Crane v The Mission to Seafarers Newcastle Incorporated

Background

1. The plaintiff was an Anglican priest licensed by the Bishop of Newcastle. In 1991 he applied to be a chaplain under the auspices of the defendant. The governing body of the defendant was the Port Committee of which Father Christopher Bird was the chairman. The bishop is the ex-officio president of the Committee represented by his appointed person.
2. The plaintiff attended a meeting with the chairman of the Committee. The plaintiff was offered the position of chaplain by the Bishop and accepted it. In 1992 he was commissioned by or on behalf of the Bishop as chaplain to the defendant.
3. At some time in 2008 he was suspended from duty by the Diocese of Newcastle on behalf of the Bishop. In September and October 2008 he was admitted to hospital with serious mental health issues. On 13 February 2009 he received a letter from the Director of Chaplaincy raising the issue of his retirement on the grounds of ill-health.
4. On 26 March 2009 he had a meeting with Fr Bird, from whom the plaintiff took direction in his role as a chaplain, and Mr John Cleary who was the business manager of the Newcastle Diocese. There is a dispute about what was said at the meeting, but the plaintiff claimed that his resignation was sought and $20,000 was offered by Mr Cleary if he resigned.
5. The plaintiff subsequently resigned on 7 April 2009 and his letter of resignation made no reference to any payment.
6. The plaintiff alleged that during the period of his chaplaincy the defendant experienced financial difficulties and that he agreed to sacrifice his salary to reduce the financial drain on the defendant. The plaintiff alleged that between July 2003 and October 2005 he sacrificed $19,513.50. The plaintiff offered to defer his housing entitlement of $180 per week. After other amounts were adjusted he claimed overall the sum of $30,216.75 for the salary sacrificed and an accrued housing allowance.

The judgment and the appeal

1. The Magistrate, after considering eight aspects of the evidence, concluded that the legal relationship was between the plaintiff and the Bishop of Newcastle, and that the plaintiff therefore did not have a contract of employment with the defendant. Further, on the plaintiff's evidence, the person who nominated the sum of $20,000 for the plaintiff's resignation, Mr Clearly, was not employed by the defendant but was the business manager of the Diocese. The Magistrate found that, even if Fr Bird had agreed to the payment of $20,000, other matters, including the plaintiff's resignation letter and the absence of evidence of acceptance by the plaintiff of the offer of $20,000 if he resigned, meant that the defendant had no liability for that amount.
2. Accordingly, the magistrate dismissed the proceedings and ordered the plaintiff to pay the defendant's costs.
3. By a summons filed in this Court on 10 January 2018, the plaintiff relevantly sought the following orders: 1. Pursuant to section 39 and/or section 40 of the Local Court Act 2007 the Plaintiff appeals orders 1 and 3 of the Local Court of New South Wales dated 14 December 2017, Matter Number 2015/00098468, dismissing the Further Amended Statement of Claim. 2. Leave to appeal pursuant to section 40 of the Local Court Act 2007 is granted as required. … 5. Judgment for the Plaintiff in the sum of $50,216.75 plus interest.
4. There were four grounds of appeal as follows: 1. Ground 1 - The Court erred on a question of law when it found for the Defendant on the question of whether the Defendant was the employer of the Plaintiff. 2. Ground 2 - The Court erred on a question of law and/or fact when it failed to give adequate reasons when it found for the Defendant on the question of whether the Defendant was the employer of the Plaintiff, 3. Ground 3 - The Court erred on a question of law when it found there was no concluded agreement in relation to the resignation benefit. 4. Ground 4 - The Court erred on a question of law and/or fact when it failed to give adequate reasons in finding that the Plaintiff was not entitled to be reimbursed for the benefits claimed.

