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[2014] VSC 435
General information, not legal advice.
Supreme Court of Victoria
2014-09-11
KYROU JA
Original judgment source is linked above.
Regione Calabria Pty Ltd v Fato (Unreported, Magistrates' Court of Victoria, Magistrate Ginnane, 20 December 2012)
APPEAL - Question of law - Magistrates' Court Act 1989 s 109 - Test applicable where it is alleged the Magistrate's decision is not open on the evidence.
ADMINISTRATIVE LAW - Natural justice - Magistrate made comments in running indicating adverse view of credit of appellant and respondent's key witness - Comments more adverse to respondent's key witness - Neither party complained during the trial - Appellant not denied natural justice - Waiver of right to rely on any breach of rules of natural justice.
ADMINISTRATION OF JUSTICE - Fair trial according to law - Undue interference by Magistrate in the conduct of the hearing - Magistrate took initiative to telephone a new witness during the hearing - No miscarriage of justice when trial considered as a whole.
CONTRACT - Loan agreement - Non-payment of principal and interest - Whether action statute barred - Limitation of Actions Act 1958 s 5.
1 The appellant was sued by the respondent in the Magistrates' Court at Melbourne for recovery of an alleged loan of $35,000 together with outstanding interest ('MC proceeding'). On 20 December 2012, the Magistrate decided that the parties had entered into a loan agreement and that the appellant had breached it by failing to pay the principal and interest when due ('Magistrate's decision').[1] His Honour made an order that the appellant pay to the respondent the amount of $100,000 ('Order').
2 The appellant has appealed to this Court against the Order on several questions of law pursuant to s 109 of the Magistrates' Court Act 1989 ('Act').
3 At the hearing of the appeal there was no appearance on behalf of the respondent because it no longer had any directors and thus was incapable of giving instructions to lawyers.[2] However, Mr Antonio Scriva of counsel sought leave to appear on behalf of Madge Enterprises Pty Ltd ('Madge') on the basis that Madge was the assignee of the judgment debt of $100,000. Upon the appellant challenging the validity of the assignment, Madge accepted the Court's invitation to seek leave to appear as a friend of the Court and to give an undertaking that it would be subject to any costs order that may be made against it. On the basis of this undertaking, the Court granted Madge leave to appear.
4 The granting of leave to appear to Madge ensured that the hearing of the appeal could proceed with the assistance of a contradictor and without the need to resolve the collateral issue of the validity of the assignment of the judgment debt of $100,000.
5 The appellant seeks to impugn the Order on three broad bases: first, that the Order was not open on the evidence; secondly, that the Order was vitiated by erroneous legal findings; and thirdly, that the Magistrate's constant intervention during the hearing denied the appellant natural justice and caused the trial to miscarry.
6 For the reasons that follow, the Magistrate's factual and legal findings on the ultimate issues in dispute were open to him. Further, although there is merit in the appellant's complaints about the Magistrate's behaviour, which is summarised at [107] below, in the context of the trial as a whole, the appellant was not denied natural justice and the trial did not miscarry. It follows that the appellant has failed to establish any of the three bases upon which she sought to set aside the Order.
7 However, as it is common ground that the Order contains an error in relation to the amount of interest payable, the appeal will be allowed, the Order will be set aside and the MC proceeding will be remitted to the Magistrates' Court.
8 In order to provide context for the MC proceeding, the Magistrate's decision and the grounds of appeal against that decision, it is necessary to set out an overview of the key people, events and documents that featured in the MC hearing.
9 Mr Antonio Dattilo was, at the times that were relevant to the MC proceeding, the sole director of the respondent and Dattilo Holdings Pty Ltd ('Dattilo Holdings'). He was a director of Madge from 13 January 2011 until 31 May 2013. Dattilo Holdings was placed in liquidation on 7 December 2010.
10 Mr Dattilo's wife, Mrs Patricia Dattilo, is the sister of the appellant and Ms Rosa Fato. Mrs Angelina Fato is the mother of the three sisters. Ms Rosa Fato is the de facto wife of Mr Salvatore Cosentino.
11 At the times that were relevant to the MC proceeding, the appellant was a director of Linfa & Co Pty Ltd ('Linfa & Co') and that company operated a bank account at the Carlton branch of the Bendigo Bank ('Linfa & Co's bank account'). The respondent also operated a bank account at the same branch of that bank ('respondent's bank account').
12 In August 2004, Mr and Mrs Dattilo lived at 39 Ruby Street, Balwyn ('Ruby Street') and they operated their companies from that address. The appellant initially lived in Sydney but during the course of 2004, she moved to Ruby Street.
13 According to exhibits P10 and P13 in the MC proceeding, in 2004, the appellant and her sisters were directors of Calcorp (Australia) Pty Ltd ('Calcorp') whose trading address was Ruby Street. Mr Dattilo gave evidence that he was involved in managing that company. Calcorp had two letterheads, one with a Sydney street address and fax number and one with a Melbourne post office box address and a fax number.
14 In August 2004, Mrs Angelina Fato lived at 111 Victoria Street, East Brunswick ('Victoria Street').
15 The bank statements for Linfa & Co's bank account and the respondent's bank account show that on 3 August 2004:
(a) there was an 'in branch transfer' of $35,000 from the respondent's bank account;
(b) there was an 'in branch transfer' of $35,000 into Linfa & Co's bank account; and
(c) there was an 'in branch transfer' of $35,000 out of Linfa & Co's bank account.
16 It was common ground that the third transfer was to a bank account of Dattilo Holdings.
17 Exhibit P8 in the MC proceeding was a document which the appellant alleged is a forgery. On its face, it is a fax dated 27 July 2004 from the appellant to her sisters ('27 July 2004 fax'). The fax is on the Sydney letterhead of Calcorp and the subject is 'Refinancing Perpetual Trustee'. The text of the fax is as follows:
I tried to call but there was no answer. Bendigo Bank called me regarding Brunswick loan because it's in arrears and I have already told them that we are in the process of re-financing.
Can you get in contact with Nathan and ask him to hurry up with the refinancing with AML. I spoke to Antonio and Nathan told him he can't do the Letter of Credit until after the re-financing. He can only do up to $750,000.00 over Brunswick, so I might have to refinance my properties and get extra money from there for the oil overseas.
Also Antonio is lending me $35,000.00 next week to pay Dattilo Holdings so we can start moving with the vinegar line.
Speak later,
Lina Fato
18 Exibit D5 in the MC proceeding was a document which the appellant also alleged is a forgery. On its face, it is a fax dated 3 August 2004 from the appellant to the Bendigo Bank headed 'Transfer' ('3 August 2004 fax'). The fax states:
As per your conversation with Antonio Dattilo, could you please transfer $35,000.00 from Linfa & Co Pty Ltd account # ... to Dattilo Holdings Pty Ltd account # ... Also can you organise to transfer my account from Camberwell branch to Carlton. Any queries please do not hesitate to call me on ...
Thank you
Lina Fato
Linfa & Co Pty Ltd
19 Bendigo Bank produced to the Magistrates' Court a copy of the 3 August 2004 fax which contained a fax header and was annotated with the words 'Reconfirmed via telephone + signature held on file.' It was common ground that the 'sender' fax number on the fax header was associated with Ruby Street and that the fax was received by the Bendigo Bank on 3 August 2004.
20 Exhibit P7 in the MC proceeding was a document which, on its face, is a copy loan agreement dated 13 August 2004 executed by the appellant as 'Borrower' and the respondent as 'Lender' ('Loan Agreement'). The appellant alleged that her signature, which was purportedly witnessed by Mrs Dattilo, was forged. The key terms of the Loan Agreement were as follows:
(a) The word 'Loan' was defined as 'the money already advanced on the 3 August 2004'.
(b) The loan was for an amount of $35,000 and for a term of seven years.
(c) Interest was payable on '3 of August 2005, 3 of August 2006, 3 of August 2007, 3 of August 2008, 3 of August 2009, 3 of August 2010, 3 of August 2011 and or at any time demanded by the Lender.' The interest rate was fixed at 11 per cent per annum. A 'default rate' of 16 per cent per annum applied 'to any payment that has not been ... paid by its due date from the due date until it is paid.'
(d) The principal was due on '3 of August 2011 and or at any time demanded by the Lender.'
(e) The 'Default Judgment' clause relevantly provided as follows:
The Borrower consents to the Lender producing this Agreement to a Court for the purposes of obtaining Default Judgment against the Borrower for the entire amount due and payable to the Lender under the terms of this Agreement, in addition to the Lender's legal costs on an indemnity basis.[3]
(f) By way of security for the performance of the Borrower's obligations under the agreement, the Borrower charged all the Borrower's interest in a Rosebud property.
21 Exhibit P6 in the MC proceeding was yet another document which the appellant alleged is a forgery. On its face, it is a fax dated 23 August 2004 from the appellant to Mr Dattilo ('23 August 2004 fax'). The fax is on the Melbourne letterhead of Calcorp and contains that company's fax header. The text of the fax is as follows:
Dear Antonio,
I rang Trish and she told me to send you the following docs so you can give them to Nathan for my loan.
Can you please give those documents to Nathan when you go there today because I'm not sure where his office is?
Thank you,
Lina Fato
22 The only financial report that the respondent was able to produce at the MC hearing was for the 2005 financial year ('2005 financial report'). The balance sheet contained the item 'Loan - Linafa & Co (35,000)' under the heading 'Current Liabilities'.
23 At the MC hearing, the respondent relied on three letters dated 4 August 2009, 4 August 2010 and 4 August 2011, respectively, from the respondent to the appellant. Each letter enclosed a statement of the then current loan balance for the 'Loan Agreement dated 03 August 2004' and the principal and interest components of that balance.[4] Unlike the first two letters, the letter dated 4 August 2011 stated: 'Failure to pay the total amount outstanding of $98,917.69 will result in us taking legal action'. The appellant denied receiving the three letters.
24 On 29 September 2011, Mrs Angelina Fato filed a complaint in the Magistrates' Court at Heidelberg against Mr Cosentino and Ms Rosa Fato ('Heidelberg MC proceeding'). The complaint, which was not drafted by a lawyer, alleged that the defendants had unlawfully removed various items from Victoria Street, including items belonging to Mr Dattilo and his businesses. The items listed in the original complaint and in an amended complaint that was drafted by lawyers on 10 May 2012 did not include corporate records of the respondent or Dattilo Holdings.
25 The respondent filed a statement of claim in the MC proceeding on 3 October 2011. The statement of claim alleged the following:
(a) on 3 August 2004, the respondent lent to the appellant $35,000 for a period of seven years;
(b) the loan amount was advanced by the respondent on the basis that the appellant would execute a loan agreement no later than 14 days from the day the appellant received the loan amount in her nominated bank account;
(c) on 13 August 2004, the appellant executed a loan agreement prepared by the respondent;
(d) the appellant has failed to make any repayments of principal or interest under the loan agreement and is in default; and
(e) the appellant owes the respondent $98,917.69, inclusive of 'an amount of $63,917.69 ("the default interest") for outstanding and unpaid interest accrued over the seven (7) [year] period of the loan.'
