Australian Honey Exports Pty Ltd v Powell

Supreme Court of NSW|2012-09-13|Before: Garling J

Judgment 1Australian Honey Exports Pty Ltd is a company which, in 2007, was based in Seven Hills, Sydney. Its sole director was Mr Roderick Yates. Mr Yates is a man of considerable experience in the area of beekeeping and honey production. 2Mr John Powell was a person who, speaking generally, had assisted Mr Yates in the business being conducted by Australian Honey. Their relationship did not subsist and came to an end some time in September or perhaps early October of 2007. 3Australian Honey, and Mr Yates, appealed to this Court against the decision of the Local Court of NSW (Barkell LCM) delivered on 25 May 2011. 4For the reasons which follow, I have concluded that the summons and the appeal ought be dismissed with costs.

Local Court proceedings 5The disputes between the parties have a lengthy history. The history is uncontentious. 6In or about January 2008, Mr Powell commenced proceedings in the Wollongong Local Court against Australian Honey, claiming a debt in the sum of $8,000 plus interest and costs. 7In February 2008, a defence was filed to this claim and a cross-claim was filed by Mr Yates. The cross-claim alleged that Mr Powell had stolen various goods from the premises of Australian Honey and sought damages. 8Mr Powell filed a defence in April 2008, which denied any liability for the claims made in the cross-claim. 9Proceedings were then stayed for a period of time because criminal proceedings were on foot. On 25 March 2010, an amended Statement of Claim was filed by Mr Powell which named Mr Yates personally as the first defendant, and Australian Honey as the second defendant. 10On 17 August 2010, orders were made in the Local Court striking out the defence of Australian Honey and Mr Yates, and also dismissing their cross-claim. The Local Court ordered that judgment could be entered within 14 days. 11On 29 August 2010, judgment was entered in the Local Court on Mr Powell's claim against Mr Yates and Australian Honey, in the sum of $10,121.96. As well, Mr Yates and Australian Honey were ordered to pay Mr Powell's costs. 12Subsequently, on 23 December 2010, the Local Court ordered that the decision to dismiss the cross-claims of Mr Yates and Australian Honey be set aside. That was because it was a decision which was made in the absence of Mr Yates and Australian Honey. The Local Court, at that time, declined to set aside the judgment was entered on 29 August 2010. It seems that it was not satisfied that there was any defence of substance to that claim. 13The Local Court further ordered that any amended cross-claim by Australian Honey and Mr Yates be filed by February 2011. It made consequential orders. 14It appears that an amended cross-claim was filed and the matter proceeded to a final hearing on the claims made in that amended cross-claim in the Local Court on 21 April 2011, before Barkell LCM. 15The terms of the amended cross-claim are not before this Court, however the transcript of evidence and of the proceedings in the Local Court on 21 April 2011 contains this description of it, namely: "Her Honour: Now, going through the file, this first cross-claim asserts that the cross-defendant wrongfully took equipment. The original cross-claim claimed that the cross-defendant stole various items. That's now been amended to assert that - or to claim that - the defendant wrongfully took the equipment for the cross-defendant's own use." 16Earlier, in the course of the proceedings before Barkell LCM, counsel for Mr Powell had described the proceedings as relating to two discrete claims, one in conversion and one in detinue. 17At the hearing of the proceedings in the Local Court on 21 April 2011, counsel appeared for Mr Powell, and Mr Yates appeared for himself and also to represent Australian Honey. 18Various affidavits were identified and read into evidence. In short, Mr Yates' case consisted of affidavits from himself, Mr David Liddle, Mr Stephen Cook and Mr Milan Zeck. 19Mr Yates sought to include a police statement of Damien Nardo dated 12 November 2007, as part of his evidence. Mr Yates informed the Court that Mr Nardo was a person "...of an itinerant nature of employment and he's in Western Australia, we tried very hard to get him to make arrangements to give evidence by telephone, and we have his original police statement, we hope his evidence would confirm his original police statement, but we have not been able to get him to answer the phone. It appears that he is away from the Perth area and not contactable." 20Counsel for Mr Powell indicated that he would object to the tender of the statement. He acknowledged that he had had notice of the statement for some time, but that he maintained his objection. There then occurred this exchange: "Defendant [Mr Yates]: It's of minor importance now, Your Honour, because Mr Powell has given evidence that confirms much of what Mr Nardo had to say. Her Honour: Oh good. Well, if it's of minor importance we will worry about it later. ..." 21After this exchange, the affidavits were identified and read, Mr Yates gave evidence-in-chief and was cross-examined. Other oral evidence was given by Mr Zeck, Mr Liddle and Mr Cook. At the end of all of this evidence for Mr Yates and Australian Honey, the proceedings were adjourned part heard to Wednesday 25 May 2011. 22The transcript of any further proceedings during which evidence was taken on that day was not tendered in the Supreme Court. But it does appear that further evidence was taken and the proceedings concluded on that day. 23On that day, Barkell LCM also gave an oral judgment. The transcript of that judgment is available in this Court. She dismissed the amended cross-claim and ordered that the cross-claimants, that is, Mr Yates and Australian Honey, pay the cross-defendants, that is, Mr Powell's costs, on the ordinary basis. 24As well, she ordered that the stay on the enforcement of the judgment entered on the principal claim on 29 August 2010, be lifted.

