Alan K Davies Pty Ltd v Agaiby

Medium Neutral Citation: Alan K Davies Pty Ltd v Agaiby [2025] NSWSC 1271

Hearing dates: 24 October 2025

Date of orders: 30 October 2025

Decision date: 30 October 2025

Jurisdiction: Common Law

Before: Griffiths AJ

Decision: 1. Leave to appeal is refused in respect of Ground 2 of the amended summons filed 17 April 2025 (as further amended with leave on 24 October 2025).
2. The amended summons filed 17 April 2025 (as further amended with leave on 24 October 2025) is dismissed.
3. The plaintiffs pay the defendants’ costs.

Catchwords: APPEALS — right of appeal on question of law — whether rescission notice under s 925A(2) of the Corporations Act 2001 (Cth) was given within a reasonable period — whether the recipient’s state of mind was an irrelevant consideration — whether the primary judge asked the wrong question — no error established
APPEALS — leave to appeal on question of mixed law and fact — whether appeal should be granted under s 40(1) of the Local Court Act 2007 (NSW) — no issue of public importance — lack of proportionality between the monetary amount at issue and the cost of proceeding — leave refused

Legislation Cited: Aboriginal Councils and Associations Act 1976 (Cth), s 71
Corporations Act 2001 (Cth), ss 766A, 924A, 925A, 925B, 925E, 925F, 925G, 925I
Local Court Act 2007 (NSW), ss 39, 40, 41
Supreme Court Act 1970 (NSW), s 101

Cases Cited: ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65
Alan K Davies Pty Ltd v Agaiby (Local Court (NSW), Brender LCM, 31 March 2025, unrep)
Guiseppe v Registrar of Aboriginal Corporations (2007) 160 FCR 465; [2007] FCAFC 91
Namoi Sustainable Energy Pty Limited v Buhren [2022] NSWSC 175
Souaid v Nahas [2019] NSWSC 1132
Styles v Rowley [2023] NSWSC 1053
Woodlawn Capital Pty Ltd v Motor Vehicles Insurance Ltd [2016] NSWCA 28

Texts Cited: Nil

Category: Principal judgment

Parties: Alan K Davies Pty Ltd (First Plaintiff)
Alan Davies (Second Plaintiff)
Khalaf Agaiby (First Defendant)
Zeazaf Agaiby (Second Defendant)
Jackie De Abreu (Third Defendant)

Representation: Counsel:
C Koikas (Plaintiffs)
MJ Jones (Defendants)
Solicitors:
Kennedys Law Firm (Plaintiffs)
Kazi & Associates (Defendants)

File Number(s): 2025/00149031

Publication restriction: Nil

JUDGMENT

1. The first plaintiff is Alan K Davies Pty Ltd, a company of which the second plaintiff, Mr Alan Davies, is the secretary and sole director. Mr Davies was banned by the Australian Securities and Investment Commission (ASIC) from providing financial services from 30 March 2020 until 6 May 2023. He has not held a financial services licence thereafter.

2. The first and second defendants are Mr and Mrs Agaiby. Their daughter, Ms Jackie De Abreu, is the third defendant. She holds a power of attorney in respect of each of her elderly parents. For convenience and without intending any disrespect, I will refer to the third defendant as Jackie, except where otherwise stated.

3. By an amended summons filed 17 April 2025, Mr Davies and his company appeal and seek leave to appeal from a decision dated 31 March 2025 by the primary judge (Brender LCM). In brief, the first plaintiff commenced proceedings in the Local Court claiming a 20% commission fee under an alleged oral or written agreement for assisting Jackie and/or her parents to recover allegedly exorbitant premiums paid by Mr and Mrs Agaiby relating to two insurance policies. The primary judge dismissed the claim on the basis that the agreements had been validly rescinded under s 925A of the Corporations Act 2001 (Cth) and were unenforceable.

4. Mr Davies and his company appeal on two grounds. They claim that the primary judge erred in law by taking into account an irrelevant consideration (being the plaintiffs’ position on whether the rescission notice was necessary, irrelevant or misconceived) when determining that the rescission notice was issued within a reasonable period, as required by s 925A. They also challenge what is described in the latest iteration of the amended summons as an error of mixed law and fact in relation to the same matter, for which they seek leave to appeal.