26 The appellant filed a defence in the MC proceeding on 13 February 2012, in which she largely denied the allegations in the respondent's statement of claim. The defence alleged the following:
(a) the appellant's purported signature on the alleged loan agreement is a forgery;
(b) if the alleged loan agreement were enforceable, on its true construction all amounts of principal and interest were due on 3 August 2005, which is more than six years prior to the commencement of the MC proceeding and therefore the respondent's cause of action is statute barred pursuant to s 5 of the Limitation of Actions Act 1958;
(c) the alleged loan agreement is void or unenforceable due to lack of consideration, as the monies that were the subject of the alleged loan had already been advanced at the time of executing that agreement; and
(d) the loan, if it existed, was made to Linfa & Co and not to the appellant personally.
27 The MC hearing took place over three days, on 17-19 July 2012. The appellant was represented by counsel, Mr Kirby, and the respondent by a solicitor, Mr Boden. Three witnesses were called on behalf of the respondent: Mr and Mrs Dattilo and Mr Joseph Chimirri, a former employee of the Commonwealth Bank. The appellant gave evidence and did not call any other witness.
28 Mr Dattilo gave evidence that in mid-July 2004 he was approached by the appellant, who requested a loan of $35,000 to settle an outstanding invoice for that amount that she owed to Dattilo Holdings in relation to a business venture. Mr Dattilo discussed the proposed loan with the appellant over the telephone, and sent a draft agreement to her residence in Sydney by post on 1 August 2004. The term of the loan was to be seven years, with interest payable annually.
29 Mr Dattilo said that the loan amount was transferred on 3 August 2004 from the respondent's bank account into an account nominated by the appellant, being Linfa & Co's bank account. On the same day, it was transferred into the bank account of Dattilo Holdings.
30 Mr Dattilo said that the Loan Agreement was signed on 13 August 2004 by him and the appellant at Ruby Street, in the presence of Mrs Dattilo. He was unable to produce the original Loan Agreement because it was stored at Victoria Street and, as a result of the appellant and Ms Rosa Fato changing the locks and removing the contents from the property, he was no longer able to access documents previously stored there.
31 Mr Dattilo stated that the loan of $35,000 was made to the appellant rather than to Linfa & Co because the appellant was able to provide security but Linfa & Co could not do so.
32 Under cross-examination, Mr Dattilo agreed that he had drafted some aspects of the Loan Agreement, and filled in the gaps, including by inserting the definitions of 'Loan' and 'Security'. He was cross-examined about why there were two different copies of the Loan Agreement in evidence, with only one of them containing the Calcorp Melbourne fax header and the date 23 August 2004 on the header. Mr Dattilo stated that this may have arisen because his lawyers had sent copies by fax at different times.
33 Mr Dattilo was then cross-examined about why he kept the original Loan Agreement at Victoria Street, when it was not the registered office or principal place of business of the respondent. Mr Dattilo said that after Ruby Street was sold in 2008, he kept the business records of the respondent at Victoria Street. When questioned about why he did not seek to recover the loan at an earlier stage, Mr Dattilo said that he was waiting for the appellant to sell a property in Queensland, which turned out to be a bad investment. He had agreed to extend the due date for the first payment of interest under the loan.
34 When he was cross-examined about the 2005 financial report, which showed a loan to 'Linafa & Co', Mr Dattilo stated that he considered that 'Linafa' means 'Lina Fato'. In answer to a question from the Magistrate, Mr Dattilo later stated that the entry may have been a 'misprint' or that his accountant may have had some notes indicating that the money was paid to Linfa & Co.
35 As to the purpose of the loan, Mr Dattilo stated that it was to discharge a liability owed by the appellant to Dattilo Holdings. He was unable to produce the invoice evidencing the liability. Under cross-examination, Mr Dattilo could not say precisely what the $35,000 was in relation to, but stated that the invoice had been issued by Dattilo Holdings, and that the money was owed by Linfa & Co. The liability could have related to a 'vinegar venture' in which the appellant was involved through Linfa & Co. Mr Dattilo said that the invoice may be in the possession of the liquidator of Dattilo Holdings.
36 Under cross-examination, Mr Dattilo denied having arranged the transfer of $35,000 from Linfa & Co's bank account to Dattilo Holdings' bank account on 3 August 2004. In relation to the Heidelberg MC proceeding, Mr Dattilo accepted that he had been involved in instructing lawyers about the items owned by him and his companies which had been kept at Victoria Street and that the Heidelberg MC proceeding did not include a claim in respect of the business records of the respondent.
37 In relation to the version of the 3 August 2004 fax which had been produced by Bendigo Bank,[5] Mr Dattilo accepted that, if the fax had been sent from Ruby Street, it could not have been sent by the appellant, as she was in Sydney on that day. Mr Dattilo denied that he forged the appellant's signature on the 3 August 2004 fax and that he faxed it.
38 Mr Dattilo was recalled on the third and final day of the hearing, for further cross-examination in relation to documents that were called for on the first day. He gave evidence that he could not produce particular financial accounts of the respondent because they were not in his possession. The events which followed are the subject of complaint by the appellant and are discussed at [111] to [113] below.
39 Mrs Dattilo stated that she witnessed the signing of the Loan Agreement in the kitchen at Ruby Street. She believed the money was to be used by the appellant to import vinegar. Mr Dattilo made an oral request for payment of an amount due under the Loan Agreement in around July or August 2005, and the appellant requested more time to enable her to sell her Queensland property. Mrs Dattilo's evidence in respect of the Heidelberg MC proceeding was that business records had been left at Victoria Street but they were not included in the claim because they did not have any monetary value.
40 The appellant gave evidence that she was in Sydney on 3 and 4 August 2004, and bank statements and telephone records tendered through her showed transactions and telephone calls in Cronulla on those dates. The appellant stated that she had not seen the Loan Agreement prior to the hearing. She denied that she had received a draft loan agreement from Mr Dattilo by post in August 2004. She discovered the existence of the alleged agreement when she was contacted by debt collectors and learned that a bankruptcy proceeding had been issued against her. The appellant denied that the signature on the Loan Agreement was hers.
41 The appellant's evidence was that she did not know anything about the transfer of $35,000 into or out of Linfa & Co's bank account until 2011. She received but did not read the bank statements for that account, as Linfa & Co was not active.
42 The appellant stated that she was the only person authorised to operate Linfa & Co's bank account, and she did not authorise a transfer of $35,000 to Dattilo Holdings. When she found out the transfer had been made, she made enquiries with the Bendigo Bank and was provided with the 3 August 2004 fax.
43 The appellant's evidence was that she had not signed or sent the 3 August 2004 fax, but she agreed that the mobile telephone number on that document was hers. She stated that she did recall whether she had a Calcorp fax machine in Sydney. She did not make or receive any calls to or from the Bendigo Bank on 3 August 2004. She suggested that Mr or Mrs Dattilo may have spoken to the bank.
44 The appellant denied that she drafted, signed or sent the 23 August 2004 fax. She gave evidence that the fax number from which that fax appeared to emanate was the fax number used by the respondent. The appellant also denied that she had created or sent the 27 July 2014 fax. She stated that she had nothing to do with Calcorp.
45 The appellant denied that Linfa & Co had ever had any dealings with Dattilo Holdings. She said that she had never been contacted with requests to repay the loan amount and had never requested more time to pay. Her Queensland property was sold in May 2006 at a profit.
46 The appellant said that no business records had been stored at Victoria Street and that she had not received the letters referred to at [23] above.
47 In crossexamination, various commercial documents were put to the appellant which she accepted contained her signature.
48 The Magistrate found that the question of whether a sum of $35,000 was paid by the respondent to the appellant was one of the few questions in the MC proceeding amenable to an easy answer, and that it had been paid into Linfa & Co's bank account on 3 August 2004. His Honour found that this amount had been paid into the account of Dattilo Holdings on the same day.[6]
49 His Honour stated that, as the invoice which was said to evidence the debt to Dattilo Holdings was not produced, he was unable to determine the amount of the debt or whether the invoice was addressed to the appellant or to Linfa & Co.[7]
50 The Magistrate found that the record-keeping of the respondent was 'incomplete' and expressed some reservations about the reliability of that record-keeping. His Honour stated:
I had occasion in the course of the hearing to question and test a good deal of Mr Dattilo's responses to the non-provision of many records and, in particular, the absence of audited company accounts. However when all is said and done much of ... that inquiry and examination of Mr Dattilo in regard to the same did not prove probative in determining the existence of the alleged loan.[8]
51 His Honour concluded that neither the appellant nor Mr Dattilo was an impressive witness.[9]
52 The Magistrate did not accept the appellant's evidence that she did not receive the three letters referred to at [23] above. His Honour went on to consider whether the copy Loan Agreement was admissible in evidence, as the unavailability of the original agreement precluded the appellant from calling expert evidence about its authenticity. The Magistrate was satisfied on the evidence that the copy Loan Agreement accurately reflected the agreement that the parties executed on 13 [10]gust 2004.10 His Honour did not consider that evidence that certain items were not included in the Heidelberg MC proceeding was evidence that company records, possibly including the original Loan Agreement, were not stored at Victoria Street.
53 Given the seriousness of the appellant's allegations of forgery, the Magistrate applied the principles in Briginshaw v Briginshaw.[11] In accordance with those principles, his Honour determined that the original of the Loan Agreement was executed by the appellant and Mr Dattilo on behalf of the respondent on 13 August 2004.
54 The Magistrate rejected the appellant's evidence that the 3 August 2004 fax is a forgery because that evidence required acceptance of the proposition that the respondent relied on the transfers made on 3 August 2004 years later in order to 'clothe the creation of a false loan agreement with some historical verisimilitude.'[12] In his Honour's opinion, it stretched the bounds of credulity to suggest that the respondent could have anticipated on 3 August 2004 a benefit in creating a false fax of instructions to the Bendigo Bank to be used years later in support of a false loan.[13]
55 While the Magistrate could not reach any conclusion as to why the 3 August 2004 fax bore the fax number of Ruby Street, he was satisfied that it was prepared by the appellant, that she was aware that the amount of $35,000 had been paid into Linfa & Co's bank account and that she authorised and directed that it then be paid to Dattilo Holdings.[14]
56 The Magistrate also rejected the appellant's evidence that the 27 July 2004 fax was a fabrication.
57 With respect to whether the MC proceeding was statute barred, the Magistrate found that a critical issue was whether the Loan Agreement contained an acceleration clause, and concluded that it did not contain such a clause. His Honour was also satisfied that the appellant was not in default on 3 August 2005 for the following reason:
I am satisfied by the evidence that there [was] an agreement made at the request of the [appellant] and agreed to by the [respondent] to defer the interest due. Therefore the claim is not brought beyond the statutory limitation.[15]
58 The Magistrate did not decide the period of the deferral of the obligation to pay interest. It is implicit, however, that the revised due date was after 3 October 2005, as a due date before then would potentially cause the MC proceeding to be statute barred.
