Solicitors:
Oliveri Lawyers (First and Second Defendant)
File Number(s): 2022/295047
[2]
JUDGMENT
The plaintiff sued the defendants in the Local Court. His suit was described in an amended statement of claim filed on 13 July 2021. In brief, the plaintiff said the defendants owed him money for work he had done pursuant to a contract between them.
The claim was for $43,340, being the outstanding balance of a total figure of $93,340. In other words, he had been paid $50,000 but this was not the full amount that was owed.
The defendants rejected the claim stating that the $50,000 they had paid was a loan to the plaintiff. They filed a cross claim to this effect.
The matter came on for hearing before Greenwood LCM on 25 July 2022. The hearing occupied most of the day. The decision was delivered orally on 8 September 2022. The plaintiff's claim was dismissed, as was the defendants' cross-claim. Cost orders were made which took into account a "Calderbank" offer that had been made by the defendants before the hearing.
On 4 October 2022, the plaintiff filed a summons commencing an appeal from the decision of the Magistrate. An amended summons was filed on 21 October 2022. There is no appeal from the dismissal of the cross-claim.
At the commencement of the hearing before me, the plaintiff wished to further amend the summons to add an extra ground of appeal. I refused permission, for two reasons:
1. Notice had not been given of the application. It was simply too late to expect the defendants to meet it.
2. More importantly, the proposed new ground attacks the validity of the cross-claim as decided in an interlocutory application heard earlier by Freund LCM. As stated above, the cross-claim was dismissed in the primary judgment. To have had an argument about its invalidity for a different reason was effectively pointless and a waste of time.
The background to the case is as follows: the second defendant is a solicitor. He operates through an incorporated legal practice, the first defendant. The plaintiff has a background as an accountant but more recently, since 2009, he has been a financial market trader. He also continued to do some work as an accountant.
The plaintiff had a friend, Mr Benjamin Wilcox. The plaintiff wished to help Mr Wilcox to ensure that he obtained all his entitlements arising from his deceased mother's estate.
The plaintiff met the second defendant in 2015. From time to time the plaintiff introduced clients to the defendants. Generally, after the introduction, he had no further involvement in those clients' legal affairs. Mr Wilcox however was an exception.
According to the plaintiff, at a meeting on 20 December 2018, he agreed with the second defendant that he would provide his services in pursuit of Mr Wilcox's legal interests, in return for which he would receive 50% of "the legal fees paid not including counsel fees and disbursements".
Mr Wilcox paid the defendants $186,680 (not including counsel fees, expenses and disbursements) ostensibly entitling the plaintiff to $93,340. However, the defendants only paid $50,000 to the plaintiff, generating the claim for $43,340. The failure to pay the full amount, said the plaintiff, amounted to a breach of the agreement between the plaintiff and the defendants.
The amended statement of claim also pleaded an alternative cause of action against the second defendant; namely, that he was in breach of the Competition and Consumer Act 2010 (Cth) because he had made misleading or deceptive representations causing the plaintiff to enter into the above agreement.
The introduction to the plaintiff's written submissions includes a strident attack on the counsel who appeared for the defendants in the Local Court. It is not entirely clear what the relevance of this attack is. It was certainly not justified.
Under s 39 of the Local Court Act 2007 (NSW), a dissatisfied party has a right of appeal to the Supreme Court, "… but only on a question of law". Section 40 provides for appeals subject to leave of this court. Leave is required for a "… question of mixed law and fact …" and "… an order as to costs".
There are 23 grounds of appeal which, in his written submissions, the plaintiff has separated into four groups. Most of the grounds of appeal are expansive submissions making widespread allegations. As will be seen below there is productive substance in only one area of the assertions.
This area relates to an allegation of apprehended bias on the part of the Magistrate. I have come to the view that apprehended bias has been established and that the matter must necessarily be returned to the Local Court for a fresh hearing, restricted to the plaintiff's claim.
Because I have reached this conclusion, I will deal with the issue of bias first.
An application was made to the Magistrate to disqualify her on the basis of actual bias and apprehended bias. The application was made on 8 September 2022 after the delivery of the reasons for dismissing the claim and cross-claim. The application was refused. The current grounds of appeal do not specifically attack the decision made by the Magistrate, but rather seek a determination on appeal as to her Honour's conduct.