The defendant's notice of motion

1. By a notice of motion filed 5 February 2018 the defendant sought that the appeal be dismissed as incompetent pursuant to r 50.16A of the Uniform Civil Procedure Rules 2005 (NSW), and in the alternative, that leave to appeal be refused.
2. The affidavit in support of the notice of motion sets out the costs that the defendant incurred in the Local Court ($127,591.84 plus GST) and estimated, on the basis of a 75-80% recovery on assessment, that the defendant would obtain an order for recoverable costs between $95,693.88 and $102,073.47. It estimated that a further $35,000 to $50,000 would be incurred by the defendant with respect to the appeal proceedings. The affidavit drew attention to the lack of proportionality between the amount claimed in the Local Court proceedings and the costs incurred.
3. The affidavit pointed out that the defendant was registered as a charity with the Australian Charities and Not-for-Profits Commission, that it was funded by donations and was currently running a deficit as at 30 December 2017 in an amount slightly exceeding $120,000. The affidavit said that in the appeal proceedings the defendant anticipated calling three witnesses being Canon Garry Dodd, the Senior Chaplain and Regional Director for the defendant, Fr Bird, and Mavis Randle who, as the Magistrate noted in his judgment, acted as the defendant's Treasurer from 2003 to April 2009. Their attendance at Court would involve time and personal expense and take them away from their other work.
4. The plaintiff swore an affidavit in relation to the motion setting out his and his wife's financial position including their assets and income. The plaintiff also made reference to the legal fees of about $40,000 he had incurred in the Local Court.
5. In submissions, the defendant put the argument in relation to the competency of the appeal on a threefold basis: a. The quantum of the plaintiffs claim and the legal costs of the parties are disproportionate; b. The Summons is nothing more than a generalised complaint against the Judgment, has no prospects of success and does not accord with the requirements of UCPR 50.12; and c. Even if the Summons were amended, the appeal has no prospects of success, due to the basis of Magistrate Cheetham's findings.
6. The defendant submitted that the issue of the costs of the proceedings was not a matter that could go to competency. To the extent that the summons was deficient in identifying matters required by the Rules, that could be rectified by the filing of an amended summons. The defendant submitted that a number of matters raised by the grounds of appeal were errors of law including the construction of letters which influenced the Magistrate's decision on employment, as well as the issue of the adequacy of reasons.

The Rules

1. Relevant rules in Pt 50 UCPR are as follows: 50.4 Statement of ground (1) The summons commencing an appeal must be in the approved form and must contain a statement as to: (a) whether the appeal relates to the whole or part only, and what part, of the decision of the court below, and (b) what decision the plaintiff seeks in place of the decision of the court below. (2) The summons must also contain a statement setting out briefly but specifically the grounds relied on in support of the appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below. (3) … 50.12 Leave to appeal (cf SCR Part 51A, rule 2A) (1) A summons seeking leave to appeal must be filed: (a) within 28 days after the material date, or (b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or (c) within such further time as the higher court may allow. (2) … (3) The summons must be in the approved form and must contain a statement as to: (a) whether the appeal relates to the whole or part only, and what part, of the decision of the court below, and (b) what decision the plaintiff seeks in place of the decision of the court below. (4) The summons must also contain a statement of: (a) the nature of the case, and (b) the reasons why leave should be given, and (c) if applicable, the reasons why time to apply for leave should be extended, setting out briefly but specifically the grounds relied on in support of the appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below. (5) … 50.16A Objections to competency of appeal (1) A defendant who objects to the competency of an appeal must, by notice of motion filed and served on all other parties to the appeal within 14 days after service on the defendant of the notice of appeal, apply to the court for an order dismissing the appeal as incompetent. (2) If the defendant fails to comply with subrule (1) and the appeal is nevertheless dismissed as incompetent: (a) the defendant is not entitled to costs of the appeal unless the court otherwise orders, and (b) the court may order the defendant to pay the plaintiff any costs of the appeal proving useless or unnecessary.

Procedural developments

1. Although the defendant does not complain of the matter, the plaintiff in his written submissions concedes that, contrary to r 50.4(1), the summons does not identify whether the appeal is from the whole or only part of the judgment of the Magistrate and, if the latter, which part. The plaintiff also concedes that the articulation of the grounds might be provided with more detail.
2. On the day before the motion was heard, the plaintiff served an amended summons, to deal with what he perceived as the shortcomings of the original summons. That amended summons spelt out such matters as the nature of the case, the parts of the judgment from which he appealed, and a somewhat elaborate analysis of the Magistrate's judgment designed to show that the errors in the grounds of appeal were errors of law or mixed errors of law and fact. The relief claimed included leave to appeal under s 40 of the Local Court Act 2007 (NSW) on questions of mixed fact and law, and in respect of the costs order made by the Magistrate.
3. The grounds of appeal were not amended, but in response to a suggestion I made during the course of the hearing, the conjunctive "and/or" in grounds 2 and 4 was deleted and replaced with "or a question of mixed law and" in a further version of the proposed amended summons subsequently forwarded to my associate. The effect of that was that the grounds relevantly read: "The Court erred on a question of law or a question of mixed law and fact when it failed…".

