ECS Services Pty Ltd v DGA Holdings Pty Ltd

The first judgment 28After counsel had addressed, his Honour delivered the following ex tempore judgment: "In this matter DGA Holdings, essentially in the form of Mr Azzi, seek a determination that there was a contract between him and ECS Services as opposed to Cornish Properties. Given no formal written document of any contractual significance the course of conduct between the parties ultimately has to be the guide that the court has to follow. It is undoubtedly the case that anything approaching justice in this case has been avoided in this case by the fact that the parties have not compromised. The court is then left with having to decide who Mr Azzi had a contract with, and the only evidence of that is in the exchange of invoices and emails, however ineffective they may have been for various statutory purposes. Those are the only evidence that the court can consider. I THEREFORE MUST, AS I SAID BEFORE, WITH SOME MISGIVINGS, FIND FOR THE PLAINTIFF IN RESPECT OF ECS SERVICES. SO THE ORDER WILL BE FOR THE AMOUNT CLAIMED. AGAIN, THE USUAL INTEREST AND TIME WILL APPLY." 29As I have recorded at [1] above, Harrison AsJ concluded that the magistrate's reasons were inadequate and amounted to an error of law. The proceedings were returned to the Local Court. The second judgment 30Following the return of the proceedings to the Local Court, a notice of motion was filed by ECS seeking leave to call further evidence and that the matter proceed by way of re-hearing. On 13 November 2012, the magistrate announced that he was against the argument that had been advanced by Mr James on behalf of ECS. His Honour was of the view that Harrison AsJ's judgment "simply" required that further and better reasons should be provided. His Honour adjourned the proceedings to 28 November 2012. 31According to the affidavit of John Bui, DGA's solicitor, dated 19 March 2013 (ex 1), the magistrate made orders on 28 November 2012 dismissing ECS's motion. The proceedings were stood over to 6 December 2012 for hearing and determination. On 5 December 2012, Mr Bui was served with a notice of motion by ECS that the magistrate disqualify himself on the ground of an apprehension of bias. The magistrate stood the proceedings over to 29 January 2013. 32On 29 January 2013, the magistrate delivered the following judgment: "As for the substantive matter, I do find for the plaintiff, as I did before. My reasons are as follows. I have before me, not merely the statements of the parties, but there was oral evidence adduced and, as the court above said correctly, the only issue to be determined is whether or not the contract was between the two parties. To reach that conclusion, I needed to examine the evidence of the parties, both oral and written. It is my view on the balance of probabilities, that the evidence of the plaintiff was more convincing. I therefore find that the way in which the contract was established, is as he said, that the contract was between [DGA] and ECS. The argument adduced by the defence, that because of certain payments, the contract was in fact between [DGA] and Cornish Property Services, is one which I think is adequately explained on the balance of probabilities by the evidence given by [Mr Azzi] in court and in his statements. That is, that the only way in which he became involved with Cornish was at the behest of the defendant as a means of early payment. How that arrangement was made, it was his understanding and the facts seem to suggest that Cornish was merely an agent for payment by the defendant. It is for those reasons that I find that the contract was indeed between [DGA] and ECS. The only other matter which might be referred to is the legal relationships between ECS and Cornish Property Services but it seems to me that whatever that relationship might have been, it does not affect the finding that I must make on the basis of the evidence that was before me, that I found compelling to the required standards at least. I therefore find for the plaintiff and the judgment will be as before." 33The magistrate had commenced his judgment by rejecting the application that he disqualify himself, "principally because of the stage at which the application was made", His Honour said that "[b]ut for the intervention of the Supreme Court, [he] would have been practice (sic) officio and it would be quite improper if such application were made regularly at the time of judgment." Should the transcript be an accurate record of what was said by his Honour, it appears that he meant "functus officio." The obligation to provide adequate reasons 34The relevant principles as to the requirement to provide an adequate statement of reasons are summarised in Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127 at 135-136; [2004] NSWCA 