Supreme Court proceedings 25On 23 June 2011, Australian Honey and Mr Yates filed a summons in this Court commencing an appeal from the Local Court and also seeking leave to appeal. 26The grounds nominated were as follows: "1. That the judgment is not in the interests of law, and that the magistrate erred in not applying the appropriate standards of proof in the matter, or allowing the admission of relevant evidence of significance, due to the unavailability of the witness. 2. That evidence of a police statement by witness Nardo be allowed. 3. That the 'balance of probability' should apply to the judgment." 27In support of that summons, Mr Yates filed an affidavit of 22 August 2011, to which was annexed a significant number of documents dealing with the proceedings in the Local Court. 28On 19 September 2011, Mr Powell filed a notice of motion seeking orders for the dismissal of the summons pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 ("UCPR"), or in the alternative, an order that Australian Honey and Mr Yates provide security for costs. 29On 30 September 2011, Grove AJ heard the motion, declined to summarily dismiss the proceedings, but ordered that Australian Honey and Mr Yates jointly or severally should provide security for the defendant's costs of the proceedings in the sum of $12,000 within 21 days of the order. 30On 28 October 2011, the orders of Grove AJ were varied by Rothman J with respect to the time within which the security for costs to be provided. 31On 2 December 2011, Australian Honey and Mr Yates filed a summons in the Court of Appeal seeking leave to appeal from the orders made by Grove AJ. 32On 13 March 2012, the Court of Appeal (Young and Meagher JJA) dismissed the summons seeking leave to appeal. 33The proceedings were then fixed for hearing on 17 May 2012. 34Although the security for costs order had not been complied with by Australian Honey or Mr Yates, Mr Powell took no objection to the matter proceeding to a hearing and determination.

Appeal from Local Court to Supreme Court 35A party to proceedings in the Local Court does not have a general right of appeal to the Supreme Court. 36A party to proceedings before the Local Court which is dissatisfied with the judgment or order of the court may appeal to the Supreme Court but only on a question of law: s 39(1) Local Court Act 2007. 37If the party wishes to appeal on a ground which involves a question of mixed law and fact, then leave of the Supreme Court is necessary: s 40(1) Local Court Act 2007. 38In an appeal to the Supreme Court, a dissatisfied party is not entitled to challenge a pure error of fact. 39On an appeal to under the Local Court Act 2007, the Supreme Court may determine the appeal: "(a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal." s 41(1) Local Court Act 2007. 40Any appeal to the Supreme Court is by way of rehearing. On any such rehearing, the Court can receive further evidence but only on special grounds: s 75A Supreme Court Act 1970. No application was made to the Court to receive further evidence in this case.