Consideration

1. Rule 50.12 makes it essential for there to be a distinction made in the summons for that part of the appeal which depends on leave being granted under s 40 of the Local Court Act. Where leave to appeal is sought, the summons must, relevantly for the present matter, contain a statement of the nature of the case and the reasons why leave should be given. In circumstances where the plaintiff purports to appeal as of right but also seeks leave, it becomes necessary for the plaintiff to identify the parts of the judgment from which it is claimed an appeal as of right is given and the parts of the judgment in respect of which leave is needed. Further, the Local Court Act does not enable an appeal to be brought on a ground that involves a question of fact alone whether by leave or otherwise.
2. The original form of the summons did not, but the proposed amended summons does, comply with r 50.12. The issue concerning competency of an appeal relates to whether leave is necessary or not for any of the grounds put forward, and to whether the appeal may be brought at all where, in an appeal from the Local Court, a respondent may assert that only questions of fact are raised by the grounds of appeal. Here, the defendant bases its allegations of incompetency on non-compliance with the rules as to the form of the summons, on the issue of proportionality of costs to amount claimed and, apparently, on the likely success of the plaintiff at the hearing of the appeal.
3. Whether an application under r 50.16A is appropriate where the summons does not comply with rules, unless the basis of the appeal cannot be understood, might be doubted. However, it is not necessary to decide that matter because the plaintiff accepted that the summons needed amending by reason, at least, of the defendant's submissions in support of the motion.
4. One of the defendant's other complaints was that the summons raised only a generalised complaint against the judgment. I do not agree that the grounds of appeal are only a generalised complaint. Two grounds focus specifically on the issue of employment which was the key issue at the hearing of the proceedings. Ground 3 identified a complaint about the finding on the resignation benefit. The inadequate reasons referred to in ground 4 are specifically related to the lack of reimbursement for benefits from the employment. In any event, the greater detail provided in the proposed amended summons seems to me to have adequately dealt with any shortcomings in that regard.
5. The principal issue raised by the defendant was that of proportionality, in reliance on what was said in Sattar v Boral Constructions Materials Group Limited [2018] NSWSC 196 and Sayed v Deng [2012] NSWSC 851. In Sayed Beech-Jones J said: [31] This concern as to protecting parties from the costs of appeals is also evident from three matters in s 39 and s 40 of the Local Court Act. [32] First, it is evident from the restriction imposed by s 39 confining appeals only to questions of law. Secondly, it is evident on the restriction on the extension of such appeals to mixed questions of law and fact that follows from the need to obtain leave under s 49(1) [scil. s40(1)]. Thirdly, it is reflected by the restrictions on leave imposed by s 40(2). [33] The Local Court has a limited monetary jurisdiction. Left unchecked, appeals from its decisions, especially interlocutory decisions, could lead to there being a significant risk that the overall costs of proceedings would be completely disproportionate to the matters in dispute.
6. Those remarks were followed by Harrison AsJ in Sattar at [30]. They were made in the context of appeals where leave was necessary for some reason under s 40 of the Local Court Act. In Sattar, Harrison AsJ took those matters into account in the exercise of her discretion with regard to the grant of leave, when her Honour considered the proportionality between the judgment and the legal costs expended - see at [32].
7. In cases where leave to appeal is required, various means of filtering out cases can be employed: Zelden v Sewell Henamast Pty Limited v Sewell [2011] NSWCA 56 at [22]; Jaycar Pty Limited v Lombardo [2011] NSWCA 284 at [46]; Coshott v Vardas [2017] NSWCA 258 at [17] and MacPhail v MacPhail [2017] NSWSC 942 at [75]-[77]. Sayed v Deng suggests that proportionality of costs to the claimed amount or judgment is a relevant consideration.
8. The defendant sought to extend the principle from Sayed v Deng and Sattar to an appeal on a question of law. It is difficult to see on what basis it could be so extended.
9. Bell J in HIA Insurance Services Pty Limited trading as Home Owners Warranty v Kostas [2008] NSWCA 297 at [15] suggested that where a party has a right to appeal on a question of law there is no basis to strike out the appeal on the basis of any consideration of proportionality between the judgment or amount claimed on the one hand and the costs on the other. Nothing in s 60 of the Civil Procedure Act 2005 (NSW) suggests otherwise, because that section is concerned with the practice and procedure of the court. The right to appeal in s 39 of the Local Court Act is a substantive right. The grant of leave is, however, concerned with practice and procedure, so that the invocation of s 60 where leave is needed is entirely appropriate.
10. A number of authorities discuss what amounts to a question of law: R L & D Investments P/L v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Prieston v Warwick John Williams Pty Ltd [2017] NSWSC 1577. Those authorities make clear that unless there is no evidence to support a finding, no error of law is involved, even if the decision is against the weight of evidence or is lacking in logic.