174: "A miscarriage of justice can arise where what is and is not disclosed in a judge's reasons is a breach of the principle that justice must not only be done but must be seen to be done: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 431, per Mason P. As McHugh JA explained in Soulemezis v Dudley (Holdings) Pty Ltd (1987)10 NSWLR 247 at 279, one of the purposes served by a judicial decision is that: "... [I]t enables the parties to see the extent to which their arguments have been understood and accepted as well as the basis of the judge's decision". Accordingly, as McHugh JA said (at 278-279): "... [A] judicial decision must be a reasoned decision arrived at by finding the relevant facts and then applying the relevant rules or principles. A decision which is made arbitrarily can not be a judicial decision; for the hallmark of a judicial decision is the quality of rationality ...". In Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377; [2000] 1 All ER 373, which was followed in Moylan v Nutrasweet Co [2000] NSWCA 337, Henry LJ said (at 381-382; 377-378) in regard to the general duty of a judge to give reasons for his or her decision (particularly in relation to expert evidence): "(1) The duty is a function of due process, and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties especially the losing party should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know ... whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not." It is, of course, well settled that a judge does not need to refer to all the evidence in the proceedings or to indicate which of the evidence is accepted or rejected. The extent of the duty to give reasons depends upon the circumstances of the individual case: Mifsud v Campbell (1991) 21 NSWLR 725 at 728 (per Samuels JA, with whom Clarke JA and Hope A-JA agreed). But it is not for nothing that in some bilingual countries the judgment of the court is given in the language of the unsuccessful party. The proper administration of justice requires reasons to be given in a form, firstly, that will enable the losing party to understand properly the grounds upon which the case was lost, and, secondly, that will not, effectively, frustrate the losing party's right of appeal: Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666-667." 35In Young v Cesta-Incani (2007) 49 MVR 31; [2007] NSWCA 229, Tobias JA (with whom Ipp JA and Hoeben J agreed) said at [56] - [57]: Essentially, a judge at first instance must engage with the case presented by each of the parties: Whalen v Kogarah Municipal Council [2007] NSWCA 5 at [40]; The Nominal Defendant v Kostic [2007] NSWCA 14 at [56]. As Meagher JA said in Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 443: "There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it ... Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to." Further, as Ipp JA pointed out in Kostic at [59], "...Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his or her findings as to how he or she comes to accept one over the other." 36In Beale, Meagher JA considered at p 443, that there are three fundamental elements of a statement of reasons. His Honour opined that a judge should; 1. refer to relevant evidence, but there is no need to refer to it in detail; 2. set out any material findings of fact and any conclusions or ultimate findings of fact reached; and 3. provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Argument on appeal 37Mr Southwick, counsel for ECS, contended that the magistrate's second judgment appeared to be at odds with his ex tempore judgment where he based his decision solely upon "the exchange of invoices". He submitted that his Honour failed to identify, discuss and analyse the invoices and emails in any way. The magistrate, it was said, failed to consider the oral evidence of the witnesses as to who DGA contracted with and to explain why he was (if it was the case) unable to reconcile the evidence. Mr Southwick pointed out that the magistrate had made no findings at all as to the terms of the alleged express oral contract nor were any findings made in relation to the quote to Cornish. Another complaint was that the magistrate did not discuss or make any findings on the "amended invoice" that had been the subject of extensive cross-examination. 38Mr Southwick submitted that the difficulty with his Honour's judgment was that none of the evidence was discussed, there were no findings of fact and the magistrate had simply proceeded to say that the evidence of the plaintiff was more convincing. Mr Southwick complained that ECS did not know what evidence the magistrate was talking about. 