5. By a notice of contention filed 7 May 2025, the defendants contend that, if error is established, the decision below should be affirmed because: (a) Mr Davies was unlicensed to provide financial services at the relevant times and was previously banned; (b) the agreements are contrary to public policy; (c) Mr Davies provided legal advice when he was not a legal practitioner; (d) there was non-disclosure of the commission fee; and (e) Mr Davies was only belatedly joined as a party. They also seek that the costs order made below not be disturbed.

Relevant background matters summarised

6. In early March 2023, Jackie approached Mr Davies seeking assistance in resolving a complaint she had lodged with Resolution Life Australasia Limited (the Insurer) on behalf of her parents regarding the allegedly exorbitant premiums paid by them over many years. The Insurer ultimately agreed to pay a settlement sum of $380,000 to Mr and Mrs Agaiby.

7. In early October 2023, Mr Davies’ company commenced proceedings in the Local Court, seeking 20% of the recouped amount as commission for services provided to the defendants pursuant to an alleged oral agreement made on 4 May 2023 (when Mr Davies was banned) and a written agreement dated 10 May 2023 (when Mr Davies was unlicensed).

8. On 11 November 2024, Jackie served on the plaintiffs a notice of rescission pursuant to s 925A of the Corporations Act.

9. On 6 December 2024, the matter was heard by Brender LCM. The parties provided written closing submissions in February 2025. Mr Davies was joined as a party to the proceeding after he filed a notice of motion dated 12 March 2025 seeking to be joined.

10. On 31 March 2025, his Honour delivered judgment: see Alan K Davies Pty Ltd v Agaiby (Local Court (NSW), Brender LCM, 31 March 2025, unrep) (PJ). Several legal and factual issues were raised by the parties. They will be canvassed to the extent that they are relevant to the plaintiffs’ present claims.

Primary judgment summarised

11. Brender LCM joined Mr Davies as a party, finding that there was no prejudice to the defendants on the basis that his Honour intended to dismiss the plaintiffs’ substantive claim (PJ[14]-[15]).

12. Brender LCM held that both the written and oral agreements were valid and the parties had agreed that Mr Davies would be paid 20% of any money received from the Insurer (PJ[30]-[32]). His Honour accepted the defendants’ position that Mr Davies provided them with a claims handling and settling service, as well as providing financial product advice within the meaning of the Corporations Act while he was unlicensed. His Honour further concluded that the agreements were unenforceable in circumstances where the defendants had given a statutory rescission notice under s 925A of the Corporations Act. His Honour rejected the plaintiffs’ contention that the notice was ineffective because it had not been given within a reasonable period of the defendants becoming aware of the facts entitling them to give such a notice.

13. It is desirable to outline some of the relevant provisions of the Corporations Act which are at the core of the plaintiffs’ challenge*.*

14. Part 7.6 of the Corporations Act establishes a scheme for the licensing of providers of “financial services”. The meaning of “financial service” is set out in s 766A(1), noting that it includes providing “financial product advice” and a “claims handling and settling service” (s 766A(1)(a) and (eb), respectively). Section 911A provides that, subject to the section as a whole, a person who carries on a financial services business in Australia must hold an Australian financial services licence covering the provision of the financial services.

15. Section 925A is important. By dint of s 924A, it applies to an agreement with a client entered into in the course of a “financial services business” by a non-licensee who does not hold a licence and is not exempt from the requirement to do so, where the agreement constitutes or relates to the provision of a “financial service” by the non-licensee. It is uncontroversial that, at all relevant times, Mr Davies did not hold a financial services licence.

16. Section 925A relevantly provides:

925****A Client may give notice of rescission

(1) Subject to this section, the client may, whether before or after completion of the agreement, give to the non‑licensee a written notice stating that the client wishes to rescind the agreement.

(2) The client may only give a notice under this section within a reasonable period after becoming aware of the facts entitling the client to give the notice.

…

17. The effect of the notice is to rescind the agreement (s 925B). It also has the effect that the non-licensee is not entitled to enforce the agreement or to rely on it by way of defence or otherwise as against the client and that the non-licensee is not entitled to recover a commission or fee from the client in relation to that agreement (see ss 925E(2) and 925F(2)).

