaintiff.
6. BT was about 13 years old when he attended Bible studies on Saturday evenings at St Joseph’s. The second defendant was his teacher. At about the same time, BT met the plaintiff and they became close friends. They were “passionate” about their religious studies.
7. BT stated (Exhibit E) that he remembered the Relics Tour and thought that “it was around this time that I first noticed (the plaintiff) stopped attending Church altogether.” The plaintiff initially refused to explain his non-attendance, but in about 2005, when in the swimming pool at DU’s house, the plaintiff said:
“I was sleeping at the church of the last night of the Relics, and it was early in the morning. [SS] told me I’m taking you to get breakfast. I entered his car and we arrived at the location for breakfast, but it was closed. So, he said I will take you back to the church. While we were driving back, I fell asleep.
…
When I woke up, I found myself in the side street of the church and I felt his hand on top of my pants on my dick. I was too shocked to move or open my eyes because I couldn’t believe what was happening. I kept my eyes closed. He then started to rub my dick from the outside of my pants. He kept rubbing my dick until I had an erection and kept going until I blew. Then he wiped the cum off his hands on my pants. I kept my eyes closed and I couldn’t believe what was happening. Then he woke me up once we were back in the church, but I was awake the whole time just too scared to move.”
1. The plaintiff then told BT that the abuse was the reason he had stopped going to church. The plaintiff also said that the assault had occurred in SS’s motor car.
2. In about September 2013, after a conversation with UT about a different priest, BT was told to contact the plaintiff to persuade him to disclose what had occurred. BT met the plaintiff, together with UT and NB at the airport where the plaintiff repeated what he alleged had occurred. The plaintiff was convinced to make a report.
3. Under cross-examination BT was asked about being an altar boy and some questions concerning KN. BT said that he had not stayed overnight during the Relics Tour.
4. BT said that the conversation in the pool had occurred after some alcohol had been consumed. However, he stated that nobody was “blind drunk”.
5. NB’s statement is Exhibit F. NB was also a friend of the plaintiff, BT and DU, the latter being the plaintiff’s cousin. NB recalls the plaintiff as an altar boy. He thought the plaintiff “was very religious and was always helping at the Church”.
6. NB remembered the Relics Tour and said that the plaintiff “was there for most of the time”. NB was present at the pool incident described by BT. He heard the plaintiff’s recollection of the events, and he also said that some alcohol was consumed.
7. NB said that after the disclosure the plaintiff, “started to change as a person. He started to gamble, and he would always be playing poker. Sometimes when I would see (the plaintiff) I thought he was off his face”.
8. In 2012 NB spoke to the plaintiff and told him to report the abuse. The plaintiff said he did not wish to do so. “He told me he wanted nothing to do with the Church.”
9. The cross-examination of NB concentrated on events at the church. He also said that although he met the plaintiff at church they went to different schools.
10. Notably, like all the other complaint witnesses, it was never put to him, that the plaintiff had not made the complaint of being abused.
The Second Defendant
1. The second defendant prepared two statements which became Exhibits 1D5 and 1D6 respectively. In his first statement, prepared on 12 December 2020, the second defendant relays that he came to Australia in 2002 with the intention of becoming a priest. He had completed a degree in theology and philosophy in Lebanon. He was ordained as a Sub-Deacon in Tripoli.
2. In 2003 the second defendant started attending St Joseph’s. He began assisting at the Church on weekends. At the end of 2004, or early 2005, Monsignor FT asked him to join the church in Australia. After receiving approval from an archbishop in Lebanon, he was ordained, on 14 May 2005, as a Deacon at St Joseph’s. He was ordained as a priest on 6 May 2006.
3. After becoming a Deacon, the second defendant became more involved in the services and assisted with youth groups. However, he stated that his main role was to ensure “that the church was properly prepared for mass.”
4. The second defendant stated that he knew the plaintiff, but he denies all the allegations made against him. The second defendant heard about the allegations at the end of 2013. He was charged and pleaded not guilty. After being convicted and sentenced, his conviction was overturned on appeal. After his release from prison, he returned to Lebanon.
5. In addition to denying the allegations the second defendant stated that after the Relics Tour he thought he had a good relationship with the plaintiff.
6. In his second statement, dated 26 May 2023, the second defendant again denies the plaintiff’s allegations, and also denies allegations made by other witnesses called on behalf of the plaintiff. He specifically denies that any physical action he took, such as “a hug on occasions” had “any sexual connotation or involved molestation”. Hugs were given by way of “emotional support”. He denied kissing adolescent males and as a general statement, all of the allegations made by the plaintiff’s witnesses.
7. In respect of HC, the second defendant admitted to the exchange of text messages referred to by HC (Exhibit T) but said that the messages concerning circumcision and the offers to assist in the shower were made in jest. There were other reasons, but SS said he could not reveal them because they were protected by the rules of the confessional.
8. Strangely, under cross-examination, the second defendant was asked to read Matthew chapter 12 verse 34 aloud to the court. I am not sure what was behind this request.
9. The cross-examination of the second defendant was generally constituted by putting to him the assorted allegations made against him. In each such circumstance, he simply denied the accusation. The manner of the cross-examination made it difficult to assess the second defendant as a reliable, or otherwise, witness.
10. The first defendant tendered a number of witness statements from persons who were not required for cross-examination. Some of them read like character references for a person about to be sentenced.
11. BC was appointed as the first defendant’s financial administrator in 2006. In 2013 she became the Child Protection Officer. Shortly thereafter she was told about the allegations made by the plaintiff. The second defendant had been stood down from his duties. BC states that the second defendant was an “enthusiastic and well liked member of the choir …” She continues:
“I also observed [SS] from time to time around the Church and with Parishioners and I did not ever see any conduct on his part which caused me any concern in relation to the safety of children in the parish. If I had such concerns I would have raised them with the Parish Priest.
I can recall attending St Joseph’s church during the Relics Tour in 2005. It was a very busy period, a number of services were being held and many people attended the Church both from within the Parish and from outside. I do not recall seeing any altar server in and around the church during that time on his own late at night and after a service had concluded, and I do not recall seeing any altar server getting into a car with priests or deacons.”
1. Suffice to say that if events were as busy and bustling during the Relics Tour as BC suggests, the fact that she did not see people getting into cars is meaningless. Not only does the plaintiff say he went to the vehicle, but so too did GT, who I found to be a very believable witness.
2. Like Monsignor NZ, there is a distinct air about BC’s statement of an overriding desire to protect the reputation of the Church.
3. Monsignor FT was ordained as a Priest in 1999 in Lebanon. In 2004 he came to Australia where he was initially an Assistant Priest and then appointed as a Parish Priest at St Joseph’s in September 2004. When he started at St Joseph’s it was a busy parish with three assistant priests and the second defendant as a sub-Deacon.
4. Monsignor FT never noticed any inappropriate behaviour at the parish. The allegation made by the plaintiff is the only allegation that he has encountered in respect of St Joseph’s.
5. Monsignor FT has a good recollection of the Relics Tour in October 2005, he stated that “it was a very significant moment for Maronites, similar to the Pope visiting.” There were lots of services, the Church was open during the day and night, the staff was very busy and there were kiosks for souvenirs and food.
6. Monsignor FT has no recollection of the plaintiff during the Relics Tour. Nevertheless, he continues:
“I would regard it as extremely improbable that (the plaintiff) would have been alone at the Church overnight during the Relics’ Visit. Whilst I could not observe the Church 24 hours a day, I cannot see why anyone would have permitted that to occur or for what reason he would have been there without his family as a teenager.”
1. Surprisingly, the just quoted passage had not been objected to. Nevertheless, the plaintiff was part of a devout family and a special request had been made for him to remain at the church overnight. The extreme improbability envisaged by Monsignor FT is at odds with the second defendant requesting that the plaintiff remain, and the plaintiff requesting permission from his mother. I also see no inconsistency, or improbability, in a young man being given a lift home by a church official, apparently concerned for the welfare of the youth.
2. As to the second defendant, Monsignor FT stated:
“In my observations he was a very committed person who was very passionate about his ministry and well-suited for the pastoral work. He was much loved and respected by the parishioners and I received positive feedback about his contribution to the Church. Prior to his ordination in 2006 as a priest, I was asked whether I would recommend him for priesthood. I did so without hesitation. I had observed the way in which he treated children and adults alike and had no concerns at all in relation to that. I had heard no allegations about him conducting himself inappropriately and had observed nothing unusual about his behaviour.”
1. Monsignor FT’s recommendation that the second defendant be a priest is reminiscent of Monsignor NZ’s sponsorship of Father KB, an action taken it would seem more as a formality than an endorsement.
2. Monsignor TN lives in Lebanon. He was to give evidence by Audio Visual Link, but the plaintiff chose not to require him for cross-examination. Monsignor TN became the Parish Priest at St Joseph’s in 1998 and continued in that position until 2004. He remembered the plaintiff’s family, consistent with my observations in respect of Monsignor FT, as “active parishioners” who regularly attended services at the Church. He also recalls the plaintiff as an altar boy from time to time.
3. In relation to the second defendant’s status at the church, Monsignor TN stated:
“While I was Parish Priest at Croydon, I also came to know [SS]. I recall at the time he had already been ordained in Lebanon as a Subdeacon and not long after arriving in Australia he became involved in helping St Joseph’s Parish, on a part-time and volunteer basis. After my time at St Joseph’s, he was ordained a Deacon and commenced full-time ministry in the Parish and was subsequently ordained a Priest and again appointed to serve in the Parish.”
1. The important words in the passage just quoted are “on a part-time and volunteer basis”. They are directly relevant to the first defendant’s submission that, as at October 2005, the second defendant was not employed by the first defendant and therefore the first defendant could not be vicariously liable for his actions.
2. Monsignor TN also remembers the second defendant as “a helpful participant in pastoral administration in the Parish and was a well-liked and enthusiastic worker.” He went on:
“I was able to observe [SS] first hand in and prior to 2004 and I did not see anything which caused any concerns to me as regards risks to children in the parish. I found [SS] to be of significant assistance in the work of the Parish. He was a hard worker, responsible, reliable, and committed to his pastoral work and I regarded him as a valuable member of the pastoral team. I was surprised some years later when told of the allegations made against him by (the plaintiff).”
1. This passage also has some relevance to the vicarious liability question. Assuming the first defendant did not employ the second defendant, it is nevertheless clear that the first defendant involved him in the work of the church and in dealing with the parishioners. The first defendant made the second defendant a part of its “pastoral team”.
2. Notwithstanding Monsignor TN’s obvious admiration for the second defendant, the church executives asked him to be the plaintiff’s pastoral support during the criminal trial. In an annexure to his statement, Monsignor TN gives details of the plaintiff’s complaint to him on 1 October 2013. The details of the complaint are generally consistent with the plaintiff’s evidence.
3. Monsignor TN relates that the plaintiff was crying when making the complaint and it was only after some “initial hesitation” that the plaintiff gave him permission to take up the matter with the Church. My reading of the annexure reveals a young man reluctant to describe the abuse, and markedly moved by his oral recollection of it. I think it amounts to significant complaint evidence.
4. TL has been a parishioner at St Joseph’s church for the last 35 or 40 years. She remembers the Relics Tour. She worked with the second defendant whom she thought of as a “close friend and support.” She said:
“We would get coffee together, he came for dinner at my home, and we sometimes worked alone together in his office or in the sacristan.”
1. TL said the Relics Tour was a “very busy and exciting time for the parish, a huge event.” She said the Church was open day and night. She worked under the supervision of the second defendant, she said that “he was on the move and was usually busy answering people’s queries or assisting with preparation and activities. There was a constant flow of worshippers and parishioners whenever I was at the Church.”
2. I note that TL said she remained at the event until about 10pm so that she is clearly unable to comment on events later in the night.
3. TL was “shocked” to hear about the accusations against the second defendant. She saw him “as a man of strong character and decency and regarded him very highly.”
4. CT is another person who was a regular attendee at St Joseph’s. She became close friends with the second defendant. She thought “he was a kind and trustworthy person.”
5. CT remembered the plaintiff. She “did not see any indication that he had a particularly close relationship with SS”. SS never gave her children a lift home and she never “saw him giving another parishioner a lift.”
6. The comments in the preceding paragraph are of little assistance. The fact that her own children were never given a lift, or that she didn’t see other persons given a lift is irrelevant to my decision about whether the plaintiff was ever taken home by the second defendant.
7. CT also has a good recollection of the Relics Tour. She said:
“I was part of a group of parishioners that was there all three nights during the all night vigil, overseeing the visual and praying. We had been asked to attend and be there during the time so the priests could go back to their house and sleep. I did not see any children at the Church during the all night vigil, including the plaintiff. I knew the plaintiff, and I would have recognised him if I had seen him. If I had seen any children by themselves, I would have been concerned and made arrangements for them to be picked up by their parents.”
1. CT cannot exclude the possibility of the second defendant giving the plaintiff a lift home while he was supposed to be in his house sleeping. The arrangements that she poses for children to be picked up by the parents is not inconsistent with a parent giving permission for another person to give the child a lift home.
2. CT, like the other ‘character witnesses’, does not overly assist with the issues before me. The second defendant may well have been a decent person to them, but that does not exclude his alleged actions in relation to the plaintiff. Once again, there is also an aura of a need to protect the Church. These parishioners were devout members of the Church and no doubt formed loyal and trusting relationships with the clergy. Their desire to protect the Church is not surprising and to some degree perhaps affords them a degree of insulation from matters they might have missed.
3. The final lay witness to give evidence was DU. He is the plaintiff’s first cousin and also his friend. His statement is Exhibit V. He states at [5]-[8]:
“(The plaintiff) and I attended youth group on Saturday afternoons together. I also helped as an altar boy. We were both very involved in the Church and spent a lot of time there.
(The Plaintiff) said to me words to the effect “he touched me man and I didn’t know what to do”. I asked (the plaintiff) what he meant by that statement, and he said words to the effect “He touched me on my inner thigh. I was too embarrassed and frozen to act, and I blew”.
I could see (the plaintiff) was emotionally distraught.
(The plaintiff) told me that it occurred in [SS’s] car after the Relics.”
1. In his oral evidence DU said that the disclosure had been made within a few days of the incident. DU said to the plaintiff “bury it and do not tell anyone”. The disclosure was repeated on other occasions including by the swimming pool at his home. BT was present.
2. During the cross-examination of DU, an attempt was made to present the plaintiff as acting in a generally normal fashion, by going out during the day. DU agreed that the plaintiff put money in DU’s account from time to time and that DU would place bets for the plaintiff and buy cannabis for him. DU would also drive him places from time to time although DU had never travelled with the plaintiff.
3. DU was unaware that the plaintiff had been to Surfers Paradise in 2023 and he did not know that the plaintiff was using ICE. He did know the plaintiff used Xanax but did not know where he sourced it from.
Notice to admit facts (Exhibit U)
1. Subject to the qualification that the facts referred to a period prior to 6 May 2006, the second defendant admitted that, in respect of the first defendant:
1. it had not conducted a working with children check;
2. it had not obtained a full psychological and medical report; and
3. it had not conducted any police checks in any country where the second defendant had lived for the previous five years, relevantly referring to Lebanon.
1. These admissions were tendered to support the allegation of negligence on the part of the first defendant. Assuming the checks were required at the time, the failure to carry them out could suggest negligence on the part of the first defendant. The difficulty is that there is no evidence of what the checks might have produced. Any negligence therefore could not be seen as having caused any harm.
2. As to not obtaining a psychological and medical report, again it is unknown what such a report might have revealed.
3. The most that can be made of the first defendant’s failure to obtain the checks is that it had a somewhat casual attitude to ensuring its employees could work safely with children. Such a finding is not a basis for a finding of negligence causing harm to the plaintiff.
The experts
1. Five medical experts were retained by the parties. The plaintiff tendered reports from Dr Klug, Ms Curtain, and Dr Dilati. The first defendant tendered reports from Dr Brown and Mr Williamson. Drs Klug and Brown are psychiatrists. They produced a joint report and gave evidence concurrently. Ms Curtain and Mr Williamson are occupational therapists. They also produced a joint report and gave evidence together.
2. Dr Dilati is a psychologist. He was not required for cross-examination.
3. Ms Curtain is of the view that the plaintiff requires 24-hour care. Importantly this was not based on any physical need, but on the need for supervision necessary to prevent self-destructive behaviour. The plaintiff’s addictions required him to be constantly supervised.
4. Mr Williamson had a very different view. He recognised that the addictive behaviours could be harmful but essentially said that the plaintiff was an adult who could make choices as he pleased and would not be assisted by permanent care. His formula, as expressed in the joint report, did not exceed four hours of assistance per day.
5. Importantly, when Mr Williamson was asked to make a number of assumptions he changed his view to decrease the amount of care down to three or four hours per week, other than during episodes of mental illness. Ms Curtain did not change her views although she did concede that the assumptions painted a different picture to that which had been presented to her by the plaintiff and his mother, but she nevertheless thought that the psychiatric opinion still justified the full-time care. Ms Curtain stated that she would have liked to have investigated the background to the various assumptions.
6. The assumptions put on behalf of the first defendant were said to have been derived from the evidence given in the case so far. Thus, for example the experts were told about the plaintiff’s various trips, his ability to organise those trips and his apparent independence while on the trips. The assumptions however only contained the bare facts. Thus, while the plaintiff may have been able to get himself by motorcar to Surfers Paradise, it took him three days, involved very risky driving, and as I understood it, he was under the influence of alcohol or drugs.
7. The plaintiff may well have spent some time in Bali. However, if he was, as he says, on a “bender” due to the consumption of alcohol and drugs, conduct of that sort might be seen as emphasising the need for supervision rather than an indicator of a lack of such a need.
8. The plaintiff’s frequent excursions from his home, again on the surface, might be seen as contradicting the histories given to the occupational therapists. However, if each expedition, in particular when he was alone, was to purchase drugs or alcohol or to consume fast food, then the asserted independence of his actions must be seen in a different light. This was a point made in the oral evidence of Dr Brown, which I deal with below.
9. It is important to note at this stage that on 15 August 2023 I made an order that the care claim could not exceed four hours per day and on 19 June 2024 I refused an application to extend this claim. I gave separate reasons for each of these decisions.
10. Drs Klug and Brown were given the same assumptions as Ms Curtain and Mr Williamson although in more detail and included specific dates of travel and residential treatment. Dr Brown’s reaction to the assumptions was that they suggested that the plaintiff was less symptomatic, and more functional than she had gathered from the history she was given in assessing the plaintiff in 2019 and 2023. Dr Klug agreed that the assumptions portrayed a picture of a more active plaintiff, but he also said that they confirmed his “terrible” substance use and gambling.
11. Dr Brown accepted that the compulsions to take drugs and gamble could overwhelm any reluctance to leave the house. Therefore, leaving the house is not necessarily an indication of a lack of severity of the plaintiff’s mental health issues.
12. Both doctors were asked to comment on the plaintiff’s behaviour at school before October 2005 as being indicative, and perhaps causative, of his later addictions. Dr Brown, in her comments in the joint report had said:
“Absent the abuse, (the plaintiff) would still have required treatment for depression, substance use and gambling disorder but not for post-traumatic stress disorder, which is allegedly associated with the abuse.”
1. Dr Brown explained this passage as referring to other factors in the plaintiff’s background which might have been the causes of his mental illnesses, other than the Post Traumatic Stress Disorder (PTSD). The plaintiff’s behaviour at school before October 2005 was such a factor. She said that bad behaviour as a child can lead to substance abuse later in life.
2. Dr Klug agreed that factors other than abuse could have an effect on later addictions, but he pointed out, as had the plaintiff, that these behavioural problems had occurred at a time when the plaintiff asserts he was being groomed. Dr Klug said that the main response to abuse, which would include grooming, is anger. Therefore, if the bad behaviour highlighted by the first defendant had occurred while the plaintiff was being groomed by the second defendant, there would be a logical explanation for the behaviour.
3. The amended statement of claim says that the grooming took place from about 2002 up to the final incident in October 2005. In his evidentiary statement (Exhibit A) the plaintiff says he first met the second defendant in about 2002. He places the first incident when he was aged 13 or 14.
4. The school reports however show problems commencing before 2003. I have already dealt with the school reports which have critical entries extending back to 2000. Thus, even if Dr Klug is to be accepted as to the consequences of grooming, if it occurred, it is difficult to attribute the plaintiff’s behaviour at school to the grooming.
5. Dr Dilati took a history from the plaintiff of alcohol use from the age of 15, cocaine use from 19 and cannabis use from 23. The report is dated 24 October 2022, so it precedes the plaintiff’s use of ICE.
6. Dr Dilati made a diagnosis of “symptoms consistent with Schizophrenia, Post Traumatic Stress Disorder, Cannabis Use Disorder and Gambling Disorder.” There is little doubt about the disorders concerning cannabis and gambling. The PTSD finding is dependent upon the identification and acceptance of the trauma. Neither Dr Klug or Dr Brown have considered the existence of schizophrenia. No submission was made on behalf of the plaintiff that I should accept the diagnosis of schizophrenia.
7. Dr Dilati’s opinion includes the following at [76]-[78]:
“Unfortunately, (the plaintiff) has not yet achieved rehabilitation for his symptoms, in particular his hyperarousal symptoms of agitation and reactivity to others who he perceives are authority figures, are intimidating or threatening, which is common in males who have a history of sexual trauma.
Specifically, in (the plaintiff’s) case, since the age of 15, he has engaged in chronic stimulant use to reduce his anxiety, depression, and negative affect related to his trauma. This maladaptive approach has continued into adulthood to treat his trauma symptoms as a form of self-medication.
Due to his lack of insight and avoidance behaviours, (the plaintiff) continued to self-medicate with stimulants and cannabis to avoid his unwanted emotions, despite no improvement in his trauma symptoms.”
1. Dr Dilati suggested a regime of treatment which included support in instilling “self-soothing techniques”, pharmacological intervention, drug, and alcohol counselling, and “trauma informed psychological treatment”.
2. None of the parties tendered any material from the various hospitals and rehabilitation services that the plaintiff attended. This is unfortunate, although a fair amount of detail can be ascertained from the expert reports.
3. Starting with Dr Klug, his first report is dated 2 July 2018 (Exhibit P(1)) and his second report is dated 29 March 2023 (Exhibit P (2)). For preparation of his first report Dr Klug had access to a suicide letter written by the plaintiff to his parents, discharge records from Concord Repatriation Hospital and a discharge summary from The Cabin dated 17 November 2017.
4. Dr Klug, addressing the plaintiff’s solicitors, refers to the new memories said to have arisen at The Cabin but observes:
“You note that he began to experience new memories when he commenced therapy in Thailand of being sexual abused that there is no corroboration that these events occurred.”
1. In relation to the discharge records from the Concord Repatriation Hospital, Dr Klug says:
“I note the mental health discharge/transfer summary from Concord Hospital noting his exposure to childhood sexual abuse at fifteen years of age, his various symptoms, ongoing treatment with reference to a post-traumatic stress disorder and depression. The suicide attempt was regarded as serious and it is noted he had no memory of the event …
It is noted the suicide attempt was triggered by feelings of hopelessness in the context of attending his friend’s wedding which highlighted to him his inability to experience intimacy due to “complex PTSD”.”
1. The reference to the suicide attempt occurring after the trip to Italy is another example of a serious distortion of the picture that the first defendant had endeavoured to paint, of a person independently travelling and caring for himself.
2. In her first report of 19 March 2019 Dr Brown summarises some of the records she has been provided with. She notes that the plaintiff was initially diagnosed at Concord Repatriation Hospital with cannabis dependence. He presented to the hospital on 27 May 2017 “after being transferred from Canterbury ED.” Dr Brown continues:
“He had thoughts of ending his life for the past 10 years, however he had felt “particularly bad” during the last few days and was experiencing nightmares.
(The plaintiff) reported that his mood had been low “since reliving the CSA when reporting to police/legal system/family” four years ago. He felt guilty that he had allowed the CSA to occur and “still heard” the perpetrators voice, despite him being in prison.”
1. Dr Brown summarised some notes from St John of God Hospital. She noted:
“(The plaintiff) achieved a score of 35 on the K-10 questionnaire (severe mental distress). He also achieved scores within the severe range for depression, the extremely severe range for anxiety and normal range for stress on the DASS questionnaire.”
1. In her report of 21 February 2023 Dr Brown refers to more recent records from St John of God Hospital. She notes:
“(The plaintiff) was admitted to SJG between 28 March and 28 April 2022. A Discharge Summary lists diagnoses of Cannabis Use Disorder and Complex PTSD.
(The plaintiff) was admitted for mood stabilisation and treatment of a Cannabis Use Disorder, having previously undergone detoxification at Concord Hospital.
…
Apart from being admonished about taking an approved leave on 18 April (the plaintiff’s) behaviour is otherwise recorded as being polite and appropriate. He was “struggling” with intrusive suicidal thoughts and reported nightmares in relation to “his trauma”, associated with feelings of hopelessness and worthlessness.
At the time of discharge (the plaintiff’s) mood was “bright”.
(The plaintiff) was re-admitted to St John of God Hospital on 3 June 2022. He had a long history of MDD (Major Depressive Disorder), PTSD and anxiety and chronic THC use. He had also made use of “ice” in crystal form. His symptoms included low mood and anhedonia, however psychosis was not determined.”
1. In her report of 9 October 2023 (Exhibit N) Ms Curtain refers to the plaintiff currently having “fortnightly psychological treatment via video link from St John of God hospital.”
2. Mr Williamson, in his report of 21 December 2023 (Exhibit 1D31) gives more detail of the suicide attempt from the Concord Repatriation Hospital Discharge letter:
“(The plaintiff) reported that after initially returning from the wedding on the Wednesday 3 days before the attempt everything seemed to be ok. However, that night while he tried to sleep he started to experience recurrent negative self-talk, he could hear the voice of the priest inside his head and he could hear him outside the window in the trees, he slept very poorly intermittently waking up due to vivid nightmares … . On Thursday night he purchased a large amount of cannabis (7g) and went to smoke in his car all night at the site at which the sexual assault occurred returning home at 6am. On Friday night after going out to dinner with his friends, he drove home and wrote a suicide note in his car and ingested an unknown quantity of sertraline tablets.”
1. Mr Williamson also quotes from a report of a psychologist, Ms Walters in 2017:
“(The plaintiff) has a history of substance and process addiction from a young age, following sexual abuse by a Catholic priest. (The Plaintiff) has tried to end his life prior to and between primary treatment episodes, which has escalated the addictive cycle.”
Admissions
1. The plaintiff relied heavily on admissions made by the first defendant. This seems to have been almost to the exclusion of more direct evidence. As I have observed above, cross-examination of the second defendant seemed to have been largely an exercise in putting to him the plaintiff’s allegations. There was no exploration, for example, of the details of the relationship between the defendants, whether, in October 2005 as a Sub-Deacon the second defendant was paid by the first defendant, or whether there existed any of the other indices of employment which would have gone a long way to assist the plaintiff in establishing vicarious liability on the part of the first defendant.
2. In oral submissions the plaintiff’s advocate said:
“I also say that something that just fell from my friend's mouth to the effect that the church was not accepting liability, I appreciate that. It's up to your Honour what you make of what I'll call the admission that was made on one view and that in fact informed my treatment of the transcript, where I took the view that there were substantive admissions, but we didn't want to capitalise on that in an inappropriate way. It's a matter for your Honour as to what weight you might give that admission and the circumstances of it. Of course the mere fact that the bishop wasn't the bishop at the time of the offending doesn't, in my mind, mean that he would have no capacity to make a subsequent admission subsequent to the event. That's all I really have to say.”
1. The most substantive admission said to have been made by the first defendant is contained in the letter written by Bishop CU, the Maronite Bishop of Australia, on 4 June 2019. The letter is Annexure A to Exhibit L1. The letter to which it responds is not in evidence but seems to be a request, or perhaps a complaint, relating to counselling services for the plaintiff.
2. Here are some parts of the letter:
“As I respond I am on leave in Lebanon but have in the interim undertaken enquiries of the Eparchy’s counselling services to see how we can meet (the plaintiff’s) concerns as relayed by you in your letter.
It must be borne in mind that in writing to you I am compelled to do so on a without prejudice basis simply because the action brought by your son is before the courts and we are represented by our solicitors who have the carriage care and control of the matter.
…
It would be for me neither appropriate nor in order to respond to your complaints levelled against me and the Church as to the failure to provide medical and such further assistance of both counselling and spiritual support as they have been offered and by this letter is am (sic) re-offering them to (the plaintiff) and your Family. I do take issue with your statement I have done nothing as promised.
…
I offer to (the plaintiff) the service of MaroniteCare and White Capstone Incorporated which specialises in counselling people suffering from addiction related conditions. These services administer to the person in primary need as well as their families and I commend them to you.
The issue of an apology is noted however as the case is before the Courts and it was commenced prior to the acquittal of the priest in question it has put beyond my ability to consider it as our lawyers were of necessity engaged when (the plaintiff) sued for damages (as is his right).
…
The events having come as far as they have with the litigation, puts it beyond my ability to do other than I have offered and will continue to offer, to ensure (the plaintiff’s) mental health is monitored and treated as best we can with the resources available to us should he so wish.
I again answer your final sentence in your letter by renewing our offer of assistance set out above.
…
In concluding it should never be forgotten that (the plaintiff) and you as a Family continually in our thoughts and prayers.”
1. I am not satisfied that the contents of the letter amount to an admission on the part of the first defendant. The offering of support and counselling services might be seen as an acceptance by the first defendant of an obligation to provide the services because of a responsibility for their onset. But it must also be remembered that the plaintiff and his family were loyal churchgoers, and the church might have felt a pastoral duty to its flock.
2. Significance must also be given to the letter being without prejudice. Bishop CU wrote another letter to the plaintiff on 16 September 2019. It is Annexure C to Exhibit L1. The letter was given to the plaintiff when he met the Bishop for lunch together with his mother and other members of the family. The Bishop had two friends with him. According to the plaintiff’s mother, this exchange occurred with the Bishop:
“Mother: I have an obligation to protect my children just as you have an obligation to protect your church, how can you allow him to go. I do not wish for any victim or family to endure the pain and suffering our family has endured. How can you allow him to go?”
Bishop: “The church has no money and I hope that the insurance will give (the plaintiff) millions of dollars. I can give you an apology, but I cannot give you closure, the church has no money … You have to forgive and forget.”
1. The Bishop’s words were said to be an admission on the part of the first defendant. I think there is some force in the submission, in particular the reference to the giving of an apology, although it could not be seen as an outright admission.
2. There was also a meeting between the plaintiff and Bishop CU on 5 October 2013. The plaintiff clandestinely recorded the conversation on his mobile phone. It was initially suggested that the conversation contained an offer by Bishop CU of $50,000 but this assertion was later withdrawn. In re-examination this exchange occurred:
“Q. Could you please clarify that now for the Court?
A. Yes, sir. Long story short, I think I believe, well, last night whilst smoking a joint, I had time to think and calm down and I believe I got mixed up with the whole mention of $50,000 was, was another incident about two or three or four weeks after the meeting with the bishop. At the meeting with the, the meeting at the bishop’s house, there was no mention of the actual amount of money, now that I’m thinking about it.
But the number of 50,000 is not a made up number. It is in my head, it did happen, where a gentleman came over to my house, who was mutual friends with my father and mutual friends with the bishop, and there was another attempt at buying my silence. That’s the best way I can put it, and that wasn’t the last time they attempted to buy my silence or asked me to drop the case many years ago.”
1. The gentleman referred to by the plaintiff was not established to be a representative of the first defendant. The offer of $50,000, if it was made, does not help the plaintiff.
Did the sexual abuse in the motor car occur?
1. The defendant submitted that there was a list of objective factors, all of which combined to reach an inescapable conclusion that the abuse had not occurred. These factors included:
1. the plaintiff’s credibility was such that he simply could not be believed. The source of his lack of credibility extended to the contradictions of his evidence in the school reports, the medical reports, his travel habits, and his bank records;
2. it was unlikely that the plaintiff had remained at the Church overnight. In his evidentiary statement (Exhibit A) the plaintiff says he was at church “all hours of the night”. Even though the plaintiff possibly refined this evidence to the final night, it was still improbable. The program for the Relics Tour (Exhibit 1D18) suggests that on Wednesday 19 October the Relics Tour left the church at about 4pm following a farewell mass. The submission assumes that the abuse took place in the early hours of the Thursday morning. However, if it took place in the early hours of the Wednesday morning it would be consistent with the program which states that at 12am there would be “Midnight Prayer & Adoration all night”;
3. the witness evidence that the plaintiff had not been seen during the night and no children stayed at the church after midnight. This of course is contradicted by the fact that the witnesses may not have seen the plaintiff and the church was busy through the night;
4. the organised activities finished at 10.30pm so that the plaintiff was not required for any altar services. This is contradicted by the program which has events at 11pm and 12am with the Adoration to continue through the night;
5. the second defendant said he normally went to bed around midnight during the Relics Tour and he did not stay overnight. This evidence was unchallenged. Many things were regrettably unchallenged on behalf of the plaintiff and that is clearly a factor I must take into account. I do however note that GT said that he was also driven home by the second defendant on one of the nights of the Relics Tour although he did not say the time of the trip. Nothing untoward occurred on the trip;
6. there were numerous inconsistencies between the plaintiff and his mother about the conversation in which the second defendant allegedly offered to take the plaintiff home. The inconsistencies extended to the terms of the conversation, the time that had elapsed before it was remembered, the precise location of the conversation (in the hall or at the doors of the church) and the absence of the conversation from the plaintiff’s statement to the police;
7. in his evidentiary statement, the plaintiff said that before leaving the church “we closed everything up”. The first defendant posed the question of why it was necessary to close anything up if the church was open through the night. The submission ignores the possibility that there were only a few people left in the very early hours and they were all leaving. The plaintiff’s evidentiary statement continues: “SS and some other committee members were going to get some breakfast before SS drove me home”;
8. there was significant confusion about precisely where the abuse took place, the route taken to that place and what the intentions in relation to having breakfast had been. The part played by the Lebanese bakery and McDonald’s were unclear and reflected a fabricated memory on the part of the plaintiff. One matter that is constant is that the plaintiff says he fell asleep in the car. Any attempts by him to establish the route taken, including any stops on the way, could only be reconstructions. In addition, he was then 15 years of age and may not have been familiar with the precise road system;
9. the plaintiff’s conduct after the abuse was inconsistent with the abuse having occurred. His assertions that he spent a good deal of time in bed following the abuse are inconsistent with the notes of his general practitioner which have him attending the doctor on 19 October 2005 complaining of ankle pain. The point made by the first defendant was not that the plaintiff did not mention the abuse to the doctor, but rather that he was up and about and seeing the doctor at all;
10. the plaintiff’s assertions of not going back to church after the abuse were contradicted in a number of ways, which included photographs of him with the second defendant (for example Exhibit 1D2); and
11. the second defendant who was “barely challenged in cross-examination” said the abuse had not occurred and there was no reason to disbelieve him.
1. I have commented on some of the factors when listing them, but must acknowledge that, certainly cumulatively, they present a powerful case to reject the plaintiff’s assertions.
2. But there is of course, the other side of the story. Very useful observations were made in CLH v KAG 2022 BCSC 994, a decision of Veenstra J in the Supreme Court of British Columbia at [216]-[217]:
“In evaluating evidence, triers of fact regularly make generalizations and rely on common sense inferences about the way people think and behave. However, the courts and the legislature have recognized that many of what may at one time have been thought “common sense” beliefs about sexual behaviour and the behaviour of victims of sexual assault are misguided and discriminatory. As noted by McLachlin C.J. in R. v. Find, 2001 SCC 32 at para. 103:
[103] These myths and stereotypes about child and adult complainants are particularly invidious because they comprise part of the fabric of social “common sense” in which we are daily immersed. Their pervasiveness, and the subtlety of their operation, create the risk that victims of abuse will be blamed or unjustly discredited in the minds of both judges and jurors.
Among the now discredited myths and stereotypes are beliefs that a real victim of sexual assault will report the assault immediately and that they will thereafter avoid the perpetrator.”
1. More generally, in relation to the recollection of events from years before I note these comments of Leggatt J in Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15]-[22]:
“An obvious difficulty which affects allegations and oral evidence based on recollection of events which occurred several years ago is the unreliability of human memory.
While everyone knows that memory is fallible, I do not believe that the legal system has sufficiently absorbed the lessons of a century of psychological research into the nature of memory and the unreliability of eyewitness testimony. One of the most important lessons of such research is that in everyday life we are not aware of the extent to which our own and other people's memories are unreliable and believe our memories to be more faithful than they are. Two common (and related) errors are to suppose: (1) that the stronger and more vivid is our feeling or experience of recollection, the more likely the recollection is to be accurate; and (2) that the more confident another person is in their recollection, the more likely their recollection is to be accurate.
Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact, psychological research has demonstrated that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is true even of so-called 'flashbulb' memories, that is memories of experiencing or learning of a particularly shocking or traumatic event. (The very description 'flashbulb' memory is in fact misleading, reflecting as it does the misconception that memory operates like a camera or other device that makes a fixed record of an experience.) External information can intrude into a witness's memory, as can his or her own thoughts and beliefs, and both can cause dramatic changes in recollection. Events can come to be recalled as memories which did not happen at all or which happened to someone else (referred to in the literature as a failure of source memory).
Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time.
The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.
Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does or does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.
It is not uncommon (and the present case was no exception) for witnesses to be asked in cross-examination if they understand the difference between recollection and reconstruction or whether their evidence is a genuine recollection or a reconstruction of events. Such questions are misguided in at least two ways. First, they erroneously presuppose that there is a clear distinction between recollection and reconstruction, when all remembering of distant events involves reconstructive processes. Second, such questions disregard the fact that such processes are largely unconscious and that the strength, vividness and apparent authenticity of memories is not a reliable measure of their truth.
In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
1. This is obviously not a commercial case. However, applying the approach suggested by Leggat J, the comparison of objective facts and the testimony of the first defendant’s witnesses might be seen as the equivalent to a comparison of the plaintiff’s evidence to “documentary evidence and known or probable facts”. Taking this approach, the first defendant submitted that the plaintiff’s evidence can only be seen as unreliable.
2. The difficulty with the approach in cases of historical sexual abuse is that recognition must be given to memories of adults talking about childhood experiences many years before, even if there are apparent inconsistencies and contradictions. The removal of the limitation period in respect of child sex cases is a reflection of an acceptance that reliable evidence can be given notwithstanding its internal inconsistencies. I am not suggesting that every adult who complains about being abused as a child must be automatically believed. I am suggesting that inconsistencies and contradictions are not necessarily fatal to a witness’s evidence when they are given about matters that occurred many years before. This approach I think is consistent with the majority decision in the High Court in GLJ.
3. The delay of informally reporting the abuse in this case, has I think two related considerations:
1. the fact that there are minor inconsistencies in versions over time does not necessarily affect the core allegations. Obviously major inconsistencies could have the opposite result. In this case I think the inconsistencies are generally minor; and
2. complaints made by the plaintiff can be very persuasive and give substance to the proof of the alleged facts.
1. An example of minor inconsistencies includes whether a sleeping child remembers something as having occurred on the way to a bakery or to McDonald’s or on one corner or another. I think inconsistencies have much less weight if the description of the active abuse remains constant. That is the case here.
2. The detail of the complaint is generally consistent. The plaintiff told:
1. DU, within days of the event, “He touched me on my inner thigh. I was too embarrassed and frozen to act, and I blew”;
2. GT, in the following year, “We were in his car and SS thought I was asleep, and he reached down and played with me until I came.” I also note here that under cross-examination GT said that he had also been given a lift home by the second defendant on one of the nights of the Relics Tour;
3. BT, within months, “I was sleeping at the church on the last night of the Relics, and it was early in the morning. SS told me I’m taking you to get breakfast. I entered his car and we arrived at the location for breakfast, but it was closed. So, he said I’ll take you back to the church. While we were driving back, I fell asleep ... When I woke up, I found myself in the side street of the church and I felt his hand on top of my pants on my dick. I was too shocked to move or open my eyes because I couldn’t believe what was happening. I kept my eyes closed. He then started to rub my dick from the outside of my pants. He kept rubbing my dick until I had an erection and kept going until I blew …”;
4. NB, within months, “(the plaintiff) said that when he was in the second defendant’s car on the way to get some food, he had fallen asleep. (The plaintiff) told me he woke up because SS was rubbing his private parts over his pants, but he pretended to be asleep. (The plaintiff) said that it kept going until he had finished”;
5. UT, on 30 September 2013, “SS was taking me to breakfast in his car in the early hours of the morning. I was sleeping and he pulled over to the side of the road not far from the Church and McDonalds. I felt SS’s hand on my penis, and he began to masturbate me”;
6. Sister NU, in January 2013, “He told me a little about the incident in the car. He didn’t go into too many details. (The plaintiff) did not tell me exactly when, but he mentioned that it was in his early teens and that they were in the second defendant’s car”;
7. Monsignor TN on 1 October 2013, “(the plaintiff) explained that after staying at the Church till late with the Relics he helped a Priest to close up the Church around 3.00am and when they had finished the Priest offered to take him to McDonalds for something to eat then to drop him home. (The plaintiff) explained that while at McDonalds he fell asleep in the front seat of the Priests car. (The plaintiff) said to me that he was woken up, but remained lying back still, when he felt a hand on his thigh. (The plaintiff) said he saw it was the Priest’s hand. Then the Priest moved his hand over (the plaintiff’s) crotch and began rubbing his hand over (the plaintiff’s) penis over his pants causing him to have an erection and then continuing to rub his hand caused (the plaintiff) to ejaculate within 2 minutes”; and
8. Monsignor NZ on 5 October 2012, “he was sleeping and SS put his hand near his dick and he slipt [sic] his hands to his dick and let him ejaculate, the incident happened in 2005 it was his first time.” (Annexure A to the Exhibit 1D17).
1. As I have already discussed, a close examination of the content of each complaint would reveal differences in detail. But most details remain unchanged. These include the plaintiff being in the passenger seat, being asleep, the second defendant placing his hand on top of his trousers, rubbing his penis, and the plaintiff ejaculating. The last three details are the substance of the sexual abuse and there is no doubt that they are actions of sexual abuse.
2. This is a case going back to an allegation of an event in 2005. That is almost 20 years ago. I cannot imagine any examination of events occurring that many years ago that would not unearth a plethora of inconsistencies and divergent details. But what in my opinion is important is whether or not the essence of the abuse has remained constant and is consistent with the ongoing suffering of the plaintiff. Even if his addictions have their source in pre-existing conditions, his PTSD, his depression and his suicidal ideation and attempt, are all conditions consistent with the abuse having occurred.
3. I am satisfied, on the balance of probabilities, that the abuse occurred and that it included the second defendant having the plaintiff in his motor vehicle, the plaintiff falling asleep, the second defendant stopping the motor vehicle and then rubbing the plaintiff’s penis (above his clothing) until the plaintiff had an erection and then ejaculated.
4. There are some other matters I need to cover in relation to the finding I have just expressed.
5. The plaintiff relied on other evidence in support of his case. This included the evidence of persons who asserted they had endured, or witnessed, inappropriate conduct on the part of the second defendant. This submission was made:
“It is submitted that the words of [SS] evidenced in his text messages to KSC, together with the other incidents of sexualised conduct from [SS] betray [SS’s] heart. He is a sexual predator who seeks opportunity of sexualised conduct with other males, (including minors). To this extent, it follows that the plaintiff was a very vulnerable person at the time of the abuse.”
1. The text messages sent to KSC are in Exhibit T:
KSC: “im home now about to have a shower and sleep for work!”
SS: “Good have a nice shower! Do you need help:)?
Lol
N good night will have chat after ur shower.”
1. The text message exchange seems to have occurred in early 2012. KSC was then 19 years of age. The second defendant was then an ordained priest. The plaintiff submitted that the exchange was “totally inappropriate” for the second defendant’s “calling”. The exchange is probably inappropriate, but it occurred between two adult males. I do not think it assists the plaintiff’s case.
2. The other “sexualised conduct” relied upon by the plaintiff is to be found in the evidence of Father KB. As already described, he witnessed an incident in 2007, again after the second defendant had been ordained as a priest. He saw the second defendant do the following:
“[SS] entered the sacristy when I was in there with KSC. When [SS] saw KSC, he gazed up at him, his eyes dilated, and he had a smile on his face. He raised his right hand and stroked the side of the youth’s face, running the tips of his fingers along the chin line.”
1. Father KB said the second defendant “was tactile with young men to an extent I considered abnormal.” In his oral evidence Father KB said he was referring to:
“Not just touching, but leaving his hand on them…”
1. Again, there could be elements of inappropriate behaviour in the second defendant’s actions as described by Father KB, but I do not think they can be elevated to “sexualised conduct”. Bearing in mind that the second defendant was then a priest, the conduct may have sent a warning to his superiors, but absent evidence of this conduct being known to his superiors before October 2005, I cannot see any assistance to the plaintiff’s case.
2. The witness who gave the most relevant evidence in relation to “sexualised conduct” was GT. In his evidentiary statement he says at [9]-[11]:
“When [SS] would touch my leg, he would often slide his hand from my thigh area towards my groin. When [SS] did this, I would push his hand away. I pushed it away because his actions made me uncomfortable, and his hand was entering an area where it didn’t belong, that is my genital area.
He would try and run his hand up my thigh during conversations. He would be talking and just do it without hesitation.
[SS] attempted to touch my penis and genitals on occasions. At the time I would push him away with my hands to stop him touching me there. I knew what he was attempting to do, and I knew it was wrong. I didn’t tell anyone as I felt like I could hold my own against him. I just felt I could deal with it myself.”
1. Based on the plaintiff making his complaint to GT in “around 2006”, suggests GT was about 14 years of age when the above incidents occurred. Despite an extensive cross-examination on other matters, the cross-examination of GT on the above passages from his statement was, to adopt the first defendant’s criticism of the plaintiff’s advocates’ cross-examination, “perfunctory”, simply suggesting the allegations were untrue.
2. From the plaintiff’s side however, it is difficult to draw any helpful conclusions from GT’s evidence. It was not submitted in final submissions to be tendency evidence and there is no suggestion that any other person was aware of the conduct. GT specifically says he did not tell anybody about the conduct.
3. I stated above that I thought GT was doing his best to give honest evidence and I accept his evidence. The difficulty I have is putting it to use in aid of the plaintiff’s case. I think the best I can do is to say that it corroborates the plaintiff’s allegations but does not play any part in proving them.
4. Looking back on the matters I have outlined there are obviously factors in favour and against a conclusion that the abuse in the motorcar occurred. The onus is on the plaintiff to prove his case. I think he has done so. I think his evidence combined with the complaint evidence, together with my dissatisfaction with a good deal of the defendants’ evidence, has enabled the plaintiff to prove his case.
Was the first defendant negligent?
1. This question is governed by the CLA and in particular s 5B. The only way negligence could arise is through a finding that the first defendant had notice of abuse of the plaintiff or other underage children by the second defendant and failed to act to protect the children.
2. I have said on a number of occasions that I am against a finding that the grooming occurred. I formally find that the plaintiff has not established grooming on the part of the second defendant. I have also rejected any finding that any person in the church hierarchy was aware of any misconduct by the second defendant. I have also decided that the matters raised in the notice to admit facts, while possibly indicative of negligence, can be taken no further absent any evidence of what any checks, tests or inquiries might have revealed.
3. I think it must follow that the negligence action against the first defendant fails.
Is the first defendant vicariously liable for the abuse by the second defendant?
1. My finding that the abuse occurred must mean that the second defendant is liable to the plaintiff for any damages caused by the abuse.
2. There is no dispute that as at October 2005 the second defendant was not employed by the first defendant. The first defendant submitted that by virtue of this fact alone there could not be a finding of vicarious liability. The first defendant conceded that the submission was contrary to the finding of the Court of Appeal in Victoria in Bird v DP (2023) 69 VR 408; [2023] VSCA 66. The first defendant also accepted that I was bound to follow this decision unless I thought it was “plainly wrong”.
3. If I did not think it was “plainly wrong”, the first defendant submitted that even by applying the principles in Bird, I could not find the existence of vicarious liability. An appeal in Bird was heard by the High Court on 14 March 2024 but the decision remains reserved. I have decided that it is not in the interests of justice, and it was not submitted that I should do so, to delay judgment until the decision is handed down.
4. It is necessary to look at Bird in some detail. The case arose from a claim by DP “in which he claimed damages for psychological injuries he sustained as a result of assaults committed by a Catholic priest Father Bryan Coffey at the home of his parents in Port Fairy in 1971.” The proceedings were commenced against the Diocese in which the priest had ‘worked’. Father Coffey was an assistant parish priest at the time of the abuse.
5. The trial judge (Forrest J) found that the abuse had occurred. Forrest J found that the Diocese had not employed Father Coffey. His Honour found that the Diocese had not been negligent in that the Bishop of the Diocese had not failed “to exercise reasonable care in his authority, supervision and control of the conduct of Coffey.” Thus far the basic facts are very similar to the present case.
6. Forrest J did find that the Diocese was vicariously liable for the acts of the priest. The Court of Appeal, at [41] described his Honour’s finding in this way:
“In that respect, the judge rejected the proposition, relied on by the applicant, that vicarious liability is confined solely to the employment situation. His Honour considered that in Sweeney the High Court did not lay down an absolute rule to that effect, and that the Court had stated, in relation to independent contractors, that ‘the person engaging the contractor will generally not be vicariously liable’. In support of that proposition, the judge referred to the decision of the High Court in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Cooperative Assurance Company of Australia Ltd.”
1. The trial judge’s attitude was summed up in this way, at [50]:
“In conclusion, the judge was satisfied that on the occasion of the two assaults on the respondent, Coffey was engaged in a pastoral visit, in that his participation in Catholic social life in the community was as much a part of his role as celebrating Mass. The respondent’s parents permitted Coffey to be alone with the respondent in his bedroom and in the tent, because of their implicit trust in him as a priest of the church.”
1. The Court of Appeal referred to the High Court case of Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and stated at [81]-[83]:
“It is evident that the question, whether vicarious liability is confined only to cases involving a relationship with employment, may not be resolved by the first seeking to identify the underlying rationale for the imposition of vicarious liability in such a relationship. As the High Court observed in Hollis, the modern doctrine relating to vicarious liability of an employer for the torts committed by an employee ‘… was adopted not by way of an exercise in analytical jurisprudence but as a matter of policy’. The court also noted that the identification of a fully satisfactory rationale for the imposition of vicarious liability in the employment relationship has proven to be quite elusive.
Nevertheless, two important points do emerge from an examination of the cases, which we will discuss. First, it is evident that the principle of vicarious liability has not been confined solely and exclusively to cases in which the relationship between the tortfeasor and the principal is that of employer and employee. In particular, it has been recognised in the authorities that, in certain circumstances, vicarious liability may apply in respect of a relationship which is not that of employment. Secondly, the cases reveal, in large measure, a commonality of the factors that are central to the issue whether, in an appropriate case, the relationship is one to which the principle of vicarious liability may apply.
The first point is based on the decision of the High Court in Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Cooperative Assurance Company of Australia Ltd, and, in particular, the landmark judgment of Dixon J.”
1. The conclusions that vicarious liability is not confined to cases where the tortfeasor is employed by the principal and that Bird is correctly derived from Colonial Mutual Life are the conclusions that the first defendant says I should find are “plainly wrong”.
2. After discussing Hollis and Colonial Mutual Life the Court of Appeal stated, at [94]:
“A number of those factors, of course, are not applicable to the relationship between Coffey and the Diocese. It is for that reason that Coffey could not be considered to be an employee of the Diocese. However, the decision in Hollis is important, because it demonstrates the relevance and significance, as a criterion of vicarious liability, of the circumstance that the particular tortfeasor’s role was so closely tied with the enterprise of the employer that he or she was presented to the public as carrying out the work of, and representing, the employer. In that respect, their Honours referred with apparent approval to the passage in the judgment of McLachlin J of the Supreme Court of Canada in Bazley v Curry that an employer may be held vicariously liable where the employer’s enterprise created the risk and where the employee’s conduct was closely tied to the risk, which the employer’s enterprise placed in the community.”
1. Then at [114]:
“However, the decision of the High Court in Colonial Mutual Life, and in particular the judgment of Dixon J, makes it clear that, in an appropriate case, a relationship may give rise to vicarious liability on the part of a principal, notwithstanding the tortfeasor was not an employee of the principal. In such a case, vicarious liability is imposed on the principal for the actions of the tortfeasor, on the basis that the work performed by the tortfeasor and the business of the principal were so interconnected that the tortfeasor represented the business of and/or the principal, and, by doing so, conducted the business of the principal.”
1. At [116]-[117] the Court of Appeal stated:
“Although identification of the underlying rationale that explains why vicarious liability is imposed in one setting but not another has proven elusive, central to the application of the principle to employees is that, inherent in the relationship, is a contractual right of the employer to control the performance of the duties of the employee. By being subject to such control, the employee necessarily forms part of or represents the enterprise of the employer. By contrast, a hallmark of the independent contractor is independence in the performance of work.
The importance of the power of a principal to control and the inability of the tortfeasor to unilaterally delegate is readily demonstrated by those exceptional cases, in which vicarious liability is not imposed on employees who, by virtue of their particular role, exercise independent discretions. Those cases also demonstrate that the so-called rule, that an employer is vicariously liable, does not apply in every case.”
1. The Court of Appeal then turned to the relationship between a diocese and a priest, at [120]:
“The relationship between a diocese and a priest or assistant priest is, necessarily, sui generis. It does not exist in the context of a commercial relationship, such as was the case in Sweeney, nor in the context of a purely social relationship, as was the case in Scott v Davis. Rather, the relationship is founded in the context of the hierarchical system of a Diocese of the Roman Catholic Church. The decisions to which we have referred, and the principles outlined in them, reveal that that consideration of itself does not necessarily preclude the implication of vicarious liability on the diocese for the wrongful acts of a priest or assistant priest within its domain. Although undoubtedly secular, the law has not always treated religion and religious orders as if they were a form of a club or social organisation. The furtherance of religion is a recognised charitable purpose. The legal nature of the institution of marriage has its genesis in the ecclesiastical courts and the common law courts ‘absorbed much Canon law learning’.”
1. The Court of Appeal noted that “the Bishop has authority over all the priests in his Diocese” and stated, at [125]:
“The relationship between Father Coffey and the Diocese through the person of the Bishop was governed by a strict set of normative rules that each of them had subscribed to, and which enabled Coffey to embody the Diocese in his pastoral role. Those rules of Canon law also permitted the Bishop to exercise control over Coffey that was at least as great as, if not greater than, that enjoyed by an employer. The formal structures that were in place allowed the Bishop to exercise control over, and to limit the area of independent action on the part of, the priest. The Bishop had the means to do so by providing instruction, supervision, transfer, limitation on authority, and ultimately by seeking sanctions, including expulsion, from church authority. In return the priest was clothed with the authority of the church.”
1. After a further review of relevant authorities, the Court of Appeal stated, at [148]:
“Applying those principles to the evidence in the present case, we consider that the judge was well justified in concluding that the position of power and intimacy, invested in Coffey as an assistant priest of the parish, provided him not only with the opportunity to sexually abuse the respondent, but also the occasion for the commission of those wrongful acts.”
1. It is now necessary to return to the present case and to see if the evidence allows a conclusion that the position of power and intimacy, invested in the second defendant as a Sub-Deacon of the parish, provided him not only with the opportunity to sexually abuse the respondent, but also the occasion for the commission of those wrongful acts.
2. These I think are relevant parts of the evidence:
1. The plaintiff stated: “As time progressed with (the second defendant) being at St Joseph’s, I started helping on occasional weekdays. At the time I was attending Christian Brothers Lewisham High School. (The second defendant) formed a close relationship with the church community as a Deacon and people were beginning to know him better. My mother and father know him and saw him quite frequently at the church.” (Exhibit A).
2. The plaintiff’s mother said she trusted the second defendant because he was a priest and also because the youth looked up to him. (Exhibit L1)
3. GT stated: “I first met SS at St Joseph’s Maronite Church in Croydon. This was before he was a Deacon. At that time he was very involved in all the activities within the church, from decorating the church at different times of the year, helping with youth group, or helping with mass.” (Exhibit D [3]).
4. BC was appointed as Business Manager of the Maronite Catholic Diocese in Australia in October 2006. In his statement (Exhibit 1D11) he refers to “considerations concerning the Royal Commission into Institutional Responses to Child Sexual Abuse” and says the Diocese upgraded its Child Protection Policies. This occurred in 2013 and he says: “A couple of times per year I make a presentation to the Priests and Deacons working within the Diocese as to our policies and what they should and should not be doing in terms of Child protection.” Although he is talking about 2013, the relevance is that the presentations are made to Deacons as well as priests.
5. Monsignor FT emphasised, in relation to child protection, the equivalence of priests and Deacons. He was the parish priest at St Joseph’s from September 2004 until 2012. In Exhibit 1D12, he states:
“8. When I commenced at St Joseph’s Croydon, it was a busy parish. There were three Assistant Priests, Father CB, Father QFL and Father BG and [Sub-deacon SS], and we would generally have several services in the Church each week … .
…
11. … In relation to child protection, we did not have a written policy or procedures at that time. I believe that the formal working with children checks came in later, however it was made clear to us by the Bishop in our training, that there should be no unsupervised contact by Priests or Deacons with children, and that more than one adult should be present if any of the Deacons, Assistant Priests or Priests were with minors. This would have included Deacons or Assistant Priests driving children in their private motor vehicles. This was not permitted and was against the Bishop’s directives. I never saw it occur.
…
23. I had not ever seen [Deacon SS] or any Assistant Priests alone in their car with children. This would have been a breach of the directives that had been given to them. [Deacon SS] certainly never asked me for permission to do that, and if he had, I would have said: “No”.
…
27. In 2004, [SS] was a subdeacon. He was ordained as a Deacon in 2005. As a Deacon his role was to provide assistance to Priests serving the parish. [SS] to the best of my recollection during his time as a Deacon was involved in the publishing of the Parish Newsletter, with the Choir, the liturgy committee and training the leaders and teachers of the kids’ group. The children themselves were not present when he trained the leaders of the group.”
1. Monsignor TN was the parish priest at St Joseph’s from 1998 until 2004. He says that the plaintiff’s family were “active parishioners and attended services weekly and parish events … .” He states that SS helped at St Joseph’s as a Sub-Deacon “on a part-time and volunteer basis.” After he left SS became a Deacon. During his time Monsignor TN observed at [6]-[7]:
“[SS], as I recall in my time in the Parish, was a helpful participant in the pastoral administration in the Parish and was a well-liked and enthusiastic worker. He assisted in the production of the Parish Newsletter, singing, and playing the organ for services, leading the choir, setting up the altar and church for services and Feast days, preparing the PowerPoint for the services. During this period, I recall he lived mainly with his family at Belmore.
… I found [SS] to be of significant assistance in the work of the Parish. He was a hard worker, responsible, reliable, and committed to his pastoral work and I regarded him as a valuable member of the pastoral team.”
1. In his statement, Exhibit 1D5, the second defendant states at [12]:
“From May 2005 when I was ordained as a Deacon, my role within the Parish changed, in that I stood at the altar with the Priests during services. I lived in the presbytery, except generally on Mondays (my day off) when I usually went home. I also assisted with the Parish’s liturgy committee, assisting with liturgical activities in the Church such as preparing for mass. I continued to have the role I described above in the choir and the Bulletin.”
1. CT has two sons about the same age as the plaintiff. She states, in Exhibit 1D15, that she saw SS:
“around children and young adults on many occasions. He was very good with them. He formed a very good friendship with my two sons and he was a great support to them… .
I have a good recollection of the Relics tour in 2005 … . I was there each of the four nights, including when the Relics went to Mount Druitt on the final evening … .
At the time of the Relics tour, I was a member of the liturgy committee will (which was headed by [SS]) and the sodality committee…”.
1. The following conclusions emerge from the evidence I have just set out:
1. unlike KN, for example, SS did not have a separate occupation when he was a Deacon at St Joseph’s. He was essentially there on a full-time basis, albeit as a volunteer, but also as part of his progression to priesthood;
2. in particular, in relation to the Diocese’s attitude to child protection, it did not distinguish between Deacons and priests. They were both subject to the same regimen of directions to take great care to avoid the abuse of children;
3. SS, according to his own statement, was living in the presbytery (except for Mondays) from the time he became a Deacon. This was May 2005. Unfortunately, there is no evidence of him paying or not paying rent. If he did not, the benefit might be viewed as akin to a wage;
4. SS, as at October 2005, was involved in many aspects of church life including the liturgy committee (which he headed), the newsletter, the choir and youth groups;
5. SS had many dealings, and interactions, with youth in the community;
6. SS formed close relationships with many families in the community. He was trusted; and
7. SS’s roles, in particular in relation to youth, were subject to direction from the parish priest.
1. The ultimate result from the conclusions I have just set out is that SS, for all intents and purposes, but other than the receipt of remuneration, held a position and was treated as if he was an employee of the church. In addition, the trust that his position allowed him to build up with the community provided him both with “the opportunity to sexually abuse the respondent, but also the occasion for the commission” of the abuse in October 2005.
2. It might be argued that an important distinction from the facts in Bird is that in Bird the perpetrator of the abuse was visiting the child’s family as part of his pastoral duties. This is to be compared with the second defendant carrying out the abuse in the motorcar, which might be seen as an independent and unconnected expedition. However, it is to be remembered that he was taking the plaintiff home as an act of pastoral care, being a trusted member of the church community (in particular by the plaintiff’s mother) and had the plaintiff in his car as part of the exercise of carrying out an obligation arising from that trust. The second defendant only had the plaintiff in his motor car because he had been entrusted to take the plaintiff home as a responsible leader figure in the church.
3. The result is that I think the first defendant is vicariously liable for the actions of the second defendant.
4. This conclusion is obviously a product of me taking the path dictated in Bird. I do not think it appropriate for me to find that Bird is plainly wrong. The result in Bird is a product of analysis as set out in the judgment. The case is currently before the High Court; it is up to the High Court to decide if it is plainly wrong or not. I would not presume to make such a decision. Obviously if the High Court takes the view that the decision should be overturned and vicarious liability is restricted to cases involving employment, then my decision will be wrong. That is a matter out of my hands and for the future.
Damages
1. Because I have found that the first defendant was not negligent but was vicariously liable for the actions of the second defendant, the assessment of damages falls to be made under the common law and not under the CLA. The only impact of the CLA, as I have mentioned above, relates to there being no interest permitted on past gratuitous care.
2. Starting with general damages the plaintiff suggested a figure of $400,000. The first defendant suggested $250,000. The difference between the two suggestions probably represents the limits of the appropriate range. Whether the figure should be closer to one end or the other probably depends on the degree to which the whole of the plaintiff’s current condition can be related, or seen as having been caused by, the abuse.
3. The plaintiff says the whole of his current condition is related, including his addictions to gambling and drugs. The first defendant says these addictions are not related and just as likely to have been caused by a pre-existing susceptibility to the addictions. The differing views are well set out in the psychiatric expert conclave reports (Exhibits 1D33(A) and (B)). Dr Klug said this:
“I regard the plaintiff as a profoundly psychiatrically unwell man. Even though I have diagnosed him with various conditions, it is a typical combination evident in adult victims of childhood sexual abuse.
Although there was one incident of abuse which the plaintiff described, it gave rise to severe ongoing stresses for him in his adolescent life. He comes from a very religious family and religion dominated not only family life but the life of the community in which the plaintiff was raised.
Abuse by priests in that situation represent abuse by a person who occupied a great deal of power, influence, dominance and reverence in the plaintiff’s life.
As with virtually all victims of childhood sexual abuse, he did not disclose the abuse to anybody probably because of shame and guilt which he experienced at the time.
Consequently, this one incident gave rise to a severe and complex nexus of ongoing stresses in his life. This combination of trauma-related stresses has given rise to what I regard as a complex post-traumatic stress disorder and his personality-based dysfunction in adult hood as well as his other psychiatric conditions.”
1. Dr Brown responded:
“I reiterate the concerns that I have raised about diagnosing complex post-traumatic stress disorder in an individual who at the time of Dr Klug’s report indicated that there had been one incident of sexual abuse. Although by the time of my assessment of the plaintiff in February 2019, he alluded to a number of other sexual contacts with the priest, I was unable to elicit sufficient history to confidentially assess these incidents as possible further traumas.
…
On the basis of the plaintiff’s high-level emphasis of symptoms and impaired function in day-to-day life, I consider that his presentation had become complicated by his involvement in the legal proceedings.
I did consider that many of the symptoms described by the plaintiff are attributable to his conditions of cannabis and alcohol abuse and a gambling disorder without invoking post-traumatic stress disorder is a relevant diagnosis.”
1. Dr Brown later added:
“I have identified psychiatric diagnoses which I consider are independently arising to any sexual trauma.
…
I have been unable to offer a confident association between the symptoms, conditions and disorders I have diagnosed, namely cannabis and alcohol abuse, a gambling disorder and a chronic depressive condition to the alleged abuse as compared to other factors.
…
In particular, I note that the plaintiff has a number of factors which are likely to have predisposed him towards developing psychiatric disorders as an adult.”
1. Dr Brown identified the following independent factors: anti-social personality traits, sleep apnoea, a motor vehicle accident in which a pedestrian was injured, undiagnosed Attention Deficit Disorder. Dr Brown considered that the plaintiff’s behaviour at school before the abuse is a strong indicator of independent sources of his later problems.
2. In her report of 22 December 2020 Dr Brown did accept that if the abuse had occurred “it would probably have increased the likelihood of SS developing the adult psychological symptoms and conditions he complains of.” She considered the abuse would be “an aggravating factor to his pre-existing level of risk.”
3. The plaintiff, in his statement, gives a description of his “Life Before and After” the alleged abuse.
4. In his oral evidence Dr Klug came much closer to Dr Brown’s view then he had in his reports or in the conclave report. There was this passage of evidence:
“HIS HONOUR: Dr Klug, just on that last point, your view seems to place the current problems squarely at the door of the abuse, obviously assuming that it happened. What do you say about the possibility of there being other factors that could at least have influenced the gambling addiction, or the drug addiction, the depression, all the things other than the post-traumatic stress disorder?
WITNESS KLUG: Yes, I agree that there may very well be other pre-disposing factors from his childhood to those sorts of behaviours.”
1. There is no doubt that the plaintiff has a number of severe psychiatric and psychological problems. These include depression, PTSD, a drug addiction, and a gambling addiction. Other than the PTSD, I do not think I can attribute them exclusively to the abuse, but I can say that, at the least, the abuse made the plaintiff more susceptible to the non-directly related conditions.
2. A good deal was made by the first defendant of the plaintiff’s lifestyle, suggesting through his history of travel and daily activities that he was living a normal life and capable of living an independent life. In my view the evidence does not disclose this scenario. He may travel a lot, but usually to relatives and even when he travelled completely independently, such as the trip to Italy, he was soon in hospital upon his return. The plaintiffs many hospital admissions defy a conclusion of normality leaving him as a very troubled person, albeit one who has had a capacity to work and who can do usual activities like shopping and buying food and driving a car, but certainly not without difficulty and the continuing prospect of a return to hospital.
3. On this basis I think the plaintiff’s figure is closer to the mark and I will allow general damages of $350,000. Interest on half of this amount at 2% over 19 years is $66,500.
4. For past economic loss the plaintiff’s claim is $982,176, apparently based on average weekly earnings from the plaintiff turning 23. The defendant’s suggestion is $275,000. The plaintiff was in fairly steady employment from 2010 until early 2017. His notices of assessment (Exhibit S) for these years reveal an average annual taxable income of $29,983. The income for each year does however fluctuate, the lowest being $3640 for the 2009/2010 year and the highest being $64,901 for the 2014/2015 year.
5. The first defendant accepts that the plaintiff has not had a capacity to work since January 2017 but says that up to that time the plaintiff was working in a manner consistent with what he might have been expected to achieve but for the abuse. The first defendant has calculated that the plaintiff had an average net income of $910 per week during his last three years of employment.
6. There are 391 weeks between 1 February 2017 and 1 August 2024. Using the $910 per week as a guide the result is $355,810. The first defendant says this figure should be discounted because of the contribution of other factors besides those related to the abuse. The first defendant’s figure also includes interest. On the other hand, had the plaintiff continued working it is likely that his income would have increased since 2017 until the present. I think a fair compromise is to allow the $355,810 without any decrease plus a relatively small amount of interest to bring the figure to $400,000.
7. The plaintiff is also entitled to lost superannuation benefits which I calculate at 9% of the net loss. This is $36,000.
8. The plaintiff’s claim for future economic loss is $1,711,418 which is based on average weekly earnings until age 67 less an allowance for vicissitudes. I note the calculation is made on the 3% tables consistent with a common law assessment.
9. The first defendant allows $100,000 for future treatment which is a significant amount and in fact is the same amount sought by the plaintiff. I think this allowance is generous even though the plaintiff will require significant and intensive treatment. However, assuming a degree of success of the treatment, the plaintiff should be able to return to some employment after about 10 years.
10. I think the first defendant’s approach of a buffer is correct, but I do not think the sum is sufficient. If the plaintiff is given 10 years at $1100 per week, on the 3% tables and less 15% for vicissitudes, the result would be $422,433. I think if I allowed $350,000 for future economic loss as a buffer, but also including lost superannuation benefits then this is a fair assessment. It specifically takes into account the possibility that the plaintiff’s inability to work may be the result of his addictions which are not necessarily a product of the abuse.
11. The next head of damages is past out-of-pocket expenses. The plaintiff’s evidence came in after I had reserved my decision. No objection was taken to my receipt of the evidence although the first defendant does not concede any entitlement to any of the amounts claimed. I have marked the out-of-pocket expenses invoices as Exhibit W. The invoices all relate to The Cabin or The Dawn Rehab, both institutions being in Thailand. The invoices total $95,428.57. Based on the terms of the invoice and the receipts for some of them, they all appeared to have been paid.
12. The first defendant does not challenge the validity of the invoices but says that absent evidence of who paid the invoices and whether there is an obligation on the part of the plaintiff to repay the amounts, the claim should not be allowed.
13. The plaintiff’s bank records (Exhibit 1D34) indicate, as did his evidence, that he receives a lot of money from other persons, in particular his mother. His mother was not asked whether she had made any loan type arrangements with the plaintiff although I suspect there would be an expectation that he would pay the monies back if he recovered compensation. I also note that Exhibit W refers to a payment on 18 February 2017 of $8,000 made by the plaintiff’s mother.
14. Nevertheless, the first defendant’s point is well made and there is no evidence of any obligation to repay the rehabilitation invoices. The plaintiff did however say that he was required to pay back $2,200 per month to “people I’ve borrowed off.” He later said he was referring to an “uncle of mine that doesn’t want to be mentioned.
15. I think I can infer from the repayments to the uncle and from the absence of any identified benefactor, that the plaintiff is obliged to repay the amounts spent on the rehabilitation in Thailand. I note that the plaintiff’s parents do not appear to be wealthy. His mother stopped work following an injury and her compensation has been spent.
16. Another factor to be taken into account is that the addictions being treated in Thailand are not necessarily entirely related to the abuse, as propounded by Dr Brown and to some extent conceded by Dr Klug. Taking these matters into account I think allowing $30,000 is appropriate.
17. I have already noted that the plaintiff and first defendant agreed that future treatment should be assessed at $100,000. I will allow that amount.
18. The next head of damage is past gratuitous care, in this case provided by the plaintiff’s mother. The plaintiff claims $65,000 per annum from January 2017 to June 2024. The first defendant says no allowance should be made.
19. The rate used by the plaintiff is $40 per hour. I did not understand there to be any suggestion the rate was unreasonable. The first defendant submitted that no reliance should be placed on the plaintiff’s mother’s evidence because “she was prepared to do and say anything to support her son” and the evidence of Mr Williamson was preferable to that of Ms Curtain. Ms Curtain did not actually assess past care. Mr Williamson said past care should not exceed four hours per week.
20. The first problem with the plaintiff’s claim is that $65,000 per annum exceeds the four hours per day limit which I placed on the claim. I made two separate decisions to this effect.
21. The second problem for the plaintiff is that while I do not think the plaintiff’s mother was so dishonest as to have totally, or effectively, invented a past care claim, I do think there was a degree of exaggeration which does not take into account the plaintiff frequently leaving the house and travelling.
22. I think I should allow Mr Williamson’s formula of four hours per week for the 391 weeks from 1 February 2017 to 1 August 2024. At $40 per hour the resulting figure is $62,560. I have not discounted this amount for periods spent in hospital to reflect a degree of compromise because there are likely to have been times when more than four hours per week was provided by the plaintiff’s mother.
23. Turning to the future, the plaintiff intends to spend six months in South Africa for rehabilitation and then to receive further treatment, all of which will hopefully enable him to live an independent life. I think I should take a roughly similar attitude to that in respect of future economic loss, that is to make an allowance for four hours per week for 10 years. I will also defer the 10 years for one year to take into account the plaintiff gaining into rehabilitation shortly after he receives his funds.
24. At $40 per hour for four hours per week for 10 years on the 3% tables, but then deferred for one year, the calculation is 40 x 4 x 451.8 x .971 = $70,191.65.
25. The last head of damages to be considered is aggravated damages.
26. In AA v PD [2022] NSWSC 1039, from [126] Chen J summarised the principles for the awarding of aggravated damages at [126]-[128]:
“Aggravated damages are a form of general damages, given by way of compensation for injury to the plaintiff, which may be intangible, resulting from the circumstances and manner of the wrongdoing: State of New South Wales v Ibbett (2006) 229 CLR 638; [2006] HCA 57 at [31] (Gleeson CJ, Gummow, Kirby, Heydon and Crennan JJ). They are awarded for injury to the plaintiff’s feelings caused by insult, humiliation and the like: Lamb v Cotogno (1987) 164 CLR 1 at 8 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ); [1987] HCA 47. That is, they are awarded when the harm done by the wrongful act was aggravated by the manner in which the act was done: Uren v John Fairfax (1966) 117 CLR 118; [1966] HCA 40; State of New South Wales v Abed [2014] NSWCA 419 at [231] (Gleeson JA, Bathurst CJ and Macfarlan JA agreeing). The entitlement to aggravated damages therefore turns upon establishment of these elements.
The defendant’s conduct
In order to secure an award of aggravated damages, typically (but not invariably) there must be “conscious wrongdoing in contumelious disregard of another’s rights”: Gray v Motor Accidents Commission (1998) 196 CLR 1; [1998] HCA 70 at [14] (Gleeson CJ, McHugh, Gummow and Hayne JJ). In State of NSW v Riley (2003) 57 NSWLR 496; [2003] NSWCA 208 at [138] (Hodgson JA, Sheller JA and Nicholas J agreeing) (‘Riley’), explained that whilst the presence of malice was not essential to ground an award of aggravated damages, and gave some guidance on the character of the defendant’s wrongful conduct necessary to support such an award:
“Conduct may be high-handed, outrageous, and show contempt for the rights of others, even if it is not malicious or even conscious wrong- doing. However, ordinarily conduct attracting exemplary damages will be of this general nature, and the conduct must be such that an award of compensatory damages does not sufficiently express the court’s disapproval ...”
Injury to feelings
As aggravated damages, like compensatory damages, are directed towards injury to (or hurt) feelings, the Court must take care not to “double-count”. This is particularly relevant in a case whether the injury relied upon to justify an award of damages is psychiatric, rather than physical, injury. This means that, if a court has awarded damages for hurt feelings as part of ordinary compensatory damages, the award of aggravated damages must only be for the difference justified by this approach; that is, an award of so much as is necessary to bring the damages up to the upper end of the available range: Riley at [131]-[133] (Hodgson JA, Sheller JA and Nicholas J agreeing); State of New South Wales v Radford (2010) 79 NSWLR 327; [2010] NSWCA 276 at [95]-[96] (Sackville AJA, Beazley and Macfarlan JJA agreeing).”
1. I have already mentioned the trust that was imparted to the second defendant by the plaintiff’s family, and in fact the community which included a number of parents. The abuse was a “contumelious disregard” of this trust. In addition, the abuse was attended by the humiliation felt by the plaintiff as well as the shame which prevented him from disclosing the abuse to any adult for some years. At the same time, I am aware that the general damages I have awarded are significant and I must avoid double counting. For these reasons I think the award of aggravated damages should be $15,000.
2. This is a table of the damages I have assessed:
General Damages $350,000.00
Interest on general damages $66,500.00
Past economic loss $400,000.00
Past lost superannuation benefits $36,000.00
Future economic loss $350,000.00
Past out-of-pocket expenses $30,000.00
Future treatment $100,000.00
Past gratuitous care $62,560.00
Future care $70,191.65
Aggravated damages $15,000.00
Total $1,480,251.65
1. A final matter to be considered is whether there should be an order that the plaintiff’s judgment sum not be given to him directly. It seems to me that a person with a gambling addiction and a drug addiction will take very little time to disperse the funds. I think it appropriate for the verdict sum to be paid into court and for the parties to then obtain such evidence as they wish in order to guide the path of the funds.
Orders
1. I make the following orders:
1. Judgment for the plaintiff against the first and second defendants, jointly and severally, in the sum of $1,480,251.65.
2. The judgment sum is to be paid into court within 28 days and is to remain in court until further order.
3. The defendants are to pay the plaintiff’s costs of the proceedings.
4. All parties have leave to apply for a different costs order.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 27,900 |
nsw_caselaw:191060e068439cd4c69fd0c5 | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Danaei v Medical Council of New South Wales [2024] NSWCATOD 116 | https://www.caselaw.nsw.gov.au/decision/191060e068439cd4c69fd0c5 | 2024-08-04T23:52:43.994001+10:00 | Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Danaei v Medical Council of New South Wales [2024] NSWCATOD 116
Hearing dates: 8 – 9 July 2024
Date of orders: 01 August 2024
Decision date: 01 August 2024
Jurisdiction: Occupational Division
Before: Acting Judge Levy SC, Principal Member
Dr J Fogarty, Senior Member
Dr H Haikal-Muhktar, Senior Member
M Christenssen, General Member
Decision: (1) Pursuant to s 163(1)(c) of the Health Practitioner Regulation National Law (NSW) 2009, the applicant Dr Aliyar Danaei, may apply to the Medical Board of Australia for registration to reinstate him as a medical practitioner subject to the practice and health conditions listed in the Appendix to these reasons.
(2) The Medical Council of NSW is the appropriate review body for the purposes of Part 8, Division 8 of the Health Practitioner Regulation National Law (NSW) 2009.
(3) Pursuant to clause 13 of Schedule 5D of the Health Practitioner Regulation National Law (NSW) 2009, the applicant is to pay the respondent’s costs of these proceedings on the ordinary basis as agreed or assessed.
Catchwords: OCCUPATIONS — registration of medical practitioners — application for re-registration after expiry of disqualification period — male general practitioner disqualified from registration following findings of unsatisfactory professional conduct and professional misconduct — violation of professional boundary between doctor and patient — sexual relationship with a vulnerable female patient — whether previous Tribunal findings on 24 December 2021 expressing concern over former registrant’s insight into past misconduct and his mental health issues have been clearly and sufficiently addressed and displaced by appropriate remedial steps — assessment of likelihood of reoffending — whether public health and safety would be adequately protected if the practitioner were to be reinstated at this time notwithstanding the previous Tribunal findings on 24 December 2021 — reinstatement subject to practice and health conditions
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), s 64(1)
Health Practitioner Regulation National Law (NSW) 2009, s 3, s 3A, s 3B, s 139B, s 139E, s 149C, s 149E, s 163A, s 163B, s 163C
NCAT Procedural Direction 3, clauses 19(c) and (d)
Cases Cited: Ameisen v Medical Council of NSW [2013] NSWCATOD 49
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Coe v Health Care Complaints Commission [2013] NSWMT 12
Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588
Davie v The Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34
Dawson v Law Society of NSW [1989] NSWCA 58
Evatt v New South Wales Bar Association (NSW Court of Appeal unreported, 12 April 1972)
Evatt v New South Wales Bar Association (NSW Court of Appeal unreported, 15 December 1981)
Ex Parte Lenehan (1948) 77 CLR 403; [1948] HCA 5
Haber v Health Care Complaint Commission [2018] NSWCATOD 16
Health Care Complaints Commission v Danaei (No 2) [2021] NSWCATOD 216
Health Care Complaints Commission v Danaei [2021] NSWCATOD 188
HG v The Queen (1999) 197 CLR 414; [1999] HCA 2
Jan v Health Care Complaints Commission [2021] NSWCA 350
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
Ng v Health Care Complaints Commission [2018] NSWCATOD 105
Paric v John Holland Constructions Pty Ltd [1985] HCA 58
Qasim v Medical Council of New South Wales [2021] NSWCA 173
Re Mansoor Haider Zaidi [2006] NSWMT 6
South Eastern Sydney Area Health Service v Edmonds [2007] NSWCA 16
Zepinic v Health Care Complaints Commission (No 2) [2018] NSWCATOD 92
Zepinic v Health Care Complaints Commission [2020] NSWSC 13
Texts Cited: E Brooks, M H Gendel, S R Early, D C Gundersen & J H Shore, “Physician Boundary Violations in a Physician’s Health Program: A 19-Year Review” (2012) J Am Acad Psychiatry Law 40(1), 59-66.
Category: Principal judgment
Parties: Dr Aliyar Danaei (Applicant)
Medical Council of New South Wales (Respondent)
Representation: Applicant (self-represented)
Counsel:
A Petrie (Respondent)
Solicitors:
Medical Council of New South Wales (Respondent)
File Number(s): 2023/00461308
Publication restriction: Publication restrictions apply to these proceedings. See paragraph [1] of these reasons.
REASONS FOR DECISION
Table of Contents
Non-publication order [1]
Introduction – Application for reinstatement to medical register [2] – [22]
Grounds of the application [23] – [29]
Jurisdiction and legislative focus [30] – [34]
Baseline considerations [35] – [40]
Legal principles for reinstatement [41] – [53]
Issues [54] – [55]
Evidence overview [56] – [61]
Applicant’s background [62] – [70]
Development of applicant’s relationship with Patient A [71] – [106]
Mandatory report of boundary violation with Patient A [107]
Termination of applicant’s employment [108] - [109]
Applicants’ certification documents [110] - [126]
Approach to assessment of expert medical and allied evidence [127] - [134]
Review of medical and allied evidence [135] – [174]
Applicant’s submissions [175] – [182]
Respondent’s submissions [183] – [185]
Consideration and determination [186] – [218]
- Baseline findings, factual acknowledgments, relevant insights [187] – [194]
- Applicant’s credit as a witness [195] – [198]
- Assessment of guidance value of expert medical and allied evidence [199] – [203]
- Reformation of prior professional failings [204] – [213]
- Displacement of previous adverse findings in favour of reinstatement [214] – [218]
- Conditions for practice [219]
Disposition [220]
Costs [221] – [222]
Orders [223]
Non-publication order
1. At the outset of the hearing, the Tribunal made an order pursuant to s 64(1) of the Civil and Administrative Tribunal Act 2013 (NSW) to the effect that the disclosure or publication of the name of any patient referred to in the evidence, or the name of any person referred to in the evidence who has made a complaint in respect of the applicant, is prohibited. For the avoidance of doubt this order does not preclude the disclosure or publication of the name of the applicant.
Introduction
1. By application made to this Tribunal pursuant to s 163B(1)(c) and s 163B(4) of the Health Practitioner Regulation National Law 2009 (NSW) (“the National Law”), Dr Aliyar Danaei (“the applicant”) who presently works as a general medical practitioner in Iran whilst he remains deregistered in this jurisdiction, seeks reinstatement onto the Register of Medical Practitioners in this State.
2. The applicant, who had legal representation in the underlying proceedings which led to his de-registration, is self-represented in these proceedings. He appeared without language difficulties and gave his evidence by means of an AVL connection from Tehran, in Iran.
3. The applicant became deregistered because he crossed and then violated the professional boundary between doctor and patient by engaging in a personal and then an intimate sexual relationship with a vulnerable female patient with mental health issues which included a severe form of borderline personality disorder, depression, and other health issues (“Patient A”). The relationship resulted in pregnancy and the birth of a child now aged 6 years, who lives with her mother.
4. The applicant’s offending conduct evolved incrementally over the course of a six-month period between November 2017 and May 2018. In that period, as an international medical graduate who had relatively recently arrived in Australia to work under supervision in an area of need, he was experiencing loneliness, social and cultural isolation, and he had his own mental health issues, including major depression. In that time, it appears that his practice supervisor was unaware of those mental health problems.
5. The applicant claims that since his deregistration, with the passage of time, with treatment and further medical education, he has remediated his prior professional failings and he now seeks reinstatement. He accepts that if he is to be reinstated, in light of earlier adverse Tribunal findings, for the protection of the health and safety of the public, his registration would be required to be subject to a series of practice and health conditions.
6. Following two earlier decisions in the Occupational Division of the New South Wales Civil and Administrative Tribunal (“the Tribunal”) by two differently constituted Tribunals, on 19 November 2021 and 24 December 2021, in a two staged process, adverse findings were made declaring the applicant had engaged in unsatisfactory professional conduct and professional misconduct on account of his boundary crossing behaviour which led to boundary violations involving an intimate sexual relationship with Patient A, and related matters: Health Care Complaints Commission v Danaei [2021] NSWCATOD 188; Health Care Complaints Commission v Danaei (No 2) [2021] NSWCATOD 216.
7. The Medical Council of New South Wales (“the respondent”) neither consented to nor opposed the application for re-registration but properly, in the public interest, took an active part in the proceedings by testing the evidence and making submissions on relevant matters requiring consideration by this Tribunal.
8. These reasons assume familiarity with the prior Tribunal decisions identified in paragraph [7] above. Those decisions were preceded by some earlier administrative inquiries initiated by the respondent pursuant to s 150 and s 150A of the National Law. These reasons should be read in conjunction with those earlier decisions.
9. The circumstances in which the applicant’s relationship with Patient A developed were complicated. Nonetheless, what occurred was plainly unethical according to accepted standards of practice and applicable codes of professional conduct. It is plain that the applicant knew that to be so, based on his understanding of basic professional ethical standards that applied both in Australia, and in Iran, where he obtained his primary medical qualifications. The circumstances in which the applicant’s personal relationship with Patient A developed to the point of boundary violation are identified below with greater particularity at a later point in these reasons at paragraphs [71] to [106].
10. The applicant concedes that before he commenced his intimate sexual relationship with Patient A, without a clinically documented indication other than the fact that she was a new patient, he ordered a series of tests to screen her for possible sexually transmitted diseases. He ordered those tests on three separate occasions over the course of a period of three months. The applicant also admitted keeping inadequate medical records in relation to his consultations with Patient A.
11. The prior Tribunal determined that there was insufficient evidence to conclude that those tests were carried out as part of a pre-meditated plan by the applicant to pursue an intimate sexual relationship with Patient A, although that was plainly suspected. In these proceedings that finding by the previous Tribunal is not open to be re-litigated. The child of that relationship, a daughter now aged 6 years, lives with her mother, Patient A.
12. The applicant remained a registered medical practitioner subject to conditions of practice at the time the Stage One Tribunal hearing took place, however, his registration had expired by the time of the Stage Two Tribunal hearing.
13. On 24 December 2021, the Stage Two Tribunal recorded findings made pursuant to s 149C(1) and s 149C(4)(a) of the National Law to the effect that if the applicant had been registered at the time of that hearing, his registration would have been cancelled.
14. In those circumstances, orders were made disqualifying the applicant from registration for one year from 24 December 2021. At that time, he was also precluded from making an application for reinstatement for a year. That preclusion period commenced to run from 24 December 2021. In fact the applicant filed his application for registration almost two and a half years after those orders were made, notwithstanding that he could have done so much earlier.
15. Since the applicant became disqualified from registration he has lived and worked in Iran as a general medical practitioner, where he has been deriving a very modest income compared to the potential earnings of general practitioners in this country.
16. On 30 November 2023, from Iran, the applicant completed his application for reinstatement as best he could, nominating his postal address as the place where he had formerly practiced, in West Gosford, New South Wales. Whilst he believed the usual filing fee for his reinstatement application was waived in light of his disclosed financial circumstances, it appears he was mistaken in that regard, as such applications are fee exempt.
17. Throughout the previous Tribunal proceedings, and in these proceedings, the applicant has unreservedly acknowledged his misconduct as a big mistake on his part, and he did not seek to downplay or avoid answering difficult questions on the detail of the matters that led to him being deregistered.
18. The applicant has not only unreservedly accepted personal responsibility for that misconduct, but without seeking to make excuses or justify his wrongdoing, he has expressed his deep regret, deep shame and deep remorse at being in breach of his obligations to Patient A, whose vulnerability he has acknowledged. He has also expressed his sorrow to Patient A for having breached his professional responsibilities. He is plainly regretful and remorseful that his actions have caused harm and have had a negative impact on Patient A's mental health and well-being.
19. The applicant has also expressed his deep regret at bringing the medical profession into disrepute as a result of having placed his own emotional needs ahead of his professional obligations towards Patient A as her medical practitioner. He has acknowledged this constituted a breach of trust on his part.
20. The applicant claims that now, with greater insight, maturity, and the benefits of medical treatment and psychological therapy, and with the benefit of the educational programs he has attended and completed, he is more mature, better informed, better able, and is now equipped with suitable strategies for avoiding a future recurrence of the boundary violations for which he was deregistered.
21. The applicant stated that if he is permitted to do so, he intends to return to Australia as soon as possible so he can continue working as a medical practitioner. If that occurs, he also hopes to spend more time with his daughter and provide her with financial and emotional support.
Grounds of the application
1. The applicant initiated these proceedings by filing his application form on 14 December 2023. The stated grounds of his application for reinstatement were identified as follows:
“As the 12-month period has expired I would like to apply for reinstatement of my Registration. I have insight and have reflected on my prior misconduct. I have gained a clear understanding of boudaries (sic) in the doctor/patient relationship as outlined in the Medical Board's Code of Conduct. I understand the importance of being vigilant with patient's mental health conditions and their vulnerability. I have significantly improved my mental health as a result of continuous Psychotherapy and Cognitive Behaviour Therapy (CBT), work/life balance and having clear strategies in managing my mental health well-being. I have matured and grown immensly (sic).”
1. In summary, the applicant claims that at this time, the Tribunal would be comfortably satisfied that by the remedial steps he has undertaken, he has addressed the previous issues of concern which led to his disqualification and his current de-registration.
2. The applicant concedes that his own mental health issues, his loneliness and isolation, his long working hours, and his use of prescribed psycho-stimulant medication, his inexperience in dealing with the challenges of managing patients with borderline personality disorder presentations such as those of Patient A, in combination, were influential factors which led to his offending conduct. It also appears from the expert medical evidence that there may well have been an iatrogenic component which influenced the applicant’s offending conduct consequent upon him taking the psycho-stimulant drug Vyvanse or lisdexamfetamine, which was prescribed by his treating psychiatrist to treat a diagnosis of inattentive attention deficit hyperactivity disorder (“ADHD”).
3. The expert evidence in these proceedings indicates the use of that medication was likely to have been accompanied by symptoms similar to acute mania and impaired judgment, which was thought to have contributed to the appellant initiating a sexual relationship with Patient A. That evidence raises the question of whether the applicant’s use of that medication, which was prescribed by his treating psychiatrist, could be seen as being a mitigating factor in the applicant’s offending conduct. That evidence was not available for the consideration at the previous Tribunal hearings.
4. The applicant claims that over the course of time, following his participation in psychiatric and psychological treatment, with prescribed medication, his mental health issues of previous concern, particularly his major depression, have been in remission. The applicant also claims his personal circumstances have now materially changed in that he has had a stable 2-year relationship in Iran with his fiancée whom he plans to marry. His wish is for them to travel to Australia as a couple, and for him to practice in Australia.
5. The applicant also claims his prior deficiencies of insight, behaviour and character failings which based the adverse findings in the previous Tribunal hearings have now been satisfactorily addressed by treatment, further education, and mature reflection on his part. He states that if he is reinstated to practice in this country, his aspiration is to have a relationship with and his 6-year-old daughter, and he intends to take personal and financial responsibility for her as a parent, although she would continue to live with Patient A.
6. In that regard, the applicant stated that on past visits to Australia following his deregistration he has met with Patient A and with their daughter and he has had mature and constructive contact with them. On that basis, he believes that his aspirations for having a supportive parental relationship with his daughter are feasible. At present, he is only able to visit here on tourist visas because without reinstatement and registration, he is unable to work here in his profession. He is conscious of the child’s need for stable non-disruptive parental contact, which is the basis for his explanation as to why he has not sought to have contact with the child since late 2023, given the uncertainties over the outcome of these proceedings.
Jurisdiction and legislative focus
1. The objective focus and overriding principle guiding the exercise of jurisdiction in this case must be the paramount consideration of the safety and the protection of the public. As such, the focus is not on the particular needs, wishes and circumstances of the practitioner: s 3, s 3A, and s 3B of the National Law.
2. Section 3(2)(d) of the National Law identifies as a relevant objective of the legislation the facilitation of the rigorous and responsive assessment of overseas-trained health practitioners.
3. Section 3A(1) of the National Law identifies the paramount guiding principle of the administration of that legislation as being the protection of the health and safety of the public.
4. Section 3B of the National Law requires that in the exercise of jurisdiction and functions under that legislation the health and safety of the public must be the paramount consideration.
5. This Tribunal has jurisdiction to hear and determine an application for reinstatement. That jurisdiction consists of a non-discretionary power to make an order in favour of reinstatement if such a course is determined to be appropriate at the time the application is heard, having due regard to the overriding paramount principles identified in the legislation: s 3, s 3A, s 3B, s 163A, s 163B and s 163C of the National Law.
Baseline considerations
1. The baseline requirement for considering the present application for reinstatement is that this Tribunal must have regard to the full force of the previous findings of the Tribunal’s Stage Two reasons published on 24 December 2021 in order to determine whether those findings which were adverse to the applicant should still be regarded as being applicable at this time: Health Care Complaints Commission v Danaei (No 2) [2021] NSWCATOD 216, at [42] to [64].
2. The determination by the Stage Two Tribunal gave detailed consideration to a series of factors. These included not only the seriousness of the impugned conduct and the need for the public to have confidence in the medical profession, but questions concerning the applicant’s insight, his emotional and mental health, his competence and knowledge, his relationship with his daughter, his financial situation, and his preparedness to work in an area of unmet need.
3. In that regard, the Stage Two findings concluded that the applicant was a competent practitioner who has shown insight into the events, and despite doubts about his emotional and mental well-being, that Tribunal was satisfied that the risk of the applicant again violating sexual boundaries in the future was low.
4. Notwithstanding that conclusion, and in conformity with accepted principles, the previous Tribunal considered the applicant’s impugned conduct to be sufficiently serious to require deregistration for general deterrence as well as for the maintenance of confidence in the medical profession: Health Care Complaints Commission v Danaei (No 2), supra, at [64].
5. As the applicant became disqualified due to the expiry of his registration, as distinct from suspension, he was required to apply to this Tribunal for reinstatement after the expiry of the disqualification period.
6. Recognising those baseline factors, in this application for reinstatement, the essential questions to be determined are whether the applicant has now demonstrated his fitness to practice, and whether, if he is to be reinstated, what would be the likely impact on the health and safety of the public in terms of the risk of a recurrence of the behaviour which led to his disqualification.
Legal principles for considering reinstatement
1. The applicant bears the heavy onus of proof to satisfy the Tribunal by clear, solid and substantial evidence, that he has undergone a reformation of his past character flaws which led to his deregistration thereby justifying an order for his reinstatement onto the register of medical practitioners in this jurisdiction.
2. The discharge of that onus of proof cannot be achieved by simply making unsupported assumptions based on flimsy aspirational and platitudinal evidence where the paramount consideration is the safety and protection of the public: s 3A and s 3B of the National Law. The decided cases, which authoritatively explain those requirements are uncontroversial, and are summarised below.
3. The starting point for the Tribunal’s consideration of a reinstatement application by a former medical practitioner against whom adverse findings have been made in respect of ethical breaches is to recognise the well-established principle that there is no public interest in forever denying a former practitioner the chance of redemption through reformation of character, if that can be satisfactorily established.
4. On the contrary, the decided cases indicate that the public interest is better served where practitioners who have offended against the accepted standards of practice but are otherwise suitably qualified are afforded a second chance provided reformation has been affirmatively established.
5. The test to be applied in an application for reinstatement is the provision of clear and demonstrative proof of persistence in habits of integrity, uprightness and responsibility: Dawson v Law Society of NSW [1989] NSWCA 58, (at 15.10), following Evatt v New South Wales Bar Association (NSW Court of Appeal unreported, 12 April 1972), which was cited with approval in Evatt v New South Wales Bar Association (NSW Court of Appeal unreported, 15 December 1981); Coe v Health Care Complaints Commission [2013] NSWMT 12, at [23]; Ameisen v Medical Council of NSW [2015] NSWCATOD 49, at [24].
6. The paramount consideration in an application for reinstatement must be that the privileged status of registration as a medical practitioner should only be afforded to those practitioners who are suitably trained, qualified, and who can be trusted to practice in a competent and ethical manner according to expected standards of practice that are protective of the health and safety of the public. Of relevance to this case, where prior findings of unfitness to practice have been recorded, there is a heavy onus is on the applicant to displace the earlier adverse findings of unfitness and to clearly show that he is no longer unfit: Qasim v Medical Council of New South Wales [2021] NSWCA 173, at [17]-[19]; Jan v Health Care Complaints Commission [2021] NSWCA 250, at [21].
