Klapsis v Formosa

Supreme Court of NSW|2016-09-15

Judgment

HER HONOUR: The plaintiff in these proceedings seeks to appeal from the whole of the decision of his Honour Local Court Magistrate Curran dated 2 November 2015 where the Magistrate entered judgment for the defendant on his claim for breach of a contract of bailment of a pleasure boat.
By amended summons filed 17 May 2016, the plaintiff seeks firstly, an order pursuant to r 51.44 of the Uniform Civil Procedure Rules 2005 (NSW) suspending the operation of the judgment of the decision of Magistrate Curran dated 2 November 2015 in the Local Court, pending determination of this appeal; secondly, leave to appeal the decision of Magistrate Curran dated 2 November 2015 in accordance with s 39 of the Local Court Act 2007 (NSW); thirdly, that the appeal be allowed; fourthly, in lieu of the judgment entered in the Local Court proceedings 2014/199879, orders that (a) the claim in the Local Court proceedings 2014/199879 be dismissed; and (b) the defendant pay the costs of the defendant; and fifthly, in the alternative, an order that the matter be remitted to the Local Court for rehearing. The plaintiff has made an application to stay the execution of the judgment in the Local Court. It has been listed to be heard but it has not yet been assessed. (T49.9-10, 15/9/2016).
The plaintiff in this Court is George Klapsis who was the defendant in the Local Court proceedings. The defendant in this Court is Michael Formosa who was the plaintiff in the Local Court proceedings. For convenience and to avoid confusion, I shall refer to the parties by name.

The appeal

Section 39(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
Section 40(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
Section 41 of the Local Court Act provides that this Court may determine an appeal made under ss 39(1) or 40(1) either (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.

Grounds of appeal

Briefly the grounds of appeal are that the Magistrate erred in a matter of law by firstly, failing to afford the plaintiff procedural fairness ("Ground 1"); secondly, finding that a bailment existed between the plaintiff, personally, and the defendant ("Ground 2"); and thirdly, giving any weight to the evidence of the handwriting expert, Mr Anderson ("Ground 3"). In his written submissions, Mr Klapsis also included a further ground of appeal that the decision reached by the Magistrate is afflicted with legal unreasonableness. It is a ground that was not pleaded in the amended summons. I shall briefly address this ground in my reasons.
It is difficult to discern whether leave to appeal is required. I will deal with the grounds of appeal on the basis that they raise errors of law.

The pleading framework

On 7 July 2014, Mr Formosa filed a statement of claim seeking breach of bailment or alternatively misleading or deceptive conduct or unconscionable conduct pursuant to the Competition and Consumer Act 2010 (Cth).
The following is not in dispute. Mr Klapsis is and was the sole director and secretary of a company known as ACN 142 499 018 Pty Ltd (in liquidation). The company operated a business of selling new and second hand boats, as well as repairing boats. Until 20 January 2015, the company was known as Nowra Power Boats Pty Ltd ("the company"). (S/C [1] to [3]).
From approximately April 2009, Mr Formosa was the owner of an Ebbtide 2700 power boat ("the boat"). From about December 2009, Mr Formosa stored the boat at the business premises of the company. (S/C [10] and [11]).
The following is in dispute. In early December 2013, Mr Klapsis telephoned Mr Formosa and advised him that he had sold the boat for the sum of $86,755.70. During this conversation Mr Formosa indicated that Mr Klapsis had no authority to sell the boat. (S/C [12] and [14]).
Subsequent to the conversation, Mr Formosa accepted that the boat had been sold and asked Mr Klapsis if he (Mr Formosa) could remove the battery charger prior to the boat leaving the premises. Mr Klapsis agreed to this action. (S/C [15]).
On or about 13 December 2013, Mr Klapsis said to Mr Formosa that he should receive the proceeds of sale from the sale of the boat, being approximately $67,500, in January 2014. Despite requests for payment, Mr Klapsis has not paid the proceeds from the sale of the boat to Mr Formosa. (S/C [16] and [17]).
Mr Klapsis produced a motor vehicle and vessel consignment agreement ("the consignment agreement") dated 5 December 2013 to Mr Formosa containing a signature allegedly of Mr Formosa. Mr Formosa says that the signature on the purported consignment agreement is not his. (S/C [18] and [19]).
Mr Formosa is uncertain as to whether Mr Klapsis sold the boat personally or through the company. (S/C [20]).
Mr Formosa pleaded further or in the alternative that Mr Klapsis was a bailee of the boat and had an obligation to return it to Mr Formosa upon request. Mr Klapsis has failed to return the boat or the proceeds from its sale to Mr Formosa. (S/C [21]).
In essence Mr Klapsis claims that the boat was sold by the company after having been placed on consignment with Mr Klapsis and Mr Formosa's claim is against the company and not him personally. (D 30/12/14, [4], [5], [9] and [11]).
At the hearing in the Local Court, the parties agreed that the quantum of damages was $75,000. (T4.24-28, 2/11/2015).