39Mr Woods, counsel for DGA, cited Wiki v Atlantis Relocations at [59] that a judge does not need to refer to all the evidence in the proceedings or to indicate which of the evidence is accepted or rejected. He pointed out that the magistrate found that he accepted DGA's explanation that the issuing of the invoice to and receipt of payment from Cornish in January 2011 was at the behest of ECS as a means of early payment. Mr Woods contended that although not specifically referred to in the reasons, it was clear from the transcript at ex A TB 21 p 72 how the magistrate viewed this evidence (see [21] above). He argued that having regard to communications from ECS's solicitor, the magistrate concluded that Mr Azzi's lawyer had taken a line of attack, which included an alternative claim against Cornish as the second defendant. 40It was submitted by Mr Woods that the affidavit of debt sworn by Mr Azzi was not capable of establishing that DGA did not contract with ECS. Not only were there the invoices issued to ECS, but the joining of Cornish followed the letter from the solicitors dated 15 June 2010 (ex A TB 28). Mr Woods referred to the inconsistency between Mr Luck's affidavit at paragraph 23 and his evidence that he had spoken to Mr Azzi in February regarding payment. 41Mr Woods submitted that although brief, the reasons of his Honour when read with parts of the transcript make clear the magistrates' reasoning process in favour of DGA on the real issue to be determined, that is whether the contract was between DGA and ECS, and why his Honour did not accept ECS's contentions arising from the payment by Cornish to DGA or the motion for default judgment. Decision 42The content required in a statement of reasons depends on the circumstances of the case. The proceedings had taken two days in the Local Court during which the parties were represented by counsel and the unpaid accounts involved amounts that were not insignificant. The evidence advanced by the parties on important issues was diametrically opposed. Moreover, Harrison AsJ in her judgment had reminded the magistrate of the obligation to provide adequate reasons. His Honour had reserved his decision. 43The circumstances of the case obliged the magistrate to refer at least briefly to the significant conflicts between the evidence of Mr Azzi and Mr Kim for DGA on the one hand and the evidence of Mr Luck and Mr Morrison for ECS on the other and to the conflicting invoices. His Honour was required to set out any important findings of fact which included the terms of the contract between DGA and ECS (or Cornish). His Honour was not obliged to make explicit findings on each piece of evidence that was in dispute, but was required to set out his findings as to how he came to accept one set of significant evidence over the other. 44In his second judgment, the magistrate did state that he found the evidence of "the plaintiff was more convincing". Presumably, he was referring to the evidence of Mr Azzi. He accepted Mr Azzi's evidence that the only way he became involved with Cornish was at the behest of ECS as a means to early payment. However, the magistrate made no attempt to explain how he came to accept Mr Azzi's evidence over the evidence of Mr Luck. He did not set out in his reasons how he reached the critical finding that the only way Mr Azzi became involved with Cornish was at the behest of ECS. Although his Honour referred to "the finding that [he] must make on the basis of the evidence that was before [him] that [he] found compelling", he neither identified that evidence nor provided reasons for reaching that conclusion. His Honour did not refer to the conflicting evidence, even in a cursory way. The obligation to provide adequate reasons is not fulfilled by making general statements as to the need "to examine the evidence of the parties, both oral and written." 45His Honour's remarks at [21] above, were made on the first day of the hearing and before Mr Luck had given evidence. They were not incorporated in either judgment and do not provide a consideration of the affidavit of debt that was sworn by Mr Azzi or his evidence at [17] above that he had not sworn an affidavit that Cornish owed DGA money. 46It is unfortunate that the magistrate appears to have had minimal regard to Harrison AsJ's judgment, even though by reserving for over two months, he had ample opportunity to provide adequate reasons for his decision. His Honour's reasons do not provide ECS with a satisfactory explanation for its lack of success. 47Although an error of law may arise from inadequate reasons, the court has a discretion as to whether or not to direct a new trial. If the only conclusion open on the evidence is that reached by the magistrate, then, notwithstanding the inadequate reasons, the matter need not go to a new trial. Mr Woods submitted that a result in favour of DGA was the only conclusion available and there is no need for the proceedings to be returned to the Local Court for a re-trial. 