59 The Magistrate was not satisfied that the Loan Agreement rested on past consideration. His Honour was satisfied that the appellant initiated a conversation with Mr Dattilo on 1 August 2004 in which she requested the provision of a loan. His Honour found that there was a draft agreement in existence prior to the transfer of the loan amount, and that the subsequent execution of the Loan Agreement on 13 August 2004 amounted to executed consideration. Accordingly, the loan was supported by good consideration.[16] My understanding of this reasoning is that prior to the transfer of the $35,000, the respondent promised to provide a loan for that amount and the appellant promised to repay that amount on the terms that were eventually included in the Loan Agreement.
60 With respect to the question of whether the loan had been made to the respondent rather than to Linfa & Co and, therefore, whether the appellant rather than Linfa & Co was the appropriate defendant to the action, the Magistrate concluded that the direction for payment of the loan amount was given by the appellant, and the destination of that amount in Linfa & Co's bank account was not determinative. His Honour was satisfied that the proceeding had been correctly brought against the appellant.[17]
First ground of appeal: No evidence for factual findings
61 In broad terms, the appellant's first ground of appeal was that the Magistrate made findings of fact for which there was no evidence, or insufficient evidence to support them.
62 Section 109 of the Act provides that a party to a civil proceeding in the Magistrates' Court may appeal to the Supreme Court, on a question of law, from a final order of the Court in that proceeding.
63 A question whether there was any evidence to support a particular finding is a question of law.[18]
64 In Transport Accident Commission v Hoffman,[19] the Full Court was required to interpret s 52(1) of the Administrative Appeals Tribunal Act 1984, which provided for appeals to the Supreme Court from the Administrative Appeals Tribunal on a question of law. Young CJ and McGarvie J held that the section granted a right of appeal from any decision of the Tribunal on a question of law which was involved in the decision. This construction excluded an appeal upon such questions as whether a particular decision was against the evidence and the weight of the evidence, but allowed an appeal upon the question of whether there was any evidence upon which the Tribunal could have reached the decision which it did reach.[20]
65 In Victoria v Subramanian,[21] Cavanough J was required to apply s 109 of the Act. His Honour identified two different lines of cases. In the first line of cases, his Honour considered Hoffman and S v Crimes Compensation Tribunal.[22] In S, Phillips JA reasoned that a determination of fact can give rise to an error of law, but ordinarily it will not be so unless it is shown that the fact-finding tribunal arrived at a finding that was simply not open to it.[23] If such a finding (whether made on direct evidence or by inference) was not open, that may give rise to an error of law. Whether an unsubstantiated finding has led to a relevant error of law will depend on the significance of the finding to the ultimate determination made.[24]
66 The second line of cases identified by Cavanough J related specifically to appeals under s 109 of the Act, and included Cehner v Borg.[25] That case adopted the formulation of whether 'there was evidence upon which the magistrate might, as a reasonable man, come to the conclusion to which he did come'.[26]
67 Cavanough J compared the approaches in both lines of cases and concluded that there was no significant difference between them, stating that it is rarely easy to establish that the decision of a lower court was 'not open'.[27]
68 The appellant sought to establish that the Order was not open on the evidence by attacking particular findings of fact made by the Magistrate in support of his ultimate conclusion about the validity of the Loan Agreement and its breach by the appellant. In particular, the appellant submitted that:
(a) the Magistrate erred in finding that the amount of $35,000 was paid into Linfa & Co's bank account to meet a debt owed by the appellant to Dattilo Holdings arising out of a failed vinegar venture to which the appellant had been a party, as Mr Dattilo's evidence was that the debt to Dattilo Holdings was owed by Linfa & Co and he contradicted himself about the nature of the venture and the parties to it;
(b) the Magistrate erred in construing the entry 'Linafa & Co' in the 2005 financial report as a reference to the appellant instead of Linfa & Co and he should have concluded that, if any loan was made, it was made to Linfa & Co;[28]
(c) the Magistrate erred in finding that the appellant had sent the 3 August 2004 fax, as the fax was sent from the Ruby Street fax machine and the evidence, including that of Mr Dattilo, was that the appellant was in Sydney on that day;
(d) the Magistrate's reasoning in rejecting the appellant's case that Mr Dattilo sent the 3 August 2004 fax was unreasonable and flawed;
(e) key documents, such as the original Loan Agreement and the alleged invoice from Dattilo Holdings to Linfa & Co for the original debt for $35,000 arising from the vinegar venture could not be found and the reason given for this failure - namely the unlawful removal of documents from Victoria Street by Mr Cosentino and Ms Rosa Fato - lacked credibility because that type of documentation was not mentioned in the Heidelberg MC proceeding;[29]
(f) the respondent's conduct was inconsistent with the entering into of the Loan Agreement in 2004, as the respondent did not send any correspondence about the loan to the appellant until five years later, in 2009;[30]
(g) the respondent failed to call critical witnesses, such as its accountant, the liquidator of Dattilo Holdings and a representative of the Bendigo Bank; and
(h) the respondent's case in the MC proceeding was based on fallacious premises, such as the illogicality of an alleged debt to Dattilo Holdings by Linfa & Co being discharged by a transfer of $35,000 by the respondent to Linfa & Co and an immediate transfer of the same amount to Dattilo Holdings, with the appellant assuming liability for repayment of that amount.
69 Madge submitted that, on the evidence as a whole, it was open to the Magistrate to make the Order and that, even if the Magistrate erred on some subsidiary issues - which was denied - these were matters of weight for the Magistrate and no error of law was established.
70 In my opinion, the appellant has failed to make out the first ground of appeal.
71 The ultimate issues for the Magistrate were whether there was a binding loan agreement for $35,000 between the appellant and the respondent and whether the appellant had breached that agreement. There was sufficient evidence to enable the Magistrate to resolve these issues in favour of the respondent.
72 It was not in dispute in the MC proceeding that, if there was a valid loan agreement between the respondent and the appellant containing the terms alleged by the respondent, the appellant had not complied with those terms. In other words, while the existence of a loan agreement was in issue, it was not in dispute that the appellant had not made any payments of principal or interest pursuant to any such agreement.
73 The bank statements for the respondent's bank account and Linfa & Co's bank account provided cogent evidence that, on 3 August 2004, the respondent transferred $35,000 into Linfa & Co's bank account. The respondent's contention that this transfer was made at the appellant's direction as part of a loan agreement between her and the respondent was supported by the 27 July 2004 fax, the 3 August 2004 fax, the Loan Agreement and the 23 August 2004 fax. The respondent's allegation that all these documents were forgeries was a serious one and its acceptance would have required the Magistrate to find that both Mr and Mrs Dattilo had committed not only fraud but also perjury. The Magistrate correctly applied the principles in Briginshaw.[31] It was open to him to reject the allegations of forgery and fraud and to find that the abovementioned documents were genuine.
74 Once it is concluded that it was open to the Magistrate to find that the Loan Agreement and the faxes dated 27 July 2004, 3 August 2004 and 23 August 2004 were genuine, it is impossible to conclude that the Magistrate's ultimate findings about the existence of a valid loan agreement between the parties and a breach of that agreement by the appellant were not open to him.
75 It is true that some of the Magistrate's conclusions on particular factual issues are not fully explained. For example, the Magistrate does not explain how the appellant was responsible for the sending of the 3 August 2004 fax to the Bendigo Bank from Ruby Street when the evidence was that she was in Sydney on that day.
76 However, even if it is accepted that there are deficiencies in the Magistrate's reasoning in relation to particular factual issues, that is insufficient to establish that his ultimate conclusions were not open to him on the evidence. That is because the question of whether the Order was open on the evidence requires a consideration of the evidence as a whole rather than each item of evidence in isolation. A deficiency in reasoning or a factual error on a subsidiary issue does not necessarily vitiate a factual finding on an ultimate issue. The facts relating to subsidiary issues need to be weighed up with all the other evidence in the process of deciding an ultimate issue.
77 In any event, the particular factual errors upon which the appellant has relied - and which I have summarised at [68] above - are not persuasive. I will consider them in turn.
78 In relation to [68(a)] and [68(h)] above, from the respondent's perspective, there is nothing illogical about requiring the appellant to become personally liable for a loan that is used to discharge a liability owed by Linfa & Co to Dattilo Holdings. According to the Loan Agreement, the appellant was able to provide security over a property in Rosebud. As it appears that Linfa & Co did not have any assets, the effect of the loan transaction was to replace an unsecured loan with a secured loan. The fact that Mr Dattilo's evidence about how the original debt to Dattilo Holdings arose was vague and contradictory cast some doubt on the authenticity of the loan transaction but it was not sufficient to require a finding that the transaction was not genuine. Contrary to the appellant's submission, the Magistrate did not find that the original debt to Dattilo Holdings was owed by her. Even if it is accepted that the Magistrate made some errors concerning the original debt and the purpose of the loan, those errors would not necessarily preclude a finding in favour of the respondent about the existence of a valid loan to the appellant. The same applies to any mischaracterisation by the Magistrate of parts of Mr Dattilo's evidence.
79 In relation to [68(b)] above, even if the Magistrate erred in construing the entry 'Linafa & Co' in the 2005 financial report as a reference to the appellant, the Magistrate was entitled to accept Mr Dattilo's evidence that the entry may have been made in error by the respondent's accountant. An inconsistency between the respondent's financial records and the Loan Agreement may cast some doubt on the authenticity of the Loan Agreement but it did not mandate a finding that the loan was not made to the appellant and paid to Linfa & Co at her direction.
80 In relation to [68(c)] and [68(d)] above, even though the Magistrate did not adequately explain how the appellant could have been responsible for the sending of the 3 August 2004 fax from Melbourne when she was in Sydney on that day, there were features of the fax that indicated that the appellant was its author and intended it to be sent to the Bendigo Bank. One such feature is the fact that the fax set out the appellant's personal mobile telephone number and requested a change in the bank branch for her personal bank account. If, as the appellant contended, she had nothing to do with the fax or the transfers to and from Linfa & Co's bank account on that day, it would have been expected that, once she became aware of the transfers and the change in the bank branch upon receipt of the relevant bank statements, she would have lodged a formal written complaint to the bank about the unauthorised transactions. The evidence established that the appellant received the bank statements and that she later made 'enquiries' with the Bendigo Bank about the alleged unauthorised transactions but not that she lodged a formal written complaint about them.