Error of fact or error of law? 41It is necessary to keep in mind, when hearing an appeal under the Local Court Act 2007, whether the error relied upon to ground the appeal is one of law, or of fact, or of mixed fact and law. 42Hall J has considered the issue of what constitutes an error of fact or law in US Manufacturing Co Pty Limited v ABB Service Pty Ltd [2008] NSWSC 705 at [46]-[55]. 43I adopt what Hall J has written and in particular [54] where his Honour says: "[54] It is clear that an error in point of law may include: (1) A finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn. (2) A finding that no person acting judicially and properly instructed as to the relevant law could have made. (3) Where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126." 44For present purposes, there is no need to distinguish between the phrase "an error in point of law" and the phrase "question of law". 45It is to be recalled that there is no right of appeal from an error of pure fact. However, as Jordan CJ said in Australian Gas Light at 138: "(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences ... (4) Such a finding can be disturbed only: (a) if there is no evidence to support its inferences; or (b)if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences ...; or (c) if it has misdirected itself in law ..." 46That part of the decision of Jordan CJ was referred to by Kirby J in R L & D Investments Pty Ltd v Bisby (2002) NSWSC 1082 at [13] where his Honour encapsulated the relevant authorities in this way: "Arising from these authorities, a number of broad propositions can be stated: First, there is no error of law in simply making a wrong finding of fact (Australian Broadcasting Tribunal v Bond ... per Mason CJ at 341), unless there is no evidence to support that finding. Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence: )Glass JA in Azzopardi v Tasman UEB Industries Ltd [(1985) 4 NSWLR 139] at 155). Thirdly, it is not an error of law even if the reasoning process by which the court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in R v District Court: Ex Parte White (1966) 116 CLR 644, at 654). Fourthly, there is limited exception ... in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment: (Mahoney v Industrial Registrar of NSW & Anor [(1986) 8 NSWLR 1] per Hope JA at 1 and Samuels JA at 5)." 47I will apply these principles in considering the submissions of the parties in this case.

Local Court judgment 48The Local Court judgment was delivered orally on Wednesday 25 May 2011, after the conclusion of the evidence. It contains the following parts: "... I am dealing with a cross-claim brought by Australian Honey Exports Pty Ltd and Roderick Yates, a director of that company. That cross-claim alleges that the cross-defendant, John Powell, wrongfully took certain equipment from the premises of Australian Honey Exports Pty Ltd for his own use and damages are claimed in conversation and [detinue]. There are various issues that arise out of this case, but the threshold issue is whether or not the evidence, on the balance of probabilities, proves that John Powell wrongfully took this equipment. This assessment must be done, and I agree with the submissions of the cross-defendant in this matter, the assessment must be done in accordance with what was said by the High Court in Neat Holdings Pty Ltd, that is, that the strength of the evidence necessary to establish a fact or facts on the balance of probabilities, may vary according to the nature of what it is sought to prove, 'Authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary where such a serious matter as fraud is to be found'. Those statements apply where such a matter as wrongful taking must be proved too." 49At that stage her Honour goes on to deal with the evidence in the proceedings before her. She considered inferences which she was urged to make. 50In conclusion she expressed her judgment in this way: "Basically, Mr Yates' evidence is that Mr Powell had the opportunity and the knowledge and the motive, and that he cannot think of anyone else. The difficulty that he faces is that a motive is not sufficient and indeed, motive to steal is not confined to people who have a relationship which sours - a business relationship which sours and so far as the other matters are concerned, it does not seem to me that the items that were taken were so specialised and so distinctive that only someone that had a careful knowledge of or full knowledge of the business as it was run would have been able to find them. I think that the inferences for are equally balanced with the inferences against. There is good reason to be very suspicious. There is not sufficient evidence to prove, on balance of probabilities, that it was Mr Powell who unlawfully took these items and that being the case, I do not have to deal with anything else. I DISMISS THE CROSS-CLAIM." 51In the oral judgment, Barkell LCM refers to a decision which she calls Neat Holdings Pty Ltd. It seems that her Honour was referring to a decision of the High Court of Australia called Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1993) 67 ALJR 170. 52This was a decision dealing with the question of a standard or degree of proof. It appears from her Honour's oral judgment that she read aloud a part of the judgment. 53It would be useful to put into context the principles to which her Honour referred and, which were obviously, before her Honour. 54In the majority decision of Mason CJ, Brennan, Deane and Gaudron JJ, the following appears at [2], which seems to be the source of the reference which Barkell LCM included in her judgment: "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not however be understood as directed to the standard of proof. Rather they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct, and a judicial approach that a court should not likely make a finding that, on the balance of probabilities, a party to civil litigation as being guilty of such conduct. As Dicksen J commented in Briginshaw v Briginshaw: 'The seriousness of an allegation made, the inherent likelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must effect the answer to the question whether the issue has been proved ...'."