7. The jurisdictional power to recommend reinstatement is conferred on the Tribunal by the force of the enabling legislation within the National Law. That power does not involve the exercise of a discretion. Instead, it is a power that must “be exercised with the greatest of caution and only upon solid and substantial grounds”: Jan v Health Care Complaints Commission [2021] NSWCA 350, at [67], following Ex Parte Lenehan (1948) 77 CLR 403, 422; [1948] HCA 5, as was applied in Ng v Health Care Complaints Commission [2018] NSWCATOD 105, at [27]-[29], and in many other cases.
8. Central to the exercise of that conferred power, when considering an application for reinstatement, the Tribunal must assess the potential for risk to the health and the safety of the public: s 3A and s 3B of the National Law.
9. That assessment is required because studies show that practitioners with a history of prior sexual boundary violations are more likely to commit further sexual boundary violations. Those studies acknowledge the known phenomenon that further violations by such practitioners tend to go underreported for fear of legal retribution: E Brooks, M H Gendel, S R Early, D C Gundersen & J H Shore, “Physician Boundary Violations in a Physician’s Health Program: A 19-Year Review” (2012) J Am Acad Psychiatry Law 40(1), 59-66. Accordingly, in this instance, a considered risk assessment is required.
10. The Tribunal’s jurisdiction for undertaking those assessments is not punitive in nature. In Re Mansoor Haider Zaidi [2006] NSWMT 6, at [42], the former Medical Tribunal of New South Wales set out a conveniently digested form, a summary of the principles to be applied in applications for reinstatements, as follows:
“1. The purpose of the jurisdiction which is exercised by the Tribunal is not for punishment or further punishment of the former practitioner. Instead the Tribunal’s jurisdiction is for the protection of the public which deals with medical practitioners on the basis that they are members of an honourable profession who can be expected without reservation to conduct the affairs of their patients with honour and in whom the patients can place unbounded confidence. What is in question in an application for reinstatement to the Medical Register is whether an applicant is fit and proper to be held out to the rest of the profession, to patients and to the whole of the community as a person worthy of their confidence.
2. An applicant who seeks to establish fitness to have his name restored to the Register having been earlier removed from it bears the onus of proving the case. It is a heavy onus and the question whether the applicant is a fit and proper person, is one to be trusted to exercise the high responsibilities of the profession is one to be determined on solid and substantial grounds and as an applicant for reinstatement to the Medical Register he is in a more disadvantageous position than an original applicant. He must in effect displace the decision for deregistration which has been made. That decision involves the judgment that the applicant is probably permanently unfit to have his name on the Register. As a consequence, presumptions of fitness which might arise otherwise than from an absence of contrary suggestions can no longer advantage him, precisely because of the removal of his name from the Register on the basis of unfitness.
3. The ultimate issue is whether the Tribunal can conclude on the basis of all the evidence that an applicant is now a fit and proper person to join other members of an honourable profession in the responsible and trusted activities which are involved in the work of the medical profession, what is at stake is not so much the reputation of the applicant but the Tribunal's assessment of his character, uprightness, honour and trustworthiness. In the case of some offences committed over an extended period with deliberate intent and resulting in serious distress to patients it will be very difficult to contemplate any circumstances in which the name of the offender will be restored to the Register.
4. It is not a question of what an applicant has suffered in the past. It is a question of his worthiness and his reliability for the future. What in this respect the Tribunal must determine is whether it is satisfied that for the future the applicant will act in accordance with the high standards and responsibilities of the profession. It is difficult to decide what a man will do in the future and the decision in a particular case is to a greater or lesser extent dependant upon the Tribunal’s assessment of the applicant. In making that assessment, it may draw inferences from what he has done in the past, and in particular, what led to his being removed from the Register. An understanding of that may assist the Tribunal to determine what are his standards and his understanding of a practitioner’s responsibility, and from this, what he is apt to do in the future. Where what has been done in the past has been sufficient to indicate his probably permanent unfitness the Tribunal will require solid and substantial grounds for the conclusion that his standards have changed, his character has been reformed and that he will act honourably.”
1. More recently, those guiding principles have been affirmed, echoed and applied without controversy in other cases: Zepinic v Health Care Complaints Commission [2020] NSWSC 13, at [85], citing the first instance decision of Zepinic v Health Care Complaints Commission (No 2) [2018] NSWCATOD 92, at [7]-[8], also citing Haber v Health Care Complaint Commission [2018] NSWCATOD 16, at [12].
2. In Re Mansoor Haider Zaidi [2006] NSWMT 6, at [42], the ultimate question to be determined was identified as being whether an applicant has established worthiness and reliability for the future practice of medicine, that is, whether the Tribunal can be comfortably satisfied on the balance of probabilities that in the future the applicant will act in conformity with the high standards and privileged responsibilities expected of the medical profession when dealing with the health needs of patients.
3. The latter considerations were unquestioningly applied in reinstatement cases determined by the former Medical Tribunal of NSW. They also apply unquestionably in this Tribunal, which is the successor to that Tribunal.
Issues
1. In light of those principles, the fundamental issues calling for determination in these proceedings centre around the applicant’s credit as a witness; his acknowledgment and level of insight with regard to his past sexual misconduct concerning Patient A; whether the expert evidence provides reliable guidance on those matters; whether the previous adverse findings against the appellant have been satisfactorily displaced by clear, solid and reliable proof on the balance of probabilities such that those findings should be seen to be no longer appropriate with reference to efforts at reformation and remediation of his prior professional failings which have led to his deregistration.
2. Those issues must be satisfied according to a high bar for proof on the balance of probabilities having due regard to the seriousness of the issues and the risks involved: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, at 358 – 363. They must be determined by the Tribunal with primary focus on the paramount consideration of the protection of the health and safety of the public. That paramount consideration must override any considerations of sympathy arising from hardship and economic disadvantage experienced by the applicant following his deregistration as those matters are neither relevant nor determinative on the question of fitness to practice.
Evidence Overview
1. In addition to the applicant’s evidentiary statements, he gave oral evidence and made his submissions by means of an AVL connection from Tehran. In combination, the time zone difference and a fluctuating internet connectivity unfortunately meant that his treating psychologist and psychiatrist in Iran could not be called to give oral evidence to explain aspects of their clinical letters which formed part of the applicant’s evidence in the proceedings.
2. Oral evidence was given by the practice manager of the medical practice where the applicant had worked in Wyong until his employment there was terminated due to the disclosure of the boundary violation which led to his deregistration. The substance of her evidence was that following the passage of time and in light of her knowledge of the applicant’s remedial efforts to address the issues his deregistration, that former practice is now prepared to re-employ him in Gosford if he is reinstated.
3. In support of his application for reinstatement, the applicant produced a bundle of documents, correspondence and reports: Exhibit “A”, pp 1-53, together with a further 14 pages of annexures. The respondent Medical Council also produced a bundle of documents; Exhibit “1”, Tabs 1-24, pp 1-240. Some of those materials had been considered at the previous Stage Two hearing.
4. The respondent’s bundle of documents contained copies of historical disciplinary documentation and comprising the materials and the decisions which preceded the present application. Those materials were supplemented with further uncontroversial documents comprising professional guidelines tendered during the course of the proceedings. The applicant’s documentary evidence, which included his statements and certificates, was marked in the series Exhibits “A” to “B”. The respondent’s documentary evidence was marked in the series Exhibits “1” to “16”.
5. The deliberations of the Tribunal were assisted by expert evidence both in the form of a written report and further explanatory oral evidence from Associate Professor Chanaka Wijeratne, a consultant psychiatrist who examined the applicant at the request of the Health Professionals Councils Authority for the purpose of these proceedings.
6. Relevant aspects of that array of evidence will be considered and referred to in the appropriate context and detail in these reasons.
Applicant’s background
1. The applicant is presently aged 41 years. He is living and working as a general medical practitioner in Iran.
2. In 2010, at age 27 years, he obtained the degrees variously described as Doctor of Medicine or Bachelor of Medical Sciences from the University of Guilan in Iran. Between 2011 and 2013 he worked as a medical practitioner in general practice in a number of remote rural areas in Iran, ultimately working in Tehran.
3. In 2013, when aged 30 years, the applicant passed his AMC MCQ examinations on his first attempt. On 19 October 2015, as an international medical graduate, he was registered as a medical practitioner in New South Wales subject to supervision conditions. Shortly afterwards he returned to Iran.
4. In March 2016, the applicant returned to Australia and began working at the Reliance Medical Practice on the Central Coast of NSW, in Wyong as a general practitioner in accordance with the supervision conditions of his registration.
5. Whilst working as a general practitioner on the Central Coast, the applicant experienced feelings of loneliness, homesickness and isolation from his family, and he became depressed. Those personal problems did not seem to have come to the attention of his practice supervisor although they did come to the concerned attention of the practice manager as she explained in her oral evidence. She was the one who noticed he was not doing well psychologically and suggested he seek psychological assistance.
6. In July 2017, he referred himself to a psychiatrist, Dr Sian Ong, who diagnosed and treated him with medication for the diagnosed conditions of depression and ADHD. He disclosed to Dr Ong that he was feeling stressed about his forthcoming FRACGP examinations. Dr Ong prescribed antidepressant medication for the applicant to treat his depression as well as Ritalin for his ADHD.
7. As the applicant experienced an adverse reaction to Ritalin, that drug was substituted with another dextamphetamine psycho-stimulant lisdexamfetamine or Vyvanse, which was later recognised to have some significant side effects which were apparently not initially understood, either by the applicant, or by Dr Ong who had prescribed that medication to him.
8. Of relevance to these proceedings, those side effects included a feeling of increased energy and work capacity. This resulted in the applicant taking on large numbers of patients over extended working hours each week as a response to his depression, loneliness and isolation. Although unrecognised at the time, apart from mania like symptoms and impairment of judgment, another side effect of that ADHD medication Vyvanse was increased libido, which was a factor identified in the evidence of Associate Professor Wijeratne.
9. Between 1 July 2017 and 25 September 2019, the applicant continued to consult Dr Ong for periodic psychiatric review, treatment, and for prescriptions for his medications for his conditions of depression and inattentive ADHD. In that period, in March 2018, the applicant made a short trip to Iran, and on his return, he resumed working at the Wyong practice.
Development of applicant’s relationship with Patient A
1. It is necessary to identify and summarise the events which led to the applicant’s offending conduct in order to form the baseline from which to evaluate whether the applicant has truly implemented the required changes in his outlook and understanding of the requirements for the ethical practice of his profession.
2. The following summary has been reconstructed from the source referenced chronology comprising MFI “1”, the findings recorded in the previous Tribunal decisions and s 150 and s 150A proceedings, and from relevant evidentiary concessions and admissions made by the applicant.
3. It is beyond dispute that at all relevant times, the applicant knew from his medical education in Iran, and from his knowledge of applicable medical ethics guidelines in Australia, that a professional ethical boundary must at all times be observed and maintained between doctor and patient, and that in particular, sexual relations with a patient were totally unacceptable and amounted to professional misconduct, especially in the case of a vulnerable patient who had significant mental health issues.
4. The evolution of the personal boundary crossing relationship between the applicant and Patient A developed according to the following chronological summary.
5. On 19 November 2017, following the applicant’s return to Australia from Iran, whilst working at the Wyong practice, Patient A, a 33-year-old female patient, first consulted him for treatment of what was noted to be a sore finger. She also told him she had a history of a work related back injury which was the subject of a workers’ compensation insurance claim, for which she was consulting another medical practitioner.
6. At that time, like Patient A, the applicant was also aged 33 years. He was experiencing loneliness, cultural and social isolation, and he was also feeling homesick. Over the course of a series of ensuing consultations with Patient A, a good personal rapport developed between them.
7. Hindsight analysis shows that between 19 November 2017 and 30 May 2018, the applicant had some 28 consultations with Patient A. Some of those consultations were very close together in timing. The applicant’s clinical notes for some of those consultations were at times either sparse, absent, or did not record adequate detail of what had been discussed or concluded. The content of those notes of his consultations with Patient A attracted peer professional criticisms which the applicant accepts.
8. When the applicant commenced treating Patient A, he did not have access to the medical records kept by her former general practitioner. Therefore, initially, he did not realise there were aspects of her past history that indicated she was a vulnerable patient who had a history of addiction to marijuana, issues over her alcohol use, a series of miscarriages, post-natal depression, depression generally, and most significantly, a severe borderline personality disorder.
9. It appears that initially, either Patient A did not fully disclose those matters to the applicant, or he did not have the clinical acumen to discern that Patient A had emotional issues which indicated she ought to have been regarded as being a vulnerable patient who should be treated with due caution.
10. Subsequently, the applicant eventually obtained access to Patient A’s medical records from her former general practitioner. Consequently, he became aware of aspects of her medical history which ought to have caused him to take pause and reflect on the fundamental inappropriateness of the social relationship which was developing between them.
11. Along that timeline, in the professional setting the applicant came to know many personal things about Patient A. Those matters included details of her sexual history, her past history of testing for sexually transmissible diseases, her multiple past miscarriages, her history of depression, her history of post-natal depression after the birth of her son, and significantly, her diagnosis of borderline personality disorder. In combination, those matters ought to have signalled to him that his patient was psychologically and emotionally vulnerable.
12. Whilst the applicant ought to have had a professional awareness of the inappropriateness of a personal relationship with Patient A, and he ought to have had an awareness of the potentially adverse professional consequences for him if he engaged in a personal relationship with her, instead he became distracted by the circumstances, and he basked in and enjoyed the personal attention that Patient A was directing his way.
13. In those circumstances the applicant was somewhat blindsided to some key red flag characteristics within Patient A’s presentation which ought to have suggested to him that she had some serious emotional issues well before he became aware that she had a diagnosis of borderline personality disorder. Those aspects of her presentation were, amongst other things, her over familiar and friendly attitude towards him, her felicitous and flirtatious manner, and her choice of late in the day appointments with him.
14. In those circumstances, the applicant felt flattered by Patient A’s attentions and sociability. In that context, in December 2017, Patient A began suggesting they have meetings outside the practice. Initially, the applicant resisted those suggestions and he declined. That initial stance of resistance indicated that he plainly understood the need to maintain professional boundaries.
15. Although inexcusable, over the course of time, despite his initial instinctive resistance which led him to decline Patient A’s invitations to meet privately, eventually he succumbed and accepted an invitation for them to meet socially away from the practice setting. He said this occurred due to his failure to recognise the warning signs that should have flagged to him the need for his cautious attention. He explained that his failures on that account occurred because he lacked assertiveness in securing the required boundaries.
16. The applicant either remained unaware or was oblivious to the signals he was giving Patient A which encouraged her to engage in personal communications outside the context of the medical practice. Ill-advisedly, at an early stage, he provided Patient A with his mobile telephone number as a means by which he could be contacted. The applicant only came to fully realise the implications of this in hindsight, with the assistance of psychological therapy. However, at the time, the evolving circumstances ought to have alerted him to the dynamics at play and this should have caused him to reflect upon and supress any inclinations he entertained for having a personal and sexual relationship with Patient A.
17. In hindsight, in broad terms, without seeking to ascribe moral blame to Patient A for the way in which the relationship developed, the applicant acknowledged that he was attracted to her. He was flattered by the attention she was directing towards him, and eventually, on a social outing, he did not flinch from a kiss and an embrace which Patient A had initiated, and he did not appear to resist or strategize against further personal contact with her. Instead, ultimately a sexual relationship developed between them after they ended up at his home on one of those social meetings. An intimate sexual relationship continued thereafter, intermittently, on a number of occasions over the course of some months. It is not necessary to catalogue all of those occasions in these reasons.
18. In those events, it is plain that the applicant did not initially or fully appreciate the psychological processes which were operating in the dynamics of those circumstances, namely the well understood mechanisms of transference and countertransference that foreseeably led him into the realm of crossing the professional doctor and patient boundary.
19. In that time, it remains a curiosity as to why the applicant arranged STI testing of Patient A on three separate occasions over the course of as many months, apparently without telling her why he ordered those tests. The first tests were carried out on 28 November 2017 (at the fifth consultation), the second tests were carried out on 17 December 2017 (at the twelfth consultation) and the third tests were carried out on 2 January 2018 (in between the seventeenth and eighteenth consultations).
20. Whilst the applicant was seeing Patient A in the Wyong practice, ill-advisedly, he was also having social meetings with her away from the practice in a cafe. From his training both in Iran and in Australia, he must have known that those circumstances were leading him towards an ill-advised boundary crossing and potential breaches of the ethical requirements of his profession.
21. Over the course of time, that realisation ought to have become increasingly more evident to the applicant as he became incrementally aware of Patient A’s mental health issues, as follows:
1. On 11 December 2017, at the ninth consultation, he prepared a Mental Health Treatment plan for her;
2. On 17 December 2017, at the twelfth consultation, he wrote a referral letter for her to attend a psychologist;
3. On 27 December 2017, at the sixteenth consultation, he noted symptoms comprising high levels of tension and anxiety;
4. On 30 December 2017, at the seventeenth consultation, he prescribed Zoloft, an antidepressant, and Targin, for pain relief;
5. On 31 January 2018, at the twentieth consultation, he wrote a letter to Patient A’s treating psychologist seeking an opinion on the management status of her borderline personality disorder;
6. On 6 February 2018, at the twenty first consultation, he changed Patient A’s antidepressant medication from Zoloft to Cymbalta on account of her experiencing confusion whilst she was taking the former antidepressant medication;
7. On 14 March 2018, whist the applicant was on holidays in Iran, he spoke to Patient A from there. He stated that whilst there, in that conversation, they had agreed to end their relationship;
8. On 10 April 2018, at the twenty fourth consultation, the applicant became aware that in the week before, on 4 April 2018, Patient A had threatened suicide, which had led to an overnight admission to St George Hospital for “reaction to severe stress and adjustment disorders”: Exhibit “6”. He also became aware that following that overnight admission, she was then transferred to the Wyong Acute Care Team at the Central Coast Community Health Centre, where she stayed for 4 nights between 5 and 9 April 2018;
9. At that twenty fourth consultation, Patient A disclosed to the applicant that she had been hospitalised (as outlined above) for an apparent mental health breakdown. Consequently, at that consultation, the applicant provided Patient A with a referral to a psychiatrist, but in doing so he did not make a record as to what was discussed or disclosed by Patient A, including with regard to the reasons for her recent hospitalisation for mental health issues.
1. On 12 April 2018, which was just three days following Patient A’s discharge from mental health treatment by the Wyong Acute Care Team, she and the applicant engaged in unprotected sexual intercourse at his home, which resulted in the conception of their child.
2. By 17 April 2018, if not beforehand, the applicant was aware of the recent hospital admission because on that date he referred Patient A to a psychiatrist in Gosford for an opinion and management of multiple issues including chronic pain, borderline personality disorder, recent suicidal thoughts and an assumed risk of suicide where, according to the referral letter, the only medication Patient A was taking was one 60mg capsule of Cymbalta capsule each morning: Exhibit “5”. Cymbalta is an antidepressive used to treat major depressive disorders.
3. On 17 April 2018, at the twenty fifth consultation, the applicant made a second referral for Patient A to see a psychiatrist and a pain specialist for assessment of her chronic pain. By that time it was plain that the applicant had already received Patient A’s hospital discharge summary.
4. On 9 May 2018, in conversation that took place away from the practice, the applicant and Patient A discussed the positive result from her urine pregnancy testing. Those discussions were followed by a discussion at the applicant’s home, where they discussed the subject of Patient A either continuing with or terminating the pregnancy.
5. On 15 May 2018, at the twenty seventh consultation, after reviewing the positive urine pregnancy test carried out on 9 May 2018, the applicant referred Patient A for obstetric ultrasound imaging tests.
6. On 30 May 2018, at the twenty eighth and last consultation, the applicant noted Patient A’s “high level of anxiety” which he ascribed as being “due to her psychological problems and suicidal thought[s]”, and he noted “it might be prudent to continue with her psychologist and exercise physiologist”. At that time Patient A was provided with a new Workcover certificate. The basis for referring her to an exercise physiologist was obscure.
7. In either late May or early June of 2018, in a non-clinical personal setting the applicant advised Patient A to have a termination of her pregnancy. Patient A did not accept that recommendation.
8. On 3 June 2018, Patient A disclosed to another doctor in the practice that she was pregnant as a result of her sexual relationship with the applicant, and that she had been advised to terminate the pregnancy because of the medications she was taking, and because she had not been taking folic acid supplements.
9. On 3 June 2018, Patient A consulted an obstetrician at the Royal Hospital for Women about her pain, her depression, and her medication intake, following which she ceased taking some of her medications and she decided not to terminate her pregnancy.
10. The events described above raised questions as to the adequacy of applicant’s professional acumen and insight regarding the obligation of medical practitioners to recognise and appropriately maintain personal and professional boundaries between doctor and patient and how this should be achieved and maintained in challenging circumstances.
11. Those questions arose because the applicant had either ignored or had failed to recognise an incremental series of warning signs and professional implications of the boundary crossing that was occurring and which ultimately led to him into violating that boundary, notwithstanding that in their sexual relationship, both he and Patient A were consenting adults.
12. His explanation for not seeking out professional advice and assistance at an early stage of the relationship when he realised the professional implications of his misconduct was that he felt shame, guilt, fear, and felt trapped by the circumstances. He also said he thought he would cause damage to Patient A irrespective of whether he kept seeing her or not.
13. That latter explanation demonstrates that the applicant had placed his own emotional needs above those of Patient A.
14. Now, reflecting back on those events, without glossing over them, the applicant has unreservedly accepted that those events occurred due to professional and personal failings on his part, and he has apologised for those failings. He also unreservedly accepts the previous Tribunal findings of unsatisfactory professional conduct and professional misconduct which properly required that his registration be cancelled.
15. The applicant also unreservedly accepts that as a result of his misconduct, Patient A has suffered emotional and other harms. He said that if he is able to take up employment in Australia, and when he has the financial capacity to do so, he intends to take practical steps in terms of his personal responsibility for their child. In that regard, he is also sensitive to the fact that the child is entitled to financial and emotional support, for which he intends to take personal responsibility.
Mandatory report of boundary violation with Patient A
1. On 25 July 2018, when another general practitioner became aware of the intimate sexual relationship between the applicant and Patient A, that general practitioner made a mandatory report of that disclosure to the regulator. On 23 August 2028, Patient A made a second disclosure to another doctor in the practice regarding her pregnancy which followed from her intimate sexual relationship with the applicant.
Termination of applicant’s employment
1. On 31 August 2018, following the management of the practice becoming formally aware of the applicant’s intimate sexual relationship with Patient A, the applicant’s employment with that practice was terminated by the practice manager.
2. The disciplinary proceedings involving the s 150 hearings, and the Stage One and Stage Two Tribunal hearings then followed. Appropriately, the applicant admitted the relationship with Patient A. This ultimately resulted in his disqualification from practice on account of his violation of the professional boundary between doctor and patient.
Applicant’s certification documents
1. On the issue of fitness to practice, the applicant relied upon a series of certificates of attainment including various CPD courses he has attended. Some of those certificates had already been considered in the previous Tribunal hearings. In the paragraphs that now follow, those documents are reviewed in the order in which they bear dates of issue. Where the documents were in the Farsi language they were accompanied by certified translations.
Certification from the Medical Council of Iran
1. On 23 January 2010, the applicant obtained formal certification as the holder of a degree in medicine (translated as a doctor’s degree) issued under the Medical Council of Iran’s national code for medical licensing, as certified by Dr Reza Laripour, the Vice-President for Technical Affairs and Supervision for that Medical Council. The certificate was issued on 6 March 2024.
Avant Mutual Group: Managing Boundary Issues for patients with mental health issues
1. The Avant Mutual Group Limited provided a confirmatory certificate to the effect that on 15 May 2019, the applicant completed a CPD learning centre course on managing boundary issues for patients with mental health issues for which he earned 2 activity points according to the requirements of the Royal Australian College of General Practitioners.
Avant Mutual Group: CPD Course: Ethics obligations knowledge and skills: Professionalism in Medicine
1. The Avant Mutual Group Limited provided a confirmatory certificate to the effect that on 16 May 2019, the applicant completed a CPD learning centre course on ethical obligations knowledge and skills entitled Professionalism in Medicine, for which he earned 2 activity points according to the requirements of the Royal Australian College of General Practitioners.
Central Queensland University course on Professional Boundaries - a Health Professionals Guide
1. The Centre for Professional Development within the Central Queensland University provided a certificate to the applicant certifying that on 17 May 2019, he completed a one-hour course of professional boundaries entitled “A Health Professional’s Guide”.
Certificate from Black Dog Institute – Online Mental Health Self Care for Doctors
1. The Black Dog Institute certified that on 18 May 2019, the applicant completed an online training Webinar for Online Mental Self-Care for Doctors, for which he earned 2 activity points according to the requirements of the Royal Australian College of General Practitioners.
Avant Mutual Group: CPD Course: Medical records: Chapter One – Documentation
1. The Avant Mutual Group Limited provided a confirmatory certificate to the effect that on 12 September 2021, the applicant completed a CPD learning centre course on documentation in medical records, for which he earned 3 activity points according to the requirements of the Royal Australian College of General Practitioners.
Avant Mutual Group: CPD Course: Medical records: Chapter Two – Legal Requirements
1. The Avant Mutual Group Limited provided a confirmatory certificate to the effect that on 12 September 2021, the applicant completed a CPD learning centre course on the legal requirements of medical records, for which he earned 3 activity points according to the requirements of the Royal Australian College of General Practitioners.
Iran University of Medical Sciences – Certificate
1. Dr Ali Moski, the Vice-President for Therapy at the Iran University of Medical Sciences provided a certificate dated 13 January 2024 confirming the applicant’s activity or status as a general practitioner between 17 December 2014 to 19 March 2015, and between 20 March 2022 and 11 December 2023.
Certificate of attendance: 10th Annual Conference of Medical Ethics in Iran
1. On 6 March 2024, Dr Babak Shekarchi, the Vice-President for Education and Research for the Medical Council of Iran, certified that between 14 and 16 February 2024, the applicant had attended at the 10th Annual Conference of Medical Ethics conducted by that Council.
2. That certificate of attendance gave no indication of the programme of the conference. It did not specify whether the ethical question of boundary violation, which is the subject of a medical ethics code of conduct in this country, was on the agenda of that conference.
Certificate of Good Standing issued on 6 March 2024 by Medical Council of Iran
1. On 6 March 2024, Dr Mohammadreza Kheradmand, the Vice-President of Disciplinary Affairs of the Medical Council of Iran, certified that as at that date, there was “no record of final disciplinary sanction” relating to the applicant held by that organisation. That certificate was issued by the Medical Council of Iran in the absence of any knowledge of the applicant’s history of boundary violation with Patient A and the subsequent disciplinary proceedings that followed as the applicant did not make such disclosures to that Medical Council.
Reliance Medical Practice – Reference
1. On 26 March 2024, Ms Julie Abdilla, the CEO of Reliance Health, provided the applicant with a reference based on her professional workplace acquaintance with him in the period between April 2016 and August 2018. The reference was in the following terms:
“I worked with Dr Aliyar Danaei for about 21⁄2years between April 2016 and August 2018. In my opinion, and the opinion of one of our senior supervising GP's, Dr Danaei was an excellent GP, always following up his patients, dedicated to all his patient's wellness and was professional in his attendance.
He understood the Australian Healthcare industry, and this was reflected in his practice. He has generous heart; he was always generous with his time and very supportive towards the practice. He was very instrumental in building our Wyong practice.
After Dr Danaei had been practicing for 12-18 months, I noticed that he was not doing too well personally. I believe he struggled with self-doubt and I tried my best to ensure him of our respect towards him, and I also tried to encourage him to seek the help of a Psychologist, and I believe if he did, he would still be working with us.
Dr Danaei, like a few of our overseas trained single doctors would have found it very difficult not only to adjust to living alone in Australia, but also living away from their friends and family.
I would be very happy to discuss further if needed.”
[Emphasis added]
1. Ms Abdilla’s reference made no mention of whether she was aware of the Applicant’s professional wrongdoings whilst working at the practice. The emphasised reference in that letter to the applicant’s dedication “to all his patient's wellness and was professional in his attendance” requires comment.
2. The correctness of that statement is questionable because Patient A was one of the patients of the practice and that statement could not possibly have applied to the applicant’s care of her as patient.
3. In her oral evidence, Ms Abdilla acknowledged that she was aware of the applicant’s professional and ethical transgressions towards Patient A when she wrote that letter. She also acknowledged the misleading content of that letter, as it made no reference to the applicant’s dismissal from his previous employment from that practice.
4. That said, Ms Abdilla has maintained contact with the applicant since his dismissal. She obviously thought highly of him, and she stated that the practice would be prepared to re-engage the applicant if he were to be reinstated.
Approach to the assessment of expert medical and allied evidence
1. As the array of evidence requiring consideration in these proceedings includes correspondence and reports from medical and allied treating practitioners and experts, it is appropriate at this point to identify some key principles which govern the assessment of the guidance value of expert evidence as it applies to the facts of the case.
2. The general law requirements governing the acceptability of opinion evidence from experts and the persuasive weight to be given to such opinions are well understood across all Tribunals exercising judicial functions: Paric v John Holland Constructions Pty Ltd [1985] HCA 58, at [9]; Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305, at [59], [87], pp 743-744; Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21, at [83].
3. When evaluating expert evidence, it is important to distinguish between matters of fact that are assumed to be correct, and the consequential formation of opinions based on those found facts: HG v The Queen [1999] HCA 2; (1999) 197 CLR 414, at p 427; [39]. In that case, at page 429, Gleeson CJ pointed out:
“… Experts who venture ‘opinions’ (sometimes merely their own inference of fact), … may invest those opinions with a spurious appearance of authority, and legitimate processes of fact-finding may be subverted. …”
1. For reliability, expert opinions must be based on the factual accuracy of its foundations. The factual evidence must have a sufficient similarity with the underlying assumptions that form the basis for the opinions expressed by experts: Paric v John Holland (Constructions) Pty Ltd, supra, at [9].
2. Expert opinions must be analysed for reliability according to the reasoning which underpins the opinions, and for the validity of the underlying assumptions upon which such opinions are based. Where there is disconformity between the facts assumed by the expert and the facts ultimately accepted, expert evidence that is otherwise admissible, must be assessed as to its persuasive weight: Dasreef Pty Ltd v Hawchar, supra, at [83].
3. Statements by experts that simply invoke sweeping statements in the form of unsupported ipse dixit reasoning or oracular pronouncements do not provide a proper basis for acceptance of expert evidence because such opinions are untestable, and therefore should carry little weight: Makita (Australia) Pty Ltd v Sprowles, supra, at [59], [83] - [87], [93]; South Eastern Sydney Area Health Service v Edmonds [2007] NSWCA 16, at [130] – [131], following Davie v The Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34, at 39 – 40.
4. In addition to those general law considerations, in this Tribunal, the assessment of the reliability of expert opinions must also be guided by the degree to which those opinions are compliant with the well-understood procedural requirement of being appropriately reasoned, including by adequate identification of the basal assumptions for such opinions: NCAT Procedural Direction 3, clauses 19(c) and (d).
5. In combination, those principles operate as a guide to the evaluation of the expert medical and allied opinions tendered in evidence in these proceedings.
Review and assessment of medical and allied evidence
1. The applicant relied upon historical correspondence from his initial treating psychiatrist and his initial treating psychologist, Dr Ong and Mr Kearney. That correspondence was previously considered by the Stage Two Tribunal. In addition, he relied upon correspondence from his treating psychiatrist and psychologist in Iran. The report and oral evidence of Associate Professor Wijeratne were also considered by the Tribunal. That array of correspondence, reports, historical medical and allied correspondence is identified and summarised in the following sequence.
Correspondence from Dr Sian Ong, Consultant Psychiatrist
1. On 21 July 2017, the applicant first sought psychiatric assistance from Dr Sian Ong for treatment of his mental health issues which at that time were described as being major depression with inattentive ADHD.
2. It is noteworthy that the applicant first consulted Dr Ong some 5 months before he commenced his intimate sexual relationship with Patient A. That relationship commenced in January 2018. Whilst Dr Ong’s correspondence covers the periods both before and after the commencement of that relationship, the descriptive content of his correspondence is somewhat oblique, and makes no direct reference to the fact of and the details of the applicant’s unethical relationship with Patient A.
3. Between 21 July 2017 and 25 September 2019, the applicant consulted Dr Ong on a total of 12 identified occasions for review and treatment.
4. In that period, Dr Ong issued three letters variously addressed to the solicitor for the applicant’s professional indemnity insurer, the Medical Council of NSW, and Mr Brian Kearney, a treating psychologist to whom Dr Ong had referred the applicant for treatment.
5. An overall view of Dr Ong’s correspondence shows that in those sessions, the applicant was primarily focussed on his own needs. Dr Ong’s letters make no mention of any contemporaneous feelings of remorse and empathy that might have been expressed by the applicant over the effects his unethical conduct has had on Patient A.
6. It is also noteworthy that the specific issue of boundaries only arose within Dr Ong’s correspondence some 2 years after the first consultation, namely, on 29 September 2019. By that time, the applicant had already appeared before a s 150 hearing convened on 23 October 2018, by which time his boundary violation with Patient A had already come under investigatory scrutiny by the regulator: Exhibit “1”, Tab, 8, pp 102-11.
7. On 15 November 2018, Dr Ong wrote to the Medical Council in relatively oblique and minimalist terms, noting that the applicant had self-referred when he presented on 21 July 2017 with a mixture of mood and inattention difficulties that had adversely impacted on his functioning and his interpersonal relationships. At that time Dr Ong wrote:
“He had been troubled by depressed mood for a number of reasons, particularly in relation to his social isolation, cultural adaptation issues and loneliness. He has struggled with feeling isolated from his friends and family and as a recent single unmarried immigrant living alone here, his struggles with loneliness are particularly heightened and contributory to his emotional vulnerabilities and sense of judgement in interpersonal relationships.”
[Exhibit “1”, Tab 10, p 128]
1. In the context of the applicant’s offending behaviour, the vague oblique reference to his sense of judgment concerning “interpersonal relationships” was obscure and relatively uninformative.
2. On 29 September 2019, Dr Ong wrote to the applicant’s treating psychologist Mr Brian Kearney, also in relatively vague and non-specific terms, as follows:
“Thank you for assisting Dr Danaei who presented for review on 25 September.
I note that he has benefitted from your input and that he has a good understanding of appropriate management of boundaries within his professional life. I understand that the role plays in a number of challenging complex settings that a medical general practitioner may encounter, as well as healthy assertiveness interpersonal skills are crucial skills that he has been practising within your sessions. He has also been reflecting and consolidating such skills in a number of ways.
I note that he has also participated in online courses to enhance and consolidate his interpersonal skills within general medical practice settings.
As you know, he is applying to the Medica! Council for review of his registration conditions. This is appropriate as he has significantly learned from the past mistake and he has been now aware with a good understanding of the professional boundaries within medical practice settings as well as having benefitted from assertiveness skills when dealing with difficult complex patient circumstances.”
[Exhibit “1”, Tab 10, p 127]
1. The absence in that letter of any specific reference to the appellant’s boundary violation with Patient A is remarkable, even when making due allowance for the fact that his correspondence was clinical, and not medico-legal in nature.
2. On 10 October 2019, Dr Ong wrote to the applicant’s former solicitor to provide some contextual background assistance for the applicant’s registration issues: Exhibit “1”, Tab 10, pp 125-126.
3. That letter noted the stresses the applicant was experiencing associated with his medical examinations and in relation to the social isolation where he was living and working. That letter also noted that the applicant had a longstanding history of sub-optimal attention and associated difficulties. The letter recorded that before the applicant had consulted Dr Ong, he had trialled a number of antidepressants including citalopram and duloxetine.
4. Dr Ong’s letter to the applicant’s former solicitor stated that the applicant had a strong family history in Iran of mood disorder. It noted that the applicant’s father suffered bipolar disorder and one sister suffered significant major depression requiring treatment. Dr Ong’s letter went on to identify the historical dates of the applicant’s consultations with Dr Ong, and the prescribed medication regime, being Citalopram 20mg and Vyvanse 50 mg, with significant benefit, “without unwanted effects”. That comment by Dr Ong must be viewed and read down in light of the evidence of Associate Professor Wijeratne who identified known side effects which included mania like symptoms, impairment of judgment, and increased libido.
5. In vague and non-specific terms, Dr Ong’s letter to the applicant’s former solicitor stated that the applicant had engaged well with all aspects of his treatment regime and had also benefitted from the psychological assistance provided by Mr Kearney. That treatment involved role playing, interpersonal assertiveness skills, managing complex cases, and boundary issues. The reference to boundary issues was oblique in that context.
6. Dr Ong’s letter to the applicant’s former solicitor concluded with the opinion that the applicant was considered fit for medical practice. He did so in the following terms:
“I consider him fit to practice as a medical practitioner. He has learned from his life lesson, with a significantly enhanced awareness and insight of clinical interpersonal boundary issues as well as interpersonal skills to manage potential complex situations in the future.”
[Exhibit “1”, Tab 10, p 126]
1. The Dr Ong’s reasoning for his opinion on the applicant’s fitness to practice was sparse and lacked any specific reference to the relevant factual details that formed the basis the “life lesson” to which he made oblique reference. That lack of explanatory detail undermines the reliability of that expressed opinion. On its own, that opinion does not carry persuasive weight.
Correspondence from Mr Brian Kearney, Clinical Psychologist
1. On 20 October 2019, Mr Brian Kearney, the clinical psychologist whom the applicant consulted, wrote to the applicant’s former solicitors confirming he had been consulted by the applicant at the referral of Dr Ong in order to assist him “to improve interpersonal boundaries and interpersonal skills, with a special focus on workplace interactions”: Exhibit “1”, Tab 11, pp 129-131.
2. The inherently vague and euphemistic description within the above cited extract does not specifically identify the egregiously serious sexual nature of the applicant’s “interpersonal boundaries” issues with specific reference to a mentally ill and vulnerable patient in the context of boundary violations, which Mr Kearney was presumably addressing in his treatment of the applicant.
3. Without precise identification of the factual details of those matters, the evidentiary utility and persuasive value of Mr Kearney’s report relative to the issues with which this Tribunal is concerned on this application must necessarily be significantly limited: Paric v John Holland (Constructions) Pty Ltd, Ibid, at [9].
4. Mr Kearney noted the applicant’s presenting history of depression which followed his suspension for boundary violation, and he recounted the applicant’s presenting symptoms as “feeling miserable” and being “really depressed”.
5. It appears from the terms and the content of Mr Kearney’s report that the focus of the applicant’s depression was not an underlying mental health issue, but was instead, his personal subjective discomfiture over the disciplinary predicament in which he found himself as a result of his ethical transgression being exposed in the complaint process.
6. Mr Kearney noted the applicant’s test scores on the Depression Anxiety Stress Scale to be severe for the element of depression, normal for the element of anxiety, and moderate for the element of stress on that test. Mr Kearney recorded the applicant’s expectations from his psychological treatment to be as follows:
“Dr Danaei reported he would like to be reinstated to the training programme and had undertaken a number of courses (including RACGP and University of Queensland) on medical and professional boundaries. He described difficulties with boundaries arising from: cultural differences, fears of complaints or negative reactions from patients; difficulties saying ‘no’; and, trying to care for patients. He reported understanding that this had sometimes went wrong ‘signals’. He reported he wanted to help to ‘define boundaries’ very clearly, for example when patients ask for unreasonable things.
…
He stated he wanted to help interpersonal skills and communication skills in order to be able to apply professional boundaries, especially with challenging and difficult patients. Dr Danaei appears to have good insight into the impact of his anxiety including fears of rejection and catastrophising about outcomes (e.g. patient complaints) on his difficulty in voicing boundaries directly to patients, as well as trans-cultural issues and the impact of being in a small community where he was very visible. He appeared to be open and non-defensive in describing complaints and findings against him. He presented as motivated to address the fundamental issues described above.”
[Exhibit “1”, Tab 11, p 130].
1. The fundamental issues Mr Kearney was referring to in the above description consisted of the admixture of the applicant’s depressed mood, which remained symptomatic despite treatment, his anxiety and constant worry and stress over his situation, his pre-existing social anxiety concerns which were occurring in the context of the outstanding disciplinary proceedings, and some background stresses which included migration, relocation, and isolation due to separation from his family, as well the “registration / training process” and “financial distress”.
2. Mr Kearney’s description of his treatment interventions with the applicant seemed to cover a range of complex situations and techniques. These were described as including feedback, goal clarification for psychological input, education about professional boundaries and the skills required to enable action to be taken and apply those skills in interpersonal situations with patients. This treatment was provided in the context of cognitive behavioural therapy, relaxation training, breathing techniques, education and application of skills concerning interpersonal boundaries and assertive communication strategies with practice using role play techniques to handle specific patient interactions, provision of reading materials, identification of management of problem situations that presented as obstacles in applying the requisite skills.
3. Mr Kearney indicated that he had gained the impression that the applicant was an active and engaged participant in the described treatment interventions, and appeared motivated to improve his skills in applying professional boundaries citing as evidence, compliance with set homework tasks, producing notes taken in relation to assigned research tasks, demonstrating an understanding of relevant concepts from readings, asking appropriate questions, active participation in role playing sessions which practiced assertive communications and voicing boundaries, as well as voicing unhelpful thoughts and beliefs that could operate as potential barriers or obstacles to communication and maintaining boundaries.
4. Mr Kearney’s letter concluded with the following statement’
“At treatment completion, Dr Danaei reported he felt confident that he could engage with work as a GP and interact with patients using the skills to be able to apply the appropriate ethical and professional practice guidelines and principles. He reported his mood as improved with a low level of symptoms. This was reflected in his scores on the DASS at session 5 as shown in the table. I recommended he continue to see Dr Orig for ongoing care as he navigated the Medical Council process. No foreseeable harm to self or others was detected throughout the contact.”
[Exhibit “1”, Tab 11, p 131]
1. The reliability of Mr Kearney’s opinions and concluding remarks must necessarily be seen to be limited by the absence of relevant details to reliably ground those remarks in specifically identifiable facts concerning the applicant’s offending conduct in the professional setting. Therefore, on its own, and in combination with Dr Ong’s correspondence, Mr Kearney’s opinion must be seen to carry little persuasive weight on the questions of the applicant’s insight and his fitness to practice.
2. There was no further evidentiary correspondence concerning the applicant’s treatment from either Dr Ong or Mr Kearney, or from any other practitioner in Australia. The most likely explanation for this is that the applicant was required to return to Iran when his work visa expired following his disqualification from practice. As a result, the applicant’s mental health treatment then continued with specialists in Iran. In November 2019, the applicant returned to Iran, where he obtained further treatment from Dr Nazemi, a psychiatrist, and Dr Mohemadi, a psychologist.
Dr Farzad Nazemi, Consultant Psychiatrist in Iran
1. On 12 March 2024, Dr Farzad Nazemi, a consultant psychiatrist in Iran wrote a letter to the Medical Council of NSW concerning the applicant in the following terms:
“12/03/2024
Re: Dr. Aliyar Danaei
Medical Council of NSW
I first saw Dr Danaei on 6 December 2022 with symptoms of depressed mood, hopelessness, helplessness, sleep problem, lack of concentration, and feeling guilty. He had not been on any medications including Antidepressants for the prior 2 years. Dr Danaei was a 41-year old doctor living alone. He was working part-time 2 days a week as a GP in a clinic in Baharestan. Dr Danaei told me he had lost his career in Australia due to breaching boundaries with a vulnerable patient. Now, He has a daughter in Australia whom he misses a lot. He told me he had been feeling guilty for his mistake, he was remorseful for what he had done and had an insight for his mistake. He had high scores for Depression in K10 and DASS21. A few years earlier in Australia Dr Danaei saw a Psychiatrist and he was diagnosed with Major Depressive Disorder (MDD) due to loneliness and social isolation, and inattentive
ADHD. He was prescribed citalopram 20 mg daily plus Vyvanse (long-acting Dexamphetamine) 30 mg then increased to 50 mg daily for symptoms of inattentive ADHD. After starting the medications, Dr Danaei reported that he started to feel better, his symptoms improved and he had a better concentration and energy.
After 2 consecutive consultations in a week with Dr Danaei, I realized symptoms of Dr Danaei were more likely due to a spectrum of mood disorders namely Major Depressive Disorder. I believe his symptom of lack of concentration was as a result of his mood disorder not inattentive ADHD. Dr Danaei had passed important examinations in his medical science university, qualifying exams to be a GP in Australia and English tests with high scores. Thus, I believe, his temporary symptom of lack of concentration was due to his Depression and situational rather than something in nature and permanent. I started a trial of Asentra 50 mg twice a day, and I referred Dr Danaei to a Psychologist specialized in cognitive behavioural therapy.
In follow up consultations on 9 February 2023 and 6 June 2023, after 2and 6months, Dr Danaei started to feel better. His mood improved gradually. He had better thought-processing, more energetic and better sleeping and eating habits. His pessimistic attitude started to fade away. Dr Danaei was happy with the treatment plan, medications and his Psychotherapy sessions with his Psychologist. My latest consultation with Dr Danaei was on 29 February 2024. Hsi mood has significantly improved. He is working full-time as a GP in a clinic and has more confidence, good quality sleep, normal thought-processing and is well-focused. He now has a fiancé and plans to marry her in the near future. I tapered down his medication dosage to 75 mg per day and have a plan to gradually cease it in about 3months, if everything goes well.
I believe, Dr Danaei went through a difficult time. A male losing his job, in his mid-age, living alone unemployed with symptoms of Depression. In risk analysis, he was considered high risk, However, Dr Danaei managed to take himself out of the situation and deal with his obstacles. His intelligence, self- awareness, as a result of CBT, and his knowledge from reading books, helped him in his way to maturity. Dr Danaei is now more confident, resilient and stronger to deal with challenges in future. He is aware of keeping his mental health well by recognizing early alarm signs. Dr Danaei has learnt a lot from his mistake of breaching professional boundaries with a patient. He has a clear strategy for the future to keep professional boundaries with patients and monitor his mental health.
I confirm that Dr Danaei is, currently, fit to work as a General Practitioner and deserves to be given a second chance. Please don't hesitate to contact me if you need more information.”
1. The persuasive power of Dr Nazemi’s cited opinion as to the applicant’s fitness to practice as recorded in the final paragraph of that quotation requires evaluation according to the requirements for reliability of expert testimony that apply in this jurisdiction as outlined at paragraphs [127] – [134] above. It is not apparent as to whether Dr Nazemi was made aware of those requirements, particularly NCAT Procedural Direction 3, clauses 19(c) and (d), when he was asked to prepare his report.
2. Without intending any disrespect to Dr Nazemi, whilst there is no issue with his factual summary of the treatment he gave the applicant, his final opinion as to the applicant’s fitness for resuming work as a general practitioner must be seen to be of limited forensic and probative value in this jurisdiction because of an issue over the sufficiency of his reasons for that opinion and because the correspondence does not permit a reasoned comparison to be made between the expected standards of practice in Australia and in Iran.
Associate Professor Zadeh Mohamedi, treating psychotherapist in Iran
1. On an unspecified date, Associate Professor Zadeh Mohamadi (PhD), a psychologist, wrote a letter in the following terms, addressed to whom it may concern, in relation to his treatment of the applicant:
“I would like to take the opportunity to offer a formal confirmation letter for Dr Aliyar Danaei, who was referred to me by the psychiatrist. He participated in my psychotherapy sessions with symptoms of depression and feelings of loneliness and helplessness from August 2021 to June 2022. The sessions were held one hour, once a week.
In the first stage, cognitive-behavioural techniques (CBT) were applied, focusing recognition of negative thoughts and feelings, cognitive restructuring, stress management techniques and problem solving were practiced and taught, in 24 sessions and after six months follow-up was done. In this intervention, he gained sufficient insight into the internal sources of traumatic emotions and self-efficacy. Due to Mr Danai's (sic) chief complaint, I became aware of his neglect of professional medical ethics, we discussed the psychological aspects of this issue. During the meetings, the issue of self-awareness and responsibility was taken into consideration. My evaluation of whether he is mentally and psychologically ready to work as a doctor or not, I got, his motivati167on to get involve in the treatment and recovery process was high and his awareness of individual boundaries, behavioural control and emotion regulation were significantly improved and strengthened. In my opinion, his ability in professional relationships is trusted.
Please kindly, if you have any questions regarding this letter, please do not hesitate to contact me.”
1. Again, without intending any disrespect to Professor Mohamedi, the remarks made at paragraph [166] above also apply to the persuasive weight of his expressed opinions on the applicant’s trustworthiness and fitness to practice as cited above, but with the caveat that he did not have the opportunity of clarifying his views by oral evidence as his availability to give evidence did not coincide with the Tribunal’s timing. In those circumstances, the applicant decided not to delay the proceedings by seeking a further date on which to call that evidence.
Dr Chanaka Wijeratne, Consultant Psychiatrist
1. On 15 May 2024, at the request of the Health Professionals Councils Authority, the applicant was examined for the purpose of these proceedings by Associate Professor Chanaka Wijeratne, a consultant psychiatrist. The examination took place by means of a telehealth consultation, where Associate Professor Wijeratne was situated in Sydney and the applicant was located in his home in Tehran. Associate Professor Wijeratne’s report which followed that consultation was tendered as part of the respondent’s materials in these proceedings: Exhibit “1”, Tab 1, pp 3-14. Associate Professor Wijeratne also gave oral evidence in the proceedings. The summary which now follows incorporates a combination of the views expressed in his report together with clarifications provided in his oral evidence.
2. After identifying the briefing materials and the instructions for the preparation of his report, Associate Professor Wijeratne provided an overview summary of the applicant’s background circumstances, his health and psychiatric history, his mental state, his medication intake, and a review of relevant documents concerning the details of the circumstances leading to the complaint which resulted in the cancellation of the applicant’s medical registration. That report included a consideration of the Stage Two Tribunal and the s 150A inquiry reasons for decision.
3. Associate Professor Wijeratne’s report addressed a series of six questions that he was asked to consider in relation to the applicant’s psychiatric state, and his level of insight, based on the history he obtained, and on the basis of the identified documents he had read. His opinion covered the following six elements with additional annotations in his oral evidence:
1. Diagnosis of Major Depressive Disorder, recurrent, in remission – The applicant’s reported onset of depression, and his diagnosis of a depressive disorder in the context of his long working hours in mid-2017, and his diagnosis of ADHD for which he took the prescribed psycho-stimulant drug lisdexamfetamine until September 2018, were noted to have also been accompanied by symptoms similar to acute mania and impaired judgment. Associate Professor Wijeratne inferred, in retrospect, that the applicant should be ascribed a diagnosis of Major Depressive Disorder, recurrent but in remission. He added the following conclusion in that context:
“In my opinion, at the time Dr Danaei engaged in an inappropriate sexual relationship with Patient A, he was vulnerable as a result of his loneliness, social isolation and the fact he was living in another country, far removed from his own culture and family. The prescription of lisdexamfetamine further contributed to the initiation of his sexual relationship with Patient A.”
[Exhibit “A”, Tab 1, p 12]
It follows from that opinion that an iatrogenic cause may well have been a mitigating factor in the applicant’s boundary violation with Patient A due to possible impairment of judgment. That opinion was not available for the consideration of the earlier Stage One and Stage Two Tribunal. In light of the contributing factor of the effects of lisdexamfetamine, Associate Professor Wijeratne considered that the applicant should not be prescribed stimulants because of the risk of a recurrence of drug induced mania, as occurred when the applicant was taking that prescribed drug which resulted in him experiencing increased energy which led him to work 12 to 14 hours per day, along with experiencing the associated side effects of reduced appetite, increased libido and impaired judgment, all of which was suggested consistency with a diagnosis of hypermania or drug induced mania.
1. Diagnosis of an Impairment – On the question of whether the applicant is suffering a relevant impairment as defined by the Health Practitioner Regulation National Law (NSW), Associate Professor Wiijeratne answered that question in the affirmative: Exhibit “A”, Tab 1, p 12. He considered that the applicant’s recurrent depressive disorder, albeit in remission at present, should be seen to be an impairment issue because inherent in that condition is the risk of recurrence or relapse of depression which could have an adverse effect on the ability of the applicant to practice safely. In his oral evidence he said this justified the imposition of structured conditions centred around practice and health issues. Given the applicant needed ongoing anti-depressant medication he added that treatment conditions and conditions for supervision and mentoring were necessary in the long term subject to periodic reassessment.
2. Consequences from a possible relapse of depressive disorder – On the question of the applicant’s impairment, Associate Professor Wijeratne considered that whilst the applicant’s major depressive disorder was presently in remission, thus giving him an opportunity to reflect on his past behaviour, he also noted the possibility of a relapse following a period of remission, where the onset of depression or mania would hinder his capacity to self-reflect, which emphasised the need for the applicant’s health to be monitored on an ongoing basis: Exhibit “A”, Tab 1, p 12. In his oral evidence he added that the applicant was at risk of relapse of depression if he were to encounter psychosocial triggers or emotionally triggering situations such as, for example, difficulty negotiating childcare and access issues with Patient A, especially if she were to become manipulative, which was identified as a characteristic of borderline personality disorder as described in the evidence.
3. Qualified opinion on the insight question – On the question of whether the applicant has in fact developed insight into appropriate strategies to manage the stated concerns such that there would be no risk to patient health and safety and if he were to be restored to the Register, Associate Professor Wijeratne gave a qualified answer by stating that the applicant “does appear to have developed some level of insight with the passage of time and long term consultations with his psychologist and treating psychiatrist”. That qualified view was also tempered by the fact that the applicant, whilst expressing remorse and self-reflection, and accepting “full responsibility for his boundary violation”, did not discuss the consideration of the potential harm to Patient A from his actions: Exhibit “A”, Tab 1, pp 12-13. The critical focus of that comment was ameliorated to a significant degree in Associate Professor Wijeratne’s oral evidence where he fairly acknowledged there were some time constraints associated with the interview with the applicant which may have had an impact on the comprehensiveness of that interview of the applicant where there may not have been an opportunity to cover those elements of concern. He considered it likely that the applicant’s prior difficulties with factors such as loneliness, and isolation would tend to be ameliorated by his stated plans for marriage, and the proposal for multiple structured health and practice conditions concerning treatment, mentoring and supervision. He added that those factors would also tend to militate against the occurrence of a further boundary violation, which he acknowledged should now be assessed as being of a relatively low risk in light of the remedial efforts the applicant has undertaken to date.
4. Range of onerous conditions – On the question of whether conditions should be imposed if the applicant were to be reregistered, Associate Professor Wijeratne suggested the need for a series of structured health and practice conditions which addressed the regular need for treatment and review, and restricted practice conditions, including working conditions, working hours, Level C supervision, mentorship, CPD activities to include management of patients with borderline personality disorder and other particular presentations, and restriction on the ability to prescribe S4D and S8 drugs: Exhibit “A”, Tab 1, p 13-14. In his oral evidence, those prescribing recommendations were modified to a degree on considering a factual clarification the applicant made to an aspect of the evidence as to his administration of opioid drugs to another patient as was considered at the s 150A hearing. Associate Professor Wijeratne considered that any practice conditions should be structured in a form which recognised that as an international medical graduate in need of appropriate mentoring and support, in order to guard against problems relating to adequacy of acculturation and orientation to local practice conditions, the applicant should not be set up for failure.
5. Impact on ability to adhere to conditions if relapse occurs – On the question of whether the applicant may have issues that might adversely impact on his ability to adhere to conditions placed on his registration if reinstated, Associate Professor Wijeratne stated that the most likely reason for the applicant not adhering to any conditions would be if he would have a relapse of a mood episode: Exhibit “A”, Tab 1, p 14.
1. Associate Professor Wijeratne considered that on an overall view, the applicant’s statements of deep shame, embarrassment and remorse seemed genuine, and as such, those expressed feelings, taken together with the applicant’s scarifying experience of the disciplinary process, were strong factors that militated against the likelihood of him committing further boundary violations.
2. Associate Professor Wijeratne identified a qualifying issue, namely that the historical treatment reports which he reviewed, and which have been summarised in these reasons, failed to deal with any diagnostic formulation of the applicant’s personality. This was a point of some significance as such factors could be of relevance to the risk of re-offending. That said, his review of the applicant’s history did not suggest any adverse personality or attachment issues had been causative of the applicant’s prior boundary violating behaviour.
3. The respondent noted Associate Professor Wijeratne’s comments and recommendations and took them into account in proposing appropriate health and practice conditions for registration. We have incorporated the substantive effect of those opinions as to the appropriate conditions in the Appendix to these reasons.
Applicant’s submissions
1. The applicant commenced his submissions by restating his abject apologies to Patient A and her family for the psychological harm his conduct has caused her. He expressed hope that she could forgive him for compromising her medical care by his breaches of ethical standards of practice. He accepted that he had acted against his obligations as a doctor and that he had acted against his own personal ethics. He also expressed his apologies and his regret that his conduct had brought the medical profession into disrepute.
2. The applicant acknowledged that his professional misconduct was due to his inexperience and his lack of an effective ability to establish and maintain professional boundaries. He also acknowledged that in combination, his inexperience in dealing with a vulnerable patient with mental health issues, and the effect of his own mental health issues had contributed to his professional misconduct whereby he had placed his own emotional needs above his obligations to his patient.
3. In making those acknowledgments the applicant did not seek to diminish his own responsibility by reference to the iatrogenic factor identified by Associate Professor Wijeratne, namely the effects of the prescribed psycho-stimulant ADHD medication Vyvanse that he was taking, which was known to impair the exercise of judgment, amongst other things. The applicant submitted that after reflection and receiving psychological and psychiatric treatment for his own mental health issues, including over 30 sessions of cognitive behavioural therapy, and his completion of the educational and training courses described in the evidence, he considers that he has grown immensely as a person, having learned from his mistakes. He submitted that he is now a different and more confident, mature, less anxious and insightful person than was the case six years earlier when his offending conduct occurred.
4. The applicant submitted that now, he is equipped to utilise appropriate strategies and management plans to prevent such mistakes from recurring in the future. He also submitted that he has learned to be more vigilant with patients suffering mental health problems, and is now able to be appropriately assertive and active in establishing and maintaining professional boundaries
5. The applicant spoke convincingly of his passion for the ethical practice of medicine and of his desire to help people to suffer less. He described those concepts as being the essence of the way in which he intended to practice. He referred to the fact that following treatment, his own mental health issues have been in stable remission. He stated that as a result of the disciplinary processes he has been through he has learned how to effectively deal with life’s challenges.
6. The applicant made an earnest plea to be afforded a second chance through reinstatement as a medical practitioner in order to contribute to society in a positive, ethical and meaningful way. He hopes to be able to return to practice in Australia and to be in a position to support his daughter both financially and emotionally, and in that way, he hoped to provide Patient A with at least a partial measure of compensation for her predicament that was caused by his misconduct, which he unreservedly acknowledged as being a significant departure from the expected standard of practice.
7. The applicant described the disqualification process he has been through as the darkest experience of his life. He described the experience as being a heavy price which he has paid for his significant misconduct. He submitted, with humility, that he has learned the lesson of his life from that experience.
8. In making those submissions the applicant did not seek to justify his offending conduct in any way. He accepted full responsibility for his actions and acknowledged the required disciplinary process as being necessary in the interest of the protection of public health and safety,
Respondent’s submissions
1. The respondent maintained the position of neither consenting to nor opposing the application for reinstatement. Instead, the respondent addressed a series of protective practice and health conditions which have to be assessed as to reasonableness in the context of risk. Those matters will be addressed in the course of our consideration on conditions of practice and the result of that consideration is embodied in the Appendix to these reasons.
2. The respondent’s written submissions raised concerns as to the genuineness and the adequacy of the applicants’ evidence as to his insight into his past professional wrongdoings with regard to Patient A. The respondent’s written submissions also questioned the applicant’s apparent lack of expressed concern or empathy over how his actions had caused harm to Patient A. In light of our findings as to the applicant’s credit and in light of the comments made by Associate Professor Wijeratne on that topic as cited at sub-paragraph (d) of paragraph [171] above on that latter point, we consider that those submissions should be discounted and not accepted.
3. In oral submissions the respondent pointed to a number of concerns about the applicant’s evidence which dissipated in importance during exchanges during addresses in light of the absence of any suggestion put to the applicant that he was disingenuous in any aspect of his evidence.
Consideration and determination
1. We now turn to address the issues identified at paragraphs [55] – [56] above, applying the principles as identified at paragraphs [41] – [53] above.
Baseline findings: applicant’s factual acknowledgments and insight
1. The baseline for the consideration of this application is to recognise the full force of the adverse Stage One and Stage Two Tribunal findings of unsatisfactory professional conduct and professional misconduct.
2. The applicant did not contest those findings. He has fully accepted the factual basis for them without reservation, and he did not seek to deflect or make exculpatory excuses for the findings concerning his conduct and professional failing, including with regard to the deficiencies in his clinical records relating to Patient A. Those findings identified serious personal and professional failings in the applicant.
3. Notwithstanding the Tribunal’s collateral findings that the applicant had practiced in an otherwise competent and ethical manner, consequential protective orders were determined to be necessary. In making those orders the previous Tribunal placed emphasis on the need for a preclusion period before re-registration could occur, emphasising the need to maintain public confidence and trust in the medical profession as well as the need for a statement of general deterrence against the occurrence of such conduct.
4. In summary, in abject terms, the applicant described his boundary crossing and boundary violations as a big mistake and a breach of his obligation of trust which Patient A was entitled to expect of him. He expressed his deep remorse, shame, guilt and regret over those matters, including regret at having brought the medical profession into disrepute. He also expressed shame and sorrow at having caused harm to Patient A’s mental health and well-being. In making those acknowledgments with considerable humility the applicant has shown appropriate insight into the consequences of his misconduct.
5. Although Associate Professor Wijeratne’s report initially referred to the applicant’s apparent lack of empathy for Patient A, those remarks were later qualified in his oral evidence in which he fairly acknowledged there might have been some time constraints which could have affected the depth of discussion on that point at interview with the applicant. Accordingly, that former criticism of him must be read down in his favour.
6. We are comfortably satisfied that at all times the applicant had insight into the unethical nature of his personal and intimate relationship with Patient A, but he found himself ill-quipped to assertively set appropriate boundaries, which allowed his misconduct to escalate in circumstances where he was too fearful to terminate the relationship and implement appropriate measures for the benefit of Patient A. The circumstances were compounded by his own depression, loneliness and social isolation, which led to escalation into boundary violations.
7. The applicant’s submissions summarised at paragraphs [175] to [182] above and his evidence which underpins those submissions, together with the effects of his reflections, the therapies and the remedial educational courses he has undertaken, comfortably persuade us that he is now equipped with the required insight into the causes and the consequences of his offending professional conduct.
8. In our assessment, the relevant difference between the circumstances of the applicant’s past offending conduct and his present situation is that now, with appropriate insight and vigilance, he is better able to recognise the scope for such offending professional conduct to occur, and to take appropriate steps to avoid a recurrence.
Applicant’s credit as a witness
1. We accept the genuineness of the applicant’s evidence as summarised in in the preceding paragraphs.
2. The applicant was not challenged by cross-examination as to his credit. It was not suggested to him that his explanatory evidence was either disingenuous, insincere, or conveniently couched in formulaic terms in order to seek a favourable outcome in these proceedings.
3. Whilst the applicant did refer to and emphasise his own mental health issues at the time of the offending events, namely his depression and his feelings of loneliness, cultural and social isolation as historical background facts, he did not put those matters forward as excuses or justifications for his misconduct. Nor did he seek to take the opportunity of sheltering himself from criticisms over his personal misjudgments by reference to the iatrogenic side effects from his use of the prescribed drug dexamphetamine or Vyvanse, which Associate Professor Wijeratne identified as a relevant contributing factor.
4. We find the applicant gave credible and reliable evidence concerning his offending conduct, the circumstances in which it developed, his insight and remorse concerning those events, the remedial mental health therapy and further medical education he has undertaken, and his expressions of sorrow and empathy towards Patient A for the harm she has encountered as a consequence of his actions. We accept the genuineness and the sincerity of the applicant’s evidence on those matters, and generally.
Assessment of guidance value of expert medical and allied evidence
1. Before addressing the question of whether the applicant has adequately addressed and remediated the personal flaws and mental health issues which led him to cross and violate the professional boundary with Patient A it is necessary to consider the content and the implications of the medical and allied evidence on those matters. That evidence is reviewed and summarised at paragraphs [135] to [174] above.
2. In summary, as identified in those paragraphs, whilst the clinical correspondence from Dr Ong, Mr Kearney, Dr Nazemi, and Professor Mohamedi contain relevant historical and factual descriptions of their respective assessments following their interviews with the applicant and their treatment of him, on the important question of whether the applicant is now fit to be reinstated to the medical register, that correspondence cannot be given the persuasive weight sought by the applicant.
3. Without intending any disrespect to those practitioners, the reason for that conclusion is that the content of that correspondence from those practitioners does not adequately meet the necessary criteria for the reliability and acceptance of expert evidence, as explained at paragraphs [124] – [134] above.
4. The ipse dixit sweeping statements inherent in that correspondence, absent required supporting reasons, do not meet the assessment standard for reliability of expert evidence. That is not a criticism of the authors. The deficiency lies with the self-represented applicant who apparently did not appreciate the need for expert evidence to be compliant with applicable standards for acceptance.
5. In contrast, the expert report and evidence of Associate Professor Wijeratne plainly meets the required standard for acceptance. We find the opinions he has expressed in his report and in his explanatory oral evidence represent a reliable guide to the determination of the issues requiring consideration in these proceedings.
Reformation of prior professional failings
1. In our assessment, the applicant has satisfactorily discharged the heavy onus he carries in that regard by presenting persuasively clear, cogent and substantial evidence of the reformation of his personal vulnerabilities and flaws that led to his deregistration.
2. In our assessment the applicant has demonstrated the characteristics of integrity, maturity and personal responsibility in acknowledging his boundary transgressions, and by not seeking to deflect or avoid blame.
3. Those acknowledgments included admitting his initial reluctance to seek professional assistance whilst the boundary violating behaviour was still current because he was fearful of the professional consequences if he did so. That candid admission against his interests shows that he can now face up to his earlier shortcomings with appropriate insight into them.
4. The applicant has shown consistent commitment, both in Australia and in Iran, to the task of reforming himself by acknowledging his mental health issues and obtaining appropriate treatment for his depression which is now in remission. That remission has given him the opportunity to reflect on his past offending actions. In addition he has sought out proper assistance to ensure that he is equipped with strategies to avoid future recurrences.
5. The applicant has also used the extended opportunity whilst deregistered to pursue suitable courses in further medical education to better equip himself against the risk of recurrence of the offending conduct. In that period of his deregistration, he has also matured and gained appropriate insight into the causes for his lapse in standards, and how to strategise to avoid recurrences.
6. The applicant is now very much aware of the need to continue to maintain treatment for his mental health in order to properly manage his depression, which is now in remission. He is insightful of the risk and the adverse consequences of a relapse in his mood disorder. He is aware of the need for that risk to be the subject of monitoring and for his mental health to be properly maintained.
7. The applicant has shown he is appropriately conscious of the fact his misconduct has caused harm to Patient A. Our impression from his evidence is that now, after pursuing appropriate psychological and psychiatric treatment, and by attending appropriate educational courses, he is properly equipped with better medical knowledge and education to know how to avoid a repetition of his past mistakes. In that regard, we note and accept the evidence of Ms Abdilla in which she said the applicant is now “a different person”.
8. On the evidence before this Tribunal, we are comfortably satisfied that the applicant is now acutely mindful of the need to adhere to applicable ethical codes to ensure he does not repeat his past offending conduct.
9. We are fortified in that view by the assessment of Associate Professor Wijeratne who satisfied himself that the applicant has appropriate insight and commitment to avoid similar difficulties in the future, as explained at sub-paragraph (e) of paragraph [171] above.
10. Those views are supported by the cited literature concerning lowered risks of reoffending based on expressions of remorse and self-reflection and an understanding of vulnerabilities that led to the offending behaviour, together with the development of an appropriate self-management plan in conjunction with treatment, supervision, and mentoring.
Displacement of prior finding of unfitness in favour of reinstatement
1. The regulatory scope within the National Law as explained in decided cases provides a pathway for reinstatement in appropriate cases. That pathway is established and available where there has been acknowledgment of past error and convincingly clear and reliable proof, based on satisfactory evidence, of reformation of the personal flaws which led to deregistration in the first instance.
2. The Tribunal notes that throughout all levels of his engagement with the disciplinary proceedings the applicant has consistently acknowledged his professional mistakes without reservation concerning his violation of the professional boundary by his unethical sexual relationship with Patient A. He has not sought to deflect or shirk from taking full responsibility for his professional and personal mistakes, nor has he sought to take refuge from criticism by making exculpatory excuses.
3. The Tribunal’s task of determining the issue of whether the applicant has at this time satisfactorily proven that his quest for reinstatement is justified must be guided by the paramount consideration of the health and safety of the public: s 3, s 3A and s 3B of the National Law. He must show that he is now worthy of trust in the professional setting, and that he is now fit to practice his profession.
4. The applicant’s sincere acknowledgments of past wrongdoing, his remedial efforts through the pursuit of psychological and psychiatric treatment to manage his depression, his pursuit of further educational courses, his unchallenged competence as a practitioner, the willingness of the former practice where he worked to re-engage him, and the opinion of Associate Professor Wijeratne as to the risk of him reoffending being relatively low, in combination comfortably persuade us that the applicant is unlikely to reoffend, and therefore if reinstated, he would not pose an unacceptable risk to the health and safety of the public.
5. For the foregoing reasons, on the basis of the evidence we have identified and accepted, we find that the applicant has discharged the onus of establishing that the earlier Tribunal findings of unfitness to practice no longer apply to him.
Conditions
1. On reinstatement of the applicant the public are entitled to expect that he would be required to comply with a series of structured conditions to ensure public health and safety. Those conditions have been the subject of expert evidence, submissions, and debate. In our view, the appropriate practice, health, mentoring and supervision conditions for applicant, subject to review by the Medical Council, are incorporated in the Appendix to these reasons.
Disposition
1. We consider that according to the legal tests and criteria identified earlier in these reasons, having due regard to the paramount consideration of the health and safety of the public, subject to the applicant’s adherence to proposed conditions of practice set out in the Appendix, the applicant has justified his request for reinstatement.
Costs
1. The respondent was required to actively participate in these proceedings and was entitled to test the applicant’s evidence and make submissions in the public interest. It follows that the respondent’s costs incurred in that regard should be paid by the applicant on the ordinary basis, as agreed or assessed.
2. The applicant raised no objection to having to pay the costs of the proceedings but sought to pay any such costs by way of instalments on account of his impecuniosity. That is a matter for negotiation between the parties. That issue ought not represent a barrier for reinstalment.
Orders
1. The Tribunal makes the following orders:
1. Pursuant to s 163(1)(c) of the Health Practitioner Regulation National Law (NSW) 2009, the applicant Dr Aliyar Danaei, may apply to the Medical Board of Australia for registration to reinstate him as a medical practitioner subject to the practice and health conditions listed in the Appendix to these reasons.
2. The Medical Council of NSW is the appropriate review body for the purposes of Part 8, Division 8 of the Health Practitioner Regulation National Law (NSW) 2009.
3. Pursuant to clause 13 of Schedule 5D of the Health Practitioner Regulation National Law (NSW) 2009, the applicant is to pay the respondent’s costs of these proceedings on the ordinary basis as agreed or assessed.
**********
APPENDIX – Conditions
Practice conditions
1 To obtain Medical Council of NSW approval prior to re-commencing or changing the nature or place of practice.
2 To practice in a group practice approved by the Medical Council of NSW where there are at least 2 registered medical practitioners (excluding the subject practitioner) and:
1. Where the patients and patient records are shared between medical practitioners
2. Where there is always one other registered medical practitioner on site
3. Which is an accredited practice.
3 To treat no more than 35 patients in any day, and no more than 5 patients per hour.
4 The practitioner is to provide the Medical Council of NSW with copies of records confirming the number of patients treated, their consultation times and hours worked on any dates as specified by the Council.
5 To practice no more than 40 hours per week.
6 To complete within 6 months of recommencement of practice The National Prescribing Curriculum organised by the University of Tasmania.
1. Within 1 month of recommencement of practice they must provide evidence to the Medical Council of NSW of their enrolment in the abovementioned course.
2. Within 1 month of completing the abovementioned course, they are to provide evidence to the Council from the training provider that they have satisfactorily completed the course.
3. To bear responsibility for any costs incurred in meeting this condition.
If the National Prescribing Curriculum organised by the University of Tasmania is unavailable, he must propose to the Council for approval a similar course to be undertaken in accordance with the requirements of this condition and provide a written explanation, within 2 months of recommencement of practice.
7 To complete within 6 months of recommencement of practice Complete Better Pain Management Program (12 modules) organised by Faculty of Pain Medicine Australian and New Zealand College of Anaesthetists (ANZCA).
1. Within 1 month of recommencement of practice they must provide evidence to the Medical Council of NSW of their enrolment in the abovementioned course.
2. Within 1 month of completing the abovementioned course, they are to provide evidence to the Council from the training provider that they have satisfactorily completed the course.
3. To bear responsibility for any costs incurred in meeting this condition.
If the Complete Better Pain Management Program (12 modules) organised by Faculty of Pain Medicine Australian and New Zealand College of Anaesthetists (ANZCA) is unavailable, he must propose to the Council for approval a similar course to be undertaken in accordance with the requirements of this condition and provide a written explanation, within 2 months of recommencement of practice.
8 To practice under category C supervision in accordance with the Medical Council of NSW’s Compliance Policy – Supervision (as varied from time to time) and as subsequently determined by the appropriate review body.
1. The terms of the Council’s Compliance Policy are varied to require the practitioner to:
1. Have monthly face-to-face supervision meetings with the Council-approved supervisor for a minimum period of 1 hour.
2. Authorise the Council-approved supervisor to forward reports to the Council (in a Council-approved format) every month.
1. At each supervision meeting the practitioner is to review and discuss his practice with his approved supervisor with particular focus on:
1. Professionalism and professional ethics, including but not limited to:
1. Maintaining appropriate professional boundaries with patients
2. The Medical Board of Australia’s ‘Good Medical Practice: A Code of Conduct for Doctors in Australia’ and ‘Guidelines: Sexual Boundaries in the Doctor-Patient Relationship’.
1. Compliance conditions.
2. Workload management.
3. Clinical performance, including assessment, management of patients, surgical procedure technique and appropriate investigations, including the assessment and management of patients with mental health issues.
4. Medical records, including a review with the supervisor of a minimum of 5 randomly selected medical records from the preceding month.
5. Appropriate prescribing practices concerning the assessment and management of patients with chronic pain, including appropriate prescribing of Schedule 8 drugs of addiction and Schedule 4 Appendix D drugs.
1. Within the first 6 months of supervision and in addition to the supervision meetings, the practitioner is to undertake monthly observations with the Council approved supervisor. These observations will alternate between:
1. The practitioner observing the approved supervisor conduct at least 3 patient consultations with patients.
2. The practitioner having at least 3 patient consultations observed by the approved supervisor.
3. Details and feedback about the observed consultations are to be discussed during the supervision meetings and recorded in the supervision reports.
4. Each observation session is to be a minimum 1 hours in duration.
5. On completion of the minimum required observation sessions, the practitioner is required to submit for Council consideration a reflective report outlining and demonstrating:
1. Lessons learned from the observation sessions, and
2. How the practitioner will implement his learnings into his future medical practice
1. To authorise the Medical Council of NSW to provide the approved supervisor(s) with a copy of the decision which imposed this condition and any other decision or report as determined by the Council.
2. Not to practice until a supervisor has been approved by the Medical Council of NSW.
9 To nominate an experienced General Practitioner to act as his professional mentor for approval by Medical Council of NSW in accordance with the Medical Council of NSW’s Compliance Policy – Mentoring (as varied from time to time) and as subsequently determined by the appropriate review body:
1. The terms of the Medical Council of NSW’s Compliance Policy – Mentoring are varied so that the Council-approved mentor must not be co-located or practice at any location where the practitioner works.
2. At each mentoring meeting the practitioner is to include discussion of the following:
1. initially the issues highlighted in this decision and then any personal and medical practice issues that may arise
2. Maintaining boundaries and Professional ethics
3. Work life balance and workload
4. His personal and professional development
1. To authorise the mentor to report, in an approved format, to the Council every 3 months about the fact of contact, and to inform the Council if there is any concern about his professional conduct or personal wellbeing.
2. To authorise the Medical Council of NSW to provide approved mentors with a copy of the decision/s which led to the imposition of this condition.
10 To authorise and consent to any exchange of information between the Medical Council of NSW and Medicare Australia for the purpose of monitoring compliance with these conditions.
Health Conditions:
11 Not to prescribe for self-medication.
12 To attend for treatment by a General Practitioner of their choice but not working at their place of practice, at a frequency to be determined by the treating practitioner. The practitioner is to:
1. authorise the treating practitioner to inform the Medical Council of NSW of failure to attend for treatment, termination of treatment or if there is a significant change in health status (including a significant temporary change)
2. provide the Council with the professional details of the treating practitioner.
13 To attend for treatment by a psychologist of their choice, at a frequency to be determined by the treating practitioner. The practitioner is to:
1. authorise the treating practitioner to inform the Medical Council of NSW of failure to attend for treatment, termination of treatment or if there is a significant change in health status (including a significant temporary change)
2. provide the Council with the professional details of the treating practitioner.
14 To attend for treatment by a psychiatrist of their choice, at a frequency to be determined by the treating practitioner. The practitioner is to:
1. authorise the treating practitioner to inform the Medical Council of NSW of failure to attend for treatment, termination of treatment or if there is a significant change in health status (including a significant temporary change)
2. provide the Council with the professional details of the treating practitioner.
15 To attend for review by a Council Directed Health Assessor (Psychiatrist) on a 3 monthly basis or as otherwise directed by the Medical Council of NSW.
16 To attend a Medical Council of NSW Review Interview on a 3 monthly basis or as otherwise directed by the Council.
17 To authorise the Medical Council of NSW to forward copies of the decision which imposed this condition and any reports and any other information relevant to their health and treatment to the Council Directed Health Assessors, supervisors and to their treating practitioners.
18 These conditions may be altered, varied or removed by the Medical Council of New South Wales and the Medical Council is the appropriate review body for the purposes of Part 8 Division 8 of the Health Practitioner Regulation National Law (NSW).
19 Sections 125 to 127 of the Health Practitioner Regulation National Law are to apply whilst the practitioner’s principal place of practice is anywhere in Australia other than New South Wales.
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 20,362 |
nsw_caselaw:190fcad16b4f7ade2a54f446 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | Rodny v Weisbord [2024] NSWCA 183 | https://www.caselaw.nsw.gov.au/decision/190fcad16b4f7ade2a54f446 | 2024-08-04T23:53:33.908796+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Rodny v Weisbord [2024] NSWCA 183
Hearing dates: 4 July 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Before: Ward P at [1];
Stern JA at [10];
Basten AJA at [14]
Decision: (1) Allow the appeals in matter 2015/324966 (Joel Weisbord) and in matter 2015/324977 (Alexander Weisbord) and in each matter set aside order 2 entered on 15 December 2023.
(2) In place of those orders, in each matter order that the plaintiff be paid an amount of $700,000 from the estate of Rose Rodny (deceased).
(3) In matter 2015/324982 (Jeannette Weisbord) refuse the executor leave to appeal from the refusal of the primary judge to award indemnity costs.
(4) Order that the respondents’ costs in this Court, assessed on the ordinary basis, be paid from the estate.
(5) Order that the appellant’s costs in this Court, assessed on an indemnity basis, be paid from the estate.
Catchwords: STATUTORY INTERPRETATION – literal meaning gives way to contextual and purposive approach – powers of court – “at the time the order is made” – Succession Act 2006 (NSW), s 59(2)
SUCCESSION – family provision – evidence – whether primary judge erred in failing to require the claimants to provide updating evidence –– whether Succession Act 2006 (NSW), s 59(2), required claimants to file updating evidence – evidence was over five years old – judge subsequently accepted updated valuation of the estate – impact of delay on assessment of provision
SUCCESSION – family provision – claim by grandchildren for provision from deceased’s estate –weight to be given to deceased’s testamentary intentions – intentions expressed in unexecuted will – passage of 16 years – evidence of applicants’ financial circumstances and needs lacking currency
COSTS – requirement for leave to appeal – offer of compromise before first trial – order sought for indemnity costs – failure to challenge costs order on prior appeal – offer contained no real compromise
Legislation Cited: Civil Procedure Act 2005 (NSW), Pt 6
Succession Act 2006 (NSW), Pt 3.2, ss 57, 59, 60
Supreme Court Act 1970 (NSW), s 101
Uniform Civil Procedure Rules 2005, r 36.16(3A)
Cases Cited: Baker v Baker [2024] NSWSC 559
Blendell v Blendell; Blendell v Blendell [2020] NSWCA 154
Bohen v Mitchelmore [2024] NSWSC 171
Bowditch v NSW Trustee and Guardian [2012] NSWSC 275
Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392
Langdon v Carnival PLC [2024] NSWCA 168
Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391
Rodny v Weisbord [2020] NSWCA 22
Sreckovic v Sreckovic [2018] NSWSC 1597
Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114
Weisbord v Rodny [2018] NSWSC 1866
Weisbord v Rodny [2020] HCASL 191
Weisbord v Rodny (No 2) [2019] NSWSC 739
Category: Principal judgment
Parties: Laurence Rodny (Appellant)
Joel Weisbord (First Respondent)
Alexander Weisbord (Second Respondent)
Jeannette Weisbord (Third Respondent)
Representation: Counsel:
L Ellison SC / O Bellhouse-Smith (Appellant)
V Culkoff (First to Third Respondents)
Solicitors:
Norbert Lipton & Co (Appellant)
Kramer & Kramer (First to Third Respondents)
File Number(s): 2023/00465451
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Equity
Citation: [2021] NSWSC 458; [2022] NSWSC 1726; [2023] NSWSC 1581
Date of Decision: 30 April 2021; 16 December 2022; 15 December 2023
Before: Robb J
File Number(s): 2015/324966; 2015/324977; 2015/324982
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The testator, Rose Rodny, died in 2014. She was survived by two offspring, Laurence Rodny and Jeannette Weisbord. Ms Weisbord had two sons Joel and Alexander Weisbord and two daughters. The testator had executed a will in 1997 naming her son as her executor and disposing of three residential properties, one to each of her offspring and the third to her four grandchildren. The property left to her grandchildren was sold in 2003. Her solicitor held a copy of a will prepared in 2008 by which her son’s property was left for her grandchildren. Her son obtained a grant of probate of the 1997 will.
In 2015 and 2016 Ms Weisbord and her two sons, Joel and Alexander Weisbord, (the claimants) commenced proceedings in the Equity Division seeking a grant of probate for an unexecuted 2008 will and, in the alternative, provision out of the estate. A trial took place in October 2017. In December 2018 the primary judge, Robb J, granted probate with respect to the unexecuted 2008 will and did not need to resolve the provision applications. He did not make contingent findings against the possibility of a successful appeal. In early 2020, the Court of Appeal overturned the probate judgment and remitted the matter to the Equity Division to determine the provision applications. The claimants made an unsuccessful application to the High Court for special leave to appeal.
In April 2021 the primary judge rejected the executor’s application for the claimants to file updating evidence as to their circumstances, despite the significant period that had passed since the claimants had filed their evidence in 2016 and been cross-examined at the trial in 2017. In December 2022, the trial judge held that an order for provision from the estate should be made in favour of Joel and Alexander Weisbord (placing significant weight on the testamentary intentions found within the unexecuted 2008 will), but dismissed Ms Weisbord’s claim. The amount was not determined. Subsequently, the trial judge accepted evidence of an updated valuation for one of the properties in the estate, and in December 2023 made orders granting provision of $1,750,000 each to Joel and Alexander Weisbord and dismissing the executor’s claim for indemnity costs relating to Ms Weisbord’s failed claim.
On 8 March 2024 the executor filed a notice of appeal raising the following issues, namely whether the primary judge erred in:
(i) rejecting the executor’s application for updating evidence;
(ii) granting provision to Joel and Alexander; and
(iii) dismissing the executor’s claim for indemnity costs of the first trial.
The Court (Ward P, Stern JA and Basten AJA) allowing the appeal in part, held:
As to (i) (application for updating evidence)
1 The direction in the Succession Act 2006, s 59(2), that the court is to have regard to “the facts known to the Court at the time the order is made” does not impose an obligation on the court or the parties to update evidence up until the delivery of judgment. It reflects the statutory purpose to allow reference to events after the testator’s death, but without speculation as to the future: [64]-[66] (Basten AJA); (Ward P at [2], Stern JA at [11] agreeing).
2 Given the lack of up to date information as to the claimants’ current needs, the value of the properties, and the costs incurred by the estate, to be fair to both parties the judge ought to have acceded to the executor’s application: [3], [6] (Ward P); [11], [13] (Stern JA); [67], [76], [98] (Basten AJA).
As to (ii) (grant of provision to grandsons)
3 The primary judge erred in placing dispositive weight upon the testamentary intentions of the deceased identified in the unexecuted 2008 will, given the significant time that had passed after 2008 and her death in 2014, the requirements of s 60(2) of the Succession Act and the approach to provision claims made by grandchildren: [83], [88]-[92], [96], [99] (Basten AJA); (Ward P at [6], Stern JA at [10] agreeing).
Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392; Bowditch v NSW Trustee and Guardian [2012] NSWSC 275; Bohen v Mitchelmore [2024] NSWSC 171, applied.
4 The deficiencies in the evidence must be given appropriate weight in determining the amount of provision to be ordered. With little current information about their financial resources or needs as to such matters as accommodation, the Court should reduce the amount of provision granted by the primary judge: [78], [94], [108], [113] (Basten AJA); (Ward P at [6], Stern JA at [13] agreeing).
5 The testator’s intention to benefit the grandchildren, the fact that she continued to provide support during her lifetime when the plaintiffs were in their twenties, and their disabilities, which it may be inferred where ongoing, warranted an order of $700,000 for each: [103]-[117] (Basten AJA); (Ward P at [7], Stern JA at [12] agreeing).
As to (iii) (refusing leave to appeal on costs)
6 The only order sought by the executor in relation to Ms Weisbord was to overturn the judge’s refusal to award indemnity costs of the first trial. That being an appeal as to costs only, required leave: Supreme Court Act 1970 (NSW), s 101(1)(c). The offer on which the application was based was not a true “compromise”. Having failed to challenge the costs order on the appeal, the executor could not now challenge that order: [125], [126]-[128] (Basten AJA).
Langdon v Carnival PLC [2024] NSWCA; Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 applied.
JUDGMENT
1. WARD P: I agree with Basten AJA, for the reasons that his Honour gives, that the appeal should be allowed. I also agree with the orders his Honour has proposed. I would simply make the following additional comments.
2. While I agree that (in the absence of an order for the provision of updating affidavits when the matter was remitted to the primary judge) there was no obligation on the part of the respondents to file updating affidavits, it is nevertheless incumbent on claimants for family provision to make full and frank disclosure to the Court of their personal and financial circumstances so that the Court is in a position to make orders having regard to the facts as known at that time (see Baker v Baker [2024] NSWSC 559 at [22], citing Hallen J in Sreckovic v Sreckovic [2018] NSWSC 1597 at [228]).
3. The failure to do so (indeed in this case the deliberate forensic decision of the respondents not to do so coupled with their active resistance to the making of an order for updating affidavits) carries with it the very real risk that the Court will not then have all the necessary information to make the assessments required in such a case (both as to the adequacy of provision by the deceased for the proper maintenance, education or advancement in life of the claimant or claimants; and as to what would be appropriate provision in any particular case).
4. The problem in the present case was exacerbated by the apparent tendency of Counsel for the respondents to make submissions from the Bar table and in written submissions as to the respondents’ circumstances in lieu of evidence as to those matters. In particular, I refer to references both before the primary judge and in written submissions in this Court (ultimately withdrawn) as to the attempted suicide or suicidal ideation of one of the respondents, of which there was no evidence; and which Counsel for the respondents, when pressed, accepted were factually incorrect (but which appear to have led the primary judge to refer to that claimant having “suicidal depression”). Such an approach is far from satisfactory.
5. The decision by the respondents not to make full and frank disclosures of their circumstances as at the time of the remittal of the matter to the primary judge also placed them at risk of their application for provision being dismissed outright.
6. While, for the reasons given by Basten AJA, this Court on rehearing the matter on appeal has been in a position to form a view as to the appropriate provision to be made, the material on which this conclusion was reached was nevertheless in my opinion unsatisfactory. Absence of knowledge of the circumstances of each of the respondents at the relevant time makes it difficult to make a reliable assessment as to what their respective needs might be. So, for example, one cannot assume that the accommodation needs of a claimant living outside Australia (as I understand from the submissions made for the respondents may have been the case when the matter came back before the primary judge) would be the same as those the claimant had when a number of years earlier he was living in Sydney (whether or not his health issues, unemployment status or the like had remained unchanged). Nor can an inference be drawn, from the absence of evidence as to the respondents’ up to date circumstances, that their position had not changed (whether for better or worse) in the years between the probate judgment and the time that the primary judge came to rule on their family provision claim. For that reason, I could not support an order for provision in anywhere near the amount that the primary judge arrived at, particularly where his Honour in my opinion gave undue weight to the testamentary intentions discerned from the unexecuted will.
7. That said, I am persuaded, taking into account the evidence at the first hearing at first instance as to the respondents’ psychological and physical issues, their relationship with the deceased, the deceased’s previously expressed testamentary intentions, the size of the overall estate and the lack of competing claims put forward by other beneficiaries, and the other matters to which Basten AJA has referred, that the appropriate provision for the respondents (on balance) is the sum identified by Basten AJA. I also agree with his Honour’s conclusions on the issue of costs.
8. Finally, while the primary judge explained his decision not to deal with the family provision claim at the time of the probate judgment (on the basis that it was not feasible or convenient to consider the outcome of the family provision claims in circumstances where the deceased’s testamentary intention could fall within such a wide range of possibilities), in hindsight that decision has proved to be most unfortunate (not least because of the time and expense that has subsequently been incurred in relation to the matter, including not one but now two sets of appellate proceedings).
9. The procedural chronology has been referred to by Basten AJA and need not here be restated. Suffice it to note that, by the time the primary judge came to rule on the question relating to updating evidence (in March 2021), at least four years had elapsed since the affidavits on which the respondents relied to establish their personal and financial circumstances had been filed. The delay occasioned by the decision not to address the family provision claims at the time of the probate judgment makes it difficult to understand the refusal by the primary judge when the matter came back before him in 2021 to accede to the appellant’s application for directions to be made as to the filing of updating evidence. Indeed, his Honour himself noted in the final judgment that the evidence as to the respondents’ personal and financial circumstances was by then (some six and a half years later) “somewhat remote” (see at [62]), recognising that there was no specific evidence as to the respondents’ accommodation needs. In those circumstances, the suggestion by the primary judge in his 2021 judgment that some practical absurdity would arise where updating evidence might be required some time after the hearing at first instance cannot be accepted.
10. STERN JA: I agree with the orders proposed by Basten AJA and with his Honour’s reasons for proposing those orders.
11. Without in any way derogating from that agreement, I would add that, for my part, a significant consideration in determining the amount to be ordered by way of family provision for Joel and Alexander Weisbord (whom I will refer to as “the plaintiffs”) is the uncertainty that arose from their failure to put any updating evidence before the Court as to their circumstances, or needs, since their affidavits were prepared in 2016 and early 2017 and they were cross-examined in 2017. This necessarily led to uncertainty as to the ongoing significance of the matters identified in that evidence. As Basten AJA explains, this is of particular significance given the proper construction of s 59(2) of the Succession Act 2006 (NSW).
12. I agree with Basten AJA that assumptions could properly be made as to the likely continuance of the plaintiffs’ physical and intellectual needs and that the plaintiffs would likely have continued to have some difficulties in obtaining stable employment. Those assumptions, together with the other matters referred to by Basten AJA, support a conclusion that adequate provision was not made by the deceased’s will for the proper maintenance, education or advancement in life of the plaintiffs. In these circumstances, I would reject Mr Rodny’s contention that the plaintiffs’ application for family provision should be dismissed on account of the lack of up to date evidence.
13. The fact remains, however, that there is no current evidence before the Court as to the plaintiffs’ financial resources or financial or accommodation needs. That evidentiary deficiency must be given appropriate weight in determining the amount of provision to be ordered under s 59(2) of the Succession Act. That, together with the other matters identified by Basten AJA, supports the conclusion, with which I agree, that the appropriate course is to order provision for each in an amount of $700,000.
14. BASTEN AJA: On 15 December 2023, the primary judge, Robb J, made orders in favour of Joel and Alexander Weisbord for provision from the estate of their grandmother, Rose Rodny, who died in August 2014. The appellant, Laurence Rodny, who is the testator’s son and executor, seeks to have those orders set aside. (As they have played different roles in the various proceedings, it will be convenient, after outlining the background, to refer to Mr Rodny as “the executor” and Joel and Alexander Weisbord as “the plaintiffs”.)
15. The original proceedings, commenced in November 2015, included a claim for provision by Jeannette Weisbord, the testator’s daughter. That claim was dismissed at the time the claims of the two grandsons were upheld. Ms Weisbord has not sought to challenge the dismissal of her claim but is the third respondent named in the appeal because there is a challenge to the costs order made by the primary judge in dismissing her claim.
16. Although there is a single notice of appeal, there are in fact three separate appeals dealing with separate proceedings, heard together, commenced by each of the respondents. That has consequences for the appeal involving Ms Weisbord, which concerns costs only and requires leave.
17. That the proceedings remain unresolved, just short of the tenth anniversary of the testator’s death, is a matter for regret. It is not this Court’s function to apportion blame for the delays that have occurred, but it will be necessary to recount a significant part of the procedural history in order to dispose of the appeal. The fundamental complaint underlying the various grounds of appeal was that, in assessing the provision to be made for the plaintiffs in 2023, the primary judge relied upon affidavit evidence prepared in 2016 and oral evidence heard in October 2017. The executor submitted that the primary judge was wrong to proceed without more recent evidence as to their needs, and, in the absence of such evidence, his assessment could not stand.
The probate proceedings
1. The last will of the testator was executed in 1997. Although in November 2015 Ms Weisbord had filed a summons seeking additional provision from the estate, it was not until some nine months later that she filed a separate proceeding seeking to set aside the grant of probate in common form with respect to the 1997 will and seeking, in its place, that an unexecuted draft will prepared in August 2008 be admitted to probate. In August 2016, the latter proceeding was amended to include Joel and Alexander Weisbord as co-plaintiffs.
2. In 1997, the testator owned two properties in Balfour Road, Bellevue Hill and a property at Carramar Avenue, Carramar. Her other major asset was a shareholding in the company, Karod Investments Pty Ltd (Karod), which had owned the business run by Mrs Rodny and her husband prior to his death in 1989. Under the 1997 will, 77 Balfour Road was devised to her daughter, and 102 Balfour Road to her son. The shares in Karod were given to her son, and the Carramar property was to be held on trust for her grandchildren who survived her and attained the age of 25 years. The residue of the estate was left to her son. In 2003, the Carramar property was sold. As a result, the testator’s intention for that property to go to her grandchildren was frustrated.
3. In August 2008, the testator’s solicitor prepared a fresh will which, for reasons which were not entirely clear, was not signed by her. Relevantly for present purposes, the unexecuted 2008 will would have left 102 Balfour Road on trust for her four grandchildren, in equal shares as tenants in common at 18 years of age.
4. It was clearly appropriate for the primary judge to determine the probate proceedings first. In the event that he found, as he did, that the unexecuted 2008 will should be admitted to probate, the family provision claims fell away. The judge could have, but did not, deal with the family provision claims on a contingent basis, against the possibility of a successful appeal by the executor of the 1997 will. The judgment disposed of the probate proceeding by orders 1 and 2 and further ordered: [1]
“4 Consequently upon orders in terms of pars 1 and 2 being made, each of the plaintiffs’ claims for family provision orders is to be dismissed.”
1. Further submissions were entertained in respect of costs and a second judgment dealing with those issues was delivered on 19 June 2019. [2] Orders were made in each of the proceedings in the Equity Division and entered on 2 July 2019.
2. Weisbord (No 1) was the subject of an appeal and the orders admitting the unexecuted 2008 will to probate were set aside by this Court on 27 February 2020. [3] By a further order made on 16 March 2020, the family provision claims were remitted to the primary judge (or some other judge in the Equity Division). The parties were granted liberty to approach the judge’s associate to list the matters for directions.
Family provision proceedings
1. There was some delay in relisting the matters, primarily, it seems, as a result of a late application for special leave to appeal to the High Court brought by Ms Weisbord and the plaintiffs. On 9 September 2020, the relevant extension of time was refused. [4]
2. The first directions hearing in the Equity Division after the remitter was held on 2 March 2021. The executor sought case management orders that would give all parties an opportunity to serve updating evidence. [5] The plaintiffs’ written submissions dated 16 March 2021 dealt with the question of “updating evidence”. The submissions contained two parts. The first stated that the proper construction of s 59 of the Succession Act 2006 (NSW), discussed below, required that orders for family provision be made on the basis of the evidence as at the date judgment was reserved. In the present case, that was 12 April 2018. However, the plaintiffs also submitted that, if the primary judge determined there should be updating evidence, “any such updating should not include a reopening of the case with a further hearing and further cross-examination – particularly given the original hearing took place over 16 days”. [6]
3. The second part of the plaintiffs’ written submissions identified further information relevant to each of the claimants. It was said that the information “is provided to merely demonstrate that nothing of any real significance has changed from the Plaintiffs’ perspectives regarding their financial positions and their health issues”. [7] However, this was, as the executor submitted somewhat tartly, [8] an attempt to provide further factual material without subjecting the plaintiffs to further cross-examination as to their circumstances, or permitting the executor to put on evidence as to the current circumstances of the estate.