81 Another important feature of the 3 August 2004 fax is the Bendigo Bank officer's notation on it, namely, 'Reconfirmed via telephone + signature held on file.'[32] Given that the fax stated that any queries should be directed to the appellant on her mobile telephone number, the most logical inference is that the officer made the notation after speaking to the appellant on her mobile telephone. While the appellant alleged that Mr and Mrs Dattilo had acted fraudulently, no such allegation was made against the Bendigo Bank. Accordingly, the notation must be accepted as representing that the officer spoke by telephone to a person the officer believed to be the appellant, who was an established customer of the bank.
82 The fact that the appellant was in Sydney on 3 August 2004 does not mean that the only available explanation for the 3 August 2004 fax is forgery on the part of Mr Dattilo. For example, it is possible that the appellant had signed and dated the 3 August 2004 fax in advance as part of the loan arrangement prior to departing for Sydney and authorised Mr Dattilo to send it to the Bendigo Bank as soon as the loan funds were transferred into Linfa & Co's bank account, and that both the appellant and Mr Dattilo had forgotten this. In these circumstances, the Magistrate's reasoning is not necessarily unreasonable or flawed. But even if it were, this would not mandate a finding that no valid loan existed.
83 In relation to [68(e)] above, the Magistrate was entitled to find that the Loan Agreement was genuine even if Mr Dattilo's explanations for the respondent's inability to produce the original Loan Agreement were not persuasive. On its face, the Loan Agreement was signed by the appellant and her signature was witnessed by Mrs Dattilo. The Magistrate did not make any adverse credit findings against Mrs Dattilo and he was entitled to accept her evidence.
85 In the light of the above discussion, it simply cannot be credibly asserted that:
(a) there was no evidence upon which the Magistrate could have decided that the parties had entered into a loan agreement and that the appellant had breached it; or
(b) based on the evidence adduced at the MC hearing, the Magistrate, as a reasonable judicial officer, could not arrive at the above decision.
Second ground of appeal: Erroneous legal findings
87 The second ground of appeal alleges that the following findings of the Magistrate were wrong in law:
(a) the Magistrate's finding that the respondent's claim was statute barred;
(b) the Magistrate's finding that there was good consideration for the Loan Agreement; and
(c) the Magistrate's ruling that the copy of the Loan Agreement and the copy of the 3 August 2004 fax were admissible in evidence notwithstanding that the originals could not be produced to allow the appellant to obtain expert evidence about the authenticity of her signature on those documents.
88 The first of the above alleged errors relied on the proposition that the default clause in the Loan Agreement[33] constituted an acceleration clause such that upon the appellant's failure to pay interest when due on 3 August 2005 - which was more than six years before the commencement of the MC proceeding - the entire principal and outstanding interest became due and the cause of action accrued on that day.
89 It is not necessary for me to consider whether, on its proper construction, the default clause constituted an acceleration clause. This is because the Magistrate found as a fact that the contractual obligation was varied to extend the time for the first payment of interest beyond 3 August 2005.[34] That factual finding was based on the evidence of Mr and Mrs Dattilo, which the Magistrate was entitled to accept, and has not been challenged on appeal. It follows that the appellant did not breach the Loan Agreement on 3 August 2005 and that the MC proceeding, which was commenced on 3 October 2011, was not statute barred.
90 The second and third alleged errors are devoid of merit. The Magistrate was entitled to find, as he did in substance, that the execution of the Loan Agreement on 13 August 2004 and the transfer of the amount of $35,000 on 3 August 2004 were preceded by discussions between the parties in which they agreed on the essential terms of the Loan Agreement. Consistently with ss 51 and 135 of the Evidence Act 2008 and his understanding of the evidence as a whole, the Magistrate was also entitled to rule that the copy Loan Agreement and the copy 3 August 2004 fax were admissible in evidence.
91 For the above reasons the second ground of appeal must be rejected.
Third ground of appeal: Denial of natural justice; mistrial
92 In the course of the hearing of the appeal, the appellant applied for leave to amend her notice of appeal to include a third ground. As Madge did not oppose the application, the appellant was given leave to add a third ground of appeal.
93 This third ground of appeal, in summary, was that the appellant was denied natural justice in that the Magistrate called for evidence, unreasonably interrupted counsel, cross-examined a witness and expressed views on the evidence during the course of the proceeding to such an extent as to:
(a) deprive the appellant of the ability to conduct her case in the manner determined by her;
(b) led the appellant to believe that Mr Dattilo was not to be accepted as a witness of credit and that counsel for the appellant need not exploit any advantage or further advantage otherwise to be gained from cross-examination; and
(c) led the appellant to believe that the respondent's case would not be accepted by the Court and thus deprived the appellant of the opportunity to conduct her case to her advantage by continually interrupting her counsel, engaging a witness to the disadvantage of counsel and calling evidence of his own accord.
94 The conduct of a judicial officer during the trial of a civil action may cause a mistrial for a number of reasons. Two reasons which are presently relevant are where the conduct gives rise to a reasonable apprehension of bias and where the conduct involves such excessive interference with a party's running of his or her case that it deprives that party of a trial according to law.
95 In Ebner v Official Trustee in Bankruptcy,[35] Gleeson CJ, McHugh, Gummow and Hayne JJ set out the following test of apprehended bias:
Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge ... the governing principle is that, subject to qualifications relating to waiver ... or necessity ... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.[36]
96 Their Honours stated that the application of that principle has two steps. The first step is to identify what it is said might lead a judge to decide a case other than on its legal and factual merits. The second step requires an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.[37]
97 In Vakauta v Kelly,[38] Brennan, Deane and Gaudron JJ expressed the opinion that the appearance of impartial justice could be compromised if the words or actions of a trial judge conveyed the impression that preconceived adverse views about a particular witness were influencing the judge's approach to the case to an extent that:
the judge was entering the arena to denigrate the witness or to oppose the witness' views or that the judge was biased against the party who had called that particular witness or that the judge was likely to be concerned, in the judgment actually deciding the case, to vindicate the preconceived adverse views about the witness by findings contrary to whatever views that witness might express.[39]
98 However, the expression of tentative views during the course of argument as to matters on which the parties are permitted to make full submissions does not manifest partiality or bias.[40]
99 Procedural fairness is directed at the fairness of the decision-making process rather than fairness of outcome, and includes a judicial obligation to afford a party a reasonable opportunity to present or meet a case.[41] The introduction by a trial judge of material not yet in evidence may render a hearing unfair in the relevant sense, particularly when the material does not form part of the case to be presented by the party affected.[42]
100 In Vakauta, Brennan, Deane and Gaudron JJ stated that when comments which give rise to a reasonable apprehension of bias are made, a party with legal representation is not entitled to stand by and wait until the contents of the final judgment are known before deciding whether to attack the judgment. By failing to object to the judge's remarks at the time they are made, the party waives any right to appeal against an adverse judgment on the ground of what was said at the trial.[43]
101 The proper limits of a judge's interference with a party's running of his or her own case were described by Denning LJ in Jones v National Coal Board[44] in the following well-known passage:
the judge is not allowed in a civil dispute to call a witness whom he thinks might throw some light on the facts. He must rest content with the witnesses called by the parties ... So also it is for the advocates, each in his turn, to examine the witnesses, and not for the judge to take it on himself lest by so doing he appear to favour one side or the other ... And it is for the advocate to state his case as fairly and strongly as he can, without undue interruption, lest the sequence of his argument be lost ... The judge's part in all this is to hearken to the evidence, only himself asking questions of witnesses when it is necessary to clear up any point that has been overlooked or left obscure; to see that the advocates behave themselves seemly and keep to the rules laid down by law; to exclude irrelevancies and discourage repetition; to make sure by wise intervention that he follows the points that the advocates are making and can assess their worth; and at the end to make up his mind where the truth lies. If he goes beyond this, he drops the mantle of a judge and assumes the robe of an advocate; and the change does not become him well.[45]
102 The appellant relied on R v Mawson,[46] which sets out the principles that apply to excessive interference or involvement by a trial judge in the conduct of a criminal trial. In that context, such interference or involvement may constitute such a departure from the due and orderly processes of a fair trial as to amount to a miscarriage of justice. Such a miscarriage may arise where the judge prevents a witness from giving a full account of the facts as they understand them to be, or seems to identify with one or other party to the litigation.[47]
103 A trial judge may improperly 'enter the arena' by taking actions such as making good deficiencies in one party's case by making his or her own enquiries, relying on material that has not been produced by either party, or reopening the case without notice to one of the parties.[48]
104 The appellant also relied on R v Esposito,[49] in which Wood CJ stated that when asking questions of a witness the trial judge walks a narrow line. There is nothing wrong with questions designed to clear up answers that may be equivocal or uncertain or to identify, within reason, matters that may be of concern to the judge. However once the judge resorts to extensive questioning - particularly of the sort that amounts to cross-examination in a criminal trial before a jury - the judge is on thin ice. The 'thinness of the ice' will depend on the identity of the witness being questioned, and on whether the judge's questions appear to be directed at elucidating an area of evidence that has been overlooked or left in an uncertain state, or directed towards establishing a point that is favourable or adverse to the interests of one or other of the parties.[50]
105 Wood CJ cited extensively from Galea v Galea,[51] in which Kirby A-CJ stated that the test to be applied in the context of excessive judicial intervention is whether the judicial questioning or pejorative comments have created a real danger that the trial was unfair. His Honour reviewed the authorities and identified a distinction between the limits of questioning or comments by a judge when sitting with a jury and when sitting alone in a civil trial. Greater latitude in questioning and comment will be accepted where a judge is sitting alone.[52] Where a complaint is made of excessive questioning or inappropriate comment, the appellate court must consider whether such interventions indicate that a fair trial has been denied to a litigant because the judge has closed his or her mind to further persuasion, moved into counsel's shoes and 'into the perils of self-persuasion'.[53]
106 The appellate court must consider the context of the whole trial and the number, length, terms and circumstances of the interventions. Interventions which suggest that an opinion has been finally reached must be distinguished from those which are provisional, put forward to test the evidence and invite further persuasion.[54] The point at which the judicial intervention occurred is also relevant - a vigorous interruption early in the trial or in the examination of a witness may be less readily excused than one at a later stage which is designed to permit the judge to better comprehend the issues and to weigh the evidence of the witness concerned.[55]
107 In order to determine whether the Magistrate's conduct in the present case was such as to deny the appellant natural justice or to result in a mistrial, I have read the entire transcript of the MC hearing. It is readily apparent from the transcript that the Magistrate:
(a) excessively intervened in the conduct of the hearing;
(b) vigorously cross-examined Mr Dattilo and the appellant and cut across them before they finished their answers;
(c) expressed adverse views about the veracity of the evidence of Mr Dattilo and, to a lesser extent, the appellant while they were giving evidence;
(d) made facetious comments, told irrelevant anecdotes and used indiscreet language;
(e) made cynical remarks about the parties' case theories in the presence of Mr Dattilo and the appellant; and
(f) effectively adduced new evidence to rebut Mr Dattilo's evidence by initiating a telephone call to the respondent's accountant during the hearing and asking him questions.