Onus of proof: Grounds 1 and 3 55This ground is covered partly in Ground 1 and partly in Ground 3 of the summons. Allowing for the fact that Mr Yates was not legally represented, it seems that he complains of an error of law in that he says that the Magistrate failed to apply the appropriate standard of proof and that the standard which ought to have been applied was one on the balance of probabilities, rather than something else. 56A careful reading of the judgment of Barkell LCM shows that her Honour had her attention drawn to the decision in Neat Holdings which is an authority by which she was bound. The judgment of the High Court of Australia in Neat Holdings makes it plain that the standard of proof in a civil matter is one on the balance of probabilities. Not only did her Honour have her attention drawn to the decision, but she clearly read it prior to delivering her judgment because in her judgment she quotes from a part of it, a more extensive quotation is set out above. 57It is clear that her Honour acknowledged the effect of that authority, and its application to the proceedings before her. 58At the start of her judgment, she says that the assessment must be on the balance of probabilities. She again refers to the requisite onus of proof when announcing her final conclusion. She said: "There is not sufficient evidence to prove on balance of probabilities that it was Mr Powell who unlawfully took these items ..." (emphasis added) 59There is no basis for an assertion that the judgment of the Local Court discloses an error of law with respect to the onus of proof applied by the Magistrate. On the contrary, her Honour was taken to a relevant authority on the question, she clearly read it, she acknowledged in her judgment that she was deciding the matter "on the balance of probabilities", and when she announced her conclusion, she made specific reference to the correct onus. 60In addition, the reasoning of the Magistrate leading up to her conclusion does not suggest that she was considering any onus of proof other than one which was on the balance of probabilities. 61I can detect no error of law of the kind asserted in the grounds of the notice of appeal.