4. The Court heard brief oral submissions on 23 March 2021. On 30 April 2021, the primary judge handed down a further (third) judgment. [9] The judge rejected the executor’s application so that the Court would “decide the plaintiffs’ family provision applications on the basis of the evidence that was before the Court when it initially reserved judgment”. [10]
5. That conclusion was based on three matters, namely (i) the absence of a reopening application by the executor; [11] (ii) the failure of the executor to provide “evidence to the Court as to the general nature of any updating evidence that the [executor] contends should be placed before the Court”; [12] and (iii) acceptance of the plaintiffs’ submission as to the construction of s 59(2) of the Succession Act, namely to require that orders be made based on the facts known to the Court at the time judgment was reserved. [13] The judge also noted the potential prejudice to the plaintiffs if they were required to attend for a further hearing and cross-examination, given “the psychological difficulties from which they suffer”, in the event the Court made “open-ended case management orders that permitted the [executor] to serve evidence as to events that have occurred after the Court first reserved judgment”. [14] Nevertheless, the primary judge did not proceed to determine the family provision claims but rather sought additional submissions as to “whether, and if so in what respects, the reasoning of the Court of Appeal should influence the Court’s determination of the family provision applications”. [15]
6. The resolution of the question of updating evidence proceeded on a somewhat informal basis. The initial application appears to have resulted from the executor seeking directions at the hearing on 2 March 2021. (No transcript of that hearing was in the papers before this Court, nor was a copy of the executor’s submissions in support of the application, dated 9 March 2021.) It also seems that there was no notice of motion, and the judge made no orders in his judgment of 30 April 2021.
7. On 25 May 2021 the plaintiffs filed written submissions. Their short answer to the judge’s questions was, unsurprisingly, that the Court of Appeal, having dealt with the issue before it by considering whether the testator’s intention for her last will had directed that intention to a particular document; otherwise the findings as to other matters and as to credibility remained undisturbed. However, the plaintiffs claimed support for the proposition that the draft will which they had propounded in the probate proceedings broadly reflected her testamentary intentions as to the disposition of her property.
8. The executor’s submissions, filed on 8 June 2021, doubted the “influence or relevance … of expressions of testamentary intentions the deceased made some 6 years prior to her death in contemplation of signing a will which was never signed”. [16] The plaintiffs filed submissions in reply on 15 June 2021.
9. Judgment in Weisbord v Rodny (No 4) [17] was not delivered until 16 December 2022, some 18 months later. The coversheet to the judgment recorded “final written submissions delivered on 15 December 2021”, but that appears to be a mistake: there is no indication, either in the judgment or in the papers before this Court, of any written submissions having been filed after 15 June 2021.
10. On 30 January 2023 the plaintiffs filed written submissions which attached two appraisals indicating the current value of 102 Balfour Road as in the range of $8m-$9m, and two offers of compromise dated 13 September 2017 and 17 March 2020. The plaintiffs submitted that 80% of a quarter of the property’s value would be between $1.6m-$1.8m and sought indemnity costs. In his response dated 6 February 2023 the executor contended that, having obtained a direction from the Court precluding further evidence, the Court should act consistently with its ruling in Weisbord (No 3) by limiting its consideration to the evidence already before the Court.
11. There was a further directions hearing on 7 February 2023. Two issues were addressed in oral submissions, namely questions as to costs and as to the valuation of 102 Balfour Road. The issues relating to costs may be put to one side. As to the value of 102 Balfour Road, the judge accepted the executor’s submission that if evidence of value were to be obtained, contrary to his general refusal to accept further evidence, the appraisals put forward by the plaintiffs were inadequate and a proper valuation should be obtained. No reasons were given to support that course. Subject to that matter, the judge reserved his judgment.
12. Ten months later, on 15 December 2023, judgment was delivered in Weisbord v Rodny (No 5). [18] In recounting the history, the judge stated that, on 24 August 2023, the plaintiffs had provided a valuation report, adopting $10.5m as the current value for 102 Balfour Road, a valuation not challenged by the executor. [19] In calculating the provision to be made in favour of the plaintiffs, the judge noted that the value of 102 Balfour Road had been agreed at the time of the original hearing as $5.1 million. The judge concluded:
“62 In all of these circumstances, I will make orders for the provision out of the residue of Mrs Rodny’s estate a lump sum legacy of $1.75 million to each of Joel and Alexander. I consider that to be a fair way to take into account the evidence of the increase in value of No 102. I have not simply multiplied the $1 million tentatively suggested in [171] of Weisbord No 4 by a factor of 2 to reflect the apparent doubling of the value of No 102. That makes an allowance for the fact that Joel and Alexander have not given specific evidence addressed to their accommodation needs. It allows for the fact that the new valuation has not been subject to scrutiny (having regard to the two appraisals that were submitted by the plaintiffs that were below the value adopted by the valuer). It also acknowledges that the evidence that was presented at the original hearing concerning the personal and financial circumstances of Joel and Alexander is now somewhat remote, so that it is fair that some effect should be given to Mr Rodny’s objection to evidence being received of the current value of No 102, in circumstances where he has been denied the opportunity of demonstrating that Joel’s and Alexander’s circumstances have materially changed since 12 April 2018.”
Statutory scheme
1. The issues raised on the appeal concerned the orders for financial provision made in favour of the testator’s grandchildren, Joel and Alexander Weisbord. To identify the relevant matters, it is necessary to have regard to the applicable provisions in Pt 3.2 of the Succession Act and the primary judge’s findings in respect of each matter.
Eligibility
1. Section 59(1) of the Succession Act conditions the making of a family provision order upon the satisfaction of three conditions. The first is that the applicant is an “eligible person”: s 59(1)(a). The primary categories of “eligible persons” identified in s 57 of the Succession Act are spouses, including de facto and former spouses, and children of the deceased, but not later generations. The grandchildren may fall within one or both of two further categories:
57 Eligible persons
(1) The following are eligible persons who may apply to the Court for a family provision order in respect of the estate of a deceased person—
…
(e) a person—
(i) who was, at any particular time, wholly or partly dependent on the deceased person, and
(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,
(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.
1. The judge made findings as to eligibility in Weisbord (No 4):
“158 I am satisfied for the purposes of s 57(1)(e)(i) of the Succession Act that, for most of their lives while the deceased was alive, both Joel and Alexander were partly dependent on the deceased, who provided to them a substantial level of accommodation and financial and emotional support, for much of the time largely eclipsing the support provided by their parents.
159 I am also satisfied for the purposes of s 57(1)(f) of the Succession Act that both Joel and Alexander were living in a close personal relationship with the deceased at the time of her death.”
1. Ground 3 of the notice of appeal challenged the finding that the plaintiffs were “eligible persons” within the meaning of s 57(1)(e). However, as was noted in oral submissions, there was no challenge to the alternative finding based on par (f). Although ground 3 was neither withdrawn nor amended, the submissions concerning eligibility were not developed in oral argument. There was ample evidence to justify the finding that the grandchildren were eligible persons. It is not necessary to deal further with ground 3.
Factors warranting
1. The second condition, applicable to eligible persons who satisfy one of pars (d), (e) or (f) in s 57, is that “having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application”: s 59(1)(b). This condition, commonly referred to as the need for “factors warranting” was dealt with briefly by the primary judge in Weisbord (No 4):
“160 The evidence clearly satisfies me for the purposes of s 59(1)(b) of the Succession Act that there are factors which warrant the making of the application for further family provision by both Joel and Alexander. I accept that the deceased encouraged both of her grandsons to believe that they would, on her death, receive a share in No 102 Balfour [Road] that would entitle them to a unit so that they would have an independent home. The relationship between the deceased and her grandsons, as appears from the evidence summarised above, was such that they were natural objects of testamentary recognition by the deceased at the time of her death. The gift included by the deceased in the second typewritten draft will in 2008 in favour of her grandchildren speaks eloquently of the truth of the proposition that the deceased herself recognised Joel and Alexander as being objects of testamentary recognition by her. That conclusion is reinforced by the fact that the deceased included a gift in favour of her grandchildren in the December 1997 will that has been admitted to probate that was only ineffective because it has been adeemed as a result of the deceased’s need to sell the property to provide a fund for her living expenses.”
1. Although this finding was challenged by ground 4 of the notice of appeal, that ground was not pressed.
Adequate provision
1. The third requirement in s 59(1) is that “adequate provision” has not been made in favour of the applicant during the life of the testator or by her will. There is a temporal element which gave rise to close consideration on the appeal and which requires reference to further provisions in s 59:
59 When family provision order may be made
(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that—
…
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.
(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
…
(3) The Court may make a family provision order in favour of an eligible person in whose favour a family provision order has previously been made in relation to the same estate only if—
(a) the Court is satisfied that there has been a substantial detrimental change in the eligible person’s circumstances since a family provision order was last made in favour of the person ….
Issues on appeal
1. Subject to one category best described as miscellaneous, the nine grounds of appeal set out in the notice of appeal fell into four categories. The first challenged the refusal of the primary judge to allow updating evidence following the remittal by this Court for the purpose of disposing of the family provision claims. Grounds 1 and 7 read as follows: [20]
“1 The trial judge erred on 30 April 2021 (Judgment (No 3), [17], [18]):
(a) In not ordering Joel and Alexander to file and serve updating evidence of the personal and material circumstances of each (Judgment (No 4), [11], [12], [18], [164], [165]), and
(b) Not granting leave to the appellant to file and serve updating evidence of the nature and value of the estate (Judgment (No 4), [11], [13], [62]).
7 The delays occasioned from March 2020 to December 2023 (three years nine months) bespeak an error incompatible with the proper trial process and inconsistent with Civil Procedure Act, s 56.”
1. The second category comprised three grounds, being 5, 6 and 8, in the following terms:
“5 The trial judge erred in the manner by which he determined provision for each of Joel and Alexander (Judgment (No 4), [165], [167], [169]-[171]).
6 The trial judge erred in making the provision he did for each of Joel and Alexander (Judgment (No 5), [115], [116]).
8 His Honour erred in providing no reasons or no sufficient reasons (thereby exposing his reasoning process) in coming to the decision he did to make provision for each of Joel and Alexander.”
1. The third category was a single ground relating to costs:
“9 His Honour erred in exercising his discretion not to order the third respondent [Ms Weisbord] to pay the ordinary costs of the appellant up to 12 August 2016 and on the indemnity basis thereafter.”
This was the only ground relating to the third respondent.
1. The final (miscellaneous) category included grounds 2, 3 and 4. Ground 2 was as follows:
“2 The trial judge erred in making any assumptions about the financial circumstances of the appellant (Judgment 4, [162]).”
It will be appropriate to deal with this matter briefly, but in short, the assumption, whether right or wrong, had no material effect on the outcome.
1. Ground 3 challenged the finding that the claimants were “eligible persons” within the meaning of s 57(1)(e), a challenge which, as noted above, was immaterial given the alternative finding under s 57(1)(f). Ground 4 alleging error in finding “factors warranting” under s 59(1)(b), was not pressed.
Ground 2 - financial circumstances of executor/beneficiary
1. It is convenient to address ground 2 first. As to ground 2, the executor submitted that his financial circumstances, comfortable or otherwise, were irrelevant. A similar issue arose in Blendell v Blendell; Blendell v Blendell, [21] where Meagher JA stated:
“42 [The primary judge] noted that the absence of evidence as to Michael’s financial resources and needs justified the inference that he had sufficient resources to meet those needs, whatever they might be …. His Honour then observed that it did not follow that Michael’s ‘competing’ claim as sole beneficiary should not be evaluated when assessing whether adequate provision had been made for the ‘proper’ maintenance and advancement in life of the adult children. That required regard also be had to Michael’s position as the deceased’s surviving spouse and the chosen object of her bounty ….
43 The former is an aspect of the consideration of the relationship between the deceased and a beneficiary, in Michael’s case having regard to their marriage of 50 years and his contribution to her estate (ss 60(2)(a), (d)). The latter acknowledges the need to give due regard to ‘what the testator regarded as superior claims or preferable dispositions’ (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 (Dixon CJ); [1962] HCA 19). Here the deceased did not leave her estate to Michael for the purpose of benefitting him financially, but rather because she trusted him to decide how and when her wealth should be divided between their adult children. Although not emphasised by the primary judge, a relevant consideration was whether in this context the deceased had given appropriate consideration to whether some provision ought be made on her death for each of those children.”
1. The primary judge’s reference to the executor’s circumstances went no further than to note that he neither made a claim on the estate nor put his own circumstances in issue as a factor limiting the amount of provision which might otherwise be ordered. Section 60(2)(d) permitted the court to have regard to “the financial resources … and financial needs, both present and future, of the applicant, … or of any beneficiary of the deceased person’s estate”. [22] It was entirely appropriate to identify Mr Rodny’s personal interests as matters which could and should be disregarded, and to explain why. Ground 2 should be rejected.
Grounds 1 and 7 – delays and updating evidence
General observations
1. Although ground 7 invokes a fundamental element of civil procedure, namely the guiding principles stated in Pt 6 of the Civil Procedure Act 2005 (NSW), a failure to comply with the principles does not of itself demonstrate a basis for setting aside a judgment or any particular orders. Apart from other difficulties, the existence of “delays” in the abstract fails to identify those responsible. Self-evidently, the executor cannot rely upon his own failure to comply with the statutory requirement in order to set aside the resulting judgment.
2. The written submissions in support of ground 7 identified two periods. One was the period of two and a half years from the delivery of Weisbord (No 3) in April 2021 until the final judgment in December 2023. The second was the period of six or seven years from the time evidence was given in 2017 until the final judgment in December 2023. The substance of that complaint, however, found expression in ground 1, challenging the failure of the judge to permit updating evidence.
3. With respect to the shorter period from April 2021 until final judgment, the submissions did not seek to attribute responsibility to the plaintiffs. Nor was it suggested that the delay had in some respect adversely affected the judge’s ability to make the final orders.
4. One aspect of the lengthy period during which these proceedings have been on foot is to make doubly unattractive the possibility of remitter for a further hearing in the Equity Division. The orders sought by the executor did not include remittal. The primary orders sought were that the appeal be allowed, the orders made on 15 December 2023 in favour of the plaintiffs be set aside and the summons of each seeking such orders be dismissed with costs. There followed two further proposed orders:
4 In the alternative to order 3 above (and in the event an order in the nature of order 3 is not made) the Court of Appeal reassess the provision to be made for each of the first and second respondents.
5 In the event the Court of Appeal considers it appropriate to make a family provision order for each of the first and second respondents, directions with regard to the filing and service of updating evidence in respect of the first and second respondents and the estate, and directions as to the further conduct of the proceedings.
1. There was an ambiguity in the formulation of these orders: was the proposal that this Court could reassess the amount of family provision contingent upon taking the steps for updating evidence referred to in order 5? If it were open to the Court to reassess family provision without updating evidence, was that consistent with the challenge to the failure of the primary judge to permit updating evidence, in ground 1?
2. If it were necessary to obtain updating evidence, it would be necessary to permit cross-examination, and, in effect, to conduct a second trial. That was not a course which would be adopted in this Court. In oral submissions, senior counsel for the executor proposed that the Court should conclude that without updating evidence the application should be dismissed, but, in the alternative, accepted that it was open to the Court to reassess the family provision without such evidence. [23] If the Court were to undertake a reassessment, on the basis of the available evidence, the true needs of the plaintiffs may be under-recognised, but that would be a consequence of their failure to provide evidence at the remitted hearing in 2021 and not a matter about which they could complain.
3. In relation to ground 1, it is convenient to identify its relationship with grounds 5 and 6. Ground 1 might be viewed in either of two ways. On one view, as a matter of statutory construction of s 59 of the Succession Act, the judge was obliged to permit (or require) updating evidence. On another view, whilst the judge had a discretion, the exercise of which could take into account other matters, such as prejudice to the plaintiffs if they were to be subjected to further cross-examination, in the circumstances of the case the need for further updating evidence was determinative of the exercise of the discretion.
4. As a freestanding ground, the failure of the primary judge to permit updating evidence could support the setting aside of the orders made and the dismissal of the applications for family provision. Alternatively, if the failure did not, of itself, constitute a miscarriage of justice requiring that the orders be set aside, nevertheless it constituted an error which led the primary judge to make orders on a false basis. In that sense, it fed into grounds 4 and 5 challenging the orders made. If ground 1 were not made good, grounds 4 and 5 constituted a separate and freestanding challenge to the orders for provision.
5. It is convenient to consider first the terms of s 59.
The statutory obligation
1. The executor submitted that s 59(2), set out at [42] above, required the court to make an order for provision “having regard to the facts known to the Court at the time the order is made”. That, it was submitted, obliged the court to permit or require the plaintiffs to ensure that their current circumstances were known to the court “at the time the order is made”.
2. As explained above, the primary judge considered, largely as a practical matter, that the section must be speaking of facts known to the court at the time judgment is reserved. There will almost always be some delay between the time when judgment is reserved and the time the orders are made. It would not be a reasonable reading of the statute to impose on the court some obligation to obtain updated evidence whenever judgment is reserved for more than a short period. Further, it is not possible to identify from the language of the section what period would trigger such an obligation. Where there is some delay, the court is entitled to assume that there has been no material change in circumstances, unless it is otherwise advised by a party.
3. The executor contended that the plain words of the section did not bear such a construction and that authority, the Court’s practice note and established practices, were inconsistent with such a construction.
4. It is appropriate to start with the language of the statute. Clearly it is not possible to read the words, “at the time the order is made” as if they were “at the time judgment is reserved”. However, it is necessary to consider the context in which the words appear and their apparent purpose in order to give them their proper effect.
5. As to context, the phrase preceding the temporal aspect is, “having regard to the facts known to the Court”. This is curious language: facts are not usually described as “known to the Court”, nor does the Court have regard to “the facts”. Rather, the Court has regards to the evidence and, where facts are disputed, it makes findings as to the facts, on the balance of probabilities. On one view, s 59(2) requires the Court to make the order which it considers appropriate, having regard to the evidence and any findings it has made, at the time the order is made. That accords with the language of the provision taken as a whole and makes practical sense. The evidence will be complete when judgment is reserved, but the facts will remain unresolved until judgment is delivered.
6. Once the preceding phrase is so construed, the temporal element takes a different flavour, but appears to be a statement of the obvious. Its purpose remains uncertain, but that uncertainty may be resolved by having regard to the surrounding text. Section 59(1)(c), which immediately precedes s 59(2), directs the Court to consider whether adequate provision has been made by the testator’s will. Section 59(1)(c) directs that the assessment be made “at the time when the Court is considering the application” and not, as might otherwise have seemed appropriate, as at the time of the testator’s death. Consistently, but for the direction in s 59(2), the intention might well have been to determine the amount needed to address the deficiency as at the time of the testator’s death. Read together, ss 59(1)(c) and 59(2) establish that events subsequent to the death of the testator (or intestate person) are to be taken into account, both in determining the need for, and in formulating an order for, provision.
7. The second aspect of context is to be found in what follows, namely s 59(3), which permits the Court to make a further order where the Court is satisfied that there has been “a substantial detrimental change in the eligible person’s circumstances since a family provision order was last made”. The ability to make a further order is a significant factor when making the initial order: there is no need for the Court to speculate as to any future deterioration in the eligible person’s circumstances. That in turn explains why in s 59(2) the court is to act on the facts known to it at the time it makes the order. In other words, there is no need to speculate as to the future and, indeed, the Court should not do so.
8. So understood, there is no reason to construe s 59(2) as imposing on either the court or the parties an obligation to update evidence until the moment judgment is delivered, with all the costs and potential delays which might be incurred as a result of an attempt to comply with such an obligation.
When is updating evidence required?
1. That is not to say that it is not important for a claimant to ensure that the court has current information before it when considering its judgment. If a detrimental change occurs, and the Court is not notified before making orders, the eligible person may miss out on a benefit, because the possibility of a further application only arises where the detrimental change occurs after the initial family provision order was made. But there is no reason to construe s 59(2) as obliging an applicant to put his or her best case forward.
2. On the other hand, there may be an obligation to provide updating information where not to do so would leave the Court to make an order based on false or misleading evidence. That is the limited principle to be drawn from observations of Leeming JA in Blendell: [24]
“78 … There are a number of distinct ways in which unsatisfactory conduct by applicants may manifest itself. One, as in In re the Will of F B Gilbert (1946) 46 SR NSW 318, is by perjury in support of their application. A second is non-compliance with the obligations imposed by s 56 and applicable practice notes. A third, which was raised in relation to Dominic, is the disregard for a court order, leaving a party in contempt.
…
80 The applicant [in] In re the Will of F B Gilbert was Mrs Annie Elizabeth Gilbert, the deceased’s second wife, who was found to have perjured herself in understating her assets. … Roper J said her evidence was ‘very unsatisfactory’. Jordan CJ said that even after some of her false evidence had been disclosed, ‘I do not feel wholly satisfied that even now all the facts, the onus of proving which is upon the applicant, are before the Court’: at 324-325. Nonetheless, the Court confirmed that some further provision should be made in her favour, and rejected the proposition that her perjury was per se disentitling.
…
85 The deficiencies attending both Julian’s and Dominic’s applications were essentially evidentiary. The primary judge made no error in proceeding on the basis that (a) the executor pointed to no hardship, and (b) [given] what was left … after deducting agreed amounts of provision to Denise and Nicholas, and large legal costs, the estate was sufficiently large that a relatively broad brush approach was sufficient.”
1. There was no submission in the present case that the plaintiffs had given false or misleading evidence, and a suggestion that their circumstances had significantly improved since 2017 was not supported by evidence. [25] It follows that, although the executor’s challenge to the rewriting of s 59(2) by the primary judge succeeds, his attempt to derive an obligation to file updating evidence from the language of s 59(2) fails.
Relevance of delay – determining ground 1
1. However, it does not follow that ground 1 should be rejected. As has been noted, it was the executor’s case in 2021, prior to Weisbord (No 3), that updating affidavits be filed, not only by the plaintiffs, but by the executor himself. There had been a trial, an appeal, and an application for special leave to appeal, all involving costs orders, which in total were known to exceed $2 million. [26] Although the executor put on no formal notice of motion, neither his position, nor that of the plaintiffs, was in doubt. Accordingly, the primary judge was required to rule upon the issue as to whether updating affidavits should be required. The substantive question for this Court is whether the judge’s ruling not permitting such additional material was erroneous because the proper conduct of the trial required that such material be provided.
2. Although the judge placed primary emphasis on his understanding of the statutory scheme (“the true answer” to the executor’s application [27] ), there appear to have been three further reasons why the judge considered that updating evidence should not be required. First, the primary judge relied upon the absence of any formal application by the executor to reopen his case, and the executor’s failure to identify “the general nature of any updating evidence” that he contended should be put before the Court. [28] Whether it was appropriate to require the executor to make a formal application to reopen his case was largely beside the point; the judge happily referred to his “application”. [29] Further, the executor had indicated that updated information should be made available as to costs incurred by the estate and the valuation of its assets. The contentious issue was whether the plaintiffs should have been directed to provide updating affidavits as to their circumstances, which would not require the executor to reopen his case. This aspect of the judge’s reasoning was unpersuasive.
3. Secondly, because the judge could have taken a different course in 2018, he considered it unfair that the outcome might depend on when the court made the determination. [30] While that analysis may have some weight from the perspective of the plaintiffs, theirs was not the only relevant perspective. Ultimately, whatever the vagaries of litigation, the court is required to determine the applications before it having regard to fairness to both parties and applying the relevant legal principles. Similar circumstances could have arisen if the family provision claims had been dealt with, but the orders had been set aside on appeal and a retrial ordered. This reason is similarly unpersuasive.
4. Thirdly, the judge stated:
“25 The practical arguments put by the plaintiffs in support of their contention also carry weight. … The defendant had left open the question of whether a further hearing and cross-examination of witnesses would be required following the service of the updating evidence. The plaintiffs put forward evidence at the hearing of the psychological difficulties from which they suffer, and they submitted that they should not be subjected to the doubts and anxieties, as well as the costs, that would follow if the Court made open-ended case management orders that permitted the defendant to serve evidence as to events that have occurred after the Court first reserved judgment.”
1. Stress to the plaintiffs that would follow “if the Court made open-ended case management orders” overstated the nature of the concern. Courts are confronted daily with parties and witnesses who are genuinely vulnerable to the stresses of litigation and, particularly, of giving evidence and being cross-examined. Those concerns should not be disregarded, but they are addressed by case management orders, including the imposition of proper restraints on the extent and length of cross-examination. The reference to “open-ended case management orders” was misconceived. The issue was in any event not related to such evidence as the executor might serve; rather, this reasoning carried some, but limited, weight, by reference to the stresses of further cross-examination. That weight was limited because, contrary to the statement (in the present tense) that “the plaintiffs put forward evidence at the hearing of the psychological difficulties from which they suffer”, they did not do so in 2021, but only in 2017. These “practical arguments” may be acknowledged but should not be given dispositive weight.
2. The judge confronted the apparent inconsistency in admitting evidence of the current value of 102 Balfour Road in Weisbord (No 5), stating:
“55 I reject the suggested equivalence between unidentified and open-ended new evidence relevant to the plaintiffs’ circumstances that would risk a complete renewal of the hearing on the one hand, and evidence of the current value of the assets in the estate on the other hand. The latter type of evidence is an objective integer that may be crucial to the formulation and proper operation of the orders for further provision and costs orders that the Court might make. It is evidence that is independent of the conduct of the parties.”
1. This reasoning was flawed for two important reasons. First, it underestimated the importance of current information as to the needs and resources of the plaintiffs. Secondly, it revealed that the factor which underpinned the judge’s approach was the weight to be given to the testamentary intentions of the deceased. That is, the orders were calculated as a proportion of the value of the property, subject to a discount of 12.5%, as “an allowance” for the fact that the plaintiffs had not given specific evidence addressing their accommodation needs. [31] The validity of that approach depends upon whether it was appropriate to give determinative weight to the intention derived from the unexecuted will. That in turn is a matter to be addressed in the context of grounds 4 and 5.
2. The very fact that it was appropriate to permit current valuation evidence for 102 Balfour Road, and then necessary to apply a “discount” to the plaintiffs’ claims, demonstrated the difficulty with the refusal to allow updating evidence. The ruling was waived in favour of the valuation evidence, a ruling made at the plaintiffs’ behest and a waiver which strongly favoured their interests. Their current needs were not assessed, and the effect of litigation costs incurred by the estate were ignored.
3. Ground 1 should be upheld, not on the basis that there was a statutory obligation to require the provision of evidence of the plaintiffs’ current needs, but on the basis that the proper conduct of the proceedings, according fairness to all parties, required that course in the circumstances at the time of the remittal.
Grounds 5, 6 and 8 – determining amount of provision
Executor’s claims
1. The executor’s challenge to the outcome, namely the provision orders in favour of the plaintiffs, had two elements. The first was that giving weight to the gifts made by the testator to her grandchildren, both under the 1997 will and under the unexecuted 2008 will, involved an element of speculation as to her final testamentary intentions. There was, he submitted, no evidence as to why the Carramar property, the subject of the 1997 gift, was sold in 2003, nor as to why the testator did not seek to vary her will until 2006, then did not pursue the variation until 2008, and finally did not execute the draft will before her death some six years later. Further, while the executor accepted that the testamentary intentions of the testator was a relevant consideration, pursuant to s 60(2)(j) of the Succession Act, he submitted it should not be given dispositive weight; the primary consideration should be the responsibilities of the testator to the plaintiffs, having regard to their financial resources and needs, pursuant to s 60(2)(b) and (d).
2. The second element in the executor’s case was the absence of up-to-date evidence as to the plaintiffs’ financial resources and needs. It will be necessary to address this complaint in more detail shortly: it suffices to say, the adequacy of the provision to the plaintiffs should have regard to their needs as described in 2016 in the evidence before the primary judge at the hearing in 2017, but the weight to be given to that evidence must be diminished having regard to the passage of a further seven years.
3. The reasons of the primary judge placed considerable, if not dispositive weight on his understanding of the testator’s intentions and it is convenient to address that issue first.
Testamentary intentions
1. With respect to the executor’s complaint of “speculation” concerning the testator’s intentions as to the plaintiffs, the primary judge was correct to accept that the unexecuted 2008 will did state the deceased’s testamentary intentions. So much was accepted by the executor in this Court in the probate appeal. [32] The lack of evidence to support a finding that the testator intended the unexecuted document (which she had never seen) to constitute her will did not affect that conclusion; nor did the fact that the draft, perhaps wrongly, lacked the bequests of jewellery which had been in the 1997 will. Although the evidence was inconclusive as to why she did not execute the document, there was no evidence that she had changed her mind with respect to her intention to confer a benefit on her grandsons, although the proposed gift treated all four grandchildren equally.
2. However, two points may be noted with respect to that intention. First, each of the four grandchildren was intended to benefit equally. Secondly, by leaving a property, it should not be inferred that she was intending to provide accommodation, as opposed to a financial benefit dependent on the value of the property. There was no evidence that the girls (as they were in 2008) were in need of accommodation, nor that all four grandchildren were expected to occupy the property. Given that the vesting of each share would only occur when each turned 18, such an intention would have been impractical.
3. Further, the possible inference that the testator intended her grandchildren to obtain a benefit sufficient to provide each with his or her own accommodation, is itself open to doubt. First, there was no evidence (at least, this Court was not taken to such evidence) that 102 Balfour Road was free of any mortgage, in 2008; nor did the draft will require that it be transferred free of any mortgage. However, the 1997 will had left the property to Mr Rodny, together with the residue, on the basis that it was subject to a mortgage and potentially to a liability for capital gains tax. (The 2008 unexecuted will was not in the evidence provided for this appeal, but the edited version set out in the judgment of this Court in the probate appeal, did not refer to the gift being free of any mortgage.)
4. Secondly, if there had been an intention on the part of the testator in 2008 to provide a sufficient sum to cover, or at least assist, her grandchildren with their needs for accommodation, it was necessary to take account of the passage of some 15 years since that intention was expressed. Whatever needs may have been foreseen at that time, or responsibilities accepted at that time, must now be given diminished weight.
Reasoning of primary judge
1. In Weisbord (No 4) the primary judge considered the appropriate further provision for the plaintiffs at [166]-[171]. The reasoning commenced:
“166 At the centre of debate in this case has been the significance of the evidence of the deceased’s testamentary intentions, being a factor in the Court’s consideration made relevant by s 60(2)(j) of the Succession Act.”
1. After stating why the Court should be satisfied that those testamentary intentions were reflected in the unexecuted 2008 will, the judge stated:
“167 In these circumstances, I consider that it will be proper for the Court in the exercise of its discretion under s 59(2) of the Succession Act to give exceptional force to the evidence of the deceased’s testamentary intentions ….
168 In this case, the prominence that should be given to the deceased’s testamentary intentions is not to any significant degree diluted by a consideration of the other factors made relevant by s 60(2) of the Succession Act.”
1. After noting that Ms Weisbord had assets valued at some $8.7 million, that Mr Rodny did not make a claim for further provision and that the granddaughters had not made claims, the judge then stated: [33]
“Consequently, there is little evidentiary barrier to the factors made relevant by s 60(2)(a), (b), (d) and (f) of the Succession Act, and which have generally been considered above, reinforcing the significance of the evidence of the deceased’s testamentary intentions.”
1. The judge then stated:
“169 If the deceased had succeeded in leaving a will that contained the proposed gift to the grandchildren in the second typewritten draft, the four grandchildren would have become entitled to equal shares in a property worth $5.1 million, so that each would have received $1.275 million. I do not think that it would be appropriate for the Court to make an order for further provision in favour of Joel and Alexander that gave them the same outcome as if the deceased had succeeded in making a formally valid will that had that effect. However, in this case, I consider that only a small discount is necessary to allow for uncertainties that arise in respect of the deceased’s failure to have executed a valid will embodying her apparent testamentary intentions. All other things being equal, I would have made an order in the exercise of my discretion that a lump sum legacy of $1.0 million be paid to each of Joel and Alexander out of the deceased’s estate. That legacy would represent 80% of the gift that those applicants would have received under a validly executed will in the terms of the second typewritten draft will.”
1. There are three aspects of this reasoning which should not be accepted. First, for reasons which will be explored further below, the reliance on pars (a), (b), (d) and (f) of s 60(2), as reinforcing reliance on the deceased’s testamentary intentions is obscure. Without further explanation, some of those factors weigh against giving “exceptional weight” to the testamentary intentions expressed in the 2008 unexecuted will; each requires separate consideration.
2. First, par (a) refers to the relationship between a claimant and the deceased person. However, reliance on testamentary intentions was justified by reference to the deceased being “the best judge of how to dispose of her estate”: at [167]. That involved duplication of the reliance placed on the unexecuted will, rather than a separate assessment by the court.
3. With respect to par (b) (dealing with the deceased’s obligations to the claimant), reliance had been placed on extensive evidence given by the plaintiffs of the support obtained from their grandmother, particularly during their childhood. That does not of itself demonstrate a continuance of a moral obligation into adulthood. In 2008, the plaintiffs were 20 and 23 years of age respectively. It will be necessary to look with greater care at the evidence of subsequent dependency. However, the support given during childhood was linked, on their own evidence, to the inadequacies of the upbringing provided by their mother.
4. With respect to par (d) (which refers to the financial resources and financial needs “both present and future” of the claimant), the only evidence available to the primary judge was that provided in 2016, from which, no doubt, certain matters could be extrapolated, but only with a significant degree of imprecision and uncertainty.
5. As to par (f) (referring to “any physical, intellectual or mental disability” of a claimant), the evidence given in 2016 and 2017 could in large part be safely relied upon five years later. However, evidence of financial resources and disability were themselves properly matters to be taken into account in their own terms, rather than as reinforcing reliance upon the testator’s intentions. That was not an exercise which the primary judge undertook.
6. Secondly, the calculation undertaken at [169] gave dispositive weight to the value (as known to the Court) of the property which they might have taken under the unexecuted 2008 will had it been admitted to probate, subject to a “small discount” said to embody “uncertainties” arising from her failure to execute it. With respect, that approach disregarded the fact that the grandsons were 35 and 38 years of age respectively at the time judgment was delivered, that their mother, who had a stronger responsibility for their advancement in life had substantial assets, and that there was no up to date evidence of current needs.
7. Thirdly, the judge acknowledged the deficiencies in the evidence stating that “the Court cannot ignore the consequences of the costs of proceedings being paid out of the deceased’s estate, particularly as the amount of some of those costs is not known to the Court”: [170]. The judge also noted that the Court had “no evidence of changes in values of the estate’s properties since judgment was reserved on 12 April 2018”. The judge then indicated that each of the plaintiffs and the executor should have an opportunity “to provide brief written submissions as to whether the Court should vary its stated intention to order that legacies of $1.0 million be paid to each of Joel and Alexander”: at [171]. The history of what happened thereafter, allowing the plaintiffs to put on evidence of a doubling in value of 102 Balfour Road, has been set out above. The proposed provision was not doubled, but increased to $1.75 million for each plaintiff. No account was taken of the likely costs which had been incurred by the estate resulting from the litigation.
Challenge to orders for provision – conclusion
1. In order to determine whether there was error on the part of the primary judge in these respects and, for this Court to consider the appropriate weight to be given to such matters, it is convenient to start with certain principles governing the making of orders for provision in favour of members of a testator’s family.
2. First, although the court conventionally approaches the exercise in stages, the jurisdictional element, or factor which engages the power to make such an order, should not be disregarded in determining the appropriate provision. As has been observed in considering questions of eligibility, the Act does not assume that a testator has a moral responsibility to provide for grandchildren: the primary responsibility for their welfare lies with their parents. That remains a relevant consideration in assessing the adequacy of provision.
3. Secondly, the Court must ask whether the testator made “adequate provision” for the claimant in his or her will. That consideration is supplemented by the factor identified in s 60(2)(i), namely the provision made for the claimant by the testator during her lifetime. Although the fact that a testator has made provision in a will may demonstrate an acknowledgement of responsibility for the claimant’s personal wellbeing, it is not to be assumed that the provision made was inadequate, or the responsibility on-going.
4. The remittal of the family provision claims to the primary judge following the appeal in the probate proceedings undoubtedly placed the judge in a difficult position. The possibility of permitting or requiring the parties to provide further evidence, in circumstances where family relationships were fractured and any further evidence was likely to give rise to disputation, was unattractive. Nevertheless, the very considerable lapse of time and the statutory obligation for the court to make orders based on current circumstances at the time of judgment, indicated that further evidence should have been required. The case provides an example of the risks of following shortcuts. When the difficulties of that course became apparent, in Weisbord (No 4), the course taken was, again understandably given the further passage of time, not to reconsider the decision not to require further evidence, but to permit it on a limited basis. However, that limited basis was partial to the plaintiffs and did not provide the full circumstances on which orders should have been made.
5. Thirdly, the “exceptional weight” given to the testator’s intentions as expressed in the unexecuted 2008 will, while apparently sidelining the need for up-to-date evidence of the plaintiffs’ situations and the financial status of the estate, in fact diverted the primary judge from a proper consideration of all material factors.
6. For each of these reasons, the appeal must be allowed. It is then necessary to address the consequences of that conclusion.
7. As has been explained in relation to the orders sought by the executor, the circumstances facing this Court in making alternative orders mirror those faced by the primary judge, subject only to a further lapse of time since the evidence of needs was provided by the plaintiffs at trial. The executor’s primary position is that the lack of updating material should have led the primary judge to dismiss the applications brought by the plaintiffs and this Court should take that step. In the alternative, the executor submitted that the Court could make an order for provision, by reference to the limited material available to the primary judge. He abandoned the third theoretical possibility that this Court could remit the matter for a retrial. The plaintiffs did not seek a retrial.
8. For reasons explained above, s 59 of the Succession Act does not preclude the Court from making orders in the absence of up-to-date information as to the plaintiffs’ needs. As with other civil litigation, the Court does not lack jurisdiction because of the inadequacy of the material presented by the parties. Where the material is inadequate, the party bearing the onus of proof will be the one to suffer any prejudice which results. As neither party sought a remittal of proceedings in the event that the appeal was upheld, the Court should accept their entitlement, on an appeal by way of rehearing, to the judgment of this Court.
Reassessment of claims for provision
1. In undertaking this exercise, it is appropriate to take account of the fact that when the grandchildren were young the testator thought it appropriate to leave them a property which, however, she subsequently sold to provide for her own needs. The evidence of the executor, which the judge accepted, was that the Carramar property was sold in 2003 for $1.25 million. [34]
2. The value of 102 Balfour Road at the date of the unexecuted will in 2008 is not known. At the time of the trial in 2017 it was said to be worth $5.1 million. [35] There is a question as to whether this Court should take into account the further valuation obtained whilst judgment was reserved in 2023. Although in Weisbord (No 5) the judge relied upon the further valuation, he considered it necessary to allow for the fact that “the new valuation has not been subject to scrutiny (having regard to the two appraisals that were submitted by the plaintiffs that were below the value adopted by the valuer)”. [36] Further, it would be inappropriate to assume that the full increase in value would accrue to the estate, which had been valued in 2018 at approximately $11.1 million, without bringing into account the costs of realising the value, including payment of CGT.
3. It would also be necessary to take into the calculation the very considerable costs for which the estate was liable, as a result of the earlier litigation. The executor had given evidence that, as at 22 September 2017, the estate had borne expenses totalling some $245,000. [37] In a subsequent affidavit, he noted that the costs to the estate of the first hearing and the appeal were $827,000 and that, in an affidavit dated 3 April 2019, the plaintiffs’ solicitor had claimed the costs required to be paid out of the estate by the Court order then in force stood at $1.444 million. The proceedings since that time have been outlined above: there have been an appeal to this Court and three further judgments in the Equity Division. If the estate were required to pay those additional costs, it seems likely that the total legal costs will be in the order of $3 million. No doubt the estate has also borne the ongoing costs of maintaining the properties which are in dispute. Making allowance, as did the primary judge, for the possibility that a sale of 102 Balfour Road might not reach the valuation, it is quite possible that the net increase in value is largely offset by the costs which have not been accounted for, including the legal costs. Without the increase in the value of the property, the primary judge would have awarded each of the plaintiffs $1 million by way of provision from the estate.
4. The next consideration concerns the other factors to be taken into account. First, the purpose of a family provision order is not to give effect to the terms of a will which remained unexecuted and is not the subject of a grant of probate.
5. Secondly, to the extent that the unexecuted will demonstrated an intention to benefit the plaintiffs, that factor may be taken into account and given weight. However, the amount of an appropriate benefit must be determined by the Court in accordance with the considerations listed in s 60 of the Succession Act. It is not the Court’s function to rewrite the will according to some inchoate principle of fairness. [38]
6. Thirdly, the Court should give proper weight to the matters identified as relevant to a claim by a grandchild by Hallen AsJ in Bowditch v NSW Trustee and Guardian [39] approved in general terms in Chapple v Wilcox. [40] It was therefore necessary to start with the proposition that a grandchild was not normally regarded as a natural object of testamentary recognition. A corollary of that proposition is that where a testator has sought to “skip a generation”, for no acceptable reason, a parent with continuing care and responsibility for the young children may succeed in a family provision claim. [41] Ms Weisbord’s claim might have invoked that principle.
7. That does not mean that, where it is clearly indicated that the testator, for good reason, sought to benefit her grandchildren (or some of them) that would not form a sound basis for a family provision order. The inadequacies of the parents as carers could constitute good reason. However, as Hallen AsJ further stated in Bowditch at [113(d)]:
“Generosity by the grandparent to the grandchild, including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of grandparent.”
1. Nor should it be assumed that substantial support given whilst the children were under 18 years of age was intended to continue throughout their adult lives. Nevertheless, it may be accepted that the testator continued to provide some support to the plaintiffs during her lifetime when they were entering their twenties. However, the evidence relied upon by the primary judge in Weisbord (No 4) at [143]-[154] (which need not be repeated here), related almost entirely to the financial care and support provided to the plaintiffs when they were under 18 years of age. The judge also referred to evidence of the plaintiffs’ sister (describing the testator as a second parent to the grandchildren). The judge accepted that that evidence “broadly reflects the true position that they lived in her house as their home for substantial, relatively unbroken periods during their adulthood”. [42]
2. The primary judge also accepted evidence as to the plaintiffs’ health and financial resources. Indeed, as the judge noted, the executor also broadly agreed that Joel Weisbord “has suffered from significant medical and psychological disabilities”. [43] Those difficulties were summarised in Weisbord (No 4) at [103]-[104] (in respect of Joel) and at [105]-[106] (with respect to Alexander). Their evidence was referred to in Weisbord (No 1) in opening paragraphs, though not in detail given the limited relevance to the probate proceeding and for matters of privacy. [44] The judge concluded in Weisbord (No 1):
“16 The evidence establishes that over the course of the plaintiffs’ lifetimes Mrs Rodny provided substantial, if not exceptional, emotional, material and financial support to her daughter’s family out of love, and in apparent recognition of the special needs that they had.”
1. There is no doubt that the judge was entitled to accept the accounts given in the plaintiffs’ affidavits. [45] That evidence was not significantly challenged in cross-examination. [46] The thrust of the challenges was that both plaintiffs had understated their capacity to study and work. With respect to Joel Weisbord, that included an extended period when he was studying in Israel. He agreed that he got $25,000 from an aunt’s will and used it to set up a business which failed. [47]
2. It may be accepted that, given the testator’s intention to benefit her four grandchildren, and including the plaintiffs, it is appropriate that orders for provision from the estate be made. However, the absence of any evidence as to their needs since their affidavits were prepared in 2016 (and cross-examination in October 2017) makes it difficult to assess those needs at the present time. It may be correct that, as their counsel submitted, their circumstances have not improved since 2017; however, there was no evidence to support that proposition. Indeed, the reason why there was no such evidence was because they had declined to provide it. There was not even evidence that they would suffer significant stress if, which was not a necessity, they were cross-examined for a second time. The cross-examination could properly have been limited by an appropriate order, depending on the evidence they put forward. The transcript of the evidence of both together in October 2017 covered 54 pages or a little over half a day. There was no evidence that they found the experience particularly stressful, nor does the transcript give rise to an inference to that effect.
3. Even assuming, in the absence of evidence of their present circumstances, they have an unsatisfied need for stable accommodation, and a mother who is unwilling to provide assistance, it does not follow that it would be appropriate for this Court to interfere with the testator’s actual disposition of her estate by finding that she had an unfulfilled obligation wholly to provide the means to satisfy those needs.
4. On the other hand, it may be accepted that the plaintiffs’ physical and mental disabilities have not abated, or not to a significant extent. Nevertheless, their evidence in cross-examination limited one’s confidence in a finding that they were not capable of obtaining qualifications or gainful employment. It seems more probable than not that their limitations would render stable employment unlikely. They had, before 2017, during the better part of a decade after leaving school, failed to obtain stable employment.
5. It is relevant to have regard to the size of the available estate. If neither the increases in value of the properties, nor the costs and liabilities of the estate are adequately identified in the evidence, the Court is largely limited to the inventory relied upon by the primary judge in Weisbord (No 1) at [19]. That inventory valued the estate at $11.6 million. The principal items were the properties at 77 and 102 Balfour Road (valued at $4 million and $5.1 million respectively), the shares in Karod (valued at $1.5 million) and an interest in the estate of a sister-in-law of the deceased, Ms Singer, (valued at $558,000). The other smaller items, being mainly jewellery and personal effects, were bequeathed individually to family members and may be put to one side for present purposes. Further, to the extent that 77 Balfour Road was given free of any mortgage to Ms Weisbord, and constituted a significant part of the reason why she did not obtain further provision, that item should also be disregarded. The remaining items constituted gifts (including of the residue) to Mr Rodny. They total $7.16 million. The Court should accept, as did the primary judge, that Mr Rodny has no competing needs.
6. On the basis of the values then known to the primary judge, he proposed an order for provision of $1 million to each of the plaintiffs. For reasons explained above, that provision overestimated the weight to be given to the assumed intentions of the testator. However, the estate is one which is capable of bearing an order for substantial provision of a kind not commonly made. Having regard to the known disabilities and the assumed continuing needs of the plaintiffs, the appropriate course is to order provision for each in an amount of $700,000.
Costs appeal
1. On 15 December 2023, the primary judge made orders dismissing Ms Weisbord’s summons seeking additional provision from the testator’s estate and ordered that she pay the executor’s costs of the proceedings from 19 June 2019 on the ordinary basis. (The executor obtained an order for his costs from the same date to be paid out of the estate, assessed on an indemnity basis.) Ground 9 in the notice of appeal sought an order that Ms Weisbord pay the executor’s costs assessed on the ordinary basis up to 12 August 2016 and thereafter on an indemnity basis.
2. While the notice of appeal combined the proceedings brought by the plaintiffs and Ms Weisbord in the one document, the only ground directed to Ms Weisbord’s proceeding was with respect to the costs order. That was, in substance, an appeal with respect to “costs only”, which required leave pursuant to s 101(1)(c) of the Supreme Court Act 1970 (NSW). The need for leave was not to be disguised by joining what were in effect three separate appeals in one document. Neither party took any issue with respect to this matter and, while it remains a live issue, the submissions should be dealt with on the merits.
3. On 11 August 2016, the executor made two offers of compromise, one in each of Ms Weisbord’s proceedings. In the probate proceeding, the offer included dismissal of the statement of claim with payment of Ms Weisbord’s costs in an amount of $1,000. (That offer is not relevant to the family provision proceeding.) However, an offer was made on the same date, 11 August 2016, in the family provision proceeding on the basis that the summons be dismissed and the plaintiff’s costs in the sum of $5,000 be paid from the estate. The offer was not accepted.
4. The offer sought to be relied upon in support of an order for indemnity costs was made prior to the first trial. The costs of that trial were dealt with in the judgment of 27 March 2019, Weisbord (No 2). Although the costs orders were in part contentious, the judge recorded that “the parties are agreed that the starting point should be that the costs of the plaintiffs on the one hand, and Laurence on the other, should be paid out of the estate on the ordinary basis”. [48] The judge continued:
“35 Laurence did not submit that, for the purposes of the costs order that should be made, the plaintiffs' family provision claims should be treated separately and not as part of the overall costs of the proceedings.”
He further noted that “Laurence’s senior counsel explicitly accepted that the effect of an order made by the Court at an earlier time that all of the proceedings be heard together was that there should be a single costs order”. [49]
1. As the plaintiffs and Ms Weisbord had succeeded at the trial, no issue arose in relation to the executor’s offers of compromise. The judge made the agreed order that the plaintiffs’ reasonable costs of the proceedings “be paid on the ordinary basis out of the estate”: order 2, entered 2 July 2019 in each proceeding. That order was, however, stayed pending the determination of the appeal by order 4.
2. Although the notice of appeal had included a proposed order setting aside the costs order, Meagher JA noted that “it is not suggested that in the event of the appeal being allowed, the costs orders made by the primary judge should be set aside”. That was consistent with it also being common ground that the costs of the appeal, assessed on the ordinary basis, should be paid out of the estate. [50] Accordingly, the orders made in February 2019 were set aside, but not the orders in relation to costs made in July 2019. The executor’s position in the appeal proceedings was consistent with his approach before the primary judge at the first trial, namely that costs of the probate proceeding and costs of the family provision proceeding not be separated.
3. In dealing with the present application in Weisbord (No 5), the judge referred to authority in this Court dealing with the operation of r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (UCPR). He concluded:
“92 The legal position therefore is that the costs of the probate claim have finally been determined by orders of the Court that have been entered, and it is now too late for Mr Rodny to make an application for an order setting aside or varying the orders that have already been made in those proceedings.”
1. There was no indication, either in written submissions or orally, as to why the judge’s conclusion as to the finality of the earlier costs order was erroneous. Whilst it was undoubtedly open to the executor to pursue his challenge to the earlier costs order on the appeal, not having pursued that step, the order with respect to costs up to and including 2 July 2019 must be treated as final. The only question remaining to be determined was whether the executor could rely upon the offer of compromise to seek an order against Ms Weisbord personally in respect of the costs of the family provision proceeding following the first appeal and the determination of the special leave application in the High Court.
2. The judge accepted that costs should follow the event and that Ms Weisbord should pay the executor’s costs of the proceedings from 19 June 2019, being the date on which judgment was delivered in Weisbord (No 2). As to the offer of compromise, the judge described the proposal for dismissal of the provision claim with a “trivial” amount on account of costs as not constituting a real or genuine compromise. [51] The judge described her claim as “by no means trivial or frivolous”. [52]
3. Although the executor submitted that the amount of the costs which had been incurred at that time would not have been large, and the offer therefore a true compromise, that was not the approach adopted by the trial judge. In referring to the claim as neither frivolous nor trivial, the judge was assessing the offer by reference to the total rejection of the claim.
4. As a matter of principle, the approach of the trial judge was correct. The purpose underlying the rule, involving encouragement of settlement, is not satisfied unless there is an element of “compromise” involved in the offer. A “walk-away” offer by a defendant may not involve a sufficient element of compromise, unless there is some real concession as to costs. [53] Where the costs incurred are likely to have been small, that may be hard to establish. Whether, objectively considered, the element of costs should have been seen at the time as other than a trivial amount, was a matter for the primary judge. It was not established by the executor that the judge’s assessment in that respect was clearly unreasonable or led to some patent injustice. Indeed, the better view is that there was no error.
5. Indeed, it would have been open to the primary judge to have rejected the offer on two further bases. One was that it sought to isolate Ms Weisbord’s claim from that of the plaintiffs. That was necessary for the executor, because the plaintiffs succeeded in their claims. However, it was appropriate for the three claims to be run together on the basis that the Court might have concluded that the grandsons’ claims would fail but that Ms Weisbord’s claim, as the testator’s daughter and as the family member responsible for the grandchildren should succeed.
6. Secondly, the claim for indemnity costs could properly have been rejected on the ground that, by the time the family provision proceedings recommenced in 2021, the offer made in 2016 was spent.
7. Each of these reasons is sufficient to refuse the executor leave to appeal with respect to the costs order involving Ms Weisbord.
Costs of appeal
1. With respect to the plaintiffs, although the appeal has been allowed, they have retained family provision orders in significant amounts. Their costs of the appeal should be assessed on the ordinary basis and paid from the estate. Ms Weisbord should also have the costs of the executor’s unsuccessful appeal in relation to her claim from the estate. As she and the plaintiffs had common representation, there should simply be an order that the respondents’ costs be paid by the estate.
Orders
1. The following orders are proposed:
1. Allow the appeals in matter 2015/324966 (Joel Weisbord) and in matter 2015/324977 (Alexander Weisbord) and in each matter set aside order 2 entered on 15 December 2023.
2. In place of those orders, in each matter order that the plaintiff be paid an amount of $700,000 from the estate of Rose Rodny (deceased).
3. In matter 2015/324982 (Jeannette Weisbord) refuse the executor leave to appeal from the refusal of the primary judge to award indemnity costs.
4. Order that the respondents’ costs in this Court, assessed on the ordinary basis, be paid from the estate.
5. Order that the appellant’s costs in this Court, assessed on an indemnity basis, be paid from the estate.
**********
Endnotes
1. Weisbord v Rodny [2018] NSWSC 1866 (“Weisbord (No 1)”)
2. Weisbord v Rodny (No 2) [2019] NSWSC 739 (“Weisbord (No 2)”).
3. Rodny v Weisbord (2020) NSWCA 22 (Meagher JA, White JA (with additional reasons) and McCallum JA agreeing).
4. Weisbord v Rodny [2020] HCASL 191.
5. Weisbord v Rodny (No 3) [2021] NSWSC 458 (“Weisbord (No 3)”) at [14].
6. Plaintiff’s submissions on updating evidence, par 10.
7. Submissions, par 15.
8. Executor’s submissions in reply, 22 March 2020.
9. See fn 5 above.
10. Weisbord (No 3) at [18].
11. Ibid at [16].
12. Ibid at [17].
13. Ibid at [22].
14. Ibid at [25].
15. Ibid at [28].
16. Written submissions, 8 June 2021, par 32(b).
17. [2022] NSWSC 1726 (“Weisbord (No 4)”).
18. [2023] NSWSC 1581.
19. Weisbord (No 5) at [46].
20. References have been changed to accord with the convention adopted in this judgment.
21. [2020] NSWCA 154 (Meagher JA, Gleeson and Leeming JJA agreeing).
22. See also s 60(2)(b) identifying as a factor the deceased’s responsibilities to “any beneficiary”.
23. CA Tcpt, 4 July 2024, pp 11(45), 13(15).
24. See fn 21 above.
25. Tcpt, 2 March 2021, p 2(35).
26. Weisbord (No 5) at [174].
27. Weisbord (No 3) at [22].
28. Weisbord (No 3) at [16] and [17].
29. Weisbord (No 3) at [18] and [22].
30. Weisbord (No 3) at [24].
31. Weisbord (No 5) at [62].
32. Rodny v Weisbord [2020] NSWCA 22 at [12].
33. Weisbord (No 4) at [168].
34. Weisbord (No 1) at [22].
35. Weisbord (No 1) at [21].
36. Weisbord (No 5) at [62].
37. Affidavit, Laurence Rodny, 3 October 2017, par 5.
38. Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 at [95] (Brereton JA).
39. [2012] NSWSC 275 (“Bowditch”) at [113].
40. (2014) 87 NSWLR 646; [2014] NSWCA 392 at [17]-[21] (in my judgment, Gleeson JA agreeing at [150]).
41. Bohen v Mitchelmore [2024] NSWSC 171 at [30]-[33].
42. Weisbord (No 4) at [157].
43. Weisbord (No 4) at [102], referring to Weisbord (No 1) at [15].
44. Weisbord (No 1) at [9].
45. See affidavit of Joel Weisbord, 5 November 2015 at pars [22], [30]-[33] and [38]-[47]; Alexander Weisbord, 14 March 2016 at pars [36]-[37], [101], [114], [116] and [137].
46. Tcpt, 17 October 2017, pp 307-330 (Joel Weisbord); pp 336-345 (Alexander Weisbord).
47. Tcpt, p 323(20).
48. Weisbord (No 2) at [34].
49. Weisbord (No 2) at [37].
50. Appeal judgment at [96].
51. Weisbord (No 5) at [99] and [101].
52. Weisbord (No 5) at [101].
53. Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [41]-[42] (McColl JA, Gleeson JA and Sackville AJA agreeing); Langdon v Carnival PLC [2024] NSWCA 168 at [232].
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 16,633 |
nsw_caselaw:190341f37d4543d03e71a20d | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-31 00:00:00 | Sydney Metro v C & P Automotive Engineers Pty Ltd [2024] NSWCA 186 | https://www.caselaw.nsw.gov.au/decision/190341f37d4543d03e71a20d | 2024-08-04T23:54:23.781369+10:00 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Sydney Metro v C & P Automotive Engineers Pty Ltd [2024] NSWCA 186
Hearing dates: 23 April 2024
Date of orders: 31 July 2024
Decision date: 31 July 2024
Before: Meagher JA at [1];
Payne JA at [2];
Kirk JA at [154]
Decision: 1. Appeal allowed.
2. Order (1) made in LEC proceeding no 2022/40567 on 15 September 2023 be set aside.
3. In lieu of order (1) referred to above the following order be made in LEC proceeding no 2022/40567:
Compensation to C & P Automotive Engineers Pty Ltd pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of its leasehold interest in Lot 23 in DP 733500 and disturbance losses is determined in the sum of $416,182.99 (plus statutory interest), that amount comprising:
(1) $231,000 for market value under s 55(a);
(2) $185,182.99 for disturbance losses under s 55(d) comprising:
(a) $145,600 (GST exclusive) for relocation costs involving relocating to temporary sites under s 59(1)(c);
(b) $39,582.99 (GST exclusive) for legal costs under s 59(1)(a).
4. Respondent pay the appellant’s costs of the appeal.
Catchwords: LAND LAW — Compulsory acquisition of land — Compensation — Loss attributable to disturbance — costs incurred in connection with relocation — meaning of “relocation” — where lessee seeks costs of constructing landlord’s fixtures for use in lessee’s business — fit out costs — whether fit out costs encompass replacement of landlord’s fixtures
LAND LAW — Compulsory acquisition of land — Compensation — market value — relationship between loss attributable to disturbance and market value of interest in land
LAND LAW — Compulsory acquisition of land — compensation — Loss attributable to disturbance — costs incurred in connection with relocation — difference between rent at acquired premises and at the relocation premises — profit rental assessed for market value — whether compensation available as disturbance for difference in market rents
Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ss 3, 4, 11, 12, 19, 20, 22, 34, 37, 54, 55, 56, 57, 58, 59, 60
Land and Environment Court Act 1979 (NSW) s 57
Cases Cited: Brown Bros (Marine) Holdings Pty Ltd v NSW Land and Housing Corporation (1991) 72 LGRA 50
Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215
Commissioner of State Revenue v Placer Dome Inc (2018) 265 CLR 585; [2018] HCA 59
Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 1 All ER 846
El Boustani v The Minster administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33
Federal Commissioner of Taxation v Resource Capital Fund III LP (2014) 225 FCR 290; [2014] FCAFC 37
George D Angus v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212
Home Care Services (NSW) v Albury City Council (2003) 136 LGERA 117; [2003] NSWLEC 433
Hua v Hurstville City Council [2010] NSWLEC 61
Konduru v Roads and Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36
Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 353
Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115
McDonald v Roads & Traffic Authority of NSW [2009] NSWLEC 105
Melino v Roads and Maritime Services (2018) 98 NSWLR 625; [2018] NSWCA 251
Minister for Army v Parbury Henty & Co (1945) 70 CLR 459
Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252
National Australia Bank Ltd v Blacker (2000) 104 FCR 288; [2000] FCA 1458
Nelungaloo v Commonwealth (1947) 75 CLR 495
Olde English Tiles Australia Pty Ltd v Transport for New South Wales (2022) 108 NSWLR 503; [2022] NSWCA 108
Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30
R v Khazaal (2012) 246 CLR 601; [2012] HCA 26
Richardson v Roads and Traffic Authority of New South Wales (1996) 90 LGERA 294
Road and Maritime Services (NSW) v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41
Roads & Traffic Authority (NSW) v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236
Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2015] NSWCA 167
Roads and Traffic Authority v Peak [2007] NSWCA 66
Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11
Speter v Roads and Maritime Services [2016] NSWLEC 128
TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576; [2010] HCA 49
The Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82
Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5
Texts Cited: C Harpum, S Bridge and M Dixon, Megarry & Wade, The Law of Real Property (7th ed, 2008, Sweet & Maxwell)
Category: Principal judgment
Parties: Sydney Metro (appellant)
C & P Automotive Engineers Pty Ltd (respondent)
Representation: Counsel:
G Sirtes SC; M Astill (appellant)
R Lancaster SC; T Poisel (respondent)
Solicitors:
Bick & Steele (appellant)
Addisons (respondent)
File Number(s): 2023/323415
Publication restriction: Nil
Decision under appeal Court or tribunal: NSW Land and Environment Court
Jurisdiction: Class 3
Citation: [2023] NSWLEC 95
Date of Decision: 15 September 2023
Before: Pain J
File Number(s): 2022/40915
2022/40567
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
On 19 March 2021, the appellant, Sydney Metro, compulsorily acquired land in Clyde, New South Wales. The respondent, C&P Automotive Engineers Pty Ltd, had a lease over the acquired land for a term of five years from 1 April 2020, with an option to renew for five years. The respondent relocated its hire, storage, sale and repair business from the acquired land, first to three temporary rental premises and then to rental premises in Granville.
On 15 September 2023, the primary judge awarded the respondent compensation in the amount of $2,418,759.99 (plus statutory interest and costs) pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“Just Terms Act”). The appeal concerns a portion of the compensation awarded, namely $2,187,759.99 awarded for disturbance under s 55(d) of the Just Terms Act.
The primary judge found, relevantly, that the respondent was entitled to compensation for two categories of costs incurred in relation to relocation within the meaning of s 59(1)(c) of the Just Terms Act:
1. $1,914,404 (GST exclusive) for costs of constructing new landlord’s fixtures at the replacement permanent lease site under s 59(1)(c); and
2. $88,173 (GST exclusive) for the difference in rent between the acquired property and the new site for the remainder of the term under the lease (i.e. four years).
The issues on appeal were:
(i) What was the correct construction of s 59(1)(c) of the Just Terms Act?
(ii) Was the respondent entitled to compensation under s 59(1)(c) of the Just Terms Act for the costs incurred in constructing new landlord’s fixtures at the replacement premises?
(iii) Was the respondent entitled to compensation for disturbance in constructing new landlord’s fixtures, given that the respondent had been compensated for the loss of the right to use the landlord’s fixtures as part of the market value of the acquired leasehold right?
(iv) Was the respondent entitled to compensation under s 59(1)(c) of the Just Terms Act for the increased rent at the replacement premises?
The Court (Payne JA, Meagher JA and Kirk JA agreeing at [1] and [154] respectively) held, allowing the appeal:
On issue (i)
(1) “Relocation” in s 59(1)(c) means the act of moving something or someone from one place to another: at [85]. Building new capital works does not involve the act of moving something or someone from one place to another: at [71]-[72]. The Just Terms Act is neutral about the quality of the replacement premises: at [73]-[75], [84], [115]. The Just Terms Act does not import the “value to the owner” principle: at [56]-[57], [88], [97], [113]. “Relocation”, “replacement”, “reinstatement” and “reestablishment” are different concepts and connote different things: at [54], [81], [96], [100].
Nelungaloo v Commonwealth (1947) 75 CLR 495; Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 353; El Boustani v The Minster administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33 applied.
Minister for Army v Parbury Henty & Co (1945) 70 CLR 459; Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215; Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 1 All ER 846 distinguished.
On issue (ii)
(2) The words “financial costs reasonably incurred in connection with the relocation” cannot be read as permitting compensation to construct landlord’s fixtures on the new landlord’s property: at [59]-[63], [70], [89]-[100], [107]-[110] [114]-[116]. The Just Terms Act does not permit compensation to be paid for financial costs of replacing the physical characteristics of the leasehold premises, belonging to the landlord, which were available for use as an incident of a lease of leased premises: at [72], [77]-[78], [85], [102]-[105], [111]-[112], [150].
TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576; [2010] HCA 49; National Australia Bank Ltd v Blacker (2000) 104 FCR 288; [2000] FCA 1458 applied.
George D Angus v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212; The Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82; Speter v Roads and Maritime Services [2016] NSWLEC 128; Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11; Konduru v Roads and Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36 considered.
McDonald v Roads & Traffic Authority of NSW [2009] NSWLEC 105; Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30; Home Care Services (NSW) v Albury City Council (2003) 136 LGERA 117; [2003] NSWLEC 433; Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115 not followed. Hua v Hurstville City Council [2010] NSWLEC 61 doubted.
On issue (iii)
(3) The tenant’s loss was of the right to use fixtures pursuant to, and for the term of, the lease. That loss was compensated as market value of the lease under s 55(a). Awarding compensation for relocation costs, including constructing equivalent buildings and hardstands at another site, effectively compensates for the loss of the same thing twice: at [124]-[140].
Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161; Roads & Traffic Authority (NSW) v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236; Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252; Olde English Tiles Australia Pty Ltd v Transport for New South Wales (2022) 108 NSWLR 503; [2022] NSWCA 108; Road and Maritime Services (NSW) v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41; Roads and Traffic Authority v Peak [2007] NSWCA 66; Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2015] NSWCA 167 applied.
On issue (iv)
(4) Where rent for a leasehold interest in a property is greater than the rent payable under the acquired leasehold interest, compensation for disturbance under s 55(d) of the Just Terms Act is not payable for the additional cost: at [147]-[152].
Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252; Road and Maritime Services (NSW) v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41 applied.
Judgment
1. MEAGHER JA: I have had the benefit of reading Payne JA’s judgment in draft and agree with his Honour’s reasons and proposed orders.
2. PAYNE JA: On 19 March 2021, the appellant, Sydney Metro, compulsorily acquired land in Clyde, New South Wales. The respondent, C&P Automotive Engineers Pty Ltd, had a lease over the acquired land for a term of five years from 1 April 2020, with an option to renew for five years. The respondent operated a hire, storage, sales and repair business from the site which included a large fleet of heavy machinery.
3. No appeal is brought against the award of $231,000 to the respondent for the market value of the leasehold interest. The appeal concerns the award of $2,187,759.99 for disturbance of the leasehold interest under s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 (“Just Terms Act”).
4. The freehold of the acquired land was owned by Ms Nohra and Ms Carpenter. Ms Nohra’s husband, Mr Nohra, was the director and general manager of the respondent. The primary judge awarded Ms Nohra and Ms Carpenter compensation of $6,974,472.98 (plus statutory interest and costs) pursuant to the Just Terms Act comprising:
1. $6,920,000 for market value under s 55(a); and
2. $54,472.98 for disturbance losses under s 55(d) comprising:
1. $35,222.98 (GST inclusive) for legal costs under s 59(1)(a); and
2. $19,250 (GST inclusive) for valuation fees under s 59(1)(b).
1. No appeal is brought against any aspect of the award of compensation in relation to the compulsory acquisition of the freehold interest in the land.
2. The primary judge awarded the respondent compensation in the amount of $2,418,759.99 (plus statutory interest and costs) pursuant to the Just Terms Act comprising:
1. $231,000 for market value under s 55(a);
2. $2,187,759.99 for disturbance losses under s 55(d) comprising:
1. $145,600 (GST exclusive) for relocation costs involving relocating to temporary sites under s 59(1)(c);
2. $1,914,404 (GST exclusive) for “relocation” costs involving construction of new landlord’s fixtures at a new permanent site under s 59(1)(c);
3. $88,173 (GST exclusive) for relocation costs involving the difference in rent between the acquired property and the new site for the remainder of the term under the lease (i.e. four years) under s 59(1)(c) of the Just Terms Act); and
4. $39,582.99 (GST exclusive) for legal costs under s 59(1)(a).
1. The appellant appeals from the part of the decision below in relation to part of the respondent’s entitlement to compensation for disturbance of its leasehold interest under s 55(d) of the Just Terms Act, being relocation costs identified at (b) and (c) above.
2. After initially moving its business to three separate premises (see the compensation paid described at [6](2)(a) above), the respondent entered into new leases of two adjoining blocks in Railway Parade, Granville. The owners of those premises are, in relation to the first block, Mr Nohra and, in relation to the second, Inta-Parts Pty Ltd, a company of which Mr Nohra is a director.
Primary judgment
1. There were two proceedings before the primary judge. The first related to claims by the owners of the freehold. As I have said, there is no appeal in relation to that part of the case.
2. The respondent, the lessee of the property, made a claim for compensation that comprised:
1. a sum for the market value of its lease under ss 55(a) and 56 of the Just Terms Act; and
2. a sum for disturbance under s 55(d) of the Just Terms Act, being:
1. an amount for legal costs under s 59(1)(a) (which was agreed);
2. an amount for the physical relocation of its assets from the acquired land to the new property under s 59(1)(c) (which was agreed);
3. an amount for proposed construction works at the new leased premises under s 59(1)(c) (which is the principal subject of this appeal); and
4. an amount representing the difference between the rent it was paying under the lease and the rent that it was to pay under the leases at the relocation premises under s 59(1)(c) (which is also the subject of this appeal).
1. The respondent claimed compensation under ss 55(d) and 59(1)(c) of the Just Terms Act for financial costs involving construction costs of what it called the proposed “fit out” at the relocation site. Despite obtaining compensation for the market value of its leasehold interest under ss 55(a) and 56 of the Just Terms Act, the respondent’s case was that significant construction was required to render the new premises fit for the respondent’s business, given that no suitable like-for-like replacement premises could be found.
2. The interest in land which had been acquired was, relevantly, the leasehold interest held by the respondent. The Lease was in evidence. The property leased by the respondent was defined in cl 3 to include the property leased as described on page 1 of the lease, which is just the real property Torrens title description “23/733500”. Clause 3.2 provides that “The lessor’s fixtures are included in the property leased”. The additional leased property was “none”.
3. All of the financial costs here sought by the respondent were for construction costs for replacement landlord’s fixtures. The landlord’s fixtures were not capable of being relocated as they were part of the landlord’s property.
4. Before the primary judge, the respondent’s claim for $1,914,404 (GST exclusive) comprised the following construction costs at the new site:
1. Office building - $138,564;
2. Awning replacement - $352,165;
3. New hardstand and miscellaneous works - $266,660;
4. New warehouse - $428,840;
5. Preliminaries/site management/labour - $201,659;
6. Design, professional fees and management - $166,546;
7. Authority or planning approval/council fees, permits and charges - $27,980;
8. Contingency (15%) - $237,362; and
9. Escalation allowance (5.2%) - $94,628.
1. The construction costs were all in respect of costs for new fixtures, replacing those which had been available on the acquired land. They were a main warehouse building (including a large gantry crane), a ground floor office and amenities building, a first floor office and amenities building, a rear warehouse, a large hardstand area, and a side awning area. The respondent’s Senior Counsel, Mr Lancaster SC, accepted that all of these improvements planned to be constructed on the new land would become the property of the owners of the new properties once built.
2. The fixtures which existed on the acquired property that the respondent sought to replicate were many years old and pre-dated the respondent’s occupation. All of the fixtures on the acquired land were owned by the holders of the freehold, Ms Nohra and Ms Carpenter. The owners of the freehold received compensation for the market value of the acquired land, including compensation for the ability of the land to generate income using those fixtures. The respondent’s lease, as I have said, included the right to exclusive possession and use of the whole of the acquired land by the respondent, including the fixtures, for the term of the lease.
3. The primary judge held that under s 59(1)(c) of the Just Terms Act the respondent was entitled to compensation for its financial costs, being construction costs, in connection with what her Honour described as “the business that needs to be replaced”. Her Honour concluded that these construction costs were reasonably incurred in relation to the relocation of the respondent’s business.
4. Her Honour cited the decision of Preston CJ of LEC in George D Angus v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212 as the principal authority for the conclusion she had reached:
[77] The category of costs that may reasonably be incurred in connection with relocation is wide, and includes expenses in removing furniture and goods from the old premises, moving to the new premises and setting up in the new premises, including fit out costs: see McDonald v Roads and Traffic Authority (NSW) at [107]-[109]. It can also include replacement of essential equipment not able to be relocated: Hua v Hurstville City Council [2010] NSWLEC 61 at [59].
1. Seemingly, by reference to this passage, the primary judge concluded that the construction costs claimed by the respondent were either “fit out costs” (George D Angus) or replacement costs for essential equipment not able to be relocated (Hua). If those costs met either description, the primary judge apparently concluded that they necessarily fell within s 59(1)(c) as being financial costs incurred in relation to relocation and the only question is whether they were reasonably incurred on behalf of “the business that needs to be replaced”.
2. Her Honour also relied on the decision of Moore J in Konduru v Roads and Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36 where it was held that compensation payable for “fit-out” included construction work to render the new property fit for purpose for the operation of the applicant’s medical practice.
3. The primary judge distinguished her Honour’s previous decision in The Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82 on the basis that the lease in that matter was terminable on two months’ notice whereas the respondent’s lease in this matter was for five years with an option to renew for five years. The primary judge stated that Whitcurt does not stand for the proposition that construction costs can never be compensated as costs in relation to relocation. Her Honour found that compensation was payable under s 59(1)(c) to a former lessee to construct fixtures on newly leased premises. This was because the primary judge accepted the respondent’s submission that that the only issue she needed to determine in relation to the “relocation” claim was whether the “fit out” costs sought were reasonable. Her Honour said:
[100] I consider that C&P’s claim for fit-out costs is reasonable given its interest in the land acquired by the Respondent and the nature of the business that needs to be replaced. (emphasis added)
1. Explicit in this conclusion is that s 59(1)(c) of the Just Terms Act permits the payment of compensation for the replacement of business premises of a lessee, subject only to the control that the expenditure incurred, or planned to be incurred, is “reasonable”; that is, that financial costs in connection with relocation of a lessee’s business include the costs of constructing replacement infrastructure, even if that infrastructure becomes a fixture owned by the landlord. Whether s 59(1)(c) should be so construed is the critical question of construction at the heart of this case.
2. A subsidiary issue before the primary judge concerned the respondent’s claim for the cost of increased rent arising from its relocation to temporary sites, reduced by the market value of the lease. The claimed rent differential between the acquired property and temporary locations was $88,173. The primary judge found that the appellant’s submission that compensation is only payable for a like-for-like rental, calculated by area of land, ignored the practical reality of finding alternative rental sites. The primary judge distinguished Road and Maritime Services (NSW) v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41, which her Honour found was directed to s 59(1)(f), not s 59(1)(c). The respondent’s claim for the rental differential of $88,173 (GST exclusive) was allowed.
Grounds of appeal
1. The appeal is brought pursuant to s 57 of the Land and Environment Court Act 1979 (“LEC Act”). Appeals are limited to questions of law: LEC Act s 57(1).
2. At the outset of the hearing leave was granted, by consent, to the appellant to rely upon the following grounds of appeal:
1 The court below erred on a question of law in finding that the respondent was entitled to compensation under s 59(1)(c) of the Just Terms Act for fit-out works at a new site.
2 The court below should have found there was no such entitlement in circumstances where the respondent did not own the relevant fixtures at the acquired premises, but merely had the right of use [of] them pursuant to its lease for the term thereof.
3 Further or in the alternative to 2. The court below should have found there was no such entitlement in circumstances where the respondent had already been compensated for its loss of right to use of the relevant fixtures (as part of its compensation for loss of the right of the use of the acquired premises), pursuant to its lease for the term thereof.
4 The Court below erred on a question of law by:
(a) granting the respondent’s claim for rent differential under s59(1)(c) of the Just Terms Act, when that provision does not encompass a claim of that nature, and
(b) If such a claim can be legally made under that provision, by failing to assess the respondent’s claim for rent differential under s 59(1)(c) of the Just Terms Act to take into account the additional per metre space leased by the respondent and, accordingly, making an adjustment, in the appellant’s favour, on account of such additional space.
1. The appellant sought the following orders:
1 Appeal allowed.
2 Order at [126] and [129(1)] of the Judgment of the court below be set aside.
3 In lieu of [126] the following:
C&P is awarded compensation in the amount of $416,182.99 (plus statutory interest and costs) pursuant to the Just Terms Act comprising:
(1) $231,000 for market value under s 55(a);
(2) $185,182.99 for disturbance losses under s 55(d) comprising:
(a) $145,600 (GST exclusive) for relocation costs involving relocating to temporary sites under s 59(1)(c);
(d) $39,582.99 (GST exclusive) for legal costs under s 59(1)(a).
4 In lieu of [129(1)] of the Judgment in the Court below, the following:
Compensation pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of the Applicant’s leasehold interest in Lot 23 in DP 733500, known as ….Street, Clyde and disturbance losses is determined in the sum of $416,182.99 (plus statutory interest)
5 The respondent pay the appellant’s costs of the appeal.
1. Both parties in their submissions addressed grounds 1-2 together and grounds 3 and 4 separately.
Grounds 1-2
Whether construction costs claimed by the respondent were incurred in connection with relocation within the meaning of s 59(1)(c) of the Just Terms Act
Submissions
1. The appellant submitted that the respondent was not entitled to an award of compensation under s 59(1)(c) of the Just Terms Act for amounts incurred in respect of “relocation” because the respondent was not relocating any of its property but was seeking compensation for constructing new fixtures, belonging to the landlord of the new premises. Compensation for relocation under s 59(1)(c) does not involve a guarantee of equivalent accommodation or reinstatement of business premises. As Mr Sirtes SC submitted:
We say that this notion of equivalence of reinstatement, when it comes to disturbance costs, does not apply and that providing compensation for the cost of construction or purchasing the amenities leased at the acquired premises does not fall or fit within the notion of relocation.
1. The appellant submitted that s 59(1)(c) of the Just Terms Act does not contemplate the construction of replacement landlord’s fixtures at new premises to replicate those which had been used at the acquired premises. The claimed compensation for construction costs at the new premises could not constitute a claim for “relocation” of the business from the acquired premises, because the respondent had no right to remove or relocate the fixtures it was intending to construct at the new premises.
2. Although ground 2 was put in terms of compensation only being payable for relocation of chattels and fixtures “owned” by the dispossessed lessee, the appellant clarified in oral submissions that the only point necessary to be decided was whether as a matter of construction of s 59(1)(c) of the Just Terms Act, compensation was payable for the construction by a lessee of landlord’s fixtures at new leased premises. Thus, to take an example, no issue is raised in this case about whether compensation would be payable under s 59(1)(c) for the financial costs incurred in relocating a tenant’s fixture from the acquired premises to the new premises, even if the lessee did not own the tenant’s fixture but rather used it as part of its business under a hire-purchase agreement. Conversely, the appellant submitted, if the fixture in question was a landlord’s fixture at the acquired premises, and thus owned by the landlord, the lessee could not receive compensation under s 59(1)(c) for financial costs incurred in constructing replica landlord’s fixtures at the new premises.
3. The respondent submitted that in order to make the new permanent site fit to conduct the respondent’s business, construction works, which it described as “fit out” works, estimated to cost almost $2 million were required. The respondent contended that Mr and Ms Nohra gave uncontested evidence that extensive searches for suitable alternative sites were unsuccessful. The respondent eventually made a decision to move to a permanent site that was deficient compared to the acquired site and proposed to undertake “fit out” works to replace the essential features of the acquired land in the new location. The respondent submitted that without the “fit out” works, the new site would be unsuitable for the respondent’s business. The respondent submitted that the question of equivalence of the new site to that which had been acquired fell within the statutory notion of expenditure reasonably incurred in connection with the relocation.
4. The appellant submitted that given the ownership and control of the new premises by Mr Nohra and a company of which he was a director, Mr and Mrs Nohra’s evidence that no suitable alternative sites for lease could be located was of limited weight:
“[T]here was nothing really said that would justify Sydney Metro weighing in and asking him if he’d had any negotiations with himself as to whether or not he’d give himself a different rent based upon constructing buildings that ultimately he would take the benefit of.”
1. The respondent submitted that s 59(1)(c) of the Just Terms Act does not specify that it must own essential equipment or infrastructure on the acquired land in order for construction costs to replicate those fixtures to be compensable under s 59(1)(c). It was submitted that there was nothing in the terms of s 54 of the Just Terms Act that confined the scope of s 59(1)(c) to the respondent’s loss as a result of the compulsory acquisition.
2. The respondent disputed the proposition that relocation involves moving things from one location to a different location, such that the construction costs were not recoverable as compensation in connection with relocation because there was no transportation or movement involved. The respondent’s submission was that the category of costs that may reasonably be incurred in connection with the “relocation” is wide and includes expenses for setting up the new premises, including fit out costs and the replacement of essential equipment not able to be relocated. It was not relevant, the respondent submitted, that the “essential equipment” comprised landlord’s fixtures which the tenant had no right to remove and relocate. The respondent emphasised that s 59(1) of the Just Terms Act refers to the relocation “of those persons” and does not refer to the relocation of “things”.
3. The respondent submitted that s 59(1)(c) should be construed as providing a right to compensation for financial costs incurred in relocating “business operations” of a lessee including constructing landlord’s fixtures which replicate or reinstate the business premises which were acquired, subject only to a limitation that those financial costs be reasonably incurred.
Consideration of grounds 1 and 2
1. Part 1 of the Just Terms Act relevantly contains the objects of the Act and critical definitions. It is convenient to delay reference to the definitions until the operative provisions have been set out. The primary objects may be identified here:
3 Objects of Act
(1) The objects of this Act are—
(a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and
(b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and
(c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and
(d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and
(e) to encourage the acquisition of land by agreement instead of compulsory process.
(2) Nothing in this section gives rise to, or can be taken into account in, any civil cause of action.
1. Part 2 deals with acquisition of land by compulsory process. It provides that an authority may not acquire land unless it has given the owners of the land written notice of its intention to do so: s 11(1). Those to whom notice must be given are identified in s 12(1):
12 Owners to be given notice
(1) A proposed acquisition notice need only be given to all the owners of the land who –
(a) have a registered interest in the land, or
(b) are in lawful occupation of the land, or
(c) have, to the actual knowledge of the authority of the State, an interest in the land.
…
1. Acquisition is provided for in Part 2, Div 2 and is effected by publication of a notice in the Government Gazette describing the land being acquired: s 19. The effect of such a notice is set out in s 20:
20 Effect of acquisition notice
(1) On the date of publication in the Gazette of an acquisition notice, the land described in the notice is, by force of this Act –
(a) vested in the authority of the State acquiring the land, and
(b) freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land.
(1A) Subsection (1) is subject to any express provision of an Act that authorises the acquisition of land by compulsory process but preserves the operation of any trusts, restrictions, dedications, reservations, declarations, setting apart of or other matters relating to the land concerned.
(2) If –
(a) the acquisition notice excepted an easement from acquisition, and
(b) immediately before the vesting, the benefit of a restriction as to user was annexed to the easement,
then (unless otherwise specified in the acquisition notice) the restriction continues to have effect as if the acquisition had not taken place.
Note. Examples of express provisions of Acts to which section 20(1A) refers are section 17AB(4)(b) of the Fisheries and Oyster Farms Act 1935, section 15(4C)(b) of the Forestry Act 1916, section 186(3) of the Local Government Act 1993 and section 146(2C)(b) of the National Parks and Wildlife Act 1974.
1. In certain circumstances, an owner may initiate acquisition of land but, pursuant to s 22, the process is only available to a person who has a fee simple estate in the land or “a person who has become entitled to exercise a power of sale of the land”. A person entitled to exercise a power of sale is a person having an interest in the land.
2. There is provision in s 34(1) for a former owner to occupy land until compensation is paid:
34 Former owner’s right to occupy land until compensation paid etc
(1) A person who was in lawful occupation of land immediately before it was compulsorily acquired under this Act and to whom compensation is payable under this Act is entitled to remain in occupation until—
(a) the compensation is duly paid to the person, or
(b) the authority of the State makes (in accordance with any other provision of this Act) an advance payment of not less than 90 per cent of the amount of compensation offered by the authority, or
…
whichever first occurs.
…
1. Compensation is provided for in Part 3, which sets out the entitlement to compensation, relevantly in s 37:
37 Right to compensation if land compulsorily acquired
An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.
1. The entitlement, it may be noted, is vested in an “owner of an interest in land”. The meaning of this phrase is found in the relevant definitions in s 4:
4 Definitions
(1) In this Act –
acquisition of land means an acquisition of land or of any interest in land.
…
interest in land means—
(a) a legal or equitable estate or interest in the land, or
(b) an easement, right, charge, power or privilege over, or in connection with, the land.
Land includes any interest in land.
…
owner of land means any person who has an interest in the land.
…
1. The respondent was the owner of an interest in land, as defined, being a leasehold interest in the acquired land.
2. The entitlement to just compensation is provided by s 54(1):
54 Entitlement to just compensation
(1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.
…
1. The amount of compensation is to be determined “having regard to all relevant matters under this Part”. The matters under Part 3 which may be relevant are the matters listed in s 55 (as assessed in accordance with Div 4 of Part 3). The matters identified in s 55 constitute “an exhaustive list to which regard must be had when determining the amount of compensation under s 54”: Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 353 at [37]; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [13]. The relevant matters from this exhaustive list are those which are relevant to the interest in the land acquired and the owner of that interest.
2. Section 55 requires that the assessment is to be undertaken having regard “only” to the matters listed:
55 Relevant matters to be considered in determining amount of compensation
In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) –
(a) the market value of the land on the date of its acquisition,
(b) any special value of the land to the person on the date of its acquisition,
(c) any loss attributable to severance,
(d) any loss attributable to disturbance,
(e) the disadvantage resulting from relocation,
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
1. The Land Acquisition (Just Terms Compensation) Amendment Act 2016 (Amendment Act), made one change to s 55, deleting (e) (solatium) and replacing it with “the disadvantage resulting from relocation”: sch 1 [14]. The Amendment Act inserted a definition of “disadvantage resulting from relocation” in s 60(1) of the Just Terms Act being “non-financial disadvantage resulting from the necessity of the person entitled to compensation to relocate the person’s principal place of residence as a result of the acquisition”, and limited the maximum compensation to $75,000. Section 55(e) was also amended to refer to the disadvantage resulting from relocation, and did not address business loss. The change simply replaced an obsolete term.
2. The Explanatory Note which accompanied the change said:
Schedule 1 [16] adopts, as the definition of disadvantage resulting from relocation, the existing definition of solatium and entrenches the increase by Ministerial order of the maximum amount of compensation for the disadvantage resulting from relocation to $75,000. Schedule 1 [20] provides that the maximum amount may be increased by regulation and is to be increased annually in line with inflation.
1. Section 56(3) is an important provision, added in 2016 by the Amendment Act sch 1 [15]. The sub-section relates to reinstatement, which did not form part of the Just Terms Act when enacted:
56 Market value
(1) In this Act—
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)—
(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
(b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and
(c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.
(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.
(3) If—
(a) the land is used for a particular purpose and there is no general market for land used for that purpose, and
(b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose,
the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner’s financial position because of the relocation. (emphasis added)
1. Thus, the reinstatement provision found in s 56(3) is subject to two important limitations:
1. the land is used for a particular purpose and there is no general market for land used for that purpose; and
2. the owner genuinely proposes to continue after the acquisition to use other land for that purpose.
1. The Explanatory Note said of s 56(3):
Compensation payable on reinstatement basis in certain cases
Schedule 1 [15] provides that, in determining the compensation payable for compulsory acquisition, the market value of land used for a particular purpose for which there is no general market is taken to be the reasonable cost to the owner of equivalent reinstatement in some other area.
1. Although the Amendment Act made numerous changes to the Just Terms Act, there were no others with respect to Part 3, Div 4.
2. As I have earlier noted, the respondent in the present case sought and obtained compensation for the market value of its leasehold interest. The respondent obtained compensation from the primary judge on the basis that financial costs incurred in connection with “relocation” encompassed replacing elements of the respondent’s business at a new location by building new fixtures. The respondent’s decision not to seek reinstatement under s 56(3) is no doubt because it was able to prove that compensation for the market value of its leasehold interest could be calculated. In the present case the respondent could thus not have shown that the acquired land was used for a particular purpose and that there is no general market for land used for that purpose.
3. It is clear that compensation for “reinstatement” and compensation for loss attributable to disturbance under s 55(b) cannot overlap. That is underlined by the terms of s 56(3) which requires any compensation payable for loss attributable to disturbance to be subtracted from an amount payable under s 56(3).
4. It is in this context that the terms of s 59 define, exclusively, loss attributable to disturbance in a series of closely identified and confined sub-paragraphs:
59 Loss attributable to disturbance
(1) In this Act –
loss attributable to disturbance of land means any of the following –
(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,
(b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),
(c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),
(d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired),
(e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage),
(f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
…
1. In determining the present matter, the precise terms of the Just Terms Act, and in particular ss 54, 55, 56 and 59 are determinative. The High Court has cautioned that it should not be assumed that the Just Terms Act reproduces or attempts to reproduce an understanding of “principles” derived by way of judicial gloss upon the terms used by similar provisions of earlier legislation: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority at [47]. As I will explain, where cases in the Land and Environment Court have addressed the construction of s 59(1)(c), many, including the critical decisions relied upon by the primary judge in the present case, have imported an impermissible judicial gloss derived from the “value to the owner” principle which was used in construing earlier legislation.
2. The Just Terms Act was a deliberate break with former compensation schemes which applied the “value to the owner” principle which was used in construing earlier legislation. As Spigelman CJ explained in Leichhardt:
[28] The [Just Terms Act] was clearly influenced by the Lands Acquisition Act 1989 (Cth), which was based on the Report of the Australian Law Reform Commission. That Report recommended the replacement of the “value to the owner” approach by a statutory list, subject to a “just compensation override”. (See ALRC Report No 14 Lands Acquisition and Compensation (Canberra, 1984) at [231]-[237].) This recommendation is clearly reflected in s 54 and s 55. Indeed, the New South Wales Parliament, unconstrained by a Constitutional requirement of just terms, could and did go further by making the list an exhaustive one.
1. The question squarely to be confronted in this appeal is whether compensation is payable under s 59(1)(c) for financial costs incurred in connection with the relocation of a lessee, where those financial costs are incurred in the construction of new landlord’s fixtures on the new property, replicating landlord’s fixtures which existed at the acquired property.
2. Somewhat remarkably, given the subject matter, scope and purpose of the Just Terms Act, and the context of compensation properly payable for the acquisition of a leasehold interest in land, little attention has been paid in the Just Terms Act authorities to the doctrine of fixtures. As I have said, in the Just Terms Act, interest in land means, relevantly, a legal or equitable estate or interest in the land. The leasehold interest here engaged gave the respondent, relevantly, a right to exclusive possession of the acquired land and the right to use the land, including the landlord’s fixtures on the land.
3. In TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) (2010) 241 CLR 576; [2010] HCA 49, a unanimous High Court explained the application of fundamental principles about the character of chattels affixed to land, particularly by tenants. The Court said:
[23] Accordingly, some statement of basic principle is appropriate. In the seventh edition of Megarry and Wade’s The Law of Real Property, the following appears:
The meaning of “real property” in law extends to a great deal more than “land” in everyday speech. It comprises, for instance, incorporeal hereditaments; and it includes certain physical objects which are treated as part of the land itself. The general rule is “quicquid plantatur solo, solo cedit” (“whatever is attached to the soil becomes part of it”). Thus if a building is erected on land and objects are permanently attached to the building, then the soil, the building and the objects affixed to it are all in law “land”, ie they are real property, not chattels. They will become the property of the owner of the land, unless otherwise granted or conveyed. (Footnote omitted.)
1. The Court quoted with approval (at [24]) the statement by Conti J in National Australia Bank Ltd v Blacker (2000) 104 FCR 288; [2000] FCA 1458 at [10]:
[10] There is a variety of general principles which should be considered in assessing whether an item of personal property has become attached to land in a manner designed to achieve a specific objective or a variety of objectives, such as to become a part of the realty and therefore, a fixture. Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation.
1. The High Court in TEC Desert explained at [25] that the law respecting “tenant’s fixtures” concerns the rights of persons who have limited interests (such as leases for a term) to sever and remove from the land what admittedly are fixtures. Unless and until that right of severance and removal is exercised, the fixtures form part of the realty. The Court in TEC Desert quoted C Harpum, S Bridge and M Dixon, Megarry & Wade, The Law of Real Property (7th ed, 2008, Sweet & Maxwell) at p 1072 [23-010] with apparent approval to this effect:
“Prima facie, all fixtures attached by the tenant are ‘landlord’s fixtures’, i.e. must be left for the landlord at the end of the lease. But important exceptions to this rule have arisen, and fixtures which can be removed under these exceptions are known as ‘tenant’s fixtures’. This expression must not be allowed to obscure the fact that the legal title to the fixture is in the landlord until the tenant chooses to exercise his power and sever it. The tenant may do so only during the tenancy or (except in cases of forfeiture or surrender) within such reasonable time thereafter as may properly be attributed to his lawful possession qua tenant.” (Footnotes omitted.)
1. Although no attention was paid in the case below to this question, it appears clear that the fixtures used by the respondent the subject of this appeal were landlord’s fixtures. All were affixed to the land before the lease was entered. No right to sever the fixtures was granted by the lease. If it were necessary to determine, on the correct construction of s 59(1)(c), proof of this issue was on the respondent and it failed to prove that it was entitled to relocate those fixtures. Both parties approached this case on the assumption that all of the improvements planned to be constructed on the new land by the respondent the subject of grounds 1-3 of the appeal would become landlord’s fixtures and become the property of Mr Nohra and Inta-Parts Pty Ltd, the landlords of the new properties. As I will explain, on the correct construction of s 59(1)(c), proof of this issue was also on the respondent.
Construction of s 59(1)(c) of the Just Terms Act
1. I turn now to the correct construction of s 59(1)(c) of the Just Terms Act and, in particular, whether compensation is payable to a dispossessed lessee to replace landlord’s fixtures found at the acquired premises by constructing new landlord’s fixtures at the new premises. In Commissioner of State Revenue v Placer Dome Inc (2018) 265 CLR 585; [2018] HCA 59 Kiefel CJ, Bell, Nettle and Gordon JJ said:
[13] In assessing value, the starting point is the particular statutory scheme. That scheme provides the legal context in which the valuation exercise is to be undertaken and that context determines the relevant principles of valuation to be applied.
1. The Court cited in support of this proposition Federal Commissioner of Taxation v Resource Capital Fund III LP (2014) 225 FCR 290; [2014] FCAFC 37 at [47]; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority and Leichhardt at [35]‑[36].
2. The Just Terms Act must be read as a whole and having regard to the relevant text, its statutory context and its apparent purpose.
Text of s 59
1. The text of s 59(1)(c) requires examination of financial costs reasonably incurred “in connection with” the relocation of those persons (including legal costs but not including stamp duty or mortgage costs).
2. As to the use of the phrase “in connection with”, in R v Khazaal (2012) 246 CLR 601; [2012] HCA 26, French CJ described “in respect of” and other “relational terms” such as “connected with”, “in relation to” and “in connection with” as follows:
[31] They may refer to a relationship between two subjects which may be the same or different and may encompass activities, events, persons or things. They may denote relationships which are causal or temporal or relationships of similarity or difference. The task of construing such terms does not involve the resolution of ambiguity. They are ambulatory words and may be designed to cover a variety of subjects and a variety of relationships between those subjects. The nature and breadth of the relationships they cover will depend upon their statutory context and purpose.
1. The relationship described in s 59(1)(c) is between financial costs reasonably incurred and the relocation of “those persons”, being the persons referred to in s 59(1)(a) as entitled to compensation in connection with the compulsory acquisition of the land. The person here entitled to compensation is an artificial person, the respondent.
2. The text of s 59(1)(c) refers to reasonably incurred financial costs of the relocation of the respondent. There is no textual indication in the words of the section that financial costs reasonably incurred in connection with a natural person are to be understood as broader or narrower than financial costs reasonably incurred in connection with an artificial person. In particular, there is no textual support for reading “those persons” as including assets available to be used in the business, whether or not the business has any legal or equitable right to move those assets. Much less is there any textual support for the respondent’s claim that a right to relocate “business operations” includes a right to replicate or reinstate business premises, subject only to a limitation that those financial costs be reasonably incurred.
3. The respondent’s submission that the extent of compensation is regulated, if at all, by the phrase “reasonably incurred” does not reflect the text of s 59(1)(c). The respondent’s construction does not adequately address the concept of “relocation”. Unless the meaning of relocation is determined, the consideration of what is “reasonably incurred” in connection with relocation is a difficult, if not impossible exercise. The respondent’s interpretation would promote an unpredictable outcome. It is not to read words of limitation into the statutory provision to give meaning to the term used in s 59(1)(c), “relocation”.
4. “Relocation” as a matter of ordinary usage means the act of moving something or someone from one place to another. Building new capital works, which then accrue to the value of the owner at the new premises, on its face does not involve the act of moving something or someone from once place to another. There is nothing in the text of s 59(1)(c) that permits compensation to be paid for financial costs of replacing assets available for use as an incident of a lease of leased premises if those assets are not available to be moved by the lessee, as is the case in relation to landlord’s fixtures which form part of the leased premises.
5. The respondent’s position is that “relocation” means relocation to suitable premises or premises having particular characteristics. As Mr Lancaster SC submitted, “the premises have to be appropriate for the conduct of the enterprise that is moved.” This construction was accepted by the primary judge in finding that the respondent was entitled to compensation for expenditure given the “nature of the business that needs to be replaced”.
6. I see no support in the text of s 59(1)(c) for the proposition that “relocation” means relocation to suitable premises or premises having particular characteristics. The concluding words “including legal costs but not including stamp duty or mortgage costs” are words of limitation, as stamp duty and mortgage costs are recoverable, but subject to strict limits, in s 59(1)(d) and 59(1)(e).