108 There are many examples of the above conduct. What follows are the worst instances of the Magistrate's behaviour in relation to Mr Dattilo and the appellant.[56] In all the extracts from the transcript, the emphasis is mine.
109 The first incident relates to a line of questioning from the Magistrate about the Heidelberg MC proceeding and why the respondent's corporate records were not included in the list of items allegedly removed from Victoria Street by Ms Rosa Fato and Mr Cosentino.
His Honour: Well the relevant question for me sir is why didn't you include in the Heidelberg complaint any reference to documents that were taken that related? Business documents?
Mr Dattilo: All right, mainly to - I'd say two two reasons.
His Honour: Yes?
Mr Dattilo: One is because the complaint hasn't been drafted by a lawyer, ah the one on the 29th hasn't been drafted by - - -
His Honour: The Heidelberg matter?
Mr Dattilo: Yes and the second one yes has been drafted by the amended one - - -
His Honour: Yes?
Mr Dattilo: Has been drafted by Starnet Legal.
His Honour: Yes?
Mr Dattilo: Ah the first one hasn't been drafted by the - - -
His Honour: Well why didn't - why didn't the amended document include references to company or business documents that had disappeared?
Mr Dattilo: Ah look I believe because I made the, what it's called, the the complaint against ah ah Fato was already on foot and also because in my statement to the police or whatever was ah destroyed and taken in the circumstances of why they've destroyed or taken the documentation, then be set up in that ah in the record.
His Honour: But do you see the prayer for relief in the amended complaint and presumably in the original complaint - - -?
Mr Dattilo: Yes.
His Honour: Would not only seek damages in respect of property [that has] been lost or taken or converted but you seek an order for the delivery up of the property. In other words your lawyers, using lawyers language, are asking the court to compel the other side to not only compensate, but to deliver up, hand over the property that was contained there that's gone missing. Did you not think it was important, did you turn your mind to the question of company records that had gone missing?
Mr Dattilo: No ... because like I said this is not my proceeding.
His Honour: Well come on it is really. You were the moving force behind it or you were the one who gave instructions. You were the one who gave the list of documents?
Mr Dattilo: What do you mean to give give instruction?
His Honour: You instructed Starnet Legal in relation to this proceeding in Heidelberg didn't you?
Mr Dattilo: No.
His Honour: Well who did?
Mr Dattilo: It was with mother-in-law - - -
His Honour: Your mother-in-law did it?
Mr Dattilo: Yes.
His Honour: So she put it - - - ?
Mr Dattilo: To Starnet Legal - - -
His Honour: Are you seriously suggesting to me that your mother-in-law put the list of these documents together?
Mr Dattilo: No no no, the list I - - -
His Honour: You did - - -?
Mr Dattilo: I provided the list.
His Honour: Yes, you've provided instructions. You told the solicitor what to pursue, what documents, what items had gone missing, it was you wasn't it?
Mr Dattilo: Yeah it was already in in the first draft - - -
His Honour: Well why not - why not admit that, why are you playing with me?
Mr Dattilo: I'm not playing with you - - -
His Honour: Why were you not?
Mr Dattilo: I'm not understanding what what you're - what you're asking me.
His Honour: Yes you are, yes you are. The Heidelberg proceeding?
Mr Dattilo: Yes.
His Honour: The list of items that had gone missing. You put that list together?
Mr Dattilo: In the first complaint yes.
His Honour: Both complaints?
Mr Dattilo: No, the first one yes Your Honour.
His Honour: Nonsense, nonsense - - -?
Mr Dattilo: The second - - -
His Honour: [They're] exactly the same, there are no additional items?
Mr Dattilo: Yes yes I understand that but second one was - - -
His Honour: So ... the first one was the same as the documents in the - same as the items in the second, TV, DVD - - -?
Mr Dattilo: Yes yes.
His Honour: Right and you told your lawyer? You gave the instructions didn't you? Your mother-in-law didn't you did?
Mr Dattilo: No I didn't.
His Honour: Well who gave - who told Starnet Legal that these items had gone missing?
Mr Dattilo: Ah Starnet Legal had already the the item missing from the first complaint.
His Honour: Which you gave?
Mr Dattilo: Yes.
His Honour: So you were the one who gave instructions?
Mr Dattilo: To who? Ah the first - - -
His Honour: Starnet Legal?
Mr Dattilo: The first complaint wasn't done by Starnet Legal Your Honour.
Mr Kirby: Who did the first complaint?
Mr Dattilo: I I I drafted.
Mr Kirby: You drafted?
Mr Dattilo: Yeah.
Mr Kirby: Yes - - - ?
Mr Dattilo: No no no, what I'm saying is I drafted the complaint - - -
His Honour: So it was your information?
Mr Dattilo: Yes.
His Honour: Right and then you gave it to Starnet Legal and they took it and they put it in the second complaint, the amended complaint?
Mr Dattilo: In a in a legal terms, yes.
His Honour: Right so you're the person who's giving all the relevant information to the court about what went missing from Victoria Street in Brunswick, right? Nobody else. It wasn't your mother-in-law, it wasn't anybody else, it was you?
Mr Dattilo: No but I didn't all gave a bit. I gave my in my evidence Your Honour only on my my personal belongings and on my on my business belonging and then my my wife gave evidence ah gave ah details of personal belongings as well.
His Honour: There's nothing here about business documents that have gone missing and that's the whole point?
Mr Dattilo: No no I'm talking about the business ah um ah stock you know paragraph 7, 8 sorry or the first one.
His Honour: All of that information came from you, you put it together and filed it in the court and then in the amended complaint you gave it to Starnet Legal and they copied it and put it in the amended complaint, correct?
Mr Dattilo: Well yeah I guess so.
His Honour: What do you mean you guess so?
Mr Dattilo: Yes that's how how they obviously they done.
His Honour: Well the answer is yes, why do you say I guess so? Are you trying to confuse me? Are you trying to give false evidence to me?
Mr Dattilo: No no I'm confused because I do not understand you.
His Honour: No I don't accept that, I think you're prevaricating with me. You gave this information to the court in Heidelberg? Correct?
Mr Dattilo: Yeah on the first complaint yes.
His Honour: Yes?
Mr Dattilo: Yes.
His Honour: And then you gave that information to your solicitors and they put that together in the amended complaint correct?
Mr Dattilo: Yes.
His Honour: Right and that information all came from you, didn't it?
Mr Dattilo: No not all.
His Honour: Right what parts didn't?
Mr Dattilo: The personal belongings, the information that came only from me was the business ah belongings in paragraph 8.
His Honour: Yes?
Mr Dattilo: And parts of paragraph 7.
His Honour: Well who gave that information?
Mr Dattilo: Which one.
His Honour: The ones you've just identified?
Mr Dattilo: I I I gave the, I put that information because that's was my list of items.
His Honour: Yes Mr Kirby.
110 The second incident relates to the crossexamination of Mr Dattilo about the 3 August 2004 fax and whether it was sent to the Bendigo Bank by him or the appellant.
Mr Kirby: That says 3 August 04 04:04p[m] and then right, so that's the date and time?
Mr Dattilo: Mmm.
Mr Kirby: And then it's got the fax number of ... ?
Mr Dattilo: Yes.
Mr Kirby: See that, so if that's accepted that that's how the fax was transmitted it would seem that on 3 August it's been transmitted from the Ruby Street fax machine?
Mr Dattilo: Mmm.
Mr Kirby: Do you accept that?
Mr Dattilo: Yes I can, yes.
Mr Kirby: So and you see and it's been sent to the Bendigo Bank on that day from Ruby Street, but you - you - [you're] very clear that my client wasn't in Melbourne on 3 August. So if she wasn't in Melbourne on 3 August she couldn't have been the one who sent this fax to the bank, could she?
Mr Dattilo: Yes I agree.
...
Mr Kirby: Her evidence will be ... that she only found out about how the monies were transferred, this $35,000 into Linfa & Co and out to Dattilo Holdings, after she started making enquiries after you'd commenced or your company had commenced this proceeding?
Mr Dattilo: Ah.
Mr Kirby: That's putting to you what her evidence is - - -?
Mr Dattilo: Yeah yeah OK.
Mr Kirby: And her evidence is that she didn't sign this?
Mr Dattilo: Mmm.
Mr Kirby: So I'm I'm putting putting to you her case that it was you who arranged this fax and that you put her signature on it to send it to the bank?
Mr Dattilo: I don't know.
Mr Kirby: Do you accept that?
His Honour: Put her signature or forged it?
Mr Kirby: Forged her signature - - - ?
Mr Dattilo: Forged it?
Mr Kirby: You forged her signature, you forged her signature?
Mr Dattilo: That will be her evidence.
Mr Kirby: No, yes I'm putting that to you though?
Mr Dattilo: If I did it?
Mr Kirby: Yes?
Mr Dattilo: No.
111 The third incident relates to Mr Dattilo's evidence during cross-examination - after he was recalled - that he had not been able to produce records of the respondent for the 2006 financial year. Mr Dattilo said that the documents were not in his possession, but that he had telephoned his accountant Mr Suman and left two messages. The following exchange then took place:
His Honour: Did you say it was urgent, you were in a court case?
Mr Dattilo: Yeah, he's aware of the court case.
His Honour: Would you like to ring him now? Perhaps we can get him on the phone?
Mr Dattilo: I've got no problem.
His Honour: It might be a good idea, mightn't it?
Mr Dattilo: Yeah, OK.
His Honour: We've got a phone here. Why don't we do that, gentlemen?
Mr Kirby: I'm content for the witness to make further inquiries, your Honour, that's if it's convenient to the court.
His Honour: What's the name of your accountant?
Mr Dattilo: It's Suman D. ...
His Honour: Why don't you ring him now and see whether he's in and see whether he got your messages. My clerk will phone? ... I direct my clerk to telephone the number and ask to speak with the gentleman in question and tell whoever answers the phone that you're calling from the Magistrates' Court of Victoria and a proceeding is on foot and we wish to speak to the gentleman.
112 It appears from the transcript that Mr Suman answered the telephone and that the Magistrate spoke to him without observing any formality (such as asking for Mr Suman to be sworn) using the courtroom telephone's speaker function.
His Honour: Mr Suman, this is Magistrate Ginnane. I am telephoning from the Melbourne Magistrates' Court. We are in the midst of a proceeding involving Regione Calabria Pty Ltd and another party. Are you aware of that?