18. Section 925G identifies who carries the onus of establishing the non-application of ss 925E and 925F:

925****G Onus of establishing non‑application of section 925E or 925F

For the purposes of determining, in a proceeding in a court, whether or not the non‑licensee is, or was at a particular time, entitled as mentioned in subsection 925E(2) or 925F(2), it is to be presumed, unless the contrary is proved, that section 925E or 925F, as the case may be, applies, or applied at that time, as the case may be.

19. The rights and remedies available to a client against a non-licensee are additional to the rights and remedies available to the client at general law (s 925I).

20. Applying the above provisions, his Honour found that Mr Davies provided both a “claims handling and settling service” and “financial product advice” (PJ[40] and [45] respectively).

21. At PJ[70], the primary judge concluded that the plaintiffs’ claim should be dismissed because the agreements had been validly rescinded. In brief, the primary judge’s reasoning is as follows:

(a) It was not clear from Jackie’s affidavit when she discovered that Mr Davies was unlicensed, but the chronology in her affidavit suggested it was in August 2023 (at PJ[49]). The rescission notice was not served until November 2024. (b) Reasonableness is a context and fact-based inquiry (referring to the requirement under s 925A(2) that notice must be given within a “reasonable period” after the client has become aware of the facts entitling them to give the notice) (at PJ[50]). (c) The explanation for the delay between Jackie becoming aware of the facts entitling her to give notice and the actual giving of notice can be gleaned from the following sequence of events (at PJ[50]-[52]):

(i) Mr Davies performed the work over May and June 2023 and made his claim for payment on 21 June 2023. (ii) After an acrimonious meeting between Mr Davies and Jackie regarding the commission in July 2023, Jackie retained legal assistance from which it could be inferred that she was first made aware of the fact that Mr Davies was unlicensed. (iii) A claim was then filed by Mr Davies’ company on 4 October 2023 and a defence (drafted by Jackie, who is not a lawyer) was filed on 31 October 2023. It pleaded that Mr Davies was “unregistered”. (iv) Jackie subsequently retained a lawyer who filed an amended defence in early March 2024. (v) New lawyers were retained shortly before the hearing on 6 December 2024, and the rescission notice was served on or around 11 November 2024. Thus, it was inferred that the delay was attributable to the fact that it was only when the new lawyers were retained that this course was taken.

22. On the issue whether the delay was “unreasonable” for the purposes of determining whether the notice was served within a reasonable period of the defendants becoming aware of the fact entitling them to give the notice, his Honour concluded at PJ[53]-[54] (emphasis added):

On balance in my view the delay cannot be said to be unreasonable in context. The delay has occasioned no prejudice to the plaintiff, who took the position that Mr Davies as he was not giving financial advice or providing settlement services, he did not have or need a licence, and he did not disclose he did not have a licence because it was irrelevant. I find that he believed that it was not necessary. Any rescission notice, from his point of view, would hVbe (sic) treated as irrelevant and misconceived. Whether he received it on the day he served his invoice or the day of the hearing, or any time in between, it would have made no difference to him.

The rescission was valid and no claim can be maintained. The rescission would apply equally to the written agreement.

Consideration and determination

(a) Scope of the appeal

23. Division 4 of Pt 3 of the Local Court Act 2007 (NSW) addresses appeals from the Local Court. A party may appeal to the Supreme Court as of right, but only on a question of law (s 39(1)). Leave is required where an appeal is on a ground that involves a question of mixed law and fact (s 40(1)). There is no provision for an appeal on a question of fact alone, either with or without leave to appeal.

24. Section 39 provides:

39 Appeals as of right (cf LCA 1982, section 73)

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

(2) A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness.

25. Section 40 provides for the circumstances in which leave to appeal is required:

40 Appeals requiring leave (cf LCA 1982, section 74)

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court—

(a) an interlocutory judgment or order,

(b) a judgment or order made with the consent of the parties,

(c) an order as to costs.

26. I will return below to address whether leave to appeal should be granted for Ground 2.

27. Turning to one other relevant provision in the Local Court Act, s 41 provides that the Supreme Court may determine an appeal made under ss 39(1) or 40 in the following ways:

41 Determination of appeals (cf LCA 1982, section 75)

(1) The Supreme Court may determine an appeal made under section 39 (1) or 40—

(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or

(d) by dismissing the appeal.