Wrongful exclusion of evidence: Grounds 1 and 2 62Ground 2 asserts, in combination with Ground 1, that there was an error of law because the Magistrate did not allow the admission "... of relevant evidence of significance, due to the unavailability of a witness". Ground 2 of the appeal seeks an order that the evidence of a police statement of a Mr Nardo "be allowed". 63I take these grounds to be an argument that there was an error of law committed by the Magistrate in refusing to admit the police statement of Mr Nardo into evidence. 64Some exploration of the facts and what happened in the Local Court is necessary. 65First, the statement of the witness to which reference is made, is that of Mr Damien Nardo taken by Constable L Ford of Blacktown Local Area Command on 12 November 2007. It is a two-page statement consisting of seven paragraphs. 66The statement was initially referred to on the first day of the hearing, in the Local Court on 21 April 2011. 67I have earlier, at [20], made reference to a part of the exchange between Mr Yates and the presiding Magistrate with respect to the statement of Mr Nardo. 68What the whole of that exchange demonstrates, is that Mr Yates indicated that he wished to tender the document, at least initially. He acknowledged that he was "out of time to include it". This seems to be a reference to interlocutory orders made with respect to the serving of relevant evidence. 69Nevertheless, the counsel for Mr Powell indicated that he would object to the tender of the statement. He then said this: "At this stage, your Honour, we would object to the tender of the statement of Mr [Nardo]. I am happy to elucidate the reasons why now your Honour, it may be a little premature, until Mr Yates takes us through that evidence and seeks to tender it. I don't wish to pre-empt Mr Yates' tender." 70This was responded to by Mr Yates in this way: "It is of minor importance now, your Honour, because Mr Powell has given evidence that confirms much of what Mr Nardo had to say." 71As I have earlier set out, the Magistrate responded that the matter could be readdressed at a later time. 72It is clear, although the transcript of the hearing on the second day is not available, that Mr Yates did not attempt to tender the statement again. 73I have come to this conclusion because in his submission to this Court, Mr Yates says: "On the first hearing, it was made clear to me, that the evidence of Mr Nardo could not be admitted unless he was available for cross-examination. As a representative of the company, I was led to believe that without him being available, his evidence ... was not admissible." ... However, in my inexperience, I was reluctant to insist that it be included at the risk of annoying her Honour, who already seemed quite aware that it existed. ... I understood on the basis of advice from Salvos Legal, that this new admission possibly made Mr Nardo's evidence less important, because Mr Powell now at least admitted to being in the vicinity of the factory at the time. ... In any case, I felt sure other circumstantial evidence, including Motive and Opportunity would still be sufficient to show that he was responsible for the robbery and we might get by without pressing for Mr Nardo's statement to be included." 74In those circumstances, and in the absence of any transcript which records any decision of the Local Court refusing to admit the statement of Mr Nardo, then this ground cannot succeed. 75In short, the position is that the statement was never actually tendered below, objections to it were not heard or debated in full and no ruling was given on whether it was admissible or not. When Mr Yates heard that there was to be an objection to the statement of Mr Nardo being tendered, Mr Yates said that he would not tender it because, in light of other evidence, it was of "minor importance". He was content to proceed in its absence. 76Mr Yates, having received the judgment of the Local Court, which concluded that he had not proved his case, now, in effect, seeks to re-open his case to tender that evidence. 77There was no error of law in the Local Court in respect of this statement. There is no basis for any relief available in this Court.

Summary 78The basis upon which Mr Yates attacked the decision of the Local Court was essentially two-fold. 79Firstly, that the Magistrate had applied an erroneous standard of proof. I have found that this is not so. 80Secondly, Mr Yates contends that the Magistrate wrongfully refused to admit a police statement of a potential witness. This is has not been demonstrated to be so, because Mr Yates has not proved that he tendered the statement, and that the Magistrate made a decision to refuse to admit it. On the contrary, what the transcript demonstrates is that Mr Yates did not tender the statement and the Magistrate was not invited to, nor did she, give any ruling refusing to admit it. 81A careful perusal of the submissions of Mr Yates makes it plain that he is in substance complaining about the factual finding made by the Magistrate that she was not persuaded that Mr Powell had been proved to be the person who had stolen the goods. The decision in this respect was an entirely factual one. A reading of it demonstrates that her Honour considered various matters of fact. She considered the available and competing inferences. She considered probabilities and possibilities. In the end, she determined as a matter of fact that the plaintiff, Australian Honey and Mr Yates, had not proved the defendant, Mr Powell, was liable as alleged in the amended cross-claim. 82This was a decision of fact. Even if, and I am far from persuaded that this is so, the Magistrate was in error in this finding, it was an error of fact alone. There is no appeal to this Court against an error of fact. 83And, most particularly, I am not satisfied as appears from Ground 1 in the summons, that the judgment of the Local Court is not "in the interests of law" or of justice.

Orders 84I make the following orders: (1)Summons dismissed. (2)Plaintiffs to pay the defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 September 2012

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