Karadaghian v Big Beat

Judgment 1HIS HONOUR: By Motion on notice, filed and heard on 20 October 2014, the first defendant (Big Beat) seeks orders or a decision that I disqualify myself from the hearing of the substantive proceedings. 2The basis of the disqualification application is the terms of an earlier interlocutory judgment of the Court, constituted by me. 3It is necessary to set out some short facts. On 30 April 2014, I issued reasons for judgment and orders dealing with a motion in which the first defendant, Big Beat, sought leave to withdraw certain admissions made in pleadings. That judgment (in these reasons referred to as the first judgment) was published: Phillip Karadaghian v Big Beat (Australia) Pty Ltd [2014] NSWSC 496. The first judgment should be read together with these reasons for judgment. 4As summarised in the first judgment, Phillip Karadaghian sues Big Beat, largely in negligence, arising from an assault on 20 October 2007. The assault is alleged to have occurred in circumstances where the assault was perpetrated by a security guard engaged for the purpose of providing security at a night club owned and occupied by Big Beat. The security guard was an employee or agent or subcontractor (or employee thereof) of Big Beat. 5The Statement of Claim was filed on 22 October 2010. On 2 May 2011, Big Beat filed a defence admitting that, at all material times, it made arrangements for the provision of security services by contracting with Ambiant Pty Ltd (Ambiant) to provide security services and security personnel. Ambiant (the second defendant herein) filed a defence admitting that it was contracted to provide security services. 6I also recite the fact that the Statement of Claim, filed as described above, was filed approximately two years after the plaintiff's solicitor had received a request for certain particulars of the identities of the occupier of the nightclub and the entity responsible for the provision of security services. That letter was the subject of a reply dated 25 November 2008 over the signature of the financial controller of Big Beat, Mr Waterson, and provided the information relating to the identity of the security provider, upon which, I infer (and did in the first judgment) the plaintiff relied in commencing proceedings against Ambiant and drafting its pleadings against Big Beat. 7In or about June 2012, just over a year after the filing of a defence and just under two years since it received the Statement of Claim, Big Beat formed the view that the aforementioned admission in the pleadings should not have been made and that the security services were contracted with another person, Victor Moraitis and/or another company, Southland Security and Protection Pty Ltd (now in liquidation) (Southland). 8On 27 September 2012, Big Beat filed and served notice of a Motion seeking leave to withdraw the admission. It is the withdrawal of the admission with which I dealt in the reasons for the first judgment. The Court, as presently constituted, refused leave to amend the defence. 9The first judgment points out that which is obvious from the foregoing, namely, that the admission was first made on 25 November 2008, was reiterated on 2 May 2011 and was sought to be withdrawn in 2012, in circumstances where the second defendant (Ambiant) also admitted that allegation and has not sought to withdraw the admission. 10The first judgment deals with the unfortunate unavailability of the principal Director of Big Beat, who suffered a head injury on 2 May 2010, arguably rendering him incompetent to give evidence or instructions. 11The affidavit (or one of the affidavits) upon which Big Beat relied was sworn by Mr Waterson in which he recalled the process undertaken compiling and sending the letter dated 25 November 2008. That affidavit does not attest to the proposition that he, Mr Waterson, did not discuss the matter with the then principal Director of Big Beat. Nor does he suggest, in that affidavit or in his evidence otherwise, that he did not receive instructions from the principal Director. 12At [15] and following of the first judgment, I dealt with the evidence adduced in the proceedings, including the evidence of Mr Moraitis who was a Director of Ambiant as at 20 October 2007 (the date of the assault). He gave instructions to file Ambiant's defence and was, therefore, responsible for the admission in its pleadings. Mr Moraitis confirms that Ambiant was the relevant security provider. He also attested to the existence of an incident report relating to the plaintiff's assault. 13It is fair to say that the relationship between the corporate entities with which Mr Moraitis was associated was not a relationship that was clearly defined and a number of corporate entities were involved with Mr Moraitis, or vice versa. There were issues associated with the timing of his resignation as a Director. Most importantly, Mr Waterson sought to withdraw the admission on the basis of documents that may give rise to different inferences than those admitted by Big Beat in the earlier pleadings. That evidence is analysed in the first judgment. Susannah Page, also a Director of Big Beat, had no personal knowledge of the arrangements with Mr Moraitis or any of the corporate entities associated with him. 14Big Beat rely in this application upon three factors. First, they rely on the fact that, during the course of the proceedings leading to the first judgment, the plaintiff submitted, in terms recorded or summarised at [24] of the first judgment, that Mr Moraitis' evidence "defies all credibility". The first judgment does not accept, expressly or otherwise, that submission. 