7. The text of s 59(1)(c) provides no support for the respondent’s basal proposition that “relocation” necessarily imports a requirement that the premises to which relocation occurs has to be appropriate for the conduct of the enterprise that is moved and that compensation is payable to construct new landlord’s fixtures to give effect to that requirement.
Context
1. Context is critical in determining the meaning of “relocation” and the connection to which s 59(1)(c) is referring.
2. The relevant provisions are contained within Part 3, Div 4 of the Just Terms Act. Two sections are of primary importance. Section 54 creates an entitlement to just compensation and provides that the amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. The starting point is and remains that what is payable is just compensation for the acquisition of the interest in land which is acquired. That legislative touchstone tends against a conclusion that compensation is payable for a lessee’s financial costs in reestablishing or reinstating its business operations by constructing landlord’s fixtures on new land. Those landlord’s fixtures were not part of the interest in land acquired from the lessee by the acquiring authority.
3. Section 55 identifies six matters to which regard must be had in determining the amount of compensation to which a person is entitled with respect to an acquisition of land, those being the exclusive matters to which regard may be had. The scheme of s 55 provides, in context, that the value of a lessee’s right to use landlord’s fixtures in the acquired property is compensated, if at all, in an award of market value (s 55(a)) or special value (s 55(b)).
4. The claims by the respondent the subject of the present appeal are based solely on s 55(d). Section 55(d), relevantly, is concerned with loss attributable to disturbance. That is, loss attributable to use and occupation arising from the acquisition of the property.
5. The meaning of disturbance in the Just Terms Act is explicitly and comprehensively identified in s 59: “loss attributable to disturbance of land means any of the following…[six paragraphs].” The drafting of s 59 is economical, without the use of internal defined terms. Thus, paragraph (a) speaks of legal costs incurred by “the persons entitled to compensation in connection with the compulsory acquisition of the land”. Paragraphs (b)–(e) simply refer to “those persons”, but the reference is to those persons more fully described in paragraph (a). Each paragraph speaks of costs or fees “reasonably incurred” and, except paragraph (f), the party incurring the costs or fees is identified by reference to “those persons” as described in paragraph (a). The term “interest” in land extends to any legal or equitable estate or interest in the land or any easement, right, charge, power or privilege over, or in connection with, the land. Each of paragraphs (a)-(e) refers to specifically identified costs or fees.
6. As was observed in Leichardt, to which I have earlier referred, the context in which ss 55 and 59 appear tends strongly against importing judicial glosses from the “value to the owner cases” to the construction of the Just Terms Act in general and s 59(1)(c) in particular. Those glosses, reinstatement and replacement, as purported synonyms for the statutory term, relocation, import notions which are not relevant to the determination of whether compensation may be claimed.
7. As Basten JA said in United Petroleum:
[14] The costs of relocating persons may, for example, in the case of residential premises, include the costs of furniture removal and storage whilst alternative premises are acquired, and other incidental costs of relocation. There is no apparent reason for limiting “the relocation of those persons” to the relocation of the individuals concerned, or their immediate belongings; the phrase is apt to include the relocation of business operations conducted on the acquired land. (emphasis added)
1. Mr Lancaster SC accepted that s 59(1)(c) could not, in most cases, support a trial judge saying that financial costs were reasonably incurred by a lessee claiming costs of buying an entirely new site for the installation of a warehouse. He accepted that a warehouse with a gantry crane and hardstand are commonplace in industrially zoned areas. Nevertheless, the respondent proposed a construction of s 59(1)(c) as available in the present case:
When there is just no market, there is nothing on the market available to find appropriate for that use, then there may be circumstances where, as a matter of fact, the statutory expression can be applied.
1. I do not accept this submission. The statutory meaning of relocation cannot change depending on whether or not, as a matter of fact, a claimant seeks payment in circumstances where there is nothing on the market for that use. Section 59(1)(c) exists in a legislative structure which provides for a case where there is no market. Section 56(3), subject to the limits in that section, provides for expenditure incurred for reinstatement where “the land is used for a particular purpose and there is no general market for land used for that purpose.”
2. In context, “relocation” of business operations refers to movement of the relocated business. The physical characteristics of the leasehold premises, belonging to the landlord, are not aspects of the tenant’s business which are capable of movement by the tenant. The context tends strongly against the respondent’s submission that s 59(1)(c) permits compensation for financial costs incurred in building new landlord’s fixtures at new rental premises.
Purposive considerations
1. Section 3(1) sets out the objects of the Just Terms Act and is set out at [36] above. Those objects are consistent with the plain intent of the Just Terms Act, articulated most clearly in s 54, that the Act is directed to awarding just compensation. Compensation is a well understood expression, the purpose of which is to place in the hands of the claimant the monetary equivalent of that which they have been deprived, being the property taken from them. Dixon J in Nelungaloo v Commonwealth (1947) 75 CLR 495 at 571-572 stated:
Now “compensation” is a very well understood expression. It is true that its meaning has been developed in relation to the compulsory acquisition of land. But the purpose of compensation is the same, whether the property taken is real or personal. It is to place in the hands of the owner expropriated the full money equivalent of the thing of which he has been deprived.
Compensation prima facie means recompense for loss, and when an owner is to receive compensation for being deprived of real or personal property his pecuniary loss must be ascertained by determining the value to him of the property taken from him. As the object is to find the money equivalent for the loss or, in other words, the pecuniary value to the owner contained in the asset, it cannot be less than the money value into which he might have converted his property had the law not deprived him of it. You do not give him any enhanced value that may attach to his property because it has been compulsorily acquired by the governmental authority for its purposes (Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 318). Equally you exclude any diminution of value arising from the same cause.
1. Dixon J was here describing a notion well understood to the law, which notion is employed in the Just Terms Act. Compensation in the Just Terms Act is intended to provide “compensation ... for loss”. In Leichhardt Spigelman CJ at [37] indicated that s 54(1) is “the dominant test”. That conclusion is a strong purposive driver for how to construe what follows.
2. As I have earlier explained, the Just Terms Act was a deliberate break with former compensation schemes which applied the “value to the owner” principle which was used in construing earlier legislation. The passage in Leichhardt I have earlier cited contains an important statement about statutory purpose:
[28] The [Just Terms Act] was clearly influenced by the Lands Acquisition Act 1989 (Cth), which was based on the Report of the Australian Law Reform Commission. That Report recommended the replacement of the “value to the owner” approach by a statutory list, subject to a “just compensation override”. (See ALRC Report No 14 Lands Acquisition and Compensation (Canberra, 1984) at [231]-[237].) This recommendation is clearly reflected in s 54 and s 55. Indeed, the New South Wales Parliament, unconstrained by a Constitutional requirement of just terms, could and did go further by making the list an exhaustive one. (emphasis added)
1. Section 55(d) and the exhaustive list provided by s 59 (including s 59(1)(c)) are strong purposive indications that the entitlement to compensation is limited to compensation for what is acquired by the acquiring authority and does not extend to compensation for improving new premises for the benefit of the new landlord. Purposive considerations tend against the conclusion that s 59(1)(c) permits compensation for financial costs incurred in building new landlord’s fixtures at new rental premises.
Relevant case law
1. It is also necessary to address the authorities relied upon by the primary judge to conclude that s 59(1)(c) of the Just Terms Act permits the payment of compensation for financial costs in connection with relocation of a lessee’s business for the replacement of business premises of a lessee, subject only to the control that the expenditure incurred, or planned to be incurred, is “reasonable”; that is, that financial costs in connection with relocation of a lessee’s business include the costs of constructing replacement infrastructure, even if that infrastructure was a landlord’s fixture in the acquired premises and becomes a fixture owned by the landlord in the new premises.
2. None of the cases decided to date have held that financial costs in connection with relocation of a lessee’s business include the costs of constructing replacement fixtures owned by the landlord at the new premises. Some cases have suggested that such costs fall outside s 59(1)(c).
3. The primary judge cited as authority for the conclusion that compensation in connection with relocation of a lessee is payable in respect of “the business that needs to be replaced” the decision of Preston CJ of LEC in George D Angus, which I have set out at [18]. Upon analysis, George D Angus and the cases referred in that case do not support the primary judge’s conclusion that s 59(1)(c) permits compensation to be paid to a dispossessed lessee for financial costs incurred in constructing replacement landlord’s fixtures.
4. In George D Angus itself, it may immediately be acknowledged that it was held that s 59(1)(c) extends to compensation for financial costs reasonably incurred in removing a lessee’s furniture and lessee’s goods, including tenant’s fixtures, from the old premises and moving and installing those things into new premises. I am prepared to assume, without deciding, that compensation is also payable under s 59(1)(c) for financial costs reasonably incurred in setting up the new premises, including reasonably incurred “fit out” costs, as those costs would be incurred in connection with relocation of the business operations. There has been no real examination in the cases of the breadth of the concept of “fit out” costs, beyond Preston CJ of LEC’s description of those costs as costs of setting up in the new premises. Typically, it has been assumed that ancillary costs of relocation including carpeting, painting, and office partitioning fall within the concept of compensable “fit out” costs incurred in connection with relocation of those persons. It may also be that costs will be incurred in installing tenants’ fixtures relocated from the acquired premises in the new premises. Such costs, if reasonably incurred, are also likely meet the description of financial costs in connection with relocation.
5. I am unable to accept that, however broad a concept of “fit out” costs falling within financial costs in connection with relocation is adopted, compensation payable under s 59(1)(c) extends to financial costs of reinstating or replacing landlord’s fixtures which formed part of the old premises in the new premises. Certainly, Preston CJ of LEC in George D Angus did not suggest that a lessee could receive compensation under s 59(1)(c) for construction costs of recreating or replacing landlord’s fixtures. All that was in issue in that case was whether George D Angus was entitled to $16,129.22 in financial costs reasonably incurred in connection with relocation from the acquired property to another property (which was allowed) and $19,721 in costs of relocating a second time (which was rejected).
6. The reference in George D Angus to “McDonald” was a reference to McDonald v Roads & Traffic Authority of NSW [2009] NSWLEC 105 where Biscoe J held that:
[107] The word “relocation” in s 59(c) has a wide meaning. This is indicated by Minister for Army v Parbury Henty & Co (1945) 70 CLR 459 at 507 (notwithstanding that the case was decided under different resumption legislation) per Dixon J who held that disturbance costs include costs that a claimant:
“reasonably incurs in removing his furniture and goods including tenants’ fixtures and the expenses in setting up in new premises for the purposes of carrying on his business. Nor is it denied that the expenses may include the net cost of installing fixtures, both those removed and, where reasonably necessary, newly acquired fittings. The residual value which would remain to him must of course be taken into account”.
Williams J said (at 514) that the claimants were entitled to compensation:
“not only for the value of the proprietary interests so acquired, but also for what can be compendiously called expenses of removal into premises at least as commodious and congenial taking a broad view of the matter, as those of which they were dispossessed”.
[108] The width of the meaning of “relocation” in s 59(c) is also indicated by the decision in Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30. Bignold J allowed as s 59(c) relocation costs, the costs of a dispossessed tenant in relocating and re-establishing a business on another site. They included the cost of obtaining development consent, the cost of site preparation including drainage, kerb and guttering, and removal of pergolas; the cost of additional advertising to promote the new location; the cost of reprinting business stationery; the cost of management time involved with re-establishing contacts; and the cost of electricity connection.
[109] Similarly, in Home Care Services (NSW) v Albury City Council [2003] NSWLEC [433], 136 LGERA 117 at [18] Bignold J held that “the amount of compensation recoverable pursuant to s 59(c) in the present case includes all of the relocation costs incurred by the Claimant in re-establishing its business premises in the Swift Street premises”. The relocation costs that his Honour allowed included fit-out costs.
1. “Relocation” and “replacement”, “reinstatement” or “reestablishment” are each quite different concepts and connote different things. The reference by Biscoe J to Minister for Army v Parbury Henty & Co (1945) 70 CLR 459 is not authority about the correct construction of s 59(1)(c). That case was a “value to the owner case”. Under this principle, compensation was payable, as Williams J explained in Parbury Henty & Co, for “removal into premises at least as commodious and congenial taking a broad view of the matter”.
2. The concept of “value to the owner” was a unifying concept which encompassed market value, special value, disturbance and severance. “Value to the owner” has no operative function under the Just Terms Act: Leichhardt at [24]-[27]; El Boustani v The Minster administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33 at [76]. It was an error for Biscoe J to import judicial glosses, even eminent judicial glosses, from cases involving another statute as determining the construction of the Just Terms Act, including ss 55(d) and 59(1)(c). In any event, Biscoe J in McDonald did not suggest that a lessee could receive compensation under s 59(1)(c) for construction costs of recreating or constructing landlord’s fixtures.
3. As to the remaining cases referred to by Biscoe J in McDonald:
1. In Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30, the construction of s 59(c) was based on imported judicial glosses and the “value to the owner” concept (at 38) and, at least in part, the “reinstatement” principle (at 65). Bignold J in Peter Croke Holdings allowed $73,255 in costs for “site preparation” for replacement premises being drainage, kerb and guttering and pergola removal. Bignold J refused to follow Talbot J in Richardson v Roads and Traffic Authority of New South Wales (1996) 90 LGERA 294 at 303 who had correctly rejected a claim for disturbance in respect of the cost of installing irrigation and water supply, earth works, wind shelters, electricity connections and soil tests on the basis that these were not costs in connection with relocation at all. Bignold J rejected Talbot J’s decision on the basis (which basis was repeated by the respondent in the present case) that “the only relevant limitation is that imposed by s 59(c) of the Just Terms Act, namely that the financial costs must be reasonably incurred”. This finding, like the respondent’s submission here, begs the question of whether the costs involved were incurred in connection with relocation at all. Having posed the wrong question, Bignold J then determined that meaning of “relocation” by reference to the value to the owner principle in Minister for Army v Parbury Henty & Co. Peter Croke Holdings was, to that extent, wrongly decided and should not be followed.
2. In Home Care Services (NSW) v Albury City Council (2003) 136 LGERA 117; [2003] NSWLEC 433, Bignold J relied in terms on what his Honour called “the common law basis for recovery of disturbance claims”, citing authorities which relied upon the “value to the owner” principle which, as I have said, does not apply to the construction of the Just Terms Act. Home Care Services was wrongly decided and should not be followed.
1. Hua v Hurstville City Council [2010] NSWLEC 61, referred to in George D Angus and discussed above, is another decision of the primary judge which perhaps comes a little way towards supporting the respondent’s construction of s 59(1)(c). The evidence was that a shop fit-out conducted by the lessee cost the appellant company in excess of $300,000 and took around 10 weeks to build. Although no express finding was made, it is clear that all of the items the subject of the claim for expenses incurred in connection with relocation were tenant’s fixtures, which had been installed by the lessee company in the acquired property and which were capable of severance from the leased premises. The tenants were unable, economically, to sever the fixtures from the acquired property and Pain J allowed compensation for the costs of installing new tenant’s fixtures in the replacement premises.
2. Hua is not authority that financial costs in respect of relocation of “those persons”, in the case of a business, include the costs of constructing replacement landlord’s fixtures. Pain J in Hua found that “The appropriate basis for compensation is the relocation/reinstatement of the business.” That is, although earlier in the judgment noting that the concepts were quite different, the finding was that “reinstatement” of the business was a synonym for the statutory term “relocation” of the business and that reinstatement can be ordered under s 59(c), as it is “essentially” a claim for relocation (at [33]). The basis for allowing compensation for reinstatement as relocation relied upon by Pain J in Hua was Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215 per Wells J at 210-224 and Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 1 All ER 846 at 126-127. Shipp Bros was a case where the applicant sought to compensated under a South Australian statute for the costs of the reinstatement of a business. In my respectful view, Shipp Bros is not helpful in determining the proper construction of s 59(1)(c) of the Just Terms Act. Shun Fung is a decision of the Privy Council based on the “value to the owner” principle: see Lord Nicholls’ speech at 125H. The questions posed in Shun Fung are not helpful in the proper construction of s 59(1)(c) of the Just Terms Act.
3. The other case referred to in Hua as supporting the view that compensation for “reinstatement” of a business in new premises is essentially the same as relocation were clearly influenced by the “value to the owner principle”: Brown Bros (Marine) Holdings Pty Ltd v NSW Land and Housing Corporation (1991) 72 LGRA 50. In that case reinstatement costs were awarded, not as disturbance costs but as part of special value to the owner.
4. Hua, however, is only authority for the proposition that “relocation costs in s 59(c) can include the replacement of essential equipment in new premises which can be described as reinstatement”: at [59]. The “essential equipment” in Hua was limited to the tenant’s fixtures which the lessee had itself installed. At its highest, Hua recognises that there may be grey areas where it is not economic to remove and reinstall tenant's fixtures, or where to do so would be more expensive than simply buying and installing new tenant's fixtures, in which case that cost may be an appropriate measure of compensation. Hua is not authority for the proposition that a lessee could receive compensation under s 59(1)(c) for construction costs of recreating landlord’s fixtures.
5. The final case relied upon by the primary judge in the present case was Konduru. Two properties were owned by Dr Konduru and her husband as joint tenants and compulsorily acquired. Dr Konduru sought to relocate her medical practice, which had been located in one of the two properties, to an investment property owned by Dr Konduru and her husband located nearby. The premises had been purchased as a residential investment property and not in anticipation of relocation of Dr Konduru’s medical practice. As a consequence, significant additions and alterations were necessary to be undertaken to that residential property in order to render it fit for purpose for the operation of Dr Konduru’s medical practice. Moore J recorded that “the dispute is the fundamental one of whether or not Dr Konduru is entitled to reimbursement of these costs, either pursuant to subss 59(1)(c) or (f)”. It is not clear precisely what alterations to the residential property were in issue, nor, with respect, the basis that his Honour was able to conclude that the costs were incurred in connection with relocation within the meaning of s 59(1)(c). What is clear, however, is that Konduru is not authority for the proposition that a lessee could receive compensation under s 59(1)(c) for construction costs of recreating landlord’s fixtures.
6. Pain J’s earlier decision in Whitcurt was, at least in respect to the central issue on this appeal, distinguished on an unconvincing basis. Whitcurt, on the central issue in this case, was correct. That was a case where a lessee sought as part of a relocation claim under s 59(1)(c) to be compensated for expenditure for construction of landlord’s fixtures at new premises. The case was determined on the basis of the short period remaining in the acquired leasehold interest. The present case was distinguished on the basis that the lease was for a longer period and subject to a right of renewal. However, in a passage not referred to by the primary judge in the present case, the following remarks were made in Whitcurt about a claim by a lessee for construction costs of landlord’s fixtures at the new premises:
[140] Contrary to the Applicant’s submissions, I consider it is highly relevant to ask who owns what chattels and what fixtures as part of assessing the nature of the interest in land where the compensation sought is relocation. The Applicant’s case ignores the fact that the critical infrastructure for the Applicant’s business, being substantial fixtures on the acquired land, were owned by someone else. (emphasis added)
1. The emphasised passage was correct and should have guided the decision of the primary judge in the present case.
2. For completeness, another case decided by Moore J included in the respondent’s list of authorities but not referred to in submissions, Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115 should be addressed. This was a case where Mr Massasso relocated his pharmacy business from an acquired property to new premises, a building purchased by his wife, Ms Massasso. Like the primary judge in the present case Moore J held that “fit out costs” were essential to restore Mr Massasso’s ability to operate the business and that capital works needed to be done to the landlord’s premises to permit the necessary “fit out” to occur. In determining that the expenses of these capital works and subsequent fit out fell within s 59(1)(c), Moore J principally relied on Peter Croke Holdings, Home Care Services (NSW), McDonald and Konduru. As I have explained, all of those cases were based at their core on the “value to the owner principle”. It follows that Massasso was also incorrectly decided.
3. As I have earlier said, the respondent emphasised that s 59(1)(c) of the Just Terms Act refers to the relocation “of those persons” and does not refer to the relocation of “things”. It was argued that a relocation of persons can include the relocation of business operations conducted by those persons on the acquired land. So much may be accepted. The respondent asserted, however, that the business operations of the respondent included that landlord’s fixtures used by the business and that expenditure to construct new landlord’s fixtures at new premises was somehow expenditure in connection with the relocation of the respondent’s business operations. This I am unable to accept.
4. In support of this proposition, the respondent cited Speter v Roads and Maritime Services [2016] NSWLEC 128 and Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11. In Speter, Robson J held that:
[84] Before proceeding, I note that s 59(1)(c) of the Just Terms Act refers to the “relocation of those persons”. I have seen no evidence, nor heard any submissions from the applicants, which suggested that any person, natural or corporate, has been relocated as a result of this resumption. Given this, I find that the applicants’ claim for financial costs pursuant to s 59(1)(c) cannot be maintained, as the applicants have not been personally relocated.
[85] Sections 59(1)(d) and (e) of the Just Terms Act, however, refer simply to “relocation”. Given that this term is not defined in the Just Terms Act, it should be read in context and given its ordinary meaning. The word “relocate” is defined in the Macquarie Dictionary as “to move (a firm, a factory, etc.) to a different place”. Its context, and in particular the exclusion of the words “of those persons”, suggests that the disturbance for the relocation of something other than the applicants personally can be claimed.
1. In Fraietta, Robson J held:
[170] Relocation requires, necessarily, that something be relocated. The intention to purchase a replacement property alone is insufficient, unless something is also relocated, whether it be a person, a business or physical objects. As noted above, the applicant has not personally been relocated. Whilst certain physical items on the property have been relocated, this has occurred without the need for the applicant to purchase another property or take out another mortgage, whatever his intentions may be. I therefore find that there has been no relocation that would enliven any requirement to compensate the applicant pursuant to ss 59(1)(d) and 59(1)(e) of the Just Terms Act.
1. Neither Speter nor Fraeitta support the respondent’s submission that the phrase “relocation of those persons” means a relocation of business operations meaning construction of new landlord’s fixtures at new premises. As Robson J explains, relocation requires something to be relocated. In the case of a business, that includes the assets of the business. That includes chattels belonging to the business and tenant’s fixtures. Speter and Fraeitta do not support a conclusion that the respondent is entitled to compensation for construction costs incurred recreating landlord’s fixtures.
Conclusion on grounds 1 and 2
1. The concept of “compensation” whether termed loss, financial cost or any other term is not apt to extend to compensating a person for something that they did not have and did not lose. The Just Terms Act does not provide compensation for relocating something that a person or a company never had any right to relocate.
2. In granting the monetary equivalent to the cost of reinstatement of all that is necessary to replicate that physical state, including all the costs associated with making the new premises replicate the old, the respondent is not being “compensated” for relocation arising out of its right to occupy, under the lease, the acquired land and improvements. Instead, the respondent is receiving compensation for the purpose of improving new premises for the benefit of the new landlord. This goes far beyond what the respondent has been deprived of, being the right, pursuant to its lease, to occupy and use the premises, including the landlord’s fixtures, for its business purposes, for the term of the lease.
3. I reject the respondent’s submission that “relocation” within the meaning of s 59(1)(c) imports a qualitative element meaning relocation to suitable premises or premises having particular characteristics. “Relocation”, within the meaning of the section is neutral about the premises to which the relocation occurs. Section 59(1)(c) does not import the concept of “reinstatement” or “replacement” derived from the value to the owner cases where disturbance was part of the special value to the owner of the property. As I have explained, the construction of s 59(1)(c) advanced by the respondent, and accepted by the primary judge, is ultimately derived from cases about different schemes in which “value to the owner” was the guiding principle. Under that principle, part of the special value of the land to the owner or occupier comprised the costs which the owner or occupier would incur in moving to other equivalent premises, and which was expressed to be a payment for “reinstatement” or “replacement” of the acquired premises.
4. It is a significant expansion to the Just Terms Act to read “financial costs reasonably incurred in connection with the relocation” as permitting compensation to a lessee who spends money on landlord’s fixtures which enhance the value of the new landlord’s property.
5. The Just Terms Act does not provide for relocation to “like-for-like” premises. It does not guarantee that the relocation premises will have the same fixtures. The statute is neutral about the quality of the replacement premises.
6. On its correct construction, s 59(1)(c) does not permit compensation to be paid to a tenant for the costs of constructing new landlord’s fixtures at new premises. The primary judge erred on a question of law in construing s 59(1)(c) as permitting those construction costs.
7. Grounds 1 and 2 should be allowed.
Ground 3 - The extent to which loss attributable to disturbance has been compensated by receiving the market value of the lease
Submissions
1. The appellant submitted that the respondent had been compensated for the value of the improvements at the acquired premises when it was compensated for the market value of the lease, and so an award of compensation for constructing similar improvements at the new premises would be “double dipping”.
2. The parties’ respective valuers agreed on the market value of the lease, except for the appropriate market rate for the hardstand area, with the primary judge awarding the respondent’s contended amount of $231,000. The market value of the lease was based on the value to the respondent of its interest in the actual state of the land including the respondent’s right to use the improvements on the land during the lease.
3. The appellant submitted that the respondent’s only loss was the right to use the things under the lease, and that the loss of the lease was compensated as market value. To award further compensation for disturbance in respect of relocation so as to include the cost of construction of similar improvements at the relocation site was submitted to be awarding compensation twice in respect of the same loss.
4. The respondent emphasised the authorities which caution against the use of the non-statutory phrase “double dip”. The respondent contended that compensation was appropriately determined in respect of different heads of compensation under the Just Terms Act.
5. The respondent further submitted that this argument was not brought before the primary judge and therefore that this Court is precluded from considering the matter under s 57 of the LEC Act.
6. The authorities that refer to double compensation are referring to compensation that is truly for the same compensable aspect of the interest. By contrast, the respondent submitted, compensation for market value of a lease by a profit rent methodology is entirely distinct from costs reasonably incurred in connection with the relocation, necessarily after acquisition, of the dispossessed tenant. Thus, in that submission s 59(1)(c) does not raise any question of double compensation.
Consideration of ground 3
1. Given my conclusion about grounds 1 and 2, ground 3 does not strictly arise. Nevertheless, it is useful to address ground 3 as it provides an additional reason that compensation to a lessee for constructing landlord’s fixtures on new premises is not available under s 59(1)(c) of the Just Terms Act.
2. In Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161, this Court explained that compensation for disturbance should be assessed independently of compensation for market value, so there should usually be no offset of one against the other. This does not mean that market value on the one hand and disturbance on the other should be assessed totally independently of each other. As Preston CJ of LEC observed in Tolson:
[111] In having regard to the relevant matters in s 55, care needs to be taken to identify, in the particular case, if there is any overlap in the quantified amounts of different matters, so as to avoid any double counting. As Spigelman CJ noted in Mir Bros, each of the matters in s 55 does not necessarily operate to the exclusion of each other (at [55]) and a number of the paragraphs in s 55 overlap with each other (at [56)). If there is overlap, an appropriate adjustment needs to be made to remove the amount of the overlap and hence avoid double counting.
1. This Court has cautioned against the use of the term “double dipping”, which might be convenient shorthand for conclusions reached by way of statutory construction but is not the language of the statute: Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252 at [5], [69]; Melino v Roads and Maritime Services (2018) 98 NSWLR 625; [2018] NSWCA 251 at [58]-[59].
2. In Roads & Traffic Authority (NSW) v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236, Tobias JA (Giles JA and Macfarlan JA agreeing) stated:
[44] Relevantly, his Honour [the primary judge] found that the parent land contained the respondent’s home and business. The effect of the acquisition was that it was necessary for the respondent to relocate herself by constructing a new residence on the residue land. As she had received compensation that included the value of the improvements on the acquired land, she was only entitled to recover the costs associated with the relocation of her residence to the residue land and not the cost of its construction. She had already been compensated for that. But she had not been compensated for the costs of providing access to the new residence from the boundary of the residue land or for the extension of electricity, telephone and water supply services to that residence as well as other incidental and consequential costs pertaining to her proposed relocation. (emphasis added)
1. That is, in the case of the owner of the fee simple, what was compensable under the Just Terms Act was the relocation of the acquired premises and not the construction costs of new premises. Costs of connecting the relocated premises by access and including electricity, telephone and water supply services to that residence were held to be “incidental and consequential costs” pertaining to her proposed relocation, reflecting the statutory language of “in connection with relocation”. What bears emphasis in the present context, however, is that the owner of the residence was not entitled to construction costs of a new residence and what was payable as the incidental and consequential costs pertaining to the proposed relocation did not include costs of the construction of any new residence.
2. Basten JA in Maloney provided further explanation:
[100] It is not a gloss on the legislation to recognise the overlapping nature of the heads of compensation in s 55. Section s 55 requires that “regard must be had” to the identified matters, without specifying how they should be understood to interrelate. When compensation has been obtained, in full, for losses occasioned by the acquisition in the claim for market value under s 55(a), (b) or (f) of the Just Terms Act, a separate claim for the same amount as disturbance under s 55(d) is not maintainable.
1. In United Petroleum, Basten JA stated:
[26] The third principle is that it would be inconsistent with the reasoning in Aerated Water to allow the tenant compensation for disturbance based on the assumption that the interest in land had value beyond the termination of the lease, being a value not reflected in the market value of the lease. What would then be compensated would not be disturbance of the tenant’s interest in land but disturbance of the continued operation of the business, unsupported by an interest in land. That would not fit the description of loss attributable to disturbance of land, as defined in s 59.
[27] Furthermore, there would be an inconsistency between an assessment of the market value of the land based on capitalisation of earnings and the separate capitalisation of those earnings as an element of disturbance. Whilst disturbance is a separate head of compensation from compensation for the market value of the land acquired, it is a form of compensation for a distinct loss, not for the same loss recharacterised.
1. Thus, in Moloney at [99] (Payne JA, Beazley P and Basten JA agreeing), it was held that the market value of the acquired land included the capacity of that land to generate a profit in the future, in that case by growing sugar cane. In that case I stated:
[98] I reject the appellants’ contention that whatever be the content of a claim made and addressed under ss 55(a), (b) and (f), the Court must separately determine entitlement to compensation for disturbance under s 55(d) as reflected by s 59(f) of the Just Terms Act, without regard to the fact that the same amount, in whole or in part, has already been the subject of a claim for compensation under s 55(a), (b) or (f) of the Just Terms Act. This approach is inconsistent with the overlapping nature of the heads of compensation in s 55 and with prior authority in this Court, including McDonald which was otherwise heavily relied upon by the appellants.
[99] The loss of profits claim illustrates the potentially overlapping nature of the heads of compensation in ss 55(a), (b) and (f) of the Just Terms Act and s 55(d) as reflected by s 59(f) of the Just Terms Act. The finding of the primary judge that “the right to potential profits from growing sugarcane after the date of the acquisition is encapsulated in the market value of the land” was plainly correct. The market value of the acquired land included the capacity of that land to generate a profit in the future, whether by growing sugar cane or doing anything else.
[100] It is not a gloss on the legislation to recognise the overlapping nature of the heads of compensation in s 55. Section s 55 requires that “regard must be had” to the identified matters, without specifying how they should be understood to interrelate. When compensation has been obtained, in full, for losses occasioned by the acquisition in the claim for market value under s 55(a), (b) or (f) of the Just Terms Act, a separate claim for the same amount as disturbance under s 55(d) is not maintainable.
1. Mr Lancaster SC submitted that:
I do make the general unqualified submission about s 59(1)(c) and market value. As a matter of statutory construction there is no double compensation if each is applied. But I also make a fallback submission to the effect that double compensation in that context could only be by reference to compensation that is truly for the same compensable aspect of the interest. And compensation for market value of a lease by a profit rent methodology is entirely distinct from cost reasonable incurred in connection with the relocation, necessarily after acquisition, of the dispossessed tenant.
1. I do not accept the respondent’s submissions. The general submission is inconsistent with authority, in particular United Petroleum. The fallback submission must also be rejected. The only asset of the respondent’s business that was affected by the acquisition was the lease. It was compensated for market value of the lease under s 55(a). The rights under that lease for which the respondent was compensated included the market value of the rights to use the improvements.
2. The primary judge allowed the respondent’s claim for the market value of its leasehold interest. No appeal is brought from that determination. The parties’ respective valuers agreed on the market rental for the various areas of the premises, except for the appropriate market rate for the hardstand area, with the primary judge accepting the respondent’s contended market rate for the hardstand area and an amount of $231,000 was awarded for market value of the lease. Because the lease had a market review clause, no compensation was payable for the acquisition of the leasehold in respect of the second 5 year period.
3. Pausing there, the basis of the respondent’s case, upon which compensation under s 55(a) of the Just Terms Act was sought and obtained by the respondent, was that there was a leasehold market against which the value of the leasehold interest which was acquired could be compared and that the difference between rent payable under the acquired lease and in the market could be calculated.
4. The market value compensation payable under s 55(a) of the Just Terms Act was based on a comparison between the rent payable under the acquired lease and the rent payable upon leases which in the experts’ opinions were sufficiently comparable to the acquired lease to determine market value. That calculation was based on the value to the respondent of its lease of the acquired property in its actual state including its right to use the improvements for the term of the lease.
5. This assessment of market value was entirely conventional and was consistent with the observations of Basten JA in United Petroleum:
[20] The point of distinction between disturbance and market value may be readily explained, in relation to both land used and operated for commercial purposes by the owner and land the subject of a lease where the lessee uses the land for commercial purposes. Assuming in each case that the actual use is the best economic use available, the market value of the land may be calculated by capitalising annual maintainable earnings at an appropriate discount rate. (This was the exercise undertaken by the valuers in the present case.) Where the land is put to a commercial use by a lessee, “the lessee would be entitled to an amount to represent the value of the lease to him for the balance of the term ... as his share of the full value of the land.”
…
[49] In most, if not all, cases of compulsory acquisition of interests in land, the compulsory acquisition will terminate the actual use of the land by the prior owner. If that owner’s use was private, for example residential, alternative accommodation would need to be obtained, at a financial cost. The cost of new premises, whether purchased or rented, is not reimbursed as a loss for disturbance of the acquired land or otherwise: it is covered to the extent of compensation for the market value of the compulsorily acquired land. If, on the other hand, the prior use was commercial, the prior owner’s interest is again compensated by receiving the market value of its interest in the land.
1. In addition to market value of the lease and any special value, a tenant is also be entitled to disturbance. Financial costs in connection with relocation, being expenses for moving the tenant’s property such as stock, plant or equipment are also payable.
2. The sole loss to the tenant here was the right to use the thing pursuant to, and for the term of, the lease. That loss was compensated as market value. Even if available, which is highly doubtful, no claim for special value under s 55(b) or reinstatement under s 56(3) was made in the present case. In United Petroleum at [77], I held that, “[a]ssuming that what was being valued was the highest and best use of the acquired land, I fail to see as a matter of principle why the market value of the acquired land, correctly identified, would not include the capacity of that land to generate a profit in the future”. That statement was approved in Olde English Tiles Australia Pty Ltd v Transport for New South Wales (2022) 108 NSWLR 503; [2022] NSWCA 108 at [69].
3. The primary judge awarded compensation, firstly, for the loss of the right to use the improvements as part of the market value of the lease and, secondly, for disturbance in respect of relocation so as to include the cost of constructing buildings and hardstand equivalent to the improvements at another site. Doing so was to award compensation in respect of the loss of the same thing and contrary to the decisions of this Court in Roads and Traffic Authority v Peak [2007] NSWCA 66; Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2015] NSWCA 167; Melino and United Petroleum.
4. Ground 3 should be allowed.
Ground 4 - differential rent payments awarded to the respondent
Submissions
1. The appellant submitted that a claim for the difference in rental payments between the acquired premises and the relocation site is not contemplated by s 59(1)(c) of the Just Terms Act. It was submitted that this Court in United Petroleum had decided that issue. In the alternative, it was submitted that, even if a claim for the difference in rental payments between the acquired premises and the relocation site could properly be made, the respondent elected to rent a larger and more expensive premises, reducing the amount of that expense that was “reasonably incurred”.
2. The respondent’s case was that it was entitled to compensation for the rent differential in the amount of $88,173, being $319,173 for the present value of the rent increase arising from the relocation to temporary sites less the market value of the lease being $231,000. The respondent submitted that the unchallenged evidence was that Mr and Ms Nohra could not find another suitable site and the practical reality of finding a suitable alternative site justifies compensation for the rent differential. The respondent emphasised the evidence given by Mr Dyson, the respondent’s expert. The appellant’s expert was submitted not to have engaged with the rent differential assessment.
3. The respondent submitted that a lease involves the tenant agreeing to pay rent for the right to exclusive possession of land. If, as a result of a compulsory acquisition, that right is taken from the tenant, it was submitted that the Just Terms Act provides that the tenant is entitled to the market value of the lease together with compensation for the relocation of the tenant, including its business. The respondent submitted that there is no reason why s 59(1)(c) does not entitle a tenant to compensation for higher rent at a new premises.
4. The respondent further submitted that the principles that the appellant sought to rely upon in United Petroleum were inapplicable because they were directed to s 59(1)(f), not s 59(1)(c), as was accepted by the primary judge.
5. As to the comparatively larger area of the new premises, the respondent submitted that the rent was nonetheless “reasonably incurred”. The respondent contends that this involved a question of fact as to whether another site was available. Section 59(1)(c) does not provide for a reduction based on the area of the relocated premises, and an error of law cannot arise from failing to make such a reduction.
Consideration of ground 4
1. The claim upheld by the primary judge for the difference in rent payments is contrary to principle. As Basten JA, who commanded a majority of the Court, said in United Petroleum:
[49] ... The cost of new premises, whether purchased or rented, is not reimbursed as loss for disturbance of the acquired land or otherwise: it is covered to the extent of compensation for the market value of the compulsorily acquired land. There is no additional compensation for termination of the cash flow from the prior use. Rather, the best available financial return for the commercial use of the land will form the basis of its market value. It will be compensable as such. As explained in Moloney v Roads and Maritime Services “[t]he market value of the acquired land included the capacity of that land to generate a profit in the future, whether by growing sugar cane or doing anything else.
1. Basten JA in this passage was addressing the principle of construction in relation to disturbance within the meaning of s 55(d) of the Just Terms Act. Basten JA’s exposition of principle was not limited to one particular aspect of disturbance within the meaning of s 59(1), let alone limiting his observation only to paragraph (f).
2. The statement is one which accords with the overall scheme of compensation under the Just Terms Act. It is open to a dispossessed owner or lessee to purchase or lease whichever replacement property they wish to acquire in order to relocate their business. That freehold or leasehold property may be of greater or lesser quality than the acquired property, and, in the case of leased premises, the rent payable may be greater or lesser than that paid for the leasehold of the acquired property. But where rent for a leasehold interest in a property is greater than the rent payable under the acquired leasehold interest, compensation for disturbance under s 55(d) of the Just Terms Act is not payable for the additional cost.
3. The lessee is entitled to compensation for the market value of the leasehold interest together with, in some cases, compensation for special value. If the lessee decides to relocate their business to new premises, the choice of premises is in their hands. Compensation is not payable for the difference in market rents between the old premises and new premises. The rental payable at the new premises will reflect the qualities of those premises including location, size, potential use and landlord’s fixtures available for use. It may be, depending on the facts of the case, that compensation for special value to a lessee may also be payable, depending on facts of the kind described by Basten JA in Melino and the state of the expert evidence in a particular case.
4. To the extent that the right to generate a profit is encompassed within compensation for market value, and the rent payable for the use of premises is a significant component of the right to generate that profit, the award of compensation for a difference in the amount of rental payment would constitute a backdoor attempt to subvert what was said in Moloney at [99] and quoted in United Petroleum at [49], namely that the right to generate a profit is compensated as part of market value.
5. Ground 4(a) should be allowed. In the circumstances, it is unnecessary to address ground 4(b).
Conclusion and orders
1. For the foregoing reasons I propose the following orders:
1 Appeal allowed.
2 Order (1) made in LEC proceeding no 2022/40567 on 15 September 2023 be set aside.
3 In lieu of order (1) referred to above the following order be made in LEC proceeding no 2022/40567:
Compensation to C & P Automotive Engineers Pty Ltd pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of its leasehold interest in Lot 23 in DP 733500 and disturbance losses is determined in the sum of $416,182.99 (plus statutory interest), that amount comprising:
(1) $231,000 for market value under s 55(a);
(2) $185,182.99 for disturbance losses under s 55(d) comprising:
(a) $145,600 (GST exclusive) for relocation costs involving relocating to temporary sites under s 59(1)(c);
(b) $39,582.99 (GST exclusive) for legal costs under s 59(1)(a).
4 Respondent pay the appellant’s costs of the appeal.
1. KIRK JA: I agree with Payne JA.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 31 July 2024 | 18,674 |
nsw_caselaw:191012c6b4f374d9d77d5931 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-25 00:00:00 | R v Gall [2024] NSWDC 315 | https://www.caselaw.nsw.gov.au/decision/191012c6b4f374d9d77d5931 | 2024-08-04T23:55:13.358148+10:00 | District Court
New South Wales
Medium Neutral Citation: R v Gall [2024] NSWDC 315
Hearing dates: 19 June 2024
Date of orders: 25 July 2024
Decision date: 25 July 2024
Jurisdiction: Criminal
Before: Bennett SC ADCJ
Decision: The Accused is Fit for Trial
Catchwords: Mental Health Fitness Hearing – Accused’s fitness to stand trial
Legislation Cited: Crimes Act 1900 S 52A(2), S 52A(1)(c).
Criminal Procedure Act 1986 s 66(1), s 166
Mental Health and Cognitive Impairment Forensic Provisions Act 2020
Road Transport Act 2013 Law part code 79217 S 117(1)(a)
Cases Cited: Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29
Kesavarajah v The Queen [1994] HCA 41
R v Dellamarta [2020] VSC 745
R v Maxwell [2023] NSWSC 1189
R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7
Reg. v. Presser (3) (1958) VR 45.
Roberts v R [2023] NSWCCA 187
Category: Principal judgment
Parties: David Gall (Defendant)
Rex (Prosecutor)
Representation: Counsel:
Mr Whitaker (Crown)
Mr N Broadbent (Counsel for the accused)
Solicitors:
Office of the Director of Public Prosecutions
Ms. McCarthy (Solicitor for the Accused)
File Number(s): 2023/00161384
Publication restriction: Nil
JUDGMENT
Introduction
1. David Gall was committed to the District Court of New South Wales for the following offences certified in the Local Court on 6 December 2023:
Sequence H93285414/3
On 19 May 2023, at Bourbah in the State of New South Wales, did drive a motor vehicle, namely, Holden YKZxxx, whilst under the influence of intoxicating liquor, whereby the vehicle was involved in an impact as a result of which the death of Paul Kelly was occasioned, and where the prescribed concentration of alcohol was present in his blood.
S 52A(2) Crimes Act 1900 Law part code 159
Sequence H93285414/1 (in the alternative to the above)
On 19 May 2023, at Bourbah in the State of New South Wales, did drive a motor vehicle, namely, Holden YKZxxx, in a manner dangerous to another person or persons, whereby the vehicle was involved in an impact as a result of which the death of Paul Kelly was occasioned.
S 52A(1)(c) Crimes Act 1900 Law part code 140
1. Also certified for the District Court presented pursuant to s 166 Criminal Procedure Act 1986 is the following back up offence:
Sequence H93285414/2
On 19 May 2023, at Bourbah in the State of New South Wales, did negligently drive a motor vehicle, namely, Holden YKZxxx, upon a road, namely, Gulargambone Road, and the said driving occasioned the death of Paul Kelly.
S 117(1)(a) Road Transport Act 2013 Law part code 79217
1. The accused was not arraigned and I was not provided with a form of the indictment proposed. On 25 July 2024 when I announced my decision that I found the accused fit for trial the Crown advised that a bill was found in terms of the charges certified pursuant to s 66(1) Criminal Procedure Act 1986.
2. It is uncontroversial that the question of fitness may be raised when it was in the prosecution sequence and that there was no need for the accused to be arraigned before the question is considered and determined.
3. It is also uncontroversial that the question of fitness was raised in good faith.
The Crown Case
1. The Crown case statement sets out the events from which the charges arise. I have omitted references to the primary documents in which the representations supporting the asserted facts are found.
2. The accused is aged 63 years and weighed 60-70 kilograms at the material time. He lived in Warren and held a P2 provisional licence.
3. The deceased was aged age 52 years, was married, and lived with his wife and three children on their farm in Bourbah. He was a sheep classer and worked part time on the farm with cattle and crops.
4. On 19 May 2023, before the crash, the deceased worked early on the property and returned home about 10:00am for a Zoom call. The call lasted until about 11:30am, after which the deceased with his wife went to another property to collect two trucks, which they drove home in time for lunch. En route, they noticed that some cattle had jumped over a gate. About 3:00pm he left home to secure the cattle. His wife was on a call at the time, which lasted about 1 hour and 20 minutes.
5. The deceased drove a Quadbike. It had no seatbelt.
6. In the meantime, the accused drove along Gulargambone Road towards Quambone. He was alone, but he had two border collie dogs in the back seat. He commenced his drive in Warren. He drove a white Holden Rodeo utility fitted with a bull bar.
7. At 2:22pm, the accused stopped at the Collie Hotel on the Oxley Highway where he was captured on CCTV consuming a schooner of beer. He left there at 2:41pm travelling north. About 3:40pm, he drove past West Point Road, passing a bus travelling in the opposite direction. The bus driver noticed nothing unusual about his manner of driving.
8. The accused was heavily intoxicated and his driving ability was substantially impaired as a result.
9. The accused continued driving west towards Quambone, along an unsealed road past rural/farm properties. The speed limit was 100 kilometres per hour. The speed of his vehicle is unknown, but there is evidence that it was in excess of that speed limit.
10. His approach to the crash site included a very slight right-hand bend in the road and then a straight stretch toward it. The road facilitates travel in both directions. At the place of the crash, it is 4.5 metres wide. The road is bordered by grass and gravel. The weather was fine and the road dry. The deceased was also travelling west on the Quadbike.
11. About 3:45pm, the accused collided with the rear of the Quadbike approximately in the middle of the road. Road scars were left. The accused’s attention was distracted from the roadway for a couple of seconds as he sought a cigarette in the centre console. He did not notice the quadbike until hearing the sound of the collision.
12. The deceased was ejected and fell onto the road 24.8 metres north west from the point of collision. The Quadbike came to rest on the southern side of the road, leaning vertically against a tree.
13. The accused stopped 59 metres away from the point of impact. He observed the deceased laying on the ground. He returned to his vehicle and continued driving west, looking for a property where he would request assistance.
14. The accused’s blood alcohol concentration was calculated to have been within the range of 0.220 to 0.283 grams per 100 millilitres of blood, with the most likely level about 0.241 grams per 100 millilitres of blood.. He had not consumed a full meal since the afternoon of the day before.
15. Expert opinion is that the death occasioned by the impact was attributable to the fact the accused was under the influence of alcohol, given the accused’s tunnel vision pertaining to his search for the cigarette and his impaired visual scanning ability.
16. The Crown contends that the accused’s intoxication affected his assessment of risk when taking his eyes off the road without checking sufficiently for any dangers ahead of him.
17. About 3:55pm, the accused quicky drove down the driveway of a property nearby off Gulargambone Road. He parked near a shed and alighted.
18. Jarryd Rae was in the shed at the time and walked over to the accused. He said, “Can I help you? Are you right?” The accused said, “Can you help me, I’ve hit a man on a bike.” Mr Rae said, “Where is he?” The accused said, “He’s laying on the road?” Mr Rae said, “Where abouts?” The accused said, “On the road, about 10 kilometres up the road?”
19. Mr Rae drove alone to the crash site. His father Stephen was also in the shed. He walked over to the accused. The accused was not stable on his feet. The accused said, “I’ve hit a man on a motorbike. He was just there, and now he is laying on the road and there is no movement.” He had slurred speech and unsteady eyes. This witness told the accused to follow him into the house. The accused drove behind and when they reached the house, this witness invited the accused inside. The accused grabbed a can of XXXX gold beer from the back tray of the utility. Stephen Rae said to him, “You don’t need that beer, sit it in the back of the ute.” The accused replied, “I need it.”
20. The accused followed Mr Rae inside the house, moments behind him, and sat at the end of a bench. Mr Rae introduced his wife Tracey. and offered the accused a cup of coffee. He said, “No”, opened the can of beer, and started drinking from it.
21. Stephen Rae phoned Jarryd’s mobile but there was no answer. He left to find the crash scene.
22. Mrs Rae asked the accused if he was okay. The accused replied, “He just came out and why would he do that; why didn’t he hear me coming”. He repeated these comments, slurring.
23. Mrs Rae took the accused from the house. At the stairs he stood, looked at them, but refused Mrs Rae’s offer for help, and instead walked down very slowly, swaying at each step trying to balance. He walked toward his car, unable to keep a straight line, and there collected another XXXX gold can, sat on a step nearby, and started drinking from it.
24. The accused asked Mrs Rae, “Can I have a light?” She replied, “I don’t smoke sorry. Where did you come from? He said, “Warren.” She asked, “Where were you going?” He replied, “Quambone.” She asked, “Do you know anyone there?” He replied, “I have friends at a mission there.” He said he wanted to go home and to himself, “This is the worst decision I have ever made.”
25. Mrs Rae received a call from Stephen, who told her Paul Kelly had been hit and had died. There were periods of silence as Mrs Rae waited for the Police, during which the accused said, “Am I waiting for the police?” She responded, “Yes we are, this is serious, you’ll need to speak to the police.” He said, “I wanna go home, they can see me tomorrow.” He became agitated. He rose and walked around, leaving the two XXXX gold cans empty on the step. He went for another can and started to open it but Mrs Rae took it from him and returned it to the vehicle, saying he did not need it. He grabbed another can from the back of the vehicle and went to open it. Mrs Rae told him that he was not having any more to drink. She took that from him and returned it. She told him, sternly, he was not going anywhere and was not to have anything else to drink until police arrived.
26. Mrs Rae saw a neighbour, Josie Jose, drive by. She called him over and asked him to join her so the accused would know she was not alone.
27. The accused repeated he wanted to go home. He asked for a smoke. Mrs Rae provided a box of matches and he lit a cigarette.
28. Mrs Rae and Mr. Jose spoke and agreed they must make sure the accused did not leave and would take his keys. Shortly afterwards, Mr. Jose had to leave because of cattle out on the road. Mrs Rae took the accused’s keys from the ignition and put them in her pocket. The accused repeated that he wanted to go home and that police could see him tomorrow. Mrs Rae told him she had his keys and he was not going anywhere until he spoke to police. He said, “Give me my fucking keys and I will run over the lot of you.” She replied, “Well you’re definitely not getting the keys back.”
29. The accused sat in the driver’s seat. She watched him until Police arrived.
30. Jarryd Rae found the deceased in the middle of the road, on his left side with his face towards the ground. He checked for a pulse and reflexes but detected none. He had not taken his mobile, and so drove to the property of Annette and Paul Fisher to have them call “000”. He arrived there after 4:00pm, asked Mrs Fisher to call “000”, and said there had been a road accident from which Paul Kelly was gone and ambulance and police were needed.
31. At 4:18pm, Mrs Fisher contacted her husband Paul and told him of the collision and that Paul Kelly was dead, and at 4:25pm phoned “000” and reported the event.
32. Jarryd Rae returned to the crash scene in the meantime. Shortly thereafter, Stephen Rae arrived and saw the deceased lying on the road, face down. He believed him to have died. He blocked the road with his car and called “000” and with Jarryd waited for emergency services, and with others took steps to protect the deceased and the scene.
33. The deceased’s wife completed her phone call and went to collect road signs to warn of the presence of the cattle to be moved the next day. She saw the red and blue lights of emergency vehicles, and returned to her property where Paul Fisher told her of her husband’s death. He drove her to the crash site where she saw the deceased. She stayed until about 7:00m when she returned home to call her daughter, but then returned about half an hour later to the crash site and stayed with her husband until Police arrived. Thereafter she moved out of the way and watched on until the deceased was taken away.
34. At 5:01pm, paramedics arrived. They rolled the deceased from the prone position onto his back, checked for signs of life, and verified he was deceased.
35. The deceased had suffered numerous superficial blunt force injuries, predominantly to his head and torso, and a haemorrhage.
36. Police arrived with the paramedics. Jarryd Rae told them where the accused was, that his mother had taken the accused’s car keys because he was attempting to leave, and returned to the property with two police while another took control of the scene and arranged for specialist crash investigators to attend with State Emergency Services to illuminate the roadway.
37. Shortly after 5:45pm, Police attended the property where Mrs Rae told them that the accused had consumed two XXXX gold cans since arriving there.
38. The accused remained sitting in the driver’s seat of the utility, asleep. He eventually awoke and opened the driver’s door, releasing the smell of alcohol from him and the car. His eyes were glossy and slightly bloodshot. There was a can of XXXX gold in the front passenger footwell. A roadside breath test yielded a reading of 0.274. Police arrested him and took him to Coonamble Multi-Purpose Services for mandatory blood and urine samples. They arrived there about 6:45pm, but nurses were unable to draw enough blood for a sample from 7:00pm until about 7:50pm when they were successful. He provided a urine sample. Police took him to Coonamble Police Station and on to Dubbo Police Station.
39. About 8:30pm, the Crash Investigation Unit arrived at the scene. About 12:30am, the accused’s vehicle was towed away. The quad bike was also collected. About 4:00am, the accused took part in an ERISP and representing the following:
1. He left from Warren; “I wasn’t really going [driving] anywhere to tell you the truth … I just went for a lap down the backroads”.
2. Two border collie dogs were in the back seat.
3. “I looked down and went to get a cigarette and I looked up, I ah, you know just heard a bang.”
4. The cigarette was in the centre console.
5. “I just went for a drive today [yesterday] and yeah … Gave me something to do.”
6. He had been driving for “probably an hour or two”, or left home at “12, 1 o’clock I s’pose”.
7. “I pulled up at a property when I ah, when I found out I ran over a bloke”.
8. “I don’t know where he’d come from. He wasn’t there you know, ‘cause it was a straight road.”
9. “I gave him a bit of a shake and nothing happened.”
10. He did not call “000” on his mobile because he “can’t use it”.
11. The road was in a good, dry condition. The sun was not adversely affecting his vision, and visibility was clear.
12. The mechanical condition of the car was good.
13. He was previously disqualified for “drunken driving and all that sort of stuff” and that this was “nothing serious”.
14. Upon whether he had consumed alcohol prior to the crash, he said “No, I don’t think so.”
1. On 24 May 2023 Police further inspected the Quadbike and the Holden Rodeo in the holding yard. On 8 June, the Engineering Investigation Section examined the Holden Rodeo. The examination revealed no mechanical defect or component failure which may have contributed to the collision occurring.
The Accused’s Fitness
1. These proceedings are pursuant to the Mental Health and Cognitive Impairment Forensic Provisions Act 2020 which in Part 4 provides for the determination of a person’s fitness for trial. It is uncontroversial that Part 4 applies to these proceedings.
2. Part 4 includes the following provisions relevant to the determination of this question S 36 articulates the fitness test:
S 36 Fitness Test
(1) For the purposes of proceedings to which this Part applies, a person is taken to be unfit to be tried for an offence if the person, because the person has a mental health impairment or cognitive impairment, or both, or for another reason, cannot do one or more of the following—
(a) understand the offence the subject of the proceedings,
(b) plead to the charge,
(c) exercise the right to challenge jurors,
(d) understand generally the nature of the proceedings as an inquiry into whether the person committed the offence with which the person is charged,
(e) follow the course of the proceedings so as to understand what is going on in a general sense,
(f) understand the substantial effect of any evidence given against the person,
(g) make a defence or answer to the charge,
(h) instruct the person’s legal representative so as to mount a defence and provide the person’s version of the facts to that legal representative and to the court if necessary,
(i) decide what defence the person will rely on and make that decision known to the person’s legal representative and the court.
(2) This section does not limit the grounds on which a court may consider a person to be unfit to be tried for an offence.
S 37 When question of unfitness may be raised
(1) The question of a defendant’s unfitness to be tried for an offence is, so far as practicable, to be raised before the defendant is arraigned on a charge in respect of the offence but may be raised at any time during the course of the hearing of the proceedings in respect of the offence.
(2) The question of a defendant’s unfitness to be tried for an offence may be raised on more than one occasion in the same proceedings.
S 38 Question of unfitness to be determined on balance of probabilities
The question of a defendant’s unfitness to be tried for an offence is to be determined on the balance of probabilities.
S 39 Court and other persons may raise question of unfitness
The court, the defendant or the prosecutor may raise the question of a defendant’s unfitness to be tried for an offence.
S 44 Inquiry procedures
(1) The question of a defendant’s unfitness to be tried for an offence is to be determined by the judge alone.
(2) At an inquiry, the defendant is to be represented by an Australian legal practitioner, unless the court otherwise allows.
(3) An inquiry is not to be conducted in an adversarial manner.
(4) The onus of proof of the question of a defendant’s unfitness to be tried for an offence does not rest on any particular party to the proceedings.
(5) In addition to any other matter the court may consider in determining whether the defendant is unfit to be tried for an offence, the court is to consider the following—
(a) whether the trial process can be modified, or assistance provided, to facilitate the defendant’s understanding and effective participation in the trial,
(b) the likely length and complexity of the trial,
(c) whether the defendant is represented by an Australian legal practitioner, or can obtain representation by an Australian legal practitioner.
(6) A determination by the judge must include the principles of law applied by the judge and the findings of fact on which the judge relied.
1. Mental Health Impairment and Cognitive Impairment are defined:
S 4 Mental health impairment
(1) For the purposes of this Act, a ”person has a mental health impairment” if—
(a) the person has a temporary or ongoing disturbance of thought, mood, volition, perception or memory, and
(b) the disturbance would be regarded as significant for clinical diagnostic purposes, and
(c) the disturbance impairs the emotional wellbeing, judgment or behaviour of the person.
(2) A mental health impairment may arise from any of the following disorders but may also arise for other reasons—
(a) an anxiety disorder,
(b) an affective disorder, including clinical depression and bipolar disorder,
(c) a psychotic disorder,
(d) a substance induced mental disorder that is not temporary.
(3) A person does not have a mental health impairment for the purposes of this Act if the person’s impairment is caused solely by—
(a) the temporary effect of ingesting a substance, or
(b) a substance use disorder.
S 5 Cognitive impairment
(1) For the purposes of this Act, a ”person has a cognitive impairment” if—
(a) the person has an ongoing impairment in adaptive functioning, and
(b) the person has an ongoing impairment in comprehension, reason, judgment, learning or memory, and
(c) the impairments result from damage to or dysfunction, developmental delay or deterioration of the person’s brain or mind that may arise from a condition set out in subsection (2) or for other reasons.
(2) A cognitive impairment may arise from any of the following conditions but may also arise for other reasons—
(a) intellectual disability,
(b) borderline intellectual functioning,
(c) dementia,
(d) an acquired brain injury,
(e) drug or alcohol related brain damage, including foetal alcohol spectrum disorder,
(f) autism spectrum disorder.
1. The scope of the matters which might render a person unfit for trial are not limited to those which are specifically included in these definitions. S 36(1) of the Act provides that a person is taken to be unfit to be tried because the person cannot do one more of the things set forth in the paragraphs incorporated in s 36(1) because they have a mental health impairment, or a cognitive impairment, or both, or, cannot do so for another reason.
2. The provision embraces and builds upon the principles found in Kesavarajah v The Queen [1994] HCA 41 approving the judgement of Smith J in Reg. v. Presser (3) (1958) VR 45. These authorities remain relevant to the assessment of a person’s fitness.
3. The essence of the asserted unfitness is the accused’s deterioration from alcohol abuse. Two neuropsychologists assessed the accused for his fitness to participate in these proceedings, one qualified on behalf of the accused and the other on behalf of the Director of Public Prosecutions. Each provided reports, and before the court gave evidence concurrently, each addressed in turn by counsel upon the issues identified by the parties.
4. The parties accept the skill, training, and professional experiences of these witnesses.
Dr Sally McSwiggan
1. Dr Sally McSwiggan was retained on behalf of the accused.
First Report 24 November 2023
1. On 24 November 2023 she wrote her first neuropsychological report to the accused’s solicitor sought from her upon concerns from interactions with the accused about his ability to properly comprehend and retain advice given in relation to the appropriate plea and for the conduct of a trial should the accused plead not guilty. Specifically, she was asked to address:
1. Whether the accused suffers from any mental health or cognitive impairments;
2. Whether those impairments, if present, affect his ability to provide instructions sufficient to conduct criminal proceedings;
3. Whether those impairments, if present, effect his ability to follow proceedings in the criminal jurisdiction; and
4. Whether those impairments, if present, require accommodations to be made in order to assist him in providing instructions and follow the proceedings
1. Dr. McSwiggan was provided with:
1. A facts sheet;
2. A custody management record;
3. A transcript of the accused’s interview; and
4. A statement of Constable Loughland with a transcript of the accused’s interaction with police
1. She assessed the accused over 60 minutes by AVL on 31 October 2023 when he was supported by a friend who did not contribute to the process. The friend provided what was said to be a separate informant view by telephone over about 20 minutes on 23 November 2023
2. Dr McSwiggan explained to the accused:
1. The nature and purpose of the evaluation for her to prepare a neuropsychological report based on the assessment;
2. The limits of confidentiality;
3. Any information provided would not be confidential and could be made available to a wider public if tendered in court; and
4. Her role as an independent expert.
1. He seemed to have some understanding of the explanation and consented to continue. She does not further qualify her assessment of his perception of her representations but there is no indication that she had any concerns that the accused did not understand her.
2. Her extensive qualification and experience were provided. There is no challenge to these nor any submission that she is not qualified to offer her expert opinion.
3. Dr McSwiggan acknowledged inherent limitations in any cross-sectional neuropsychological evaluation. Her opinions to an extent are based on a cross-sectional assessment of the accused, including the aforementioned primary documents.
4. She summarised the demographic information:
1. The accused was a 64-year-old single Indigenous man;
2. He has lived alone renting in the same residence for the last 10 years.
3. His income is from Centrelink.
4. He is one of 12 siblings, was raised in Warren, while they were raised in Bourke, Wilcannia, and Broken Hill.
5. He was educated to the end of Year 8 and was literate. He read newspapers comparable the Daily Telegraph.
6. He never married and has no children.
7. He worked until his mid-50’s in Warren as a drover, driving heavy machinery, and farmhand.
8. He seemed less sure what he ate for dinner the night before (“cornflakes I think”) compared to his recall of his early history. He knew his rent was direct debited and he paid bills for such as electricity at the post office.
9. He described his health as good, denied regular medication until this event, he was prescribed a nightly sedative by the Flying Doctor Service to assist with insomnia. He denied having a regular doctor over his lifetime, or hospitalisation. He could not recall any remarkable medical events beyond a “few fights” during his youth.
10. He denied psychiatric hospitalisations or treatment or contact with community mental health services.
11. He admitted a history of hazardous alcohol use with “quite a bit of prompting”. He could not (or would not) estimate amounts at first. He admitted to beer and wine use over spirits and could consume a case of beer or 5 litres of moselle over 2 days as standard. He consumed alcohol most days. He gave various accounts of recently ceasing, from 3 months to 6 months ago.
12. He gave the impression of minimising his alcohol use.
13. He denied illicit substance use; he is a long-term tobacco smoker.
14. The accused has a previous forensic history according to his recollection, but this is not further explained.
1. Upon mental state examination Dr McSwiggan wrote that the accused presented as an older male, casually dressed, reasonably groomed, who exhibited mostly reasonable eye contact, appeared cooperative, and engaged. Conversational speech was mildly slowed in rate and mostly normal in tone and volume. At times there was underlying irritability but he was generally pleasant. He showed limited spontaneous speech, his quantity of speech was generally impoverished. At times he derailed from topic when unable to respond to direct questions. He tended not to admit when he could not provide an answer. He denied a history of delusions, hallucinations, or suicidal thoughts. Objectively he did not appear especially depressed. His outward expression of emotions appeared mildly blunted. Overall he did not present with symptoms consistent with a Major Mental Illness such as severe disturbance of mood or florid psychosis.
2. Dr McSwiggan performed neuropsychological assessment. by way of the. Wechsler Adult Intelligence Scale-Fourth Edition (WAIS-IV) selected subtests, Wechsler Memory Scales (WMS- IV) selected subtests, Montreal Cognitive Assessment (MOCA). He engaged adequately over the course of the cognitive assessment conducted in one interval. He appeared to be putting forth effort on all measures.
3. The cognitive testing battery for older persons is flexible and targeted towards evaluating specific (cognitive) domains where neurocognitive or neurodegenerative impairments often manifest.
4. His premorbid function was estimated on occupational attainment at least in the Borderline to Low Average range (>10th percentile of the population) given his history of employment and tenancy. He was oriented to time and place, could spontaneously recall the Australian PM, could recall a war overseas but not the specifics beyond “Arabians and the others”.
5. Measures of attention, concentration, and holding information in mind while manipulating it were variable. His basic attention was mildly reduced. His capacity to manipulate information (working memory) was poor. He could not reverse more than three digits held in mind.
6. His performance on executive functioning tasks was reduced. He could not sustain generating simple ideas under timed conditions. His abstract reasoning was reduced by concrete thinking, unable to evaluate similarities between common items, arguing the differences despite being directed to consider only how they were alike.
7. Upon assessment of recent memory, which reflects the ability to learn and retain new information, his Immediate Auditory Memory and ability to encode beyond his basic attention span was impaired, able to encode very limited information, in the Extremely Low range (0.1%). After a delay with distractions (20 minutes), he could not recall or recognise the (limited) information.
8. The accused’s companion, Ross Marks, in a separate interview on a later occasion provided the following:
1. He knew the accused from 10 years of age, with contact for around the last 40 years, the accused remaining a friend of his family.
2. He agreed the accused would fit the term ‘a severe alcoholic’ since he has known him. He described the accused’s drinking tolerance as “week long benders” each month for the last 40 years. It was at a level where the accused would be inebriated for days without break, drinking on waking, sleeping in a chair, and not eating. There was no evidence of fresh food bought or prepared by the accused beyond a loaf of bread in the kitchen.
3. Mr Marks commented upon changes in the accused:
1. “He doesn’t seem to get it anymore; I keep thinking why is he like that”;
2. He was less tolerant, less caring, and more irritable than he was, e.g. he described the accused ripping up a form and leaving a medical appointment abruptly recently, unable to tolerate frustration.
1. Dr. McSwiggan diagnosed the accused against the DSM 5:
1. A 64-year-old man who presented on cognitive testing with mildly reduced basic attention and disruption of working memory.
2. Immediate recall of information was impacted, reducing his capacity to encode new information beyond his basic attention level to learn it for later recall.
3. Memory skills were not fatally disturbed, he was not amnestic where there is rapid (30 minutes) and complete forgetting of new information, as with Alzheimer’s dementia.
4. Measures encompassing higher order thinking (e.g. problem solving and cognitive flexibility) showed he was inflexible and concrete when trying to find solutions to fairly low-level problems.
5. His pattern of cognitive loss with a history of hazardous and sustained alcohol use would be characterized as a Minor Neurocognitive Disorder due to (probable) Alcohol Related Dementia. The deficits are limited to a single cognitive domain and appear to not substantially impact on his independent living skills.
6. Dr. McSwiggan acknowledged that this “probable” diagnosis was without the benefit of medical investigations or a CT brain scan to show levels of brain atrophy (shrinkage). This notwithstanding, the accused’s confirmed history of sustained and hazardous overuse of Alcohol included no partner to ensure adequate nutrition over his adult years.
7. Dr McSwiggan referred to two main types of Alcohol Related Dementia:
1. Severe - (Wernicke-Korsakoff’s Dementia; WKD) caused by Thiamine depletion from malnutrition and alcohol’s disruptive effects on brain metabolism, the key feature being an irreversible profound inability to store new memories compared to relatively intact intellect. The striking memory loss for recent events may lead to confabulation, where older events are used as current memories, making communication illogical at times.
2. The less severe Alcohol Related Cognitive Impairment (ARCI) might have prominent executive deficits in planning, cognitive flexibility, and reasoning (similar to Moderate to Severe Vascular Dementia) but less likely the complete dense loss of recent memory. Memory can be unreliable and inefficient (patchy) but not the dense amnesia of the severe type where the person would neither recall nor recognise episodic information (such as an entire day), even with explicit reminding. Classified as a Severe Substance Use Induced Minor Neurocognitive Disorder by DSM 5, symptoms of ARCI can remit to a degree with abstinence and treatment (Thiamine/ Nutrition) in contrast to the permanence of WKD, a Major Neurocognitive Disorder.
1. Upon the features consistent with executive deficits on a background of severe alcohol overuse for decades, the reliability of which depends upon accepting the representations by the accused and his companion, Dr McSwiggan is of the opinion that the accused would meet the DSM 5 criteria for Severe Substance Use Induced Persistent Minor Neurocognitive Disorder.
2. Her use of the term “Minor” does not indicate minor impact. Major in this context would mean the severe type (Wernicke-Korsakoff’s Dementia) where a person is more likely than not become incapable of caring for themselves safely and properly in the community, probably requiring substantial support and would benefit from accommodation in a residential facility.
3. The accused, an older Indigenous man, presented to Dr McSwiggan with no medical history. Dr McSwiggan suggested that it could be speculated that the accused’s presentation could be, in part, also related to untreated chronic vascular diseases (query Hypertension, query raised Cholesterol, query Diabetes) that may have impacted on the small vessels of his brain over time. This would contribute to the cognitive deficits seen in a Mild Alcohol Related Dementia as both conditions are quite static and encompass mainly executive functions while other cognitive domains remain relatively intact. She referred to studies to support this speculation and noted the content of the fact sheet (not further described) and the custody management record of 19 May 2023 from 8.20pm wherein it was recorded that the accused was considered to be inebriated.
4. There is no evidence that this speculation was investigated.
5. Dr McSwiggan noted the transcript of his interview conducted at 4:00am the next morning. She at this stage had not seen the electronic version. She noted the statement of Constable Loughland with a transcript of the accused’s interaction with police, and the reading from a road side alcohol breath test.
6. Dr McSwiggan referred to s.36 Mental Health and Cognitive Impairment Forensic Provisions Act, and the criteria for a person taken to be unfit to be tried for an offence because of mental health impairment or cognitive impairment, or both, or for another reason, if they cannot do one or more of the following;
1. understand the offence the subject of the proceedings,
2. plead to the charge,
3. exercise the right to challenge jurors,
4. understand generally the nature of the proceedings as an inquiry into whether the person committed the offence with which the person is charged,
5. follow the course of the proceedings so as to understand what is going on in a general sense,
6. understand the substantial effect of any evidence given against the person,
7. make a defence or answer to the charge,
8. instruct the person’s legal representative so as to mount a defence and provide the person’s version of the facts to that legal representative and to the court, if necessary,
9. decide what defence the person will rely on and make that decision known to the person’s legal representative and the court.
1. She noted additional considerations set out in section 44(5) of the Act:
1. In addition to any other matter the court may consider in determining whether the defendant is unfit to be tried for an offence, the court is to consider the following—
1. whether the trial process can be modified, or assistance provided, to facilitate the defendant’s understanding and effective participation in the trial,
2. the likely length and complexity of the trial,
3. whether the defendant is represented by an Australian legal practitioner or can obtain representation by an Australian legal practitioner.
1. Dr McSwiggan wrote that when the accused was directed to the proceedings:
1. He was aware his charge was “driving causing death” around 6 months ago;
2. He agreed he had been to court before;
3. He recalled he had discussed his case with his lawyer and had made no decisions;
4. He was of the view his lawyer would run the matter;
5. He did not feel able to provide instructions beyond “not guilty”;
6. He understood the pleas available and their definitions;
7. He had some understanding of a trial and its purpose, to determine whether or not he was guilty;
8. He spontaneously said he was aware there would be witnesses and a judge;
9. He was aware of the role and purpose of the judge, his lawyer, and the prosecution;
10. He was not aware that his lawyer could only act on instructions, and could not run the matter based on what the lawyer thinks would be in his best interests;
11. He understood a jury was made up of “6 or 8” people that have a role in decisions about guilt;
12. He could not express a view about jury challenges after the concept was explained;
13. He could not consider or reason about potential bias associated with his matter;
14. He was unable to provide specific examples of evidence despite having some understanding of the concept;
15. He understood the evidence in his matter was “what happened”;
16. In response to specific questions about the type of evidence used from car accidents he described his recall of the events.;
17. After priming him about his car and the bike of the deceased, further questioning about what evidence the prosecution might rely on to prove their case did not elicit any more information from him and he repeated his version of the facts;
18. He agreed the police have photographs of the scene, his car, and the bike;
19. He was unable to reason why there were photographs of the deceased’s bike in his documents;
20. He agreed the bike photographs were evidence but did not know why or how this could be used for or against him in his matter;
21. He agreed he underwent blood tests and did not believe there was any evidence against him based on the results;
22. His version was highly inconsistent with the statement of the attending officer.
1. The opinion given in the report is that the accused at the time of the evaluations, on balance, could not satisfy the minimum criteria specified in the Act and accordingly could be considered as unfit, and, having regard to Section 44(5) of the Act, there is no way to modify or assist him to facilitate his understanding and effective participation in a complex legal proceeding.
2. The reasons for the opinion are:
1. Cognitive impairment provides an explanation for the accused’s unfitness;
2. His presentation and scores on cognitive measures showed he performed in the range of impairment for executive skills, consistent with a Minor Neurocognitive Disorder due to (probable) Alcohol Related Dementia;
3. His capacity to enter a sensible plea, make an able defence or answer to the charge will be limited by his impoverished account and inconsistencies around alcohol consumption evidence;
4. He failed to demonstrate he could appreciate the likely substantial effect of the evidence against him;
5. He remained unaware of how any evidence may be used for or against him;
6. He could provide his version of the facts to a legal representative and to the court if necessary but would be limited to a few sentences and not consistent with the facts;
7. Should he continue to fail to recall or accept the evidence around the charge and not be able to explain its impact, he would be incapable of sensibly reasoning about his plea decision;
8. He would take a passive approach towards instructing a legal representative, wishing his lawyer to take over and help him to mount a defence;
9. He would not be capable of properly following the course of a trial proceeding with any level of complexity so as to understand what is going on given his limited capacity to encode new information;
10. A support person could assist him in simple proceedings but this matter is likely too complex for ‘support’ to overcome his deficits.
1. In response to specific questions posed to Dr McSwiggan she wrote of the accused:
1. He suffers Severe Substance Use Induced Minor Neurocognitive Disorder and will have problems reasoning when presented with decisions due to his executive deficits impacting on his capacity to thinking flexibly, appreciate and properly recall his own situation and sensibly weigh information when making choices. The consistency of his decisions could also be variable, prone to concrete thinking, he may default to ‘best outcome’ rather than maintain a decision he cannot properly reason about and hence tolerate.
2. He will be a ‘passive’ participant given he will more likely than not fail to encode sufficient education and advice given the complexity of the proposed trial matter in order to grasp the important elements. In addition, this will manifest as a limited capacity to provide instructions sufficient for a trial with some complexity.
3. There has likely been a period of attempting to educate the accused about his matter and the elements; he appeared to fail to accept some evidence which seemed cannot be overcome with repetition; he appeared to be basing his legal decisions without the capacity to appreciate his circumstances in relation to this matter given the available evidence.
Supplementary Report by Dr Sally McSwiggan 6 January 2024
1. Upon the request of the accused’s solicitor Dr. McSwiggan provided a supplementary report on 6 January 2024, also included in the tender bundle, to be read in conjunction with the report of 24 November 2024.
2. This report was sought upon the disclosure of evidence of the accused’s blood alcohol concentration about the material time, not available until after her assessment of the accused. Dr McSwiggan reviewed the report of Mr Alen Lin, Pharmacologist, the NSW Police Force Impaired Driver Research Unit dated 15 September 2023.
3. Dr. McSwiggan interviewed the accused once again for this report via AVL on 16 January 2024 for 20 minutes, during which he was supported by Mr Marks who attended on the earlier occasion but who did not contribute to the process.
4. Dr. McSwiggan repeated the caveat given in her first report that there are inherent limitations in any cross-sectional neuropsychological evaluation, and that her opinions are to an extent based on a cross-sectional assessment of the accused. From Mr. Lin’s report Dr. McSwiggan noted:
1. The accused’s blood alcohol concentration was recorded as 0.225 grams per 100 millilitres of blood at 7.59 pm, after the collision at 3.45pm, leaving the impression was his driving ability at the time of the collision would have been “very substantially impaired”.
2. This as I understand the evidence is Mr Lin’s opinion rather than an impression.
3. The material tendered in the hearing did not include the report from Mr. Lin or the specification of the blood alcohol level upon analysis of the sample taken at 7:59pm. The Crown Case Statement specified a reading of 0.274, which I understand to be a reading of grams of alcohol per100 millilitres of blood, and that the blood sample was not taken at 7:50pm. The Crown Case Statement does not specify the result of the analysis of that sample. The time difference between 7:59pm offered by Dr. McSwiggan and 7:50pm in the Crown Case Statement might be the result of one or other of the authors striking the wrong key.
4. Referring once more s.36 and s 44(5), Mental Health and Cognitive Impairment Forensic Provisions Act, Dr. McSwiggan attributed to the accused that he no recall of his lawyer having told him about the blood alcohol concentration evidence.
5. Dr. McSwiggan described the results to him and compared the extent to which his blood alcohol concentration was over the “legal driving limit” to aid understanding, but in response to questions about the evidence, he “repeatedly” reported that he did not drink to excess before the accident and his blood alcohol results were from his consumption of “a few drinks after”. When pressed with the proposition that the number of drinks he described would not fit with the blood alcohol concentration, the accused said the evidence was wrong and he did not accept it. Despite “multiple attempts” he would not shift his view and maintained the drinks he consumed post-accident and shaking, shock caused his raised blood alcohol level.
6. The accused said he was still planning on pleading not guilty for he does not accept that the blood alcohol concentration evidence would substantially impact upon his defence and he was not intoxicated at the material time.
1. Upon this material harvested in the 20-minute consultation, Dr. McSwiggan offered her opinion:
1. At the time of the evaluation, on balance, the accused still could not satisfy the minimum criteria and accordingly could be considered as unfit, and having regard to Section 44(5) of the Act, based on the evaluation, there is no way to modify or assist Mr Gall to facilitate his understanding and effective participation in a complex legal proceeding.
2. Her reasons for her opinion are:
1. His capacity to enter a sensible plea, make an able defence or answer to the charge will be severely limited by his lack of insight around the alcohol consumption evidence.
2. He fails to demonstrate appreciation of the likely substantial effect of the evidence against him, lacks awareness of how this evidence will be used against him in a trial, and does not accept he could be wrong about this, demonstrating concrete thinking, that borders on the irrational, consistent with the cognitive impairment induced by his severe alcohol misuse disorder.
3. The accused’s cognitive impairment is more likely than not permanent.
4. There is no real likelihood that the accused will become fit in the next 12 months based on the severity of his cognitive impairment, with no real prospect of voluntary remission of alcohol and treatment.
1. Dr McSwiggan saw the accused for 20-minutes via audiovisual link on 16 January 2024, to further address whether the information regarding his blood alcohol concentration at the material time impacted upon her opinion regarding his fitness. She maintained that the accused was unfit to stand trial on the basis that his ability to enter a sensible plea, make an able defence or answer to the charge, or appreciate the substantial impact of the evidence against him was ‘severely limited by his lack of insight around the alcohol consumption evidence.’ It was considered that while many individuals with mild neurocognitive disorder related to alcohol do make modest improvements, as he is unlikely to voluntarily cease alcohol and improve his nutritional intake, his deficits are more likely permanent.
Further Supplementary Report by Dr Sally McSwiggan 11 June 2024
1. Dr McSwiggan provided a third report on 11 June 2024 upon instructions as to:
1. Whether a review of the ERISP video (as opposed to reading the transcript) changes her opinion on the accused’s diagnosis and fitness;
2. Her main areas of agreement and disagreement with the report of Ms Barhon
1. She relied upon the limited consultations conduct prior to her first and second reports.
2. She reviewed reports of Ms Barhon of 2 April 2024 and 5 June 2024 and the electronic recording of the accused’s police interview.
3. After reiterating her obligations as an expert witness she wrote regarding the ERISP that the accused’s appeared blunted and at times inappropriate to the circumstances, presented as superficial, expressing disappointment about his car being a write off, with a smile.
4. She identified areas of agreement with Ms Barhon:
1. Mr Gall has a diagnosis of Minor Neurocognitive Disorder. The Major variant would be consistent with functional impairment to the degree he would require formal care. Unlike most neurodegenerative disorders, the decline in alcohol related dementia is not progressive or inevitable. It can be a stepwise decline into Korsakoff’s Dementia (the Major variant).
2. His irritability, agitation, apathy, and depressed cognitions are the predominant neuropsychiatric consequences of alcohol related brain damage. There was no evidence Mr Gall was deliberately trying to embellish or reduce his effort to avoid legal proceedings.
1. She identified areas of disagreement quoting the identified passages from Ms Barhon’s report and offered comment:
“a. [The accused] was able to articulate his reasoning for pleading not guilty, in that he intended to do so as he believed the incident had purely been an unfortunate accident as a result of a momentary lapse in attention to the road by both parties (himself and the deceased).”
1. His version is not an evaluation of his reasoning.
2. Based on decision-making capacity literature
1. Evaluation of reasoning requires enquiry into how the person reached the decision, what elements they considered as having importance, and how did they go about balancing those things.
2. Her evaluation of the accused’s reasoning indicated he viewed the evidence as having little to no importance for his case, so he gave it little to no weight when considering his decision.
3. His reasoning was impacted by impaired insight.
4. She cited the article McSwiggan, S., Meares, S., & Porter, M. (2016). Decision-making capacity evaluation in adult guardianship: a systematic review. International Psychogeriatrics, 28(3), 373-384. tendered on the hearing. She continued:
“Insight manifests when it is related to something. It cannot be expressed without having something to have insight into. In decision making capacity literature it is often referred to as the ‘appreciation’ element (choice, understanding, appreciation, reasoning).
Self-awareness is the most complex of level of insight. It is a higher-order level of thinking, requiring meta-representations, the ability to consider alternative perspectives and engage in non-pathological self-reflection. Defined as the ‘reasonable or realistic perception or appraisal of a given aspect of one’s situation, functioning or performance, or of the resulting implications’, it can be expressed implicitly or explicitly.
Based on my previous evaluation, the accused demonstrated grossly impaired insight in relation to the substantial impact of the evidence as a result of his inability to accept or believe the feedback he was given in order to consider alternative perspectives. In addition to his distorted, pathological capacity for self-reflection, his responses showed a failure to accept or believe the evidence of his blood alcohol concentration and that he “can’t be wrong” about this. His denial of the BAC results showed his beliefs surpassed wilful obstinance.
Deterioration in insight occurs in numerous neurocognitive and psychiatric conditions (e.g. Schizophrenia, Anorexia Nervosa, Strokes, Moderate to Severe Traumatic Brain Injury, Alzheimer’s, Frontotemporal Dementia, Alcohol Related Dementia etc). It also fails to develop in some neurodevelopmental disorders such as Autism Spectrum Disorder and Intellectual Disability. No single neuropsychological test, cognitive domain or psychiatric presentation consistently predicts impaired insight, and there is no single cause. Contributions from organic brain damage (often related to disruptions in frontal regions and limbic system connectivity), psychiatric manifestations (delusions, paranoia, mania, depression, apathy), personality traits, culture, environment, and past experiences correlate to variable degrees.
[The accused’s] insight has deteriorated as a result of the cognitive and neuropsychiatric impacts of alcohol related brain damage. He fails to realistically appraise the substantial impact of evidence (appreciation) in relation to himself and case. So, he considers the evidence has little to no importance, giving it little weight, if at all, when evaluating his options or inferring how his choice will impact on himself and others (reasoning).”
b. “When asked what impact all these bits of information could have, he remarked “a fair bit I’d say…. If they’re going against me, can’t be good”.”
1. This indicated that his evaluation of the substantial impact of the evidence was unrealistic. Based on the facts, the blood alcohol concentration test results, and witness evidence, do, and will, quite clearly go against him.
c. His refusal to accept the evidence that he was intoxicated with alcohol (beyond one schooner of beer) at the time of the incident – which would implicate himself as guilty if he did acknowledge this fact - does not equate to an inability to reason.
1. His refusal to accept the evidence, due to the cognitive and neuropsychiatric impacts of alcohol related brain damage rendering his perception of the impact of the evidence and the implications as unrealistic, does result in an inability to properly reason. He dismisses the evidence as an important element when weighing up his choices.
d. As previously stated, Mr Gall’s refusal to acknowledge further alcohol consumption prior to the incident does not demonstrate a lack of memory or understanding (as appears to have been previously suggested), as it could be equally explained as a rational decision to not implicate himself as guilty when his current intention is to plead not guilty.
The accused’s firm belief is there is no evidence that implicates him as a result of his impaired insight given his unrealistic appraisal of the evidence, which becomes irrational (mistrust of existence) when his beliefs are challenge. Given the strength of the evidence against him, his ‘refusal’ would appear to make the likelihood his decision can be explained as balanced, extremely unlikely.
1. Dr McSwiggan concluded in summary: due to the effects of alcohol related brain damage, the accused lacks the capacity to understand the substantial effect of the evidence that will be given against him, which has more likely than not resulted in the choice of defence he plans to rely on, without comprehending the impact or implications.
2. It must be that the opinions offered rest upon her acceptance that the representations made by the accused to her were according to his perception accurate and truthful. I am not persuaded that she gave sufficient attention to the accused’s representations to assess whether and to what extent they were reliable or self-serving.
Ross Marks
1. There is no evidence from the accused in the proceedings, but filed and read is the affidavit by Ross Marks of 5 June 2024. He is the accused’s friend who supported him when he attended neuropsychological assessment, in which he made no contribution other than to be present. He was not required for cross examination. He states that:
1. He is a long-term friend of the accused from when Mr Marks between the ages of 14 and 16 years moved to live with him.
2. When he was 19 years of age Mr Marks married and lived elsewhere, later to be joined by the accused until he moved to Queensland. The accused later moved back to Warren in New South Wales, and they continued contact.
3. Wherever Mr Mark and his wife lived, the accused would come and stay with them in their home.
4. Regarding a medical history:
1. He knows of no medical diagnoses aware that the accused tends to stay away from doctors.
2. The accused had car accidents when in his twenties and thirties.
3. He does not think the accused was hospitalised.
4. He is aware the accused was assaulted in gaol “a few times” but does not know the severity.
1. Regarding history of alcohol use:
1. The accused has always been a big drinker from when he was in high school including after work.
2. He is a “binge drinker” – drinking alcohol for days and then abstaining for a day or two before beginning again.
3. He frequently went to the river with others in Warren and drink “goons.” I accept this to be a usage representing flagons of wine.
4. His consumption of alcoholic drinks could extend to eight litres in a day and the past four years it has increased. He drinks twenty four of thirty days each month. His binge sessions increased to two to three times a month.
5. His diet was inadequate when he was drinking.
6. He lived alone in a one-bedroom flat described as “half clean” to facilitate his lack of memory where his things might be place. He had two dogs which left hair throughout.
1. There were changes:
1. His food intake reduced from 2019.
2. Since 2019 he is more forgetful. He stares blankly without knowing what to do or say and utters “um” frequently.
3. Around summertime last year, which could have been either early or late 1923, which is not made clear, the accused called to say he would come to visit the following day, but when Mr Marks called back the accused had forgotten and was drinking.
4. Twice during the summer last year, which again could have been early or late in 2023, the accused was driving to visit Mr Marks and called on en route to ask where he was. On one occasion he drove to Canowindra, and on the other Cudal.
5. His memory for events in his childhood are disappearing.
6. He loses items around his house. He lost his car keys a number of times. He has forgotten his reporting obligation under his bail, but Mr Marks was able to get him to the police station in time. On occasions a neighbour has reminded him.
7. The accused calls Mr Marks after his conferences with lawyers to ask what he said about the last time he called to discuss what occurred in conference. He reports that he does not understand what the lawyers told him.
8. No matter how many times things are explained, his story remains the same. He appears to remember one line which he repeats.
9. Over the last five years he has shown increasing frustration, anger, and appears to be overwhelmed, such that he cannot be around people.
10. On an occasion after complaining that coffee from a fast-food outlet was too hot, he threw it out the window. I infer this was from a vehicle.
11. There is an example of his anger when he would not accept advice from Mr Marks regarding the replacement of a gasket in a car engine.
12. He is 40% of the person he once was.
Roisin Frances McCarthy
1. Roisin Frances McCarthy provided an affidavit on 6 June 2024 offering her description of observations made of the accused in her interactions with him as his solicitor retained in the present matter. She has had carriage of the proceedings on behalf of the accused since June 2023.
2. The Crown did not require her for cross examination.
3. I do not accept her as an expert witness, notwithstanding that she provides a history of representing clients with cognitive impairments and has in the past raised the issue of fitness. She has no qualifications upon which to draw for an opinion regarding the accused’s fitness, however her evidence is admissible as direct evidence of her observations of him when in her presence and when communicating in response to the prosecution evidence she produced to him. The observations might provide a basis for inferences as to the accused’s capacity which are implicit in the affidavit:
1. She met with the accused four times; 31 August 2023, 14 September 2023, 31 October 2023, and 16 January 2024. The consultations were from 20 minutes to 60 minutes. Present were another solicitor from the Aboriginal Legal Service and Mr Marks. She has also had a number of telephone conversations with the accused.
2. During the meetings she spoke with him about the brief of evidence and on 31 August 2023 at his request she provided him with a copy of it.
3. During the conference on 14 September 2023, she read to him some of the key parts of the evidence anticipated from civilian witnesses, attending police, and from his electronically recorded interview. She does not describe the specific representations read.
4. The accused was adamant that the evidence read was wrong, contrary to his version of events, maintaining he was not intoxicated at the time of driving the vehicle, he would regularly interrupt repeating his version particularly in relation to how much alcohol he had to drink before and immediately after the collision.
5. He appeared to struggle to appreciate how the evidence was to be used against him and would easily become irritated and frustrated when discussing the evidence.
6. When the Crown served evidence of his blood alcohol level it was brought to his attention, but he maintained his version and did not appear to comprehend how the evidence impacted upon it.
7. Ms McCarthy identified characteristics from which she inferred that he had difficulty with his memory:
1. From early on he had difficulty remembering her.
2. He had difficulty remembering where his matter had reached in the court and when listed the purpose for it. In a telephone contact on 28 August 2023, he asked what the charges were and whether he would be sentenced on the next date. In conference on 14 September 2023, he had trouble reading the brief, forgetting what he had read upon turning to the next page.
3. Following the conference on 14 September 2024 Ms McCarthy arranged for the consultation with Dr McSwiggan.
1. Ms McCarthy offers her impression that the accused’s instructions are inconsistent with a complete understanding of the evidence against him.
2. Ms McCarthy offers that the accused would have difficulty participating in the trial process, following the evidence, and providing instructions throughout.
Lucienne Barhon
1. Lucienne Barhon provided reports upon her assessment of the accused. The first report was countersigned by Dr Susan Pulman, also a neuropsychologist. Both are employed as in the entity styled Dr Susan Pulman & Associates, Forensic Psychologists & Clinical Neuropsychologists.
2. Ms Barhon’s provided her curriculum vitae in a separate document. As with Dr McSwiggan there is no suggestion that she does not have the training, skill, and experience to provide her opinions.
First Report 2 April 2024
1. The first of her reports was on 2 April 2024 with responses to the opinions offered by Dr McSwiggan’s reports on 24 November 2023 and 16 January 2024.
2. She interviewed the accused in person in Dubbo on 20 February 2024 for a period of three and a half hours, including a 15-minute break. Ross Marks accompanied the accused and was interviewed independently.
3. She conducted a further interview by audio video link on 27 February 2024, lasting 75 minutes. The accused said that he attended this appointment independently arriving by public transport.
4. Ms Barhon had the following documents:
1. Brief of evidence (documentary only);
2. The charge certificate;
3. A certificate pursuant to s 166 Criminal Procedure Act 1986;
4. The Crown Case Statement;
5. The report of Dr McSwiggan of 23 November 2023 and her supplementary report of 16 January 2024;
6. Criminal History;
7. The video recorded interview of the accused on 20 May 2023; and
8. Body Worn Camera Footage of the accused on 19 May 2023 (two videos).
1. Ms Barhon sought Neuropsychological test data from Dr McSwiggan but understood she was unwilling to disclose this information.
2. The accused presented as an older man with a weathered sun damaged appearance, of fair complexion with blue eyes and short grey hair, dressed in tattered casual clothing and a cap. He maintained good eye contact but had a paucity of facial expressions. Ms Barhon observed:
1. The accused presented differently to Dr McSwiggan and Ms McCarthy. To Ms Barhon he presented as disgruntled at having to attend the assessment as a result of the alleged offence. Though willing to participate, he was often dismissive and prickly and needed to be regularly encouraged to elaborate and expand on his responses. This typically resulted in more comprehensive information about his history and understanding. At times it was evident that he was unwilling to divulge certain information (rather than being unable to) and became agitated with attempts to explore further details. During formal testing he intermittently required encouragement to persevere, and for some tasks it was apparent he was not putting forth his best efforts.
2. The accused spontaneously remembered Ms Barhon on the second interview, a week later, the purpose of the assessment, and the general content of their previous interaction.
3. His speech was fluent and normal in rate and tone. He spoke in simple language commensurate with his reported background history. While receptive language was preserved, it was evident he had at least a mild hearing impairment, needed information to be conveyed in a loud and clearly enunciated voice, and on several occasions needed things repeated due to mishearing. He did not bring his reading glasses to the assessment but conveyed that the stimuli were large enough, and that this did not impact his participation. There was no indication that he struggled to see task stimuli.
4. The accused as reluctant to discuss his recent mood, although conveyed heightened stress and anxiety since the collision in May 2023, most predominantly recurrent distressing thoughts and dreams upon his vivid recollection of seeing the deceased’s body after the incident.
The Accused’s Background
1. The accused correctly recalled being “63 or 64” years of age and identifies as an Indigenous Australian. He was born and raised around Warren by his maternal grandparents; his mother was under 16 years of age when he was born.
2. His parents’ relationship was de facto. They always lived elsewhere such as in Broken Bay and Cobar. He had little contact with his parents throughout his life, seeing them a handful of times when they came to visit. His relationship with his grandparents was good and harmonious. He had approximately ten siblings. He had “nothing much to do with them” and apparently did not live with any of them. He grew up with various other members of his extended family living close by. He continues regular contact with relatives who live nearby.
3. The accused lives in Warren, in a one-bedroom private rental unit. He denied issues with living independently, aside from not having a driver’s licence. He primarily relied on others for transport to appointments but otherwise caught public transport independently, such as on the second occasion he was assessed when he reported independently catching public transport to Dubbo to attend the appointment.
. Education and Employment:
1. The accused was reluctant to discuss in detail his school history. He attended Warren Public School; he disliked school. He denied learning difficulties; he learned to read and write; however, was generally ranked bottom of the class. He was unsure but suspected he had had repeated grades. He progressed to Warren High School but had often truanted and had not participated in learning. He left school at the earliest possible age; which he estimated to be Year 8 when 15 or 16 years of age, although he was not sure. He denied difficulties with the social aspect of school and made friends easily.
2. After leaving school he was employed droving and caring for sheep on various properties on and off for 30 years when not in custody. He was incarcerated numerous times from early adulthood until his 40’s for driving offences including “drink driving”. He received Centrelink benefits for many years due to “unemployment”. He retired five to ten years ago because he was too old for the physically demanding work but continued to do casual work now and then.
Relationship History;
1. The accused had not married and had no dependants. His one serious relationship about 20 years ago lasted 12 to 18 months.
Alcohol and Substances
1. The accused had a 50-year history of smoking 10 to 15 cigarettes per day, denied any and all history of illicit substance use, and was evasive about his alcohol use, giving the impression he was minimising its extent.
2. With encouragement, he said he began drinking almost exclusively beer when about 14 years of age. He had a lifelong pattern of drinking beer typically once per week but later remarked, “if I want to have a beer I have it”. He was reluctant to estimate the quantity of alcohol he would drink, but at one point indicated he would consume “half to a full carton of XXXX Gold” once per week. He denied ever drinking on a daily basis.
3. He reported that after the collision he ceased drinking alcohol. He was compelled via the Royal Flying Doctor Service to have regular contact with a Drug and Alcohol practitioner who visited him approximately fortnightly. He felt this was unnecessary. He reported good appetite and ate regular daily meals he prepared.
4. Ms Barhon noted in the report of Dr McSwiggan of 24 November 2023 that the accused disclosed to her a pattern of drinking ‘most days’ and could consume ‘a case of beer or five litre Moselle over two days as standard intake’, and that his long-term friend Mr Marks described the accused to have been a ‘severe alcoholic’ over the forty years they had known each other, and ‘could be inebriated for days without break’ and that he was not eating adequately.
Medical History
1. The accused said he was generally well and healthy throughout his life, rarely needed a doctor, and never had regular medications before the collision.
2. The reported significant history was of multiple brawls at the local pub when intoxicated. He had not sought medical attention after these, but acknowledged he had likely been concussed multiple times. I incident about 25 years ago where he was more severely assaulted and thrown through a window, after which he attended hospital for stitches to a scalp laceration. He described no persistent post concussive symptoms following these events.
3. The accused sustained injuries to his right arm and ribs after coming off his motorbike about 30 years ago. He did not recall sustaining a head injury on this occasion.
Mental Health History
1. The accused said he had no history of any mental health symptoms and had never seen a mental health professional. He denied any history of depressed mood, anxiety, suicidal ideation, or symptoms of psychosis.