48The conclusion reached by the magistrate is not the only conclusion available on the evidence. As I have decided that this matter is to be re-heard, it is inappropriate for me to identify the strengths or weaknesses particularly of the evidence of Mr Azzi or Mr Luck, but I am unable to determine that DGA's case must succeed. The magistrate's reasons are so inadequate that they constitute an error of law. 49ECS seeks an order that the proceedings not be returned to the magistrate but Mr Woods submitted that unless there was a finding of bias, the magistrate should be required to complete the case. 50In Northern NSW FM Pty Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39 at p 42-43 Davies and Foster JJ said: "If a decision has been set aside for error and remitted for rehearing, it will generally seem fairer to the parties that the matter be heard and decided again by a differently constituted tribunal. This is because the member constituting the Tribunal in the original inquiry or hearing will already have expressed a view upon facts which will have to be determined in the rehearing. The aggrieved party may think that a rehearing before the Tribunal as originally constituted could be worthless, for the member's views have been stated. Thus, if a decision of the Administrative Appeals Tribunal has been set aside and the matter remitted for rehearing, the President of that Tribunal ordinarily allocates to the rehearing a different member of the Tribunal. There are, of course, cases where it is convenient for the Tribunal as previously constituted to deal with the matter. And occasionally the Court itself expresses such a view, so as to make clear that it would not be improper for the Tribunal as previously constituted to consider the matter again." 51In my view, the overriding purpose of the Civil Procedure Act 2005 "to facilitate the just, quick and cheap resolution of the real issues in the proceedings" is not served by returning the proceedings for a second time to the magistrate who unfortunately has displayed little interest in providing adequate reasons. 52I propose to place the proceedings before the Chief Magistrate of New South Wales so that another judicial officer may be allocated to rehear it. 53In view of my findings, it is unnecessary to deal with ECS's complaints about the interlocutory judgments in any detail. The principal complaint about his Honour's dismissal of the motion seeking leave to call further evidence appears to be that Mr James was not allowed by his Honour to put oral submissions in support of the motion. This contention is not supported by the transcript of 13 November 2012 (ex A TB 39) that records Mr James saying: "I wish to have some argument on that, your Honour" His Honour replied: "Yes, what would you like to say?" The magistrate then heard Mr James' submission which he ultimately rejected. 54The difficulty with Mr Southwick's submission that the magistrate should have disqualified himself is that Mr Southwick at no stage during the Local Court hearing objected to the magistrate's conduct of the case on the basis of an apprehension of bias. The application was made after the appeal had been heard by Harrison AsJ and the motion seeking leave to call further evidence was dealt with by the magistrate. To my mind, his Honour was entitled to reject the application because of the stage at which it was made. In Cassegrain v Commonwealth Development Bank of Australia [2003] NSWCA 260, Sheller JA said at [52]: "In Vakauta v Kelly (1989) 167 CLR 568 the High Court pointed out at 572 and 587 that a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. "By standing by, such a party has waived the right subsequently to object. The reason why that is so is obvious. In such a case, if clear objection had been taken of the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing." 55In any event, I do not think that the material referred to in Mr James' affidavit dated 5 December 2012 and Mr Southwick's submissions in this court justifies the complaint of apprehended bias. 56I do not grant leave to ECS to appeal against the interlocutory judgments. Neither complaint has a reasonable prospect of success. Orders 57I make the following orders: (i) The judgment of Coombs LCM delivered on 29 January 2013 is set aside. (ii) The matter be remitted to the Chief Magistrate of New South Wales so that he might allocate it to a judicial officer of the Local Court other than Coombs LCM to be heard and determined according to law. (iii) DGA Holdings Pty Ltd is to pay the costs of ECS Services Pty Ltd of this appeal as agreed or assessed. 58I grant to DGA Holdings Pty Ltd an indemnity certificate in respect of the appeal under the Suitors Fund Act 1951.

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