I can see no evidence of actual bias in this matter. The test for actual bias has a high bar. Wilcox J in Sun v Minister for Immigration and Ethnic Affairs (1997) 81 FCR 71 said at 123:
"First, the fact that a decision maker has formed a preliminary conclusion about an issue is not sufficient to indicate bias. There will be actual bias only when preliminary views are incapable of alteration. Second, any particular matter relied on as showing actual bias must be considered in the context of the whole hearing. Third, it is not enough that the decision maker displayed irritation or impatience or even used sarcasm."
Also in Sun, North J said at 134:
"Actual bias exists where the decision-maker has prejudged the case against the applicant, or acted with such partisanship or hostility as to show that the decision-maker had a mind made up against the applicant and was not open to persuasion in favour of the applicant: Wannakuwattewa v Minister for Immigration and Ethnic Affairs (North J, 24 June 1996, unreported) and Singh v Minister for Immigration and Ethnic Affairs (Lockhart J, 18 October 1996, unreported). The courts have rarely found actual bias to exist."
As stated in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6], an allegation of apprehended bias will be established 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."
The core of the plaintiff's current complaints seems to arise from her Honour not giving the plaintiff enough hearing time, in particular curtailing his cross-examination of the second defendant, and a refusal to allow him or a friend, to take notes during the hearing. These complaints fall within grounds 8 and 12 of the amended summons. The relevant part of the latter ground is the asserted failure "to afford each party the opportunity to present their case".
The matter had been allocated one day for the hearing. Apparently, the Magistrate dealt with another matter for 10 minutes before commencing this hearing at about 10:10am. The plaintiff submitted that a normal hearing day is from 9.30am to 4.30pm. He is wrong. Courts do often sit prior to 10am but this is usually to deal with mentions, directions and other interlocutory matters. Courts very rarely sit after 4pm. At best the plaintiff lost 10 minutes of the hearing day that had been allocated. To that extent his complaint has no merit.
More important is the curtailment of his cross-examination of the second defendant in order to ensure the matter finished by 4pm. The plaintiff said that another half an hour would have been sufficient. Based on his meandering cross-examination of the second defendant, I doubt that would have been correct. Nevertheless, the point is whether her Honour, by shortening the cross-examination, gave rise to an apprehension of bias.
The defendant submitted that the Magistrate had actually attempted to assist the plaintiff rather than impede his progress. For example, her Honour told him that the contract issue was "straightforward", depending on whether the alleged conversation had occurred or not.
The Local Court is a very busy court dealing with many thousands of matters within the overall constraint of trying to achieve this objective efficiently and within the scope of s 56 of the Civil Procedure Act 2005 (NSW).
Further, to have allowed the plaintiff to have continued his cross-examination would almost certainly have caused the matter to have been part heard. In a busy court the adjourned date would probably not have been the next day, but rather some months ahead.
However, estimates can be unreliable, and cases may need to be part heard. An estimate which is incorrect to the extent of no more than, say two hours, is unfortunate but not unusual. In deciding whether the matter should go part heard, the court might take into account that in providing an estimate, one of the parties was self-represented. Other than perhaps vexatious litigants, self-represented parties generally have little experience in estimating hearing times.
Taken alone, the Magistrate's decision to have the case completed within the single day, while perhaps harsh, is not, without more, enough to establish apprehended bias.
The action of her Honour, which I think takes the matter "over the line", is her refusal to allow the plaintiff to take notes while being cross-examined.
The refusal also extended to a friend of the plaintiff who was seated in the court.
The defendants submitted that the refusal to allow notetaking was no more than an expression of her Honour's control of her court. They said that, in respect of the plaintiff, when he entered the witness box he assumed the status of a witness, not a party. A judicial officer observing a witness would be most concerned that the witness was not diverted by constantly taking notes.
Especially in a case involving the credit of a witness, the fact-finder will take the opportunity to observe the witness. A witness taking notes could well impede this exercise. I think there is some validity in this argument, but the issue must be viewed against the background of the plaintiff being self-represented.
Following his cross-examination, the plaintiff would have been entitled to make some statement to the court by way of re-examination. He did not have a lawyer taking notes as a basis for a re-examination. He would have been reliant entirely on his memory.