Mr Suman: I am just dealing with them so they have gone back [indistinct].
His Honour: Mr Dattilo has left messages for you to telephone him in order to identify and put together some company records. Are you aware of that?
Mr Suman: I'm just [indistinct] at home so I'm not totally confident about things and I am going to see him soon so that we can have a [indistinct] file ...
His Honour: Mr Suman, did you receive some messages from Dattilo yesterday?
Mr Suman: No, no, I didn't get any messages yesterday.
His Honour: Mr Dattilo says he left messages for you to phone him because he needs some company records in regard to his company that he says you have. Are you aware of that?
Mr Suman Yeah, [indistinct] he has to go ... to the previous accountants. He has just asked me to do the [indistinct] Year 2005 and I have not [indistinct] to send him anything [indistinct].
His Honour: Thank you. Just one moment, please. Do either of you wish to say anything to the gentleman on the phone?
Mr Kirby: I don't think so, Your Honour.
His Honour: All right, thanks Mr Suman.
113 The Magistrate then explained to Mr Dattilo that a proper call had been made for the respondent's business records for particular years, and that they had not been produced. His Honour said:
You've told me this morning under oath that you have left messages with Mr Suman. Mr Suman has suggested in very strong and clear terms that he is not aware of having received any messages from you. Sir, what is the position, did you telephone him or not?
114 During Mr Kirby's closing address, at Mr Boden's request, the Magistrate agreed to look at Mr Dattilo's mobile telephone which contained two text messages that Mr Suman had apparently left two days previously stating that he would contact Mr Dattilo.
115 The fourth incident occurred shortly after the telephone call to Mr Suman. Mr Dattilo's evidence was that the respondent had not filed a tax return since the 2005 financial year, six years before the hearing. The Magistrate gave Mr Dattilo a warning in the following terms:
His Honour: Mr Dattilo, I warn you that you are under oath?
Mr Dattilo: Yes.
His Honour: Do you understand the significance of being under oath?
Mr Dattilo: Yes.
His Honour: Any answer you give that is knowingly false can land you in a great deal of trouble, do you understand that?
Mr Dattilo: Yes, I understand.
His Honour: Be very careful in response to what I say to you now. Is it your sworn evidence that all the accounts relating to Regione Calabria for the years since the last [tax] return that it's in this court, 2005, as I understand it?
Mr Dattilo Yes.
His Honour: Is it your evidence that those accounts are with Mr Suman?
Mr Dattilo: Yes
His Honour: Be very careful?
Mr Dattilo: Yes ...
116 During the examination in chief of the appellant, the Magistrate asked her the following questions about whether she received bank statements for Linfa & Co's bank account:
His Honour: You get regular bank statements?
Appellant: I do.
His Honour: And you're saying the very first time you became aware that $35,000 had come into your account - - -?
Appellant: M'mm h'mm.
His Honour: - - - was last year?
Appellant: Yes.
His Honour: Are you serious?
Appellant: I'm very serious. I've never traded.
His Honour: You get the statements presumably, you read your statements?
Appellant: I get the statements, yes, and I still get the statements but - - -
His Honour: And you're saying you read that statement - - -?
Appellant: No, I don't read the statement.
His Honour: What do you do with it?
Appellant: I just file it. At the end of the year I take them out and then put them away.
His Honour: Do you file a return?
Appellant: Sorry?
His Honour: Do you file any return?
Appellant: To?
His Honour: The Tax Office or anybody in relation to income earned by the company?
Appellant: Yeah, my accountant. There's nothing, I don't get them here.
His Honour: $35,000 went into the account?
Appellant: But I didn't ask for $35,000.
His Honour: I know you didn't ask but it's there. Are you seriously saying to me you did not look at your account until last year?
Appellant: Yes.
117 At this point, Mr Kirby interrupted the Magistrate and elicited evidence from the appellant that Linfa & Co did not trade. The Magistrate then made the following comments in respect of the appellant's evidence about whether she checked the bank statements for Linfa & Co's bank account:
His Honour: It's for a very short period of time this document isn't it? It's only for the period from 1 August 04 to 01/06, so one month.
Mr Kirby: Yes, well it's the relevant transactions, Your Honour.
His Honour: Well I understand, but, you know, I asked the question how - one of the issues I'm going to deal with this case obviously at the end of the day is determining where respective crediting goes if some issues arise.
Mr Kirby: Yes.
His Honour: Your client has said that she paid no attention to this account other than to effectively file away the statements when they arrived, and that's because the account was inactive, effectively inactive. Well $35,000 went in and 35,000 went out, and she wrote a cheque of $560 on 16 August. It begs the questions perhaps what other activities was going on with this account, and whether or not I ought accept at face value your client's evidence about the fact that she simply filed away these statements when they came. Did you not concern with - if this was effectively an inactive account - - -?
Appellant: M'mm h'mm.
His Honour: - - - did you not concern yourself with keeping it open and incurring fees and paying fees?
Appellant: As in yearly fees?
His Honour: Well there are transaction fees, there are no doubt other - there may well be other fees associated with the account?
Appellant: I had the instruction of - well I didn't - - -
His Honour: Why keep it open?
Appellant: I just kept it open just in case.
118 Another theme on which the Magistrate questioned the appellant related to what actions she had taken upon discovering the transfers of the loan amount in and out of Linfa & Co's bank account. His Honour asked the appellant whether she had written to Mr Dattilo asking why he had been 'putting money in and taking money out of an account which [he had] no authority to'. The appellant answered that she had only found out about the transfers in 2011. The following exchange then took place.
His Honour: Well did you write - did you ring him, fax him, write him, email him, threaten him, say what the heck have you been doing interfering with my account?
Appellant: No, I didn't. No.
His Honour: Why not?
Appellant: Cos you can't - he doesn't respond. They don't respond.
His Honour: Did you go to the police?
Appellant: I'm in the process.
His Honour: No, did you [go] to the police?
Appellant: Yes.
His Honour: You did, last year did you?
Appellant: No, no, no.
His Honour: About this? Because on what you say this is a fraudulent - - -?
Appellant: Yes.
His Honour: - - - interference with your bank account?
Appellant: And I have paperwork that I am lodging.
His Honour: No, no, that's good - - -?
Appellant: I know you're saying - - -
His Honour: - - - I'm just asking did you do anything?
Appellant: Not last year.
His Honour: No, all right. Yes, Mr Kirby.
119 Mr Kirby then asked some questions to clarify the answers that the appellant had given to the Magistrate's questions. The Magistrate later resumed questioning the appellant about whether she had been to the police.
His Honour: Let me just get this right, you have not approached the police in regard to any complaint against your brother-in-law that he or someone else forged your name?
Appellant: I have now.
His Honour: No, I'm not interested in now?
Appellant: Yeah, yeah.
His Honour: I've asked you repeatedly?
Appellant: OK.
His Honour: At the time that you became aware last year did you make a complaint to the police?
Appellant: No.
His Honour: No, thank you. Yes Mr Kirby.
120 Mr Kirby then asked a question to clarify the position and moved to the logic of bankruptcy proceedings that the respondent had initiated against the appellant. However, the Magistrate returned to the issue of a complaint to the police. The following exchange then took place.
His Honour: I just want to know at what stage, if at any stage, did Ms Fato raise in any proceeding, bankruptcy proceeding, Heidelberg proceeding, Supreme Court proceeding, is there any reference in any of the proceedings other than this for forgeries of signatures?
Mr Kirby: Yes.
His Honour: Right, well I might be helped if I know something about this.
Mr Kirby: I understand that Your Honour and I interjected about it.
His Honour: No, that's all right.
Mr Kirby: But that was a point about the police - - -
His Honour: I'm not tied down by how we get there, but let me be frank it strikes me as peculiar that someone says to me that they're aware that someone forged their signature and interfered with their bank accounts.
Mr Kirby: Yes.
His Honour: And I am asked to ultimately decide a matter in circumstances where I have no evidence to the effect that anybody who allegedly is the victim of such [an] alleged criminal act sits by in the sense that they don't raise that matter with the authorities. Now it may all be explicable for one reason or another, but it strikes me that there's a big [gaping] hole in regard to that.
Let me say that if I became aware that someone had accessed my accounts, if I became aware that $35,000 or thereabouts had gone into my account on one day and come out the next in circumstances where I maintained I had had no involvement in that transaction and I then became aware that documents were being perpetrated that purported to be signed by me in circumstances where I had not signed them, I would be on to the Victoria Police quick smart.
Mr Kirby: Yes. Your Honour, I think - - -
His Honour: This is a case that to some extent depends upon the view I take of the respective credit of Mr Dattilo and Ms Fato.
Mr Kirby: Yes.
His Honour: But it's not my case.
Mr Kirby: No, it's not, but I think the issue's been raised and we've touched on this Your Honour about other proceedings.
His Honour: Everybody's hinted at things, but nobody's really got a satisfactory response.
Mr Kirby: Well could you give His Honour an explanation as best you can - perhaps a summary of the disputes between yourself and your brother-in-law?
His Honour: I don't think really Mr Kirby that's my point. My point is why your client did not on becoming aware last year that her name had been forged and her bank accounts had been interfered with as is being put in this case did not pick up the telephone and ring 000 and say I want to speak to the police and make a complaint.
Mr Kirby: Well that's really for my client to answer.
His Honour: I understand that.
Appellant: I can go back to why all this is happening, but I don't know if you want to know it all.
His Honour: Did you think about ringing the police and making a complaint?
Appellant: I did think about ringing the police - - -
His Honour: Yes, and why did you not do that?
Appellant: Well with the current issue as Mr Kirby had mentioned in the beginning there's half a million sitting in the Supreme Court, I did get my signatures checked there and the one that I know shouldn't have happened which has happened which has created my sister to be on the title, I did not sign and I had that checked. ...
His Honour: Well Ms Fato, did you ever get your solicitors, did you ever instruct your solicitors to write a letter to your brother-in-law's solicitors and say listen - - -?
Appellant: Yes.
His Honour: - - - I'm being sued apparently up hill and down dale - - -?
Appellant: Yes.
His Honour: - - - in respect of a variety of transactions. These transactions are false, they've been perpetrated by fraudulent signatures attached to my account. Moreover my accounts have been the subject of interference with by persons other than those authorised on this account. I believe it to be Mr Dattilo. You best withdraw these proceedings immediately otherwise my client will proceed to make a [complaint] to the fraud squad in regard to these matters?[57]
Appellant: Yep.
His Honour: Now did you take any such action?
Appellant: I did speak to my previous solicitor in regards to that. The extent obviously didn't go through.
His Honour: Yes, all right?
Appellant: So I'm now going myself.