Court orders and directions

On 16 September 2014, in the absence of a defence being filed by Mr Klapsis, default judgment was entered in the Local Court.
On 20 November 2014, Mr Klapsis filed a notice of motion seeking to set aside the default judgment.
On 18 December 2014, the Registrar made an order setting aside the default judgment and ordered Mr Klapsis to pay the costs of $1,000 thrown away within 28 days.
On 7 April 2015, the matter was listed for case management before Magistrate Keogh who made directions that: 1. Leave be granted to serve expert evidence in relation to the authenticity of a signature on a document; 2. Mr Formosa to serve evidence by 5 May 2015; 3. Mr Klapsis to serve evidence by 2 June 2015; 4. The matter to be listed for pre trial review on 7 July 2015; and 5. The matter to be listed for hearing on 7 August 2015.
On 4 June 2015, on Mr Formosa's application, Magistrate Stapleton vacated the hearing date and ordered: 1. Mr Formosa to serve any evidence, including expert evidence, by 2 July 2015; 2. Mr Klapsis to serve any evidence, including expert evidence, by 30 July 2015; 3. The proceedings to be fixed for hearing for two days on 7 and 8 October 2015; and 4. The proceedings to be listed for review on 8 September 2015.
On 8 September 2015, the matter was again before Magistrate Keogh for review. On this day, Mr Klapsis sought to vacate the hearing dates. Her Honour confirmed the hearing dates of 7 and 8 October 2015, but informed Mr Klapsis that if he wished to vacate the hearing dates, an application should be made by notice of motion and that motion was to be filed by 15 September 2015 and made returnable on 23 September 2015. Magistrate Keogh also directed Mr Klapsis to serve his evidence by 23 September 2015 and noted on the file review sheet that the "defendant's evidence in chief may not be relied on at the hearing unless served in accordance with this order subject to leave."
This final order is in accordance with cl 15.4 of Local Court of New South Wales Practice Note Civ 1 - Case Management of Civil Proceedings in the Local Court ("the practice note") which states: "If a party has not served evidence in accordance with the standard directions or other order of the court, then the court may allow further time to serve the evidence on condition that if the evidence is not served within that further time, the party will not be able to rely on the evidence in chief at the hearing without leave of the court."
On 23 September 2015, the proceedings went before Magistrate Milledge for review. Her Honour noted that no notice of motion seeking to vacate the hearing had been filed. Her Honour confirmed the hearing dates.
In summary, Mr Klapsis had been in default of the court timetable on a number of occasions, resulting in an order that his evidence in chief may not be relied upon at the hearing unless served in accordance with an order to serve evidence by 23 September 2013 subject to leave. He had been given the opportunity to apply for an adjournment prior to the hearing date but he chose not to do so.