Had the Magistrate allowed him to take notes, but then seen that his notetaking was excessive, some limitation could have been imposed. However, in this case the refusal was at the commencement of the plaintiff's evidence and was unconditional:
"DANIS: Is it possible that I take in notepad so I make notes of some, (unintelligible)?
HH: No."
Regarding the friend, the refusal is less controversial because, at the time, the plaintiff was at the bar table and capable of taking a note himself. The request however was once again treated somewhat stridently. Her Honour obviously noticed a person making a note in the back of the court. She said:
"Right, mam, what are you writing down back there, thank you. Now put that pen down and your notebook, thank you mam. People don't write notes in the courtroom, put it away, thank you. I permit lawyers to write, ah, but otherwise no, thank you."
The question that arises is whether these directions to the plaintiff and the person in the back of the court, combined with her Honour's curtailment of the cross-examination, gives rise to a sustainable case of apprehended bias.
I think that they do. In my view a fair-minded observer, cognisant of the fact that the plaintiff was self-represented, could reasonably apprehend that her Honour was not bringing an impartial mind to the resolution of the case; but rather was more concerned with completion of the case and not allowing distractions, such as notetaking. If the friend was helping the plaintiff, I can see no reason why that friend should have been prevented from taking a note.
But much more importantly, I think disallowing the plaintiff from taking a note while in the witness box, being cross-examined, would, to the fair-minded observer, raise a real question of her Honour's impartiality.
My initial impression was that her Honour may have been entitled to the "protection" suggested by Meagher JA in Galea v Galea (1990) 19 NSWLR 263 at 283:
"In my view, if a reasonable disinterested bystander had heard the passage at arms complained of in the present case he would not have reasonably apprehended that the trial judge was prejudiced, he would only have noted that an exceptionally irritating witness had eventually succeeded in irritating the judge."
Unfortunately, because as will be seen below, I think her Honour was correct in her findings about the existence of a contract, but I do not think I can "excuse" the directions given about notetaking here. While the plaintiff may have been "irritating" before entering the witness box, the case had only been running for that day and the witness, not having commenced his evidence, was flatly prevented from taking a note.
I accept that a judicial officer is in charge of the court and that "the procedure to be followed at a trial of any proceedings is to be determined by the Court": r 2.6 of the Local Court Rules 2009 (NSW). However, I know of no rule that says notes may not be taken. The current LawAccess page on the NSW Government Communities & Justice website, which gives guidance on behaviour in court, states:
"You are not allowed to use a mobile phone or record anything in the courtroom but you can take notes during the hearing of your case."
If leave is necessary for this point to succeed, then leave is given. I do not however think that leave is required. In my view, the question of apprehended bias is a question of law, in this case relating to both the refusal by the Magistrate of the bias application and the consideration, on appeal, of the events that occurred during the hearing.
The defendants agreed that a finding of apprehended bias would require the matter to be remitted to the Local Court. The plaintiff said that he did not wish to return for a rehearing, but rather pressed this court to finalise the matter. I sympathise with the plaintiff's position, bearing in mind the time and costs that will be involved.
However the central question in the case, namely whether or not the contract existed, turns almost entirely on the credit of the plaintiff and the second defendant. The only way for that question to be tested is by way of a rehearing.
I will therefore make orders remitting the matter to the Local Court. Despite reaching this conclusion I think it still appropriate to deal with the grounds of appeal concerning the alleged breach of contract.
The plaintiff, in his written submissions, says that "there is no direct evidence of the conversation dated on or about 20 December 2018 which resulted in the oral agreement alleged by the plaintiff and contains Mr Oliveri's misleading or deceptive representations". He then submits that this results in the need to apply "the law applicable to wholly circumstantial cases …". He referred to the recent criminal case of R v Dawson [2022] NSWSC 1131 as the source for the applicable rules of circumstantial evidence to be applied in the present matter.
The submissions set out in the previous paragraph are obviously quite wrong. In his affidavit of 5 July 2021, the plaintiff sets out, in terms, the conversation that he says made up the agreement upon which he has sued. This is direct evidence. It was countered by the second defendant in his affidavit of 16 May 2022, by him denying "that there was any conversation at any time regarding the payment of fees by either of the Defendants to the Plaintiff".