…

28. As noted above, Mr Davies raises two grounds of appeal. Both relate to the primary judge’s finding that the rescission notice issued under s 925A was valid and operated to render the agreements unenforceable. This finding is challenged on the basis of both alleged error of law and error of mixed law and fact.

(b) Section 925A of the Corporations Act

29. Focussing upon what Brender LCM said at [53] to the effect that the delay was not unreasonable because Mr Davies regarded the rescission notice as irrelevant and misconceived in circumstances where he asserted it was not necessary for him to have a financial services licence, the plaintiffs’ claim in Ground 1 of the amended summons is that this involves an error of law because the primary judge took into account an irrelevant consideration.

30. The language of “irrelevant consideration” might be apt if the primary judge was exercising a discretion in relation to s 925A. The terms of s 925A are set out at [16] above. It is difficult to see how the primary judge was exercising any discretion in determining whether or not s 925A applied. The language of “irrelevant consideration” seems inapt.

31. In their written submissions at [13], however, the plaintiffs identified the error of law raised by Ground 1 in different terms to those in the amended summons:

In taking into account Mr Davies’ attitude as to whether the notice was “irrelevant and misconceived”, His Honour has failed to ask the correct question, namely, whether the notice was given within a reasonable period after Jackie became aware of the facts entitling her to serve the notice. The question as to whether the notice was served within a “reasonable period”, is a question of timing, not the recipient’s state of mind. By focussing on Mr Davies’ state of mind in relation to the notice rather than asking whether the notice was served within a reasonable time, Brender LCM fell into error.

32. The proper issue raised by Ground 1, therefore, is whether the primary judge misconstrued the expression “within a reasonable period” by taking into account the state of mind of the recipient of the notice. There can be no doubt that the recipient’s state of mind has no bearing on the question of fact of when the client first became aware of the facts which entitled the client to give a statutory rescission notice. The plaintiffs contend that the position is the same with respect to the reasonable period issue.

33. I consider that Ground 1 erroneously elides two matters which have been described as “conditioning facts” before a valid rescission notice can be given under s 925A.

34. In ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65 at [1422] and [1426], the Full Court of the Federal Court (Jacobson, Gilmour and Gordon JJ) identified the following two pre-conditions to the giving of a statutory notice of rescission under s 925A (emphasis added):

[1422] … The conditioning facts before a notice may be given pursuant to the provision are twofold. First, when did the client become aware of the facts entitling it to give a notice. This says nothing about awareness of any right to rescind, that is an awareness of the meaning and effect of ss 924A and 925A of the Corporations Act as applicable to the relevant facts. It is merely the client’s awareness of “the facts” giving rise to such an entitlement which is required. The facts are those, proof of which, in combination, are capable of establishing the matters set out in s 924A(1). The second condition is that the notice be given within a “reasonable period” after the client became relevantly aware.

…

[1426] … the statutory inquiry under s 925A which is directed implicitly, as a starting point, to when it was that the client first became aware of all the relevant facts which, as we have explained, are those, proof of which is necessary to establish the matters set out under s 924A. The length of the journey, and the reasons contributing to that length, before the client reaches the relevant state of awareness do not touch on the initial question which focusses on the journey’s end. It is a simple question of fact capable, ordinarily, of direct proof: when did the client become aware of the relevant facts? The question then is whether the notice was given within a reasonable period from that time.

35. In Woodlawn Capital Pty Ltd v Motor Vehicles Insurance Ltd [2016] NSWCA 28, Ward JA (as her Honour then was and with whom Macfarlan and Gleeson JJA agreed) adopted and applied the twofold analysis of s 925A in ABN AMRO. Addressing the “first condition” in s 925A at [76], her Honour said:

At [1426], the Full Court, while accepting that matters of complexity in relation to a particular agreement “are no doubt a factor in the length of time it might take for a client to become relevantly aware” of the entitling facts, emphasised that the starting point of the enquiry under s 925A was when the client first became aware of all the relevant facts proof of which was necessary to establish the matters set out under s 924A. The Full Court described this as “a simple question of fact capable, ordinarily, of direct proof”.

36. It may be interpolated here that it is well-settled that the client bears the onus of establishing when they first became aware of the relevant facts, or to adduce sufficient evidence to enable a finding to be made by way of a properly drawn inference as to the date on which they became aware of the facts entitling them to give the notice (see ABN AMRO at [1437] and Woodlawn at [108]).