The hearing in the Local Court

On 6 October 2015, the day before the hearing, Mr Klapsis served a statement of Andrew Klem, an employee of the company sworn 2 October 2015 upon Mr Formosa's solicitors. Prior to the hearing, Mr Formosa's solicitor advised Mr Klapsis that he required Mr Klem for cross examination.
On 7 October 2015, the matter came before Magistrate Curran for hearing at the Local Court, Downing Centre, Sydney. Mr Welch, solicitor appeared for Mr Formosa. Mr Formosa was not present in court. Mr Klapsis was not present when the matter was called.
Prior to Mr Klapsis arriving at court, Mr Formosa's solicitor informed the Magistrate that he would object to the affidavit of Mr Klem being relied upon and that Mr Formosa would be relying upon the affidavits of Mr Formosa; Lisa Formosa, Mr Formosa's wife; Jamie Borg and Anthony Greed, employees of Mr Formosa's company; and Chris Anderson, a handwriting expert.
The Magistrate was cognisant of the history of these proceedings, namely that default judgment had been set aside, Mr Klapsis had not complied with prior court timetables, a prior hearing date had been vacated on the plaintiff's application (due to the handwriting expert's report not having been served) and finally, a guillotine type order had been made in relation to Mr Klapsis serving affidavits after the due date for service. The Magistrate adjourned to await Mr Klapsis' appearance.
When Mr Klapsis appeared, he was self represented. The Magistrate asked Mr Klapsis why he had not served any evidence other than the Klem statement. Mr Klapsis replied, "Your Honour, I don't really have much evidence to serve." (T11.8, 7/10/2015). The Magistrate outlined the five documents that Mr Formosa was relying upon. Mr Klapsis agreed that they had been served upon him. (T11.22-28, 7/10/2015).
The following exchange took place between the Magistrate and Mr Klapsis: "HIS HONOUR: Subject to any objection in relation to their form they will go in, you won't be calling any evidence. Do you understand that? DEFENDANT: The only evidence I've got to call upon is what's already been submitted. HIS HONOUR: There is none submitted. There is not a scintilla of evidence served I have been told except for a statement that was served yesterday that won't be going in. DEFENDANT: The evidence I'm talking about, your Honour, is what's already been submitted by Mr Formosa and his law firm. HIS HONOUR: Yes, they are the statements I read out. They will be going in and you have a right of cross-examining those witnesses, there is no problem with that, but beyond that there won't be any evidence coming from you. DEFENDANT: Except for what I've already submitted I guess - the affidavit. HIS HONOUR: But you haven't submitted anything. DEFENDANT: I have submitted affidavits in the past. HIS HONOUR: Where? DEFENDANT: I certainly have. HIS HONOUR: No, there is an affidavit on the file in relation to an adjournment application, that is not going in. This is evidence that has been served in respect of the hearing." (T11.30-49; T12.1-9, 7/10/15).
After the Magistrate outlined the issues in dispute, Mr Klapsis sought to rely on the statement from Mr Klem. Mr Welch objected to it being tendered and stated that Mr Klem's statement raised an issue concerning Mr Formosa attending the company's premises on 5 December 2013 and that it was an attempt to put into evidence that somebody witnessed or was close to being a witness to the signing of the alleged consignment agreement.
Another exchange then took place between the Magistrate and Mr Klapsis: "HIS HONOUR: It is not going in, so there are a number of alternatives available to you, number 1, you can apply for an adjournment. If you apply for an adjournment and you are successful, and I wouldn't hold your breath on that but you could be, if you have got a particularly astounding and persuasive reason, the matter will be adjourned but you personally will have to pay the costs thrown away by the need for the adjournment. I suspect that will be some thousands of dollars and if the matter is adjourned a term of the adjournment will be that you pay that money within a certain period of time, if you don't the statement of defence will be struck out and the matter will then proceed to an assessment hearing, or alternatively judgment will be entered against you. It is a matter for you to consider what you want to do but that statement won't be going in from this fellow by the name of Klem if in fact it was served yesterday, it is in breach of the orders of the Court. DEFENDANT: Yes. HIS HONOUR: You can't get any leeway, so the only alternative is we proceed without him or alternatively, if he is particularly important, you can apply for an adjournment, as I said, I wouldn't at all think you are automatically going to get it but you never know, there might be a very cogent reason, but you will be paying costs and they will be some thousands of dollars and you will have to pay it within a specified period of time and if you don't the statement of defence will be struck out and the matter will proceed on the statement of claim alone. DEFENDANT: Your Honour, would the adjournment for the reason to be able to have Mr Klem here as a witness, is that what you mean? HIS HONOUR: For you to prepare your evidence but don't hold your breath on that because I would need a crackerjack reason as to why you breached the Court orders. I mean you are in contempt of Court orders. They are not made for the edification of the Court. You were ordered to serve evidence within certain or by a certain day and you haven't. The corollary of that is your evidence does not go in. DEFENDANT: Your Honour, can I just mention that Mr Welch and Mr Formosa and Mr Greed's evidence, affidavits, were also three weeks late. They were meant to be served by the end of - I think it was the end of July and they came in on the 24th. HIS HONOUR: Fine. Why haven't you done anything for the last three 10 months? DEFENDANT: I