121 After the appellant gave evidence that her relationship with Mr Dattilo had become 'toxic' in April 2010 following the sale of Victoria Street, the Magistrate asked further questions about the appellant's allegation that Mr Dattilo had prepared a fraudulent loan agreement.
His Honour: Can you think of any reasons in 2010 - - -?
Appellant: Yes.
His Honour: - - - why your brother-in-law would have sought to set you up, fix you up to use an expression - - -?
Appellant: Yes.
His Honour: - - - for a loan that was said to have come into existence back in 2004?
Appellant: M'mm.
His Honour: In other words my question really is to concentrate your mind on if he wanted to set you up and bankrupt you or compromise you in some way he could have could he not simply have created a false document that says you were indebted to him in respect of a loan that was made in 2009 - - -?
Appellant: That's right.
His Honour: - - - or 2008?
Appellant: Yep.
His Honour: Or 2007, or 2006?
Appellant: Yep.
His Honour: Or 2005, so have you got any suspicions as to why he chose the 13 August to create a false loan in 2010 or thereabouts, going back to 13 August 2004, do you follow?
Appellant: I do and my answer to that would be that he would - he wants to make sure that we're all bankrupt, cos he's done it to all my other siblings.
His Honour: Right, yes?
Appellant: Cos we've still got money in the courts.
His Honour: Right, you understand my question though I presume?
Appellant: Yeah.
His Honour: Which is - the point of my question is really this, if he set you up he could have done that arguably by setting you up in regard to a loan that he said you entered into [with] Regione Calabria in 2009. Any reason why you think he went to the trouble of being so sophisticated as to set up a loan going back to 13 August 2004?
Appellant: No idea why he did it.
...
His Honour: The best you can understand the position is this, on third or 4 August 2004 - - -?
Appellant: Yep.
His Honour: - - - you believe the position to be that your brother-in-law moved $35,000 into and out of one of your accounts, correct?
Appellant: Correct.
His Honour: All right?
Appellant: Yeah.
His Honour: Then probably subsequent to the family relationship becoming toxic in about 2010?
Appellant: Yes.
His Honour: He decides on your case - - -?
Appellant: Yeah.
His Honour: - - - to stitch you up and he creates a false loan agreement?
Appellant: M'mm.
His Honour: And he for some reason or another - - -?
Appellant: Yep.
His Honour: - - - thinks all right, well I moved $35,000 in and out of my sister-in-law's account back in August 2004, I will construct the loan agreement to reflect an indebtedness arising from that transaction those years ago, is that the case?
Appellant: That's what - - -
His Honour: That's what you believe?
Appellant: That's what I believe, yes.
His Honour: Yes, thank you Mr Kirby?
Appellant: Yes.
Mr Kirby: No further questions, thank you.
122 On the second day of the MC hearing, during the crossexamination of the appellant, the Magistrate asked her to leave the hearing room and he then had the following discussion with the parties' lawyers about Mr Dattilo's evidence about the purpose for which the alleged loan agreement was entered into:
His Honour: Mr Boden, your client's evidence was about as clear as mud on that.
Mr Boden: Yes.
His Honour: He was all over the shop. He said it could have been this or it could have been that. He gave absolutely no clear evidence as to what the transaction was in respect to. His evidence was clear that Ms Fato or Linfa owed $35,000.
Mr Boden: Yes.
His Honour: But trying to identify in respect of what the debt was for was about as clear as mud. It was either for a KFC business, it was either for the vinegar venture and that's an expression I took down because it had a certain ring to it, alliteration to it and I wrote it down.
No, absolutely not did he give any direct evidence of the type that you're now putting [to the appellant]. You're putting as I would understand it a very clear set of questions to this witness about the commercial arrangements that gave rise to what is said to be a debt of $35,000. That is not what I took the evidence to be yesterday.
Now if you've got clear instructions that's one thing, but that was not the position as I understood it yesterday. Mr Kirby do you take - - -
Mr Kirby: Exactly the same as Your Honour.
Mr Boden: Well I have to look at my notes but what - - -
His Honour: Well you can look at them.
Mr Boden: Yes.
His Honour: I am dead certain on what I just put to you being correct.
Mr Boden: Yes.
His Honour: Your client was distinctly uncommitted as to which of a number of potential arrangements may have been the reason for the need for Ms Fato either in her personal or corporate capacity to borrow $35,000 to satisfy a debt. Your client's evidence is unashamedly clear that he says Ms Fato was in debt for $35,000.
123 At the close of the second day of the MC hearing, the Magistrate said to the parties' lawyers: 'This is a credit case to some extent on one view.' His Honour went on to say: 'And I want to hear what you both say I should form a view about to the extent I've got some concerns about bits of evidence that arise from the testimony of witnesses.'
124 On the final day of the MC hearing, near the end of Mr Dattilo's crossexamination after he was recalled, Mr Dattilo said that the Magistrate did not accept his evidence of the previous day. The Magistrate responded as follows: 'Mr Dattilo ... this is the second [time] you've mentioned it, I haven't formed any concluded view about anybody's evidence in this case yet'.
125 During the final addresses, the Magistrate properly engaged with the parties' lawyers by testing their submissions. However, he continued to make facetious comments and to tell irrelevant anecdotes. The appellant has not specifically complained about anything the Magistrate said during the final addresses.
126 There were two broad limbs to the appellant's submission that the conduct of the Magistrate denied her natural justice and resulted in a mistrial.
127 The first limb was that the Magistrate effectively took over the cross-examination of Mr Dattilo and prevented the appellant's trial counsel[58] from achieving his forensic objectives because he was not able to freely pursue his chosen cross-examination strategy. The appellant relied on two examples.
128 The first example was the incident set out at [110] above dealing with the cross-examination of Mr Dattilo about whether he had sent the 3 August 2004 fax to the Bendigo Bank. It was said that trial counsel was satisfied with the fact that Mr Dattilo had answered 'I don't know' instead of 'no' when he was asked whether he had put the appellant's signature on the fax and sent it to the bank, and that counsel did not wish to ask any further questions on the issue so as not to give Mr Dattilo an opportunity to alter his answer. This strategy was said to have been undermined by the Magistrate, who reformulated the question as one involving forgery of the appellant's signature and thereby gave Mr Dattilo an opportunity to provide a denial.
129 The second example was the Magistrate's direct questions to Mr Dattilo about a template that he said he used for preparing loan agreements ('Template'). The appellant's complaint was that, instead of permitting her trial counsel to ask a series of questions aimed at locking Mr Dattilo into a particular position before asking direct questions that would have produced damaging answers, the Magistrate intervened and asked direct questions at the outset. It appears that the disadvantage that the appellant was said to have suffered was that this intervention prematurely alerted Mr Dattilo to the end point of the cross-examination and enabled him to respond in a self-serving way.
130 The second limb was that the Magistrate's adverse comments about the veracity of Mr Dattilo's evidence during the hearing were so extensive that the appellant's trial counsel was reasonably entitled to believe that the Magistrate would reject Mr Dattilo's evidence and find in favour of the appellant, and that it was not necessary for counsel to fully cross-examine Mr Dattilo. In other words, the appellant contended that the Magistrate's conduct led her trial counsel reasonably to believe that the appellant would be successful in defending the MC proceeding and that full and vigorous cross-examination of Mr Dattilo was not necessary.
131 The appellant emphasised that the above limbs had to be considered in the context that it was common ground at trial that the Magistrate's findings on the credibility of the appellant and Mr Dattilo would influence the outcome of the MC proceeding.
132 Madge submitted that the Magistrate's interventions did not deny the appellant natural justice or cause a mistrial because the impression they conveyed - that the Magistrate had a negative view of Mr Dattilo's credit - coincided with the Magistrate's findings in his Reasons. The Magistrate's decision was said to have been reached on the evidence as a whole - particularly the contemporaneous documentary evidence - rather than on the basis that Mr Dattilo was a credible witness.[59]
133 In my opinion, the Magistrate's behaviour, as summarised at [107] above, transgressed the limits of legitimate judicial involvement in the conduct of a trial. However, when the trial is considered as a whole, I am not satisfied that the appellant has made out the first limb of her natural justice and mistrial ground of appeal.
134 The Magistrate's question that is referred to at [127] above was not inappropriate in the context of the evidence that had already been given and the puttage that had already occurred about the identity of the sender of the 3 August 2004 fax. As the appellant's case was that she did not sign or send that fax and allegations of forgery had already been made against Mr Dattilo, the Magistrate was entitled to seek clarification of whether 'put her signature' meant 'forged her signature'. As the trial did not involve a jury, it was not inappropriate for the Magistrate as the judge of the facts to intervene to ensure Mr Dattilo understood the purport of the question.
135 I reject the appellant's contention that her trial counsel was satisfied with Mr Dattilo's answer 'I don't know' and did not propose to ask further questions on the issue in case Mr Dattilo altered his answer. In fact, trial counsel asked a follow-up question, 'Do you accept that' which would have given Mr Dattilo such an opportunity if the Magistrate had not intervened.
136 In these circumstances it is difficult to see what forensic disadvantage the appellant suffered from the Magistrate's intervention.
137 In relation to the Template, while I agree that the Magistrate should not have intervened to the extent that he did on this issue, I do not accept that the intervention caused any forensic disadvantage to the appellant. This is because, far from Mr Dattilo's answers to the Magistrate's direct questions being self-serving, they were vague, contradictory and singularly unimpressive. The answers would have contributed to the overall unfavourable conclusion that the Magistrate reached in relation to Mr Dattilo's credit.[60]
138 The appellant did not point to any other specific incident where the Magistrate's questions of any witness were said to have interfered with the development of her trial counsel's line of examination or to have otherwise adversely affected counsel's forensic strategies. The appellant's submissions that trial counsel may have acted differently or pursued other lines of questioning if the Magistrate had not intervened in the questioning of witnesses to the extent that he did, were very broad and speculative. Having read the entire trial transcript, I am not persuaded that the Magistrate's questions had any material impact on the manner in which the appellant's trial counsel conducted her case.
139 Although the Magistrate often asked questions whose content and tone suggested that they were being put by an advocate rather than a judicial officer, he did so during the entire trial and in respect of the key witnesses of both parties. The Magistrate may have behaved as an advocate but in doing so he did not give the impression that he was the advocate of only one of the parties. Further, some of the Magistrate's excessive questioning was on subsidiary issues and all of the questions were directed at testing what appeared on first impression to be implausible evidence. In the context of the trial as a whole, the questions did not suggest that the Magistrate had already decided the ultimate issues and had closed his mind to further persuasion by the parties' evidence and submissions. Indeed, some of the factual issues that the Magistrate vigorously pursued during the MC hearing were given little or no weight in the Magistrate's decision.
140 It follows that I am not satisfied that the Magistrate's excessive interference in the conduct of the trial deprived the appellant of natural justice or a trial according to law such that a new trial is warranted in the interests of justice.