37. As to the “second condition” in s 925A (i.e. that the notice be given within “a reasonable period” after the relevant awareness was attained), Ward JA said in Woodlawn at [110] that, since it could not be established when the client first became aware of the facts entitling the client to give notice:

… there is, as Woodlawn submits, no starting date from which a “reasonable period” may be measured for the purposes of s 925A(2), as was the case in ABN AMRO, and hence it is not possible to be satisfied whether any of the letters from MVIL in the period 17 November 2011 to 13 February 2012 were given within a reasonable period from that date.

38. In the light of these intermediate authorities, the legal position may be summarised as follows. Section 925A poses two relevant questions. The first is when the client became aware of the facts entitling the client to give notice. This involves a question of fact which is ordinarily capable of direct proof and is a question in respect of which the client carries the burden of proof. As stated above, it may be accepted that the state of mind of the recipient of the notice is irrelevant to this question.

39. The second question can only be resolved if the client discharges the onus in respect of the first question. The second question is whether, having established the timing of the requisite awareness, the notice was then given within a reasonable period therefrom. In my view, the two conditions are different in nature and scope, but both raise questions of fact for determination. The state of mind of the recipient of the notice is irrelevant to the first condition, but is not irrelevant to the second condition.

40. The plaintiffs do not challenge the primary judge’s finding of fact that, by 4 August 2023, the defendants were aware of the facts which entitled them to give a notice under s 925A(2). Ground 1 of the amended summons relates not to that finding but rather to the primary judge’s finding that the notice was given within a reasonable period from that date. I shall now explain why I reject Ground 1.

41. There is much to be said for the proposition that the determination of whether a notice was given within a reasonable period after the required awareness was attained raises a question of fact and not a question of law for the purposes of s 39(1) of the Local Court Act. An analogy may be drawn with cases, admittedly arising in different statutory contexts, which include phrases such as “within a reasonable period” or “within a reasonable time”. For example, in Guiseppe v Registrar of Aboriginal Corporations (2007) 160 FCR 465; [2007] FCAFC 91, the Full Court of the Federal Court addressed s 71(1) of the Aboriginal Councils and Associations Act 1976 (Cth). It provided that if the Registrar considered that there may be grounds for appointing an administrator to an aboriginal corporation, the Registrar may serve on the public officer of the corporation a notice in writing calling upon the corporation to show cause, within a reasonable period specified in the notice, why an administrator should not be appointed. The Full Court held that the reasonableness of the period of notice constituted a statutory condition which had to be objectively determined. That issue was not resolved by simply asking whether it was reasonably open to the Registrar to set the period specified in the notice. Significantly, the question of reasonableness of the period was described by Gyles and Edmonds JJ at [21] as a question of fact for the primary judge to determine. Their Honours added that there “is no one reasonable period” (presumably reflecting the range of circumstances in which the issue could arise).

(a) By a letter dated 4 August 2023, the defendants’ then solicitor wrote to the plaintiffs’ solicitor in response to the claim made on 27 July 2023 that the defendants had a liability to pay what was said to be an agreed service fee. The defendants’ solicitor referred to “preliminary searches”, which indicated that Mr Davies’ financial services licence had ceased on 11 May 2020 and that it appeared that Mr Davies had given advice to Jackie when it appeared that he was not licensed to do so. The plaintiffs’ solicitor was asked to provide a “meaningful response”, but it appears that this did not occur and on 4 October 2023, a statement of claim was filed. (b) In each of the three iterations of the defence filed by the defendants on 31 October 2023 (all of which were drafted by Jackie), it was made abundantly clear that they denied any liability to pay the commission fee because Mr Davies was “unregistered”. (c) After the hearing in the Local Court on 6 December 2023, the parties were given leave to file written closing addresses and Mr Davies was also joined as a party to the proceedings. On 9 February 2024, the defendants were given leave to file an amended defence, which occurred on 4 March 2024. In response to paragraph 6 of the statement of claim filed 4 October 2023, which related to the plaintiff’s claim regarding an oral agreement, the defendants denied the pleading on various grounds, which included paragraph 6(d) (underlining in original):