2. He reported that after the collision in May 2023, he experienced marked deterioration in his mood, feeling “down all the time” with recurrent distressing thoughts and dreams about the collision. He remarked, “if you’d seen what I’d seen, you’d be in a padded cell in Orange Hospital” and acknowledged that he vividly recalls certain details such as going over to the deceased’s body and observing his injuries. He described intrusive thoughts about the collision “all the time” and woke up to six times per night from nightmares. Shortly after the collision he attended his GP who prescribed a “sleeping tablet, 15mg” which he continues to take nightly. This improved his sleep; and he now typically wakes only twice per night.
3. He said his reluctance to discuss the details of what happened was due to it bringing distressing thoughts and images to mind. He was averse to the suggestion that he seek further support for his mental health symptoms, remarking that if he needed to talk to someone, he would confide in those close to him, like his aunt. He was unwilling to discuss his recent mood and symptoms in further detail.
Forensic History
1. His forensic history, so described, including references to his criminal history I do not bring to account in the decision I must make, except to the extent that he held the perception that he was at risk of its use against him in the proceedings. He reported an extensive history of driving related offences, including numerous charges of “drink driving” dating back to his late adolescent years, and for which he had served time in custody. He expressed his belief that his criminal history would be used against him in the current matter as it establishes a pattern of driving related offences, including driving while intoxicated. The supplied criminal history as summarised was extensive.
Document Review
First Report of Dr McSwiggan dated 24 November 2023:
1. Ms Barhon discussed Dr McSwiggan’s first report and that the accused was interviewed and assessed by her via audio visual link for a period of 60 minutes on 31 October 2023, separately interviewing his support person, with a further 20 minutes spent with the accused later,. The history attributed to the accused was of sustained hazardous alcohol use ceased approximately three to six months before. Dr McSwiggan administered a brief set of cognitive tasks. He was oriented to time and place and could recall some current affairs. Immediate attention was ‘mildly reduced’ and working memory was ‘poor’. He struggled with a verbal abstract thinking task and generating words that start with a particular letter. His memory appeared impaired due to poor encoding of information, but he was not considered forgetful. Ms Barhon wrote,
Based upon the available information it was considered he had a diagnosis of ‘Severe Substance Use Induced Persistent Minor Neurocognitive Disorder’ – this meaning his cognition was only mildly reduced and does not impact upon his everyday functioning in a significant way. It was also suggested that his condition could relate to an underlying ‘untreated chronic vascular diseases’. Dr McSwiggan later indicates his diagnosis to be ‘Minor Neurocognitive Disorder due to (probable) Alcohol Related Dementia’ due to his presentation and scores on (brief) cognitive testing which showed impaired executive skills.
1. Ms Barhon writes that it is of note that the diagnosis Dr McSwiggan gave, which adheres to the ICD-10-CM labelling, is correctly classified as ‘severe alcohol use disorder with alcohol-induced mild neurocognitive disorder, persistent’ (F10.288). Further, although Dr McSwiggan indicated that this diagnosis is not ‘minor’ as the title implies, to achieve this diagnosis it must be reiterated that there is only mild objective decline on neuropsychological testing and that these deficits do not have any meaningful impact on everyday functioning.
2. Dr McSwiggan further concluded that the accused, on balance, ‘could be considered unfit’ as he did not meet the minimum criteria (as per s36 of the Mental Health and Cognitive Impairment Forensic Provisions Act 2020), and that no modifications could be made to facilitate his participation in a trial.
Supplementary Report by Dr Sally McSwiggan – dated 16 January 2024
1. Ms Borhan commented upon the 20-minute interview of the accused by Dr McSwiggan leading to this report and that she maintained her previously expressed opinions but noted that Dr McSwiggan indicated that he suffered from only mild neurocognitive disorder, which according to Ms Borhan would equate to modest decline on formal testing that does not impact upon the person’s everyday functioning.
Expert Report by Alen Lin (Pharmacologist) dated 15 September 2023;
1. The accused’s calculated most likely blood alcohol concentration at the time of collision was 0.241 grams of alcohol per 100 millilitres of blood. Further, at the time of driving, the accused was under the influence of alcohol to the extent that his driving ability was very substantially impaired.
2. This level of blood alcohol concentration would have resulted in ‘gross impairment of driving ability including impaired perceptions, divided attention, visual scanning and peripheral vision, vigilance, mood, and reaction skills; flushed face, irritability, slurred speech, unsteadiness, and clumsy movements, all consistent with the effects of alcohol. His sleeping in the car is consistent with the CNS depressant effects of alcohol and contrary to the accused’s belief he was not feeling fatigued.
Neuropsychological Assessment;
1. Ms Barhon administered the following:
1. ACS Test of Premorbid Functioning;
2. Addenbrooke’s Cognitive Examination – Third Edition (ACE-III);
3. Test of Memory Malingering (TOMM);
4. Weschler Adult Intelligence Scale – Fourth Edition (WAIS-IV) – select subtests; Weschler Memory Scale – Fourth Edition (WMS-IV) – select subtests; California Verbal Learning Test – Third Edition, Brief Form (CVLT-3-BF); Rey Complex Figure Test; Trail Making Test;
5. Delis Kaplan Executive Functioning System (DKEFS) – select subtests; Wisconsin Card Sorting Test; Depression Anxiety and Stress Scale – 21 item version (DASS-21).
1. These were patently more extensive than the tests administered by Dr. McSwiggan.
2. Ms Barhon provided a table of descriptive labels and associated percentile rating against which to compare the results of the tests administered:
Percentile Rank Classification
≥ 98th Very Superior
91st - 97th Superior
75th – 90th High Average
25th – 74th Average
9th – 24th Low Average
3rd – 8th Borderline
<3rd Impaired
Premorbid intellectual functioning:
1. On an irregular word reading task designed to provide an estimate of premorbid functioning, the accused performed at the low end of the Low Average range (i.e. around 10th to 15th percentile) consistent with his reported level of educational and occupational functioning.
Global cognitive screening task (ACE-III):
1. The accused scored 65/100, below the recommended cut-off for suspected major neurocognitive disorder (normal range score ≤82).
2. The normative sample on which the cut-off was based was a small sample of 53 healthy older adult controls with an average of 14 years of education, and therefore is not representative of individuals with the accused’s background. He lost points across all subdomains of this measure, but most significantly on the memory and fluency subdomains. The memory domain is not based upon purely recall measures, but rather bases a portion of marks to encoding of information and some points for knowledge of facts (such as naming the current NSW Premier).
Attention and working memory:
1. The accused’s Immediate span of attention was intact, scoring in the Average range; he could reliably hold sequences of up to five pieces of information in mind. On two similar tasks of working memory, requiring manipulation of strings of numbers in mind, he scored in the Low Average range. He also scored in the Low Average range on a mental arithmetic task. These scores were all in keeping with premorbid expectations. He made two errors on a serial subtraction task, although was able to redirect his focus and complete the task successfully.
Processing speed:
1. On an index of processing speed, and a further speeded task requiring mental tracking and visual search, the accused scored in the low Borderline range (i.e. in the bottom 5 percent).
2. His score was in the Extremely Low range on a verbal-based task where he was asked to identify colours and words at speed, which reflected a reduction from premorbid expectations.
Language
1. The accused did not demonstrate any issues with receptive or expressive language, aside from suspected mild hearing loss. On cognitive screening, he was able to follow simple commands, consistent with his ability to follow questions and task instructions throughout the assessment. He could generate two simple written sentences without spelling error. He could name a series of common objects without difficulty and demonstrated intact semantic knowledge about some of these items. He could repeat simple phrases and words but made errors when asked to read a series of irregular words (e.g. pint) – which was unsurprising given his reported educational background.
New learning and recent memory
1. Assessment of recent memory (defined as the ability to learn and retain new information) was conducted. Subtests from the WMS-IV together with the CVLT-3 were administered to examine these functions in the verbal modality and recall of the Rey Complex Figure was used to assess visual recent memory. I have extracted below from the text offered by Ms Barhon:
1. On a verbal list learning task he performed in the Extremely Low range and below the 1st percentile, and below that of his immediate attention span, suggesting that his performance might be an underestimate of his true ability. He was reluctant to engage in this task and perceived his participation as irrelevant and frustrating. Recall of this information following a 30 second distraction and a ten-minute delay were in the extremely low range and below the 1st percentile. Ms Barhon considered that his recall of this information was consistent with diminished participation in this task. He could recall some information he had initially encoded. Performance on the recognition memory component of the task was impaired, with some answers causing suspicion of reduced effort and participation. Despite the suspicion, he performed adequately on an in-built effort component of the test.
2. On a further task of verbal learning and memory his engagement and participation seemed poor. When presented with information in the form of short stories, immediate recall was in the Extremely Low range. He was able to recall much the same information following an extended delay, although this also placed him in the Extremely Low range. Consistently with this, on the recognition memory component of this task, he also scored in the Extremely Low range.
3. As an indicator of visual memory, the accused’s incidental recall of a complex figure following a short delay was at the cusp of the Low Average to Average range, despite him producing an overall poor initial copy of this figure.
4. Qualitatively, the accused’s memory at a functional level appeared reasonable. He could recall the examiner and the purpose of the assessment at the second occasion he was interviewed (a week later). He also could spontaneously recall various details about his recent functioning and his current legal matter, that would suggest his memory is better than it was presenting on the above tests. While this does not demonstrate an absence of any memory deficit, it is suspected that his underlying memory difficulties were unlikely to be in the range of a true clinical impairment.
Adaptive / executive functioning
1. The accused’s results across tasks of executive functioning varied.
2. He scored in the low Borderline range (bottom 5 percent) on a verbal abstract thinking task, and in the clinically impaired range on a speeded mental switching task (requiring sequencing of two different sets of stimuli at speed). He demonstrated difficulties with inhibitory control on a task of this nature.
3. In contrast, on a perceptual (visual-based) reasoning task he scored in the Low Average to Average range. He performed in the Average range on a challenging task of conceptual and flexible thinking.
4. According to Ms Barhon,
Adaptive or executive functions refer to the capacity to regulate and control one’s responses in accord with what is happening in a given situation. Essentially these abilities enable a person to deal with new and unusual tasks that require them to reason, problem solve, check that they are proceeding correctly and modify their behaviour if necessary.
Psychological status
1. On a self-rated questionnaire regarding recent mood (DASS-21) the accused endorsed symptoms of depression and anxiety in the Extremely Severe range, and stress in the Severe range. He repeated that these symptoms developed following and in response to the collision.
Motivation and effort:
1. Tests designed for an objective indication of motivation and effort were administered. The accused’s performance was variable but did not clearly indicate frank exaggeration or overt poor effort. For example, he performed below the recommended cutoff on a stand-alone effort measure, but not significantly. He performed adequately on two of the three embedded effort tasks administered.
2. Overall, in conjunction with his presentation and manner during task completion, Ms Barhon considered there was a degree of diminished effort during elements of testing which may have contributed to lower-than-expected scores. His demeanour and attitude during completing of certain tasks contributed to this impression.
Fitness to Stand Trial
1. Ms Barhon addressed the accused’s fitness against the criteria in s. 36(1) Mental Health and Cognitive Impairment Forensic Provisions Act 2020.
(a) understand the offence the subject of the proceedings
1. The accused understood that he was charged with “dangerous driving and causing death” and recalled this was the charge written in the document supplied to him by his legal team.
2. He said recalled the collision and described it in detail matching the Crown Case Statement. He could not recall the exact date of the collision but correctly recalled that it was last year, 9 to 12 before, in the afternoon on the “back road between towns”.
3. When challenged about the charge of intoxication at the time he said he was not drunk because if so he would not have stopped. He said that because of his lengthy history of traffic and driving related charges, in particular his “drink driving record”, he would have kept driving to avoid a further ‘drink driving’ charge had he thought himself intoxicated. He spontaneously volunteered that he had stopped at the “Colo Pub” for a single “schooner of XXXX Gold” one to two hours before the collision.
4. He recalled that the police had a video of him when at Colo Pub confirming this, and that he was shown the video by his legal representatives at their office in Dubbo a few months before.
5. He consistently said that he had consumed “six longnecks” the evening before but denied having any other alcohol aside from the one schooner at the Colo Pub on the day before the collision. After the incident however, he said he consumed “four to six cans” of XXXX Gold and believed this to be the cause of his high blood alcohol concentration when later tested.
(b) plead to the charge
1. The accused said he understood ‘guilty’ “means you done it… caused the accident”. When questioned further, he said that if he were to plead guilty it would mean “I’m admitting it”. He understood ‘not guilty’ to mean “you didn’t do it”. He consistently expressed his intention to plead “not guilty” because “it wasn’t my fault”. He said he had looked away from the road for “two seconds” to grab his cigarettes when the impact occurred, but prior to looking away the road had been clear and straight and the deceased must have not been looking and “pulled out in front of me”. He was adamant he would plead not guilty because the collision was purely an unfortunate accident and he could explain the level of intoxication on blood testing as due to the multiple further beers shortly before the police arrived to question him.
(c) exercise the right to challenge jurors
1. The accused was unclear of his right to challenge jurors but accepted the simple explanation Ms Barhon gave him. Ms Barhon wrote that he could be further educated on this and supported when invoking this right by his legal representation.
2. This is invariably what occurs in all trial in which I have presided, granting the request of counsel, or inviting counsel to assist an accused with the decisions to challenge prospective jurors.
(d) understand generally the nature of the proceedings as an inquiry into whether the person committed the offence with which the person is charged
1. The accused admitted his extensive history of previous court attendance, estimating he had been to court “20 or 30 times” for various offences dating back to when he was 18 years old. He recalled these offences had primarily been “Local Court” and that he typically pleaded guilty, therefore could not recall having gone to trial before. He showed a basic understanding that the purpose of the proceedings was inquisitorial in nature, remarking “they’re trying to prove I’m guilty, and I’m saying I’m not”. He acknowledged further explanations about this.
2. He acknowledged that by pleading not guilty as he intended he would need to go to a trial to have the matter further explored. He showed limited understanding of the roles of key members present in a criminal trial, but seemed to grasp the purpose of the roles at a basic level and could be further educated by his legal team. He said that the role of his solicitor was to “prove that I am not guilty” and acknowledged the explanation that they were there to defend and represent him. He said the role of the prosecution was “trying to prove I’m guilty”. He could not provide a clear understanding of the role of the judge, remarking that they “say if you’re guilty or not guilty” and with further explanation acknowledged they “hand down what happens” to the defendant. When asked about the jury he could demonstrate understanding that they were approximately “half a dozen” “people from the streets” and that their job is to “sit there and see if I’m guilty or not guilty”. He understood the composition of the jury and their role when further explained to him.
(e) follow the course of the proceedings so as to understand what is going on in a general sense
1. The accused had the capacity to attend information to an average level, and functionally could demonstrate capacity to retain information, particularly the details of his legal matter. His ability to perform at speed was poor on formal testing, but in conversation there was no evidence that he required longer than normal to attend to or process verbal information. There were no issues with the general flow of conversation, or with processing complex questions or instructions, or with responding at a reasonable rate during tasks which required a degree of mental processing.
2. The accused tended to disengage and avoid certain topics of conversation he did not want to discuss by indicating his understanding and recall was limited. His reluctance to divulge information should not be taken as a lack of understanding or remembering, since on many occasions when challenged and encouraged to elaborate he showed better insight and memory than he initially conveyed.
3. Ms Barhon considered likely that he could follow the proceedings and understand what is happening in a general sense. Modifications to the proceedings suggested later in the report could optimise the accused’s understanding.
(f) understand the substantial effect of any evidence given against the person
1. The accused demonstrated at least a basic understanding of evidence and the substantial effect it could have. Asked directly what he understood evidence to mean, he said that it meant “they’ve got something to prove I’m guilty… they’ve got something on me”. When asked to provide an example of evidence that might be used, he said the video of him having a schooner at the Colo Pub was something likely to be used as evidence. He could provide other examples such as “cameras”, and acknowledged other evidence, such as photographs, witness statements, and phone calls. He volunteered that the “blood tests” taken to say he had been drinking alcohol could also be used. When asked what impact all these bits of information could have, he said “a fair bit I’d say…. If they’re going against me, can’t be good”.
(g) make a defence or answer to the charge
1. The accused could articulate his reasoning for pleading not guilty as he intended to do as he believed the incident was an unfortunate accident the result of momentary inattention to the road by both himself and the deceased.
2. He could demonstrate the capacity to reason and think flexibly on testing, despite variability across performances. His refusal to accept the evidence that he was intoxicated with alcohol beyond one schooner of beer at the time of the incident – which would implicate him as guilty if he did acknowledge this fact - does not equate to an inability to reason.
3. Despite his low performance on several formal cognitive tasks, Ms Barhon considered that upon all the information available the accused could make his defence to the charge, particularly with support from his legal representation.
(h) instruct the person’s legal representative so as to mount a defence and provide the person’s version of the facts to that legal representative and to the court if necessary
1. The accused said he had discussed the facts, his version of events, and his intention to plead not guilty with his solicitor. He understood that he had been driving the car that collided with the quadbike resulting in the death, however argued that he intended to plead not guilty as he perceived the incident to have been an unfortunate accident which was as much the fault of the deceased not paying attention as he drove out onto oncoming traffic.
2. The accused remained adamant he had not been intoxicated until consuming several beers after arriving at the ‘Emby property’. HIs refusal to acknowledge further alcohol consumption prior to the incident does not per se demonstrate a lack of memory or understanding. It could equally be explained as a rational decision to not implicate himself as guilty when his current intention is to plead not guilty.
3. The accused demonstrated reasonable attention and working memory, reasonable functional memory for recent events, and was aware of the details of the alleged offence and much of the evidence against him. There was insufficient evidence of inability to instruct his legal representatives.
(i) decide what defence the person will rely on and make that decision known to the person’s legal representative and the court
1. The accused was reluctant to discuss details of his previous interactions with his legal representatives. This was not unusual in assessments where the person understands that the assessor is evaluating them at the request of the prosecution. It demonstrates insight into the necessity for caution about divulging certain information. This notwithstanding, the accused said he could recall his previous interactions with his solicitor and that the general nature of their discussions had been similar to what he and Ms Barhon discussed during questioning regarding his fitness.
2. He reported having gone through the charges and had given his version of events. He indicated that his friend Ross Marks would accompany him to appointments with his solicitor as a support person, and because he cannot currently drive. When questioned about whether he had found any components of the discussions difficult to understand he remarked “they understand me, and I understand them” and seemed offended that anyone would question his ability to understand general conversation.
3. Based upon her interactions with the accused Ms Barhon considered that he could work with his legal representatives to decide on his defence and to make that decision known to others.
Clinical Opinion
1. After summarising the history described earlier in her report Ms Barhon repeated her description of the accused’s clinical presentation on each occasion she saw him and noted that upon formal cognitive testing he was oriented and could demonstrate functioning consistent with premorbid expectations on tasks of immediate attention, working memory, visual memory, and aspects of executive functioning e.g. perceptual reasoning, and conceptual and flexible reasoning.
2. In contrast, he demonstrated borderline to extremely low range scores on tasks of processing speed, some further tasks of executive functioning, and performed poorly overall on tasks of verbal learning and memory due primarily to poor encoding of this information. Ms Barhon held concern that he was not consistently putting forth his best effort toward testing, which might explain some of his poor scores. Additionally, while he did perform well below most same aged peers on several of the administered cognitive tasks, this was based on normative data which compared him to individuals poorly representative of the accused’s background. For example, the normative sample used to interpret several of his results was comprised of predominantly white and high school educated USA citizens. Given the accused’s known background it was expected that he would be largely performing in the bottom 10 to 15 percent of same aged peers. More importantly, someone’s performance on a series of cognitive tests (particularly when that person is not used the test taking format or environment) does not necessarily equate to their true ability, and other equally relevant information needed to be integrated – namely, their presentation conversationally and apparent functioning day-to-day.
3. The accused it was believed always lived independently and denied any issues with self-managing everyday affairs. He was evasive about alcohol use history, against evidence of a long history of persistent heavy drinking with poor nutritional intake. He said he remained abstinent from alcohol over about nine months since the collision and was required to attend fortnightly with a Drug and Alcohol Service.
4. Upon the available information, it appeared likely the accused is in early remission from Alcohol Use Disorder as classified in the DSM-5 and is experiencing some cognitive decline in the areas of processing speed, executive functioning, and possibly new learning and memory as a result of his heavy alcohol use and poor diet.
5. The severity of his alcohol use disorder was unclear to Ms Barhon upon the available information, considering the limited information available regarding his previous attempts to reduce intake or its impact upon his social and occupational functioning.
6. Nevertheless, in agreement with the diagnosis of Dr McSwiggan in her report dated 23 November 2023, Ms Barhon considered that the accused has Alcohol Induced Mild Neurocognitive Disorder. The accused acknowledged clinically elevated symptoms of depressed mood, anxiety, and stress on a self-rated questionnaire, and described other symptoms strongly suggestive of Post-Traumatic Stress Disorder (PTSD) during interview. These had arisen only after and in response to the collision. Ms Barhon considered that these to fit with the impact of current situational stressors and likely PTSD from the collision. When she raised formal support to address mental health symptoms the accused expressed strong reluctance.
7. Ms Barhon responded to the following questions:
1. Whether in your opinion the accused has a “mental health impairment” or a “cognitive impairment” as defined in the Mental Health and Cognitive Impairment Forensic Provisions Act 2020, and on what basis
1. Ms Barhon considered the accused met criteria for a mental health impairment in that he represented clinically significant mood disturbance that was impacting upon functioning (sleep).
2. Though further clinical interview would be needed to explore his current symptomatology, it is likely he is currently suffering from PTSD from the collision.
3. In partial agreement with Dr McSwiggan, it is Ms Barhon’s opinion that the accused is suffering from Alcohol Use disorder (in early remission) with Alcohol Induced Mild Neurocognitive Disorder. The key features of Mild Neurocognitive Disorder (or Mild Cognitive Impairment) as defined in the DSM-5 include modest decline from previous level of performance in one or more cognitive domains (based upon reports or observation of mild cognitive decline and modest impairment on objective cognitive testing), and that the cognitive impairments do not interfere with the capacity for independent in everyday activities/functioning.
4. Research of evidence on alcohol induced cognitive impairment generally suggests there can be some recovery of cognitive functioning over an extended period (typically the first one to two years) after the individual abstains, though, the likelihood and extent of any recovery depends on a variety of factors such as the person’s previous quantity and duration of alcohol consumption, their age, and their overall health status, amongst others.
2. Whether the accused is unfit to be tried, having regard to the fitness test at section 36 (and the factors therein) and section 44(5)(a) (in relation to any modifications or assistance), and the reasoning for your opinions on the balance of probabilities,
1. Ms Barhon is of the opinion that the accused is likely fit to be tried. He could demonstrate preserved recent memory including for the key details of the allegations against him, he could recall and understand all the information conveyed to him by his legal representatives and had at least a superficial understanding of the fundamental aspects of Court proceedings. He could clearly articulate awareness of the charges, plea options, how and why he intended to plead not guilty, and the significant effect of the likely evidence against him. He demonstrated a limited understanding of some of the intricacies of legal proceedings, such as his right to challenge jurors, but her opinion is that he could be further educated on these and he appeared to understand the concepts when briefly explained to him briefly and in simple terms.
2. There is evidence to suggest the decline in some aspects of cognition, most likely due to the long-term effects of sustained heavy alcohol use, was insufficient to render him unfit to plead or stand trial.
3. Ms Barhon’s opinion is that modifications could be made to better facilitate his participation in legal proceedings, including the presence of a support person in addition to his legal representatives so he can seek clarification or repetition of information that might be unclear, if necessary. He could benefit from regular rest breaks (every hour) to confer with his legal representatives regarding questions he might have, and the opportunity for a summary of proceedings to be reiterated to ensure his understanding.
4. He likely suffers from mild hearing loss and may benefit from having this investigated and remediated to make sure this does not impact upon his participation.
5. I note that in all the District Court there is the option of the hearing loop facility to assist any who are hearing impaired.
3. In the event you are of the opinion that the accused is unfit - whether the accused may become fit to be tried within the next twelve months, or not, and the reasoning for your opinions
1. Ms Barhon considered on balance that the accused is likely fit to plead and stand trial. On the other hand if it were determined by the Court that he was likely unfit, considering his reported abstinence from alcohol and likely improved nutritional intake over the last approximately nine months, further cognitive recovery is possible within the subsequent 12-month period.
4. Any areas of agreement and/or disagreement with Dr McSwiggan, again with your reasons
1. Ms Barhon considered that the collateral history obtained from Mr Marks included in Dr McSwiggan’s report of 24 November 2023 was limited and based upon information that only corroborated her stance about the accused’s alcoholism and its effect on current cognitive functioning. There was no other corroborative evidence available to her to support this. While the information provided by Mr Marks supports that the accused has a long history of sustained frequent alcohol use, to the level that could cause serious harm, the assumption that his recent change in manner, being ‘less tolerant, less caring, and more irritable, could equally and more likely be explained by his underlying mood disturbance resulting from the collision and ongoing legal issues.
2. Dr McSwiggan highlighted that the accused could not tolerate any feeling of frustration, a characteristic of heightened stress, but it appears Dr McSwiggan conducted a very limited battery of cognitive tests based upon the description in her report, appearing to have administered only four tests (one of which was a screening tool). Furthermore, all tests were conducted over AVL which might have hampered engagement and performance.
3. Dr McSwiggan indicated in the results section of her report that the accused demonstrated a mild reduction in attention and working memory; however, this was not supported by the current assessment and does not fit with her reported results. For example, on her assessment she reported his basic attention span was ‘mildly reduced’, however he was able to demonstrate an average range attention span on the current assessment.
4. Further, on both assessments a specific numerical based working memory task was given. On both occasions the accused could reliably reverse three digits in correct order, which places him at the cusp of the Low Average to Average range –above what Dr McSwiggan estimated to be his premorbid level of functioning. Dr. McSwiggan interpreted this as a ‘poor’ score. She also indicated that he scored poorly on tasks when asked to rapidly generate words to a given letter or category. This could be attributed to a variety of factors such as slowed processing speed, reduced vocabulary, weakness in spelling or writing skills, issues with lexical retrieval, or a lack of engagement with the task. In Ms Barhon’s opinion, that he was equally poor at retrieving words to a given letter and category is less clearly indicative of an executive deficit.
5. Dr McSwiggan reported that the accused was unable to evaluate similarities between common items. This same task was administered in Ms Barhon’s assessment, where he scored in the Borderline range. Though this remains a weak score compared to most same aged peers, it was only mildly reduced from his premorbid level of expectation. As these were the only tasks of executive functioning reported, it appears Dr McSwiggan’s assumption about the level executive dysfunction was based on limited objective information.
6. Dr McSwiggan interviewed and tested Mr Gall over a one-hour, with a further 20 minutes spent a few months later discussing the evidence regarding his blood alcohol concentration around the time of the alleged offence. Ms Barhon is of the opinion that it is extremely unlikely that one could conduct a thorough interview or assessment in such a restricted period of time, the assessment likely further limited by not seeing the accused in person.
7. Dr McSwiggan’s opinion regarding fitness appears to be based upon limited supporting evidence and a presumably very brief interview in which she would not have been able to explore his level of understanding in any detail. When Ms Barhon assessed the accused, he often provided initially quite limited responses but could frequently offer greater detail and understanding with further exploration.
8. Dr McSwiggan’s report includes apparent assumptions about the accused’s capacity to enter a “sensible” plea or make an able defence due to his ‘severely limited lack of insight around the alcohol consumption evidence’. Ms Barhon noted the accused’s right to enter a plea of not guilty and have the opportunity to refute evidence put forward by the prosecution, regardless of whether one perceives the decision to be ‘rational’ or sensible. The accused’s express refusal to accept evidence regarding his blood alcohol concentration, and one might add his assertion that any excess of alcohol found in his system was the consequence of ingestion after the collision, is in keeping with his expressed defence that the incident was an accident. To accept this evidence as true, would implicate him as guilty, which would have made less rational sense. He accepted that the evidence could be detrimental to his defence.
9. The accused’s express intention to take a passive approach to instructing his legal representatives, allowing them to help him mount a defence, suggests rationality and understanding that his legal team may be in a better position to develop a clear legal argument and position.
10. Ms Barhon noted that performance on neuropsychological testing is not a replacement (an alternative of substitute) for fitness and does not on its own necessarily provide an accurate depiction of a person’s level of functioning. Many individuals with lower levels of cognitive functioning than the accused (such as those with mild intellectual disability) are found fit to be tried, demonstrating the critical need to take other factors and elements of a person’s presentation and history into consideration.
Further Report 5 June 2024
1. Ms Barhon provided a supplementary report on 5 June 2024 in response to neuropsychological test data from the assessment of the accused conducted by McSwiggan on 31 October 2023, upon which she reported as discussed earlier.
2. After references to the reports already provided and acknowledgement of her obligations as an expert witness, she continued with the following propositions:
1. It is standard practice when there is repeat psychometric testing – particularly when reassessment is occurring within less than twelve months - that any previous test data be sought. Dr McSwiggan’s test data was requested at the time of Ms Barhon’s original assessment in February 2024, but could not be obtained prior to finalisation of her report.
2. This notwithstanding, based upon the description of Dr McSwiggan’s test results in her report and the results of her own assessment and interview she could formulate her opinion without these results.
3. Ms Barhon understood that Dr McSwiggan’s test data from her assessment with the accused was subsequently produced in response to a subpoena so the information would be available for her consideration in relation to her previous expressed opinions. With the opportunity to review these test results, those findings did not alter her opinion and were not out of keeping with her previous interpretation of results.
4. Ms Barhon provided her summary of the findings:
Dr McSwiggan concludes Mr Gall’s performance on a basic/immediate attention task was ‘mildly reduced’; however, he scored at the high-end of the Low Average range, and therefore slightly above where she placed him premorbidly. Further to this, on my assessment with Mr Gall he performed in the Average range on this task. One should not be able to improve their attention span on such tasks, rather the most likely explanation is that he was able to give a better indication of his true ability when I assessed him in person.
To reiterate my previous report, Dr McSwiggan indicated his working memory was poor and her test results showed he was scoring in the Borderline range and at the 3rd percentile on an index of working memory. When I assessed Mr Gall, he scored at the lower cusp of the Low Average range and at the 9th percentile on this index, in keeping with premorbid expectations. It is again most likely the difference in test performances is attributable to reduced engagement, and perhaps the effects of conducting testing via AVL versus in person.
Mr Gall performed similarly on both assessments on an abstract reasoning task requiring him to reflect upon the similarities between two words (scoring in the Borderline range). He also appeared to generate a low number of words starting with a letter within a short timeframe. Both these results were not considered significantly out of keeping with his estimated premorbid level of functioning. Dr McSwiggan only conducted these two brief verbal-based tasks; however, on more comprehensive executive functioning testing I found Mr Gall was able to demonstrate performances in the Low Average to Average range on some tasks.
Dr McSwiggan’s test data revealed poor performances on tasks of auditory memory. It is noted that Mr Gall’s hearing difficulties and possibly reduced engagement with these tasks may have impacted these scores. This does not appear to have been considered by Dr McSwiggan. It is noted that on one task which was repeated at both assessments, while his scores were still very low, he performed better and demonstrated a reasonable ability to retain learnt information. This demonstrated he was capable of achieving better results when assessed in person, despite his engagement with such tasks still clearly being diminished (i.e. requiring consistent encouragement to persevere and expressing his reluctance to participate).
1. When assessed by Ms Barhon the accused demonstrated a degree of hearing impairment and was at times poorly engaged in tasks which impacted upon scores. She observed this may not have been as obvious to Dr McSwiggan when assessing him via AVL, because such challenges can be misinterpreted as a lack of understanding or poor memory. The accused was difficult to engage in cognitive testing and required consistent encouragement to persevere with tasks, which would have been more challenging via AVL. Building rapport with individuals with backgrounds such as the accused can be particularly challenging when performing assessment by way of AVL, and this alone can diminish performance on cognitive testing.
2. Ms Barhon observed that the cognitive testing completed by Dr McSwiggan would have taken at least 30 minutes to complete, and the entire assessment (including consent, all testing, clinical interview, and discussion regarding fitness criteria) was completed in 60 minutes. Considering the brevity of the assessment, it is unlikely Dr McSwiggan conducted a thorough interview in which she could have further pursued his true capacity such as when he defaulted to answering questions with vague or dismissive answers such as “not sure” or “don’t know”.
3. Ms Barhon’s four and a half hours interviewing and assessing the accused in person provided the opportunity to spend significantly more time exploring his true level of understanding. As noted previously, the accused could often demonstrate a greater level of understanding and memory for recent events when encouraged to elaborate on his responses.
Further Report 19 June 2024
1. Ms Barhon provided a further report on 19 June 2024 in response to Dr McSwiggan’s supplementary report on 11 June 2024 of which she offers criticism including the following points:
1. It is unclear how Dr McSwiggan formulated her opinion that the accused’s reasoning was impacted by impaired insight considering the findings in both of their assessments.
2. It appears that Dr McSwiggan presumes that the accused lacked insight because when pressed upon the evidence regarding his blood alcohol level he did not agree with it and did not accept it, whereupon Dr McSwiggan appeared to conclude that he could not appreciate the significance of the evidence.
3. It is not unusual for an accused to not to accept evidence averse to them when they intend to defence the proceeding, particularly during discussions with a third party who is writing for the court.
4. To rule out alternative explanations and assume cognitive effects of alcohol is inappropriate.
5. Dr McSwiggan’s assumption that the accused fails to weigh the evidence as she would does not align with the requirement of fitness and is contrary to the literature. A person needs only a rudimentary understanding of the evidence against them, aware of its existence and that it is against them. Though they need to be able to weigh the evidence when making a plea decision they might do so as others might not and regardless of the weight they ascribe to the evidence decide to test the evidence at trial.
1. The report generally reiterates the findings and opinions offered in Ms Barhon’s earlier reports rejecting the further assertions by Dr McSwiggan. Specifically,
1. Paragraph 2: Dr McSwiggan apparently did not consider further examples of how the accused might or might not demonstrate problems with reasoning. Ms Barhon provided examples of the accused’s responses demonstrating insight and a capacity to reason about his circumstances.
2. Paragraph 3: Ms Barhon provided examples of the accused’s responses demonstrating his capacity to reason and reflect on the elements of his case.
3. Paragraph 4: Ms Barhon summarised the responses by the accused regarding his ingestion of alcohol including his acknowledgement that the police arrested him because he was drunk. His wish to have the evidence tested and offer an alternative explanation suggests reasoning rather than lack of ability to do so.
4. Paragraph 5: The accused “freely recalled” being shown by his solicitor the video depicting him at the Colo Hotel before the collision, aware that it could be used in evidence against him, suggesting better cognitive skills that asserted by Dr McSwiggan.
5. Paragraph 6: The accused’s reluctance to acknowledge the amount of alcohol he consumed to Dr McSwiggan did not equate with lack of awareness, noting that in the consultation with Ms Barhon though initially unwilling to discuss elements of the history and understanding legal matters, when encouraged to elaborate in the longer consultation conducted by her he disclosed comprehensive details. When asked about the collision he said it was not that he could not remember but that he did not want to remember and that he could vividly remember what happened but did not like bringing it to memory because it caused distress.
6. Paragraph 7: The representation that “if they’re going against me, can’t be good” was a comment not limited to the blood alcohol concentration but in the context of the conversation related to the breadth of the evidence available to the prosecution.
7. Paragraph 8: The test by Dr McSwiggan demonstrating executive dysfunction was limited and did not extend to the multifaceted construct including planning and organisation, verbal abstract reasoning, perceptual reasoning, impulse control, and higher-level attention control. To extrapolate from the limited testing that executive functioning was impaired from and deduce that he does not have the capacity to reason caused Mr Barhon concern.
8. Ms Barhon added,
Further to the comments made in my previous reports, someone with Mild Neurocognitive Disorder has evidence only of mild decline in their cognitive functioning – as demonstrated by ‘modest’ decline on objective testing and no evidence of such deficits extending to everyday functioning. It is reiterated that many individuals with far more severe cognitive impairment, including for example individuals with intellectual disability and executive dysfunction, can and are found it to tried.
The Hearing
1. Tendered in the proceedings were two documents, one styed “Decision-making capacity evaluation in adult guardianship: a systematic review” by Dr McSwiggan with two colleagues, and the other a paper by Grant A Blake, James R.P. Ogloff & Natalia Antolak-Saper styled Interpreting R v Presser: a clinician’s guide to contemporary Australian fitness to stand trial case law. These were referenced in the evidence led concurrently from the two experts.
2. The parties agreed that the evidence called from the experts would be efficiently presented concurrently against an agreed list of topics settled by counsel and filed in the proceedings. I ordered that the matter proceed accordingly. The course proposed is authorised s 275C, Criminal Procedure Act 1986 which provides,
(1) The court may, at any time, give directions as it considers appropriate to enable the giving of expert evidence concurrently or consecutively in criminal proceedings.
(2) Directions under this section may include the following—
(a) a direction that an expert witness give evidence at any stage of the proceedings,
(b) a direction that more than one expert witness give evidence at the same time in the proceedings,
(c) a direction that an expert witness give an oral exposition of the witness’s opinion on a particular matter,
(d) a direction that an expert witness be examined, cross-examined or re-examined in a particular manner or sequence, including by putting to each expert witness, in turn, each question relevant to one matter or issue at a time,
(e) a direction that an expert witness be permitted to ask questions of another expert witness who is giving evidence at the same time during the proceedings.
(3) A direction may be given under this section only with the consent of the prosecutor and the accused person.
(4) This section does not limit any other powers of a court to give directions in relation to evidence, witnesses or the management and conduct of proceedings.
1. The evidence was led on 19 June 2024 in the District Court, Dubbo. Dr McSwiggan and Ms Barhon gave their evidence via audio visual link.
2. Exhibit A is the bundle of documents assembled jointly by the parties.
3. Exhibit B is the report from Lucienne Barhon dated 19 June 2024.
4. Exhibit C is the article coauthored by Dr McSwiggan.
5. Exhibit D is the article shorty styled Interpreting R v Presser.
6. The Crown called Ms Lucienne Barhon and concurrently the accused called Dr Sally McSwiggan. Both affirmed. Neither was challenged about their qualifications, training, and experience. upon which they gave expert evidence.
7. The accused’s counsel took Dr Broadbent to her curriculum vitae and examined upon it amplifying some of the aspects of her professional experience.
8. The Crown examined Ms Barhon:
1. Upon diagnosis and disagreement between her and Dr McSwiggan, she agreed with Dr McSwiggan that the accused would meet the diagnostic criteria for substance use induced mild neurocognitive disorder.
2. She explained severe substance use induced mild neurocognitive disorder, to which she assumed Dr McSwiggan referred in her reports. There are two components. Someone with a substance use disorder with the classification of severe, meant they meet at least six of the listed 11 criteria for alcohol use disorder in the DSM, such as experiencing cravings, withdrawal, tolerance, and others. Someone using alcohol excessively, unable to control their use, experiences withdrawal. The second component is of mild neurocognitive disorder meaning that there is some mild reduction in the expected level of cognitive abilities but not at a level that would be considered significant or severe and not yet impacting everyday functioning. Taken together, is to say that someone because of their substance use disorder, has induced a mild change in their cognition.
3. She agreed with Dr McSwiggan that there is some cognitive impairment evident. On testing there has been some reduction from premorbid expectations in elements of the accused’s cognition.
1. The Crown examined Dr McSwiggan:
1. She rejected the proposition that she had the opinion that the accused met the diagnostic criteria for severe substance use induced mild neurocognitive disorder but agreed with the use of the term ‘minor neurocognitive disorder’ which she adopted for her reports.
2. The issue here appeared to be whether the term ‘minor’ is or is not more appropriate that the term ‘mild’.
3. The accused showed some cognitive impairment from her testing.
4. In response to what Ms Barhon said, her view was’ much the same’ to use her words. She added that in terms of dementing conditions, alcohol induced cognitive disorder, being under the guise of a dementing condition, is fractionated into two forms put into one box or another. The second, where it becomes extremely severe, includes an amnestic (memory disorder) quality to memory as well as functional impairment of everyday living skills. The amnestic quality of the accused’s memory led her from the ‘major’ diagnosis. This did not to mean that it was minor, but merely fractionated as explained in the DSM.
1. The accused’s counsel examined Ms Barhon:
1. She undertook a series of tests as set out in her report of 2 April 2024, to provide a framework for the provision of a diagnosis, and to explore on objective assessment how the accused performed for insight into his level of cognition, to assist in formulating her opinion. There are a number of items of information one would draw upon before a diagnosis of any kind, some testing being part of that process.
2. As to whether any of the tests assess capacity for reasoning, she said reasoning is complex. The tendency is to lump cognitive skill under what one would call executive functioning, that being the skills that often incorporate a number of different aspects of thinking, the ability to focus attention, the ability to manipulate information in mind and extract relevant pieces of it to plan and organise. Executive functioning is complex. Cognitive domain and reasoning tend to fall within it. However, assessing someone’s reasoning is something for which one would need to draw various items of information to formulate an opinion.
3. Her testing took at least two hours. The remaining time was spent interviewing the accused. To provide a comprehensive assessment one examines their personal history, background, education, all listed in her report as well as the specific interview relating to fitness criteria. Within that, one is not solely assessing reasoning, but examines a number of different aspects of cognition, behaviour, and how cognitive functioning manifests every day.
4. A clinician must make judgment calls upon what information is relevant and important to include within a report and what is not. It would not be possible to put the entire four and a half hours of assessment interview word for word into a report. There is a judgment about what elements to include.
5. She acknowledged her criticism of the time taken by Dr McSwiggan for testing. Typically in neuropsychological assessment, one is looking at all different aspects of cognition, including premorbid functioning, attention, working memory, processing speed, new learning and memory for visual and verbal information, visual spatial functioning, and different aspects of executive functioning and mood. To provide a comprehensive assessment, one would look at all those different aspects of functioning. Dr McSwiggan’s assessment involved a couple of subtests that she felt were most relevant but it was not a comprehensive assessment.
6. Nonetheless, upon the subtests used, Dr McSwiggan reached the same diagnosis as Ms Barhon.
7. Interpolate that it does not follow from this that the accused’s capacity assessed by Dr McSwiggan should be preferred over or equated in all respects with the more comprehensive observations by Ms Barhon.
8. The accused was tested for malingering, over 15 minutes, and did not pass. He performed below the recommended cut off for suboptimal effort. However, from his ‘laissez-faire’ attitude towards the testing, fluctuating participation, and frustration with the assessment, she thought that he was not putting in best effort and performed below the cut off but not significantly so. She did not think the accused was deliberately exaggerating or trying to feign memory impairment but was not applying himself. His ‘prickliness’ as she described it was more that he did not want to discuss some things and his agitation was about having to do the assessments.
9. Irritability was present throughout. It waned as he warmed to the assessment. Some time was spent in building rapport and discussions put him at ease. When topics perhaps more uncomfortable or distressing for the client are raised, they can become defensive and agitated. This did tend to fluctuate throughout.
10. She did not take the impression that the accused attempted to manager her.
1. The accused’s counsel turned to Dr McSwiggan:
1. Taken to the criticism of her testing, she commented that as an expert in older persons she would use a more flexible, concise battery, looking for particular areas of cognition or interest relevant to conditions of aging rather than assessing every cognitive element of a person. This is consistent with the article Exhibit C providing a systematic review of other studies.
2. I interpolate there that this impacts upon the assessment of Dr McSwiggan’s opinion. She provided far more limited observations of the accused to assess his capacity than those Ms Barhon.
3. At page two of Exhibit C halfway down the first column on page 2:
No single neuropsychological test, cognitive domain or psychiatric presentation consistently predicts a lack of capacity.
Additionally mental screening has little utility beyond staging cognitive impairment.
With regard to the second of these passages, one cannot extract from a cognitive screen whether someone has capacity to make decisions and does little beyond saying whether they are mildly, moderately, severely impaired. It doesn’t predict anything beyond in terms of capacity. The results of the systematic review discussed in the article demonstrates that decision‑making capacity is more than group membership or scores achieved on standardised tests.
1. At page 10 of the article Exhibit C, in the first column there are recommendations which include:
Ideally health professionals should provide medical information, but just as importantly they should provide written evidence of the person’s capacity to make the decision under review. … Decision-making capacity is generally conceptualised as the ability to understand the scope of the decision, appreciate that the decision relates to your circumstances and the ability to reason through the possible choices and to communicate those choices.
1. At the bottom of page 10 on the right-hand side:
Empirical study and expert consensus [have] endorsed as a gold standard the documentation of a person’s ability to understand, appreciate, reason and communicate decisions under review, taking note of their values and preferences, rather than simply engaging in testing.
1. These passages reflect her efforts toward assessment of the accused. Her approach is to examine in a very brief way the framework from the beginning stage of a choice and how that choice comes to be, and ‘the reasoning’, not only ‘the reason for it’.
2. Reasoning involves elements of how people weigh up the decisions, the elements they considered important, and how they weighed them. When a person does not see certain elements in their reasoning, then one starts to see whether or not they can appreciate important things, the perspective of another, and their ability to appreciate that perspective and self-reflect on it. When someone starts to see if they can ‘appreciate the elements’, do they believe the elements, and then formulate where in that process all of those elements are significant and where there might be difficulties. In the case of the accused significant was the appreciation element.
3. The distinction drawn between ‘reasons and reasoning’, when a person gives a reason it is in effect what they say about a particular thing, which differs from their capacity to work through the provision of a particular answer or a particular reason.
1. The accused’s counsel turned to Ms Barhon.
2. She agreed with the distinction between the giving of a reason and the capacity for reasoning as described by Dr McSwiggan.
3. The accused’s counsel returned to Dr McSwiggan:
1. She saw in the accused no indication of malingering behaviour or any sort of impression management.
2. She agreed broadly with the diagnosis of the accused by Ms Barhon.
1. Counsel returned to Ms Barhon:
1. She confirmed the diagnosis of the accused in early remission. He said on interview, that since last year he had abstained from alcohol. If someone acknowledged they have abstained, one would consider their substance use to be in at least early remission before that first 12 months.
2. This was based solely upon the accused’s account. There was no other information to corroborate his current use.
1. The accused’s Counsel turned to Dr McSwiggan:
2. With regard to the symptoms of cognitive or neurocognitive impairment:
1. Both the cognitive aspect and the neuropsychiatric aspects derived from the neuropathological consequences of overuse of alcohol, but more importantly, the lack of thiamine (vitamin B1) over time, associated with transforming carbohydrates into starch and sugars. Over time this leads to cell death. Commonly with an alcohol like dementia there is a preponderance of executive problems, frontal lobe problems, connectivity, higher order thinking, self-awareness, decision-making, ability to recognise other people’s perspectives, and conceptualise.
2. There is also the memory attention element. The person’s intellect does not diminish, but the attentional memory elements can, and when it extends into the major element, they suffer a dense amnesia where no further episodic memories can be laid down. The accused retains the capacity to retain some episodic memory. His memory is poor but not at the level of a major impairment.
3. Upon the neuropsychiatric aspects; with demise in executive functions one begins to lose the sense of self in terms of the ability to manage emotions, irritability, with superficiality from the absence of emotional recognition because of lack of self-reflection, rigidity, and narrow thinking. The person is much in the present with rigidity and inability to see any other perspective. sometimes referred to as concreteness of thought or concrete thinking.
4. Capacity to confabulate is a neuropsychological aspect also. Confabulation refers to someone who uses an old memory or an untrue memory so that it’s real, without recognition of the fact at hand.
5. In interpolate here that I do not find that there is any basis in the evidence of the conduct of the accused after the collision, and the circumstances of and leading to the collision for this to apply to the accused.
1. The accused’s counsel returned to Ms Barhon:
1. Asked whether any of the neuropsychological traits identified by Dr McSwiggan manifested in her assessment of the accused, Ms Barhon expressed disagreement with what Dr McSwiggan said regarding the suggestion of Ms Barhon’s label of mild neurocognitive impairment. She asserted that the accused was someone with dementia, or someone with significant or severe impairments in their cognition, but someone who has in some domains of cognition, perhaps one a few, modest or mild decline upon objective assessment of their cognition, not manifesting in everyday functioning. This is the basis of the use of the term mild.
2. She did not think his memory was amnestic, and noted that individuals with dementia syndrome, from alcohol or otherwise, may not necessarily be amnestic. There are other forms of dementia, whether the issue might be executive functioning or might be language. There are various different subtypes.
3. Regarding executive functioning in particular, Dr McSwiggan administered only one executive functioning measure in her assessment, upon which it was not substantially below where she expected him to be performing based upon her estimate of pre-morbid functioning.
4. Regarding her assessment of the accused and his executive functioning she performed a much more comprehensive assessment, examining various aspects which a neuropsychological assessment required. She would never reach an opinion about executive functioning on the basis of one test, as contrary to her teaching. On those assessments he performed variably. Some tasks he didn’t do as well and other tasks such as on measures of perceptual reasoning or conceptual and flexible thinking he performed within the low average to average range, well within where one would expect and above where she would have expected him to perform.
5. Ms Borhan assessed the accused’s neuropsychological capacity other than by administering tests, in her interaction and conversation with the accused, forming her clinical judgment upon observations, the way the accused spoke about things, the way he responded to questions posed. She felt therefrom that his irritability was understandable given the circumstances. He did not want to be at the assessment and did not feel comfortable talking about certain points. This did not necessarily equate to a neuropsychiatric symptom. To make that leap is not necessarily appropriate. In her assessment she would have been looking for other observational features of executive functioning.
6. Asked whether she asked the accused why he was irritated, she responded that he initially spent time explaining that he was frustrated at having to do these different assessments, he was aware he had done a previous assessment and was being made to come back to do another assessment with her. He understood the assessment was to be quite lengthy as explained to him and he became frustrated that it was out of his time to have to attend and take part.
7. Asked whether he presented with a superficial effort she said definitely at the start of the assessment he was quite agitated. She said she saw a broad range of affects demonstrating quite a lot of variability including irritability at times and as calmer and more pleasant at others. She would not say he was necessarily superficial.
8. When asked whether the accused expressed any remorse, in respect of the basic aspects of what had taken place on the day of the collision, she replied that remorse is not necessarily an element of fitness. When discussing the offence that he expressed remorse.
9. When asked whether when discussing the event she assessed his affect in respect of the circumstances of the day to be superficial she said not at the time. He was quite upset and became a little bit distressed talking about his vivid recollection seeing the deceased body and this upset him. They took a few minutes to leave that topic and bring the accused back on track. She would not say that he was superficial or inappropriate in his affect.
10. She did not believe that he attempted to impression manage.
11. She would not say there that was obvious concrete thinking in his presentation.
12. She spoke to the accuses regarding his blood alcohol concentration she believed on both occasions. His response was dismissive, perhaps more uncomfortable talking about it. He recalled there had been blood tests that showed he had alcohol in his system and was quite dismissive of that information. When she brought up the blood tests to look at his blood alcohol level she thought he didn’t want to discuss that information because it was uncomfortable for him, thought that he was aware that it was detrimental to his matter, and as such was quite reluctant to talk about it in detail.
13. When asked whether she put to the accused the extent of “the level of recorded intoxication” in the context of her discussion with him about blood alcohol concentration, she said that to the best of her memory she did not think they discussed the exact blood alcohol concentration.
14. She agreed that one way of assessing concrete thinking would have been to challenge him on the evidence of blood alcohol concentration, but it is not unusual for defendants when faced with pieces of damming evidence to not want to accept it. Even if he perhaps had been discussing it in more specific detail and perhaps remained dismissive and said, look, I don’t want to talk about it or I don’t agree with it, she did not think that refusal to accept that information necessarily equates to lack of awareness of ability to consider it.
15. She accepted that concrete thinking is one of the things that could manifest in neurocognitive decline.
16. Asked whether she was aware that the assessment of the accused was for his capacity to reason through the face of difficult evidence, she responded that there was perhaps a discrepancy here considering that decision making capacity in the civil sense such as the ability to make decisions about finances, is quite a separate issue to fitness with a low threshold and concerns different elements. In this instance, the fact that someone doesn’t necessarily want to accept evidence that is contrary to what they’re saying, would demonstrate that they have concrete of thought. Considering what followed her evidence, this representation was either misheard by the transcriber or Ms Barhon misspoke.
17. Reasons why someone would choose not to accept a piece of evidence include concern about it would mean, that they might be defensive, prior experience, or environmental factors. It does not necessarily equate to someone’s underlying level of cognitive functioning.
18. When asked whether it would have been a far more robust assessment had she specifically challenged the accused on the problematic aspects of the evidence against him, she responded that she did not agree that it necessarily would have resulted in the opinion that he has concrete thinking. There would be other ways to look at his level of ability to reason, his insight, and his forethought. In other aspects of his functioning, he could demonstrate awareness of other elements of his matter, the presence of other evidence and demonstrated a level of reasoning and the ability to reason about other issues. She identified passages from her report of 19 June 2024 for issues upon which the accused could reason, namely, on p 2, that he volunteered he was aware that there had been blood test taken that suggested that he had been drinking alcohol, he could reflect on the issues, that they were going to be adverse to him, and he was aware enough that he could think about the fact he had an extensive drink driving history. He was concerned about the impact his record could have establish a pattern of behaviour. Such factors suggest that he has put thought into it and has chosen to pursue thinking that perhaps another would not take. This does not equate to someone not having the ability to reason.
19. In response to the question that the accused told her he didn’t consider himself to be intoxicated with alcohol at the time, she said he wanted to explain that he’d had multiple drinks after the incident and that he felt that had contributed to his level of intoxication. Combined with being aware that he hadn’t had much to eat 24 hours prior, when he’d also had other alcohol in his system which perhaps had worn off. she thought it was his choice to mount that defence.
20. She read the Crown Case Statement before she interviewed the accused. She was aware that it included reference to his consumption of two cans of beer after he attended the property. She did not challenge the accused on that. He was adamant with her that he had six cans of beer at that stage of the events. Someone adhering to their assertion did not necessarily reflect concrete thinking, but adherence to their decision.
21. She agreed that in a person who suffers alcohol related brain injury, concrete thinking is consistent with that diagnosis, but it appears that she challenged this with the diagnosis of mild cognitive impairment, which does not affect the accused’s day to day activities and is not what is required to meet a diagnosis of mild neurocognitive disorder.
22. Asked to accept the proposition that in a person with a long history of alcohol intake, the symptoms described by Dr McSwiggan for the neuropsychological component, superficiality, irritability, impression management, concreteness of thinking; all are consistent with the kind of neurocognitive decline associated with long term alcohol use, she said, that long term alcohol use produces varied presentations, and one cannot just ascribe a set of symptoms to every person with alcohol related cognitive change. There is variability and other explanations. Such as if someone were to have an overlying mood disturbance, one cannot just attribute it immediately to the effects of a cognitive impairment related to alcohol. Upon the accused’s presentation she did not think he had mild neurocognitive disorder which could be attributed to alcohol use, but she was under the impression that he has been experiencing some mood disturbance as a result of the collision and subsequent proceedings.
23. She was asked about the more likely cause of symptoms between mood disturbance and alcohol elated injury. Concrete thinking – it can occur in both, but concrete of thinking she would look more towards the alcohol related neurocognitive condition. Superficiality - definitely a mood disturbance possibly in other conditions such as cognitive impairment. Irritability - most definitely in mood disturbance and conditions such as depression or PTSD or other sort of anxiety stress responses definitely irritability would be a core feature. However, it is possible it could present in someone with cognitive impairment as could a range of symptoms.
1. The accused’s counsel turned to Dr McSwiggan:
1. She confirmed that when she interviewed the accused she saw a degree of superficiality, perceived an irritability, a lack of impression management, and concreteness of thinking. She put to him some of the more challenging aspects of the evidence including his blood alcohol content, and engaged in a separate AVL when those results became available as described in her second report in which she ‘vigorously’ canvased that specific issue with him. The accused’s response began as dismissive. She challenged him, conceptualised it for him, took him to what the reading meant and asked, could he do the same conceptualisation of what level of inebriation the results indicated. The accused was challenged on these aspects and each time at the end he said, “I simply don’t believe you, I don’t believe the evidence”. She asked him could he be wrong about it, and he said, “I am not wrong on that, I can’t be wrong about that.” This she said was as if hitting a brick wall with no appreciation of the basic, direct objective evidence. He was unable to conceptualise it and when challenged about his belief about it, he had a fixed false belief that it’s not true and therefore it did not relate to him and his case. Asked if she had the view that an aspect of that response was related to a desire to avoid responsibility, she said in the face of the evidence avoidance of responsibility could also be an adaptive way of dealing with it, but there would be an explanation rather than just a fixed belief that it is not true. She agreed that his responses to the challenging evidence when put to him vigorously reflected the symptomology seen in a person with alcohol related neurocognitive decline. There is such a poor level of insight and self-awareness whereby the person cannot or does not appreciate or believe the perspectives of someone else because of their rigidity of thinking; they don’t self-reflect, and it becomes a brick wall and they will not believe what they are told and are therefore unable to use it any form to reason with it.
2. I interpolate that this and Dr McSwiggan’s other opinions including those that follow here regarding the accused’s capacities depend upon her limited assessment of him and the veracity of his representations to her given in the less than adequate circumstances of time constraint and audio-visual facility.
3. Dr McSwiggan continued that if one wished to extrapolate, one would see it as a form of delusion, a fixed false belief. Insight can only be tested when has a particular object. One must have insight about a particular thing. It maybe that the accused has a lack of insight about a range of things but unless specifically getting into the decision to be made, here his decision at the moment is his insight around self-awareness, his acceptance of blood alcohol concentration evidence was absent and he cannot reason. She repeated that she put it to him ‘very vigorously’.
1. At transcript page 26 I noted that Dr McSwiggan had not precisely articulated the evidence with which she challenged the accused. She interrupted me to say, “The BAC evidence”. I noted the response she attributed to the accused, “I simply don’t believe you; I don’t believe the evidence.” I noted the Crown case statement provides a summary of the evidence the Crown might anticipate that is with some particularity with regard to the events at the location after the crash and said I would be interested to know what particularity was adopted by Dr McSwiggan when she challenged the accused leading to the response she gave a moment before. The accused’s counsel then took Dr McSwiggan through portions of her second report where she referred to these topics, including, “In response to questioning about the evidence, Mr Gall repeatedly reported he did not drink to excess before the accident and his BAC results were due to consuming a few drinks after,” Asked what questions were posed in this exercise she said, at transcript page 27 line 42,
It would have been more around, how do you explain it? How is it going to impact? Why is there? How do you explain that this has got a point to two.
1. She said “it” was the BAC evidence. She said further with reference to his consumption of alcohol after the event that the accused offered that he had drunk eight to ten drinks afterwards. She challenged him on the two drinks and then pressed him - the number of drinks he described would not fit with the blood alcohol concentration. He then said the BAC evidence was wrong, and he did not accept it.
2. Dr McSwiggan was asked about those questions she put to the accused and the answers and whether she could explain her confidence that answers and the accused’s reasoning was a product of long-term alcohol use and associated neurocognitive decline, she said.
There are many types of cognitive disorders or neuropsychiatric disorders that impact on a person’s level of awareness. Awareness is fractionated into different levels just sensory processing in the immediacy and right up to the highest level of awareness which is self-awareness or I suppose where people sometimes refer to it as insight, denial, acceptance, appreciation.
His rigidity of thinking, his inability - because of that rigidity to self-reflect, to have a level of appreciation of what someone is actually telling them and reflect on that has been disturbed and, therefore, he has a fixed and false belief that can’t be shifted because he no longer self reflects his own self or take on board the perspectives of other people to consider the weight of what we’re saying and that it is direct and objective evidence. And to weigh all that up and to consider his views, his beliefs around it and his finding that he is no able to that. He is dismissing the perspectives of others. He is not self-reflecting. And he has got a fixed and false belief which is concrete.
1. I interpolate here that considering the limitations in her approach to the assessment it is reasonable to find that Dr McSwiggan has accepted without sufficient inquiry or analysis the bare assertions she attributes to the accused and to them has applied the learning developed in respect of people afflicted with long term alcohol abuse and consequent mental health and cognitive impairment, without carefully considering inconsistencies in his representations, including those from the more detailed responses elicited by Ms Barhon over a significant period in what I find to have been a thorough process of clinical assessment and testing.
2. The accused’s counsel asked Dr McSwiggan whether she agreed with the opinion expressed by Ms Barhon in her report of 19June 2024 at the end of the paragraph one, that in contrast to her view it arguably makes more sense that his expressed acceptance of such evidence would demonstrate poor reasoning in that it sits in conflict with his intention to go to trial and have such evidence tested, she said, at transcript page 29 line 3:
WITNESS MCSWIGGAN: Okay. I suppose in a way what it’s saying is, if he expressed an acceptance of the evidence it would demonstrate poor reasoning.
WITNESS MCSWIGGAN: No, because it’s direct and objective.
1. In response to other comment in the latest report from Ms Barhon, Dr McSwiggan advanced the following:
1. To the assertion that it is not unusual for defendants not to accept evidence that proves their guilt when they intend to defend the charge particularly during discussions with a third party who will then be writing about such admissions in a report to a Court, Dr McSwiggan did not accept that this is what the accused was doing, because his version is what he’s been repeating all along against the direct objective evidence of with a ‘huge impact’ and implications for his defence. and his decision of his choice of plea.
2. To the question whether she considered that to be a failure in his process of reasoning she replied that when he can’t reason about the weight of the evidence it is a failure of reasoning; because he doesn’t see it as an important element in terms of coming to his decision.
3. She considered that the accused is unable to understand the substantial effect of that evidence against him.
1. I considered this comment referable to the accused’s responses, not consistent with the attributions given the accused by Ms Barhon. At transcript page 29 line 44, I asked ,
How can that be so, in light of the evidence? ….
1. As I sought the evidence to which I wished to refer the accused’s counsel asked how it was that she reached that view. Dr McSwiggan replied,
WITNESS MCSWIGGAN: In terms of his lack of appreciation. Understanding is comprehending the evidence and appreciating it in relation to your own circumstances.
1. I said,
HIS HONOUR: Can I just ask this, it’s not a question of not understanding the evidence, it’s a question of - according to what you’ve told me so far as I understand it, it’s a question of accepting that the evidence demonstrates that he had a blood alcohol concentration of a certain level or within range of a certain level at the time he was driving the motor vehicle. That’s a different proposition to the one that’s being advanced.
1. Thereupon the accused’s counsel offered that his question might have been poorly framed, and added for the witness,
When I made reference before to the substantial effect, do you consider it is a situation where Mr Gall is not able to adequately weigh up the impact of that evidence against him in this case?
1. She replied, yes, and agreed that this was a function of his alcohol related neurocognitive decline. She was then asked,
BROADBENT: Do you have a view as to how that lack of reasoning, if I can put it in those terms that you’ve described, would impact on his capacity to instruct his lawyers?
WITNESS MCSWIGGAN: Because he can’t appreciate the evidence he’s instructing based on the idea that the BAC evidence will not be of any impact to him. So his instructions are discounting the weight of the evidence against him.
BROADBENT: Is the inability to understand the weight of the evidence against him a product of concrete thinking?
WITNESS MCSWIGGAN: Yes.
BROADBENT: And in your view that is a symptom of the neuropsychological aspects of his condition, is that correct?
WITNESS MCSWIGGAN: Correct.
1. The Crown asked questions of the witness from this point on. In response to these Dr McSwiggan offered the following:
1. With regard to confabulation by admitting false memory, his claim of having eight cans of beer versus the two in evidence, could be considered as part of a confabulatory view, but there is no evidence of confabulation in this case.
2. With regard to her more concise method of testing, and the evidence of Ms Barhon that standard practice is for more extensive testing to be conducted for an opinion regarding executive functioning, Dr McSwiggan would not accept this was standard practice. She first observed that executive dysfunction is a broad term and is very difficult to capture on a psychological test because it is high order thinking and contains many components. It is often related to things untestable, specific decisions, specificity of the person’s context in life and the difficulty of their daily decisions. Neuropsych (sic) tests capture within a very organised and standardised way sitting in a testing environment whereas executive functions are demonstrated in everyday life in circumstances that are unable to be properly tested. Neuropsych (sic) testing shows when there is gross impairment, but there are subtleties, not always captured in neuropsych (sic) tests.
3. The accused told her he had eight to ten drinks after the collision and before testing and had the belief that the quantity thus consumed would have given the blood alcohol level found on testing.
1. The Crown turned to Ms Barhon:
1. She said she put to the accused the evidence that he was intoxicated at the time, which explained the aggravated charge of the allegation that he was under the influence of alcohol.
2. He said he had only one schooner at the Colo Hotel on the day of the collision and later six cans of beer which he believed was the cause of his blood alcohol concentration.
3. He did not at that point say that the reading was wrong. He did not say that he had eight to ten drinks after the collision.
4. The Crown referred to the evidence from Dr. McSwiggan when taken to the paper, Decision-Making Capacity Evaluation in Adult Guardianship, a Systematic Review, co-authored by Dr McSwiggan. and the passage that was read to her. In response Ms Barhon agreed that rather looking at one issue it is relevant to look at other decisions the accused made about the evidence in the case.
1. The Crown returned to Dr McSwiggan:
1. The Crown asked whether the accused’s understanding or ability to reason in respect of other parts of the evidence in the case is relevant to the question whether he is able to reason about the blood alcohol content. After an objection to the question for lack of specificity she agreed that it is relevant in determining the accused’s fitness that one look at his broader understanding of the case and the evidence against him.
2. She agreed that in determining whether his concrete thinking, in relation to the blood alcohol content evidence is perhaps the result of obstinance or fabrication, or whether a result of neurocognitive impairment, it is relevant to look at his understanding and his reasoning process concerning other aspects of the Crown case.
3. The accused used the CCTV footage depicting him at the Colo Hotel as an element, which I understand to be a reference to a component of the evidence.
4. She conceded the accused was concerned about the use of his history of drink driving against him in the trial.
5. She accepted that this shows in him an understanding of how that evidence in the trial adverse to him might be used.
6. She said the accused’s unwillingness to discuss his history of alcohol use was consistent with what is common among those with alcohol use disorders. to underestimate the level of alcohol use and so she sought out an informant for a more objective view. This she said shows an inability to be self‑aware and deliberate in terms of his lifetime of alcohol use. This she suggests is a hallmark feature of people who’ve had a severe substance use disorder.
1. The Crown turned back to Ms Barhon:
1. She agreed that the accused’s unwillingness to discuss his history of alcohol use is relevant to whether he might be deliberately downplaying his alcohol use on the day of the collision. As Dr McSwiggan pointed out it’s not uncommon for people with substance use disorders to under-report the amount of alcohol they are using and is more likely to be the case if they are aware that, in admitting to heavier use, they could implicate themselves somehow. This demonstrates a level of insight.
2. Ms Barhon did not agree that an inability to reason about a particular issue or have insight about particular evidence would be confined to one piece of evidence. If one has concrete thinking it would be expected that there would not be selective choosing of items.
1. The Crown returned to Dr McSwiggan:
1. Regarding selective insight about evidence or inability to reason about a particular issue, she said that when looking at sort of self‑awareness, must look at a specific object of it - the object of the awareness was the blood alcohol concentration evidence and the object of awareness was the witness statements, that he was inebriated, and the object of evidence was about the alcohol use afterwards. She found the accused to vigorously dismiss the direct and objective evidence, but other evidence was also dismissed, she thought because it was more circumstantial. She did not press that as much as she did the direct and objective evidence.
2. With regard to her use of the term “fixed false belief” she said it is a form of a delusion in the face of all the objective evidence, and the person saying, “no I don’t believe it”. The belief is fixed because it can’t be shifted. She did not think there was any room for error. It is false because it is demonstrably untrue and it’s a belief because it’s one that they hold and express, with an appreciation of it in relation to their circumstances. It plays into concrete thinking or rigidity of thought.
3. In response to the suggestion that the accused changed his version, referring to the accused telling Ms Barhon he had four to six drinks, she said that this was in terms of how he was remembering what he did on the day and she acknowledged that his recall of what he says he did was not consistent between the two assessments. She agreed that he was not fixed on the amount he had to drink.
4. There followed the exchange at transcript page 38 line 25.
CROWN PROSECUTOR: It’s more likely that that’s a made up version isn’t it than a product of his neuro cognitive deficit?
WITNESS MCSWIGGAN: Well the making up of versions is the way that the neuro cognitive disability is manifested by just making up things that fits in to fit in or explain even if there’s no capacity for him to recognise and reason back, the fact that all people watching him drink.
CROWN PROSECUTOR: And there’s no way to distinguish that from having simply made up a version that’s favourable to him is there?
WITNESS MCSWIGGAN: Probably not.
CROWN PROSECUTOR: And where it changes it’s unlikely to be a fixed false belief isn’t it?
WITNESS MCSWIGGAN: About the amount of cans he drunk. (as said)
CROWN PROSECUTOR: Yes.
WITNESS MCSWIGGAN: I would say in terms of the number of cans that’s not fixed. In terms of the fact that he said that he created his own level of inebriation after the accident. That would seem to remain fairly fixed between the two of us.
CROWN PROSECUTOR: So how do you say it’s more likely that he’s given versions as a result of his neuro cognitive deficits and that he simply made up some evidence to explain the fact that he had a high blood alcohol reading?
WITNESS MCSWIGGAN: I would say that both of them seemed - in a way it’s his way of trying to explain what he says as the reason behind this extraordinary high BAC.
CROWN PROSECUTOR: And that would amount to a process of reasoning about the high blood alcohol content reading wouldn’t it?
WITNESS MCSWIGGAN: It would have - the evidence didn’t speak to the opposite.
CROWN PROSECUTOR: Well even though the evidence speaks to the opposite, the accused is going through a reasoning process about having a high blood alcohol content and needing to provide an explanation isn’t he?
WITNESS MCSWIGGAN: Yes.
CROWN PROSECUTOR: Doesn’t he therefore show insight into the effect of the evidence that it could have in this trial?
WITNESS MCSWIGGAN: The level of insight when you’re, as you said making up evidence, when it doesn’t correlate with the objective evidence would demonstrate to me probably not a great level of insight. Because his version would be discounted quite easily by all the witnesses.
CROWN PROSECUTOR: You would accept that he is able to give instructions to his lawyers about his version of the events that he wants put before the court isn’t it?
1. Dr McSwiggan acknowledged that the accused gave a version to his lawyers but did not “necessarily” agree that he would be able to give instructions whereby he can understand and appreciate what his lawyer is saying to him about the weight of the evidence.
1. The Crown put questions about the article, Exhibit D, and read passages from it at page 848 (the Crown incorrectly referred to page 838 or was misheard) half way down the second column beneath the heading Understand the substantial effect of evidence.
1. The article specifically refers “Defendants are only required... rudimentary, (I.e.) basic of the evidence against them”?
2. At the end of the paragraph it continued “… the defendant must understand that the prosecution’s evidence is averse to them, that the evidence could lead to a finding of guilty and what the evidence generally suggests (e.g. that they were present at the time of the crime that they intended to commit the crime).”
3. Dr McSwiggan did not accept the proposition that the accused understands the evidence of his blood alcohol concentration and that it is averse to him.
4. Upon Ms McSwiggan assessment alone, and even without the more comprehensive consultation by Ms Barhon but especially with it, I find this proposition to be implausible.
5. Dr McSwiggan said, transcript page 40 line 35.
WITNESS MCSWIGGAN: Well I suppose if I think about understanding, and this article they speak about understanding as more than just a basis understanding. And that substantial effect is not defined in the legislation that’s taken to mean that it could lead to - but it’s against him.
CROWN PROSECUTOR: I will come to that quote in a moment. Certainly the accused understands that the blood alcohol reading means that he’s had a lot to drink?
WITNESS MCSWIGGAN: He doesn’t accept that that evidence is true.
CROWN PROSECUTOR: Is it the case that he doesn’t accept that that was his reading at the time of the accident. Or is it the case that he doesn’t accept that eight to ten schooners as he told you, eight to ten cans of beer would get him to that level?
…..
CROWN PROSECUTOR: I think there may be - there’s potentially two issues at play. Is it the case in your opinion that the accused doesn’t understand that eight to ten schooners of - eight to ten cans of beer would get him to that blood alcohol level?
WITNESS MCSWIGGAN: Would not get him to that blood level, yes.
CROWN PROSECUTOR: But that’s the accused’s explanation for the blood alcohol reading isn’t it that he gave to you?
WITNESS MCSWIGGAN: Yes.
CROWN PROSECUTOR: So he understands that the blood alcohol reading shows that he consumed a significant quantity of alcohol. Is that fair to say?
WITNESS MCSWIGGAN: He doesn’t accept that the blood alcohol evidence is truthful--
HIS HONOUR: That’s a different topic(?).
WITNESS MCSWIGGAN: Yes. And then he converts to the idea of then trying to say that - the first part was it was the eight to ten cans and then me saying “it wouldn’t get you up to a blood alcohol level of that level”. And then the challenging, he said he doesn’t believe the point 22.
CROWN PROSECUTOR: And he has given some evidence I think - he’d given a version to Ms Barhon, you would accept that he referred to factors such as not having eaten anything and having been animated as having increased his blood alcohol level as well. Do you accept that?
WITNESS MCSWIGGAN: Yes.
CROWN PROSECUTOR: I propose to be very quick. Not longer than five minutes I’d expect. Doctor if I can take you over to page 849, two third of the way down the second column at page 849 it says “in some the ability to follow the substantial effect of evidence only requires basic abilities. Defendants must understand that the prosecution’s evidence is adverse to them and could lead to a finding of guilt for the offences as charged. Defendants must understand generally the substantial effect of the evidence such as whether the evidence implies intent to commit a crime”?
WITNESS MCSWIGGAN: Yes.
CROWN PROSECUTOR: The fact that the accused doesn’t believe the evidence is true doesn’t fall within those guidelines does it?
WITNESS MCSWIGGAN: He doesn’t understand that the prosecution’s evidence is going to be adverse to him in terms of that BA, so because he just ..(not transcribable)..
CROWN PROSECUTOR: Well it’s evidence that he knows it’s going to be adverse to him that he’s trying to provide explanations for it, innocent explanations isn’t it?
WITNESS MCSWIGGAN: Yes. Four explanations.
CROWN PROSECUTOR: Four explanations albeit, but he’s providing explanations and that’s evidence that he knows is adverse to him in the trial. Do you agree with that?
WITNESS MCSWIGGAN: That there will be alcohol evidence that would be adverse against him.
CROWN PROSECUTOR: Yes.
WITNESS MCSWIGGAN: He knows that alcohol will be a component of the evidence but it’s the BAC, it’s the reading that he disbelieves.
1. This evidence concludes at transcript page 42 line 24.
2. The Crown went to page 852 of the article about half way down in column 1and the passage, “ In sum, the ability to instruct counsel requires that the defendant have the capacity to share their version of what happened and why, whether it is true and why. ….. Those answers however do not need to result in a defence that is good or in their best interests.”
3. Dr McSwiggan noted within the passage that the ability to instruct counsel requires defendant to express an opinion about the evidence, such as whether it is true and why.
4. The Crown returned to Ms Barhon who, when asked to comment upon this evidence, noted from the article that someone’s defence does not have to be in their best interests, it does not have to be what ‘we’ would consider, or what ‘we’ would choose as a defence, and this does not make them unfit nor able to instruct. She suggested there is confusion over whether the person must actually admit that the evidence is true. This is not the case as Dr McSwiggan has just said.
5. Ms Barhon added her comment regarding the term fixed false belief and whether wilful obstinance would suggest a level of adaptation. She said the accused has adapted his response and has demonstrated ability to think about things that would suggest some adaptation of thinking and ability to know, “why I’m going to do it this way or maybe I need to explain myself in another way.”
6. Upon the suggestion that the accused is potentially delusional, she said cognitive impairment would not cause delusions. Were it the case there would be other conditions to consider, such as a major neuro cognitive disorder, mental illness, which is not the case with the accused who has mild changes in his functioning.
7. The accused’s counsel then turned to Dr McSwiggan who confirmed that she did not suggest that the accused was delusional. Her conclusion as to concrete thinking was with regard to critical pieces of evidence and was the product of the alcohol related neurocognitive decline.
8. As to whether there was scope for an individual presenting with that condition to move away from that kind of concrete thinking she said it is possible.
9. Her evidence thereafter was confusing, but I understand it and later questions by the accused’s counsel to be upon the topic whether the accused might become fit at some point or is burdened hereafter with the asserted affliction.
10. She referred to delusion not amounting to a delusional disorder or psychosis, and the use of the word as a psychiatric explanation or definition. She went on to speak of what she had seen of remission or changing or the ability to convince someone to appreciate their situation which is commonly done for neuropsychology under medical conditions. She spoke of hospital work, excepting conditions like cancer or heart attack and what ‘we’ would commonly do, that is, try and represent the information as often as ‘we’ can, for them to see the perspectives of the person who it trying to explain them, to see whether they can engage in any kind of better self-reflection.
11. Dr McSwiggan referred to the fact that the accused had the subject evidence for six months, and that upon her assessment of him she does not have a great deal of hope that challenging him further on it will allow him to appreciate that, to quote her:
this point to - is a concept that will indeed impact substantially on his implications and the case and his decisions he’s making around it.
1. The accused’s counsel next asked whether in her view does what she said materially impact upon any decision the accused might be able to make about the defence upon which he would rely at trial She responded yes and thereafter acknowledged awareness of s. 36(1) Mental Health and Cognitive Impairment Forensic Provisions Act 2020. Her concerns include the accused’s ability to decide what defence he will rely on and make that decision known to his legal representative and the Court, and the ability for reasoning underpinning his decisions.
2. Upon the issue of the permanency of the accused’s condition his counsel put questions to Ms Barhon from which she offered the view that considering her diagnosis there is possibility of improvement through time. She said it is the nature of mild neurocognitive impairment that many never progress from there and may stay at that subtle level but some go on to improve, and in this case she thinks it is possible if he abstains.
3. The accused’s counsel addressed Dr McSwiggan who referred to the level of abstinence, and the need for nutrition. Some make gains but for others it is permanent. For the accused, she thought it unlikely that his capacity to decide what defence he might make or understand the weight of the evidence against him is going to improve through time considering he has had the evidence with him for at least six months. If remission were likely it would have occurred by now. To achieve abstinence she said he would probably require a medical withdrawal because he will exhibit the signs and symptoms of severe alcohol withdrawals should he stop from one day to the next. He would require thiamine infusions.
4. Ms Barhon, said in response she did not necessarily agree with what Dr McSwiggan said. There were multiple elements in what she raised. Someone with extremely severe substance use over an extended period of time, as significant as what Dr McSwiggan suggests, would invariably lead to hospitalisation because they might have developed such as Wernicke encephalopathy with ophthalmological changes, ataxia, and acute states of confusion. These can lead on to a Korsakoff syndrome with major significant cognitive impairments from alcohol use. When someone is extremely impaired, they must be in supported accommodation but there may still be substantial improvement in a number of those individuals. In cases like this, where someone is only presenting with mild changes, improvement is much more likely. Given that the changes to cognition on testing are only modest, there’s a much higher likelihood of improvement with abstinence. When someone drinks excessively for a long time, more often than not they will present with Wernicke-Korsakoff encephalopathy to hospital and that usually triggers some indication of substance use issues with alcohol. Over time if it is happening repeatedly and there’s no recovery and no treatment this can lead on to a Korsakoff syndrome or Wernicke-Korsakoff syndrome.
5. Ms Barhon continued, if the accused abstained, there is evidence that individuals with mild cognitive impairment within even short time frames under 12 months can show substantial improvement.
6. At the conclusion of the evidence, and after discussion and preliminary submissions the proceedings were adjourned for judgement and to allow the parties to prepared written submissions with access to transcript.
The Crown Submissions
1. The Crown submitted in writing:
1. The opinion of both experts is that the accused meets the diagnostic criteria for severe substance use induced minor/mild neurocognitive disorder. Dr McSwiggan is of the opinion that the accused is not fit to be tried, with no real likelihood that he might become fit within the next 12 months. Ms Barhon is of the opinion that the accused is fit to be tried.
2. The Crown provided background consistent my summary and referred to the relevant provisions of the Mental Health and Cognitive Impairment Forensic Provisions Act 2020. including s 36(1) providing for the test for fitness. I agree that the effect of s 36(1) and the effect of s 36(2) is that previous common law considerations remain relevant: R v Presser (1958) VR 45, subsequently affirmed in Kesavarajah v R (1994) 181 CLR 245 (“Kesavarajah”). Smith J said in Presser:
“… the question, I consider, is whether the accused, because of mental defect, fails to come up to certain minimum standards which he needs to equal before he can be tried without unfairness or injustice to him. He needs, I think, to be able to understand what it is that he is charged with. He needs to be able to plead to the charge and to exercise his right of challenge. He needs to understand generally the nature of the proceeding, namely, that it is an inquiry as to whether he did what he is charged with. He needs to be able to follow the course of the proceedings so as to understand what is going on in court in a general sense, though he need not, of course, understand the purpose of all the various court formalities. He needs to be able to understand, I think, the substantial effect of any evidence that may be given against him; and he needs to be able to make his defence or answer to the charge. Where he has counsel he needs to be able to do this through his counsel by giving any necessary instructions and by letting his counsel know what his version of the facts is and, if necessary, telling the court what it is. He need not, of course, be conversant with court procedure and he need not have the mental capacity to make an able defence; but he must, I think, have sufficient capacity to be able to decide what defence he will rely upon and to make his defence and his version of the facts known to the court and to his counsel, if any.”
1. Kesavarajah, adds that regard must be had to the length of the trial. In their joint judgement Mason CJ, Toohey and Gaudron JJ stated:
In the context of a trial, fitness to be tried is to be determined by reference to the factors mentioned by Smith J in Presser and by reference to the length of the trial. It makes no sense to determine the question of fitness to be tried by reference to the accused’s condition immediately prior to the commencement of the trial without having regard to what the accused’s condition will or is likely to be during the course of the trial.
1. This is recognised in section 44(5) of the Act.
2. The definitions of mental health impairment and cognitive impairment are set forth in s 4 and s 5 of the Act.
3. The Crown referred to the provisions guiding the court were the accused be unfit, but upon my decision that the accused is not unfit it unnecessary to discuss them.
4. A summary of the reports and the evidence from the neuropsychologists is provided but considering the detail with which I have explored their representations for this judgement I shall make limited reference to the passages identified.
5. Each neuropsychologist conducted interviews with and provided assessment of the accused. Dr McSwiggan conducted her first via AVL for 60 minutes on 31 October 2023, and after service of the pharmacologist’s report conducted a further 20-minute interview via AVL on 16 January 2024. Tests were administered during the first interview only.
6. Ms Barhon’s interviews and assessment were in person on 20 February 2024 for 3.5 hours (including a 15-minute break), and for a further 75 minutes via AVL on 27 February 2024.
7. The Crown summarised Dr McSwiggan’s reports and her conclusions that the accused at the time of the evaluations, on balance, could not satisfy the minimum criteria and accordingly could be considered as unfit. Upon her evaluation, there is no is modification to the processes or assistance to the accused that would facilitate his understanding and effective participation in complex legal proceedings. The Crown referred to her reasons for these conclusions. In her supplementary report after access to the pharmacologist’s opinion she maintained her opinions.
8. In her second report Dr McSwiggan’s opinion extends to the proposition that the accused demonstrates concrete thinking “that borders on irrational” . She provided her opinion in relation to remission:
Mr Gall’s cognitive impairment is more likely than not permanent. Some persons can make some modest gains when they cease alcohol and receive adequate nutrition and treatment (Thiamine) for a period of at least seven months (such as the forced remission and food services of custody). Mr Gall is not in this position. There is no real likelihood that Mr Gall will become fit in the next twelve months in my opinion based on the severity of his cognitive impairment, with no real prospect of voluntary remission of alcohol and treatment.
1. Dr McSwiggan did not provide reasons why she is of the view the accused is not one who can improve through abstinence, nutrition, and treatment.
1. The Crown summarised Dr Barhon’s first report:
1. The accused willingly participated but was ‘often dismissive and prickly’, and at times unwilling to divulge certain information. At times he did not put forth his best efforts, was evasive during discussion about his alcohol use history, suggesting minimisation of his drinking. She provided examples.
2. She suggested the tests by Dr McSwiggan via AVL, might have hampered engagement and performance.
3. Dr McSwiggan’s diagnosis should be classified as “severe alcohol use disorder with alcohol-induced mild neurocognitive disorder, persistent”.
4. The accused meets the criteria for a mental health impairment upon clinically significant mood disturbance impacting on sleep. Further clinical interview is needed to further explore current symptomatology, he is likely suffering from PTSD after the collision. In partial agreement with Dr McSwiggan, the accused suffers from Alcohol Use Disorder (in early remission) with Alcohol Induced Mild Neurocognitive Disorder.
5. Research generally suggests there can be recovery of some cognitive functioning typically over the first one to two years after the individual abstains. The likelihood and extent of recovery depends on factors including quantities of and duration of alcohol consumption, age, and overall health status.
6. In February 2024, the Accused reported abstinence from alcohol since the collision.
7. Upon balance the accused is fit to be tried. He demonstrated preserved recent memory including key details of the collision, expressed ability to recall and understand the information provided by his legal representatives, and had at least superficial understanding of fundamental aspects of proceedings. He was aware of the charges, plea options, why he intended to plead not guilty, and the significant effect of the likely evidence against him. He demonstrated a limited understanding of some intricacies of legal proceedings (such as his right to challenge jurors)< He could be further educated on these and appeared to understand the concepts when briefly explained in simple terms.
8. There is evidence of a decline in some aspects of cognition, most likely due to long-term effects of sustained heavy alcohol use. The level of decline was insufficient to render him unfit to plead or stand trial. Modifications could facilitate his participation, with a support person including his legal representatives from whom to seek clarification or repetition of information when necessary, with regular rest breaks (every hour) to confer. She referred to mild hearing loss.
9. Ms Barhon addressed the fitness criteria in detail and said refusal to accept the evidence of intoxication beyond one schooner of beer at the time of the collision, which would implicate him if he acknowledged it, did not equate to an inability to reason. Despite low performance on several formal cognitive tasks, based upon all the information available he could make a defence and answer the charge, with support from his legal representation.
1. The Crown summarised her first supplementary report after consultation on 5 June 2024, provided in response to Dr McSwiggan’s neuropsychological test data. Ms Barhon concluded that the results do not alter her opinion.
2. The Crown summarised Dr McSwiggan’s second supplementary report of 11 June 2024, and challenges her assertion that the accused’s version was not evidence of reasoning.
1. His view of the evidence was it had little no importance for his case, and he gave it little to no weight when considering his decision. His reasoning was impacted by impaired insight and his responses showed failure to accept or believe the evidence. His denial of the blood alcohol concentration results showed his beliefs surpassed wilful obstinance.
2. In summary, the effects of alcohol related brain damage left the accused unable to understand the substantial effect of the evidence against him, which has more likely than not resulted in his choice of defence, without comprehending its impact or implications.
1. The Crown summarised Ms Barhon’s second supplementary report of 19 June 2024:
1. She disagreed with the conclusion that the accused’s reasoning is impacted by impaired insight and does not align with the requirements of fitness.
2. For ‘key pieces of evidence’ (such as his criminal history for drink driving and CCTV footage of him at the Colo Pub) the accused did not demonstrate problems with reasoning and insight; this demonstrates insight and capacity to reason about his circumstances.
3. It is not unusual for individuals with alcohol issues to underreport consumption and become defensive and reluctant to discuss their use, as was the case with the Accused.
4. It is standard practice for more extensive testing than performed by Dr McSwiggan for an opinion about executive functioning.
1. The Crown made submissions upon oral evidence from Dr McSwiggan.
1. The experts agreed that the accused met the diagnostic criteria for substance use induced mild/minor neurocognitive disorder; that there was not an “amnestic” quality to the accused’s memory, that if there was to be improvement in the accused’s condition, it would be expected to be within 12 months.
2. Dr McSwiggan gave evidence about “reasoning” to which I referred earlier found at transcript 4.44-15.12.
3. The Crown noted her evidence about “concreteness of thinking” at transcript 16-17.
4. The Crown noted that Dr McSwiggan said she vigorously canvassed the blood alcohol concentration with the accused at transcript 25.15 and referred to her further evidence at transcript page 26.16-39.
5. The Crown noted that Dr McSwiggan gave evidence about the accused’s purported consumption after the collision at transcript 28.12-16.
6. The Crown noted the evidence by Dr McSwiggan dealing with some of Ms Barhon’s report –transcript 28.50 - 29.
7. The Crown noted Dr McSwiggan’s opinion that the accused’s “lack of reasoning” would impact his ability to instruct his lawyers: transcript 30.20-27; and cross examination at transcript 32.33-44.
8. The Crown noted her evidence regarding the broader aspects of the Crown case: transcript 35.4-38 and 38.25-36.
9. Dr McSwiggan accepted that the accused reasoned about having a high blood alcohol concentration and needed an explanation for it: transcript 39.18; and gave evidence about insight and the ability to give instructions:
WITNESS MCSWIGGAN: The level of insight when you’re, as you said making up evidence, when it doesn’t correlate with the objective evidence would demonstrate to me probably not a great level of insight. Because his version would be discounted quite easily by all the witnesses.
CROWN PROSECUTOR: You would accept that he is able to give instructions to his lawyers about his version of the events that he wants put before the court isn’t it?
WITNESS MCSWIGGAN: He gave a version but I don’t necessarily agree that he would be able to give instructions whereby he can understand and appreciate what his lawyer is even saying to him about the weight of the evidence?
1. The Crown noted her evidence relevant to section 36(1)(i) of the Act (TT45.5-10):
BROADBENT: Having regard to section 36(1)(i), that is decide what defence the person will rely on and make that decision known to the person’s legal representative and the Court. The concern that you have is in relation to the decision, correct?
WITNESS MCSWIGGAN: The reasoning underpinning the decision.
1. The Crown addressed the oral evidence of Ms Barhon.
1. At transcript 19.10-38, after reflecting on the time spent with him, she said if there was concreteness of thinking and reluctance to discuss blood alcohol concentration evidence it was not an obvious feature of his presentation.
2. He was dismissive of his blood alcohol content as a topic with which he perhaps uncomfortable. He was quite agitated; he remembered there were blood tests that had showed that he had alcohol in his system and he was dismissive of it.
3. With reference to her report she said that when he brought up that there had been some blood tests done to look at his blood alcohol level he didn’t want to discuss it because it was uncomfortable for him. She thought him aware it was detrimental to him and he was quite reluctant to talk about it in detail.
4. Reasons why a person might not accept evidence include concern about what the admission would mean, they might be in a defensive state, it might be prior experience, it could be environmental factors. She said there is a number of reasons not necessarily equating to someone’s underlying level of cognitive functioning: transcript 21.14-19.
5. Upon whether it would be preferable to have been more robust with the accused regarding problematic aspects of the evidence, at transcript 21.21-22.15. she did not agree that it would have resulted in the opinion that the accused has concrete thinking. There were other ways to consider his ability to reason, his insight, and forethought. In other aspects of his functioning, he demonstrated awareness of other elements of his matter, the presence of other evidence, and the ability to reason about other issues. For example he volunteered that he was aware that there was blood taste taken that suggested that he had been drinking alcohol. He could reflect on some of the issues, that they were averse to him and he was sufficiently aware to think about his extensive drink driving history. This suggests he has considered them and has chosen a line of thinking that perhaps others would not take but that does not equate to someone not having the ability to reason.
6. He wanted to explain that he’d had multiple drinks after the collision and felt that is what had contributed to his level of intoxication. Combined with awareness that he had not eaten much for 24 hours beforehand and had other alcohol in this system, which perhaps had worn off, it was his choice to make such a defence.
7. At transcript 32.46-33.37 she referred to the aggravated component of the charge he faces, and that when challenged that related to the allegation he was intoxicated at the time of the collision he said he was not drunk because otherwise he would not have stopped. Her memory was that she put to him the evidence that he was intoxicated at the time, which explained the aggravated charge. He said he had only one schooner at the Colo pub and after the collision consumed six cans of beer which explained his blood alcohol concentration. He did not say to her that the reading was wrong.
8. An inability to reason would not be confined to one piece of evidence: transcript 36.44-37.3
9. Ms Barhon was asked whether she would expect inability to reason would be confined to one piece of evidence: transcript 36.44-37.3. If someone has concrete thinking there would be no choosing between items of evidence.
1. The Crown submissions then dealt with the likelihood of improvement which I need not discuss considering my finding that the accused is fit for trial.
2. I agree with the Crown’s submissions that I would find on the balance of probabilities that the accused is fit to be tried for the reasons offered, namely,
1. The evidence demonstrates that it is more likely than not that the accused can understand the substantial effect of the evidence to be given against him;
2. Can make a defence and answer the charge;
3. Can instruct his legal representatives to mount a particular defence and provide a version of facts accordingly; and
4. Can decide what defence to rely upon and make that known to his legal representatives and the Court.
1. I find that the accused demonstrated insight into the effect of various pieces of evidence in the case, including an understanding of the adverse effects of the evidence for him, and provide his version of events in reply.
2. I agree that accused’s explanations for the blood alcohol concentration made on separate occasions do not demonstrate ‘concrete reasoning’, as the term was explained by the expert witnesses. His version changed when repeated on different occasions, initially telling Ms Barhon he had one schooner at the Colo Pub, then stating that he later had four to six XXXX gold cans, which he asserted explains the blood alcohol concentration, later telling Dr McSwiggan that he had eight to ten drinks after the collision and that the blood alcohol concentration reading was wrong.
3. I agree with the submission that the accused’s provision of reasons and excuses to explain the blood alcohol concentration demonstrates insight and understanding that the evidence is averse to him and would be used to demonstrate that he was intoxicated at the time of the collision, unless it could be explained by consumption of alcohol after the collision.
4. I agree with the submission upon the accused’s acknowledgement other evidence of alcohol use would be expected in the trial, including the CCTV footage from the Colo pub prior to the collision, and his drink driving history.
5. I find that the accused understands the adverse nature of the blood alcohol concentration and the effect it will have against his assertion that he was not intoxicated at the time of the collision and showing that his differing versions of how much alcohol he consumed between the time of the collision and the blood alcohol testing were a deliberate attempt to provide an alternative explanation for the evidence.
6. I do not accept that he is unable to understand the substantial effect of the evidence or provide instructions to his legal representative due to cognitive impairment.
The Accused’s Submissions
1. The accused submitted in writing.
2. These provide an uncontroversial summary of the events leading to the collision, the investigation that followed, and the accused’s prosecution. They provide a summary of the evidence on behalf of the accused. All of this is consistent with what I have provided hereinbefore.
3. The submissions acknowledge that the Crown has accurately set out the relevant provisions of the Mental Health and Cognitive Impairment Forensic Provisions Act 2020 and primary common law principles applicable when determining whether a person is fit to be tried.
4. The key areas of dispute between the experts are noted, in particular the accused’s capacity to meet the following criteria from s 36(1) of the Act:
1. To understand the substantial effect of any evidence given against the person: s 36(1)(f) •
2. To make a defence or answer to the charge: s 36(1)(g) •
3. Instruct his legal representative so as to mount a defence and provide his version of the facts to that legal representative and to the court if necessary: s 36(1)(h) •
4. Decide what defence he will rely on and make that decision known to the person’s legal representative and the court: s 36(1)(i).
1. The submissions note that the issue revolves around the accused’s understanding and appreciation of the significant blood alcohol concentration.
2. The submissions acknowledged correctly that the test for fitness does not require perfection, nor complete understanding of the proceedings or that the accused necessarily be able to understand the applicable law, and a person cannot escape trial simply by establishing that they have low intelligence: Roberts v R [2023] NSWCCA 187 at [17].
3. Whether the accused is legally represented may also be relevant to the assessment of his ability to sufficiently understand the proceedings. The tests “may not be very difficult to meet”: Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29 at [298] per Hayne J.
4. Roberts v R ibid is also cited for the proposition that the criminal justice system is called upon hear matters concerning people with mental disorders, abnormalities, or delusions, which may be severe, and such conditions do not per se prevent an accused from being brought to trial. A mental disorder as defined in the Act may cause an accused to conduct a defence in a manner which the court considers to be contrary to their best interests but this does not of itself mean they are unfit: Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29 at [24]-[27] per Gleeson CJ; R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7 at [298]-[302]. 23.
5. The accused submits that the question of fitness here turns less upon whether any decision about the blood alcohol concentration evidence might be against the accused’s best interests, and more upon whether the accused can understand the substantial effect of that evidence.
6. The accused submits that evidence relevant to his reasoning process about the blood alcohol concentration is the critical feature in this instance.
7. The submissions address Dr McSwiggan’s evidence that the accused exhibited symptoms characteristic of a person with alcohol-related neurocognitive decline. She differentiated between cognitive aspects and neuropsychiatric aspects and agreed that she observed a degree of superficiality, irritability, impression management, and concreteness of thinking in him. His rigidity of thought was demonstrated in responses to her ‘vigorous’ challenge regarding the blood alcohol concentration evidence and she concluded that his inability to conceptualise the evidence reflected his alcohol related neurocognitive decline.
8. The submissions note that Ms Barhon did not agree that the accused exhibited concreteness of thinking or a superficial affect and attributed any irritability to his frustration from not wanting to undertake the assessment. Nonetheless, Ms Barhon did not think he deliberately exaggerated or feigned memory impairment, but he was “not really applying himself”.