There was no need for the Magistrate to turn to the criminal law on circumstantial evidence. Her task was to decide whether she accepted the plaintiff or the second defendant on the existence of the conversation and on its terms. This is precisely what she did. In particular, her Honour did not accept that the asserted conversation on 20 December 2018 took place. She said:
"I accept that at some point Oliveri Lawyers paid Mr Danis $50,000.00 for the work done by him in relation to Ben's case, but I am not persuaded that is [sic] was the result of any oral agreement between the two men as to the sharing, or between the defendants and the plaintiff, as to the sharing of any legal fees as alleged by Mr Danis."
This finding followed an analysis by her Honour of the evidence including references to relevant documents and observations about the reliability of Mr Danis. Her Honour made this strong finding:
"The inconsistencies and other difficulties with Mr Danis's evidence caused me to question his evidence unless is [sic] corroborated by other witnesses or contemporaneous documents."
Her Honour was exercising her function as a decider of the facts. She approached this task in the standard manner of assessing witnesses and any other relevant evidence, such as documents. This was an exercise in factual investigation that resulted in a finding of fact.
During the hearing before me the plaintiff attempted to change tack. He said that the evidence on the contract should be seen to include both direct and circumstantial evidence. This of course was not the case that he ran. For example, in his submissions to the Magistrate he said "The evidence of the services agreement making is in my affidavit dated 5 July 2021 at [14] …" This is the direct evidence given by the plaintiff of the oral agreement.
It is also notable that her Honour's finding on the existence of a contract was not limited to her rejection of the plaintiff's evidence about the oral agreement. Her Honour drew support and corroboration for her conclusions from two documents:
1. The plaintiff sent the defendants an invoice for $50,000.
2. The bank transfer document recording the transmission of the $50,000.
Her Honour pointed out that:
"…[N]owhere on the tax invoice is there any reference to an entitlement to a share of the legal services or a fee sharing agreement. The words used by Mr Danis on his own invoice suggest it was a fee for services rendered, contradicting any claim of a 50% fee sharing agreement."
Similarly, the bank transfer referred to services in relation to office disbursements. Once again, no mention of a fee sharing agreement. The conduct of the plaintiff in sending the invoice, including its contents, was validly considered by her Honour in accordance with, as she quoted, the following passage from Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [143]:
"By contrast, the task in ascertaining what are the terms of a contract that is not wholly in writing is quite different - the task is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task."
Her Honour's conclusion that she did not accept the agreement had been made as alleged was purely a factual finding. Her Honour had to find one way or the other; the agreement had been made as alleged (in the oral conversation on 20 December 2018) or it had not. The onus was on the plaintiff. Her Honour found that the onus had not been discharged. This factual finding disposed of the contractual allegations made by the plaintiff. It also disposed, as a matter of logic, with the allegation that the second defendant had made representations to the plaintiff giving rise to relief under the Competition and Consumer Act.
Had I not made a finding of apprehended bias I would have dismissed those grounds of appeal relating to breach of contract and misleading or deceptive conduct (grounds 1, 2, 3, 7). The plaintiff agreed that if the terms of the contract had been rightly rejected then ground 18 would necessarily fail.
The notice of appeal also challenges the costs orders made by the Magistrate. The orders were a product of a "Calderbank" offer made by the defendants some three days before the hearing. My preliminary view of the orders is that they were not appropriate when having regard to the short time during which the plaintiff, as a self-represented litigant, had to respond. However, I will not take the costs issue any further as the orders will necessarily be set aside in any event. It will be a matter for the Magistrate deciding the remitted matter to decide the question of costs.
I make the following orders:
1. The appeal is allowed.
2. The orders made by Greenwood LCM on 8 September 2022, but excluding the dismissal of the cross-claim, are set aside.
3. The matter is remitted to the Local Court for the rehearing of the plaintiff's claim.
4. The rehearing is to include consideration of the costs of the whole of the proceedings excluding the costs in the Supreme Court.
5. The defendants are to pay the plaintiff's costs of the proceedings in the Supreme Court.
[3]
Amendments
14 February 2023 - A letter "a" removed from [56].
14 February 2023 - Added (2000) to a citation and removed strikethrough from word in [26].
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: 14 February 2023