11. In my opinion, the plaintiff identifies at least two questions of law. The first concerns whether the defendant was the employer of the plaintiff, the second is whether adequate reasons were given by the Magistrate for his decision.
12. The defendant submitted that the issue of the capacity in which the bishop acted (whether as bishop of the diocese, or as the ex officio chairman of the Port Committee) concerned issues of fact which involved examining the letter of appointment and seeing in what capacity he acted. I do not agree that any issue of fact is involved. Construction of a document is a question of law: Westport Insurance Corporation v Gordian Runoff Limited (2011) 244 CLR 239; [2011] HCA 37 at [82]; Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709; [2000] NSWSC 210 at [11].
13. Failure on the part of a court or tribunal exercising judicial functions to give adequate reasons for its decision will constitute an error of law: Campbelltown City Council v Vegan & Ors (2006) 67 NSWLR 372; [2006] NSWCA 284 at [130]; Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 384 and 386; SZKLO v Minister for Immigration and Citizenship [2008] FCA 735; (2008) 247 ALR 582 at 21; COZ16 v Minister for Immigration and Border Protection [2018] FCA 46 at [32].
14. No leave is necessary for the plaintiff to argue grounds 1, 2 and 4.
15. In relation to ground 3 concerning whether there was a concluded agreement in relation to the resignation benefit, the plaintiff submitted that the Magistrate failed to deal with the issue of ostensible authority given to Mr Cleary by Fr Bird's silent acquiescence in what Mr Cleary was said to have offered. That failure was said to amount to an error of law. The plaintiff submitted that, in any event, the issue of acquiescence and ostensible authority raises at least a mixed question of fact and law, so that leave should be given. Whether any authority is given to an agent, and the scope of the authority are questions of fact: Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142, per Jordan CJ at 149-150 (Halse, Rogers and Bavin JJ agreeing).
16. However, the plaintiff drew attention to s 21 of the Associations Incorporation Act 2009 (NSW) which relevantly provides: (1) An association's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the association's express or implied authority and on behalf of the association. Further, the plaintiff submitted that there was a question touching Mr Cleary's capacity or role at the meeting, whether he was representing the bishop qua bishop or the bishop as the ex officio president of the Port Authority. The plaintiff submitted that the Magistrate failed to deal with arguments put in relation to these matters.
17. A failure to respond to a substantial, clearly articulated argument relying on established fact will amount to a denial of procedural fairness and a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 197 ALR 389 at [24] and [95]. The plaintiff's submission is that the issue of ostensible authority was raised in argument but was not dealt with by the Magistrate. On the face of the judgment, that appears to be the case. A denial of procedural fairness is an error of law.
18. The plaintiff submitted that the matter of the resignation benefit was not necessarily dependent upon a finding that the plaintiff was employed by the defendant. The plaintiff's evidence of the conversation on 26 March was consistent with an agreement that the defendant was prepared to pay the sum of $20,000 if he resigned, regardless of who his employer was. I accept the plaintiff's submission in this regard.
19. In my opinion, the plaintiff demonstrates for the purpose of the present motion that a question of law is involved in the ground concerning the resignation benefit, alternatively, that a mixed question of fact and law is involved by reason of the proof of the ostensible authority of Mr Cleary, either as a result of Fr Bird's silence amounting to acquiescence, or his response that the defendant would need to borrow the money, or as a result of the role or capacity Mr Cleary had at the meeting. It may be accepted that the Magistrate did not make findings about what conversation occurred at the meeting, but assumed the plaintiff's account was correct to reach a view adverse to the plaintiff in any event. I accept that one outcome of this ground going forward is that the matter would need to be remitted so that factual findings could be made.
20. Even if ground 3 involves a mixed question of law and fact, I do not consider that the issue of proportionality should prevent leave being granted at this stage. The appeal will proceed in any event on the pure questions of law. I do not consider it would be an appropriate exercise of discretion to refuse leave when the issue is not entirely separate from the other issues in the case, principally the issue of employment. Bearing in mind the amounts expended to date, any extra expense by this ground going forward will be relatively small.
21. Although the defendant's submissions had the flavour of a suggestion that the appeal should be summarily dismissed because the law was clear from the decisions in McDermid v Anglican Trusts Corporation for the Diocese of Gippsland & McIntyre [2012] VCC 1406 and Sturt and Anor v The Right Reverend Dr Brian Farran, Bishop of Newcastle & Ors [2012] NSWSC 400, with the result that the plaintiff's prospects of success were low, counsel for the defendant accepted that the defendant had not sought such relief in the motion. The submissions as to the weakness of the case were simply an aspect of the submission that leave should not be granted if it was needed, as the defendant submitted it was.