6. The Defendants deny paragraph 6 of the Claim and further say:

a. The Third Defendant was introduced to the Plaintiff on 4 May 2023 by Mrs Tiffany Murray - not early March 2023 as pleaded - but no discussions relating to the Plaintiff's acting for any of the Defendants occurred;

b. Prior to 4 May 2023, and at least from August 2022, the Third Defendant was already negotiating with Resolution Life Australasia Limited (the Insurer) on behalf of the First Defendant and Second Defendant;

c. During the 4 May 2023 discussion of a general nature Alan Davies said words to the effect of "keep me in the loop of how you proceed with the Insurer" because Alan Davies was considering lodging a complaint against the "Dealer Group", once the negotiations with the Insurer was concluded by the Third Defendant, and - for completeness - the conversation did not mention the Insurer at any time; and

d. At all relevant times:

i. the Plaintiff did not have an Australian Financial Services Licence (Alan Davies was confirmed AFS Banned/Disqualified Person from 07/05/2020 to 06/05/2023: ASIC extract printout 16/02/2024 at 1:55pm);

ii. Alan Davies has been banned from providing financial services by the Australian Securities and Investments Commission;

iii. was not able at law to act on behalf of the Defendants (or any of them) in relation to any insurance product or resolution;

iv. did not act on behalf of the Defendants (or any of them) in relation to any insurance product or resolution; and

v. did not undertake any work for the Defendants (or any of them) in relation to any insurance product or resolution.

vi. did not represent any of the Defendants or was requested to assist with the resolution of the dispute with the Insurer.

Particulars

ASIC Banned and Disqualification Service Provider and Person List: Printout

Australian Financial Services Register: Printout 16 February 2024 at 12:16pm

ASIC Results Printout Search for 'Alan Davies': Printout 16 February 2024 at 1:55pm

Media Release: ASIC bans financial advisers published 11 May 2020: printout 13 February 2024 at 12:01pm

Alan Davies used to hold AFS representative number 000419067 which ceased on 29 November 2013

Alan Davies used to hold AFS representative number 001006066 which ceased on 11 March 2020;

Alan K Davies Pty Ltd (Company) used to hold AFS representative number 000256600 which ceased on 11 May 2020; and

Alan Davies is not a legal practitioner or otherwise qualified in any relevant way.

(d) By a letter dated 12 September 2024, the defendants’ new solicitors wrote to the plaintiffs’ solicitor requesting that they provide a copy of “the plaintiffs’ current licensing for financial services”. (e) It is unclear whether the plaintiffs’ solicitor responded to this request, but on 24 September 2024, the solicitors for the defendants again wrote to the plaintiffs’ solicitor. They referred to their 12 September 2024 letter and noted that no response had been received to it. It was also claimed that repeated attempts to speak by telephone had been unsuccessful. (f) The plaintiffs’ solicitor responded by an email dated 25 September 2024 which was silent on the licensing issue. (g) By a letter dated 25 September 2024, the defendants’ solicitors wrote a letter to the plaintiffs’ solicitor stating that “no evidence in respect of the Plaintiff's licensing has been provided”. The letter also noted that any such licensing was not evident. (h) By a letter dated 11 November 2024, the defendants’ solicitors received four certified documents from ASIC which confirmed that, on 30 March 2020, Mr Davies was notified that he was prohibited from providing any financial services for a period of three years. (i) Also on 11 November 2024, the defendants’ solicitors served the rescission notice under s 925A of the Corporations Act. (j) In their closing written submissions dated 13 February 2024, Mr Davies acknowledged for the first time that he did not hold a financial services licence at the relevant times, but he continued to deny that his work fell within the definition of “financial services” for the purposes of the Corporations Act. It was submitted in the alternative that, if this was wrong, the defendants were not entitled to give a s 925A notice either then or on 11 November 2024. This was the first time the plaintiffs contended that the notice given was not issued within a reasonable period.

(c) Ground 2 and whether leave to appeal should be granted

46. At the commencement of the hearing, the Court pointed out that Ground 2 as formulated in the amended summons was misconceived because the Court lacked jurisdiction to consider and determine an alleged error of fact alone having regard to the terms of s 40(1) of the Local Court Act. The defendants did not oppose the plaintiffs’ application to amend the amended summons so as to state that Ground 2 related to an alleged error of mixed law and fact and that the delay in giving the s 925A notice amounted to “legal unreasonableness”.