9. The accused submits that the Court would accept Dr McSwiggan’s evidence over that of Ms Barhon on this issue, because of Dr McSwiggan’s extensive experience assessing and evaluating individuals suffering from alcohol related neurocognitive disorders, and second, because Ms Barhon did not directly challenge Mr Gall on the blood alcohol concentration results, which is a critical plank of the Crown case and a significant piece of evidence, especially in the context of the assessment of his reasoning capacity. Moreover, Ms Barhon accepted that concrete thinking “can be” consistent with a diagnosis of alcohol-related brain injury although she qualified this with her finding that the accused suffered mild cognitive impairment.
10. I do not accept that I should prefer the opinions of Dr McSwiggan as I shall explain hereunder.
11. Dr McSwiggan explained that neuropsychological tests do not always capture subtleties and, other than indicating whether a person is mildly, moderately, or severely impaired, cognitive testing does not make any predictions in terms of someone’s capacity.
12. Dr McSwiggan devoted her second assessment to challenging him on the blood alcohol concentration evidence.
13. The accused submits that the Court would have difficulty accepting Ms Barhon’s evidence that because there were other aspects of the evidence about which the accused was able to respond, it could not be concluded that the failure to reason through the blood alcohol concentration evidence was a significant indicator of unfitness. She referred to his awareness of the blood test results and that his criminal history may operate against him. The accused submits that this awareness does not demonstrate reasoning as explained by Dr McSwiggan, namely, the ability to consider elements to a decision, weigh those elements, and appreciate their importance.
14. I do not accept this submission.
15. Ms Barhon accepted the distinction between someone offering a reason and the reasoning process behind their decision.
16. Dr McSwiggan considered that concrete thinking is a neuropsychological aspect of the condition. Ms Barhon was asked questions about this at transcript 23.15:
WITNESS BARHON: I do think that he has, as I said, mild neurocognitive disorder which could be attributed to his alcohol use. But I also am under the impression as I indicated in my report that he has been experiencing some mood disturbance as a result of the offence and subsequent legal matter.
BROADBENT: In your clinical view, which is more likely the cause of those symptoms?
WITNESS BARHON: Well, which symptom?
BROADBENT: Concreteness of thinking.
WITNESS BARHON: I would say concreteness of thinking can occur in both but in this instance, concrete of thinking, I would be looking more towards the alcohol related neurocognitive condition.
1. The submissions include that it would be open to the Court to find that the accused is impaired with respect to at least 4 of the criteria, namely s 36(1)(f)-(i) of the Act. The accused does not contend that an accused would be found unfit whenever they do not wish to accept a piece of evidence which conflicts with their intended defence, as was expressed by Ms Barhon. However, the question is whether the accused fails to satisfy one or more of the criteria for fitness under that provision. The fitness criteria reflect minimum standards, the purpose to ensure effective participation by an accused in their trial: R v Maxwell [2023] NSWSC 1189 at [91] (Yehia J).
2. The accused submits relying on Dr McSwiggan’s evidence, that the accused’s inability to evaluate the substantial effect of the blood alcohol concentration evidence and provide instructions which reflect an understanding of the weight of the evidence against him would lead the Court to conclude that he is impaired in his ability to understand the substantial effect of the evidence, instruct his lawyers to mount a defence and decide what defence to rely on.
3. I do not accept that the evidence allows a finding that he has an inability to evaluate the substantial effect of the blood alcohol concentration evidence.
4. The accused submits that the specific circumstances of this matter require close consideration in determining whether the accused’s ability to meet any of the criterion in s 36(1) of the Act is impaired, noting that:
1. It is agreed he has a diagnosis of alcohol induced mild neurocognitive disorder;
2. Some of his symptoms include irritability, superficiality, concreteness of thought, and lack of impression management, and that these are related to his condition;
3. The blood alcohol concentration evidence is objectively overwhelming evidence that at the time of the collision the accused was substantially affected by alcohol; •
4. The accused was adamant in instructions that he was not affected by alcohol at the time of the collision and when challenged on the evidence says that he does not believe it and it must be wrong.
1. Dr McSwiggan states:
Based on my previous evaluation, Mr Gall demonstrated grossly impaired insight in relation to the substantial impact of the evidence as a result of his inability to accept or believe the feedback he was given in order to consider alternative perspectives. In addition to his distorted, pathological capacity for self-reflection, his responses showed a failure to accept or believe the evidence (BAC) and that he “can’t be wrong” about this. His denial of the BAC results showed his beliefs surpassed wilful obstinance.
1. The accused submits that Ms Barhon’s formulation that the accused’s attitude demonstrates mere refusal to accept the evidence should not be accepted. Considering that Ms Barhon did not challenge the accused upon the strengths of his belief or the reasons for it, it is difficult to see how she could reach such a robust view of the accused’s reasoning. Conversely, Dr McSwiggan challenge him on the evidence of blood alcohol concentration and the consumption of alcohol after the fact.
2. Regardless of the contrast drawn, upon the more comprehensive approach by Ms Barhon to the assessment of the accused l accept her opinion on this.
3. The accused submits that on balance, he cannot be said to ‘understand’ the substantial effect of the evidence if, by reason of a neuropsychological symptom of his condition, he does not believe it or is ultimately of the view that the evidence is “wrong”. This was of significance to Dr McSwiggan because the blood alcohol evidence was ‘direct and objective’ evidence rather than circumstantial. While a ‘rudimentary’ understanding may be sufficient to satisfy s 36(1)(f) and acknowledging that the accused need not have the ability to undertake a detailed and intelligent analysis of the prosecution case: R v Dellamarta [2020] VSC 745 at [84], he submits that an understanding must involve more than mere awareness of the existence of evidence. As Dr McSwiggan points out, understanding involves comprehending the evidence and appreciating it in relation to the particular circumstances. The evidence related to the blood alcohol concentration is neither complex, nor esoteric. Despite its simplicity, however, Dr McSwiggan is of the view that the accused has difficulties with the appreciation element, noting that difficulties with higher order thinking are common symptoms associated with his condition.
4. I do not accept this proposition. I find that the accused has in his responses to both experts that he understands the evidence and appreciates its effect.
5. The accused submits that the words ‘substantial effect’ used in s 36(1)(f) of the Act imply some more significant understanding. Where, as in this case, the blood alcohol concentration evidence appears overwhelming, the accused’s inability to reason in relation to it in particular reveals lack of capacity to understand the ‘substantial effect’ of evidence given against him. The fact that the accused could comprehend that there was other evidence adverse to him does not diminish this proposition, given the overwhelming significance of the blood alcohol concentration evidence.
6. I do not accept this submission.
7. Moreover, Dr McSwiggan’s concern about the accused’s process of reasoning regarding the blood alcohol concentration evidence means that in her view his capacity to decide what defence to rely upon under s 36(1)(i) of the Act is also impaired. In the absence of any thorough assessment or consideration by Ms Barhon of the accused’s decision-making capacity, the accused submits the Court would prefer Dr McSwiggan on this aspect.
8. The submissions proceed with the question of permanence but since I find that the accused is fit for trial I do not intend to address them on this point.
9. If the Court finds the accused fit for trial, an order should be made remitting the matter to a Magistrate for the holding of a case conference under Division 5 of Part 2 of Chapter 3, Criminal Procedure Act 1986: s 52(2) Mental Health and Cognitive Impairment Forensic Provisions Act 2020.
Consideration
1. I question the reliability of Mr Marks’ evidence of the accused’s incapacity considering the history he provides none of which extended to limit the accused’s opportunities to drive of which Mr Marks must have been aware through their close association.
2. I do not accept that the accused’s denial wrong doing and assertions that he had not been drinking before the crash, apart from one schooner of beer, in the face of compelling evidence to the contrary is of itself sufficient basis upon which to find that he is unfit for trial. I have weighed the opinion of Dr McSwiggan offered to explain the accused’s response to the evidence. Implicit in the opinions advanced on the accused’s behalf is the proposition that he believes his version of events to explain his blood alcohol concentration, upon which he rejects the cogent evidence against him because of his concrete thinking as opined by Dr McSwiggan. I do not accept this considering the events described by the witnesses who saw him and interacted with him after the collision, and his explanations for the collision including that the deceased came into his path notwithstanding the accused’s progress along the roadway to the point of the collision.
3. Contrary to what is said of the accused by those speaking for him, and Dr McSwiggan, rather than not having an adequate understanding of the case against him and the evidence available to the Crown to prove it, I find that his utterances in the representations attributed to him by Dr McSwiggan and Ms Barhon reveal that he understands the case against him to be that he consumed a large amount of alcohol before the collision, but denies that he did so, asserting that his intoxication was from his consumption afterward, and that the witnesses who say otherwise are wrong. This does not persuade me that he is unfit for trial.
4. The first assessment by Dr McSwiggan was via audio visual link and for one hour only. This was for clinical assessment and limited testing. Notwithstanding the confidence with which Dr McSwiggan relies upon her seniority and skill gained in practice over the years, I am not persuaded by her asserted capacity to focus upon what she perceived to be an adequate level of testing and sufficient enquiry of the accused for her assessment. This is not to suggest that Dr McSwiggan has not faithfully described her perception of the test results, but considering the circumstances in which they were administered in what I find to be less time than appropriate, I am circumspect about the opinions offered upon them.
5. I am not persuaded that the limitations which Dr McSwiggan observed provided sufficient scope to properly assess the accused’s fitness. In conjunction with the time constraints the use of an audio-visual facility must have had some limiting impact, in contrast to the in-person consultation undertaken by Ms Barhon over the longer period with a broader range of psychometric testing administered. Dr McSwiggan it would seem accepted the representations by the accused and Mr Marks without exploring further, in contrast to Ms Barhon who asked for further information from the accused testing the reliability of his initial representations to her.
6. The reliability of the clinical assessment by Dr McSwiggan must depend upon the veracity of the representations she attributed to the accused. His assertion that he did not take drinks before the collision that contributed to his blood alcohol concentration, and his representations that the blood alcohol concentration arose from his consumption of beer after the collision, gives rise to incongruity because of inconsistency between the argument that he is so burdened from long term alcohol use causing symptoms limiting his capacity to participate in his proceedings, and his representations asserting his innocence that the blood alcohol level, whatever it might be, was the product of drinks consumed after the collision.
7. The first supplementary report by Dr McSwiggan provided on 6 January 2024 was once again via audio visual ling for 20 minutes only, again providing but limited opportunity for the assessment sought.
8. The history gleaned by Ms Borhan indicates a level of competence in the accused above the observations by Dr McSwiggan, Mr Marks, and Ms McCarthy.
9. I agree with Ms Borhan’s observation that since the accused could demonstrate the capacity to reason and think flexibly on testing, despite variability across performances, his refusal to accept the evidence that he was intoxicated with alcohol beyond one schooner of beer at the time of the incident – which would implicate himself as guilty if he did acknowledge this fact - does not equate to an inability to reason.
10. I am not persuaded to accept the opinions expressed by Dr McSwiggan that the accused is unfit for trial.
Decision
1. I agree with the Crown’s submission that upon the balance of probabilities the opinion offered by Ms Barhon should be accepted and that the accused is not unfit for trial upon consideration of the criteria set forth in s 36(1) Mental Health and Cognitive Impairment Forensic Provisions Act 2020.
2. Specifically, I find that though by reason of the accused’s misuse of alcohol throughout a substantial period of his life, whereupon he was found by neuropsychologists Dr Sally McSwiggan and Ms Lucienne Barhon to suffer a mental health impairment and cognitive impairment, upon the cognitive testing administered and the comprehensive clinical assessment by Ms Barhon I find that he has demonstrated capacity:
1. To understand the offences the subject of the proceedings,
2. To plead to the charges,
3. With the assistance of his lawyers, to exercise the right to challenge jurors,
4. To understand generally the nature of the proceedings as an inquiry into whether he committed the offences with which he is charged,
5. To follow the course of the proceedings so as to understand what is going on in a general sense,
6. To understand the substantial effect of any evidence given against him,
7. To make a defence or answer to the charges,
8. To instruct his legal representative so as to mount a defence and provide his version of the facts to his representative and to the court if necessary,
9. To decide what defence he will rely on and make that decision known to his and the court.
1. I find there are no other grounds upon which the accused might be considered as unfit to be tried for the offences.
2. Ms Barhon accepts that there are challenges for the accused, but with appropriate arrangements, including a support person such as Mr Marks, to assist as might be required, together with his solicitor and counsel, he can participate in the proceedings in accordance with the above criteria.
3. I have considered the likely length and complexity trial, drawing upon the Crown Case Statement.
4. Upon representations attributed to the accused in the clinical assessments made by the neuropsychologists, as contemplated by s 44 Mental Health and Cognitive Impairment Forensic Provisions Act 2020, with appropriate modification of the trial process, if necessary, will facilitate the accused’s understanding and effective participation in the trial.
**********
Amendments
30 July 2024 - License plate redacted, full name taken out of title and other small formatting issues fixed.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 35,754 |
nsw_caselaw:191018c2411292fdaf7d4986 | decision | new_south_wales | nsw_caselaw | text/html | 2024-08-01 00:00:00 | Le v Angius; Angius v Angius [2024] NSWSC 924 | https://www.caselaw.nsw.gov.au/decision/191018c2411292fdaf7d4986 | 2024-08-04T23:55:13.460217+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: Le v Angius; Angius v Angius [2024] NSWSC 924
Hearing dates: 9–20 October 2023, 26 October 2023,
15–16 November 2023, 13–14 December 2023
02 February 2024
Date of orders: 01 August 2024
Decision date: 01 August 2024
Jurisdiction: Equity - Succession & Probate List - Family Provision
Before: Richmond J
Decision: See [434]-[437]
Catchwords: SUCCESSION — Family provision — Claim by alleged de facto partner of the deceased for provision from the deceased’s estate under Succession Act 2006 (NSW), Ch 3 — Whether eligible person — Whether in a de facto relationship at time of death
SUCCESSION — Family provision — Claim by grandchild for provision from the deceased’s estate under Succession Act 2006 (NSW), Ch 3 — Whether dependent at any time on the deceased — Whether factors warranting
Legislation Cited: Conveyancing Act 1919 (NSW)
Evidence Act 1995 (NSW)
Family Law Act 1975 (Cth)
Interpretation Act 1987 (NSW)
Succession Act 2006 (NSW)
Property (Relationships) Act 1984 (NSW)
Cases Cited: Angius v Salier [2019] NSWSC 184
Angius v Salier (No 5) [2023] NSWSC 678
Bowditch v NSW Trustee and Guardian [2012] NSWSC 275
Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392
Chisak v Presot [2022] NSWCA 100
Dridi v Fillmore [2001] NSWSC 319
Estate of Laura Angius; Angius v Angius [2013] NSWSC 1895
Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24
Fairbairn v Radecki (2022) 275 CLR 400; [2022] HCA 18
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gianna (Jenny) Angius v Gordon Albert Salier [2018] NSWSC 995
Gordon Salier v Robert Angius [2015] NSWSC 853
Hayes v Marquis [2008] NSWCA 10
Lalic v Lalic [2022] NSWSC 31
Lodin v Lodin [2017] NSWCA 327
McCarthy v Tye [2017] NSWCA 284
Minister for Immigration and Border Protection v Angkawijaya (2016) 236 FCR 303; [2016] FCAFC 5
NSW Trustee and Guardian v McGrath [2013] NSWSC 1894
Page v Page [2017] NSWCA 141
Petersen v Gregory; Estate Glen Alfred Petersen [2007] NSWSC 8
Piras v Egan [2008] NSWCA 59
Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14
Quijarro v Robson [2008] NSWSC 818
Re Fulop Deceased (1987) 8 NSWLR 679
Robert Angius v John Angius [2018] NSWSC 1772
Robson v Quijarro [2009] NSWCA 365
Saravinovski v Saravinovska [2017] NSWCA 85
Sheen v Hesan; the Estate of Zaheer [2023] NSWSC 468
Smoje v Forrester [2017] NSWCA 308
Spata v Tumino (2018) 95 NSWLR 706; [2018] NSWCA 17
Steinmetz v Shannon (2019) NSWLR 687; [2019] NSWCA 114
Sulliman v Sulliman [2002] NSWSC 169
Tarbes v Taleb [2023] NSWSC 565
Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285
Vaughan v Hoskovich [2010] NSWSC 706
Warner v Hung (No 2) (2011) 297 ALR 56; [2011] FCA 1123
Watson v Foxman (1995) 49 NSWLR 315
Zahra v Francica [2009] NSWSC 1206
Category: Principal judgment
Parties: Proceedings 2022/41064
Thi Quy Le (Plaintiff)
Jenny Angius (Defendant)
Proceedings 2023/31399
Natalie Angius (Plaintiff)
Jenny Angius (Defendant)
Representation: Proceedings 2022/41064
Counsel:
L Ellison SC / V Culkoff (Plaintiff)
M Painter SC / E Picker (Defendant)
Solicitors:
AKN Legal (Plaintiff)
Mills Oakley (Defendant)
Proceedings 2023/31399
Counsel:
M Pesman SC (Plaintiff)
M Painter SC / E Picker (Defendant)
Solicitors:
Bay Legal (Plaintiff)
Mills Oakley (Defendant)
File Number(s): 2022/00041064
2023/00031399
Publication restriction: Nil
Table of Contents
The claims
Rulings on supplementary evidence
Factual chronology
Events from the 1990s to Laura’s death in 2012
Events from 2012 to John’s death in 2022
The deceased’s testamentary intentions
The deceased’s estate
Statutory regime
Principles relevant to each plaintiff’s claim that she is an eligible person
De facto relationship
Wholly or partly dependant – s 57(1)(e)
Close personal relationship – s 57(1)(f)
Factors warranting
Approach to evidence
General observations on credit
Ms Le and witnesses called by her
Natalie and witnesses called by her
Jenny and the witnesses called by her
The evidence of witnesses called by Ms Le
Ms Le’s evidence
Lisa Reid
Matthew Reid
Alvin Johnson
Lesley Johnson
Austin Smith
Kolena Denis
Neil Johnston
Evelyn Moses
Jacqueline Varela
Ba Duc Hoang
Ba Thang John Hoang
Recordings of conversations
The evidence of witnesses called by Jenny
Kevin Batten
Nick Pappas
Jason Bates
Medical records
The evidence of witnesses called by Natalie
Natalie’s evidence
Silvana Salvatore
Domenic Dodaro
Francis Devine
Determination of Ms Le’s Eligibility
Plaintiff’s submissions
Defendant’s submissions
Consideration
De facto relationship
(a) The duration of the relationship
(b) The nature and extent of their common residence
(c) Whether a sexual relationship exists
(d) The degree of financial dependence or interdependence, and any arrangements for financial support, between them
(e) The ownership, use and acquisition of property
(f) The degree of mutual commitment to a shared life
(g) The care and support of children
(h) The performance of household duties
(i) The reputation and public aspects of the relationship
Close personal relationship
Factors warranting Ms Le’s application
Determination of Natalie’s eligibility
Provision to be made
Relevant principles
Consideration
Consideration of s 60(2) matters for Ms Le’s claim
The relationship between Ms Le and the deceased: s 60(2)(a)
The nature and extent of any obligations or responsibilities owed by the deceased to Ms Le or to any other claimant or to any beneficiary: s 60(2)(b)
The deceased’s estate: s 60(2)(c)
Ms Le’s financial resources and needs (including earning capacity) and age: s 60(2)(d), (e) and (g)
Any physical, intellectual or mental disability of Ms Le: s 60(2)(f)
Any contribution (financial or otherwise) by Ms Le to the deceased’s estate or his welfare: s 60(2)(h)
Any provision made for Ms Le by the deceased during his life or from his estate: s 60(2)(i)
The deceased’s testamentary intention, including evidence of statements made by him: s 60(2)(j)
Whether Ms Le was being maintained by the deceased: s 60(2)(k)
Whether anyone else is liable to support Ms Le: s 60(2)(l)
Ms Le’s character and conduct: s 60(2)(m)
Conduct of any other person before and after the deceased’s death: s 60(2)(n)
Conclusion regarding Ms Le’s claim for provision
Consideration of s 60(2) matters for Natalie’s claim
The relationship between Natalie and the deceased: s 60(2)(a)
The nature and extent of any obligations or responsibilities owed by the deceased to Natalie, to any other person in respect of whom an application for family provision has been made or to any beneficiary: s 60(2)(b)
The deceased’s estate: s 60(2)(c)
Natalie’s financial resources (including earning capacity) and needs, and age: s 60(2)(d), (e) and (g)
Any physical, intellectual or mental disability of Natalie: s 60(2)(f)
Any contribution (financial or otherwise) by Natalie to the deceased’s estate or his welfare: s 60(2)(h)
Any provision made for Natalie by the deceased during his life or from his estate: s 60(2)(i)
The Deceased’s testamentary intention, including evidence of statements made by him: s 60(2)(j)
Whether Natalie was being maintained by the deceased: s 60(2)(k)
Whether anyone else is liable to support Natalie: s 60(2)(l)
Natalie’s character and conduct: s 60(2)(m)
Conduct of any other person before or after the deceased’s death: s 60(2)(n)
Any other matter considered relevant: s 60(2)(p)
Conclusion regarding Natalie’s claim for provision
Conclusion and orders
JUDGMENT
1. These proceedings concern two claims brought under the Succession Act 2006 (NSW) (the Act) for provision from the estate of the late Giovanni (John) Angius (John or the deceased). In proceeding 2022/41064, the plaintiff is Thi Quy Le (Ms Le) and she claims provision on the basis that she was, at the time of the death of the deceased, living with him in a de facto relationship or, alternatively, in a close personal relationship. In proceeding 2023/31399, the plaintiff is Natalie Angius (Natalie), a granddaughter of the deceased and she claims provision on the basis that she was wholly or partly dependent on him. The common defendant to both proceedings is Gianna (Jenny) Angius (Jenny), who is the deceased’s daughter, the administrator of his estate and the sole beneficiary under his last will.
2. Although the two claims were brought in separate proceedings, they were heard together with evidence in one to be considered evidence in the other. For convenience and without intending any disrespect, I will refer to the members of the Angius family by their first names as was the course adopted during the hearing.
3. The nature of the claims brought by the plaintiffs require analysis of a significant portion of the deceased’s personal life and the broader family dynamics of the Angius family. Unfortunately, this means that private aspects of the lives of the deceased, the plaintiffs, the defendant, and other actors are canvassed in this judgment.
4. The structure of these reasons is that I will first outline the nature of the claims brought by each plaintiff, explain certain rulings on evidence made during the hearing, set out by way of background certain uncontroversial facts, and then outline the statutory regime that governs the plaintiffs’ claims. Following this I will deal with the evidence led by each of the plaintiffs and the defendant. I will then turn to determine the issues concerning each plaintiff’s eligibility and the quantum of any order for provision to be made.
The claims
1. Neither Ms Le nor Natalie were named in the deceased’s will, which left the entirety of his estate to Jenny. Both make claims for provision pursuant to chapter 3 of the Act.
2. Ms Le claims that she is an eligible person under s 57 of the Act as a person living with the deceased in a de facto relationship at the time of the deceased’s death, or alternatively as a person living with the deceased in a close personal relationship. The defendant disputes eligibility on either basis and the amount of provision claimed if Ms Le is eligible.
3. Natalie claims that she is an eligible person under s 57 of the Act as she is the deceased’s grandchild and was at one time wholly or partly dependent on him. The defendant disputes eligibility and the amount of provision claimed if Natalie is eligible.
Rulings on supplementary evidence
1. Ms Le called evidence from a number of witnesses who deposed that they considered the deceased and Ms Le to be in a de facto relationship. Evidence of this kind is relevant to the public aspects of the relationship between a claimant and the deceased: McCarthy v Tye [2017] NSWCA 284 at [49]. Having ruled as inadmissible statements by a number of witnesses of that kind where the basis of the opinion was unexplained, I indicated to Mr Ellison SC, senior counsel for Ms Le, that I would give him leave to adduce oral evidence from each witness setting out the basis for the opinions subject to proper notice in writing being given to Ms Painter SC, senior counsel for the defendant, as to the nature of that supplementary evidence. Mr Ellison SC indicated that he would provide supplementary statements for the relevant lay witnesses to Ms Painter SC by Sunday, 15 October 2023.
2. Nine supplementary statements were provided by that time, prior to the cross-examination of the relevant witnesses, and those supplementary statements were admitted without objection.
3. At the end of the sixth day of the hearing (Monday, 16 October 2023), Mr Ellison SC indicated that he was proposing to rely on a further supplementary statement from each of the plaintiff’s two sons who had already provided affidavits, being Ba Duc Hoang (Duc) and Ba Thang John Hoang (Thang). They had each previously prepared an affidavit filed in the proceedings which included a statement ‘I know that my mother was in a de facto relationship with John Angius’, but with no basis given for this statement in the affidavit. Each statement had been objected to and ruled inadmissible by me on the basis that it was unfounded opinion evidence. The proposed supplementary statements were said by Mr Ellison SC to set out the basis of their opinions.
4. Ms Painter SC objected to Mr Ellison SC seeking to rely on the proposed supplementary statements as she had not been provided with them (even in draft form) by the end of Sunday 15 October 2023, and I indicated I would uphold her objection, but would read back in the original statements by each son (that ‘I know that my mother was in a de facto relationship with John Angius’) if Ms Painter SC agreed not to press her original objection, which she did agree to. Mr Ellison SC then acknowledged that the leave that he may have had was withdrawn (T397).
5. On the seventh day of the hearing (Tuesday 17 October 2023) when Thang was called to give evidence, Mr Ellison SC handed up a two-page statement made by the witness dated 17 October 2023 which was marked for identification but not admitted into evidence. On the next day, when Duc was called to give evidence, Mr Ellison SC handed up a two-page statement by the witness dated 17 October 2023 which was also marked for identification but not admitted into evidence. My reasons for not admitting the two supplementary statements are as follows.
6. Ms Le commenced these proceedings by summons on 11 February 2022. At a directions hearing on 25 March 2022, the orders made by Sackar J noted that the plaintiff’s evidence in chief was complete. On 29 April 2022 a direction was made for the plaintiff to have leave to file further evidence by 13 May 2022. On 8 September 2022, the matter was set down for hearing. On 7 September 2023, there was a pre-trial directions hearing before me at which directions were made for Natalie to adduce further evidence of a medical nature. No mention was made in that directions hearing that Ms Le wished to file further evidence in her case. It would have been apparent to Ms Le’s legal representatives at that time that the affidavits of Duc and Thang filed in the proceedings were defective in failing to set out any basis for the opinions stated in them about their mother being in a de facto relationship.
7. No attempt was made to cure that obvious defect until the end of the sixth day of the hearing, at a time when Ms Painter SC was fully engaged in cross-examining Ms Le’s remaining witnesses and then moving immediately to cross-examine the witnesses in Natalie’s case. The terms of the leave to rely on additional statements by Thang and Duc previously given by me had not been taken advantage of. There was clear prejudice to Ms Painter SC in expecting her to deal with the new evidence to be relied on in the two statements which were only served on the defendant after the conclusion of the sixth day of the hearing. The only person responsible for the failure to remedy the defect in the evidence for Ms Le on this topic was her legal representatives. Further, the delay in leading evidence of a similar nature from nine other witnesses was part of the reason why the case suffered from a significant overrun in hearing time. In light of these matters, I considered it to be inconsistent with the just, cheap and quick resolution of the proceedings to allow the two further statements to be relied on.
Factual chronology
1. John Angius was born on 18 or 19 October 1936 in Italy, and married Laura Angius (Laura) in 1957. They emigrated to Australia in 1958. The couple had two children, Jenny Angius (the defendant) born in 1964 and Robert Angius (Robert) born in 1961. Laura died on 4 January 2012. Robert did not give evidence in these proceedings.
2. Jenny has two children, Gabrielle and Sean. Gabrielle gave evidence in these proceedings. Robert has six children: four (including Natalie) with his first wife Silvana Salvatore (Silvana), and two with his partner, Jacqueline Varela (Jacqueline). Both Silvana and Jacqueline gave evidence in these proceedings.
3. The family home of John and Laura from the 1990s was a house located at 2 Denning Street, South Coogee (the Coogee property). Laura lived there until her death.
Events from the 1990s to Laura’s death in 2012
1. John operated a smash repair business from commercial premises he owned at 6 Allen Street, Waterloo under the name ‘Waterloo Smash Repairs’.
2. Next door to John’s smash repair workshop, but located on the same land, was a mechanical work repair shop operated by Nick Pappas under the name ‘Advance LPG’. Both premises were closed in 2008 when the land at 6 Allen Street, Waterloo was redeveloped and Mr Pappas relocated to Roseberry. Mr Pappas gave evidence in these proceedings.
3. As at January 2008, John and Laura were the registered proprietors as joint tenants of 6 Allen Street, Waterloo and John also owned the adjoining property at 2-4 Allen Street, Waterloo. They both entered into a joint venture agreement with a third party in January 2008 to redevelop those parcels of land and the adjoining land at 8 Allen Street, Waterloo owned by a third party for the construction of retail/commercial premises and residential apartments on the land, which was undertaken over the period from that date to August 2010: Angius v Salier [2019] NSWSC 184 at [15]; CB 947.
4. Ms Le first met John in around 2000 while taking her car for repairs at his smash repair business and they became friends. Ms Le who is Vietnamese, was born on 3 March 1963 and gives evidence that she and John commenced an intimate relationship in March 2003 (when she was 40 years old and John was 67 years old). Ms Le’s previous marriage was dissolved in October 2001.
5. On 3 June 2001, Ms Le entered into a Residential Tenancy Agreement for premises owned by the NSW Government at 75 Philip Street, Waterloo (which will be referred to as the Redfern property). She benefited from a governmental rental subsidiary and paid a rent of $300 per week. She retained this residential tenancy agreement until June 2021.
6. In the period from around September 2005 to early 2008, Ms Le managed a pool hall business at premises located at Alfreda Street, Coogee. It appears that the premises were jointly owned by John and Laura.
7. In February 2007, an altercation occurred at the pool hall premises which, according to the police report, involved an argument between John and Laura in which Laura alleged that John was having an affair with Ms Le.
8. On 30 March 2007, there was another argument between John and Laura regarding Laura’s allegation that John was having an affair with Ms Le. This occurred at the Coogee property and involved Laura suffering injuries as a result of a fall in the kitchen. Laura alleged that John had assaulted her which he denied. An apprehended violence order (AVO) was granted to Laura against John, and the police charged John with assault. It appears from the statement made by a Detective Chief Constable for the purposes of the inquest into Laura’s death that John was found guilty of the assault, but no conviction was recorded.
9. On 10 April 2007, Laura saw a family law solicitor, Ms Cathie Blanchfield of Blanchfield Nicholls Partners. Jenny was at the meeting. Laura told Ms Blanchfield of her concerns regarding Ms Le. Ms Blanchfield advised Laura to make a new will to protect her children if she died before John and drafted one for her to sign which she did on 13 April 2007 (although later, on 27 April 2007, she re-signed it following advice from Ms Blanchfield that the first execution was invalid). Under this will, Laura appointed Jenny and Robert as her executors and after payment of just debts, funeral and testamentary expenses, Laura left the residue of her estate to Jenny and Robert as tenants in common in equal shares: Estate of Angius; Angius v Angius [2013] NSWSC 1895 at [83]. Ultimately, Hallen J determined in those proceedings that a later undated document prepared by Laura was her last will.
10. On 13 April 2007, there was another incident at the pool hall in which Laura again alleged that John was having an affair with Ms Le. The police report indicates that Ms Le ‘admitted to being involved in a relationship’ with John.
11. On 12 May 2007, an incident occurred at John’s smash repair business at 6 Allen Street, Waterloo. According to the police report, while Ms Le was having her car serviced at the premises, Robert approached Ms Le and said ‘Get out of the shop in Coogee. If you don’t get out, I’ll put you in the ground’. As a result of this incident, an AVO was granted to Ms Le against Robert.
12. On 7 June 2007, Ms Le was granted an interim AVO against Laura, which became a final order for a period of two years on 19 November 2007.
13. On 6 November 2007, Laura’s solicitor, Ms Blanchfield, sent a letter to John’s solicitors which stated relevantly:
Our client instructs us that the parties are considering entering into a joint venture for the development of the properties at Allen Street Waterloo. We understand that a request has been made for Mrs Angius to attend your office tomorrow to sign a document for that development to proceed, although we are uncertain of the exact nature of that document.
We are instructed to advise you that our client will only agree to the execution of that document on the following conditions:
1. That on 1 February 2008 Mr John Angius (“the husband”) will serve a Notice to Quit on Mrs Lee to vacate the pool hall premises at Alfreda Street, Coogee, with the period in which Mrs Le is to vacate being 4 weeks from that date. Thereafter neither Mrs Le nor any member of her family is to be involved in the business of the pool hall.
2. That on the 30th of each month, the husband and the wife shall be entitled to draw a cheque in the sum of $10,000 each. In addition the wife shall be entitled to a further cheque in the sum of $3,150 being one half of the rent on the pool hall, with additional condition that the husband sign that cheque.
3. That the parties share the expenses for 2 and 46 Denning Streets, and the costs of Gabrielle’s education at St Clare College, equally.
4. In the event the pool hall business is sold, the wife shall be entitled to one half of the sale proceeds.
5. In relation to the Waterloo property, upon completion of that development:
5.1 the husband and the wife shall retain an independent valuer to value each of the apartments and shops (“the units”) in that development;
5.2 the wife shall be entitled to one half of the parties’ interest (the whole of which is represented, as we understand it, by 12 apartments and 4 shops) based on the value of the respective units, and the husband and the wife will do all things necessary to transfer those units to her;
5.3 thereafter the wife shall be entitled to those units absolutely and may deal with them as she pleases.
6. Upon completion of the Waterloo property, the wife shall be entitled to one half of the gross rental income from all other properties and shall be liable to pay from her share of the rental income one half of the outgoings including mortgage repayments, and her tax.
We understand these terms have been discussed and agreed between our respective clients and it may only require appropriate formal documentations. In the first instance however we request an acknowledgment of your client’s acceptance of these terms signed by him by return facsimile. Upon receipt of same our client will execute the documents you hold.
In the event there is no such agreement we are instructed our client will approach the Court for appropriate orders by way of property settlement pursuant to the Family Law Act.
Please let us have your response by 12 noon tomorrow Wednesday.
1. The copy of the letter of 6 November 2007 in evidence indicates that John signed it. It can be inferred from the terms of this letter, the very strained relationship between Laura and John at this time, and the fact that the development of the properties at Allen Street, Waterloo (Waterloo development) commenced in 2008, that Ms Le had ceased to manage the pool hall business in Coogee by early 2008.
2. On completion of the Waterloo development in around August 2010, John and Laura became the registered proprietors of a number of the residential units and retail/commercial properties at 8 Allen Street, Waterloo including Shop 3 referred to below: Angius v Salier [2019] NSWSC 184 at [15].
3. On 27 February 2011, Jenny and Robert had an argument at John’s office at Shop 4, 8 Allen Street, Waterloo in which (according to the police report) Robert punched Jenny in the mouth, causing a cut to her bottom lip during an argument about the sale of a family property.
4. On 10 May 2011, a separation agreement was executed by John and Laura, recording that they had separated on 30 September 2010. On 6 October 2011, John and Laura entered into another separation agreement, which was varied on 15 and 16 November 2011. These agreements set out arrangements for the sale of their respective interests in the properties resulting from the Waterloo development so that they would ultimately each own particular properties solely in their own names.
5. On 19 November 2011, Ms Le was granted an AVO against Laura at Waverley Local Court.
6. On 3 December 2011, Jenny and Jacqueline had an argument in front of Laura, which (according to the police report) involved a claim by Jenny that Jacqueline was trying to get Laura’s money and Jenny allegedly scratched Jacqueline. An AVO was granted to Jacqueline against Jenny.
7. From 2011, Laura and John lived apart: Laura at the Coogee property and John at Unit 23, 8 Allen Street, Waterloo (referred to by the parties as the ‘penthouse apartment’) (Waterloo apartment). John ultimately sold the Waterloo apartment in 2016.
8. From around 2007 or, at the latest, the time of the separation, there was a significant rift in the Angius family between those supporting Laura and those supporting John. Jenny and her family were aligned to John’s side in this dispute, and Robert and his family were aligned to Laura.
9. On 1 August 2011, John and Laura (as lessors) executed a lease of Shop 3, 8 Allen Street, Waterloo (Shop 3) in favour of Ms Le (as lessee) for a term of five years commencing on 1 August 2011 and terminating on 31 July 2016 at a rent of $26,000 per annum (including GST), subject to adjustment, with an option to renew for a further five year term. The lease was registered. On 26 August 2011 Ms Le registered a business name ‘Waterloo Laundry Mat’ showing the principal place of business as Shop 3R, 8 Allen Street, Waterloo, the address of service of documents in relation to the business name was shown as the Redfern property. Ms Le conducted a laundromat business from Shop 3 throughout the period from 2011 to John’s death. It is not in dispute that Ms Le did not, and was never required to, pay the rent under this lease. It is also not in dispute that John gifted to her the fit out of the premises.
10. In September 2011, Laura commenced proceedings against John and Jenny (2011 proceedings) which related to the Coogee property and another property in the same street in which Jenny lived. The 2011 proceedings were resolved by a Deed dated 15 November 2011. Final orders determining the 2011 proceedings were made, by consent, on 18 November 2011: Estate of Laura Angius; Angius v Angius [2013] NSWSC 1895 (Estate of Laura Angius) at [56].
11. Laura died on 4 January 2012 at the Coogee property. Robert alleged that his father was involved in her death, and wrote to the coroner regarding his suspicions: Estate of Laura Angius at [20]–[22]. There followed protracted litigation regarding Laura’s estate and other family matters between Robert and John: see eg. Estate of Laura Angius; Robert Angius v John Angius [2018] NSWSC 1772.
12. On around 31 January 2012 John and Laura, as lender, and Ms Le as borrower entered into the instrument entitled ‘Security interest in goods’ securing a loan of $41,000 made to Ms Le, secured over certain equipment used in the premises.
Events from 2012 to John’s death in 2022
1. On 13 May 2012, John filed a Notice of Death and became the sole proprietor of the Coogee property. Ms Le deposed that from around this time until May 2017, when he was required to vacate the property John lived in the Waterloo apartment and not at the Coogee property. Jenny disputes that John lived solely at the Waterloo apartment in this period and says that he divided his time between the Waterloo apartment and the Coogee property. In the period from May to August 2017 he appears to have lived principally at the Burradoo property referred to below.
2. On 14 September 2012, John made a will (see [73] below). Ms Le was not a beneficiary under this will, but Natalie was.
3. On 3 December 2012, John purchased 21 Links Road, Burradoo (Burradoo property). He appears to have treated this property as essentially a holiday home. John and Ms Le spent Christmas 2012 at the Burradoo property and were joined there by Jenny and her family.
4. On 21 December 2012, John commenced proceedings (2012/396544) in which he sought to set aside the consent orders and the deeds which had resolved the 2011 proceedings (2012 proceedings). There were also contested probate proceedings in relation to Laura’s estate which were heard and determined in December 2013 by Hallen J (see Estate of Laura Angius) and contested proceedings relating to the construction of Laura’s will, determined by Ball J (see Gordon Salier v Robert Angius [2015] NSWSC 853).
5. On 1 April 2014, an independent solicitor, Mr Gordon Salier (Mr Salier), was granted letters of administration in relation to Laura’s estate with a copy of the will annexed. The estate was given a value in excess of $23 million.
6. On 4 November 2015, Hallen J made orders in the 2012 proceedings which included an order pursuant to s 66G of the Conveyancing Act 1919 (NSW) that Mr Salier and another person be appointed joint trustees to affect the sale of the Coogee property by auction. After contested proceedings by the trustees to obtain possession of the Coogee property, John vacated the property on 1 May 2017, and it was sold by the co-trustees at auction. John was the successful bidder paying $6 million for the property and settlement of the purchase occurred on or around 2 August 2017.
7. In an affidavit sworn by him on 26 October 2014 in the 2012 proceedings, John said (emphasis added):
181. I live by myself at the Matrimonial Home but I have been sleeping at unit 23, where I slept when completing building works to the units, as I can no longer bring myself to sleep in the Matrimonial Home and a continuing desire to reduce the debt secured against family assets has led me to wish to sell the Matrimonial Home but I anticipate no balance remaining after costs of the sale, discharge of the mortgage and reimbursement to me of money I advanced to reduce the mortgage prior to sale.
182. I continue to give financial assistance to my two children in the form of accommodation in family owned properties free of payments of rent or mortgage and allowing them to collect rent from family owned properties. This is so even where such properties having been purchased by money I placed in my and Laura’s names and where I continue to pay the bills for these properties. I also provide money to Robert and his children and Jenny and her children when they need it and from time to time by giving them cash or paying their bills. I have not exercised any right to demand payment under the mortgages in my favour over the properties I placed in their names. My children have the use of properties and businesses which Laura and I provided without Laura and I receiving any or adequate consideration.
1. It is not in dispute that the ‘Matrimonial Home’ is a reference to the Coogee property.
2. In 2015, John made a gift to Ms Le of a second hand Toyota Aurion motor vehicle.
3. On 11 January 2016, John entered into a new lease of Shop 3 in favour of Ms Le for a term of five years which included an option to renew for two further periods of five years each (with a maximum period of the tenancy under the lease and permitted renewals being 15 years). The rent payable remained unchanged. It is not in dispute that Ms Le did not, and was never required to, pay the rent under this lease.
4. In August 2016, John sold the Waterloo apartment and moved back to live permanently at the Coogee property. Ms Le says that she lived there with him from that time, but this is disputed by Jenny.
5. Having vacated the Coogee property in May 2017, as noted above, John lived at the Burradoo property during the period from May to August 2017, and then moved back to the Coogee property in August 2017 and remained living there until his death. Ms Le deposed that she lived with John both at the Burradoo property from May to August 2017 and then at the Coogee property until his death, but Jenny disputes this.
6. On 31 May 2018, Robert was joined as a defendant to proceedings brought by John in 2016 against Mr Salier and various companies of which John and Laura had been directors which owned a number of income-earning properties. The joinder of Robert was permitted because the orders which were sought by John would directly affect his rights as the principal beneficiary of Laura’s estate. Robert subsequently filed a cross-claim against John which involved an allegation that John caused the defendant companies’ funds in excess of $4 million to be paid into account which he controlled.
7. Following the appointment by the Court of a tutor for John, the substantive claims in the proceedings were settled in May 2020, apart from certain issues arising under Robert’s cross-claim which were deferred until the taking of accounts by the receiver of the defendant companies: see Angius v Salier (No 5) [2023] NSWSC 678 at [28]-[34], [76]. Robb J records at [45] that the receiver’s amended report of 22 September 2020 disclosed that the total amount of some $2.89 million had been paid by the company defendants to John.
8. There was other litigation between John and Robert after Laura’s death: see Robert Angius v John Angius [2018] NSWSC 1772. There was also a family provision claim brought by Jenny in 2013 against Laura’s estate for which Mr Salier as administrator of Laura’s estate was the defendant which was ultimately resolved by orders made in 2019.
9. On 21 April 2021, John made his last will (see [69] below). Neither Ms Le and/or Natalie were a beneficiary under this will.
10. On 8 June 2021, Ms Le had a conference with AKN & Associates, the solicitors representing her in these proceedings, seeking advice regarding her ‘situation’ in relation to the deceased. On the same day, Ms Kolena Denis (a witness for Ms Le in these proceedings) signed a statutory declaration at the offices of AKN & Associates supporting Ms Le’s claim that she was in a de facto relationship with John. Shortly after this, Ms Le relinquished her subsidised tenancy of the Redfern property and changed her nominated address for her bank accounts, credit card statements, insurance, driver’s licence and car registration, taxation office and mail from the Redfern property to the Coogee property.
11. John spent lengthy periods in hospital in 2021 for issues related to his heart, including in January (admitted on 26 January and stayed seven days), March (admitted on 28 March and stayed nine days), June (admitted on 15 June and stayed two days), July (admitted on 19 July and stayed one month) and September (admitted on 6 September and stayed three days and also on 28 September). The admission on 19 July 2021 was to Royal Prince Alfred Hospital (RPA) for heart surgery.
12. On 24 June 2021, John was taken by Jenny for a consultation with Associate Professor Tuly Rosenfeld, a consultant geriatrician and physician following a brain scan which he had organised for John. Professor Rosenfeld saw John on his own, with Jenny remaining in reception throughout the consultation. Relevant parts of the report prepared by Professor Rosenfeld are set out later in these reasons.
13. On 6 November 2021, John’s drivers’ licence was suspended.
14. On 20 December 2021, John met with a solicitor, Mr Francis Devine, at his home during which he gave instructions for the preparation of an enduring power of attorney and the appointment of an enduring guardianship, but ultimately, they were not signed.
15. John spent Christmas Day 2021 at the Coogee property and had Christmas there with Jenny and her partner, Kevin Batten, and her children, Gabrielle and Sean. Ms Le spent the day with her family at the Bankstown property, although she deposed that she returned to the Coogee property in the evening of Christmas Day and had dinner with John there alone with him.
16. John tested positive to COVID-19 on 23 January 2022 and died on 31 January 2022, aged 85 years. His funeral was on 5 February 2022. Both plaintiffs attended.
17. On 10 February 2022, Jenny arranged for Mr Jason Bates, an asset manager, to go to the Coogee property, to remove Ms Le and her son, Duc, who were staying there.
18. On 11 February 2022, six days after the funeral, Ms Le commenced her proceedings by summons, supported by her first affidavit sworn on the same day.
19. On 30 January 2023, Natalie commenced her proceedings by summons.
The deceased’s testamentary intentions
1. John left a will dated 21 April 2021 naming Jenny as his executor and sole beneficiary. If Jenny did not survive the deceased, he directed that any of her children who attained the age of 25 years should share equally in his estate.
2. The 2021 will did not name any other persons, and in particular made no provision for Ms Le (or any other of the deceased’s employees or caregivers), nor did he make any provision for his son Robert, or Robert’s children, including Natalie.
3. The 2021 will was made after the conclusion of the Supreme Court proceedings brought by Robert concerning Laura’s estate, as a result of which Robert was the sole beneficiary of her estate, net distributable value of which was estimated by Mr Salier (the Administrator) to be in excess of $13 million but by Robert to be considerably larger: see Gianna (Jenny) Angius v Gordon Albert Salier [2018] NSWSC 995 at [23] and [30].
4. Natalie gave evidence that John said to her when she visited him in hospital on 16 June 2021 that he had recently changed his will because he didn’t want her father, Robert, ‘to have any more control over anything’, that this new will had been ‘rushed through’, that it was ‘temporary’ and ‘I need to change it’. There is some further evidence regarding John’s testamentary intentions in the last months of his life referred to later in these reasons.
5. The deceased had only one previous will, executed on 14 September 2012. By that will he appointed as executors his daughter Jenny Angius and his granddaughter Gabrielle Angius. In summary, the substance of the will was as follows:
1. he gave the family vault and his interest as tenant in common in 46 Denning Street, South Coogee to Jenny (cll 5 and 6);
2. he gave the benefit of any loan payable to him at the date of his death by Jenny or Robert to Jenny or Robert (cl 7);
3. he made seven pecuniary legacies. Each of the pecuniary legacies was indexed (cl 8):
1. $200,000 to each of Sean Batten, Stephany [sic] Navarro, Natalie Navarro [sic], Melissa Navarro [sic], Jacqueline Navarro [sic];
2. $1,000,000 to Gabrielle; and
3. $1,000,000 to Robert.
1. he gave the balance of his estate in equal shares to Jenny and Gabrielle (cl 9).
1. The 2012 will gave a legacy to Natalie and each of his other grandchildren (except for Robert’s children with Jacqueline) but did not mention Ms Le and made no provision for her.
The deceased’s estate
1. Probate was granted on 23 May 2023. The estate consists of real property (some owned as tenant in common), cash at bank, shares, two low value motor vehicles and a small amount estimated in connection with home contents.
2. The estate has a gross value of $38,096,481 million and after liabilities is estimated to have a net value of $29,588,261 (Joint Agreed Schedule of Assets and Liabilities). The figure of $29,588,261 does not take into account the costs said to have been incurred (or to be incurred) by the plaintiffs (Ms Le’s costs estimated at $439,120 on a party/party basis and $548,000 on an indemnity basis, and Natalie’s costs estimated at $350,000 on an indemnity basis but no estimate provided of the party/party estimate).
3. The defendant was not challenged during cross-examination on any aspect of either the size of the estate or the administration of it. No contrary evidence has been tendered and the Court can proceed on the basis that the estate is as described in the executor’s affidavits.
Statutory regime
1. Chapter 3 of the Act governs the making of a ‘family provision order’ being an order made by the Court ‘in relation to the estate or notional estate of a deceased person to provide from that estate for the maintenance, education or advancement of life of an eligible person’ (s 3(1)).
2. Persons eligible to apply for family provision orders are set out in s 57(1) of the Act, which provides as follows:
(1) The following are eligible persons who may apply to the Court for a family provision order in respect of the estate of a deceased person—
(a) a person who was the spouse of the deceased person at the time of the deceased person’s death,
(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death,
(c) a child of the deceased person,
(d) a former spouse of the deceased person,
(e) a person—
(i) who was, at any particular time, wholly or partly dependent on the deceased person, and
(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,
(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.
Note—
Section 60 sets out the matters that the Court may consider when determining whether to make a family provision order, and the nature of any such order. An application may be made by a tutor (within the meaning of the Civil Procedure Act 2005) for an eligible person who is under legal incapacity.
Note—
‘De facto relationship’ is defined in section 21C of the Interpretation Act 1987.
1. Ms Le relies on s 57(1)(b) and, in the alternative s 57(1)(f). Natalie relies on s 57(1)(e).
2. In relation to s 57(1)(b), s 21C of the Interpretation Act 1987 (NSW) is relevant, which provides:
(1) Meaning of “de facto partner” For the purposes of any Act or instrument, a person is the de facto partner of another person (whether of the same sex or a different sex) if—
(a) the person is in a registered relationship or interstate registered relationship with the other person within the meaning of the Relationships Register Act 2010, or
(b) the person is in a de facto relationship with the other person.
(2) Meaning of “de facto relationship” For the purposes of any Act or instrument, a person is in a de facto relationship with another person if—
(a) they have a relationship as a couple living together, and
(b) they are not married to one another or related by family.
A de facto relationship can exist even if one of the persons is legally married to someone else or in a registered relationship or interstate registered relationship with someone else.
(3) Determination of “relationship as a couple” In determining whether 2 persons have a relationship as a couple for the purposes of subsection (2), all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case—
(a) the duration of the relationship,
(b) the nature and extent of their common residence,
(c) whether a sexual relationship exists,
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between them,
(e) the ownership, use and acquisition of property,
(f) the degree of mutual commitment to a shared life,
(g) the care and support of children,
(h) the performance of household duties,
(i) the reputation and public aspects of the relationship.
No particular finding in relation to any of those matters is necessary in determining whether 2 persons have a relationship as a couple.
(4) Meaning of “related by family” For the purposes of subsection (2), 2 persons are related by family if—
(a) one is the child (including an adopted child) of the other, or
(b) one is another descendant of the other (even if the relationship between them is traced through an adoptive parent), or
(c) they have a parent in common (including an adoptive parent of either or both of them).
(5) Subsection (4) applies—
(a) even if an adoption has been declared void or is of no effect, and
(b) to adoptions under the law of any place (whether in or out of Australia) relating to the adoption of children.
(6) Subsection (4) applies in relation to a child whose parentage is transferred as a result of a parentage order, or an Interstate parentage order, within the meaning of the Surrogacy Act 2010 in the same way as it applies in relation to an adopted child, even if the parentage order is discharged or otherwise ceases to have effect. For that purpose, a reference in that subsection to an adoptive parent is to be read as a reference to a person to whom the parentage of a child is transferred under such a parentage order.
1. Applications for family provision orders must be made within 12 months of the date of the death of the deceased: s 58 of the Act. This is not in issue in either proceeding.
2. Family provision orders may be made pursuant to s 59, which provides relevantly:
(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that—
(a) the person in whose favour the order is to be made is an eligible person, and
(b) in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of eligible person in section 57—having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, and
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.
(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
Note—
Property that may be the subject of a family provision order is set out in Division 3. This Part applies to property, including property that is designated as notional estate (see section 73). Part 3.3 sets out property that may be designated as part of the notional estate of a deceased person for the purpose of making a family provision order.
1. Therefore, Natalie must demonstrate that there are ‘factors warranting’ her claim for provision in accordance with s 59(1)(b), and Ms Le must only demonstrate that there are ‘factors warranting’ her claim in respect of her alternative claim for eligibility under s 57(1)(f).
2. Under s 60(1), the matters to be considered in determining whether there are ‘factors warranting’ the claim and also whether to make an order and the nature of any such order, are set out in s 60(2) which provides:
(2) The following matters may be considered by the Court—
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person’s estate,
(c) the nature and extent of the deceased person’s estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person’s estate,
(e) if the applicant is cohabiting with another person—the financial circumstances of the other person,
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person’s estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person’s family, whether made before or after the deceased person’s death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
(i) any provision made for the applicant by the deceased person, either during the deceased person’s lifetime or made from the deceased person’s estate,
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person’s death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so,
(l) whether any other person is liable to support the applicant,
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
(o) any relevant Aboriginal or Torres Strait Islander customary law,
(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person’s death or at the time the application is being considered.
Principles relevant to each plaintiff’s claim that she is an eligible person
De facto relationship
1. Ms Le relies on s 57(1)(b) which requires that she was living with the deceased in a de facto relationship at the time of his death. Two persons will be in a de facto relationship at a particular time if they have a relationship as a couple living together, and whether that is so is to be determined having regard to all the circumstances, including the matters listed in s 21C(3) of the Interpretation Act. As noted by Hallen J in Sheen v Hesan; the Estate of Zaheer [2023] NSWSC 468 at [485], there are nine circumstances referred to, which may be grouped in to ‘private’ ((c), (d), (e) and (f)) and ‘public’ ((a), (b), (g), (h) and (i)) factors. None of these factors are exclusive. In Piras v Egan [2008] NSWCA 59, Campbell JA (Giles and Tobias JJA agreeing) said at [146]:
It should be recalled that the list of ‘circumstances’ in section 4(2) [of the Property (Relationships) Act 1984 (NSW)] are reminders of matters that possibly might be relevant in deciding whether two people are in a de facto relationship, but do not state its essence. The essence is to be found in the definition in section 4(1) [of the Property (Relationships) Act 1984 (NSW)]. If two people do not ‘live together as a couple’ they do not satisfy the definition of being in a de facto relationship, regardless of what might be the situation concerning the various ‘circumstances’ listed in section 4(2) [of the Property (Relationships) Act 1984 (NSW)].
1. The ‘circumstances’ to which reference is made in this passage are the same as the circumstances listed in s 21C(3) of the Interpretation Act, set out above.
2. The concept of ‘living together’ as a couple, which is the essence of a de facto relationship, does not require that two persons share the same residence exclusively or on a full-time basis. In NSW Trustee and Guardian v McGrath [2013] NSWSC 1894, Young AJ said:
[13] Human relationships cover a wide spectrum. The cases show that there have been many situations other than the situation where a man and a woman share the one residence and live as if they were man and wife for the whole week where a de facto relationship has been held to be made out….
[18] However the concept of living together does not relate to sharing a particular residence but rather what Murphy J said in Jonah v White whether a couple manifests a relationship of “coupledom” which involves the merger of two lives.
1. In Vaughan v Hoskovich [2010] NSWSC 706, White J (as his Honour then was) said at [53]:
In my view, the fact that they lived together only for a small part of each week does not mean that they cannot be said to have lived together as a couple. Whether they lived together as a couple, must of course take into account all of the circumstances, including those listed in subs (2). But it seems to me that the maintenance of separate residences is not inconsistent with the parties living together as a couple, provided that there is sufficient shared residence over a long enough period to amount to “living together”. Parties can live together for part of a week and also live apart, for part of a week. Although living apart for some periods, they can still live together as a couple if all the circumstances indicate that they are “a couple”. I accept that the phrase “living together as a couple” connotes that the persons will live together in a place which can be said to be their home, but a person can have more than one home (Cardiacos v Cooper Consulting and Constructions Services (Aust) Pty Ltd [2009] NSWSC 938 at [27]–[29] and cases there cited.) In the present case, as indicated in paras [10] and [12], the parties treated the plaintiff’s Turramurra property as one of the deceased’s homes.
1. In Smoje v Forrester [2017] NSWCA 308 at [42] Meagher JA (Basten and Macfarlan JJA agreeing) said:
Whilst the state of living “together” does not require that the living occur at and from a single place, or that the two adults spend all of their time together at the same time, it will ordinarily include elements of interaction and sharing whilst engaging in activities associated with occupying the same place. Repeated visits for a singular purpose, without more, do not satisfy that description.
1. In Fairbairn v Radecki (2022) 275 CLR 400; [2022] HCA 18 the High Court considered the meaning of ‘living together’ in the context of the expression ‘a relationship as a couple living together on a genuine domestic basis’ in s 4AA(1) of the Family Law Act 1975 (Cth), which is in the same terms as s 21C of the Interpretation Act. The Court said at [33] and [39] (footnotes omitted, emphasis added):
Living together for the purposes of s 4AA(1) will often, perhaps usually, mean cohabitation of some residence by a couple for some period of time. But cohabitation of a residence or residences is not a necessary feature of “living together”. That phrase must be construed to take account of the many various ways in which two people may share their lives together in the modern world. Two people, for any number of reasons, may not reside in the same residence, but nonetheless be in a de facto relationship in the sense required by s 4AA.
…
The language of s 4AA of the Act and its reference to “living together” requires no different approach to determining whether a relationship exists of the kind defined. “Living together”, consistently with authority, should be construed as meaning sharing life as a couple. Section 4AA does not prescribe any way by which a couple may share life together. Its language is sufficiently broad to accommodate the great variety of ways a de facto relationship may exist. That conclusion is supported by the varied factors listed in s 4AA(2). In a given case, some of the factors listed in s 4AA(2) may be relevant and some may be irrelevant; inevitably some may have greater prominence than others. A conclusion that a de facto relationship has ended may also arise because of factors not listed in s 4AA(2). Such a conclusion is mandated by s 4AA(3) and (4). In particular, s 4AA(4) is a statutory recognition that what may constitute a genuine de facto relationship is not be determined in the same way in every case by reference to rigid criteria that must always be satisfied. In that respect, the language of s 4AA(2)(b) does not assume that every de facto relationship must have a “common residence” to some “extent” and of some “nature”. Such a construction is entirely denied by s 4AA(3).
1. An important factor in determining the question whether two persons share life as a couple, and hence can be said to live together as a couple, is whether they have a mutual commitment to a shared life. In Petersen v Gregory; Estate Glen Alfred Petersen [2007] NSWSC 8 at [11], Barrett J said the following regarding the expression ‘living together as a couple’:
It is nevertheless pertinent to remember that, as Windeyer J pointed out in Hooper v Winten [2002] NSWSC 1071, de facto relationships, like marriages, will not be perfect all the time. While the romantic characteristic to which Gzell J referred will typically exist at inception, a diminution in its intensity in a shared residential setting will not of itself mark the end of living “together as a couple”. The central concept is one of personal commitment that is mutually acknowledged and of an emotional kind transcending the mere fact of the shared residential setting. It is that which causes two persons residing under the same roof to be living “together as a couple”. This central concept has recently been explored by McLaughlin AsJ in Delany v Burgess [2006] NSWSC 1420.
1. Barrett J’s observation regarding the central concept of a de facto relationship was endorsed by McColl JA (Beazley JA agreeing) in Hayes v Marquis [2008] NSWCA 10 at [83].
2. As Barrett J noted in the above passage, the required commitment to a shared life as a couple does not require emotional or romantic love: see also Vaughan at [49] and Minister for Immigration and Border Protection v Angkawijaya (2016) 236 FCR 303; [2016] FCAFC 5 at [3].
3. Basten JA in Robson v Quijarro [2009] NSWCA 365 (Ipp and McColl JJA agreeing) made the following observations at [59] regarding the relevance of a mutual commitment to a shared life to the existence of a de facto relationship:
Although, in accordance with s 4(3), a degree of mutual commitment to a shared life is not an essential element of a de facto, it is difficult to envisage two persons living together as a couple without some degree of mutual commitment to a shared life. Thus, in most cases, satisfaction of that criterion, at least to some degree, will be a significant factor in the overall assessment of the relationship. However, the concept of a commitment to a shared life is not one which is rigidly defined and clearly may need to be applied with a degree of flexibility, depending on the circumstances. Similarly, the concept of “mutual” commitment is one which can accommodate a degree of flexibility and variation over time and having regard to the relevant circumstances.
1. It is necessary to keep in mind that ‘relationship as a couple living together’ is a composite expression or concept which should not be dissected into discrete elements: Hayes v Marquis [2008] NSWCA 10 at [73] per McColl JA (Beazley JA agreeing). What is required is an evaluative assessment of all the relevant circumstances.
2. The following observations of Hallen J in Sheen v Hesan [2023] NSWSC 468 at [504] and [514] are apposite:
Common sense dictates that a relationship may change, or develop, over time. Thus, its legal character at one point may not represent its character at another. Furthermore, in assessing the degree of mutual commitment to a shared life, it is not essential that there be entire harmony, entire fidelity, entire satisfaction with the relationship, or entire commitment; the degree of commitment may be high even though there are qualifications. Dissatisfactions, infidelities, expressed complaints, grievances, and less than entire commitment are often found in personal relationships, including marriages, and are not inconsistent with a relationship of two parties having a relationship as a couple living together, but not married to one another.
…
It can be seen, from what has been set out above, that the concept of a de facto relationship is complex. It should not be construed on “narrow, formal, pedantic, or merely geographical criteria, but should be considered taking into account the human reality of the personal, emotional and cultural complex”: Dow v Hoskins [2003] VSC 206 at [32]. Yet, it should be distinguished from the relationship of two people, who live apart, but who have a sexual relationship, and who sleep over at one another’s house; and also, from the relationship of two people, who share a house, but who do not have a romantic commitment to each other and who have other sexual partners. The fact that one provides the other, on occasions, with financial, or other, assistance, such as accommodation, to alleviate hardship does not mean that they are in a de facto relationship. In this way, a de facto relationship is different from friendship, or courtship, which has not matured into the commitment where there is a merging of lives so that there is a mutual commitment to a shared life. It is also different from simple companionship. But it is not to be judged only against the static model of persons living together full-time, sharing fully domestic, financial, and other responsibilities.
Wholly or partly dependant – s 57(1)(e)
1. Natalie relies on s 57(1)(e) under which, as a grandchild of the deceased, she must establish that she was at a particular time wholly or partly dependant on the deceased.
2. It is clear that the word ‘dependent’ in s 57(1)(e)(i) is an ordinary English word and the question of whether a person is wholly or partly dependent on another is a question of fact in light of the whole relationship between them: Spata v Tumino (2018) 95 NSWLR 706; [2018] NSWCA 17 at [68].
3. In Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 Meagher JA (Basten JA agreeing) said at [109]–[110]:
Dependency in this context means actual reliance on someone else for the total or partial satisfaction of some need. It is not limited to purely financial or material matters: Petrohilos v Hunter (1991) 25 NSWLR 343 at 346–347. Nor is it restricted to requirements of basic necessity and the standard or measure of satisfaction of any need is not to be determined by reference to any minimum or subsistence standard. In each case, the measure is the standard set by the parties: Ball v Newey (1988) 13 NSWLR 489 at 492.
Dependency may exist irrespective of whether the dependent person is financially or physically able to support himself or herself: Ball v Newey at 492. However, the reasons for and circumstances of the dependency are relevant when considering what claims the dependent has on the bounty of the testator…
1. In Page v Page [2017] NSWCA 141 Sackville JA (Leeming JA agreeing) set out a summary of the relevant principles regarding the construction of s 57(1)(e) at [101] (footnotes omitted):
1. The word “dependent” is an ordinary English word and whether a person is wholly or partly dependent on another is a question of fact.
2. The factual question can be complex and involve consideration of many elements. Accordingly, different minds might well differ in their approach.
3. While a common form of dependence is dependence on another for the material necessities of life, this is not the only form recognised by s 57(1)(e) of the Succession Act. For example, where a parent or step-parent provides a child who has no independent financial resources with services essential to well-being, the child might be found to have been wholly or partly dependent on the parent or step-parent.
4. Dependency involves the satisfaction of a need, but the need is not restricted to the requirements of basic necessities or sustenance.
5. The word “partly” in the definition of “eligible person” is a word of “some elasticity”. It does not necessarily mean “substantially”, but rather “more than minimally” or perhaps “significantly”.
6. Dependency is not necessarily correlative with a legal duty to maintain, although such a duty is a factor to take into account. Nor are dependency and actual support necessarily correlative. Hence there may be cases where support has been provided without dependency, for example where the support is provided for a short time or for a particular purpose or where an adult child provides occasional domestic assistance to an aged parent.
1. In Chisak v Presot [2022] NSWCA 100, White JA (Macfarlan and Gleeson JJA agreeing) said at [47] that the phrase ‘partly dependent’ means at least ‘more than minimally’ and added at [57]:
I respectfully doubt that it is legitimate to read into s 59(1)(e) a requirement that partial dependency be “significant” rather than “more than minimal”. Section 57(1)(e) is merely a gateway for the court to consider whether there are factors that warrant the making of an application for provision by a grandchild out of his or her grandparent’s estate (s 59(1)(b)), and if so, whether provision ought to be ordered (s 59(1)(c)). The degree of dependence for a particular period of time will no doubt be relevant to those issues. With due deference to the reasons of Palmer J in Simons v Permanent Trustee and Re: Sherborne Estate and Basten JA in Page v Page , I do not think it appropriate to conflate questions relevant to those issues, such as whether the degree of dependence was such that the grandparent assumed parental responsibility for the grandchild, with the factual question of whether the grandchild did depend on the deceased for particular periods of time. I do not accept the primary judge’s reasons on this issue at J [329] quoted above.
Close personal relationship – s 57(1)(f)
1. Ms Le relies on s 57(1)(f) under her alternative claim. This requires that she was a person with whom the deceased was living in a close personal relationship at the time of his death.
2. The expression ‘close personal relationship’ is defined in s 3(3) of the Act to mean ‘a close personal relationship (other than in marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care’. Under s 3(4)(i), a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care for fee or reward.
3. It will be seen that there are three requirements in order for s 59(1)(f) to be satisfied. First, the two people must be adults who are living together in a close personal relationship (other than marriage or a de facto relationship); second, one or each of them must provide the other with domestic support and personal care; and third, that domestic support and personal care must not be provided for fee or reward. In relation to the first two requirements, Macready M said in Dridi v Fillmore [2001] NSWSC 319 at [102]-[106]:
…
So far as the first requirement is concerned since we are not concerned with concepts applicable to couples the requirement would be met if the parties shared accommodation together. For example, a boarder in an elderly widow's home would qualify. It may not be necessary for there to be a sharing of food or eating arrangements together. In the present case this is not important as it seems that the parties ate together when they were both at home.
The second requirement is cumulative. There must be both domestic support and personal care. In this case there is evidence of domestic support as the defendant provided for the plaintiff free accommodation and meals, which he cooked for the plaintiff when the plaintiff was at home. There are other matters, not present in this case, which could be domestic support, eg. shopping for both parties, washing clothes etc
It is the provision of "personal care" which provides the clue to the meaning of the composite expression "domestic support and personal care". Some of the primary meanings of "personal" include:-
(a) Of or pertaining to concerning of affecting the individual person or self; individual; private; one's own.
(b) Of or pertaining to one's person body or figure; bodily."
Accordingly, personal care connotes care taken in connection with such matters…
1. In Hayes v Marquis [2008] NSWCA 10, McColl JA (Beazley JA agreeing) said at [84]-[87]:
The question of whether or not one adult provides the other with domestic support and personal care sufficient to satisfy s 5(1)(b) will also turn on the nature and extent of that assistance. Thus if two adults lived together fulltime and one provided domestic support and personal care to the other only once or twice a year, it would be difficult to say that a close personal relationship had been established.
While Ms Bridger conceded the respondent provided domestic support, she challenged the proposition that the evidence disclosed that either the appellant or the respondent provided the other with “personal care” within the meaning of s 5(1)(b). She drew attention to Dridi v Fillmore [2001] NSWSC 319 (at [105]–[106]) where Master Macready said that personal care connoted care taken with respect to such matters as pertained to, concerned or affected the individual person or self or pertained to one’s person, body or figure. She did not explain why the sort of care the respondent provided did not fall within that description.
Master Macready commented (at [108]) that he would not have thought that matters such as “emotional support” would “by themselves” fall within the expression “domestic support and personal care”. Clearly each case will turn on its own facts. The Second Reading Speech contemplated that personal care services may encompass ensuring the physical and emotional support of one or both parties for the other.
For my part I have difficulty with an argument that parties accepted to be in a loving sexual relationship, as the primary judge found here, are not providing each other with personal care. And there may be cases where emotional support of itself will suffice. Society recognises the importance emotional support can play in an individual’s well being. Psyche is just as much a personal attribute requiring sustenance as one’s physical self. The notion of “personal care” should not be confined to matters relating to physicality.
1. The third requirement that the domestic support and personal care must not be provided ‘for fee or reward’ was considered in Saravinovski v Saravinovska [2017] NSWCA 85 in the context of s 5(2)(a) of the Property (Relationships) Act 1984 (NSW). It may be noted that s 5(1)(b) and s 5(2)(a) of that Act are identical (following the amendment made to the Act in 2018) to s 3(3) and s 3(4) of the Act.
2. At first instance, Kunc J said of the words ‘for fee or reward’ (see [2016] NSWSC 964 at [375]-[376]):
I respectfully agree (to this extent) with Bryson AJ’s conclusion in White that on its proper construction the expression ‘… provides … domestic support and personal care … for fee or reward’ requires a ‘direct relation’ between the fee or reward and the provision of support and care. The factual question for the Court, to adopt Bryson AJ’s language, is whether ‘the fee or reward is produced by the provision of support or care’. The relationship must be causative or, putting it another way, be a quid pro quo. This requirement was captured in the observation of Mason J in Charles Moore (at 476) that ‘But for the expectation that it would receive a valuable benefit in the form of reciprocal reports, a department store would not provide a competitor with information about a customer’.
For the foregoing reasons, a party wishing to rely on s 5(2)(a) must satisfy the Court that there is a direct connection in the nature of an immediate and intentional exchange of the provision of domestic support and personal care for the purpose of eliciting the identified fee or reward. So understood, such an arrangement might be seen as the origin of, or motive for, what would otherwise be a close personal relationship under the PRA. It is to be contrasted with the situation where the provision of domestic support and personal care is an indicium or incident of the close personal relationship.
1. Leeming JA (Beazley ACJ agreeing) in the Court of Appeal approved these observations and then added at [36]-[41]:
The contrast drawn by the primary judge may be illustrated by the distinction between, on the one hand, a nurse or housekeeper who lives with an aged or disabled person and is compensated (in money or board or both) and, on the other hand, a niece or nephew who lives with an older relative who is no longer self-sufficient. Even if it is made clear that the niece or nephew will receive free board and lodging and may have an expectation of an inheritance if the relative predeceases him or her, if the purpose of doing so is primarily based on family ties, then he or she will not be living together with his or her relative “for fee or reward”.
Those examples are more clear-cut than some of the relationships which will arise in real cases (an example is the family friend who was treated as a son considered in Ye v Fung [2006] NSWSC 243). It is to be expected that there will be many cases where domestic support and personal care are provided for motives that have elements of affection or familial duty, but also elements of an expectation of some benefit in return. However, it is not necessary in order to resolve this appeal to address cases where the position is more nuanced.
The appellant seized upon the words “direct relation” or “direct connection” in the primary judge’s formulation reproduced above, and contended that on the findings of fact made by his Honour, there was the requisite relation or connection. But there is, in one sense, a direct relation or direct connection between the provision of accommodation to both the nurse or housekeeper and to the niece or nephew in the examples mentioned above. It would however be wrong to disentitle a person merely because it could be shown that there was some causal connection between the fee or reward and the provision of domestic support and personal care. That is the point made by the primary judge in the passages reproduced above, with which I respectfully agree.
There is another matter to bear in mind. These questions will only arise if the two people are “living together” and not married or in a de facto relationship. If the purpose of the living together is primarily based on bonds of family or friendship, then it is likely that the provision of domestic support and personal care will not be “for fee or reward”. If the purpose of living together is primarily remunerative, then the provision of domestic support and personal care is likely to be “for fee or reward”.
There has been an understandable tendency to take the imprecise words of the statute and to impose glosses upon them. Thus it was said in Re Filomena Rodi (dec’d) [2016] NSWSC 1696 at [53] that “in context the expression ‘for fee or reward’ implies a commercial arrangement”. In White v O’Neill [2010] NSWSC 1193 at [47], there was reference to “a contractual arrangement in which the fee or reward is produced by the provision of support and care”.
It may be helpful to ask whether a relationship is properly characterised as “commercial” or “contractual”. If the relationship be “commercial” then it is likely that the domestic support and personal care will be provided for fee or reward. But ultimately the statutory language requires an examination of a question of fact: why did the person provide domestic support and personal care? I respectfully agree with the observation of the primary judge at [378] that placing a gloss upon the statute may ultimately distract from the task of applying the words of s 5(2)(a) themselves. I appreciate, of course, that there will be cases where the reason for providing domestic support and personal care is contestable. Motivations may be mixed, and may vary over time, as the facts in Ye v Fung demonstrate. Here, as Emmett AJA has observed, the board and lodging which Maria received were an incident of her close personal relationship with her father-in-law Chris, but were not the reason for her caring for him. It follows that there was no error in the primary judge’s conclusion that she was not disentitled by s 5(2)(a).
1. It follows from Saravinovski that in order for the exclusion in s 3(4) of the Act to apply the benefit which is said to constitute the relevant ‘fee or reward’ must have a causal nexus with the provision of the domestic support and personal care.
Factors warranting
1. If s 57(1)(e) (in the case of Natalie) or s 57(1)(f) (in the case of Ms Le) is satisfied, then it becomes necessary to determine if there are factors warranting the making of the application within the meaning of s 59(1)(b). In Re Fulop Deceased (1987) 8 NSWLR 679 at 681, McLelland J (as his Honour then was) said that these ‘factors’ are ‘factors which when added to facts which render the applicant an “eligible person” give him or her the status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased’.
2. In Lodin v Lodin [2017] NSWCA 327, Sackville AJA (Basten and White JJA agreeing) said at [114] (by reference to the examples of a former spouse or grandchild):
Consistently with the analysis in Re Fulop, the starting point for applying of s 59(1)(b) of the Succession Act is that an eligible person such as a former spouse or grandchild of the deceased is not normally regarded as a natural object of testamentary recognition by the deceased. In order to satisfy s 59(1)(b) an applicant must therefore establish that there are circumstances that justify regarding him or her as a natural object of testamentary recognition by the deceased. Those circumstances must go beyond the bare fact of a familial (or, in the case of a former spouse, a previous familial) relationship. The factors relied on must be such as to demonstrate a social, domestic or moral obligation on the testator to make some provision for the claimant.
1. Sackville AJA went on to observe at [126] that ‘care must be taken not to impose rigid constraints on the circumstances that might constitute factors warranting’ the claim of a particular applicant (in that case a former spouse), but ‘[s]omething more is ordinarily needed for the claimant to show that he or she was a natural object of testamentary recognition’. His Honour added at [129] that a ‘significant matter is likely to be the nature of the relationship between the claimant and the deceased. In particular, it may be very important to determine whether there were (or are) features of that relationship that can be said to create a moral obligation on the deceased to make testamentary provision for the claimant’.
2. In the case of a grandchild, Hallen AsJ in Bowditch v NSW Trustee and Guardian [2012] NSWSC 275 at [113] stated the following ‘general principles’ which his Honour recognised at [117] are merely guidelines, where the statutory provisions are being applied to a claim by a grandchild:
In relation to a claim by a grandchild, the following general principles are, in my view, relevant and should be remembered:
(a) As a general rule, a grandparent does not have a responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased’s testamentary recognition.
(b) Where a grandchild has lost his, or her, parents at an early age, or when he, or she, has been taken in by the grandparent in circumstances where the grandparent becomes in loco parentis, these factors would, prima facie, give rise to a claim by a grandchild to be provided for out of the estate of the deceased grandparent. The fact that the grandchild resided with one, or more, of his, or her, grandparents is a significant factor. Even then, it should be demonstrated that the deceased had come to assume, for some significant time in the grandchild’s life, a position more akin to that of a parent than a grandparent, with direct responsibility for the grandchild’s support and welfare, or else that the deceased has undertaken a continuing and substantial responsibility to support the applicant grandchild financially or emotionally.
(c) The mere fact of a family relationship between grandparent and grandchild does not, of itself, establish any obligation to provide for the grandchild upon the death of the grandparent. A moral obligation may be created in a particular case by reason, for example, of the care and affection provided by a grandchild to his, or her, grandparent.
(d) Generosity by the grandparent to the grandchild, including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of the grandparent. It has been said that a pattern of significant generosity by a grandparent, including contributions to education, does not convert the grandparental relationship into one of obligation to the recipients, as distinct from one of voluntary support, generosity and indulgence.
(e) The fact that the deceased occasionally, or even frequently, made gifts to, or for, the benefit of the grandchild does not, in itself, make the grandchild wholly, or partially, dependent on the deceased for the purposes of the Act.
(f) It is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his, or her, parents.
1. These observations were approved by the Court of Appeal in Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [21] per Basten JA and at [65]-[67] per Barrett JA (Gleeson JA agreeing). Basten JA also noted at [20] that the ‘principles’ are relevant to both the question whether there are factors warranting the application and, if so, what if any provision should be made. See also to the same effect Gleeson JA at [150].
Approach to evidence
1. The Court is required to determine on the balance of probabilities whether each plaintiff has proved the different elements of her case. So far as the proof of facts is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found, which does not involve a mere mechanical comparison of probabilities, independent of any belief in reality: Warner v Hung (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48].
2. Each plaintiff’s claim to eligibility under s 57 of the Act turns on their relationship with the deceased and requires a detailed assessment of facts relevant to that relationship. Each plaintiff gave extensive evidence about that relationship and called witnesses corroborative of their evidence. However, of course, a key person in the assessment of the relevant evidence is the deceased who cannot give evidence.
3. In these circumstances, there is a need for caution and careful scrutiny of the evidence of conversations had with and actions of the deceased, bearing in mind the self-interest of each plaintiff and the vagaries of human memory: Plunkett v Bull (1915) 19 CLR 544 at 548, 549; [1915] HCA 14. In Zahra v Francica [2009] NSWSC 1206, Bryson AJ said at [1]:
In these proceedings the plaintiff makes claims against the deceased’s estate and the facts that he alleges depend for proof very largely upon his own evidence. In approaching his evidence and making findings on a matter he alleges, I bear in mind the need for careful scrutiny to which evidence in such a case should be subjected. This need is well established and was stated clearly by Isaacs J in Plunkett v Bull (1915) 19 CLR 544. Two more modern statements appear in the judgment of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 789 in a passage which was cited with approval in the judgment of Sheller JA in Eggins v Robinson (2000) NSWCA 61 at [26]:
… in a claim based on communications with a deceased person the Court will treat uncorroborated evidence of such communications with considerable caution, and will regard as of particular significance any failure of the claimant to bring forward corroborative evidence which was, or ought to have been, available.
1. In relation to the fallibility of human memory where reliance on conversations is concerned reference may be made to the well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319:
… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
1. These matters dictate that greater weight is placed on contemporaneous documents, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31]; Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [25]-[29].
2. Where the dispute concerns whether a de facto relationship existed with a deceased, it is necessary to bear in mind the following observations of Windeyer J in Quijarro v Robson [2008] NSWSC 818 at [36]:
As in many of these matters the evidence adduced by either side, although it seems to some extent contradictory, is often generally truthful. It is just that people see things partly as they want to see them or as they think they should see them and partly in accordance with statements made to them by the persons involved in a relationship. It is usually not possible to reject the evidence of witnesses of one side and accept the evidence of witnesses of another in coming to a decision as to whether or not a de facto relationship has been established. It is also necessary to bear in mind it is incorrect to think that perfection and harmony is a necessary requirement in de facto relationships but not in married relationships: Bar-Mordecai v Hillston [2004] NSWCA 65. Nevertheless for a de facto relationship to continue to exist it is necessary for there to be a sense of commitment on both sides.
1. While his Honour’s decision was overturned on appeal, this statement was cited with apparent approval by Basten JA: see [2009] NSWCA 365 at [15].
General observations on credit
Ms Le and witnesses called by her
1. Ms Le relied on her own evidence, comprising five affidavits, and the evidence of 11 witnesses. The plaintiff gave her evidence in cross-examination through an interpreter. She was cross examined extensively over five days. I found Ms Le’s evidence unsatisfactory in a number of respects which are referred to below in dealing with it. As a consequence of those matters, and her self-interest in the outcome of the proceedings, I have treated her evidence with great caution.
2. Ms Le’s sons, Duc (born 16 December 1991) and Thang (born on 20 December 1988) also gave evidence. I do not accept Duc’s evidence where it conflicts with that of Mr Bates. I accept Thang’s evidence.
3. The remaining witnesses called by Ms Le were friends of hers who made observations regarding her relationship with John.
4. Jaqueline Varela is the partner of Robert, John’s son, with whom she has been in a relationship since 1997. For reasons I explain when dealing with her evidence, I do not accept it as reliable.
5. Lisa Reid was employed by John for a short period in his smash repair business and knew both John and Ms Le and regarded them as friends, from around 2010. Her husband, Matthew Reid, gave evidence that he also knew both John and Ms Le from 2010 until John’s death. They both gave evidence about their observations of interactions between John and Ms Le. For reasons I explain when dealing with their evidence, I do not accept it as reliable.
6. Alvin Johnson gave evidence that he had known John since around 1966 and worked for John in his smash repair business. After he retired, he assisted John with gardening and handyman services at the Coogee property, the Burradoo property and other investment properties owned by John. For reasons I explain when dealing with his evidence, I do not accept it as reliable. His wife, Lesley Johnson also gave evidence. She gave every appearance of trying to answer the questions she was asked honestly and to the best of her recollection.
7. Kolena Denis is a retired nurse and welfare worker who has been a close friend of Ms Le since around 1991. For reasons I explain when dealing with her evidence, I do not accept it as reliable. Her partner, Neil Johnston, also gave evidence and he gave every appearance of trying to answer the questions he was asked honestly and to the best of his recollection.
8. Evelyn Moses was Ms Le’s hairdresser who met both John and Ms Le in about 2006 and deposed that she regularly cut the hair of both John and Ms Le. For reasons I explain when dealing with her evidence, I do not accept it as reliable.
9. Austin Smith lived in an apartment at 8 Allen Street, Waterloo and met John in about 2012 while John was living in the Waterloo apartment. He saw John intermittently at the building during the period 2012-2016 and also on occasions after John returned to live at the Coogee property in 2017. He last saw him in 2019. He gave every appearance of trying to answer the questions he was asked honestly and to the best of his recollection, but the limited nature of his interaction with John makes his evidence of little assistance.
Natalie and witnesses called by her
1. Natalie gave evidence by four affidavits and was cross-examined. She relied on her own evidence and the evidence of four lay witnesses, each of whom was cross-examined except for her solicitor. Natalie was cross examined at length and impressed me as an honest witness who gave every appearance of trying to answer the questions she was asked honestly and to the best of her recollection. While I have treated her evidence with caution in so far as it relates to her relationship with John, I generally accept it.
2. Silvana Salvatore is Natalie’s mother, who was married to Robert from 1985 to 1999. She impressed me as an honest witness and while I have treated her evidence with caution given her relationship with Natalie, I generally accept it.
3. Domenic Dodaro is a retired security guard who is a friend of Natalie, having known her since 2007. He impressed me as an honest witness, and I accept his evidence.
4. Francis Devine is a solicitor who met Natalie and her grandfather, John, on 20 December 2021 at the Coogee property for the purpose of taking instructions for the preparation of an enduring power of attorney and an appointment of an enduring guardian for John. His evidence was not challenged, and I accept it.
5. Natalie relied on the evidence of Dr Judith Spies (a neurologist) and Professor Cherry Koh (a colorectal and general surgeon) who are Natalie’s treating doctors, who provided short reports summarising Natalie’s diagnosis and care. Each was cross-examined. There was no suggestion to them that their evidence ought to not be accepted. In addition, Natalie relied on a report of Mr Christian Byrnes an occupational therapist addressing Natalie’s needs, who was not cross-examined.
Jenny and the witnesses called by her
1. Jenny relied on her own affidavit evidence and the evidence of a number of witnesses.
2. In relation to Ms Le’s claim, Jenny relied on the evidence of her daughter, Gabrielle, Jason Bates (an asset manager she retained on behalf of the deceased’s estate), Nick Pappas (a friend of John) and Kevin Batten (her partner). I refer to my approach to the evidence of Jenny and Gabrielle at [269] below. Mr Bates, Mr Pappas and Mr Batten each gave the appearance of trying to answer the questions they were asked honestly and to the best of their recollection, and I generally accept their evidence.
3. In relation to Natalie’s case, Jenny also relied on the evidence of Gabrielle who was cross-examined, and two experts, who were not cross-examined: Dr Stuart Pincott (a colorectal and general surgeon) and also Ms Sanja Zeman (an occupational therapist) who responded to Mr Byrnes’ report. It is not in dispute that Mr Byrnes and Ms Zeman are in substantial agreement. Also, I do not understand there to be any serious dispute regarding the diagnosis and prognosis of Natalie’s medical conditions recorded in the evidence of her treating specialists, Dr Spies and Professor Koh.
The evidence of witnesses called by Ms Le
1. In this section I will address the evidence relating to Ms Le’s eligibility given by her and the other witnesses called by her.
Ms Le’s evidence
1. Ms Le gave evidence that she first met John in around 2000 when taking her car to John’s smash repair business for repairs and commenced an intimate relationship with him when he took her out to dinner and drinks on 15 March 2003, shortly after her 40th birthday. At that time John was living at the Coogee property and she was living at the Redfern property.
2. Ms Le deposed that from 15 March 2003 to 2011 John visited her at the Redfern property and stayed overnight there two or three times per week and for the rest of the time he lived at the Coogee property. She did not know in the early stages of their friendship that John was married.
3. Ms Le deposed that in around 2011, after the Waterloo development was completed, John said to her words to the effect: ‘I am going to give you a shop so that you can run your own business. I will help you with the money to set up’. John did not make an outright gift of a shop to Ms Le to run her business, but he did arrange for a lease of Shop 3 to be granted to Ms Le in August 2011 and it is not in dispute that Ms Le was not required to pay the rent provided for under the lease. It is also not in dispute that John funded the cost of the fit-out of Shop 3.
4. Ms Le deposed that John explained why he did not give Shop 3 to her outright, which was that Laura wanted to give Shop 3 to Robert, whereas John did not, and said to Ms Le that: ‘we need to do a lease on the shop so that my wife can’t give it to [Robert]. That shop is for you. I will give it to you later, after my wife and I divide the shops and apartments, but for now that’s what we have to do.’
5. Ms Le signed the lease and also paid a security bond. It may be noted that after Laura’s death in 2012, John granted a new lease of Shop 3 to Ms Le, rather than gifting it to her. This is addressed below.
6. Ms Le deposed that from 2011 until he sold the Waterloo apartment in August 2016, John slept either at the Waterloo apartment or at the Redfern property. She deposed that John said to her that he did not want to sleep at the Coogee property because ‘things with him and his wife had become very hostile and she had made threats to hurt him in his sleep’. She deposed that she would cook breakfast and lunch for him, clean the apartment and do all his laundry, and that they would always eat out for dinner as that was John’s preference. Jenny disputes this evidence and says that John spent time at both the Waterloo apartment and the Coogee property during this period, including while Laura was alive.
7. Ms Le deposed that in around December 2011, when her daughter became pregnant with her first child, Ms Le moved to live solely at the Waterloo apartment, so that her daughter could live at the Redfern property. I note that John’s affidavit referred to at [49] above stated that in October 2014 he ‘lived by myself’ (at the Coogee property) which appears to contradict her evidence. Ms Le sought to deal with this apparent inconsistency by unsatisfactory evidence about what John meant when he said he ‘lived by myself’. She said in her affidavit of 3 June 2022 that on the day Laura’s dead body was discovered at the Coogee property she picked John up from the Maroubra police station and ‘drove him from the police station to our home in the [Waterloo apartment]’, and when they got ‘home’ they had a conversation in which John said to her:
The police think that I killed Laura, but I was with you. You have to tell them! But, you can’t tell them that we sleep in the same room, if they know we are together, they will think I killed her because of our relationship.
She deposed that she told the police in a subsequent interview that ‘I slept in a different room to John in the Waterloo penthouse on the night of Laura’s death. I was his alibi. I did this only to help John.’ However, neither the police record of John’s statement to police on the day he attended Maroubra police station (CB 567) or the statement given by a Detective Senior Constable to the coronial enquiry into Laura’s death recording the evidence of all relevant witnesses including John but not Ms Le (CB 593) make any mention of John using Ms Le as his alibi and indeed states, to the contrary, that John did not have an alibi (CB 607). Also, the police record shows that a police constable drove John home to the Waterloo apartment from Maroubra police station on the day Laura’s body was discovered (CB 567), which contradicts Ms Le’s evidence that she did so. Ms Le states later in the same affidavit that John’s use of her as his alibi involved him lying to police. I cannot accept this evidence, which appears to be a desperate, and false, attempt to explain away John’s statement in October 2014 that he lived by himself.
1. Ms Le deposed that John had a heart attack in 2006, and that while he was hospitalised at RPA she visited him every day for a week, looking after him and bringing him food. It appears that Ms Le is mistaken as to the time of these events, as Jenny says the heart attack was in 2007 and that is confirmed by John’s medical history as recorded in Professor Rosenfeld’s letter dated 24 June 2021. However, Jenny does not dispute that Ms Le may have visited John at the hospital during his recovery.
2. Ms Le deposed that John had a hip replacement in 2007 at Randwick Hospital and later moved to a hospital in Bondi for rehabilitation and that she visited him every night from 6:00pm to 8:00pm at both hospitals. Again, it appears that Ms Le is incorrect as to the date of the hip replacement surgery. Professor Rosenfeld’s letter dated 24 June 2021 states that it took place in 2009, and that is Jenny’s recollection. Jenny does not dispute that Ms Le may have visited John at the two hospitals while he was recovering from the surgery, but says that she visited John with her partner Kevin nearly every day and often in the evening and never saw Ms Le.
3. Jenny deposed that John had another heart attack in 2016 and that during his hospitalisation at RPA, she visited him two to three times per day, helping to clean, shower and dress him and also brought him breakfast, lunch and dinner as he did not like the hospital food.
4. Ms Le deposed that when John was required to vacate the Coogee property in May 2017, they moved to the Burradoo property and then moved back to the Coogee property when he bought it back in August 2017. She deposed that she thereafter lived with John at the Coogee property. She deposed that in the period they were living at the Burradoo property they would often go to her Redfern property for two to three days per week because John found the Burradoo property to be too cold for him. Again, Jenny disputes this evidence.
5. Ms Le deposed that John spent a week in hospital in May 2018 and then two months at Camperdown Hospital from November 2018 to January 2019 due to serious illness, including heart failure. She said that in both periods she visited John two to three times per day until he was discharged, helping to clean, shower and dress him and bring him breakfast, lunch and dinner. She deposed that she spent Christmas Day 2018 with him in hospital.
6. Ms Le deposed that John’s health was very poor in this period from 2016 until his death and he was regularly in and out of hospital. She deposed that during all these hospital admissions, she was the primary caregiver for him.
7. Ms Le deposed that while she was living with John, he took care of all their finances, and she took care of all their domestic matters. He gave her money weekly for all their expenses such as medicine, clothing, groceries and homewares.
8. Ms Le deposed that in about 2015, John gave her his used Toyota Aurion (which she still drives) and that she then gave her Toyota Corolla to Natalie. Natalie denies that.
9. It is not in dispute that John employed a cleaner when he moved back to the Coogee property, Yuhua Yan (known as Ms Linda Yan). Ms Le deposed that the reference in Professor Rosenfeld’s letter of 24 June 2021 to two women who assisted John with cleaning and housework was to Linda and ‘a Thai lady who came to work at [the Coogee property] in 2021’. She said in her affidavit that John told her: ‘You are too busy with the laundromat and then you have to look after me after work. I will hire another lady to help Linda with cleaning the house. That is not work for you. You spend time with me.’
10. Jenny and Gabrielle dispute that John engaged a second person to assist with cleaning and housework (the ‘Thai lady’ that Ms Le refers to) and say they never observed such a person at the Coogee property. Jenny lived in the same street and was a regular visitor to the Coogee property; it is inconceivable that she would not have been aware that her father had employed another cleaner. Ms Linda Tan did not give evidence.
11. I do not accept Ms Le’s evidence regarding the ‘Thai lady’. No witness corroborates Ms Le’s evidence that such a person existed. That the reference in the statement to Professor Rosenfeld regarding the two ladies who assist John with cleaning and house care is a reference to Linda Tan and Ms Le is supported by statements to Francis Devine that Ms Le was employed to look after the house as a carer (see [335] below).
12. Ms Le accepted that John referred to her as ‘the Chinesa’ or ‘Chineso’. It is clear he did so both in speaking to her and in the presence of others. This is confirmed by several witnesses. I consider this to be a derogatory term, noting that Ms Le is Vietnamese and not Chinese as he was clearly aware.
13. In relation to the relationship between Ms Le and John, there are a number of photographs in evidence which show John and Ms Le being affectionate to each other (including kissing) or being happy in each other’s company. Those showing him displaying affection to her were taken in the period 2003 to 2011. There are no photographs in evidence of Ms Le and John together at either the Waterloo apartment or the Coogee apartment.
14. Ms Le deposed that she became pregnant from John in 2006 and then again in 2007, but on each occasion lost the baby after four to six weeks. She deposed that their sexual relationship continued until the end of John’s life.
15. Ms Le deposed that Jenny and her partner, Mr Batten, spent Christmas 2012 with John and Ms Le at the Burradoo property. This is not in dispute. Ms Le deposed that she thought that her relationship with Jenny and her family improved from this time and the evidence does show that from 2013 she and John went to dinner with Jenny and her family at the South Sydney Juniors Club in Kingsford or the Sydney Portugal Community Club in Marrickville, including to celebrate John’s birthdays. There are photographs in evidence showing Ms Le with Jenny and her family at restaurants during the period from 2018 to 2020.
16. Ms Le also deposed that Jenny and her family stayed with John and Ms Le at the Burradoo property for two weeks over Christmas 2019 and went to restaurants together during that time. There is a photograph in evidence showing them all having a meal at the Mittagong Club on 25 December 2019. Ms Le also deposed that Jenny and her family went to dinner with John and Ms Le at the Coogee property on 19 October 2021 and that Ms Le cooked for everyone. This was not disputed.
17. On Christmas Day 2021, Ms Le had lunch with her family at the Bankstown property, and John had lunch at the Coogee property with Jenny and her family. She deposed that she prepared the ingredients for the meal which was cooked by Gabrielle. Ms Le deposed that she came home later that evening and had dinner with John, after Jenny and her family had left.
18. Ms Le also deposed that John often attended special occasions for Ms Le and her family (without Jenny or her family being present). There is a photograph showing John attending a dinner for Ms Le’s birthday with members of her family in March 2017.
19. Ms Le deposed that while John was alive, Gabrielle visited him more than Jenny, and that Jenny visited him irregularly for only about one hour each time, whereas Gabrielle visited regularly after work. Jenny and Gabrielle dispute this. I do not accept Ms Le’s evidence on this and accept the evidence of Jenny and Gabrielle that they frequently and regularly visited John, noting that Jenny lived on the same street.
20. Ms Le deposed that from around 2006 to 2018, John regularly took her on trips to country New South Wales and Victoria, which were either holidays or business trips (as John had an interest in pubs in Windsor and Albury). She deposed that the holidays were taken during the Easter and Christmas period and she would sleep with John either in his motorhome/campervan or in a motel on these trips.
21. Ms Le deposed that she and John started sleeping in the same bed from the time they first started going out in 2003 and that she shared a bedroom with John from 2011 when she moved into the penthouse apartment. She deposed that she continued to sleep in the bed with him when they stayed at Burradoo in 2017 and from August 2017 when John moved back into the Coogee property, until his death.
22. Ms Le deposed that John told her when she entered into the Variation of Lease in 2016 that the reason a new lease was necessary was to protect her from Robert. She stated in her affidavit that John said to her at the time the Variation of Lease was entered into in 2016: ‘Robert could kick you out of the shop if something happened to me. It is better if you just sign these lease documents so that no one can take the shop from you. You don’t actually need to pay any rent, it is free, it is your shop, but this is just to protect you’. She said that she signed the lease document when John told her to because she trusted him.
23. Ms Le deposed that the reason she kept the Redfern property until 2021, was so that she could support her daughter who became pregnant for the first time in December 2011 and, as a single mother with twins, had nowhere else to live. She also deposed that her daughter lived at the Redfern property from 2011 to 2016, when she obtained her own subsidised accommodation, and that she only stayed with her daughter for short periods to help her. There is no evidence from Ms Le’s daughter to corroborate this evidence. Nor does Ms Le explain why she continued to keep the Redfern property after 2016, which is the time that her daughter moved out.
24. Ms Le deposed that she and Gabrielle went to the hospital on 31 January 2022, when they were informed of John’s death. Ms Le returned to the Coogee property and remained there until Jenny required her to leave. This was on the basis that she had no entitlement to be at the Coogee property as it was owned by John.
25. John’s funeral took place on 5 February 2022. Ms Le attended the funeral, although she deposed that she felt offended and hurt that Jenny did not allow her sit in the front few rows which were reserved for family members, and she regarded herself as part of the family.