15The submissions of Big Beat, in this application, also rely upon the comments made by me at [33] and [36] of the first judgment. It is appropriate, notwithstanding the availability of the first judgment, to recite those paragraphs in context and I include paragraphs [31] to [39] of the first judgment, which are in the following terms: "[31] Mr Jon Dupre gave evidence. Mr Dupre was the licensee nominated on the master security licence held by Southland as at 20 October 2007. [32] Mr Dupre with Mr Gerald Gleeson, Mr Moraitis and Mr Markowski formed Southland Security and Protection Pty Ltd in December 2006. The company obtained a master licence under which, initially, Mr Markowski was the nominated licensee. [33] The venture was not successful. Mr Moraitis and Mr Markowski resigned from the board of the company and as Directors on 30 June 2007, or effective as that date. Mr Dupre wrote to the Security Licensing and Enforcement Directorate of the New South Wales Police Force on 11 July 2007 substituting his own name for that of Mr Markowski as the master licence holder and doing so on the ground that Mr Markowski had resigned from Southland. Mr Dupre did not inform ASIC as soon as he should have, but I accept his evidence that the failure to notify ASIC was an oversight. [34] Mr Dupre testified that Mr Moraitis had no further business dealings with Southland after 30 June 2007 and that Southland never provided security services to Big Beat after 30 June 2007. In particular, Mr Dupre testified that Southland was not providing security services at the Home Nightclub on 20 October 2007. Mr Dupre held, in his possession, the master licence for Southland as at 20 October 2007 and it was never (i.e. after 30 June 2007) displayed at the Home Nightclub, which premises he had never attended. [35] Importantly, from the prospect of prejudice, Mr Gleeson, his business partner, who, according to Mr Dupre would have corroborated his evidence, passed away in February 2011 and the business records, that, according to Mr Dupre would also have corroborated his evidence, were destroyed in July and December 2010. [36] It is unnecessary for me to come to any final conclusion on credibility. The evidence can be reconciled. If it were necessary to state a preference, I would clearly prefer the evidence of Mr Dupre over that of Mr Mortaitis. Mr Dupre's evidence was corroborated by independent contemporaneous records. [37] Nevertheless, the evidence is reconcilable. It seems that Mr Page and Mr Moraitis had meetings with each other about the provision of security services, during which discussions agreement was reached. It also seems that Mr Moraitis paid little or no regard to the separation of the corporate entities with which he was associated, or was once associated, or the proper identification of the entity on behalf of whom he was acting. To reiterate the somewhat trite proposition of the former Lord Chancellor, Edward Thurlow, corporations have neither bodies to be punished nor souls to be condemned. They act through individuals. [38] The evidence establishes that Mr Page and Mr Moraitis concluded an agreement for the provision of security services. Mr Page was acting on behalf of Big Beat. The evidence is ambivalent as to the entity on behalf of whom Mr Moraitis was acting. It may be the identity of the security provider was a matter left to the discretion of Mr Moraitis. Nevertheless, on the evidence before the Court, at this juncture, Mr Mortaitis was not in a position to agree on behalf of Southland to provide security services and the security services were not provided by Southland. [39] On the balance of probabilities, the evidence of Mr Stamatakis is accurate. It is most likely that he provided security services on 20 October 2007 as an employee of Ambiant." 16As can be seen from foregoing, I expressly decline to come to any final conclusion on credibility. Further, I express the view that the evidence could be reconciled. The statement of preference, to the extent necessary, was a statement preferring the evidence of Mr Dupre, expressly because it was corroborated by independent contemporaneous records. It is not a finding on credit. 17There is no suggestion in any of the foregoing that I took the view that any person was either generally unreliable or to any extent untruthful. 18As was set out in [42] of the first judgment, the test being applied by the Court on the withdrawal of an admission was whether the arrangement admitted in the pleadings had been "disproved" or was "contrary to the facts or arguable facts" arising from the evidence adduced in the interlocutory hearing. I concluded that it was, on the balance of probabilities, Ambiant that provided security services and that Mr Moraitis was negotiating those services on its behalf. I also concluded that Big Beat had shown that it was arguable "that there is a possible hypothesis inconsistent with that state of affairs", but that was insufficient to allow the withdrawal of the admission in circumstances where the withdrawal of that admission would effect considerable delay.