47. The principles guiding the grant of leave to appeal under s 40 of the Local Court Act are similar to those applying to the need for leave under s 101(2) of the Supreme Court Act 1970 (NSW). The principles were relevantly outlined in Styles v Rowley [2023] NSWSC 1053 at [56]-[57], noting in particular what is said regarding the approach that should be taken to small claims:

Unsurprisingly, there was substantial agreement regarding the relevant legal principles. They were recently reaffirmed by the Court of Appeal in Cheng v Motor Yacht Sales Australia Pty Ltd (t/as the Boutique Boat Company) [2022] NSWCA 118 at [15] ff, where Bell CJ (with whom Ward P and Basten AJA agreed) stated that a grant of leave to appeal generally requires the identification of an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable.

Where small claims are involved (as is the case here), it is also relevant to consider that “there must be an early finality and determination of litigation otherwise the costs which will be involved are likely to swamp the money sum involved in the dispute” (Carolan v AMF Bowling Pty Ltd (t/as Bennetts Green Bowl) [1995] NSWCA 69). The importance of there being proportionality between the monetary amount at issue in a proceeding and the costs of the proceeding was noted in Cheng at [20]. Section 60 of the Civil Procedure Act 2005 (NSW) requires that consideration be given to the cost of litigating a matter or issue and the Court’s practice and procedure should be implemented with the object of resolving the issues between the parties in such a way that the cost is proportionate to the importance and complexity of the subject-matter. As Leeming JA observed in Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 at [44], where the costs of litigation exceed the amount in issue, “[s]uch litigation is a poor candidate for a grant of leave”.

48. Basten J emphasised some relevant features of these provisions in Souaid v Nahas [2019] NSWSC 1132 at [3] (emphasis added):

Sections 39 and 40 of the Local Court Act reflect the conventional view that legal proceedings involve questions of law, questions of fact and questions of mixed law and fact. Such a tripartite classification is never easy to apply in practice. However, what appears not to be appreciated by the structure of the provisions of the Local Court Act is that there is no right of appeal, with or without leave, from findings of fact. The assumption that the application of law to the facts may be a question of ‘mixed law and fact’ will rarely assist an appellant. If the legal principle has been incorrectly identified in the Local Court, that may be established on an appeal as of right. If it be a material error, that will usually result in an order setting aside the judgment below and may involve replacement with a different order, or remittal to the Local Court. It is only in the rare case that the legal principle has been correctly stated, but misapplied to the facts as found, that leave will be appropriate.

49. Applying those principles here, I would not grant leave to appeal in respect to Ground 2. It does not raise any issue of principle or question of public importance. Nor am I satisfied that the plaintiffs have demonstrated that there is a reasonably clear injustice that goes beyond something which is merely arguable. I have explained above why I have rejected the plaintiffs’ contention that the primary asked himself the wrong question in assessing whether the notice was served within a reasonable period. Having rejected that contention, there is truly no question of “mixed law and fact” presented by Ground 2.

50. Finally, I consider that leave to appeal should be refused having regard to the relatively small sum of money involved, being $77,351. As Bellew J pointed out in Namoi Sustainable Energy Pty Limited v Buhren [2022] NSWSC 175 at [38]-[39], the intention of the Local Court Act is that this Court should have supervision over Local Court decisions in matters of law. I respectfully agree with his Honour’s observations that, where small claims are involved, it is important that there be early finality in litigation. There is also a need for legal costs to be proportionate to the value of the claim in issue. It is notable that, in this case, the defendants’ costs below were estimated to be $84,000 on a party-party basis, having been confirmed by the parties at the hearing that the $42,000 specified was only 50% of the party-party costs (see the affidavit dated 22 July 2025 affirmed by the defendants’ solicitor, Mr Mofazzal Haque Kazi).

51. The Court was informed that it was now contemplated that a fixed sum costs order would be made in relation to the Local Court proceedings dependent upon the outcome of the present proceeding. This does not detract, however, from the existing evidence, which powerfully indicates that the legal costs are entirely disproportionate to the legal costs.

(d) Notice of contention

52. It is unnecessary to determine the defendants’ notice of contention.

Conclusion

53. For all these reasons, leave to appeal in respect to Ground 2 of the amended summons filed 17 April 2025 will be refused. The amended summons filed 17 April 2025 will be dismissed, with costs. The defendants’ notice of contention need not be addressed.

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