26. Ms Le was never given a set of keys to the Coogee property. She deposed that John gave as the reason for that ‘I’m always at home to let you in’. She deposed that she obtained the keys from John’s belonging when she took them home from the hospital on 31 January 2022.
27. On 6 February 2022, Gabrielle went to the Coogee property and requested Ms Le to give the keys to the Coogee property to her because the executor (Jenny) required vacant possession of the property, and she had no right to remain there. Ms Le responded that she planned to stay at the property. Ms Le recorded part of the conversation during this visit, and Gabrielle is recorded as having said the following:
You look after [John] very well. No-one is saying otherwise, even my mother said that you look after him … My mother said this to me and I can say this to you … Mum said that you did look after him very well and that she was able to spend more time with her father because you probably did extend his life. No-one is denying that, no-one is denying that, we admit that you very well cared for him … absolutely, absolutely …
1. Ms Le was cross-examined regarding prior engagement of her solicitors in or around May 2021 regarding John’s estate. Ms Le’s response was that she wanted to understand Australian law regarding her situation if John was to pass away (T72). Ms Le’s solicitors obtained a statutory declaration from Ms Le’s friend Kolena Denis regarding her relationship with John on 8 June 2021, and other people in July 2021. Ms Le accepted that she had given instructions for this to occur (T74). She did so because she wanted that evidence available before John died (T73).
2. A significant portion of the cross-examination of Ms Le focused on documents that recorded her address as the Redfern property and not the Coogee property, as she contended.
3. Ms Le’s tenancy of the Redfern property from 2001 to 2021 required her to lodge annual applications with the relevant government department which she signed. Ms Le accepted that she had not been honest on those forms in stating the occupants of the house (T80). Ms Le’s evidence was that whilst she kept the tenancy for the Redfern property, she did not reside there from December 2011 onwards, but did occasionally spend nights at the property (T81–82).
4. Ms Le’s evidence regarding her occupation of the Redfern property was unsatisfactory. As noted at [22] above, she had a subsidised tenancy of that property from 2001 to June 2021. She relinquished that tenancy on 21 June 2021 in circumstances where she had completed her annual renewal application only one month earlier, on 25 May 2021 (Ex 19). She gave as her forwarding address Shop 3, and not the Coogee property. She then proceeded to change her mailing address for various third parties to the Coogee property (see [59] above). This all occurred shortly after she received advice from her solicitors, AKN & Associates, regarding a potential claim that she was in a de facto relationship with John.
5. The evidence establishes that throughout the period from 2001 to June 2021, Ms Le consistently adopted her address as being the Redfern property. She accepted in cross-examination that she knew that it was a condition of her tenancy of that property that she occupy it, and that there were penalties for giving false information (T79, 83-84). Nevertheless, she made annual declarations that she did occupy it when she renewed the tenancy annually.
6. Particularly telling is the fact that her daughter moved out of the Redfern property in 2016, when she obtained her own subsidised accommodation. Ms Le’s renewal applications from this time state that she was the sole tenant and that the household consisted only of herself. Importantly, there was no need for her to keep the Redfern property from 2016 if she really did live with John at one of his residences.
7. She said in cross-examination that her reason for relinquishing the tenancy of the Redfern property on 21 June 2021 was that her solicitor (AKN & Associates) advised that it was ‘wrong’ to retain it (T113-115). There is some ambiguity in this answer. I am satisfied that the true position is that she gave up the tenancy in order to improve her case for a claim that she was in a de facto relationship with John, and that in the period before June 2021 she maintained the tenancy of the Redfern property because she did live there.
8. Ms Le deposed that John made significant financial contributions for her benefit during their relationship. In addition to waiving the rent payable by her under the lease of Shop 3, her affidavit evidence summarises the other benefits she received as follows:
1. Between 2003 and to around 2011, John often gave $1,000 every week as an allowance. From 2011 to the end of John’s life, he paid for ‘our household groceries, bills, and all expenses for going out to eat, and he also paid for my personal shopping, including for clothing, shoes, cosmetics, medications, toiletries, salon and nail shop visits’.
2. Some bills and expenses John paid directly, for other expenses John regularly gave her between $500-$1,000 per week.
3. John also gave her the money to purchase his medications and any other items he needed from the shops.
4. John paid for her car maintenance expenses including servicing and her car insurance.
5. Many times, especially during the COVID-19 pandemic, John paid the laundromat business bills and expenses because the business was not doing well during the lockdown.
6. John also gave her around $2,000-$3,000 approximately 7-8 times per year on special occasions, including Christmas, New Year, Chinese New Year, Valentine’s Day, their anniversary (15 March), her birthday, and Mother’s Day. She deposed that when he gave her the money he would often say: ‘You know I don’t like shopping, I never know what to get for you. Go and get yourself something nice from me’.
Lisa Reid
1. Ms Reid made a short affidavit and a supplementary statement during the course of the hearing. She was employed by John when he operated what she referred to in her affidavit as his ‘mechanic workshop’ at Allen Street, Waterloo for around a year to 18 months. She agreed in cross-examination that John operated a smash repair business rather than a mechanic workshop (as it was Nick Pappas who operated a mechanical workshop next door). Her role was to provide quotes for cars to be repaired and work with the assessor who would come to the premises to approve the quote, and then order the parts required to repair the vehicle. It was a full-time job.
2. Her affidavit evidence contained a number of basic errors. First, she agreed in cross-examination that John operated a smash repair business, rather than a mechanical workshop. Second, she deposed that she started working for John in 2010 and confirmed the date in her cross-examination, but this is incorrect because the evidence indicates that John’s smash repair business closed in 2008, when the Waterloo development started. The date of closure was corroborated by Nick Pappas who operated the mechanical repair workshop next door, and his evidence was that both John’s business and his own business closed in 2008 (and his business then relocated to Rosebery). Third, Ms Reid deposed that she and her husband had visited John and Ms Le at the Burradoo property in late 2021, which was her only visit to the Burradoo property and was shortly before she signed her first affidavit on 10 February 2022.
3. In cross-examination she said that this visit was in the period from October to December 2021. However, while she could recall that Jenny and her partner, Mr Batten, were also there, she could not recall when in the period October to December 2021 the visit occurred. Her husband, Michael Reid, said that the visit could have been in 2020. Both Jenny and Mr Batten gave evidence that the visit took place in 2020.
4. Fourth, Ms Reid said in her affidavit that: ‘Whenever I would meet John, Le would be with him’. However, she said in cross-examination that on most of the occasions that she visited John at the Coogee property they occurred around lunchtime and Ms Le was not there because she was working at the laundromat (T338).
5. Fifth, Ms Reid deposed in her statement that she saw Ms Le’s clothes and toiletries at both the Coogee property and the Burradoo property. However, she gave evidence in cross-examination that she did not go into any of the bedrooms or use the toilets on the bedroom level of either the Burradoo property or the Coogee property, or see any toiletries at the Burradoo property.
6. As a result of these inconsistencies in her evidence, and her unresponsive answers in cross-examination, I do not regard her evidence as reliable. In so far as the general statements she made in her affidavits and statement that she understood that John and Ms Le were a couple, having a domestic relationship and that she thought that they were married, they are too general and insufficiently supported by observations of the nature of the relationship to be reliable.
Matthew Reid
1. Mr Reid made a short affidavit and a supplementary statement during the course of the hearing. He said in cross-examination that he had spoken to his wife, Lisa, about his affidavit and statement ‘to try to recall the dates’.
2. Mr Reid deposed that he had been at the Coogee property around a half a dozen times and once to the Burradoo property (together with his wife, Lisa), which he said was in 2020 or 2021. He said that the first visit he made to the Coogee property was with Lisa at lunchtime and Ms Le was not present. He also said that on each subsequent visit to the Coogee property, Ms Le was not present because she was working (T353). This is in contrast with what he said in his statement that ‘When we went to Denning Street, Le was at home at times and we would have lunch with her and John’.
3. His evidence was that on the first visit to the Coogee property, John showed him and Lisa the rooftop, but they did not spend any time on the bedroom level. His evidence was that he did not, on any of the subsequent visits, go to the bedroom level. This is difficult to reconcile with what he said in his supplementary statement that he saw Ms Le’s clothes and toiletries at both houses.
4. Mr Reid deposed that although John did not show affection in public, he recalled a conversation at the Burradoo property when John said he loved Ms Le, and that he saw John blow kisses to Ms Le and that they referred to each other as ‘honey’. He also regarded them as being in a loving domestic relationship and ‘thought they were married’.
5. Again, Mr Reid’s evidence is very general in nature and non-specific regarding his observations of the relationship between John and Ms Le, particularly as to when the observations occurred. I give his statement, that they were in a domestic relationship or like a normal married couple, no weight.
Alvin Johnson
1. Mr Johnson knew the deceased from the mid to late 1960s and worked for him for more than 10 years as a mechanic at his smash repair business at Allen Street, Waterloo. He gave evidence by two affidavits dated 16 February and 2 June 2022, and a supplementary statement made during the hearing.
2. Mr Johnson deposed that after he ceased working for John, he assisted him with handyman and gardening tasks at the Coogee property and the Burradoo property. He deposed that he first met Ms Le in about 2000, at a time when John told him ‘I got two Chinesa. Which one I choose? Which one do you like?’ to which Mr Johnson replied, ‘Le is the best one for you’.
3. He deposed that the conversation took place at the Coogee property. He deposed that he met both Ms Le and the other girlfriend and that after John ceased his relationship with the other girlfriend and commenced his relationship with Ms Le alone, John would often tell him ‘I take Le to the club and out for dinner and we play the poker machines’.
4. Mr Johnson deposed that John had accompanied him on three holidays to the United States. While he could not be precise about the years in which these trips occurred, he recalled that one was before Laura’s death in 2012. He deposed that his wife, Lesley, attended two of the trips and that Ms Le did not attend any of them. This evidence was corroborated by Lesley, who also could not recall the years in which the trips occurred. Mr Johnson said that the trips came about because he was a member of a Navy organisation. However, no explanation was provided for why this precluded Ms Le from going on the trips with John had he so wished, given that Alvin’s wife accompanied him on two of them.
5. Mr Johnson deposed that he saw Ms Le assisting in the garden at the Coogee property, doing ‘the washing and general housework as any wife would do’. He deposed that she was always part of their social interaction and would sit with John at the table and have lunch with them and chat. He also deposed that he saw Ms Le from time to time affectionately giving John a peck on the cheek and calling him ‘honey’. However, he accepted in cross-examination that he never heard John call her ‘honey’.
6. Mr Johnson accepted in cross-examination that the deceased was not a physically affectionate person and did not initiate affectionate gestures, the most Mr Johnson saw the deceased initiate was a pat on the back (T357), and accepted in cross-examination that he never saw John initiate a hug with Ms Le.
7. He deposed that Laura knew about Ms Le because he had heard Laura say to John: ‘You got rid of the other one, now this one?’
8. Mr Johnson deposed that when John was in hospital on one occasion (although he did not indicate which one this was) John told him in a telephone call that Ms Le was his ‘partner’ and that later when he visited John in hospital John said to him: ‘I told the hospital I have a partner, and my partner is Le. Le always look after me, she will look after me when I am home. She is my wife. Luckily, she fights for me so that the hospital will let me go home with her. Lucky Le wants to take me home.’ I do not accept this evidence, given the following exchange in cross-examination by Ms Painter SC (T370-371):
Q. You’ve given some examples of conversations you had with John where he said she - Le - was not a carer, but a partner. I just want to suggest that you are mistaken about those conversations?
A. Why do you say that?
Q. Because they didn’t happen?
A. Well, I think she was, she was more than a carer.
Q. I just want to make it clear that what I'm suggesting is that the deceased, John, did not tell you that she wasn’t his carer, but his partner, or words to that effect?
A. He never called her a carer, or he never said she was just a - just his carer.
Q. And he never said she was his partner?
A. No.
Q. That's not his language, so far as you'd know?
A. That's right.
1. Mr Johnson was vague about the dates when he visited the Coogee property after Laura’s death in 2012. When asked to focus on the years 2019, 2020 and 2021 he could only recall having visited the Coogee property a few times (he accepted it was probably between two and five times) and had no clear recollection of Ms Le being present on those visits (T362-363). On those visits he did not go upstairs and visit the bedrooms or bathrooms of the Coogee property.
2. Mr Johnson was cross-examined on a conversation he had with Mr Bates recorded in a file note which Mr Bates made on 15 February 2022. The file note recorded that Mr Johnson said that Ms Le cooked and cleaned, undertook ‘personal duties’ and was like a ‘carer’ and that John was not happy as she would ‘come and go a lot’. Mr Johnson accepted that he had a conversation with Mr Bates on that day, and that in the course of which he said that Ms Le had undertook ‘personal duties’ for John, but denied these other statements attributed to him. I am satisfied that the statements recorded in the file note were made by Mr Johnson in the conversation.
Lesley Johnson
1. Lesley Johnson is the wife of Alvin. She gave evidence by an affidavit dated 2 June 2022 and a supplementary statement made during the hearing.
2. She deposed that when she met Ms Le over 15 years before her affidavit was prepared, John had said to her: ‘This is the Chinesa’.
3. She deposed that based on her observations and interactions with John and Ms Le, she had ‘no doubt’ that they were a couple living together in a de facto relationship. She deposed to observations of the following matters about their relationship in support of this opinion. First, she deposed that Ms Le did everything for John: cooked, cleaned for him, drove him everywhere and they went together to the club and to dinners regularly. She deposed that on one occasion when she, her mother and her husband, Alvin, visited the Burradoo property in about 2013, she saw Ms Le in the main bedroom making the bed and tidying the room (T391). She also said in cross-examination that while she was shown through the house with her mother, on this occasion in 2013, she did not look in the cupboards or drawers in the bedrooms or bathrooms.
4. She observed that Ms Le called John ‘honey’ often and that after Laura passed away, John and Ms Le ‘appeared to me like a happy old couple’. However, she accepted that John was not a physically affectionate person and that she did not hear him call Ms Le ‘honey’ and although she saw the deceased kiss Ms Le on the cheek, she did not see him ever kiss her ‘like a lover’ (T387-388). She accepted in cross-examination that she and her husband never stayed overnight at the Burradoo property. She observed that they were happy in each other’s presence, often smiling and joking.
5. She deposed that she went on two trips to the United States with her husband, Alvin, and John to the United States, one to Hawaii and one to the mainland. The one to Hawaii was after and the mainland was before Laura’s death. She confirmed that Ms Le did not go on either trip.
Austin Smith
1. Austin Smith was a neighbour of John when he lived in the Waterloo apartment. He made one affidavit dated 13 February 2022 and a supplementary statement prepared during the hearing.
2. He deposed that he regularly had coffee with John on a fortnightly basis over the period from 2012 until he sold the Waterloo apartment in 2016 and moved to the Coogee property. He also deposed that he had dinner with John on one occasion at the Sydney Portugal Community Club in about 2015 or 2016. He also deposed that he visited John at the Coogee property on one occasion, but it was only a brief visit. He bought a coffee for John with him, and they walked around the front and the side of the property but, did not go inside. His evidence in cross-examination was that his conversations with John at 8 Allen Street, Waterloo were superficial, colloquial chats at the same time each was getting coffee (T377). Given the superficial nature of his relationship with John and Ms Le and his observations of that relationship, his evidence is of limited assistance.
Kolena Denis
1. Kolena Denis made an affidavit dated 16 February 2022 and a supplementary statement prepared during the course of the hearing.
2. She deposed that she was a close friend of Ms Le having known her since 1991. She also said that she knew John for around 19 years having first met him when he was her ‘mechanic’, although she accepted in cross-examination that he was a smash repairer and not a mechanic.
3. In her affidavit, she deposed that John said to her regarding Shop 3 at 8 Allen Street, Waterloo: ‘This shop belongs to Le and she can keep it. I will give it to her’. She also deposed that Ms Le and John resided in the Waterloo apartment from 2011 until it was sold in 2016 and that on the many occasions that she visited the apartment, she could see Ms Le and John’s personal belongings including clothing and her makeup in the same bedroom. In her supplementary statement she said that she visited the apartment at least once every two weeks and observed that Ms Le’s clothes were around the apartment.
4. She deposed that around Christmas 2015 she and her partner, Neil Johnston, went on holiday with John and Ms Le for one week. It started with a visit to the Burradoo property and then they travelled in separate vehicles (as John and Ms Le were in a motor home and she and Neil in their own car) to Albury and Gundagai. She also deposed that at Albury, Neil and she rented a room at a motel and John and Ms Le rented a separate room for themselves at the motel. In cross-examination, she contradicted this evidence and said that in Albury John and Ms Le stayed in the motor home and not in the motel. She seemed to prefer to say it was the motor home because ‘the motor home got only one bed’ (T445.45). In contrast, Mr Johnston was clear that John stayed in a motel room in Albury and not in the motor home.
5. She deposed that she visited John and Ms Le at the Coogee property from the time they moved there in 2016 until around November 2021 ‘many times, approximately three times a week’ and that she saw that they shared the master bedroom together, and saw their clothing and jewellery in the walk-in wardrobe of his room and their personal care items in the ensuite to the room. In her subsequent statement she said that these visits were at least once every two weeks. She also deposed in her affidavit that she stayed at the Coogee property overnight on two occasions and saw that John and Ms Le would return to their master bedroom and sleep together. However, in cross-examination she accepted that the statement was untrue (T454).
6. She deposed that John and Ms Le were very affectionate when they were together, even in public and they would walk together, hold hands, kiss, refer to each other as ‘honey’ and say to each other ‘I love you’. She also deposed that John said to her ‘on many occasions’ words to the effect of ‘When I die, I will leave Le a very rich woman’. In her supplementary statement, she stated that when John and Ms Le moved to the Coogee property in 2016 she visited at least once every two weeks, and on these visits she went to the main bedroom and saw Ms Le’s clothes and other personal effects there and also saw the wardrobe where clothes of both John and Ms Le’s were hanging. However, in cross-examination she accepted that on these visits she did not open the closets or cupboards or drawers in the various bedrooms or bathrooms (T455). In light of this, I cannot accept her evidence about what she saw in the main bedroom as reliable.
7. In her supplementary statement she recalled a conversation with John during a visit to the Coogee property, in which he said: ‘I will leave Le the laundry shop, the childcare in Botany Road, and this house. She will have Coogee house and the laundromat is for her for life. It can bring her income.’ In cross-examination she was asked about this evidence and where it occurred, she said the following:
Q. Do you remember where you were when you had this conversation?
A. We have it all the time.
Q. Where were you?
A. Sometimes when we, when we in the laundromat, because in the laundromat, I make him to - we make him - we're talking all the time. When you go to restaurant. Any time. So - and he told me.
Q. When John said these words, he was in different places?
A. What different places? Yeah. Well, he's talking all the same. He's talking all the - and not only once.
Q. I just want to suggest that this is more like what Le would say than what John would say. What do you say to that?
A. No.
Q. And you’ve been fed‑‑
A. It's not Le told me; John told me.
Q. You’ve been fed this list by Le in the period since you swore your affidavit in February 2022, haven’t you?
A. No.
HIS HONOUR
Q. Can I ask you in relation to paragraph (m) how many times John said those words to you?
A. Many times. Many times.
Q. Can you give me a rough idea how many?
A. Many time before he died. Maybe - many times.
Q. Can you tell me when?
A. When? Sometimes in his office in Waterloo, because he got office in Waterloo. And sometimes in the laundry, sometimes when we go out with - for dinner, sometimes. But it's not only one times he say it; he say it all the time. Most of the time. That make me believe.
1. I find this evidence implausible, and indicative of the tendency of Ms Denis throughout her cross-examination to tailor her answers to put Ms Le’s case in the best light possible.
2. Ms Denis accepted in cross-examination that she considered that it was very unfair and very wrong that Ms Le was left out of John’s will and that was part of her motivation in giving evidence and that part of her motivation for giving evidence was to right what she regarded as an unfair wrong (T420).
3. Ms Denis said in cross-examination that her affidavit was prepared on 16 February 2022, the same day that she signed it and that she had been to see Ms Le’s solicitor before then but could not recall the date or why she did so. She ultimately accepted in cross-examination that she swore a statutory declaration on 8 June 2021 at the offices of Ms Le’s solicitors which contained statements substantively the same as those in her affidavit of 16 February 2022. She ultimately accepted that she went to see the solicitor on that occasion because ‘I want to help my friend Le’ and ‘I want to make sure John and Le in a relationship de facto for long time’ (T424).
4. Ms Denis accepted in cross-examination that she knew in 2011 that Ms Le only had a lease of Shop 3 however, she also said that John said to her in 2011 that the shop belonged to Ms Le, that ‘John give it to her for her life’ and John told her this (T429, 432). In the course of cross-examination about the lease, the following exchange occurred:
Q. But you knew that there was a lease?
A. There is a lease.
Q. And you knew that she was the lessee, the tenant?
A. Yes.
Q. And she wasn't the landlord?
A. No.
Q. John was the landlord?
A. No, but he give it to her.
Q. You know that's not true don't you?
A. It is true, she (as said) give it to her, she doesn't pay rent.
Q. I'm going to move onto another topic.
A. Yes.
HIS HONOUR
Q. Ms Denis, can I ask you, is the reason why you say he gave the shop to her, because she doesn't pay rent?
A. She doesn't pay rent because he was, Le was John wife, de facto, John wife, that's why he (as said) doesn't pay rent, give it to her. He give it to her rent free.
PAINTER
Q. You know that the reason she didn't pay rent was because it was payment for some of the services that she provided to John?
A. What services?
Q. Driving, collecting medicines, cooking, cleaning, that was what the rent holiday was for, isn't it?
A. I don't accept.
Q. You don't think so?
A. No.
Q. You don't know?
A. I don't think so.
Q. Why don't you think so?
A. Because they are wife and, and husband, de facto.
Q. But do you have any actual knowledge of an explanation ever given to you about why the rent wasn't paid by John or by Le?
A. Because they are living together.
1. This evidence and the lengthy exchange which preceded it was characterised by Ms Denis’ failure to provide responsive answers to the questions she was asked and her desire to support Ms Le’s case that she and John were in a de facto relationship.
2. Ms Denis accepted in cross-examination that she was in the habit of taking photographs when she was with friends, having fun (T438). However, the only two photographs in evidence taken by her with Ms Le and John were two photographs taken in around 2014 at the Burradoo property. It is surprising given her evidence regarding a number of occasions that she spent with Ms Le and John socialising at the Waterloo apartment, the Coogee property and on holiday that no further photographs are in evidence.
Neil Johnston
1. Neil Johnston is the partner of Kolena Denis. He made an affidavit on 16 February 2022 and a supplementary statement prepared during the course of the hearing.
2. He deposed that he first met John in about 2013 and that he had seen John and Ms Le together when they regularly had dinner at a restaurant in Marrickville and at South Sydney Juniors. He deposed that he had seen them many times on those occasions holding hands, embracing each other, kissing each other and generally being affectionate to each other. He also deposed to visiting John and Ms Le at the Burradoo property in 2015 and going on a trip with them to Gundagai and Albury for around seven days accompanied by his wife, Ms Denis. He also deposed to having visited them at the Waterloo apartment and at the Coogee property.
3. He deposed that he visited John at the Coogee property about four months before he died and saw Ms Le there caring for him and attending to his needs. He deposed that on at least two occasions when he and Ms Denis had dinner with John and Ms Le at the Portugal restaurant in Marrickville, Jenny attended along with her partner and son. He observed on these occasions John and Ms Le held each others’ hands, hugged and kissed. Jenny did not dispute that these dinners occurred, but deposed that she did not see her father acting in a loving and affectionate way with Ms Le.
4. In his supplementary statement, Mr Johnston deposed that John took him on a tour of the Burradoo property when he and Ms Denis visited it in 2015, and that John showed him a bedroom and said, ‘Le and I sleep here’ and later that evening he saw Ms Le and John go into that bedroom and did not come out until the morning. It was clear from his evidence in cross-examination that he did not have actual knowledge of the sleeping arrangements at the Burradoo property.
5. He also deposed to a conversation with John after they were walking to a restaurant in around 2020 saying to him: ‘I don’t know what I would do without Le’. He deposed that he recalled John and Ms Le referring to one another as ‘honey’. However, I note that no other witness (apart from his partner, Kolena) observed John calling Ms Le ‘honey’ and based on all the evidence it seems unlikely that he would have done so other than on an isolated occasion.
6. He said in cross examination that he visited John at his Coogee home two or three times and never stayed there overnight. He sat in the open plan living area and did not open the cupboards and drawers for the bedrooms and the bathroom.
7. Given the generalised nature of Mr Johnston’s evidence of his recollections of Ms Le’s relationship with John, in my view it is of limited assistance. However, I accept his evidence that John said to him in 2020 words to the effect of ‘I don’t know what I would do without Le’.
Evelyn Moses
1. Evelyn Moses made an affidavit dated 14 February 2022 and a supplementary statement prepared during the course of the hearing.
2. Ms Moses is a hairdresser and deposed that Ms Le and John were her customers at her hair salon in Redfern from around 2012. She deposed that she closed her salon in March 2020 shortly after the onset of the COVID-19 pandemic and after that time went to the Coogee property to cut John’s hair and dye and/or cut Ms Le’s hair. She deposed that she always went there with her sister, Evangeline Neave, as she cannot drive a car and relied on Evangeline to drive her.
3. She deposed in her affidavit that John told her while she was cutting his hair that he ‘loves Le and relies on her to do everything for him’.
4. In her supplementary statement, she deposed to a number of other conversations with John, including that he showed her around the Coogee property on the first occasion that she visited it and in the course of doing so showed her a bedroom and said, ‘this is me and Le’s bedroom’. She also deposed in a supplementary statement to a number of other conversations which were said to have occurred during the time that John was her customer, including statements apparently made by John to her a couple of years before COVID-19 which surprisingly were omitted from her affidavit of 14 February 2022.
5. In cross-examination, Ms Moses accepted that when she prepared her affidavit, she understood that it was important to be careful and accurate and to be complete in describing the events she talked about in the affidavit (T477) and Ms Moses affirmed that she only visited the Coogee property after the COVID-19 restrictions started in 2020 and that she went to the Coogee property every six weeks. She was then asked to estimate how many times she went to the Coogee property to cut John’s hair and the following exchange occurred:
Q. When you went to the Denning Street, Coogee house to cut John’s hair – so this is the period between 2020 and 2021 – was John ever there on his own?
A. First, first time when I went there, by himself.
Q. What about other times?
A. Other times with his partner, Le.
Q. How many other times do you think you went to the Denning Street, Coogee house from the beginning of 2020?
A. I can’t remember.
Q. Maybe half a dozen times?
A. I can’t remember.
Q. Does that sound about right? Six or seven times? Or maybe five or six times?
A. I can’t remember.
1. In light of Ms Moses’ inability to even estimate how many times she went to the Coogee property after the first visit, and the fact that she introduced in her supplementary statement a number of what are clearly highly pertinent conversations with John which did not appear in her affidavit made some 19 months earlier, I am not satisfied that her supplementary statement is reliable in setting out conversations with the deceased which are uncorroborated. However, I accept the evidence in her affidavit of 14 February 2022, which was not challenged, that he told her, at some unidentified time, that he loved Ms Le.
Jacqueline Varela
1. Jacqueline Varela is the partner of Robert with whom she has been in a relationship since 1997 and they have two children. She made one affidavit dated 14 March 2022 and a supplementary statement during the course of the hearing. In her affidavit she purported to having visited the Coogee property on one occasion ‘in or around early 2021’ to discuss a possible settlement for the case involving John and Robert. She then corrected this in her oral evidence as a visit on 1 September 2019, which was based on a handwritten letter which she said John had given her at the meeting. This was not disclosed in her affidavit. In her supplementary statement, she said that she went to the Coogee property on two occasions after Laura’s death, being 1 September 2019 and an additional occasion sometime before the COVID-19 restrictions commenced in 2020 but she could not recall the date. In the supplementary statement she said that when she went to the Coogee property on 1 September 2019, John took her around the house to look at new furniture he had bought and said, ‘This is Le and my bedroom’ and that she could see female items on the dressing table such as perfume and hair brushes. In her statement she said that on the occasion of the other visit, she said that John invited her to join him and Ms Le for dinner and stated that after Ms Le arrived home she asked John ‘Do only you and Le live here?’ and he responded ‘Yes, only Le and I live here’. She also said in the supplementary statement that she saw John and Ms Le kissing and John touching Ms Le’s shoulder affectionately. She also, in her statement, recalled an instance when she saw John and Ms Le holding hands and walking which she thought was before 2012 in the Waterloo apartments.
2. There are a number of difficulties with Ms Varela’s evidence. First, she was reluctant to accept in cross-examination that the relationship between the deceased and Robert, and between Robert and his sister Jenny was characterised by hatred, but she did ultimately agree that there was a harsh disagreement between Robert and John during the litigation between them and that there were arguments between them (T496 and 498). Second, she accepted in cross-examination that she had made allegations to the police in 2012 to the effect that either or both of John and Jenny were responsible for the death of Laura and that she had accused both of them of killing Laura. She also accepted that she had told the police in 2012 that John asked her to help him kill Laura and she said no, and that she told the police that she resented John and Jenny for what they did and the way they treated her and for all the problems that arose in the family. As noted earlier, she obtained an AVO against Jenny after a fight between them in December 2011. Jacqueline also said in cross-examination that she no longer had resentment against John or Jenny having forgiven them a long time ago (T512). I find this last piece of evidence to be implausible and do not regard her evidence as being that of a disinterested witness.
3. Third, Ms Varela was cross-examined regarding her attendances at the offices of Ms Le’s solicitors, AKN & Associates, prior to making her first affidavit on 14 March 2022. Her initial evidence was that she only went to the office of AKN & Associates on one occasion. However, it became apparent when she was cross-examined on an itemised fee note provided by AKN & Associates to Ms Le (Ex 25) that she had several conferences with them, including conferences concerning the contents and amendments to a draft affidavit to be provided by Robert (1, 4, 8, 10, 14, 17 and 18 March 2022). When challenged with this record she accepted that the AKN & Associates’ record was correct and that her initial answer had been given because she could not remember the number of visits. Again, I find this evidence implausible and particularly concerning that she had had a discussion with AKN & Associates regarding the contents of an affidavit to be provided by her partner, Robert. I note that no solicitor from AKN & Associates was called to give evidence about the matters discussed at these meetings between the firm and Ms Varela.
4. Ms Varela had a clear motive to give evidence that could harm Jenny, and I do not regard it as being reliable.
Ba Duc Hoang
1. Duc is a son of Ms Le, born on 16 December 1991. He gave evidence in three affidavits dated 11 February, 17 February and 2 June 2022 and was cross-examined.
2. His first two affidavits address the events which occurred at the Coogee property on 10 February 2022 (which was 10 days after John’s death). Duc deposed that he was staying at the property because his mother was distraught and he wanted to support her and stay with her at the Coogee property. It is not in dispute that at around 2:00pm on 10 February 2022, Mr Bates, together with others, including a locksmith went to the Coogee property. Duc deposed that Mr Bates introduced himself to Duc as the ‘asset manager’ and told Duc that he was authorised to take control of the property and that he and his mother must leave immediately. Their accounts of what happened after that are broadly consistent, although there are differences in their recollections of what occurred. For present purposes, I do not regard these differences as material, except for their disagreement as to one conversation.
3. Duc and Mr Bates gave conflicting accounts of the conversation which they had at the Coogee property on 10 February 2022 about why Duc was at the property.
4. Mr Bates in his affidavit of 16 February 2022 deposed that the conversation was as follows:
Bates: Do you know the owner of the premises and what is your relationship, if any, to this person?
Duc: I knew John and my mother was his carer.
1. Duc denies that he said that Ms Le was John’s carer and deposed in his affidavit of 17 February 2022 that the conversation was to the following effect:
Bates: What are you doing here? You are not allowed to be here.
Duc: I’m staying here with my Mum.
Bates: Do you know whose house this is?
Duc: Yes, this is John Angius’ house. My mum is his partner for 19 years.
1. I prefer Mr Bates’ evidence about this conversation because he has no interest in the outcome of these proceedings in contrast to Duc who does, and the description of Ms Le as John’s ‘carer’ is consistent with their relationship at the end of his life when he was clearly very ill and being cared for by Ms Le.
2. In his affidavit of 2 June 2022, Duc deposed that he and his siblings knew John well and spent time with him on many occasions, including almost every Mother’s Day, Ms Le’s birthday, and sometimes their own birthdays. He put into evidence a photograph of an evening spent at a restaurant to celebrate his mother’s birthday in 2016. He also deposed that his mother and John were in a relationship since the time that he lived at the Redfern property up until 2011 and he recalled a time when he saw John and her sleeping in bed together at that property. He also deposed that he frequently saw her and John in the morning when he woke up and they were in the living area together. He also deposed that he recalled a conversation with his mother in 2011, when she said to him, ‘John asked me to live with him in Waterloo, so Thuy can have my room’. He explained that this was a reference to his sister, Thuy, taking the master bedroom which had previously been his mother’s room. The other two bedrooms in the house were occupied by him and his brother. I treat Duc’s evidence on these matters with caution given my conclusion in the previous paragraph and his interest in the proceedings in giving evidence in support of his mother’s claim to be in a de facto relationship with John.
Ba Thang John Hoang
1. Thang is one of Ms Le’s sons. He made an affidavit dated 17 February 2022.
2. Thang’s evidence was directed to his purchase of the Condell Park property in August 2012. He deposed that he purchased it for $540,000, funded by a borrowing from the ANZ Bank, secured by a mortgage over the property, of $432,000, a contribution from his sister, Thi Kim Lan Hoang, of $68,000 and the balance from his savings. He deposed that since the purchase of the property he made mortgage repayments. He deposed that apart from a contribution from his sister of $68,000 he had been solely responsible for the mortgage payments.
3. He accepted in cross-examination that as far as he was aware, the contribution of $60,000 came from the sale of a laundromat business in Glebe run by his sister (T487). It was put to him that his mother, Ms Le, owned that business and the contribution of $68,000 came from her, which he denied. It was also put to him in cross-examination that in the period from January 2019 to January 2020, Ms Le transferred from her accounts towards the mortgage the sum of $31,000 and also made further payments in respect of house repairs, insurance, council rates and water rates. Thang did not accept that this was correct.
4. In my view, while the bank records in evidence indicate that Ms Le may well have made payments to assist her son to service the loan and to pay various expenses referred to in the previous paragraph, the state of the evidence is insufficient to establish that she has a beneficial interest in the Condell Park property by virtue of those payments. It was not put to her in cross-examination that the $68,000 contribution came from the sale of her business, rather than her daughter’s and the evidence does not allow any findings to be made as to the source of the $68,000 payment.
5. Thang did not give any evidence in his affidavit of the living arrangements at either the Waterloo apartment or the Coogee property during the lifetime of the deceased.
Recordings of conversations
1. Ms Le relied on recordings of conversations between her and the deceased in 2019 and also in 2021, in the last few months of his life (Ex 21). She explained that she made the recordings to show that she was in a de facto relationship with John (T260).
2. The recordings in 2019 comprised a short recording made on 12 June 2019 at 2:09am in which John says to Ms Le: ‘You sleep on this side next to me. Switch the lights off’. I accept that this is evidence that they were sleeping together at that time, but do not regard the recording as having any other relevance. A second recording is a relatively long recording of a conversation between Ms Le and the deceased on 27 June 2019, starting at 10:43am. I will set out below the parts relied on by Ms Le in support of a submission that John acknowledges his long de facto relationship with Ms Le and her right to be financially taken care of.
3. During a discussion at the beginning about what John might give her in his will, the following exchange occurs (emphasis added):
John: … but some stuff I leave it for you. Some stuff … [unclear] … of course.
Le: What you give to me you better you do it.
John: I have to write it down. But you deserve it?
Le: Hmm?
John: Did you deserve it?
Le: What mean?
John: What I give to you do you deserve it?
Le: Yes. Please.
John: Okay. What does that mean? Do you deserve my clock, my watch or my rent?
Le: I do everything for you.
John: What about the furniture? (laughing)
Le: You give everything what you give you say it and don’t leave for fight. You know in the court always the letter win.
John: But you, you better off than me. You better off you, I’ll pay the Bowral, I’ll pay the flats, up here in, if it become my, in Waterloo because it’s close to the shops, and to your shop. Get your shop, Bowral, all the stuff in Bowral because you’re getting old, Bowral is a nice place to live there. Because, even Waterloo is nice. Because all the shops. But you get the shop, Bowral, and one unit, and you’re done. Plus you get probably some money if there’s any left.
Le: You give me the, why you don’t give me the house?
John: What house? This one? 7 million. That’s how much it’s worth. Double Bay double price. Double package with the…
1. The deceased appears to be indicating the possibility of making a gift to Ms Le in his will of Shop 3, the Burradoo property, a unit in the Waterloo development to live in and ‘probably some money’, although he qualifies all of this by the question ‘do you deserve it?’. Ms Le then asks ‘why don’t you give me the house’ (by which she means the Coogee property) and do so now. This then leads to the following discussion (emphasis added):
John: If I put it on, no you don’t understand. If I give it to your name now yes you’re going to pay $300,000 plus the cost of the solicitor, maybe $650, to put this house in your name. Okay. Once it’s in your name, until I’m alive, you’re kicking me out.
Le: No I’m not.
John: Maybe you don’t do it but… you entitled to kicking me out.
Le: You think, I stay with you 16 years now, not one day, two day, you understand me very well.
John: [You add one year every month.] Listen to me, the situation is this. The moment I put in your name this house, this house is yours. You can kick me out, any time, any day, any hour. If I put this house in a will, they will fight you. So you got these problems…
Le: I no fight, who look after you? Your daughter? And your son? Or your granddaughter? Who stay with you…
John: If I look after you, if you look after me. If you look after me, and I leave you enough. There will be enough for you to maintain yourself. They won’t fight you because they don’t throw their money away. But if I leave you half the properties they will fight you. You understand. You finish in court. That’s the problem. You finish in court all your life, you die in court. Same as what’s happened to me now.
1. The words attributed to the deceased in square brackets are the defendant’s transcription of the recording with which I agree.
2. In this passage John expresses concern about the stamp duty of around $300,000 which would be payable if he was to make an immediate gift to Ms Le of the Coogee property, and also of the risk that, as the property would be transferred into her name during his lifetime, she could ‘kick him out’. That suggests a significant lack of trust in their relationship. He also expresses concern about the potential for litigation between Ms Le and his children (Jenny and Robert) if he were to leave her ‘half [his] properties’ in his will.
3. Following this, John says that he needs to ‘leave something to them’ (by which he means his children), and then the following exchange occurs (emphasis added):
Le: No no, of course you give to them. You plenty. Only I ask you, you give me the Botany Road and the shop, two shop and the one house. That’s all. And you put what you put the house for me name…
John: You got a house, Bankstown.
Le: That one not my house. That my son. Don’t ask me that, don’t talk that rubbish.
John: You’re very greedy…
Le: And you know…
John: Anyway, I still alive.
Le: I know you’re still alive, your heart very danger, sometime I’m very scared. Yesterday morning, you know what you did, you can’t drink, lip purple, that one I’m very scared.
Le: I know you not come back, you can’t do nothing. Your daughter your son very terrible. And you do… The right thing.
John: What about what about leave everything to the government.
Le: You give everything, you like it. That one in your pleasure, your house.
John: I want to find out all these properties, where they’re going to go.
Le: Now your land, you got Botany Road, and that house in my shop. And that one you do, that one don’t need anything.
John: Yeah. Botany road I can leave it to you. And the, and the shop. All the [Angius] shops in partnership with all the other fucking bullshit.
Le: You give me this house, or 21 Link Road? What you give to me?
John: Maybe 21 Links Road.
Le: You tell the truth…
John: It’s $2 million you know there.
Le: You tell the truth, give me 21 Links Road.
John: You know Link Road, if you sell it it’s nearly 2,000,000. They sold next door it’s five, it is $2 million, they sold it. You know Links Road, it’s more land, what can you do with the land there. Fucking bullshit. Don’t worry about it.
1. The reference to ‘Links Road’ is to the Burradoo property. There follows further discussion in which Ms Le asks or demands (‘you give me…’) particular properties, and the deceased then says:
John: Bullshit. When the time come, I’ll do the will. If you want to fight it, you want it to be a fight.
1. At this point the recording becomes difficult to follow. The impression left by the recording as a whole is that, as the defendant submits, the deceased was subjected to a sustained barrage of demands from Ms Le leading to his apt observation that she is ‘greedy’. While it involves some recognition that he should leave her something in his will, which never eventuated, the precise extent of that recognition is left unclear by the concluding comment in the preceding paragraph, read with the earlier qualification ‘do you deserve it?’.
2. I accept that the recording is some evidence that the deceased had a testamentary intention to benefit Ms Le in his will, but the precise way is left unclear. I do not accept however that it contains any acknowledgement of a de facto relationship.
3. To the contrary, the deceased explains in the conversation that if he were to put the Coogee property into her name, he would be at risk of being ‘kicked out’ of his home. Further, he asks during the conversation ‘Do you deserve it?’. Both of these statements suggest a lack of the mutual commitment to life as a couple inherent in a de facto relationship, and suggest a lack of trust (of Ms Le), and that what he is contemplating is a gift as a reward for things done for him rather than as a recognition of his relationship with her as (de facto) husband and wife. It is also consistent with the impression which I gained from all the evidence that the deceased viewed all the members of his family, and also Ms Le as having ulterior motives (being that they wanted his money).
4. There are also recordings of conversations between Ms Le and the deceased on 16, 19 and 23 September 2021. I have listened to each of them again and find the interactions between Ms Le and the deceased incoherent, reflecting the very serious deterioration in his health at that time. It is evident that he had difficulty in breathing (assisted by a machine to deliver oxygen to his lungs, which had been installed by 3 September 2021) and was taking morphine. I do not regard anything said in those recordings as reliable as to his testamentary intentions or his relationship with Ms Le.
5. The general nature of these conversations in September 2021 is illustrated by a recording of a conversation on 19 September 2021 which starts at 5:12pm, with the following exchange:
Le: You make the new Will for me.
John: I already made the new Will. That one was in March.
Le: How many you give to me?
John: The shop. I don’t got any other yet.
Le: You got this house, and Botany Road and the shop. And Bowral, that one for your land. No one can touch. That one what you can give to me.
John: I want more than that.
Le: Yeah now, and know only that one before Gabbie to check that. And that one you give to me this house, number 2 Denning St, and the childcare Botany Road. And my shop. That one you give to me?
John: You already have that one.
Le: You do it and give-
John: I can’t do anything Le.
There follows an exchange over several minutes which is mostly incomprehensible, and then it concludes as follows:
Le: You give me that childcare Botany Road, and this house and my shop that one I’m happy. That one you give to me.
John: Over 20 million dollars
Le: yeah, I’m happy
John: Yeah
Le: that’s all. I’m stay with you 18 years, not short time, very long time, everything I done for you. My son sick, I can’t look after him, I look after you. You remember my big boy operation, the same you. I can’t look after him. He in Bankstown, I in here. I look after you, I can’t, my daughter call-
John: I don’t care-
Le: Yeah, that’s why my- That’s why I say I love you
John: I don’t care much about your son.
Le: No no, I don’t talk about my son. If I can’t help him. I can’t help him before he sick, he leave me, I can’t help. That’s what I say. I got you, look after you, I can’t move. Three times a day I come to you, look after you. Look after you everything. You see, one month you in hospital, I can’t- The Covid, I can’t get in, you see you very dirty, you very messy, your body you see that? And before I come, I shower for you every day and make for you clean, look you healthy and you stay here, you dirty everything. That one very hard, you know? No one can do that.
John: yeah
Le: Your daughter, your granddaughter, can’t look after you that.
John: listen botany road
Le: Yeah, give me Botany Road, my shop number 3-
John: No.
Le: Number 3, my shop mean number 3
John: Coogee Bay Road they get
Le: You give me Coogee Bay Road?
John: No, Coogee Bay Road that’s for Robert, I give you botany Road
Le: Yeah, you give me Botany Road, 2 Denning St and my shop. That one you give to me.
John: Yeah.
Le: Yeah, that good. Yeah, that one okay. I stay here, I fix the house up. I stay here.
John: Put the title in
Le: yeah
John: realise and put the title, cause tomorrow. Tomorrow what you say, ask them for the Titles.
Le: The titles, you ask them for the Gabby. He can tell you.
John: It’s …. ah eh
Le: He don’t tell till now see.
John: cos it…
Le: now she scared something she will not tell you the truth. You understand?
John: Yeah.
Le: She know the Will not pass. You do another Will not pass, now you do the new Will. That one different.
John: I-
Le: What you feel now? You feel okay? You feel tired?
John: Probably, I’m thirsty.
Le: Yeah you thirsty, your heart not work properly.
John: Thirsty for water.
Le: Yeah, you want the cold water? I give you little bit?
John: Yeah, that’d be nice.
1. There seems to be a recognition here that Ms Le should receive the shop (ie. Shop 3) but beyond this, the recording is inconclusive.
2. Ms Le also relies on a recording of a conversation with Gabrielle on 6 February 2022 at the Coogee property, referred to at [174] above. I do not accept the submission for Ms Le that this recording is evidence that Jenny and Gabrielle were fully aware of John’s de facto relationship with Ms Le. At most, it records an acknowledgement by Gabrielle that Ms Le looked after John ‘very well and … probably did extend his life’. I am satisfied on all the evidence that Ms Le did look after John at least in the last six months of his life when he clearly was incapable of looking after himself but that, without more, does not establish a de facto relationship between them.
The evidence of witnesses called by Jenny
1. Jenny led evidence to refute both Ms Le’s and Natalie’s claim to be an eligible person under the Act. It is appropriate to consider that evidence together, given that this is how the Court received it during the trial.
2. Jenny and Gabrielle each made several affidavits in which they responded to the evidence given by Ms Le and Natalie regarding their relationship with John, and the evidence of other witnesses. I have referred to the evidence of Jenny and Gabrielle where necessary in dealing with the evidence to which they respond. I have treated their evidence with caution given their interest in the outcome of the proceedings, but I accept that they each had a close and loving relationship with John throughout the period that Ms Le and John knew each other and both of them had regular contact with John, particularly Jenny who lived in the same street as the Coogee property.
Kevin Batten
1. Mr Batten gave evidence by an affidavit made 27 April 2022 and a further affidavit made on 26 October 2023, which supplemented parts of his first affidavit which were not admitted. He has been the partner of Jenny since 2003 and they have one child together, Sean, born in 2004. Kevin worked at Qantas for a number of years as a shift worker and retired in 2014.
2. Kevin deposed that he visited John’s Waterloo apartment with Jenny roughly once a month while John was living there and when John moved back to the Coogee house in 2017, he would visit him at least weekly as he was retired and lived only a few houses away in the same street with Jenny. He deposed that he often assisted John with repairs and maintenance around the house and was very familiar with it. He deposed that he only observed John’s belongings at the Waterloo apartment and also at the Coogee property from 2017.
3. Kevin deposed that as John became more ill, he observed Ms Le take on more of a carer role along with her cleaning duties. He deposed that John would often say to him words to the effect ‘I pay Ms Le to cook and clean’ and ‘I give her free rent on the shop to help me around the house’.
4. Kevin deposed that he had never seen John and Ms Le act affectionately towards one another and gave a number of examples where he observed John make disparaging comments to Ms Le and/or ordered her around. He deposed to one conversation during 2021 when the deceased said to Kevin that he wanted to sell the house in Coogee and move to Bowral and when Kevin asked him who was going to help him, he responded ‘I’ll find someone. I don’t want Le coming, she gives me the shits.’
5. He deposed to having visited the Burradoo house on many occasions, and that Ms Le would also attend as she would drive them there and back, cook lunches while they were there and do all the cleaning and provide additional care to John, such as ensuring his medicine was administered. He deposed that John often told Kevin that ‘I pay her extra money to come to Bowral’. While at the Burradoo property he again assisted John with repairs and maintenance on the property.
6. Kevin deposed to visiting the Coogee property in early 2021 to fix a downlight in the house and that while he was there, he heard John say to Ms Le words to the effect ‘You’re not my wife. You don’t tell me what to do. I don’t want another wife.’
7. Kevin said in cross-examination that his understanding was that John and Ms Le did not sleep together at the Burradoo property. He explained this understanding as based upon John having said to him, on a few occasions, that ‘We never slept together’.
8. Kevin deposed that he had never seen John and Ms Le act affectionately towards each other.
Nick Pappas
1. Nick Pappas made an affidavit on 27 April 2022. He deposed that he first met John in 1994 and ran his mechanical work repair shop, under the name ‘Advance LPG’ next to John’s smash repair workshop, for about 15 years until the Waterloo site was redeveloped. After that time, he opened a workshop at 110 Dunning Avenue, Rosebery which is a property which John had a 50% interest in.
2. Mr Pappas deposed that after Laura died in 2012, John told him that he was not charging Ms Le rent on the lease of the Waterloo laundromat, ‘because she can look after me as my wife has passed away’. He deposed that John said to him on numerous occasions, words to the effect ‘Le is only a carer, she just looks after me’. Mr Pappas deposed that the first time he met Ms Le was in approximately 2005 when she was running the Coogee Pool Hall. In cross-examination, he was uncertain as to the date when he first met her (T979-980). He said in cross-examination that he was told around the time that Laura died in 2012, by Robert that John was having an affair with Ms Le and that when he told John to ‘watch out for Le’ John responded ‘Yes, but I need someone to look after me’.
Jason Bates
1. Mr Bates is an asset manager who is engaged by Jenny to review the assets of the estate and take steps to secure those assets for the benefit of the estate. His evidence was that he worked in asset management and portfolio management for a number of companies, including CBRE and Jones Lang LaSalle and has a diploma in property management. He said in cross-examination that he provided asset management services to Ms Angius on the basis of an hourly rate.
2. It is not in dispute that Mr Bates attended the Coogee property on 10 February 2022 at around 2:00pm and had a conversation with Duc in which he asked Duc to hand over the keys to the property and asked him to leave and take with him any items on the premises that belonged to him.
3. He deposed that he asked Duc whether he knew the owner of the premises and what his relationship, if any, was to that person and that Duc replied ‘I knew John and my mother was his carer’.
4. Mr Bates also deposed to a conversation that he had with Mr Alvin Johnson on 15 February 2022 which came about because Jenny asked him to liaise with persons who may have worked on the Coogee property to ascertain the level of maintenance required. He recorded in a file note the following regarding the conversation with Mr Johnson:
Call Alvin Johnson re lawns & maintenance.
Alvin said “Went to Hawaii w/ Laura & John, been friends since the late 60’s.
He spoke of Ms Le “The Chinese Hired Help”, cooked & cleaned was like she was a carer & personal duties.
John wasn’t happy as she would come & go a lot.
Stated he thinks they were having an affair, Laura thought so too.
He said never saw them intimate, kiss, cuddle, share a bed together.
John never showed affection, he never did and when he was married to Laura even then he never really saw anything, just occasional.
Lawns and odd jobs occasionally completed. End of call.
1. In his affidavit of 27 April 2022 (made 10 weeks after the file note) he deposed that Mr Johnson told him that ‘He believed Ms Le and Giovanni Angius were once in an intimate relationship for a short period of time a few years ago’ and said words to the effect ‘I never saw evidence of this but had suspicions’, and when he asked Mr Johnson to elaborate on this he said ‘She cooks and cleans for him so they are in a relationship’.
2. Mr Bates was cross-examined at length on the file note and his affidavit evidence of the conversation, I am satisfied that none of the cross-examination calls into doubt that it is an accurate record of what Mr Johnson said to Mr Bates. First, Mr Bates has no interest in the outcome of these proceedings. Second, Mr Johnson was very vague in his cross-examination about a number of matters which he ought to have recalled, including the years in which he went on three trips to the United States with the deceased and how many occasions he visited the Coogee property in the last three years of John’s life. As indicated above, I am not satisfied that Mr Johnson’s recollection of the conversation is accurate. Third, while Mr Ellison SC sought to call into question why it was that Mr Bates would be ‘fishing’ for information about Ms Le, there is an explanation for it in that he was engaged to find out from Mr Johnson who assisted with the maintenance of the Coogee property and it is not surprising that Mr Johnson would raise her name in that context.
Medical records
1. Ms Le relied on hospital records regarding John’s admission to hospital over the period from May 2018 to June 2021 (Ex H). Those records describe Ms Le variously as John’s ‘partner’, ‘wife’ or ‘friend’. In my view, these records are not evidence of John’s perception of his relationship with Ms Le as they are explicable as being a description which she provided to hospital staff.
2. Of more significance, in my view, are two other records of what he told his treating doctors. The first is a record on his admission to Prince of Wales Hospital on 28 September 2021 (Ex 29), which states that he told Dr Prendergast in the context of a discussion of his home set-up: ‘states Lee is not his partner. Also states is not his carer. Does help with his medications’.
3. The second is a report made by Professor Rosenfeld, a consultant geriatrician and physician of a consultation with John on 24 June 2021, contained in a letter to John’s GP shortly afterwards. This letter states under the heading ‘BACKGROUND’ (emphasis added):
He went on to tell me that his wife died about nine years previously and that he has been well and fully independent since that time.
…
He has two children Jenny who is married with two children (he told me his grandchildren’s names) he has a son called Robert who he described. He denied that he had been a significant smoker. When I indicated that I had seen correspondence that indicated a smoking history he indicated that ‘those people must be liars’. He drinks a ‘little bit of wine’ but has not been a heavy drinker. He lives alone in a house in South Coogee. He said it was worth ‘$7 million’.
1. The letter states under the heading ‘FUNCTION’ (emphasis added):
Said that he is not done appear (sic) power of attorney or enduring guardian. He said “I know nothing about this” – when I asked him about whether he would appoint an individual to help him with decisions if he was ill he indicated that his daughter’s children would be suitable.
He has help from two ladies who assist with cleaning and house care. He eats in a restaurant every night. He said he built his house about 20 years ago.
He described various problems in his situation since the death of his wife in 2012 – this has caused him a great deal of upset. He told me of some of the problems, indicated the view that he had been taken advantage of and that he had a lot of money.
He is independent in toileting, personal care and ADL. He told me he is still driving “a four-wheel-drive Toyota” and that he has not had problems or incidents in that regard.
1. The letter states under the heading ‘EXAMINATION’:
On examination he was alert and attentive. He was able to walk unassisted. His gait was a little wide based but he was able to balance without difficulty when he turned. He seemed a little breathless times (sic). Cardiac and respiratory examination was otherwise unremarkable. The neurological examination was unremarkable. The glabellar tap was positive.
On cognitive screening with the MMSE he scored 23/30 (he was able to speak in English without difficulty). He made an error with the year. He wasn’t aware of the date and could not name the nearby hospital “Randwick hospital”. In explanation he said he usually goes to ‘RPA where there are more specialists’. He was able to register three items but after a distraction could only recall one of the items – exclaiming at the time his surprise that he could not recall.
He made a number of errors on a reverse spelling task as well as serial sevens – score 3/5. Later in the examination he was unable to recall either of the three words despite having practiced them earlier. He wrote a sentence “I like to be a nice person” – he was able to draw a clock face however the orientation of numbers was poor. He wasn’t able to indicate time with the hands of the clock making lines on the page.
1. The letter states under the heading ‘SUMMARY – RECOMMENDATIONS’ (emphasis added):
1. Mr Angius has a number of medical problems. I am not entirely clear about the history and progress of these issues with the limited history I have so far.
Correspondence that you forwarded with your referral from Dr Sean Lai (RPAH Medical Centre) thank you – in May 2021 indicated that he has had a number of admissions to RPAH with heart failure.
…
2. The brain scan and my clinical examination indicates the likely presence of microvascular brain disease as well as evidence of a previous infarct. Some cognitive impairment is present.
3. He is receiving help at home on a regular basis but I am not able to tell if this is sufficient for his needs. He said that he goes out to eat each evening to eat – I don’t have a great deal of additional information or verification about his function generally. I was not able to complete a detailed history of his function in the time I had with his daughter.
4. I suspect would benefit from additional services and support and in that regard it would be appropriate that he be reviewed by the aged care assessment team at home.
…
5. The issue of POA and enduring guardian should be resolved. He has medical problems that are likely to require decision making about care and support. Advanced care planning would presumably have already been addressed with his cardiologist.
1. The letter is significant in at least three respects. First, while Professor Rosenfeld refers to the brain scan as indicating some cognitive impairment, there is nothing in the letter to suggest that John lacked mental capacity at this time (nor has this been suggested by any party). Second, John said to Professor Rosenfeld that ‘he lived alone’ at the Coogee property. Third, he said to Professor Rosenfeld that he had help from ‘two ladies who assist him with cleaning and house care’. There was a dispute between Ms Le and Jenny as to whether Ms Le was one of the two ladies being referred to. For the reasons given earlier, I do not accept Ms Le’s evidence that there was another ‘Thai lady’ who, along with Linda, provided ‘cleaning and home care’ and I am satisfied that John was referring to Linda and Ms Le.
The evidence of witnesses called by Natalie
1. Natalie gave affidavit evidence and relied on the affidavits of three lay witnesses: Silvana Salvatore, her mother, Domenic Dodaro, a friend, and Francis Devine, a solicitor. Each was cross-examined. Some of this evidence is also relevant to Ms Le’s matter, noting that evidence in each matter is evidence in both. Natalie also relied on the evidence of three experts referred to earlier.
Natalie’s evidence
1. It is not in dispute that Natalie suffers from multiple sclerosis, having been diagnosed with this condition in 2014. She also has experienced the following symptoms caused by her multiple sclerosis: foot drop, trigeminal neuralgia and greater auricular neuralgia, optic neuritis in the left eye, severe vertigo and balance issues, bladder issues causing incontinence, difficulty swallowing food, sensation of pins and needles throughout the left side of her body and fatigue. She also suffers from a number of other serious medical conditions including pericarditis and post-inflammatory syndrome having been diagnosed after receiving her COVID-19 vaccine in 2021; various respiratory conditions including asthma (diagnosed in around 2010); sleep apnoea (diagnosed in around 2021) and lung nodules (diagnosed in 2021); carpal tunnel syndrome (diagnosed in 2019); acute complicated appendicitis with perforation and peritonitis and visceral hyperalgesia and motility disorders (diagnosed in 2022), and Hashimoto’s disease (diagnosed in January 2023). She put into evidence extensive medical records regarding the diagnosis and treatment of these conditions.
2. Natalie deposed that the first time that she could recall meeting John, her paternal grandfather, was in 2006 or 2007 when she was 16 years old. Her parents, Silvana and Robert, had divorced in 1997 when she was around seven years old. She deposed that shortly after first seeing John, he gave her a cheque payable to her for $2,000 and not long after that a further cheque for $5,000 saying ‘Go and buy yourself a car to learn on’. She deposed that from this time she visited him on average weekly either at the smash repair workshop or at the pool hall in Coogee. She deposed that after John moved into the Waterloo apartment, she visited him there on average weekly, and later, after Laura died in 2012, she visited John at the Coogee property, again on average weekly. She deposed that in the last five to six years before John’s death, as her health deteriorated and she was away from work more often, the frequency of her contact with John increased and from 2019 she visited him two to three times per week until his death, except during the COVID-19 lockdown periods.
3. She deposed that on occasions John would take her to dinner at a few places he frequently visited including the Portuguese Club at Marrickville, South Juniors and Da Mario, and sometimes Jenny, her cousin Gabrielle and Ms Le were also present (although not necessarily together).
4. Natalie deposed to having a number of conversations with John in the period 2007 to 2011 in which he said to her that he had paid the child support payments which Robert was required to make following the divorce of her parents. The making of these child support payments is a matter dealt with in Silvana’s evidence.
5. Natalie deposed that John provided her with regular financial support when she was an adult including giving her cash when she was not eligible for Centrelink payments; when she was stood down without pay as a customer service agent with IHG Hotels; supplementing her income during 2014 and 2015 when she was relying upon Centrelink payments of around $500 per fortnight; providing cash to her in an average range of $300 to $400 per week after 2019 when she was on workers compensation payments following her diagnosis with carpal tunnel syndrome leading to her leaving her job with Service NSW.
6. Natalie’s evidence was that all these payments were in cash. I accept her evidence that frequent and regular cash payments were made to her by John. It is corroborated by the evidence of Mr Dodaro, which was unchallenged that first, he saw John give cash to Natalie at South Sydney Junior’s on more than five occasions’ and second that John said to Mr Dodaro in 2016: ‘I have grandchildren. I have to look after all my grandkids. My son is no good towards his kids. So I have to look after them’. Mr Dodaro’s evidence of this conversation with John is also consistent with evidence Natalie gave as to the statements to her by John as to why he was making cash payments to her.
7. Natalie deposed that from around 2017 until John’s death, she helped him with tasks including shopping, light cooking (although most of the cooking was done either by his cleaner Linda or Ms Le, if she and John were not eating out), paperwork for his court matters, emails to his accountant, and the payment of his various bills, as John was not ‘computer literate’.
8. She deposed that she spent more time with John from 2019, when she ceased working and was placed on Workers Compensation as he did not like to be left alone.
9. Natalie deposed to having visited John in hospital on 16 June 2021 and having a conversation with him to the following effect:
Nonno John: I recently changed my will. Because I don’t want your father to have any more control over anything. I rushed one through. I put Jenny everything to her only for now. She pushes me to leave everything for her. She’s happy I did the will that way. Its temporary. Big fight. I told her it was temporary. I need to change it. My wife’s death.
Le showed up with sandwiches so he didn’t say anything more. Le said to us words to the effect:
Le: I put my name on the hospital note because I pick your grandfather up, take him to hospital, take him home. And Jenny she remove my name each time. She tell nurse, take my name off and not talk to me.
I recall when Le was not near us in the room, Nonno John said to me:
Nonno John: Don’t forget this day. Very important. I need to talk to you. My wife’s death.
1. Natalie deposed that the topic of a new will came up again when she was with John at the Coogee property in or around September or October 2021 during the course of which the following was said:
Nonno John: You remember what I said.
Natalie What? At the hospital?
Nonno John: My will has to be changed. This house goes to Gabrielle and Sean.
Natalie: Why? They have a unit in Alexandria each.
Nonno John: Yeah, but my wife gave it to them not me and Gabrielle loves the design of this house. I’m proud of this house.
I want to give this Chinese lady something. She gets the dry cleaning shop and I give her a few hundred thousand dollars cash to say thank you. She has kids as well. Just to help her out. To say thank you.
I give Linda ten thousand dollars to say thank you.
The house in Bowral goes to you and your sisters. I wanted to build you the townhouses but the court didn’t give me the land back. Your sister Stephanie. I have to think. I have to give her something separate. Your family don’t mix with her.
Jenny to be taken off as the executor. Her house to be sold as well. Everything left in the companies divide equally to all the grandchildren.
1. Natalie deposed that John referred to this topic again in subsequent conversations. It appears that the closest John came to acting on the statements that he made was the discussion he had with Francis Devine in the meeting at the Coogee property on 20 December 2021, referred to below. She deposed that the meeting came about because John asked her to arrange a meeting with a solicitor because he wanted to ‘make new papers, guardianship and attorney and will’. Natalie deposed that during one of her visits to see John at the Coogee property in early January 2022, he asked her whether Mr Devine had ‘finished the papers’ and that she followed this up with Bay Legal in early January. However, for the reasons she gave in her affidavit evidence, she was unable to arrange for Mr Devine to meet with John before he tested positive for the COVID-19 virus, and consequently the matter was not taken any further.
2. Natalie gave evidence in her affidavits about the relationship John had with Ms Le. She said in her affidavit of 21 April 2023:
174. I don’t remember what year exactly but I first met Le at the pool hall in Coogee that Nonno John owned. He said that she was a business partner.
175. Le was often at dinners at South Juniors, the Portuguese Club at Marrickville, and Dar Mario at Rosebery. Sometimes Jenny was there and my cousin Gabrielle. I would then also see Le at the Laundromat at Alexandria. Over time she became a carer for my grandfather. I’m not sure of the date but in or around 2014. Nonno John said to me in words to the effect:
Nonno John: I give to the Chinese woman the shop rent-free. I don’t charge her rent and I give her a bit of cash extra to help me out.
176. After Laura died in 2012, there were multiple court cases involving Jenny, Robert and Nonno John. My grandfather kept fighting for the last ten years of his life. I felt that he had little joy in the final years of his life from fighting in Court. It made him sad and stressed.
177. When I visited Nonno John at the South Coogee home, Le and Linda were also sometimes there.
1. In her cross-examination by Ms Painter SC, Natalie gave the following evidence on the topic of John’s reference to her as a ‘carer’:
Q. You know who Ms Le is, don’t you?
A. Correct, yes.
Q. I think you describe her in your affidavit as your grandfather's carer?
A. That's what he said to me. When I first met her, he said she was a business partner, and then she became like a carer. That's what he said.
Q. Do you remember when he said that to you?
A. I think I first met her, it was around the pool hall. And the first time, he said she was like a business partner. And I don't know, but as time went on, she was, like, the carer. He said "She looks after me. I help her a bit, and she looks after me."
Q. When he said "I help her a bit", that was a reference, wasn’t it, to the rent that he didn’t charge her for the shop where she ran her laundromat, so far as you were aware?
A. Correct. Correct. I remember
Q. That's what he told you, isn’t it?
A. Correct. And he said he gave her a bit of extra cash on job, and she helped him.
Q. So there were two components that he told you about: the rent, and occasional cash payments?
A. He said he gave her a bit of cash as well. Like, just
Q. Did he say that to you more than once?
A. Once or twice, but
Q. But I assume she wasn’t a regular topic of conversation between the two of you?
A. Look, I saw things, but it wasn’t my business to question. And I asked them both questions, and just it wasn’t my business. My grandfather was three times my age. It's not my business to tell him what he's doing.
1. In re-examination by Mr Ellison SC on behalf of Ms Le, Natalie gave the following evidence about what she meant by that last answer:
Q. …Can you say what it was you saw that you didn’t take any further because it wasn’t your business?
A. Yeah, it’s just a few things, like I knew that first he said she was a business partner, then caring for him, but, like, I’d see her, like, initiate hugging him and stuff, but he was happy, like, I can’t - he was happy that she was around. Look, just, there's things I saw, like, way back in the past - and this is when I was at the pool hall.
Like, and I don't know, maybe it's nothing. But there was, like, a back office room in the pool hall, and I just remember Le would come out and then he would come out shortly after, and he'd just - he was very red in the face. Like, I don't know. But they spent a lot of time together, and she was so good to him. My grandfather was really sick. She - you couldn’t imagine how much she looked after him. She was unbelievable. Like
Q. Did those observations start back in the pool hall days?
A. Just, I saw that happen once or twice in the pool hall. And I don't know what was going on in the back office. But just she walked out, he walked out after her, and he'd just - he looked very flushed in the face. Like, I, I don't know, but he looked - you know, I'm not stupid, either. Just, I don't know. And he was very sick, and she, she'd be - she would - no one spent more time with him than Le. And he wanted her there. She was, I don't know, like, company. I don't know. Like, I kept him company. But maybe because she was older, I don't know. But - I don't know. Just - does it make sense?
1. Later in her cross-examination by Ms Painter SC, Natalie gave the following evidence about the help John received from Linda and Ms Le at the Coogee property:
Q. I just want to ask you about the things you say about the help your grandfather got from Linda and from Le?
A. Yep.
Q. I just want to know how you know those things?
A. I was in the house a lot, like, I know that, he told me, Linda was there to clean. Le, she cooked, cleaned a bit, like they both shared it. Gabrielle, I remember I visited him, he - Italians, like Haberfield, that's where mum goes to get like proper cheese and olives and stuff, and he used to say "I went with Gabrielle to Haberfield to get stuff like that". Like my family on the other side do that as well.
…
Q. You observed both of them cooking and cleaning?
A. Yep.
Q. Then you said "He told me, he told me Linda and Le were there to clean". Is that a reference to something your grandfather told you?
A. He just, he said she was the cleaner.
Q. About who though?
A. About Linda.
Q. What did he say to you, if anything, about Le?
A. Look, with Le, I just, I remember he said that he gave the shop rent free and a bit of extra cash to help him out and sometimes Le would cook as well. She'd go shopping for him.
Q. If we can turn to page 62, just a few pages over.
A. Yep.
Q. Paragraph 43, right up the top of the page.
A. Yep.
Q. That first sentence there you say, "I observed my grandfather had a paid carer and cleaner."
A. Mm.
Q. Just so we’re all crystal clear, when you say, “Paid carer and cleaner,” who are you making a reference to?
A. Both of them ...
Q. … When you say, “Both of them,” who do you mean? What are their names?
A. Linda and Le.
1. Natalie also said in cross-examination that she did not see John initiate a hug with Ms Le or ever hear him call Ms Le ‘honey’ and that in conversations with John, he referred to Ms Le as either Le or ‘the Chinese lady’ (T622).
Silvana Salvatore
1. Silvana Salvatore, Natalie’s mother, made two affidavits, on 20 April and 8 June 2023. She gave evidence regarding certain payments she received from John after her divorce from Robert in 1999. She and Robert have four children together: Stephanie born in 1985, Melissa born in 1987, Natalie born in 1990 and Lisa born in 1991. She separated from Robert in 1997 and at the time of the divorce in 1999 her four children were aged between six and 12.
2. She deposed that Robert had a volatile temper (a matter confirmed by Jenny’s evidence and that an AVO was issued in favour of Silvana against Robert in around 1997, and which he breached on 18 December 1997 leading to the imposition of a fine). Silvana also deposed that when her children were young, she experienced periods of mental illness requiring hospitalisation on three occasions for two to two and a half months on each occasion, but that her mental health improved markedly after her separation from Robert in 1997. She had one further period of hospitalisation for mental illness in 2008 for around two months, but she deposed that her mental health has improved significantly. I accept her evidence and am satisfied that her periods of mental illness do not affect the veracity of her evidence in these proceedings.
3. Silvana deposed that the divorce settlement was negotiated by her father, Elio (who died in 2019) and John and involved a payment to her of $206,000 as a property settlement and $25,000 for the benefit of her children, which she accepted as the best outcome she could achieve in the circumstances. This evidence is corroborated by a letter dated 28 May 1998 from Silvana’s solicitor to her.
4. Silvana deposed that John made both payments which is corroborated by her unchallenged evidence of a conversation between her father and John at the time of the settlement negotiations.
5. Silvana deposed that she opened an account with St George bank in the name of ‘Mrs Silvana Angius T-F Stephanie, Melissa, Natalia, Jacqueline’ and that John made deposits to this account over the period from 6 July 1998 to 4 March 1999 when it was closed with a closing balance of $10,005.79. She also deposed that John suggested to her that she open the account for costs associated with the children. The passbook for the account is in evidence. There is no direct evidence that John made all the payments, but I accept Silvana’s evidence that he either made deposits or was the source of the amounts used to make them. This derives support from her evidence of her conversation between her father and John referred to in the previous paragraph, which indicated that John was taking responsibility for the welfare of Silvana’s four children. It is also supported by the fact that no other person has been identified who is likely to have made the payments, certainly not Robert in light of the evidence about his attitude to his parental responsibility to his children at that time: see the statement made by Silvana to police in relation to her AVO application against Robert dated 2 September 1997.
6. Silvana deposed that all withdrawals made from the account, including the final one, were used to meet expenses for her four children. I accept that evidence.
7. The evidence establishes that Robert had an obligation to make child support payments of around $250.00 per month for each of their children who were living with Silvana until they turned 18, which in Natalie’s case was in June 2008. Silvana deposed that these payments were made wholly or substantially by John.
8. It is not clear from the evidence whether all the payments were made by John, but I am satisfied based on the evidence, including a conversation which Silvana deposed she had with John in June 2002, that John paid an amount of $3,673.86 in respect of child support payments which Robert was required to, but did not, make to Silvana in the period up to June 2002. Her evidence is corroborated by: (a) a letter dated 30 March 2003, which she sent to the Child Support Agency referring to Robert’s failure to make any child support payments in the period from December 2001 to June 2002, and stating that on 13 June 2002 John made a payment of $3,673.86 which was the amount owing by Robert on that date; (b) there are multiple references in the evidence to Robert’s unwillingness to support his first family, including the evidence of Jenny that Robert did call Silvana and her children ‘bastards and scum’ as recorded in a police report dated 25 November 2001 in evidence (T920.4); (c) evidence given by Jenny that John said to her that he was financially supporting Robert (T919-920); (d) evidence given by Natalie that John said to her that he had paid the child support obligations of Robert.
9. Silvana deposed that after the amount $3,673.86 was paid, all the child support payments required to be made were made. She believes that John made the payments, but does not clearly establish that he did so. It is possible that he did, but ultimately it is not necessary to determine that question for the purposes of these proceedings.
10. Silvana also deposed that after the child support payments ceased in 2009, when Jacqueline turned 18, John continued to support her and her daughters by giving her cheques and cash three to four times a year (outside Christmas and Easter) in amounts from $2,000-$5,000 as well as cash in smaller amounts. She deposed that John said to her on more than one occasion that these payments were ‘for the kids’. I accept this evidence. While she was challenged in cross-examination for having no records to substantiate her evidence that John made the payments, I accept her explanation that ‘it never occurred to me to keep records’. There was no suggestion that any bank account statements were available, but had not been produced, for the relevant periods when these payments were made.
11. While paragraph 29 of Silvana’s affidavit of 20 April 2023 contains an apparent inconsistency in stating in the same paragraph that John gave her a cheque for $3,673.86 and that he paid that amount to her bank account, I am satisfied that this is an honest mistake by Silvana and I accept her evidence that John paid the amount by one or other of those methods.
Domenic Dodaro
1. Mr Dodaro is a friend of Natalie. He made an affidavit on 5 September 2023 and was cross-examined.
2. Mr Dodaro deposed that he met Natalie in around 2007 when he was working as a security guard at Westfield Bondi Junction and she at Woolworths. He is around 24 years older than Natalie and deposed that they have been friends since that time, but have never been in any form of romantic relationship. He sees their relationship as in the nature of a father/daughter relationship. He deposed that when she was diagnosed with multiple sclerosis, he started to help her more, including driving her to her doctors’ appointments of which there were many.
3. He deposed to having met John at the Coogee Pool Hall, and also at the South Sydney Juniors Club several times per week in the period 2010 to 2016 when he played the poker machines there. He deposed that sometimes Natalie was there with him or with John and that he saw on more than five occasions John hand to Natalie cash notes and on at least three or four occasions, Natalie said to him that John had given her sums in the order of $200 or $300. This evidence was unchallenged.
4. Mr Dodaro also deposed to a conversation with John at South Sydney Juniors in around 2016, in which John said to him ‘I have a family. I have grandchildren. I have to look after all my grandkids. My son is no good towards his kids. So I have to look after them.’ This evidence was also unchallenged.
5. Mr Dodaro gave evidence regarding his gambling activities, including what he referred to as ‘link chasing’. He explained how this involved him using Natalie’s bank account debit card to access funds for use in the gambling activity on the poker machines at South Sydney Juniors and other clubs that he and Natalie frequented. This resulted in a large number of regular debits and credits to her account. He also deposed that Natalie would, as part of the link chasing activity, sometimes sit on poker machines for him. He also deposed that he gave her small amounts of money from time to time out of his winnings to assist her with her expenses.
6. In the course of his examination by Ms Painter SC, Mr Dodaro was asked whether he ever met Ms Le and he gave the following evidence (T728):
Q. Was she playing the pokies too?
A. She yeah, but she wasn’t playing the dollar machines.
Q. What was she playing?
A. The one cent machines. But me and John were playing the dollar machines, we, there was a $10,000 that John got a few times himself.
Q. He was a lucky man.
A. He used to say he’s got golden fingers.
1. Mr Dodaro’s evidence served to explain the large number of deposits and withdrawals to and from Natalie’s bank accounts over the relevant period. Mr Dodaro presented as a witness who was responsive to the questions he was asked and was seeking to provide honest answers. I accept his evidence.
Francis Devine
1. On 20 December 2021, John had a meeting with Francis Devine, a solicitor, at the Coogee property. The meeting was organised by Natalie at John’s request. Natalie and Ms Le were both present at the Coogee property when the meeting began, but did not participate in the meeting. The meeting went for about two hours.
2. At the time of the meeting, Mr Devine was employed by Bay Legal, but he left that firm in August 2022 and is now employed by a different firm in Gosford. He deposed that John instructed him to prepare enduring power of attorney and enduring guardianship documents (appointing Natalie and Ms Le in the relevant roles), but these were only to go into effect when he lost capacity. After the meeting, he prepared draft documents but due to the time of year he did not send them to John and ultimately they were not executed due to John’s death.
3. Based on Mr Devine’s file note and his evidence in cross-examination, I make the following findings regarding this meeting:
1. Though Natalie organised the meeting, John was Mr Devine’s client, and neither Natalie nor Ms Le were present during the meeting.
2. The purpose of the meeting was for John to give instructions for the appointment of Natalie and Ms Le as attorneys and guardians, and not the making of a new will. Importantly, their appointment was to be on the basis that their decisions in both capacities would need to be joint. It is likely given that Mr Devines’ file note records ‘Does not want to go to nursing home’ that the genesis of the meeting was John’s desire to prevent that occurring.
3. John had no difficulty in identifying his assets and the names of his children and grandchildren.
4. Mr Devine asked a number of questions directed to determining if John had mental capacity to execute the power of attorney and guardianship documents and satisfied himself that he did. His file note records that his reason for that conclusion was that John was aware of his assets, potential beneficiaries, possible claims, the effect of enduring guardian and the separate effect of enduring power of attorney and ‘appears to have no abnormality of the mind or defect of reasoning’.
5. Mr Devine asked what was the nature of John’s relationship with Ms Le (in the context of his proposed appointment of her as a joint attorney and enduring guardian with Natalie) and John said ‘employed to look after [the] house as a carer’.
6. Under the heading ‘Client concerns’ the file note records the following:
Understand his potential intestacy will automatically flow to his two children.
Although does not want his children to take all of estate.
Does not believe now is the right time to get to (sic) execute will.
Thinks his kids might do something to him that warrants cutting them out.
Thinks executing a will now is a concession or a curse of him conceding to death.
(Some what rational concern/superstition for an Italian man)
Wants to consider what charities to give his estate before giving full instructions on Will.
Does not want Robert’s mistress to take anything from his estate.
Would rather his grandchildren take from estate.
1. The reference to a ‘potential intestacy’ in the first dot point suggests that at the time of this meeting, John had forgotten that he had previously made a will in April 2021 or simply preferred not to mention it. Mr Devine’s recollection of the meeting is that John did not mention that he had made a will in April of that year but could not recall whether John said that he did not have a will. The reference to ‘Robert’s mistress’ appears to be to Jacqueline.
2. This file note is significant in the present case because John refers to Ms Le as someone ‘employed’ to look after the Coogee property ‘as a carer’, and because he recognises a testamentary intention to benefit Natalie (and his other grandchildren).
Determination of Ms Le’s Eligibility
Plaintiff’s submissions
1. Ms Le submitted that the contemporaneous evidence supported her position that she was in a de facto relationship with John at the date of his death. That relationship had begun in 2003 and continued to his death. The existence of that relationship is supported by reciprocal AVOs and interactions with the police in 2007 for Laura and John, each of which record the reasons for the domestic violence incidents to be that John was having an affair. Similarly, the AVO taken out against Robert in 2014 for Ms Le’s protection recorded John as her boyfriend. Laura’s statement made in relation to the AVO applications in November 2011 (Ex N) records her view that John and Ms Le were in a relationship and having an affair.
2. Ms Le’s affidavit evidence of the affection that John had for Ms Le is supported by documentary evidence including photos of the pair of them throughout the period kissing and hugging. The video evidence admitted as Ex B also shows Ms Le and John, closer to the date of his death, sleeping in the same bed.
3. That is inconsistent with the defendant’s view that the plaintiff was John’s carer. Ms Le’s interaction with Gabrielle on 6 February 2022, recorded on that date, shows that Gabrielle was aware of Ms Le’s status as John’s partner. At no point in that recording does Gabrielle take issue with Ms Le’s assertion that she is John’s partner and respond to the effect that Ms Le is merely a carer.
4. Ms Le never contends that she did have the keys to the Coogee property, and instead was entirely reliant on John to access the property. That was a product of John’s well-documented controlling nature.
Defendant’s submissions
1. Jenny claims that Ms Le is not an eligible person. She contends that John and Ms Le never lived together, so that Ms Le does not satisfy either s 57(1)(b) or 57(1)(f). Further John and Ms Le were not in a ‘close personal relationship’ for the purposes of s 57(1)(f) and even if they were, there are no factors warranting the making of the application. John and Ms Le were not in a ‘relationship as a couple’ at the date of his death such that Ms Le cannot be described as John’s de facto partner.
Consideration
De facto relationship
1. As noted above, the determination of whether Ms Le and the deceased were living in a de facto relationship at the time of his death requires a multi-factorial assessment by reference to all the evidence. The starting point is to consider the circumstances listed in s 21C(3) of the Interpretation Act.
(a) The duration of the relationship
1. The ‘relationship’ referred to in this factor is not the de facto relationship, but rather a looser notion under which the Court takes into account the duration of what is asserted to be the relationship though also taking into account how the other factors listed in s 21C(3) might have changed during the course of that asserted duration of relationship: Sulliman v Sulliman [2002] NSWSC 169 at [194].
2. It is clear that there was a continuing relationship between Ms Le and John from around 2003 until his death. Having regard to the evidence of the AVO taken out against Laura and Natalie’s evidence of what she observed in the pool hall, I accept Ms Le’s evidence that the relationship was from the beginning a sexual one. It is likely that in the early years (up to 2009) that the relationship involved John staying overnight at the Redfern property on occasions, but the evidence does not establish how frequently that occurred. It is not clear on the evidence to what extent the relationship involved Ms Le staying with John at the Waterloo apartment in the period from 2009 to 2016. No objective evidence is put forward by Ms Le dealing with this period. While there are some photographs of her having dinner with John and friends at restaurants in that period, there are no photographs showing them together at the Waterloo apartment.
3. It is likely that the relationship involved John and Ms Le staying together at the Burradoo property from the period of its purchase in 2012 to 2017 (when he moved back into the Coogee property) but again the objective evidence does not establish the periods of time or the frequency of those visits to the Burradoo property.
4. Ms Le’s evidence is that she lived with John at the Coogee property throughout the period from August 2017 to John’s death. The evidence of Jenny and Kevin Batten, who lived on the same street is to the contrary. No objective evidence is put forward by Ms Le to corroborate her evidence that she lived at the Coogee property in this period (or indeed in any other period) and it is contradicted by the evidence that she maintained her residence at the Redfern property until she surrendered her lease in (2021) and did not have keys to the Coogee property.
(b) The nature and extent of their common residence
1. The objective evidence establishes that during the period from 2003 until June 2021 Ms Le’s residence was at the Redfern property. As noted earlier, she renewed her lease of that property on 25 May 2021 but then relinquished it on 21 June 2021 after she received advice from her solicitors regarding a potential claim against John. It may be inferred that she relinquished the lease and changed her address in order to assist with any potential claim against John.
2. I accept that from June 2021 until John’s death she was living at the Coogee property, but at this stage she was performing caring and nursing services to him.
(c) Whether a sexual relationship exists
1. As indicated above, I am satisfied that the relationship began as a sexual relationship and I accept Ms Le’s evidence on which she was not cross-examined, that this continued throughout their relationship.
(d) The degree of financial dependence or interdependence, and any arrangements for financial support, between them
1. There is no evidence of any financial dependence or interdependence between Ms Le and John. They had no joint bank accounts and did not co-own any properties. John was clearly not financially dependent on Ms Le. Ms Le had a degree of financial dependence on John in that he waived the rent on the lease of Shop 3 and made regular cash payments to her.
(e) The ownership, use and acquisition of property
1. John did not own or acquire any property with Ms Le. Ms Le did use property owned by John (Shop 3) under a lease of that property. It is significant that John granted this lease to Ms Le in 2013 after Laura’s death at a time when there was no apparent reason why the formality of a lease was necessary.
(f) The degree of mutual commitment to a shared life
1. In my view there is a dearth of evidence that John was committed to a shared life with Ms Le. There is evidence that he went to dinner with her at restaurants, and attended the South Sydney Leagues Club with her for dinner and to play poker machines, and travel with her to Burradoo and on one holiday in country New South Wales. However, against this is the objective evidence of a rejection by John of a concept that Ms Le was any more than his carer. He stated in an affidavit in October 2014 and to Professor Rosenfeld in June 2021 that he lived alone at the Coogee property. He repeatedly refers to Ms Le as his carer and not his partner, to several people, including Natalie and Mr Pappas. He consistently referred to her throughout his life in a disparaging way as the ‘Chinesa’ or ‘Chinese lady’. While he instructed Francis Devine to make Ms Le one of his guardian and attorney, this was on the basis that she would act jointly with Natalie. Further, the decision of John to require Ms Le to enter into a new lease of Shop 3 in 2013 is difficult to reconcile with the notion that he had a commitment to a shared life with her at that time or subsequently. Had there been such a commitment he would either have transferred Shop 3 to her or simply allowed her to occupy it rent free without a lease.
(g) The care and support of children
1. John and Ms Le had no children together. There is a dearth of evidence that he had any relationship with Ms Le’s children. Indeed the conversation at [262] above suggests that he did not.
(h) The performance of household duties
1. There is evidence that Ms Le performed household duties, including cooking, washing and cleaning as well as driving him to restaurants and to the Burradoo property. There is also evidence that she was paid for doing so.
(i) The reputation and public aspects of the relationship
1. There is conflicting evidence about this. The evidence of John’s relatives, being Jenny, her partner Kevin and Gabrielle did not consider the relationship to be that of a couple living together. John’s friend, Nick Pappas, gave evidence that John said to him that he needed someone to look after him and that Ms Le performed that role. Then there are a number of witnesses called by Ms Le who deposed that they regarded Ms Le and John to be in a de facto relationship. I have explained when dealing with that evidence why I consider most of it to be unreliable. In so far as there is some evidence of a perception by Ms Le’s friends that she and John were a couple, I consider that it is likely to have been influenced by the perspective of each witness: see the observations of Windeyer J set out at [121] above.
2. Taking into account all the evidence regarding the above matters and the circumstances of the relationship, I am not satisfied that John and Ms Le were living together as a couple at the time of John’s death nor am I satisfied that they ever lived together as a couple. In particular, I am not satisfied that John ever had a commitment to a shared life with Ms Le, and hence the required mutual commitment to a shared life was lacking.
Close personal relationship
1. In my opinion, while Ms Le was not living with the deceased in a de facto relationship, she was living with him in a close personal relationship at the time of his death. Having surrendered her lease of the Redfern property in June 2021, she was living with John at the Coogee property from at least that time until his death. The audio recordings in Ex 21 corroborate Ms Le’s evidence that she provided to him domestic support and personal care in this period, nor is that seriously in dispute.
2. I am satisfied that she did not provide this domestic support and personal care to John for fee or reward. While she received various financial benefits from John during their relationship (in particular, cash payments from him and the waiver of the rent on Shop 3) I do not accept that these benefits were provided as the quid pro quo for the domestic support and personal care she provided to him. Their relationship was more complicated and nuanced than merely one involving domestic support and personal care, and considering the history of the relationship (including the romantic aspects of it) the financial benefits she received cannot properly be seen as received in return for the support/care Ms Le undoubtedly provided to him. As the statement John made to Dr Predergast at Prince of Wales Hospital in September 2021 indicates, he recognised that while she was not his partner, she was also not merely his carer.
Factors warranting Ms Le’s application
1. The next question is whether there are factors, in addition to the facts which make Ms Le an eligible person under s 57(1)(f), which give her the status of a person who would generally be regarded as a natural object of testamentary recognition by the deceased. In my opinion, when all the circumstances are taken into account, Ms Le satisfies this requirement, in particular due to the following matters:
1. She was in a relationship with the deceased, which went beyond that of a mere carer/housekeeper for approximately 19 years prior to his death, including a sexual relationship for at least part of that time.
2. While over that period the deceased made generous gifts to her (see [182] above), there is direct evidence that he recognised a need to provide for her in his will. I am referring to his statement to Natalie in September or October 2021 set out at [303] above, and the conversation with Ms Le recorded by her on 27 June 2019. In that conversation he expressed concern about giving her the Coogee property in his lifetime (because of a perceived risk she may ‘kick him out’), but there is also a clear recognition of her ‘entitlement’ to Shop 3 on his death, which is consistent with his conduct in allowing her to occupy it rent free during his lifetime.
3. It is apparent from the recordings which Ms Le made and her evidence which is not seriously disputed on this aspect, that the care she provided to John in the last months of his life was considerable and showed a significant commitment to his welfare, which went beyond that of a mere carer.
Determination of Natalie’s eligibility
1. Natalie’s eligibility to make a claim turns on whether she was wholly or partly dependent on the deceased and, if so, whether there are factors warranting her application. Jenny contends that she was not dependent on the deceased and there are no factors warranting her application.
2. In relation to dependency, I am satisfied on the evidence that Natalie was partly dependent on the deceased both in her childhood and as an adult. In relation to her childhood, I have accepted the evidence of Silvana that the deceased provided financial support to her and her children (including Natalie) of three kinds: by making a payment to her of a property settlement on behalf of Robert; by making at least some of the child support payments which Robert was required to make; and third, by making regular payments, including amounts between $2,000-$5,000 for the benefit of the kids. This evidence is corroborated by a statement in John’s affidavit of 26 October 2014 set out at [47] above. I am also satisfied that he gave significant financial assistance to Natalie, particularly after her diagnosis with multiple sclerosis in 2014.
3. It was contested by Jenny that Natalie had not proved the making of the cash payments or that John had the financial resources to make significant cash payments of the kind alleged. As to the first point, I am satisfied that the evidence of the payments being made is corroborated both by the deceased’s affidavit of 26 October 2014 and the evidence of Mr Dodaro (in the case of the cash payments by John to Natalie).
4. I am also satisfied that John had the financial resources to make the payments to Silvana and Natalie. It is clear that John received significant amounts from the various companies which he controlled over the period up to 2017 when a receiver was appointed to those companies.
5. Natalie gave evidence in her affidavit of 21 April 2023 of attending the Commonwealth Bank with John in 2019 or 2020 and seeing a statement showing he had a deposit of $3 million with the Commonwealth Bank, no doubt as a result of the very significant payments received by him from those companies. Further, the fact that he received significant payments from the companies he controlled is confirmed by the orders made by Kunc J on 12 February 2021, recorded in Angius v Salier (No 5) [2023] NSWSC 678 at [5].
6. Turning now to the question of whether there are factors warranting Natalie’s application, it is necessary to have regard to the ‘guidelines’ in Bowditch, set out earlier. As to (a), while the responsibility to make provision for a grandchild normally rests with the parent (or parents), in the present case Robert did not accept that responsibility following his divorce from Silvana. The deceased took on that responsibility in place of Robert. This is confirmed by the deceased’s affidavit to which I have already referred. To the extent that Robert did provide support for Natalie (and her sisters) during her childhood, it was limited to the relatively modest child support payments (some of which he may have made) and did not extend beyond that which is consistent with his attitude towards Silvana and their children (including Natalie) as ‘bastards’ and ‘scum’.
7. As to (b), while Natalie resided with her mother rather than the deceased, the deceased did assume a role of providing financial support to Silvana to assist her with the financial burden of bringing up her four children (and his grandchildren). This financial support extended beyond the typical support which a grandparent may be expected to provide to a grandchild. This financial support continued and increased after Natalie was diagnosed with multiple sclerosis in 2014 and I infer that this was because the deceased recognised the seriousness of her illness and considered it was necessary (given the lack of support from Robert) that he should assist her financially.
8. As to (c), Natalie provided companionship and assistance to John in the various ways referred to at [300]-[301] above. In relation to (d) and (e), while the generosity of a grandparent to a grandchild is not, of itself, sufficient to convert the grandparent relationship into one of testamentary obligation to a grandchild, there is direct evidence here that the deceased did regard his grandchildren, including Natalie, as a natural object of his testamentary intentions. This is confirmed both by his 2012 will which included his grandchildren as beneficiaries (including Natalie), the deceased’s explanation for how he came to make his 2021 will and his statement to Francis Devine in December 2021 that on making a new will his grandchildren would benefit.
9. In relation to (f) concerning the inheritance or financial support which Natalie might fairly expect from her parents, it is clear from the evidence that Silvana does not have the financial capacity to provide significant financial support to Natalie. In so far as Robert is concerned, I accept the submission made for Natalie that, given the history of Natalie’s relationship with him, there is no basis to consider that Robert will support Natalie.
10. Bearing in mind these matters, and all the circumstances of the case, I am satisfied that Natalie has established that there are factors warranting the making of her application.
Provision to be made
Relevant principles
1. Section 60(2) of the Act sets out matters to which the Court may have regard for the purposes of determining the questions posed by both s 59(1)(c) (whether adequate provision for the proper maintenance, education or advancement in life of the applicant has not been made in the will) and s 59(2) (if so, what order for such provision ought to be made). This requires an evaluative judgment, taking into account the matters set out in s 60(2).
2. In Spata v Tumino (2018) 95 NSWLR 706; [2018] NSWCA 17 at [112]-[115], Payne JA (Macfarlan JA and Sackville AJA agreeing) said:
In Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [74] Gummow and Hayne JJ cited the plurality in Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40, for the proposition that:
[T]he words ‘adequate’ and ‘proper’ are always relative. There are no fixed standards, and the Court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards.
What is “proper” requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties’ financial circumstances. The Court’s assessment of what is proper maintenance, education and advancement in life must be made at the time when the Court is considering the application. This does not, however, mean that considerable weight should not be given to the assessment of a capable testator or testatrix who has given due consideration to the claims on his or her estate.
In Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 at [12] Allsop P stated:
Accepted and acceptable social and community values permeate or underpin many, if not most, of the individual factors in s 60(2) and are embedded in the words of s 59, in particular ‘proper’ and ‘ought’. That such values may be contestable from time to time in the assessment of an individual circumstance, or that they may change over time as society changes and grows can be readily accepted.
Allsop P acknowledged that orders made by reference to “perceived prevailing community standards of what is right and appropriate” referred to an imprecise, variable and contestable standard. See also White J in Slack v Rogan; Palffy v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [125] – [127].
1. In relation to the evaluation of what is ‘proper’ by reference to ‘perceived community standards of what is right and appropriate’ (or ‘moral duty’ which was the preferred way of expressing the same concept in in Steinmetz v Shannon [2019] NSWCA 114 at [44] and [109]), these are to be ascertained according to the circumstances of the particular case, including the relationships between the applicant and the deceased and other persons who have legitimate claims upon his or her bounty and the circumstances and needs of those other persons: Chapple v Wilcox at [64]. Importantly, as White JA said in Steinmetz v Shannon at [59], ‘the court does not ask whether the will was fair and does not have the power to adjust entitlements under the will according to what it considers to be fair’.
2. In Lalic v Lalic [2022] NSWSC 31 at [48]-[54], Henry J summarised the authorities on the correct approach to the evaluative task required when determining whether the provision in a will is adequate and, if not, whether a family provision order should be made, as follows:
Pursuant to s 60(1)(b) of the Succession Act, the Court may have regard to the matters set out in s 60(2) for the purpose of determining whether to make a family provision order and the nature of any such order. Those matters may be relevant both to the question of any inadequacy of provision and, if the provision is found to be inadequate, whether an order for provision should be made and if so to what amount: Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [7]; Chan v Chan [2016] NSWCA 222 at [21].
The Succession Act does not prescribe the circumstances that constitute adequate provision for the proper maintenance, education or advancement in life of a person, nor does it allocate relative weight to any of the various matters set out in s 60(2) to which the Court may have regard.
While adequacy is concerned with quantum and the word “proper” prescribes the standard of the maintenance and advancement in life, they are relative concepts with no fixed standards. The Court is left to form opinions on those matters on the basis of its own general knowledge and experience of current social conditions: Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [74] (Gummow and Hayne JJ), [114] (Callinan and Heydon JJ); Limberger v Limberger; Oakman v Limberger [2021] NSWSC 474 (Limberger v Limberger) at [423].
A multifaceted evaluative approach that takes account of all the factual circumstances relevant to the application is required in order to determine whether adequate provision was made for the claimant’s proper maintenance, education or advancement in life: Sgro v Thompson [2017] NSWCA 326 (Sgro v Thompson) at [6] (Payne JA), [86] (White JA, McColl JA agreeing). The relevant circumstances will include a claimant’s needs, although there is a distinction between needs and adequate provision. Whether or not adequate provision has been made is not to be determined simply by a calculation of financial needs. Any assessment of a claimant’s needs also requires consideration of the size of the estate and others’ claims on it: Chan v Chan [2016] NSWCA 222 at [22].
Thus, the concepts of adequate provision and the proper level of maintenance and advancement are to be assessed in the context of all of the circumstances of the case, including the claimant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between the claimant and the deceased, and the relationship between the deceased and other persons who have legitimate claims on the deceased’s estate. Attention may also be given to how the claimant lived and might reasonably expected to have lived in the future: Blendell v Blendell [2020] NSWCA 154 at [7]–[8]; Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [114].
The determination of what is adequate provision for the proper maintenance, education and advancement in life of a claimant is to be guided by applying the Court’s assessment of what is considered to be right and proper according to contemporary accepted community standards or what is considered to be the moral duty of the deceased: Squire v Squire [2019] NSWCA 90 at [10]; Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 (Steinmetz v Shannon) at [44] (White JA), [109] (Brereton JA).