141 Notwithstanding the irony in the second limb of the appellant's third ground of appeal - the appellant has relied on alleged apprehended bias against Mr Dattilo rather than herself to support her natural justice ground of appeal - I was initially troubled by it. On further reflection, however, I am not satisfied that the appellant is entitled to any relief on the basis of the second limb.
142 There are two reasons for this conclusion. The first reason is that, even though the Magistrate made inappropriate observations on credit issues during the course of the trial, his observations were not confined to Mr Dattilo but also extended to the appellant. It is true that the Magistrate's observations were more scathing in relation to Mr Dattilo and that the respondent may have had grounds to request the Magistrate to recuse himself on the basis of apprehended bias during the time that Mr Dattilo was giving evidence. However, no such request was made and, in response to an observation in passing by Mr Dattilo that the Magistrate had not accepted his evidence, the Magistrate stated that he had not yet formed a concluded view about anybody's evidence.[61]
143 During the cross-examination of Mr Dattilo, the appellant's trial counsel would have been justified in inferring from the Magistrate's intervention that the Magistrate was not impressed with Mr Dattilo's evidence. There was nothing misleading about any such inference, however, because it is consistent with an express finding in the Magistrate's decision.[62]
144 By the time the appellant gave evidence, it would have been abundantly clear to both parties' legal advisors that the Magistrate had serious reservations about the veracity of the evidence of both Mr Dattilo and the appellant. Neither party's lawyers could have reasonably and sensibly concluded from the Magistrate's conduct that their client was assured of success. The Magistrate's reservations became increasingly obvious as the evidence concluded and the parties made their final addresses. The only reasonable conclusion that the parties' lawyers could have reached was that the outcome of the case was uncertain.
145 The trial transcript does not bear out the appellant's submission that her trial counsel was effectively misled by the Magistrate's behaviour into a false belief that the Magistrate would find in the appellant's favour and that it was not necessary for trial counsel to fully pursue cross-examination of Mr Dattilo. The transcript indicates that at the conclusion of each intervention by the Magistrate during the cross-examination of Mr Dattilo, trial counsel resumed his questioning of Mr Dattilo. There is no evidence of any alteration in forensic strategy by trial counsel.
146 Even if the appellant's trial counsel had erroneously formed the belief during the cross-examination of Mr Dattilo that the Magistrate would reject Mr Dattilo's evidence and find in favour of the appellant, that belief would have been disabused during the cross-examination of the appellant. Trial counsel would have had the opportunity at that stage to apply for leave to recall Mr Dattilo to put to him matters which counsel had left to one side while he laboured under the mistaken belief that it was not necessary to question Mr Dattilo on those matters. Counsel did in fact request that Mr Dattilo be recalled for further crossexamination on Mr Dattilo's failure to produce certain business records of the respondent.
147 There is no doubt that the Magistrate should not have initiated a telephone call to Mr Suman, the respondent's accountant, during the MC hearing. It is well established that it is no part of the role of a judicial officer to call witnesses or to introduce new evidence.[63] This is particularly so where the purpose of the new evidence is to test the veracity of evidence given by a key witness for one of the parties. However, this unfortunate incident was to the benefit of the appellant because it undermined the evidence of Mr Dattilo, albeit on a subsidiary issue (availability of financial records). For the reasons already discussed, the incident could not have reasonably induced trial counsel for the appellant to believe that the Magistrate would reject the evidence of Mr Dattilo on all material matters and that it was not necessary for counsel to vigorously cross-examine Mr Dattilo.
148 The second reason for rejecting the second limb of the natural justice ground of appeal is that, even if the Magistrate's behaviour denied the appellant natural justice, her trial counsel was fully aware of that behaviour and did not raise any objection with the Magistrate in relation to it. There was no complaint about any aspect of the Magistrate's behaviour during the MC proceeding. Indeed, in respect of some of the matters about which the appellant now complains, her trial counsel appeared to acquiesce in the Magistrate's conduct.
149 It follows that if, contrary to my conclusion, the Magistrate did breach the rules of natural justice in relation to the appellant, her failure to object to any such breach during the MC hearing constitutes a waiver of the right to rely on such breach in this appeal.[64]
150 Although I have rejected the third ground of appeal, it is necessary for me to place on record that if the Magistrate had exercised more selfrestraint and behaved more discreetly, the third ground of appeal would not have arisen. The Magistrate's behaviour prolonged the trial, would have given rise to a sense of grievance on the part of both parties and added to the grounds of appeal. His Honour was facetious and sarcastic in a tense proceeding involving family acrimony and serious allegations of fraud when he should have been cautious and tactful. The Magistrate would have done well to heed the wisdom and good sense of the principles summarised at [95] to [106] above.
There will ... be an order on the [respondent's] claim and interest with such amount of the claim not to exceed $100,000. I order that the [appellant] pay the [respondent's] costs of the proceeding on the appropriate scale. I will grant a stay of the order for costs for 30 days.[65]
152 A 'Notice of Order Made' was issued by the Magistrates' Court which stated as follows:
DEFENCE TO CLAIM
Claim order:
LINA C FATO to pay REGIONE CALABRIA PTY LTD
Claim $100000.00 and Interest $0 Costs $0 Stay 30 DAYS
OTH order:
153 On 28 March 2013, the Magistrate made an order that the Order made on 20 December 2012 be stayed pending the outcome of the appeal to this Court.
154 The amount of $100,000 in the 'Notice of Order Made' is based on the amount of $98,917.69 that was claimed in the statement of claim,[66] which assumes that default interest at the rate of 16 per cent was payable from the commencement of the loan on 3 August 2004. That assumption is inconsistent with the terms of the Loan Agreement, pursuant to which, in respect of non-payment of interest, the default rate could not apply prior to the due date of the first interest payment on 3 August 2005. More importantly, the assumption is inconsistent with the Magistrate's finding that the time for the first payment of interest was extended by the respondent at the request of the appellant.[67] Accordingly, the amount of $100,000 has been incorrectly calculated.
155 The difficulty is that, as the Magistrate did not make a specific finding about the date to which the obligation to make the first interest payment was extended, it cannot be determined from the Magistrate's decision what period is governed by the ordinary interest rate of 11 per cent per annum and what period is governed by the default rate of 16 per cent per annum.[68]
156 It follows that the Order must be set aside and the MC proceeding must be remitted to the Magistrates' Court to determine on the evidence already adduced what interest is payable under the Loan Agreement and what amount the appellant owes to the respondent.
157 For the reasons set out above, the appeal will be allowed, the Order will be set aside and the MC proceeding will be remitted to the Magistrates' Court for the limited purpose set out at [156] above.
[1] Regione Calabria Pty Ltd v Fato (Unreported, Magistrates' Court of Victoria, Magistrate Ginnane, 20 December 2012) ('Reasons').
[2] The respondent's sole director, Mr Antonio Dattilo, became disqualified from managing any company with effect from 14 October 2013.
[3] The clause does not expressly say that it applies only if the Borrower is in default. The clause may be implicitly so limited because it follows a clause that states that the Borrower is in default if the Borrower is in default of any term of the Loan Agreement.
[4] It appears that the default rate of interest was applied from 3 August 2004.
[11] [1938] HCA 34; (1938) 60 CLR 336, 361-3 ('Briginshaw').
[18] Moorabool Shire Council v Taitapanui [2006] VSCA 30; (2006) 14 VR 55, 70 [57].
[19] [1989] VicRp 18; [1989] VR 197 ('Hoffman').
[20] Hoffman [1989] VicRp 18; [1989] VR 197, 199.
[21] [2008] VSC 9; (2008) 19 VR 335 ('Subramanian').
[22] [1998] 1 VR 83 ('S').
[23] S [1998] 1 VR 83, 89-90.
[24] S [1998] 1 VR 83, 90.
[25] [2003] VSCA 72 (12 June 2003) ('Cehner'). See also Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1, 11; Insurance Manufacturers of Australia Pty Ltd v Heron [2005] VSC 482 (15 December 2005) [63]-[64].
[26] Cehner [2003] VSCA 72 (12 June 2003) [17].
[27] Subramanian [2008] VSC 9; (2008) 19 VR 335, 348 [32]-[34].
[31] [1938] HCA 34; (1938) 60 CLR 336, 361-3.
[35] [2000] HCA 63; (2000) 205 CLR 337 ('Ebner').
[36] Ebner [2000] HCA 63; (2000) 205 CLR 337, 344-5 [6] (citations omitted).
[37] Ebner [2000] HCA 63; (2000) 205 CLR 337, 345 [8].
[38] [1989] HCA 44; (1989) 167 CLR 568 ('Vakauta').
[39] Vakauta [1989] HCA 44; (1989) 167 CLR 568, 572.
[40] Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577, 610 [112].
[41] McWhinney v Melbourne Health [2011] VSCA 22; (2011) 31 VR 285, 294 [30] ('McWhinney').
[42] McWhinney [2011] VSCA 22; (2011) 31 VR 285, 296 [37].
[43] Vakauta [1989] HCA 44; (1989) 167 CLR 568, 572. Toohey J made similar remarks: at 587-8.
[44] [1957] EWCA Civ 3; [1957] 2 QB 55 ('Jones').
[45] Jones [1957] EWCA Civ 3; [1957] 2 QB 55, 64 (citations omitted).
[46] [1967] VicRp 23; [1967] VR 205 ('Mawson').
[47] Mawson [1967] VicRp 23; [1967] VR 205, 207.
[48] Gilfillan v County Court of Victoria [2001] VSC 360; (2001) 123 A Crim R 433, 437 [31].
[49] (1998) 45 NSWLR 442 ('Esposito').
[50] Esposito (1998) 45 NSWLR 442, 472.
[51] (1990) 19 NSWLR 263 ('Galea').
[52] Galea (1990) 19 NSWLR 263, 281.
[53] Galea (1990) 19 NSWLR 263, 281.
[54] Galea (1990) 19 NSWLR 263, 281.
[55] Galea (1990) 19 NSWLR 263, 281.
[56] The examples relating to Mr Dattilo are set out in the order in which they occurred during the MC hearing.
[57] The Magistrate was wrong to suggest that a lawyer acting for a party to a civil proceeding should threaten criminal sanctions against the other party if certain demands are not met.
[68] Mr and Mrs Dattilo gave evidence that the obligation to pay interest was deferred until the sale of the investment property that the appellant owned in Queensland. There are also suggestions in the evidence that the deferral was for a 12 month period.
Fato
Regione Calabria Pty Ltd [2014] VSC 435
(1938) 60 CLR 336
(2006) 14 VR 55
(2008) 19 VR 335
(2000) 205 CLR 337
(1989) 167 CLR 568
(2006) 229 CLR 577
(2011) 31 VR 285
(1998) 45 NSWLR 442
(1990) 19 NSWLR 263