Amended Summons

1. The plaintiff asked that I consider if he should be permitted to file the proposed amended summons without needing a motion to do so in all the circumstances. The defendant formally opposed the filing of the amended summons but accepted that at this early stage of the appeal no real prejudice flowed from the amendment being granted.
2. In the circumstances where I have determined that the appeal should not be dismissed, I consider that the proposed amended summons demonstrates a clearer compliance with the Rules, and provides a clearer basis for the defendant to understand the basis for the appeal. Leave to file it should be granted. The form of the amended summons is that forwarded to my associate under cover of an email from the plaintiff's counsel dated 28 March 2018.

Costs

1. The parties have had mixed success on the motion. The plaintiff accepted that the form of the original summons was defective and, as a result of the motion, has moved to correct the defects. It may be noted that the defendant did not seek an amendment of the summons by letter prior to filing and serving the notice of motion.
2. The defendant's principal argument concerned the disproportion of the costs to the sum claimed and, on that basis, sought the dismissal of the appeal for incompetency. When, despite the defects in the summons, questions of law were identified as at least part of the basis of the appeal, the defendant's motion was doomed to fail except to the extent that an amended summons in compliance with the rules was then sought to be filed.
3. In all of the circumstances I consider that the appropriate order is that the costs of the motion should be cost in the cause but, as the plaintiff accepted, he should pay the costs thrown away by reason of the amendment to the summons.
4. I cannot leave this matter without observing that the parties appear to have lost sight of the big picture. For a Local Court claim seeking a little over $50,000, which according to the judgment took no more than a day's hearing, costs of $40,000 on the plaintiff's side and $127,591.84 on the defendant's side are nothing short of scandalous and, in the light of s 60 of the Civil Procedure Act 2005 (NSW), appear to me to be a serious breach of s 56(3) and (4) of that Act. There seems to me also to be an unhappy irony in the defendant now, by its motion, complaining about that disproportion to have the appeal dismissed.

Conclusion

1. I make the following orders: (1) Leave is given to the plaintiff to file the proposed amended summons. (2) Such amended summons is to be filed and served by 4 April 2018. (3) The plaintiff is to pay the defendant's costs thrown away by reason of the amendment to the summons. (4) The defendant's notice of motion filed 5 February 2018 is dismissed. (5) Costs of the motion are to be costs in the cause.

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: 12 April 2018