In appropriate cases, if the deceased was capable of and did give due consideration to what provision for a claimant’s maintenance, education or advancement is proper, the Court should give considerable weight to the deceased’s testamentary wishes. This approach recognises that a testator or testatrix is in a better position than the Court to make such an assessment, although the application of s 59 of the Succession Act is not confined by notions of reluctance to interfere with freedom of testation. The Court’s assessment of whether there has been adequate provision for the claimant’s proper maintenance and advancement in life must be made when the Court is considering the application, rather than at the time of the deceased’s death or will, and requires an evaluative judgment of all of the circumstances: Megerditchian v Khatchadourian [2020] NSWCA 229 (Megerditchian) at [33], [35] (Payne JA, Macfarlan JA and Emmett AJA agreeing); Steinmetz v Shannon at [52]–[54] (White JA), [96] (Brereton JA); Sgro v Thompson at [86]; Slack v Rogan; Palffy v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [126]–[127].
1. Meek J in Tarbes v Taleb [2023] NSWSC 565 at [195]-[222] set out a comprehensive summary of the relevant principles to apply in undertaking that evaluative task to which I have also had regard.
2. John’s estate is on any view a large estate, with a net value of approximately $29.5 million. The significance of the size of the estate, in the present context, is that any order for provision which is made is unlikely to impose any financial hardship, or have a material adverse effect, on the position of Jenny (the sole beneficiary) or other claimant, and this may be said to remove a limiting factor often present in family provision cases where eligibility is made out.
3. In Tarbes v Taleb [2023] NSWSC 565 at [226]-[233], Meek J dealt with the significance of the size of the estate as follows:
In large estate cases, the limited scale of resources available in most estates and the competition for satisfaction of financial needs out of such limited resources cease in fact, to be limiting considerations in the Court’s overall assessment of what is adequate provision for the proper maintenance and advancement in life of the applicant.
Thus, it has been said that the Court is free to make a more liberal assessment of what is proper provision in the sense that competition for limited resources is much reduced or eliminated and unqualified by competing claims.
In Anasson v Phillips, Young J (as his Honour then was) expressed this concept in the following terms (at 20-21):
If the estate is a large one the Court has a slightly different approach. The basic principles are the same, that is, the will can only be affected to the extent that it is necessary to discharge the moral duty by making adequate provision for the plaintiffs, but where there is a large estate competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the plaintiffs. In particular, the lifestyle that has been enjoyed by the plaintiffs because they have been associated with a wealthy testatrix is a relevant factor. These principles all, I think, flow from cases such as Re Buckland (1966) VR 404, especially p412.
In Lloyd-Williams v Mayfield, Bryson JA at [32] expressed the concept in following terms:
32. It was open to White J and altogether appropriate to look well beyond needs when interpreting and applying community standards to decide what provision the Court ought to order. The concept of advancement in life can take consideration well beyond needs. The purposes White J considered are not concrete projects, but are means of appraising the provision which ought to be made, and of giving dimensions to an exercise which cannot be made highly concrete. Nothing commits the respondent to using the provision in the ways which White J considered.
In Estate of Grundy, Lindsay J at [114] expressed the same concept in these terms:
The potential availability to a claimant for family provision relief of a large estate, unqualified by competing claims upon it by any living person, may have a gravitational pull on the size of an award of family provision relief, beyond the bare notion of the claimant’s “need” for relief (Lloyd-Williams v Mayfield (2005) 63 NSWLR 1 at [29]-[32]), even if (as illustrated by Estate Hemmes; Cameron v Mead [2018] NSWSC 85) respect for the testamentary intentions of the deceased operates as a restraint upon the amount of provision deemed “proper” to award. In a large estate a “proper” provision for maintenance, education or advancement of an eligible person may (but will not necessarily) far outweigh what is necessary for his or her “adequate” maintenance, education or advancement: Wentworth v Wentworth (1995) 37 NSWLR 703 at 737.
The inquiry into adequacy is not limited to considering whether the plaintiff has enough to survive or to live comfortably without provision (or further provision, as the case may be) from the deceased’s estate: Spiteri v Vassallo at [19] per Williams J.
What is adequate in any given case may transcend the necessities of life in a sense of basic requirements for food, clothing and shelter or what is necessary for subsistence. It may extend to consideration of matters that for example make life more comfortable or to advance a person’s position in life.
This was the point of the discussion by Bryson J (as his Honour then was) in Gorton v Parks in particular addressing remarks to comments in caselaw limiting notions of the need of adult children for maintenance and support by reference to views that moral obligations of parents can be limited or possibly escaped: at 6C-11F. The point was emphasised by Brereton JA in Steinmetz v Shannon, namely, that in assessing what is proper provision to the extent that “needs” are relevant, no narrow view of that notion limited to the necessities or essentials of life is to be taken: at [132].
Consideration
1. I will now deal with the questions of whether adequate provision is made for the proper maintenance, education or advancement in life of each plaintiff and, if not, the nature of the order which the Court should make under s 59(2) of the Act. These questions are to be determined as at the time the Court is considering the application pursuant to s 60(1)(b). I will have regard to the matters set out in s 60(2) in dealing with both questions.
Consideration of s 60(2) matters for Ms Le’s claim
The relationship between Ms Le and the deceased: s 60(2)(a)
1. Ms Le was in a close personal relationship with the deceased for around 19 years. She lived with him at the Coogee property in the last six months of his life and stayed with him at his various residences (the Waterloo apartment, the Burradoo property and the Coogee property) at various times during the 19 year period.
The nature and extent of any obligations or responsibilities owed by the deceased to Ms Le or to any other claimant or to any beneficiary: s 60(2)(b)
1. For the reasons given earlier, I consider that the deceased had a moral obligation to provide for Ms Le, which he recognised during his lifetime by allowing her to use Shop 3 rent free for over 10 years.
2. It may be accepted that the deceased recognised that Jenny was a natural testamentary object, reflecting the loving relationship she and her family (particularly her daughter, Gabrielle) had with the deceased.
3. It is also relevant that I recognise that Natalie is another person who has made an application for a family provision order to whom the deceased had a moral obligation. The evidence is that her siblings also made claims for a family provision order each of which has been settled.
The deceased’s estate: s 60(2)(c)
1. The deceased’s estate is on any view a very large estate. The relevance of the size of the estate in the present case is that the Court is able to make an order to meet each plaintiff’s needs without any significant adverse effect on Jenny’s entitlement under the will.
Ms Le’s financial resources and needs (including earning capacity) and age: s 60(2)(d), (e) and (g)
1. Ms Le is currently 61 years of age and operates her laundromat business from Shop 3. Her earning capacity is limited to the income she can earn from the laundromat business.
2. Ms Le currently rents an apartment in Marrickville at a rent of $500 per week. Her current household expenses are approximately $275 per week. She owns the laundromat business conducted from Shop 3, from which she earns approximately $220 per week. She currently receives $500 per week as an interim family provision order from the deceased’s estate.
3. Ms Le’s assets are not significant. She has a personal account with the Commonwealth Bank with a balance of approximately $1,360 and a business account with the Commonwealth Bank with a balance of approximately $1,550. She has no cash savings. She owns a Toyota Aurion motor vehicle, which is about 12 years old, with a current market value of around $9,100. She has liabilities to family members of approximately $7,500.
4. Ms Le’s claimed needs, for which she seeks provision are as follows:
1. Ownership of Shop 3, from which she conducts her laundromat business (which the parties agree has a value of approximately $640,000).
2. A sum sufficient to buy a new motor vehicle, given the age of her current car, which she estimates to be $31,000.
3. Accommodation similar to the Coogee property, which she identifies as a three-bedroom house in Coogee with a two car garage, having a value of approximately $3,450,000.
4. A cash amount to allow her to live comfortably in her old age and allow her to maintain the property.
1. In relation s 60(2)(e), Ms Le is not cohabiting with another person.
Any physical, intellectual or mental disability of Ms Le: s 60(2)(f)
1. Ms Le currently suffers from the following medical conditions for which she takes prescription medicine: diabetes, high blood pressure, osteoarthritis, asthma, gout, high cholesterol, depression, and bilateral cataract extraction.
Any contribution (financial or otherwise) by Ms Le to the deceased’s estate or his welfare: s 60(2)(h)
1. Ms Le made no financial contribution to the deceased’s estate. She provided assistance to the deceased, including cooking, cleaning, driving, buying medicines and groceries, taking him to medical appointments and visiting him in hospital. In the last six months of his life, she lived at the Coogee property providing care for him during his period of significant ill health.
Any provision made for Ms Le by the deceased during his life or from his estate: s 60(2)(i)
1. Ms Le is not a beneficiary under the will. She received various financial benefits from the deceased during his life, set out at [182] above. These were significant, but I do not regard them as a quid pro quo for ‘services’ she provided to him.
The deceased’s testamentary intention, including evidence of statements made by him: s 60(2)(j)
1. The file note prepared by Francis Devine indicates that the deceased’s last will did not represent his final testamentary intentions and why he wished to change his last will is explained by Natalie’s evidence of her conversation with him in June 2021.
2. Ms Le relies on recordings of conversations with the deceased in 2019 and 2021 referred to above. There is an indication in one of the conversations in June 2019 of an intention that she receive from his estate Shop 3, the Burradoo property and one unit, and possibly some money. I have indicated above why I treat those recordings with some reservation. I consider a more reliable statement of his testamentary intention to be the conversation he had with Natalie in September or October 2021 when he said that in the new will he was considering, Ms Le should receive Shop 3 and ‘a few hundred thousand dollars to say thank you’.
Whether Ms Le was being maintained by the deceased: s 60(2)(k)
1. Ms Le was being maintained in the sense of being financially supported, by the deceased before his death.
Whether anyone else is liable to support Ms Le: s 60(2)(l)
1. There is no one on whom Ms Le can rely for financial support.
Ms Le’s character and conduct: s 60(2)(m)
1. It is clear from the evidence that Ms Le did care for the deceased, particularly in the last six months of his life when he was suffering severe ill health. However, there are aspects of her conduct, before and after the death of the deceased which are unsatisfactory. First, she took advice regarding the potential to make a claim against the deceased in June 2021 and took steps to improve her case for a claim against him, including giving up the subsidised rental accommodation at the Redfern property and changing her address to the Coogee property. She was not entirely frank in her evidence as to this matter, as noted earlier.
2. Second, the recordings she made of conversations with the deceased in 2019 and 2021 are disturbing because of the way in which she harangues the deceased in circumstances where he is clearly seriously unwell.
3. Third, she taped a conversation with Gabrielle on 6 February 2022, knowing full well that Gabrielle objected to her doing so, and then sought to benefit from the recording by relying on it in these proceedings. For the reasons I have explained above, the recording does not support her claim to have been in a de facto relationship with the deceased and does no more than confirm, what is apparent from the other evidence, that she cared for the deceased during the period of serious ill health at the end of his life.
Conduct of any other person before and after the deceased’s death: s 60(2)(n)
1. It is not clear whether Ms Le criticises the conduct of either Jenny or Gabrielle before or after the deceased’s death. In so far as there is veiled criticism of Jenny’s conduct in arranging for Ms Le to be removed from the Coogee property on 10 February 2022, I do not accept that criticism is valid. Ms Le had already indicated to Gabrielle on 6 February 2022 that she had no intention of leaving the property, but in fact she had no entitlement to be there following John’s death.
Conclusion regarding Ms Le’s claim for provision
1. It is difficult to assess what is the adequate provision for the proper maintenance, education or advancement in life of Ms Le in all the circumstances of the present case. There is evidence of what she considers to be her needs, but the evaluative judgment required is not determined by the plaintiff’s needs, and also takes into account all the relevant circumstances including the matters set out in s 60(2) which have been discussed above and the other matters referred to in the authorities cited earlier in the discussion of the relevant principles to be applied. Two important matters to consider are the totality of her relationship with the deceased, and also the Court’s assessment of what is considered to be right and proper according to contemporary accepted community standards or, put another way, what is considered to be the moral duty of the deceased. In relation to both matters the picture left by the totality of the evidence is complex.
2. On the one hand, Ms Le was clearly a divisive figure in the Angius family dynamic. Her affair with John caused or contributed to the acrimonious split in the family in around 2007, with a significant toll on all concerned, not least on Laura who was an entirely innocent party. John’s affair with Ms Le appears to have caused Laura considerable distress in the final years of her life. Further, there are a number of aspects of Ms Le’s conduct which I regard as unsatisfactory, to which I have referred above.
3. On the other hand, I am satisfied on all the evidence that John had a romantic (and sexual) relationship with Ms Le at least in the period from around 2003 to 2007. A relationship (which may not have been romantic or sexual) continued after that time until his death, although its precise character after 2007 is difficult to fathom. In particular, it is difficult to know why he refused to recognise her as his partner after Laura’s death when there was no apparent impediment to him doing so if she truly was. He was clearly equivocal about their relationship and was disrespectful to her and dismissive of her in various ways (eg. by calling her, and/or describing her to various people, as ‘Chinesa’ or the ‘Chinese lady’ or as his carer). But he was also reliant on her for care and support, particularly in the last six months of his life when he was very ill. John had many opportunities to spurn her evident affection for him after Laura’s death but, for whatever reason, chose not to do so. Similarly, she was free to leave at any time and while she says she stayed because she loved him, there were clear financial benefits to her in not doing so, including that he did not charge her the rent payable under the lease of Shop 3 (see [182] above).
4. I have attempted to understand the nature of John’s relationship with Ms Le, but have struggled to do so because of the conflicts in the evidence of the witnesses who knew them both. Bearing in mind that without the benefit of evidence from John, it is not possible to fathom the unfathomable, I have paid particular regard to what John said about his testamentary intention regarding Ms Le, and consider the most reliable evidence of this to be what he said to Natalie in September or October 2021 that when he made a new will he would give Ms Le Shop 3 and a few hundred thousand dollars cash to say thank you.
5. In all the circumstances, particularly the matters referred to in the consideration of the s 60(2) factors set out above, I am satisfied that the deceased made inadequate provision for Ms Le’s proper maintenance and advancement in life. I have taken into account the unsatisfactory aspects of her conduct referred to at [391]-[393] above in reaching that conclusion.
6. Taking into account all of these matters, I consider that a wise and just testator standing in the shoes of the deceased would consider it appropriate to give Ms Le Shop 3 and a sum of $250,000.
Consideration of s 60(2) matters for Natalie’s claim
The relationship between Natalie and the deceased: s 60(2)(a)
1. Natalie shared a close and loving relationship with the deceased, particularly towards the end of his life, which involved frequent visits (particularly after her diagnosis with multiple sclerosis in 2014), meals together, financial support, care and assistance.
The nature and extent of any obligations or responsibilities owed by the deceased to Natalie, to any other person in respect of whom an application for family provision has been made or to any beneficiary: s 60(2)(b)
1. For the reasons given earlier, I am satisfied that the deceased had a moral obligation or responsibility for Natalie in the particular circumstances of this case. I have dealt with the position in relation to the other persons referred to in s 60(2)(b) in the context of Ms Le’s claim.
The deceased’s estate: s 60(2)(c)
1. I have dealt with this matter in the context Ms Le’s claim.
Natalie’s financial resources (including earning capacity) and needs, and age: s 60(2)(d), (e) and (g)
1. Natalie is currently 34 years of age and single. She is no longer employed. She lives in a property owned by her mother, Silvana, and does not cohabit with another person.
2. Natalie’s income at the time of the hearing was $4,069 per month (after tax) in the form of workers compensation benefits relating to a repetitive strain injury. This benefit expired in April 2024. That income was sufficient to meet Natalie’s living expenses, but only because Natalie was limiting her consultations with specialists regarding her various medical conditions, and is no longer available to her.
3. Natalie’s assets are minimal comprising a 2006 Lexus GS 300 motor vehicle, with 235,000 km on its odometer, which is expensive to run and maintain in her current financial circumstances, bank accounts with relatively small balances and two superannuation accounts with a balance of $40,223. She has a HECS debt of $22,330. In light of her medical issues, I accept that her asset position is unlikely to improve significantly. I refer to the potential for assistance from her parents, Silvana and Robert below.
4. Natalie’s own assessment of her future needs are set out in one of her affidavits and revised in her closing submissions as follows: (a) a new motor vehicle at a cost of $50,000 (and a modified motor vehicle in the future with a cost of $100,000); a CPAP machine at a cost of $2,500, together with CPAP expendables of $500 per annum; (b) stem cell therapy at a cost of between $100,000 to $300,000; a two bedroom apartment, single level and NDIS compliant at a cost in the range of $850,000 to $900,000 which will need to be modified at a cost of approximately $71,752.
5. In addition, she seeks a sum based on recommendations of the occupational therapist, Mr Byrnes, on whose report she relied, and Dr Spies to account for her likely future needs comprising the following:
1. Therapy and intervention costs of $12,000 as one-off costs and annual costs of $7,339.20 (there being little doubt that Natalie will require life-long specialist care);
2. In-home assistance starting at 13.76 hours a week now ($810.89 per week) increasing to 50.34 hours per week at stage 2 in 2028 ($2,858.03 per week), and 108.1 hours per week from 2038 ($6,096.96 per week).
1. These estimates are consistent with the report prepared by the Menzies Institute for Medical Research, ‘Health Economic Impact of Multiple Sclerosis in Australia in 2021’ (published in February 2023) which estimates that the average direct and indirect costs for a person living in Australia with multiple sclerosis is in the order of $37,439 per annum.
2. Natalie does not contend that John’s estate should meet all the needs described above. Rather, it is submitted that applying a broad brush the Court should, standing in the deceased’s shoes, make a provision to significantly improve her life beyond mere survival which could be achieved by $950,000 for a suitably modified apartment, $100,000 for a suitably modified car and a sum sufficient to provide a buffer and income in relation to future medical and care needs.
Any physical, intellectual or mental disability of Natalie: s 60(2)(f)
1. Natalie is currently in poor health, principally arising from her multiple sclerosis diagnosis in 2014. As she said in her evidence: ‘MS has changed my life completely and left me physically and emotionally distraught and alone’. As indicated earlier, Natalie’s evidence contains a large number of documents relating to her various conditions, and there is no suggestion that any of that material is in dispute.
2. Each of Dr Judith Spies (a neurologist) and Professor Cherry Koh (a colorectal and general surgeon) who are Natalie’s treating doctors, provided short reports summarising Natalie’s diagnosis and care. Each was cross-examined. There was no suggestion to them that their evidence ought to not be accepted.
3. Dr Spies is a neurologist who has been treating Natalie since her multiple sclerosis diagnosis in 2014. Her summary (in a report dated 14 August 2023) states that: (a) Natalie has had aggressive multiple sclerosis from the outset, with multiple predictors of long term disability; (b) Natalie has subsequently developed several other medical issues, including pericarditis after the Pfizer Covid vaccine, with ongoing chest pain, severe gastrointestinal dysmotility after a ruptured appendix and Hashimoto’s thyroiditis; (c) Natalie has aggressive multiple sclerosis that requires close monitoring of both the disease and potential side effects of her immunotherapies, and regular engagement with pain management services; (d) most patients with the sort of multiple sclerosis Natalie has (high lesion burden especially with brainstem and spinal cord lesions) will eventually enter a secondary progressive phase of the disease where disability progresses in the absence of further relapse. The time at which this occurs is impossible to predict in an individual, but multiple population studies indicate a median of approximately 20 years since first symptoms. Natalie is already 10 years post first symptoms; (e) many costs associated with multiple sclerosis are not covered by Medicare, most importantly physiotherapy; (f) stem cell therapy is available overseas at a cost of $100,000-$300,000, but is not available in Australia outside of clinical trials.
4. An earlier report by Dr Spies dated 16 June 2022 stated that Natalie is at a high risk of significant disability, and a higher risk of ending up in a wheelchair, being disabled and needing care, but her life expectancy is normal.
5. Dr Spies did not depart from that evidence in cross-examination. She confirmed that ‘there is no doubt about the diagnosis or the aggressive nature of it’ (T807.9); so far as prognosis is concerned she accepted it varies from individual to individual but said there are well-established predictive factors (T807.20-25); and agreed Natalie’s condition is currently stable but with residual deficits (T808.4) and continued ‘MS doesn't go away, it sort of stays there and you get accrual of things with new lesions’ (T808.11).
6. After the conclusion of the hearing, Natalie was given leave to reopen her case to tender (without objection by the defendant) a report of Dr Daniel Guilfoyle (in consultation with Dr Spies) following a further MRI scan which indicates that her multiple sclerosis is no longer stable and recommends ‘instituting further highly effective multiple sclerosis disease modifying therapy to try to regain control of her aggressive relapsing condition (particularly in light of her extensive burden of old disease)’. The report (Ex HH) sets out a revised treatment plan going forward with Natalie’s agreement.
7. Associate Professor Koh’s report dated 18 September 2023 describes Natalie’s onset of symptoms of gastrointestinal motility disorder as ‘atypical and the management of this has been challenging’. Although her view is that ‘it is difficult to be prescriptive about what Natalie will require’ she will need long term support and may require surgery. Her condition is presently stable, but fluctuating (T830.4-50).
8. Natalie has experienced the following symptoms caused by her multiple sclerosis: foot drop, trigeminal neuralgia and greater auricular neuralgia, optic neuritis in the left eye, severe vertigo and balance issues, bladder, issues causing incontinence, difficulties swallowing food, sensation of pins and needles throughout the left side of her body and fatigue. She has also suffered through pericarditis and post-inflammatory syndrome, having been diagnosed after receiving her COVID-19 vaccines in 2021, a variety of respiratory conditions (including sleep apnoea), carpal tunnel syndrome requiring surgery and gastrointestinal disorders.
9. Natalie’s age of 34 is significant because one aspect of her medical issues is that multiple sclerosis causes significant disability without significantly compromising life expectancy.
Any contribution (financial or otherwise) by Natalie to the deceased’s estate or his welfare: s 60(2)(h)
1. Natalie provided John with assistance over the last four or five years of his life in the following ways in the form of shopping, some light cooking, assistance with paperwork for court matters and emails to his accountant, phone enquiries by contacting the administrator and liquidator of his companies, and paying bills using his credit card, including making Natalie the contact person for his insurances.
2. The closeness of the relationship towards the end of John’s life is also supported by the deceased’s intention in December 2021 to appoint Natalie as one of his (joint) attorneys and guardians.
Any provision made for Natalie by the deceased during his life or from his estate: s 60(2)(i)
1. John made provision for Natalie in his lifetime as described earlier. John made no provision for Natalie in the 2021 will.
The Deceased’s testamentary intention, including evidence of statements made by him: s 60(2)(j)
1. That John regarded Natalie as a proper beneficiary of his estate is demonstrated by the specific bequest to Natalie of $200,000 in cl 8.2 of his 2012 will. This predates Natalie’s multiple sclerosis diagnosis in 2014.
2. In addition, Natalie gives evidence (which I accept) that John made regular statements to Natalie about his intentions, including:
1. in 2019 or 2020, John told Natalie that there was a trust fund for all his grandchildren with $250,000 in it for each of them;
2. in or around September or October 2021, John told Natalie that he would leave Natalie and her sisters the Burradoo property;
3. on 26 December 2021, John told Natalie and her sisters that he would give them each $250,000 plus property.
1. John’s intention to provide for all his grandchildren including Natalie is confirmed by his statements to his solicitor Francis Devine in the meeting on 20 December 2021 referred to earlier.
Whether Natalie was being maintained by the deceased: s 60(2)(k)
1. I have already dealt with the extent to which Natalie was partly dependent on the deceased.
Whether anyone else is liable to support Natalie: s 60(2)(l)
1. The only persons who might potentially support Natalie in the future are her parents, Silvana and Robert.
2. Silvana owns her house (which is unencumbered), she owns a half interest in the house next door (where Natalie presently lives in the unit upstairs with the ground floor rented out at $550 per week) and a property at Toukley (subject to a mortgage of $310,000) which is rented out at $350 per week. She has a modest income as a bank teller and no other significant assets. She has three other daughters and health challenges of her own.
3. Robert is clearly very wealthy, being the sole beneficiary of Laura’s estate. The only evidence suggesting that Robert might be willing to assist Natalie is an email he sent her on 5 October 2016 (Ex 15), asking whether she needed assistance. Natalie’s evidence was that she did not respond to this email because she is ‘terrified of my father. He destroyed my whole family. You don’t understand. He destroyed everyone. He’s dangerous. He’s never helped. I don’t want to know’ (T704). I accept Natalie’s evidence as it is consistent with the other evidence referred to above regarding Robert’s relationship with Silvana and Natalie. I do not accept that there can be a realistic expectation that Robert will assist Natalie financially.
Natalie’s character and conduct: s 60(2)(m)
1. I have dealt with Natalie’s relationship with the deceased and there is nothing in the evidence which in my view casts any doubt or justifies any criticism of her character or conduct.
Conduct of any other person before or after the deceased’s death: s 60(2)(n)
1. The parties did not identify any other relevant conduct.
Any other matter considered relevant: s 60(2)(p)
1. The parties did not identify any other matter considered relevant.
Conclusion regarding Natalie’s claim for provision
1. In my view, in all the circumstances, particularly the matters under s 60(2) addressed above, the deceased made inadequate provision for Natalie in the 2021 will. The appropriate order for provision to be made out of John’s estate for Natalie is to be inferred from her needs which are considerable. The claim for provision which Natalie makes, set out at [410], reflects the appropriate approach for estimating the amount for her proper maintenance, education or advancement in life. In my view, a sum sufficient to provide a suitable buffer and income in relation to her future medical and care needs is $1,500,000. That amount, conservatively invested, will generate sufficient income to meet her needs and provide the appropriate buffer sought. Accordingly, in my opinion an order for provision should be made from the deceased’s estate by a lump sum in the amount of $2,550,000.
Conclusion and orders
1. For the above reasons, I have concluded that Ms Le and Natalie are eligible persons and that the absence of any provision in their favour by the deceased in his 2021 will was inadequate for their proper maintenance, education and advancement in life. I have concluded that in all the circumstances, the appropriate provision which should be made in their favour is:
1. In the case of Ms Le, the transfer to her of Shop 3 and provision in the sum of $250,000;
2. In the case of Natalie, provision in the sum of $2,550,000.
1. I will make orders for provision to each of Ms Le and Natalie in the terms set out in the previous paragraph.
2. I note that Ms Le has been benefitting from an interim provision order made by Parker J on 18 February 2022 in the amount of $500 per week which should now be terminated. As to costs, the usual orders in light of the conclusion I have reached regarding each plaintiff’s claim is that the costs of the plaintiffs and the defendant of these proceedings should be paid out of the estate.
3. I direct the parties to bring in short minutes of orders to give effect to these reasons.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 August 2024 | 46,730 |
nsw_caselaw:19100ae4852fe87d8d3ef453 | decision | new_south_wales | nsw_caselaw | text/html | 2024-07-30 00:00:00 | BCEG International (Australia) Pty Ltd v Yu Xiao [2024] NSWSC 922 | https://www.caselaw.nsw.gov.au/decision/19100ae4852fe87d8d3ef453 | 2024-08-04T23:56:03.212082+10:00 | Supreme Court
New South Wales
Medium Neutral Citation: BCEG International (Australia) Pty Ltd v Yu Xiao [2024] NSWSC 922
Hearing dates: 10 July 2024
Date of orders: 30 July 2024
Decision date: 30 July 2024
Jurisdiction: Equity - Commercial List
Before: McGrath J
Decision: Defendants to pay the plaintiff’s costs as a gross sum (see [179])
Catchwords: COSTS – application by plaintiff for gross sum costs orders in main proceedings, contempt proceedings and application – main proceedings long running and involve serious and complex allegations of fraud – numerous costs orders on ordinary and indemnity basis – detailed evidence of costs and reductions – gross sum costs order in contempt proceedings conceded by defendants – whether plaintiff is entitled to costs before commencement of main proceedings – no discount to be applied for gross sum costs in main proceedings but discount applied for gross sum costs for application – HELD – gross sum costs orders awarded
Legislation Cited: Civil Procedure Act 2005 (NSW) ss 98, 101
Legal Profession Uniform Law 2014 (NSW)
Cases Cited: Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39
Baychek v Baychek [2010] NSWSC 987
BCEG Australia v Xiao [2020] NSWSC 1234
BCEG Australia v Xiao (No 2) [2020] NSWSC 1403
BCEG International (Australia) Pty Ltd v Xiao [2021] NSWSC 1027
BCEG International (Australia) Pty Ltd v Xiao [2021] NSWSC 1545
BCEG International (Australia) Pty Ltd v Xiao (2022) 162 ACSR 601; [2022] NSWSC 972
BCEG International (Australia) Pty Ltd v Xiao [2022] NSWSC 972
BCEG International (Australia) Pty Ltd v Xiao [2023] NSWSC 6
BCEG International (Australia) Pty Ltd v Xiao [2023] NSWSC 57
BCEG International (Australia) Pty Ltd v Xiao (No 2) [2022] NSWSC 1102
BCEG International (Australia) Pty Ltd v Xiao (No 3) [2022] NSWSC 1221
BCEG International (Australia) Pty Ltd v Xiao (No 3) [2023] NSWSC 554
Hamod v State of New South Wales [2011] NSWCA 375
Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640
Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213
Huang v Wei (No 4) [2023] NSWSC 164
Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121
Wallis v Rudek [2020] NSWSC 1618
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
Xiao v BCEG International (Australia) Pty Ltd (No 2) [2023] NSWCA 87
Category: Costs
Parties: BCEG International (Australia) Pty Ltd (Plaintiff/ Applicant)
Yu Xiao (First Defendant/Respondent)
Yan Ying Chen (Second Defendant/Respondent)
Representation: Counsel:
D Williams SC and N Riordan (Plaintiff/Applicant)
B Le Plastrier and S Steinhoff (First and Second Defendants/Respondents)
Solicitors:
Thomson Greer (Plaintiff/Applicant)
HWL Ebsworth (First and Second Defendants/ Respondents)
File Number(s): 2019/00310768
Publication restriction: Nil
JUDGMENT
INTRODUCTION
1. The plaintiff, BCEG International (Australia) Pty Ltd (BCEG Australia), brings this application for gross sum costs orders arising from various cost orders which have been made in BCEG’s favour in these long running, complex and hard-fought proceedings.
2. On 4 October 2019, BCEG Australia commenced these proceedings (Main Proceedings) against the following defendants (collectively the defendants):
1. the first defendant, Yu Xiao;
2. the second defendant, Yan Ying Chen;
3. the third defendant, Interlink Laboratory Pty Ltd (in liquidation) (ILP);
4. the fourth defendant, Interlink Wagga Central Pty Ltd (IWC); and
5. the fifth defendant, West Wyalong Marketplace Pty Ltd (in liquidation) (WWMP).
1. Mr Xiao and Ms Chen are both former directors of BCEG and are husband and wife.
2. On 15 September 2022, BCEG Australia made an application in the Main Proceedings for contempt against Mr Xiao, Ms Chen, IWC and WWMP (Contempt Proceedings).
3. Arising from multiple costs orders which were made in the Main Proceedings and the Contempt Proceedings, BCEG Australia seeks gross sum costs orders against Mr Xiao and Ms Chen, including in relation to this application.
4. The gross sum costs orders are not pursued against ILP or WWMP because they have both been placed in liquidation. The gross sum costs orders are also not sought against IWC because no costs orders were made in favour of BCEG Australia against IWC arising from an appeal, a matter set out in more detail below.
5. At the hearing Mr Xiao and Ms Chen faintly contested BCEG Australia’s entitlement to gross sum costs orders in the Main Proceedings, the Contempt Proceedings and this application. The real contest between them was in relation to specific issues in the calculation of those gross sums. Although there is significant complexity and detail in the underlying facts, the issues in dispute are relatively confined.
RELEVANT FACTS
BCEG Australia and BCEG China
1. BCEG Australia is part of a group of companies which undertake construction and engineering projects. BCEG International Co Ltd and BCEG International Investment Co Ltd (BCEG China) are entities belonging to this group. BCEG China is the parent company of BCEG Australia.
Engagement of Thomson Geer
1. In May 2018, the law firm Thomson Geer was retained to provide advice in relation to, and investigate, the matters which were ultimately the subject of the Main Proceedings.
2. On 16 May 2018, Thomson Geer sent a letter of engagement addressed to BCEG China (May 2018 Engagement Letter). The May 2018 Engagement Letter defined BCEG China as “BCEG” and provided, among other things, the following:
1. General background (section 2.1):
We note that BCEG entered into arrangements with a local Australian property developer in relation to the development, finance and construction of two Australian projects – a private hospital at Varsity Lakes, Queensland and a residential project at Wagga Wagga, in regional New South Wales.
1. Scope of work, setting out the work undertaken to date and current instructions (section 3).
2. Thomson Geer’s professional costs, including the basis for charging, fee estimates and disbursements (section 4).
3. The incorporation of Thomson Geer’s Terms of Engagement, which were attached to the letter of engagement (section 6).
1. Section 7 of the May 2018 Engagement Letter is titled “Acceptance” and states:
This proposal is an offer to enter into a costs agreement comprising this letter and the attached Terms of Engagement. This letter overrides the attached Terms of Engagement to the extent of any inconsistency.
BCEG may accept this offer in writing or is deemed to have accepted it by continuing to instruct us after the date of this letter.
The Terms of Engagement will also apply to all future matters we undertake for the client and any associated entities, unless we agree otherwise in writing.
1. The Terms of Engagement contain the following provision:
The client described below acknowledges receipt of these Terms of Engagement and the accompanying letter or email and agrees to be bound by the terms of each costs agreement made with you, that will comprise these Terms of Engagement and the provisions of letters and emails that set out the legal services we agree to provide to you for each Legal Project.
1. Underneath this text there is provision for the “client’s full name” to be written. In the Terms of Engagement, the “client’s full name” is handwritten as BCEG Australia, together with the signature of Ms Wenjing Dong as director. The signature of Ms Dong also appears on each page of the May 2018 Engagement Letter.
Pre-commencement work by Thomson Geer
1. From May 2018 to October 2019, Thomson Geer undertook investigation work pursuant to the May 2018 Engagement Letter which included interviewing potential witnesses and engaging a forensic accounting expert to examine accounting and financial records. This work was instrumental in identifying relevant legal issues, gathering essential evidence and formulating a comprehensive legal strategy in relation to proceedings proposed to be commenced.
2. From May 2018 to September 2019, Thomson Geer issued invoices addressed to BCEG China for professional fees of $209,000 (excl GST) and disbursements of $37,756.12 (excl GST) for this investigation work.
Commencement of the Main Proceedings and engagement of Thomson Geer
1. On 4 October 2019, BCEG Australia commenced the Main Proceedings in the Commercial List by way of summons and commercial list statement.
2. On 20 December 2019, Eugene Fung (a partner of Thomson Geer) sent an email to BCEG Australia attaching their letter of engagement dated 19 December 2019 (December 2019 Engagement Letter) addressed to BCEG Australia, stating as follows:
Dear Mr Gao
As the BCEG entity engaging Thomson Geer is now BCEG Australia we need to provide a new engagement letter – please see attached.
In the engagement letter, we have confirmed that the cost guidance in our Litigation Plan (subject to the additional work stream relating to the client’s claim for self-incrimination privilege).
…
1. The December 2019 Engagement Letter set out the scope of the legal services to be provided by Thomson Geer to BCEG Australia in the Main Proceedings, identified the lawyers at Thomson Geer who would perform the work, attached Terms of Engagement and provided cost guidance to BCEG Australia.
2. As in the case of the May 2018 Engagement Letter, there is provision for the “client’s full name” to be written at the end of the Terms of Engagement attached to the December 2019 Engagement Letter. In the Terms of Engagement, the “client’s full name” is handwritten as BCEG Australia, together with the signature of Ms Dong as director. The signature of Ms Dong also appears on each page of the December 2019 Engagement Letter.
Nature of the claims made and found in the Main Proceedings
1. The commercial list statement commencing the Main Proceedings comprised 519 paragraphs across 93 pages.
2. The primary claim pursued by BCEG Australia at trial was that Mr Xiao and Ms Chen, in breach of their fiduciary duties as directors of BCEG Australia, caused BCEG Australia to submit inflated drawdown requests under a facility which it had in place with BCEG China to fund a legitimate property development project, known as the Varsity Lakes Project. To support the inflated drawdown requests, it was alleged that Mr Xiao and Ms Chen created sham subcontracts which conveyed the false impression that the costs BCEG Australia would incur in connection with that project were far greater than in truth.
3. It was further alleged that using the surplus funds BCEG Australia received from BCEG China in the form of the inflated drawdown requests, Mr Xiao and Ms Chen applied those monies towards project expenses they had incurred on an unrelated project in which BCEG Australia had no interest, being the West Wyalong Project. The West Wyalong Project involved the acquisition of land through WWMP and the construction of a shopping centre on that land. As a result, BCEG Australia (through its borrowings from BCEG China) funded the construction costs of Mr Xiao and Ms Chen’s private venture.
4. Mr Xiao and Ms Chen were the subject of serious fraud findings in the judgment delivered on 22 July 2022 by Rees J following the trial in the Main Proceedings (Primary Judgment). These fraud findings in the Primary Judgment were unchallenged on appeal.
5. In the Primary Judgment, Mr Xiao and Ms Chen were ordered to pay equitable compensation on account of the breaches of their fiduciary duties owed to BCEG Australia and WWMP (a company that was ultimately owned and controlled by Mr Xiao and Ms Chen) was ordered to account to BCEG Australia for its profits of the West Wyalong Project as a knowing recipient.
6. Over the course of the Main Proceedings, BCEG Australia discovered that other monies held in BCEG Australia’s bank accounts had been misappropriated by Mr Xiao and Ms Chen, including amounts that they caused to be transferred to an offshore entity in which Mr Xiao had an interest, Beijing Dragon International Design & Construction Co Ltd. In the Primary Judgment these transfers were found to have been fraudulent transactions implemented by Mr Xiao and Ms Chen.
7. Another claim BCEG Australia pursued at trial concerned a property development in Wagga Wagga (Wagga Project). This project involved BCEG Australia funding a construction project carried out by IWC, another company owned by Mr Xiao and Ms Chen. BCEG Australia’s case was that, if it had known of the fraud that Mr Xiao and Ms Chen had perpetrated upon it in connection with the West Wyalong Project, it would never have committed itself to the Wagga Project contracts. BCEG Australia sought to recover the amounts it paid in furtherance of the Wagga Project. BCEG Australia succeeded on this claim at first instance but that outcome was reversed on appeal, as outlined below.
Progress to trial of the Main Proceedings
1. On 25 November 2019, the defendants indicated that Mr Xiao and Ms Chen intended to claim privileges against self-incrimination and self-exposure to penalties.
2. On 20 December 2019, the defendants filed and served their commercial list response within which the privileges against self-incrimination and self-exposure to civil penalties were invoked. The commercial list response comprised 192 paragraphs across 36 pages.
3. On 18 February 2020, BCEG Australia filed a motion to strike out the commercial list response on the grounds that it did not properly raise or plead the existence and basis for the privileges (Strike Out Application).
4. On 6 August 2020, the Strike Out Application was heard by Stevenson J. During the course of the hearing of the Strike Out Application, the defendants’ senior counsel conceded that the defendants should amend their commercial list response.
5. On 10 September 2020, Stevenson J delivered judgment in respect of the costs of the Strike Out Application: BCEG Australia v Xiao [2020] NSWSC 1234. In that judgment, Stevenson J ordered that the defendants pay BCEG Australia’s costs thrown away by reason of the amendment of the commercial list response and that the costs of the Strike Out Application be BCEG Australia’s costs in the cause.
6. On 27 August 2020, the defendants filed the amended commercial list response in which the claim for privileges was maintained.
7. On 7 September 2020, BCEG Australia caused the issuing of subpoenas to Commonwealth Bank of Australia (CBA) and Richard Stone of RSM Australia, the liquidator of two companies controlled by Mr Xiao and Ms Chen who were the builders on the Varsity Lakes Project and the Wagga Project.
8. On 10 September 2020, the defendants filed a motion seeking that the subpoena issued to CBA be set aside (Subpoena Application).
9. On 13 October 2020, Stevenson J dismissed the Subpoena Application with costs: BCEG Australia v Xiao (No 2) [2020] NSWSC 1403.
10. In November 2020, BCEG Australia served evidence in chief consisting of 13 affidavits, three outlines of evidence, an expert report and a preliminary tender bundle of 380 items.
11. On 30 November 2020, Stevenson J made directions which noted that BCEG Australia would proceed to trial on its case in chief, and set the matter down for trial for 10 days commencing on 15 November 2021.
12. In February 2021, the parties conducted an unsuccessful mediation before Robert McDougall KC.
13. On 28 June 2021, the defendants filed a motion seeking security for costs against BCEG Australia (Security Application).
14. On 5 July 2021, BCEG Australia filed a motion seeking, inter alia, an order granting leave for BCEG Australia to amend its summons and commercial list statement, asset preservation orders and for leave to rely on evidence given by video link (Amendment Application). The proposed amendments concerned a new fraud claim relating to transactions made by Mr Xiao and Ms Chen without BCEG Australia’s informed consent or authority.
15. The Security Application and the Amendment Application were heard together by Williams J. Additional submissions were then made on 27 and 30 July 2021 and 4 and 5 August 2021.
16. On 16 August 2021, Williams J delivered judgment in respect of the Security Application and the Amendment Application: BCEG International (Australia) Pty Ltd v Xiao [2021] NSWSC 1027. In that judgment, Williams J found that there was a strong prima facie case of fraud and ordered that each party bear their own costs in relation to the Security Application and the Amendment Application.
17. On 23 August 2021, BCEG Australia filed an amended commercial list statement incorporating the pursuit of the new fraud claim against Mr Xiao and Ms Chen, an alternative claim by way of accounts stated and amendments to its claims for damages for breach of contract.
18. On 8 September 2021, the defendants filed an amended commercial list response which maintained the claim for privileges against self-incrimination and self-exposure to penalties.
19. In early October 2021, BCEG Australia served three further affidavits.
20. On 12 October 2021, BCEG Australia served a Court Book on the defendants. The Court Book was extensive, with 585 items comprising over 21,000 pages. This was due to the defendants’ claim for privileges and the forensic decision to put BCEG Australia to proof on all issues.
21. In the period from November 2019 to November 2021, the defendants invoked the privileges against self-incrimination and self-exposure to penalties.
22. On 2 November 2021, the defendants served a motion seeking, inter alia, that the hearing of BCEG Australia’s case in chief fixed for 15 November 2021 be vacated and that a Sabre order be made in relation to documents said to be in the possession of BCEG China. Ultimately, the defendants did not pursue a Sabre order.
23. On 3 November 2021, a directions hearing was held before Stevenson J at which time the defendants informed the court of their decision to abandon the claims for privileges against self-incrimination and self-exposure to penalties and of their intention to raise positive defences to BCEG Australia’s claims. This led to the vacating of the trial date of 15 November 2021 and to directions being made regarding the service of an amended commercial list response, service of lay and expert evidence and the provision of general discovery and an allocation of a new trial date in April 2022 with a revised estimate.
24. On 30 November 2021, Stevenson J made orders requiring the defendants to pay BCEG Australia’s costs thrown away by the vacation of the hearing: BCEG International (Australia) Pty Ltd v Xiao [2021] NSWSC 1545.
25. On 3 December 2021, the defendants served an amended commercial list response.
26. On 24 December 2021, the defendants served three affidavits and an expert report.
27. On 25 January 2022, the defendants served an affidavit of Mr Xiao which was 32 days late, 37 pages long and had documents exhibited comprising 855 pages. The affidavit referred to about 20 alleged oral conversations with multiple persons across a 10-year period. There were no translations of the foreign language documents contained in the exhibit.
28. On 2 February 2022, the defendants served their discovered documents comprising about 285,320 documents, which were 40 days late. BCEG Australia had to engage the services of a third-party document management provider to assist with the document management.
29. In March 2022, BCEG Australia served evidence in reply comprising five affidavits and an outline of evidence. BCEG Australia also served four affidavits from foreign language translators to translate a number of documents contained in the defendants’ discovery and the evidence in reply.
30. Following BCEG Australia attending to the completion of its reply evidence, the final version of the Court Book numbered approximately 23,000 pages and comprised 28 volumes.
31. On 4 April 2022, BCEG Australia filed a further amended commercial list statement.
The trial and issues whilst judgment reserved
1. Between 4 April 2022 and 22 April 2022, the trial of the Main Proceedings took place before Rees J. The trial involved 18 witnesses for BCEG Australia (including five witnesses who appeared by video-link and four witnesses requiring the assistance of foreign language interpreters, only six of whom were cross-examined), and five witnesses for the defendants (only three of whom were cross-examined).
2. During the trial, BCEG sought asset preservation orders against the defendants which resulted in the defendants giving various undertakings to this court, including on 28 April 2022.
3. On 28 April 2022, Mr Xiao, Ms Chen, WWMP and other related entities provided an undertaking to this court that they would not, without first giving BCEG Australia seven days' written notice, dispose of, deal with or diminish the value of their assets up to a certain unencumbered value.
4. The undertakings made on 28 April 2022 were made following revelations during the cross-examination of Mr Xiao that he had been signing mortgages over the real property assets of his companies mid-trial during the lunch adjournment.
5. The undertakings made on 28 April 2022 were breached by Mr Xiao and WWMP engaging in a security swap transaction and Mr Xiao and Ms Chen dispersing monies from a bank account.
6. The Main Proceedings were re-listed for a further freezing order on 8 June 2022, whilst judgment of Rees J was reserved, when it appeared that Mr Xiao had encumbered his assets notwithstanding the order made by consent following BCEG’s urgent application during the hearing. The defendants were required, amongst other things, to provide certain information about their assets and financial positions, including the details of all of the assets in Australia of Mr Xiao and Ms Chen and the net financial position of each of the corporate defendants.
7. Ultimately, Mr Xiao, Ms Chen, IWC and WWMP breached the orders made by this court on 8 June 2022 by failing to provide certain information concerning the financial positions of the defendants.
Primary Judgment and Costs Judgment in the Main Proceedings
1. On 22 July 2022, Rees J delivered the Primary Judgment in BCEG's favour, including an order for costs on a standard basis: BCEG International (Australia) Pty Ltd v Xiao (2022) 162 ACSR 601; [2022] NSWSC 972. Each of the defendants was ordered to pay substantial amounts and/or account for profits.
2. On 17 August 2022, Rees J varied the monetary amount of the Primary Judgment: BCEG International (Australia) Pty Ltd v Xiao (No 2) [2022] NSWSC 1102.
3. On 12 September 2022, Rees J gave judgment on the application BCEG Australia had brought following the Primary Judgment to vary the costs order made in its favour: BCEG International (Australia) Pty Ltd v Xiao (No 3) [2022] NSWSC 1221 (Costs Judgment). In the Costs Judgment, Rees J ordered:
[P]ursuant to section 98(1)(c) of the Civil Procedure Act 2005 (NSW), the defendants to pay the plaintiff’s costs of the proceedings:
(a) on a party and party basis up to and including 31 August 2020; and
(b) on an indemnity basis from 1 September 2020 on.
1. In the Costs Judgment, Rees J made findings, including the following:
1. The procedural history of this matter was laborious, taking two and a half years to reach trial which was an unusual delay in the Commercial List (Costs Judgment at [52]).
2. The proceedings were unnecessarily difficult and protracted as a consequence of the manner in which the defendants conducted their defence, being generally with a view to delaying and disrupting the timely progression of BCEG Australia’s case to trial (Costs Judgment at [52]).
3. The blanket claim for privileges against self-incrimination and exposure to penalties delayed the progress of the proceedings for some eight months until the defendants amended their defence. The assertion of these privileges had consequences for BCEG Australia’s preparation of its case and, likely, the cost of doing so (Costs Judgment at [53]);
4. BCEG Australia had to prepare its case on the basis it would be put to proof on every issue, in circumstances where the business records that were available to it were of dubious reliability (Costs Judgment at [53]);
5. The defendants opposed subpoenas issued by BCEG Australia in an apparent effort to restrict BCEG Australia’s ability to assemble a case in chief (Costs Judgment at [54]);
6. The defendants pleaded a detailed and false defence and BCEG Australia was put to the considerable cost of dealing with the substantive matters raised in it, in circumstances where the defendants knew that their defence was false (Costs Judgment at [59]); and
7. On the seventh day of hearing, BCEG Australia was required to make an urgent application for freezing orders when it became apparent during the course of Mr Xiao's cross-examination that, during a lunch adjournment, he was executing documents to encumber his assets. The matter was re-listed for a further freezing order on 8 June 2022, whilst judgment was reserved, when it appeared that Mr Xiao had encumbered his assets notwithstanding the order made by consent following BCEG Australia’s urgent application during the hearing (Costs Judgment at [62]).
Stay, Variation Application and Appeal Proceedings
1. On 2 September 2022, the defendants filed a notice to appeal and appealed certain aspects of the Primary Judgment (Appeal Proceedings). BCEG Australia does not make a claim for costs relating to the Appeal Proceedings as part of this application.
2. On 5 September 2022, the defendants applied for a stay of the Primary Judgment (Stay Application).
3. On 21 September 2022, a stay of certain monetary judgments was granted in favour of the defendants pending the determination of the Appeal Proceedings. The stay was granted on terms relating to the sale of the “Edward Street property” and that BCEG Australia had liberty to restore the matter on 8 December 2022 in the event that no offer to purchase the Edward Street property was received.
4. In December 2022, the sale of the Edward Street property did not eventuate and BCEG Australia relisted the Main Proceedings seeking to lift the stay.
5. On 8 December 2022, orders to the following effect were made:
1. vary the stay such that its continuation was subject to the defendants paying the sum of $4,656,160 into court by 4pm on 5 January 2023, failing which the stay is lifted;
2. the defendants to pay the costs of BCEG Australia including the costs associated with the relisting the matter and the affidavits and submissions filed by BCEG Australia in respect of the re-listing;
3. in the event that the defendants failed to comply with the additional condition of the stay, order the defendants to pay the costs of BCEG Australia in relation to the Stay Application; and
4. in the event that the defendants comply with the additional condition of the stay, order that the costs of the Stay Application abide the outcome of the appeal.
1. The defendants failed to comply with the conditions of the stay, and as a result the stay was automatically lifted and BCEG Australia became entitled to the costs of the Stay Application.
2. On 13 January 2023, Mr Xiao and Ms Chen filed a motion to vary one of the asset preservation orders made by Rees J on 21 September 2022 (Variation Application).
3. On 17 January 2023, Meek J heard the Variation Application.
4. On 18 January 2023, Meek J dismissed the Variation Application with costs: BCEG International (Australia) Pty Ltd v Xiao [2023] NSWSC 6.
5. On 6 February 2023, the Court of Appeal heard the appeal by the defendants in the Appeal Proceedings.
6. On 23 March 2023, the Court of Appeal delivered judgment in the Appeal Proceedings, dismissing the appeal except in relation to a causation issue in favour of IWC: Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48. IWC was successful in its appeal of the Primary Judgment in relation to BCEG Australia’s case regarding the Wagga Project.
7. On 4 May 2023, the Court of Appeal delivered judgment in relation to the costs of the Appeal Proceedings, including by varying the Costs Judgment: Xiao v BCEG International (Australia) Pty Ltd (No 2) [2023] NSWCA 87. In that judgment the Court of Appeal made the following orders:
1. BCEG Australia pay 25% of the appellants’ costs of the Appeal Proceedings.
2. Set aside the costs order made by Rees J on 12 September 2022 against IWC by varying order 2 made on 12 September 2022 by inserting the words “first, second, third and fifth” before the word “defendants”.
3. Subject to order 4, make no order for costs at first instance as between BCEG Australia and IWC.
4. BCEG Australia to pay IWC’s costs of the inquiry as to profits.
1. As a result, the Costs Judgment was varied so that Mr Xiao, Ms Chen, ILP and WWMP were liable for BCEG Australia’s costs at first instance. The varied order in the Costs Judgment therefore states:
Pursuant to section 98(1)(c) of the Civil Procedure Act 2005 (NSW), the first, second, third and fifth defendants pay the plaintiff’s costs of the proceedings:
(1) on a party and party basis up to and including 31 August 2020; and
(2) on an indemnity basis from 1 September 2020 on.
Contempt Proceedings
1. On 15 September 2022, BCEG filed a notice of motion and a statement of charge for contempt against Mr Xiao, Ms Chen, IWC and WWMP (Contempt Proceedings). The gravamen of the complaints was that several transactions were carried out by the defendants in breach of undertakings they had given to the court shortly after the conclusion of the trial and Mr Xiao failed to adhere to an undertaking he gave to the court in an affidavit he affirmed in compliance with the terms of the freezing order that he would unwind a transaction he had carried out in breach of the earlier undertakings.
2. The Contempt Proceedings were heard by Darke J over two stages: the first as to liability and the second as to penalty. Substantial evidence was provided by BCEG Australia and the Court Book for the liability hearing comprised three volumes totalling 2,679 pages.
3. On 1 February 2023, the liability hearing of the Contempt Proceedings took place before Darke J.
4. On 8 February 2023, Darke J held that BCEG Australia had made out a total of nine charges of contempt against Mr Xiao (four charges), Ms Chen (two charges), IWC (one charge) and WWMP (two charges): BCEG International (Australia) Pty Ltd v Xiao [2023] NSWSC 57 at [63].
5. In the period from 21 March 2023 to 12 May 2023, seven directions hearings were required to deal with the attempts made by the defendants to obtain finance to purge their contempt. The penalty hearing was vacated at their request to allow this to occur.
6. On 15 and 19 May 2023, the penalty hearing of the Contempt Proceedings took place before Darke J.
7. On 25 May 2023, Darke J gave judgment on penalty in the Contempt Proceedings: BCEG International (Australia) Pty Ltd v Xiao (No 3) [2023] NSWSC 554. In that judgment, Darke J ordered that Mr Xiao be committed to a correctional centre until such time as the contempts were purged, which order was suspended for 21 days to allow him a final opportunity to purge his contempt. In addition, Mr Xiao and Ms Chen were both ordered to pay fines of $125,000 and $75,000 respectively and Mr Xiao, Ms Chen, IWC and WWMP were ordered to pay BCEG Australia’s costs of the Contempt Proceedings on an indemnity basis.
Liquidation of ILP and WWMP
1. On 28 February 2023, an order was made that ILP be wound up in insolvency and liquidators appointed to it.
2. On 8 June 2023, the members of WWMP resolved to appoint a liquidator to WWMP.
Financial capacity of Mr Xiao and Ms Chen
1. The title searches of the real property interests jointly held by Mr Xiao and Ms Chen indicate that they are all heavily encumbered with mortgages. Only one property located in Beijing, China held by Mr Xiao alone is not recorded as being encumbered.
QUANTIFICATION OF COSTS
1. The application for gross sum costs orders is supported by the expert evidence of Michael John Dudman. Mr Dudman has been a solicitor admitted to practice in this court for 32 years and for the last 24 years he has practised solely in the area of legal costing. Mr Dudman has been an Accredited Costs Law Specialist for seven years. No challenge to the expertise of Mr Dudman was made by Mr Xiao and Ms Chen.
2. Mr Xiao and Ms Chen also did not lead any expert evidence contrary to the expert evidence of Mr Dudman.
3. Mr Dudman reviewed a considerable body of material for the purposes of arriving at his estimate of the reasonable costs of the Main Proceedings, the Contempt Proceedings and this application. This material included:
1. a letter of instruction of 5 July 2023 from Thomson Geer;
2. judgments in the Main Proceedings, the Contempt Proceedings and the Appeal Proceedings;
3. related costs orders;
4. costs agreements and disclosures;
5. invoices;
6. trust ledgers;
7. court documents including pleadings, subpoenas, various notices and evidence;
8. an Excel document titled Costs Assessment Summary setting out time entries and professional fees for attendances carried out during the Main Proceedings and the Contempt Proceedings up to and including May 2023;
9. electronic access to extracts from Thomson Geer’s file requested by Mr Dudman for sampling purposes for the months of November 2020, October 2021, February 2022 and March 2023 comprising correspondence, documents and emails; and
10. an itemised list of all disbursements and copies of disbursement invoices.
1. From reviewing these materials, Mr Dudman was able to obtain an understanding about the background and complexity of the Main Proceedings, the quality and nature of the work performed during the Main Proceedings and the procedural history of them.
2. Mr Dudman assumed that the costs of the work undertaken by Thomson Geer pursuant to the May 2018 Engagement Letter, for which invoices were issued to BCEG China, are recoverable as costs of the Main Proceedings on the basis that they were incurred in contemplation of the subsequent litigation and if reasonably incurred and reasonable in amount. Whether Mr Dudman’s assumption is correct is an issue in contest on this application.
3. On this assumption, Mr Dudman expressed the opinion that work carried out prior to the formal commencement of the Main Proceedings was clearly done in contemplation of the subsequent litigation.
4. Mr Dudman’s methodology involved comparing documents in the file sample and locating them within the Costs Assessment Summary to gauge how accurate the descriptions are within the Costs Assessment Summary and how reasonable the time spent and fees charged for the related work product were. Mr Dudman selected the months of November 2020, October 2021, February 2022 and March 2023 as his chosen file sample to ensure that a reasonably large body of a variety of work was carried out during the sample periods. Mr Dudman reviewed approximately 200 documents from the sample and determined that any review of further sample material was unlikely to provide further assistance to him.
5. After conducting the file sample review, Mr Dudman concluded that:
1. The associated times relating to preparing or perusing the 200 sample documents were almost universally reasonable.
2. Numerous emails obtained from the file sample were not specifically referenced within the costs assessment summary, indicating that fees were sometimes not charged for a considerable number of (generally brief) attendances throughout the Main Proceedings.
3. There were clear efforts made to appropriately delegate work to staff, including non-qualified staff at lower hourly rates. 60.4% of time spent in the matter reflected work carried out by non-qualified fee earners or lawyers charging at or less than $400 per hour.
4. There was very little evidence of the same task being duplicated by more than one fee earner.
5. There was little evidence of internal conferencing by one solicitor with another solicitor or with a non-qualified staff member.
6. There was some common, albeit little, evidence of excessive time being spent on tasks.
1. Mr Dudman formed the overall view that the total costs incurred in the matter are generally reasonable based on a number of factors, including:
1. the complexity of the proceedings;
2. the relatively moderate hourly rates charged;
3. the duration of the proceedings (now approaching their sixth year);
4. the significance and outcome of the Main Proceedings in which the quantum was determined by Rees J for substantial amounts against the individual defendants;
5. the significance and outcome of the Contempt Proceedings;
6. the total costs and disbursements charged in the matter; and
7. his experience of costs incurred in matters involving some complexity, significant duration and involving large settlement sums or judgment amounts.
1. Mr Dudman is of the opinion that the hourly rates charged by the solicitors for BCEG Australia (Thomson Geer) of between $270 and $650 based on seniority of experience to be relatively moderate, noting that the rates of $600 per hour for experienced legal practitioners were at the mid to upper range of the spectrum of rates allowed in New South Wales in 2019. In his view, these hourly rates would be allowed in full on assessment.
2. Mr Dudman considered the costs disclosures which had been given by Thomson Geer and formed the view that Thomson Geer had satisfied the disclosure requirements of the Legal Profession Uniform Law 2014 (NSW), and that their costs would be assessable by reference to the May 2018 Engagement Letter and the December 2019 Engagement Letter.
3. Mr Dudman also considered the terms of engagement provided by counsel and concluded that sufficient information had been provided to Thomson Geer to enable them to satisfy the requirements of the Legal Profession Uniform Law and that, if assessed, the fees charged by counsel would be assessable by reference to their costs agreements with Thomson Geer.
4. Mr Dudman did, however, make specific reductions to individual items of professional fees in the later invoices as follows:
1. attendances to research legislative provisions were reduced by 100%;
2. redacted attendances were reduced by 100%;
3. attendances more appropriately carried out by paralegal staff than by qualified lawyers were reduced to a graduate rate of $270 per hour;
4. attendances where the level of detail did not justify the time spent or fees charged were reduced by 10% in relation to costs recoverable on a party/party basis and 5% on an indemnity basis;
5. attendances non-recoverable for miscellaneous reasons such as compliance with disclosure obligations, leaving messages and enforcing bankruptcy notices (being costs of enforcement, not costs of the Main Proceedings) were reduced by 100%; and
6. attendances liaising with and reporting to BCEG Australia were reduced by 50% on a party/party basis and 25% on an indemnity basis, for the reason that Thomson Geer’s level of reporting to BCEG Australia was relatively high.
1. Mr Dudman concluded that the rates charged by counsel were not excessive, their overall fees are proportionate with the work required and all hourly rates charged by counsel would be allowed on assessment as between practitioner and client as charged, particularly having regard to all the circumstances relating to the work (including the experience of senior counsel) and the nature, complexity and the outcome of the Main Proceedings.
2. Mr Dudman calculated that the actual costs incurred by BCEG Australia in the Main Proceedings (excluding in relation to the Contempt Proceedings and this application) comprise professional fees of $1,532,156.00 and disbursements of $975,288.44, totalling $2,507,444.44.
3. Mr Dudman calculated that the actual costs incurred by BCEG Australia in the Contempt Proceedings comprise professional fees of $144,177.50 and disbursements of $197,775.85, totalling $341,953.35.
4. Mr Dudman is of the view that the professional fees would likely be reduced on assessment between 0% and 5% of the assessed costs on the indemnity basis and between 10% and 15% of the assessed costs on the ordinary basis. Mr Dudman has adopted the mid-point of these ranges, applying a reduction of 2.5% to professional fees recoverable on the indemnity basis (after application of specific reductions) and 12.5% on the ordinary basis.
5. Mr Dudman’s estimates of the costs and disbursements incurred by BCEG Australia that he considers would be fair and reasonable are as follows:
1. $2,158,431.43 in the Main Proceedings calculated as follows:
1. $1,263.021.48 for professional fees comprising:
1. $243,202.35 on the ordinary basis, with specific reductions of $12,290.46, an order reduction of $780 and a 12.5% reduction of $34,743.19 from the total assessed costs of $291,016; and
2. $1,019,819.13 on the indemnity basis, with specific reductions of $18,513.75, order reductions of $176,657.92 and a 2.5% reduction of $26,149.21 from the total assessed costs of $1,241,140; and
1. $895,409.95 for disbursements (being $975,288.44 total disbursements less reductions of $79,878.49);
1. $314,030.28 in the Contempt Proceedings calculated as follows:
1. $123,564.43 for professional fees on the indemnity basis – with specific reductions of $2,011.75, order reductions of $15,433.00 and a 2.5% reduction of $3,168.32 from the total assessed costs of $144,177.50; and
2. $190,465.85 for disbursements (being $197,775.85 total disbursements less reductions of $7,310.00).
1. The above calculations of Mr Dudman include professional fees incurred up to and including May 2023 and disbursements incurred up to and including June 2023.
2. These calculations do not include costs since those dates or any professional fees and disbursements relating to this application.
3. This means that on Mr Dudman’s calculations, BCEG Australia would recover $2,158,431.43 as its fair and reasonable costs out of total assessable costs of $2,507,444.44 in the Main Proceedings (86% recovery) and $314,030.28 as its fair and reasonable costs out of total assessable costs of $341,953.35 in the Contempt Proceedings (91.18% recovery).
LEGAL PRINCIPLES
1. Section 98 of the Civil Procedure Act 2005 (NSW) (CPA) relevantly provides:
Courts powers as to costs
(1) Subject to rules of court and to this or any other Act —
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
…
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to —
…
(c) a specified gross sum instead of assessed costs, or
…
1. In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213, Giles JA at [21]–[22] said:
[21] The power conferred by r6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment (Leary v Leary (1987) 1 WLR 72; Sparnon v Apand Pty Ltd (von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628).
[22] Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA).
1. In Hamod v State of New South Wales [2011] NSWCA 375, Beazley JA (with whom Giles and Whealy JA agreed) at [813]–[820] relevantly summarised the principles in the following way:
[813] I have already set out the relevant provisions of s 98. The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]–[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]:
The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available.
…
[815] In Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; 135 ALR 160, von Doussa J noted that the specified gross sum costs procedure was particularly useful in complex cases, that the power must be exercised judicially and only after giving the parties an adequate opportunity to make submissions, and that before exercising the power the court should be confident that the approach taken to estimate costs is fair, logical and reasonable.
[816] The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45].
[817] The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]–[195]; Hadid v Lenfest Communications Inc [2000] FCA 628.
[818] The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sony Entertainment (Aust) Ltd v Smith; Microsoft v Jiang (2003) 58 IPR 445; [2003] FCA 101; Ritchie's Uniform Civil Procedure NSW at [s 98.60]).
[819] The assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing: Smoothpool v Pickering [2001] SASC 131. In the exercise of its discretion the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: Harrison v Schipp at 743; Hadid v Lenfest Communications Inc at [35]; Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5; [1999] FCA 673.
[820] The costs ordered should be based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills): Beach Petroleum NL v Johnson (No 2) ; Leary v Leary; Harrison v Schipp at 743 ; Sparnon v Apand Pty Ltd (FCA, 4 March 1998, unreported). The approach taken to estimate the costs to be ordered must be logical, fair and reasonable: Beach Petroleum NL v Johnson at 164–165; Hadid v Lenfest Communications Inc at [27]; Harrison v Schipp at 743. This may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment: Leary v Leary at WLR 76 per Purchas LJ; Beach Petroleum NL v Johnson (No 2) at 123; Auspine Ltd v Australian Newsprint Mills Ltd at 164–165.
1. Ball J in Baychek v Baychek [2010] NSWSC 987 at [11] explained the relationship between the actual costs and the gross sum claimed in these terms:
… Implicit in this principle is that the gross sum bear a reasonable relationship to the actual costs of the party making the application, and to the costs that that party might reasonably be expected to recover on assessment. That means, among other things, that there must be a reasonable evidentiary basis for the order the court makes. That evidentiary basis is normally provided by the costs applicant in the form of an affidavit setting out the actual costs incurred and how they were calculated. Often, the evidence also includes evidence of the amount that is likely to be recovered on assessment.
1. In undertaking the exercise of calculating a gross sum, in Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121, JC Campbell AJA at [7] said (citations omitted):
Because s 98(4)(c) makes clear that a gross sum costs order is intended to be an alternative to assessed costs, the meticulous item by item examination of a bill of costs that occurs in the course of an assessment need not be engaged in. A “broader brush“ approach can be adopted. However, because the discretion is one which must be exercised judicially the Court must arrive at a figure that it is confident does justice between the parties, even though the full assessment process has not been gone through. In Hamod at [814] this Court approved the statement in Richie’s Uniform Civil Practice (NSW) that “the courts have typically applied a discount in assessing costs on a gross sum basis”.
1. The Court of Appeal of this court recently conveniently stated the relevant principles (principally those distilled in Harrison and Hamod) in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39, Meagher, White and Brereton JJA saying at [14]–[18]:
[14] The principles relevant to the Court’s exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (Beazley JA) (Hamod). Her Honour noted at [813]:
[813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]:
"The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available."
[15] The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]-[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]:
The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute” (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about “non-essential issues” which should be resolved with as little technicality and expense as reasonably practicable. [footnotes omitted]
[16] Primary considerations relevant to the exercise of the s 98(4)(c) discretion include “the relative responsibility of the parties for the costs incurred; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability”: Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22]; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30].
[17] The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213 at [22]. The power may be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod at [818].
[18] If it considers it appropriate to make the order, the Court may adopt a “broad brush” approach to quantification, as to require the Court to undertake a detailed examination of the kind carried out in a formal costs assessment would defeat the purpose of the order: Harrison v Schipp at 743; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. The costs ordered should be “based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)”: Hamod at [820]. Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court: Hamod at [814].
1. As to the discount to be applied when the gross sum is assessed on an indemnity basis, the approach is summarised in Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640, by Brereton J at [57]–[62], which establish the following propositions (citations omitted):
1. While the usual practice of the court is to apply a discount, it does not mean that the court must apply a discount and the court should be astute not to cause injustice to the successful party by applying an arbitrary discount.
2. If the court is confident that there is little risk that the gross sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined.
3. Where the amount claimed by the successful party has been revised down with “out of scope” items identified and removed, the process for which the discount is ordinarily intended to provide has in fact taken place.
4. Where a gross sum is assessed on an indemnity basis and there is no evidence of unreasonableness, it may be inappropriate to apply a discount, although it may be appropriate if there is evidence that the successful party errs on the side of excessiveness.
5. For an indemnity costs order, the unsuccessful party bears the onus of proving unreasonableness and any doubt about the reasonableness of the amount charged for a particular item is to be resolved in favour of the successful party.
ISSUE 1: PRE-COMMENCEMENT COSTS IN THE MAIN PROCEEDINGS
Submissions of BCEG Australia
1. Mr Williams SC with Mr Riordan appeared as counsel for BCEG Australia, instructed by Thomson Geer.
2. Part of the costs claimed by BCEG Australia in the Main Proceedings are termed as “pre-commencement costs”, being the costs incurred pursuant to the May 2018 Engagement Letter and before the Main Proceedings were commenced on 4 October 2019 by BCEG Australia.
3. BCEG Australia has restricted its claim for pre-commencement costs to work performed between 28 August 2018 and 27 September 2019. BCEG Australia does not seek to recover as costs the amounts that were charged under the invoices dated 31 May 2018, 30 June 2018 and 27 July 2018.
4. BCEG Australia submits that it is entitled to recover its pre-commencement costs because it was liable for those costs pursuant to the May 2018 Engagement Letter. It says that whilst the addressee of the May 2018 Engagement Letter was BCEG China, the letter itself was signed by Ms Dong in her capacity as a director of BCEG Australia. It also says that parts of the May 2018 Engagement Letter also pointed to BCEG Australia as a party to it, being the reference in paragraph 2.1 to the “arrangements with a local Australian property developer in relation to the development, finance and construction of two Australian projects”, which refers to the BCEG Australia as the entity that entered into the project agreements the subject of the investigation. BCEG Australia asserts that BCEG China was not a party to any construction contracts or projects statements.
5. Further, BCEG Australia contends that if I was to find that the May 2018 Engagement Letter was with BCEG China, BCEG Australia was its subsidiary and the work performed under the engagement was clearly in contemplation of the Main Proceedings that ultimately ensued in the name of BCEG Australia. BCEG Australia also asserts that BCEG Australia benefited from the work that was undertaken in this period, including interviewing potential witnesses (one of whose evidence was instrumental in establishing liability), reviewing BCEG Australia’s business records and engaging a forensic accounting expert from whom an expert report was later filed in support of BCEG Australia’s damages case.
Submissions of Mr Xiao and Ms Chen
1. Mr Le Plastrier with Ms Steinhoff appeared as counsel for Mr Xiao and Ms Chen, instructed by HWL Ebsworth.
2. Mr Xiao and Ms Chen submit that the May 2018 Engagement Letter was with BCEG China and nothing in it or the Terms of Engagement attached to it suggests that the true contracting party was other than BCEG China.
3. Mr Xiao and Ms Chen refer to the Terms of Engagement which state:
These Terms of Engagement form part of our agreement with our client. Our client is the person or entity that we agreed to act for in the letter of engagement … that accompanies or refers to these Terms of Engagement. The client that we agreed to act for in the letter of engagement… is referred to in these Terms of Engagement as ‘you’.
1. Mr Xiao and Ms Chen point to the numerous references to “you” in the Terms of Engagement, including:
1. Thomson Geer “will provide you with legal services arising from your instructions from time to time”;
2. “You are entitled to receive a written bill of costs”;
3. “You have rights under the LPA in relation to each of our costs agreements”; and
4. “You may terminate this agreement at any time”.
1. According to Mr Xiao and Ms Chen, the signature of Ms Dong beneath BCEG Australia’s handwritten name in the May 2018 Engagement Letter only establishes that Ms Dong may have been confused but nothing more.
2. They also say that the issue can be determined on liability: Thomson Geer would be liable to BCEG China for any negligent advice and Thomson Geer would look to BCEG China to be liable to pay any unpaid invoices issued by Thomson Geer.
3. They further submit that the following contractual conduct is admissible on the question of whether a contract was formed with BCEG Australia in the form of the May 2018 Engagement Letter, being:
1. The fact that the December 2019 Engagement Letter was issued to BCEG Australia demonstrates that the May 2018 Engagement Letter was not with the BCEG Australia but was with BCEG China, otherwise there would have been no need to enter a new retainer.
2. Eugene Fung, the partner, project lead and primary contact at Thomson Geer, sent the email on 20 December 2019 which attached the December 2019 Engagement Letter with the Terms of Engagement and stated:
As the BCEG entity engaging Thomson Geer is now BCEG Australia we need to provide a new engagement letter …
Mr Xiao and Ms Chen assert that the court should refer to Mr Fung’s understanding of the identity of the party to the May 2018 Engagement Letter.
1. It has always been open to BCEG Australia to seek rectification of the May 2018 Engagement Letter to reflect that it was with BCEG Australia but no such application has been made.
2. The reference in the May 2018 Engagement Letter to “arrangements with a local Australian property developer in relation to the development, finance and construction of two Australian projects” can only be to BCEG China because it was that entity that provided the project finance and therefore the paragraph does not speak in either direction on the construction question.
1. In the event that I find that the May 2018 Engagement Letter was with BCEG China, Mr Xiao and Ms Chen counter the argument made by BCEG Australia that it benefited from the work that was done and it is entitled to the costs incurred by BCEG China. They argue that the liability under the May 2018 Engagement Letter is that of BCEG China alone. They also say that BCEG Australia cannot recover BCEG China’s costs simply because it is BCEG China’s subsidiary, as wholly-owned subsidiaries have a separate legal status. They assert that the liability to Thomson Geer for costs under the May 2018 Engagement Letter would appear in the books of BCEG China, not BCEG Australia, it is only BCEG China that is entitled to a bill of costs and it is only BCEG China that is owed a fiduciary duty and a duty of care by Thomson Geer.
2. Finally on this issue, Mr Xiao and Ms Chen submit that the argument that the work undertaken pursuant to the May 2018 Engagement Letter was clearly in contemplation of the Main Proceedings that ensued in the name of BCEG Australia does not advance BCEG Australia’s argument because it does not create a liability on the part of BCEG Australia to pay the costs incurred under the May 2018 Engagement Letter, nor does it give BCEG Australia an entitlement to obtain the orders sought in the application.
Consideration
1. To my mind, this issue can be determined very simply.
2. The Terms of Engagement attached to the May 2018 Engagement Letter were signed at the end on behalf of BCEG Australia by its director, Ms Dong. By doing so, BCEG Australia became the “client described below” who “acknowledges receipt of these Terms of Engagement and the accompanying letter” and, importantly, “agrees to be bound by the terms of each costs agreement made with you [BCEG Australia], that will comprise these Terms of Engagement and the provisions of letters and emails that set out the legal services we [Thomson Geer] agreed to provide to you [BCEG Australia] for each Legal Project.”
3. It was by providing her signature as director of behalf of BCEG Australia that Ms Dong bound BCEG Australia as the “client” under the May 2018 Engagement Letter to be liable for the fees charged by Thomson Geer for all of the pre-commencement work done by them. I consider that the lack of any signature on behalf of BCEG China makes the case for BCEG China being the “client” far more difficult to mount than that of BCEG Australia.
4. Based on this construction of the May 2018 Engagement Letter, in accordance with its plain terms and obvious objective intention, it is not necessary for me to consider any of the alleged post-contractual conduct said to be consistent with only BCEG China being the client liable under the May 2018 Engagement Letter. It is also unnecessary for me to consider the alternative argument made by BCEG Australia that the costs were incurred by BCEG China for the benefit of BCEG Australia. That question does not arise on the determination I have made.
5. Accordingly, in my determination BCEG Australia is entitled to claim the costs of the pre-commencement work from Mr Xiao and Ms Chen.
ISSUE 2: GROSS SUM COSTS IN THE MAIN PROCEEDINGS
Submissions of BCEG Australia
1. BCEG Australia made the following submissions in support of its case that a gross sum costs order should be made:
1. The conduct of the defendants unnecessarily contributed to the costs of the proceedings.
2. The proceedings were lengthy and complex and involved multiple parties and the costs assessment process would likewise be protracted and expensive.
3. This is a case that “cries out to be finalised” (Wallis v Rudek [2020] NSWSC 1618, Kunc J at [27]), with the Main Proceedings being initiated in 2019 and having spawned satellite proceedings such as the Contempt Proceedings and three proceedings in the Federal Court.
4. The alternative of costs assessment is undesirable as there is a real prospect that the defendants would seek to frustrate and delay that process having regard to their conduct that is the subject of similarly adverse findings in this court.
5. It is also probable that the defendants will be unable to satisfy their costs liability, having regard to the heavily encumbered state of their real property assets which is consistent with the numerous attempts that were required in order for the defendants to refinance in order to purge their contempt.
1. BCEG Australia contended that it is not apparent that Mr Xiao and Ms Chen oppose a gross sum costs order but seem to oppose the quantum of that order.
2. BCEG Australia say that useful guidance on the approach to be followed in this case in relation to quantum can be found in Huang v Wei (No 4) [2023] NSWSC 164 where costs were awarded on the ordinary basis and on the indemnity basis for discrete periods during the course of the proceedings. In that case, Kunc J took the following approach:
1. For the period in which costs were determined on the ordinary basis, the professional fees were reduced by 25% and counsel’s fees and other disbursements were not discounted at all, and then a further 10% discount was applied to reflect a broad brush approach.
2. For the period in which costs were determined on the indemnity basis, the professional fees were reduced by 5% and counsel’s fees and other disbursements were not discounted at all, and then no further discount was applied.
1. BCEG Australia primarily relied on the opinions of Mr Dudman in support of its claim to fix its costs as a specified gross sum. It says that Mr Dudman’s approach of adopting a sampling-based analysis, making entire or partial reductions to specific items which he did not consider to be reasonably recoverable, giving the benefit of the doubt to those costs that were recoverable on the indemnity basis, constitutes a fair, logical and reasonable approach to the assessment of the recoverable costs.
2. In particular, BCEG Australia points to the following further specific matters to support Mr Dudman’s overall opinions concerning costs calculated on the ordinary basis:
1. The Main Proceedings involved lengthy and complex allegations of fraud, making it appropriate to brief junior and senior counsel at an early stage.
2. The defendants first indicated that they would be relying on the privileges against self-incrimination and self-exposure to a civil penalty and left unclear in their response whether assertions of fact were denied due to the claim for privilege or because they believed them to be untrue.
3. Mr Dudman was provided with the invoices and formed the view that the fees itemised and charged in the matter were particularly reasonable and almost universally reasonable and there was little evidence of excessive costs.
1. BCEG Australia pressed for me to accept Mr Dudman’s methodology of making specific reductions and then applying midpoint discounts of 2.5% on the indemnity basis and 12.5% on the ordinary basis.
2. BCEG Australia placed store in the fact that a substantial amount was deducted by Mr Dudman to reflect the fact that some costs incurred during the period did not fall within the scope of the costs order. Those costs were primarily incurred in connection with the concurrent hearing of two notices of motion before Williams J, the result of which was that each party was to bear their own costs.
3. BCEG Australia addressed each of the criticisms levelled by Mr Xiao and Ms Chen (underlined below) about the opinions of Mr Dudman in the following way:
1. The deductions to reflect the order made by Williams J may be inaccurate: No attempt was made by Mr Xiao and Ms Chen to explain why further or greater reductions ought to have been applied.
2. Non-litigation fee earners of Thomson Geer charged fees for their time on the file: Mr Fung as a partner, assisted by Ms Siew Mai Fagan as his senior associate, had language skills and experience in international matters to assist with client communications and the setting of strategy. The fees incurred by David Chen, Christian Teng and Erin Mack occurred when they were graduate solicitors on rotation to Thomson Geer’s dispute resolution and litigation practice. Frances Coyne from the corporate team assisted with the large-scale discovery given late by the defendants.
3. The costs attributable to the IWC account of profits enquiry have been included in the overall amount claimed: Mr Dudman considered all relevant costs orders, including those made by the Court of Appeal and excluded fees relating to costs orders under which BCEG Australia has no entitlement to recovery. Order 4 of the orders made by the Court of Appeal required BCEG to pay IWC’s costs of the inquiry as to profits. Mr Dudman had regard to BCEG Australia’s non-entitlement to the costs of the inquiry as to profits. He went through each of the line items of all of the invoices and came to the view that it was an infinitesimal part of the case. In any event, the causation finding on appeal was not a point which had been run in the court below and this was the reason why it was held by the Court of Appeal that costs should not follow the event. There was no fact rich matter relevant to the claim against IWC. The case was that two fraudsters had caused a loss to BCEG Australia and profited. The obtaining of an order for an account of profits took next to no time in the case. This is not a case in which I would look to the number of parties and work out a percentage. There is no reason to provide any further discount because any further reduction of $2,000 or so in the context of a gross sum costs order of around $2.8 million is a “drop in the ocean”.
4. The costs of the appeal are included in the calculations: Mr Dudman noted a discrepancy between the actual costs identified by Thomson Geer and the actual costs he has determined. The reason for the discrepancy appears to relate to the inclusion of some costs referable to the appeal in the amount stated in the letter of instruction to Mr Dudman. Mr Dudman’s reference to an “amount largely excludes costs relating to the appeal proceedings” is simply to be read to the effect that “a handful of attendances and disbursements” relating to the appeal might have survived his culling process. This is consistent with the correct approach to gross sum costs application, which does not involve the consideration of every narrative in fine detail.
5. Mr Dudman has not accounted for any set off that might be available for the defendants: This is explained by the fact that the defendants have taken no steps to quantify any of the costs orders which benefit them and it is their onus to do so. Neither BCEG Australia nor Mr Dudman have been provided with any invoices issued by the defendants.
Submissions of Mr Xiao and Ms Chen
1. Mr Xiao and Ms Chen submit that the intention of the costs orders made by the Court of Appeal was that BCEG Australia would not receive any of its costs in relation to the claim against IWC. They say that it does not appear that Mr Dudman has taken into consideration the fact that IWC was excluded from the costs orders made by Rees J in the Main Proceedings, nor that the Court of Appeal also said that there was no order as to costs at first instance as between BCEG Australia and IWC and that BCEG Australia was to pay IWC’s costs of the inquiry as to profits.
2. Mr Dudman was cross-examined on these matters. Mr Xiao and Ms Chen say that on a logical, fair and reasonable approach, I cannot be confident that Mr Dudman has properly identified the costs attributable to the prosecution of IWC and nowhere in his evidence in the report or in his answers did he give a considered reflection to how the amount of the order reduction of $780 (0.002%) has been applied. No alternative amount was proffered by Mr Xiao and Ms Chen.
3. According to Mr Xiao and Ms Chen, these errors made by Mr Dudman mean that there should be no gross sum costs order made on this application, but if I am minded to make a gross sum costs order then in so far as Mr Dudman has failed to reduce his overall total by reference to these matters, the question arises as to the extent of the discount that should apply which would fairly reflect, in a broad brush way, the reductions that ought to have been made by Mr Dudman.
4. Mr Xiao and Ms Chen also say that if I accept that I do not have confidence in the proper approach taken by Mr Dudman to the calculation of the $780 figure then that should impact on my ultimate conclusion about the weight that I can place on Mr Dudman’s report and his ultimate conclusions. They say that I should not have any confidence in, or have a valid question over, whether the balance of the figures is correct and I would not be able to make my own calculations without the assistance of any evidence. They assert that the burden is on BCEG Australia and if it has turned up to court with evidence that does not prove a critical aspect of the calculation then I am entitled to say that I am not going to embark on the process.
5. Alternatively, Mr Xiao and Ms Chen say an appropriate discount would be 20% applied in a broad brush way simply because there are five defendants and I would be seeking to reduce the costs to reflect the removal of one of them, IWC, recognising that there is no evidence and no science behind a reduction in that fashion.
Consideration
1. I am firmly of the view that this application is a quintessential case for the making of a gross sum costs order. I completely agree with the thrust of the submissions put forward by BCEG Australia that it is a case that “cries out to be finalised”. Applying the tests outlined in Harrison and Hamod, I am confident that on the materials I have been provided I am able to arrive at an appropriate sum using an approach that is fair, logical and reasonable.
2. The parties have been buried in complex litigation in the Main Proceedings for the past five years involving serious and complex allegations of fraud against multiple parties. The disputation needs to be brought to an end, in the interests of all parties. I have no doubt that based on the history of the Main Proceedings, it is highly desirable to avoid the expense, delay and aggravation likely to be involved in any contested costs assessment between the parties. These are all matters which favour the making of a gross sum costs order, as identified in Harrison at [21] and Hamod at [816]–[817].
3. There is no doubt that the delaying conduct of Mr Xiao and Ms Chen has unnecessarily contributed to the costs incurred by BCEG Australia in the Main Proceedings (Hamod at [818]). They commenced their defence in November 2019 by relying on privileges, which they maintained for two years before adopting a last minute about-face on the eve of the first dates fixed for the trial of November 2021. Not only did this cause an abandonment of those trial dates, it also caused BCEG Australia to have to adopt a different approach of its own. BCEG Australia had to be prepared to be put to proof on every issue and then deal with a wholesale change in the approach of the defendants. The disruptions that this would have caused to BCEG Australia cannot be understated.
4. As Rees J stated in the Costs Judgment, the Main Proceedings were delayed, unnecessarily difficult and protracted by the defendants, BCEG Australia’s preparations were considerably disrupted and derailed and false defences were maintained by the defendants when they were known to be false.
5. I am also satisfied that as unsuccessful parties, Mr Xiao and Ms Chen have doubtful capacity to satisfy any costs liability due to the encumbered state of their real property interests (Hamod at [816]–[817]). They did not provide any evidence to counter this impression.
6. I also consider that the approach taken by Mr Dudman in estimating the costs incurred by BCEG Australia in the Main Proceedings is logical, fair and reasonable (Harrison at [22]; Hamod at [813], [815] and [820]). Mr Dudman’s specialist expertise derived from his decades of experience is undoubted. The approach he has taken to the calculation of costs is detailed, nuanced and reasoned. It involves complex considerations across a very significant body of material. No competing expert view was put forward by Mr Xiao and Ms Chen.
7. The integrity of Mr Dudman’s approach is emphasised by the specific reductions he has made. My view of the comprehensiveness of his approach and his integrity was reinforced on the cross-examination of him. I have confidence in accepting his approach.
8. The only real question which arose during that cross-examination was the extent to which Mr Dudman had made a proper reduction arising from the Court of Appeal decision to make no order for costs at first instance as between BCEG Australia and IWC. In reaching my view on the issue I must keep in mind that I am approaching the quantification of costs for a gross sum costs order in a broad brush way and in the exercise of my discretion I am not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment (Harrison at [22]; Hamod at [819]). I need to be confident that in adopting the broad brush approach I can do justice between the parties (Penson at [7]).
9. Mr Dudman was questioned on whether he had made a sufficient reduction in his calculations when he lowered the costs by $780 in the calculation of costs on the ordinary basis before September 2020 to allow for the effect of the Court of Appeal revisions of the costs orders made in the Costs Judgment by Rees J. It was put to Mr Dudman that in the commercial list statement in October 2019 there were serious, fact rich allegations against IWC and answers provided to requests for particulars in November 2019 which related to the case against IWC, which Mr Dudman accepted as true for the case in general, not just that against IWC (T15–19 and T28.12–19). Mr Dudman was shown the time entries for the work undertaken by Thomson Geer on the answers to the particulars totalling $14,541, as part of the work for which costs of $291,016 on the ordinary basis were calculated (T19–23).
10. Mr Dudman was also challenged on whether the order reductions of $176,657.92 in the calculation of costs on an indemnity basis after September 2020 included the costs associated with the account of profits claim against IWC for which the Court of Appeal ruled there should be no award of costs (T24–25). Mr Dudman said that that these reductions of $176,000 did include costs disallowed by him in relation to the account of profits (T25.48–26.8).
11. Mr Dudman was asked a series of questions which were premised on the charge out rate of the partner of Thomson Geer with carriage of the matter (Ms Walkom — $600 per hour) and Thomson Geer having carried out the following work in relation to the claim against IWC prior to 1 September 2020: investigations about whether IWC was a possible defendant, investigating possible causes of action against IWC, considering whether there existed a factual basis to make out those causes of action, considering the appropriate relief to be obtained against IWC, advising on prospects against IWC, drafting a summons in relation to IWC, drafting the commercial list statement in relation to IWC and carrying out work for the preparation of a response to particulars in relation to IWC (T27.30–44).
12. The following questions asked of, and answers given by, Mr Dudman are particularly instructive (T27.46–29.49, emphasis added):
Q. Are you seriously suggesting that all the work that I just catalogued, which you accept occurred prior to 1 September 2020 in relation to the Fourth Defendant, cost $780, or only 1.5 hours of Ms Walkom's time?
A. My approach in relation to orders taking the costs of the Fourth Defendant out in the party/party costs aspect of it were based on really more contextual information, looking at the – like a dozen paragraphs out of 519 paragraphs of the amended commercial list statement, effectively sort of suggesting to me that that part of the case was relatively minuscule, compared to the overall approach in the way the matter was managed. And so I took the view that if I removed a portion of those costs, it would be quite arbitrary and, not reflective of the overall case, which in my view tended to be focused on the fraud of the First and Second Defendants, and I just made a judgment call that really those costs were all, if you like, relevant to the case against the First and Second Defendants. But I accept what you're saying that, if you like, a more forensic approach may have come up with a different answer.
…
Q. You agree that you told his Honour at the outset of the cross examination the claim against the Fourth Defendant was fact rich and technical?
A. Yes. Sorry, I think I answered that – understand the question about the case in general. Certainly I accept in relation to the Fourth Defendant that would be true too.
Q. And yet your evidence is that you thought it would be arbitrary to embark upon what you considered a more forensic analysis in the face of a conclusion that what you were facing was a fact rich and technical claim against the Fourth Defendant?
A. As I state in my affidavit – I can take you to the paragraph. Look at paragraph 52 of my affidavit, it's stated identify costs from the narrative descriptions, all contextually. And I just took the view contextually that those costs were minimal, and really the case was all about – certainly in the initial stages, particularly the First and Second Defendants.
Q. You said a moment ago that you accept what I'm saying, what was it that I was putting to you that you accepted?
A. Well, that the matter was technically complex in relation to all components of the claim.
Q. Do you accept as a consequence of these exchanges, that a more forensic approach would have been preferable?
A. To be honest not necessarily, because I think if you look in the context of the sort of costs, I mean even if you have a look at the total costs incurred in the primary proceedings, you go to table 68, and total assessed costs, 291, you know, after you take out specific reductions, you're sort of down to the 280 mark. If you have a look at the costs – sorry, the work involved in putting together at least the amended commercial list statements, which is the one that I was relying on, that relates specifically to the Fourth Defendant. The paragraphs amount to roundabout 2.8 percent of the total document. And when you look at the response, I don't really identify any part of the response that deals particularly solely in relation to the Fourth Defendant whereas there are a number of responses that deal with the First, Second and Fourth Defendants. So you're sort of all grouped together in a matrix of facts. So, I guess my point is if you take, $280,000, and look at that, 2.8 percent, and these costs include costs relating to mediation, and a range of other factors that, you know, little to do with draft and pleadings, so roundabout $7,000 worth of costs. That's on the broadest basis that you're actually saying, you know, 2.8 percent should be carved out of all of those costs on the party-party basis. So I just don't – I'm sorry, I just don't accept that the costs are that significant in the early part of proceedings, relating to the Fourth Defendant.
Q. You refer to 2.8 percent, perhaps I can give you another percentage. Would you accept that $780 as a percentage of $291,000 is .002 percent?
A. I'm sure you've done your calculation, I accept that?
Q. So you're seriously suggesting to his Honour that in relation to the Fourth Defendant having catalogued all the tasks that you accept were required, only .002 percent of that work was attributable to the prosecution of the case against the Fourth Defendant; is that your evidence?
A. Well look, you know, according to my contextual inquiry into the pleading, and the way the matter was run, it doesn't really surprise me too much that it's so low at that early stage of proceedings. And if I can just add, there are, you know there's a global reduction there of 12.5, there's something of a sort of a margin of error. I mean we're looking at fixing a costs order in a gross amount, you take a broad brush approach, and it, you know, it's probably a margin of error plus or minus 5 percent, but the point still remains, taking a broad bush approach, and contextually applied my knowledge of the costs.
…
Q. And you would agree that this more forensic approach that you suggest you could have taken would have required you to ask for those sorts of documents, wouldn't it?
A. I don't think I was required to take a [forensic] approach.
Q. What sort of approach were you required to take if not one that's appropriate for a court?
A. More of a broad brush approach. The authorities are clear on that aspect. I've attempted to identify costs with precision based on descriptions in a narrative that would not be recoverable. But, you know, this is not an item by item costs assessment.
1. I accept the evidence given by Mr Dudman. Calculating a gross sum costs amount does not involve fine forensic distinctions on an item by item analysis of the time entries. Mr Dudman is correct in stating that the exercise involves broad brush considerations (not a line by line forensic approach) and the making of global reductions with a margin for error, including by looking at the costs in a contextual way. It is no part of my task to start making detailed calculations about what percentage is or is not attributable to a particular claim against a particular defendant which should be deducted from the costs of calculations.
2. Mr Dudman is right to say that the costs of the claim against IWC are relatively miniscule when the context of the overall claim is considered. As submitted by BCEG Australia, those costs are really nothing more than a “drop in the ocean”.
3. I reject the argument made by Mr Xiao and Ms Chen that Mr Dudman’s approach has been demonstrated to be wrong or erroneous in any way. I am confident of his approach across the whole of his calculations and I accept them.
4. I also reject the notion suggested by Mr Xiao and Ms Chen that I should arrive at a position where I discount the costs to be ordered against Mr Xiao and Ms Chen by 20% to account for the claim against IWC being one of five defendants. Proceeding in that way is so thoroughly detached in logic from even the idea of a broad brush approach that it cannot be sustained. A cursory consideration of the claims made in the Main Proceedings would not suggest that 20% of the work undertaken for BCEG Australia related to the claim against IWC.
5. Mr Dudman’s fair and reasonable approach of applying specific reductions, order reductions and a global reduction results in the legal fees in the Main Proceedings being $1,263,021.48 and the disbursements being $895,409.95, totalling $2,158,431.43. A gross sum costs order based on that amount would be an 86% recovery, so bears a reasonable relationship to the actual costs incurred by BCEG Australia in the Main Proceedings (Baychek at [11]).
6. In light of the many reductions that Mr Dudman has made, I do not propose to apply a further discount in setting the amount of the gross sum costs order for the Main Proceedings. I am satisfied with the accuracy and reliability of the costs evidence available to me in the form of Mr Dudman’s detailed and reasoned opinions and calculations so I consider that this is a case in which it is apt not to apply a discount for the costs claimed in the Main Proceedings (Ahern at [18]). I am confident based on Mr Dudman’s method that there is little risk that the gross sum includes costs that might be disallowed on assessment and therefore the case for a discount is seriously undermined (Hancock at [57]).
7. BCEG also claims interest under s 101(4) of the CPA calculated from the date of the costs order (12 September 2022) to the date of the hearing of this application (10 July 2024) of $369,774.79.
8. This results in a gross sum costs order (including interest) in favour of BCEG Australia in respect of the Main Proceedings of $2,528,206.22.
ISSUE 3: COSTS IN CONTEMPT PROCEEDINGS
1. Mr Xiao and Ms Chen conceded that BCEG Australia was entitled to a gross sum costs order on an indemnity basis in relation to the Contempt Proceedings and agreed that the amount of those costs is $314,030.28 plus interest under s 101(4) of the CPA calculated from the date of the costs order (25 May 2023) to the date of the hearing of this application (10 July 2024) of $35,982.71.
2. This results in a gross sum costs order in favour of BCEG Australia in respect of the Contempt Proceedings of $350,012.99.
ISSUE 4: COSTS OF THIS APPLICATION
1. BCEG Australia also claims the costs of this application on a gross sum costs basis. There was no opposition by Mr Xiao and Ms Chen to this part of the application.
2. The amounts sought are as follows:
1. Legal fees of Thomson Geer totalling $122,661.00 (GST exclusive) comprising:
1. Fees invoiced – $96,450.00;
2. Fees not yet invoiced – $18,591.00 and
3. Attendance at hearing of this application – $7,620.00.
1. Disbursements totalling $93,268.30 comprising:
1. Filing fee incurred – $1,436.00;
2. Costs expert incurred – $34,686.30;
3. Junior counsel incurred – $3,366.00;
4. Disbursements from the hearing of this application totalling $53,780.00, comprising:
1. Costs expert – $7,920.00;
2. Senior counsel – $30,550.00;
3. Junior counsel – $14,110.00;
4. Transcript – $1,200.00.
1. Given that there have been no reductions in the manner of those applied by Mr Dudman in the Main Proceedings, I agree with the approach suggested by BCEG Australia that in calculating the gross sum costs of the application I should apply a 25% discount to the legal fees of $122,661.00, which results in an amount of recoverable fees of $91,995.75.
2. I also agree with the approach suggested by BCEG Australia that in calculating the gross sum costs of the application I should apply no overall discount to the disbursements but should reduce the rate charged by senior counsel to $11,000 per day or $1,100 per hour, which results in the disbursement for senior counsel being reduced from $30,550.00 to $22,550.00 and reduces the total recoverable disbursements to $85,268.30.
3. This results in a gross sum costs order in favour of BCEG Australia in respect of this application of $177,264.05.
ORDERS
1. For the reasons set out above, I propose to make the following orders:
1. Order that the first and second defendant pay the plaintiff’s costs of the notice of motion filed 15 March 2024.
2. Order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the plaintiff is entitled to a specific gross sum (including interest under s 101(4) of the Civil Procedure Act 2005 (NSW)) in respect of the plaintiff’s costs of the proceedings in the total amount of $3,055,483.26.
3. All exhibits to be returned.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2024 | 15,784 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.