have. HIS HONOUR: Where is it? Where is the product of your work? DEFENDANT: Mr Welch can confirm this: the liquidators which we needed a document from-- HIS HONOUR: I couldn't care about liquidators because they are not suing the company. ... DEFENDANT: So what would the costs be incurred if I wanted to-- HIS HONOUR: I am not going to tell you that. DEFENDANT: Okay. HIS HONOUR: You have to decide what you want to do. I told you they will be some thousands of dollars and I am telling you now I would not hold your breath on getting the adjournment. This matter is set down for hearing. The Court has got to dispose of these matters in accordance with the [Civil] Procedure Act in a quick, just and cost effective manner. So far the need, on the face of it, if you adjourn the matter it is not cost effective and all that I can do is make orders that can ameliorate the cost to the plaintiff but adjournments don't necessarily bring about justice, they have got to wait for their money, so why should they be put out of court waiting for you to do what you should have done months ago. As I said, there is always a reason that perhaps you might be able to persuade me allows in the name of justice at least to put it over but it is going to cost money and it will cost a large sum of money. When I say, "a large sum" I mean it costs some thousands of dollars I would have thought given the money that has been thrown away by preparing the matter for hearing, Mr Welch being here today and his witnesses being here today, and tomorrow it is booked as well, so we are looking at some significant sum of money in terms of the value of the case which is it would seem $75,000 in fact, so we are looking at some thousands of dollars. I don't know how many, I haven't got a clue. Mr Welch undoubtedly, if we get to that situation, will tell me and I will exercise my discretion as to whether I think that is reasonable or excessive or appropriate but I suspect it would be the full value of his legal fees, legal money thrown away; in other words, not just on what we call a party/party basis, but on an indemnity basis which means everything that has been incurred within the parameters of reasonableness will have to be paid for. It is a matter for you. The matter is listed today and tomorrow for hearing so as far as I'm concerned that is what is going to happen but if you wish to make an application to have the matter adjourned tell me - make and tell me - and I will listen to it and I will hear from Mr Welch." (T16-19, 7/10/15).
There was a short adjournment. Upon resumption the Magistrate asked Mr Klapsis if he had any application for an adjournment. Mr Klapsis replied, "No." (T20.37-43, 7/10/2015).
The issue of whether Mr Klem's affidavit should be admitted was revisited at the close of Mr Formosa's case. The Magistrate heard argument as to whether Mr Klapsis should be allowed to rely upon the affidavit of Mr Klem. Once again leave was opposed by the solicitor for Mr Formosa. (T105 to T113, 8/10/2015). His Honour concluded that service of the document "literally hours before the matter comes on for hearing" was not appropriate. (T113.15-16, 8/10/2015).
In his ex tempore reasons for his decision, the Magistrate stated: "… The only evidence that was served pursuant to the Court orders was that of the plaintiff. The defendant did not serve a statement of any witnesses other than the day before the matter coming on for hearing. The one particular statement that was served the day before was not a statement that the plaintiff would consent to going into evidence. It therefore did not go into evidence. I told the defendant that evidence that was not served in accordance with the practice note and the various Court orders that have been made would not be admitted into evidence. However, I did advise the defendant that if he wished to apply for an adjournment to rectify these difficulties that he had, I would hear the application but in the event that he was successful, he almost certainly would have to pay the plaintiff's costs thrown away by the need for the adjournment being made. Those costs would have to be paid regardless of the outcome of the case ultimately and would probably have to be paid by the defendant within a timeframe following the date of adjournment. Prior to hearing I noted they had already been vacated, this being on 7 August 2015 and I indicated that the application may have difficulties bearing in mind the provisions of ss 56, 57, 58 and 61 of the Civil Procedure Act. The defendant decided that he did not wish to make the application for an adjournment and the matter proceeded to be heard. As I said, it was heard on the plaintiff's evidence alone. Obviously if the matter did proceed, which it did, the defendant would have rights as usual of cross examination." (J1.15-38).
I now turn to consider the grounds of appeal.

Denial of procedural fairness (Ground 1)

This ground of appeal is that the Magistrate erred in a matter of law by failing to afford Mr Klapsis procedural fairness by (i) refusing to allow Mr Klapsis to rely on evidence that had previously been filed or served in the proceedings by the defendant ("Ground 1(i)"); (ii) refusing to allow Mr Klapsis to rely on evidence that had not been served in accordance with the practice note ("Ground 1(ii)"); (iii) advising Mr Klapsis that he would "almost certainly have to pay the costs of the plaintiff [in the Local Court] thrown away as a result of any adjournment application" in circumstances where he did not understand the impact of not having any evidence and did not receive direction regarding what costs "thrown away" were ("Ground 1(iii)"); and (iv) failing to allow Mr Klapsis the ability to present evidence viva voce in circumstances where this may have addressed the procedural unfairness arising from the refusal of Mr Klapsis' request to rely on evidence that had previously been filed or served by Mr Formosa and evidence prepared by Mr Klapsis that had not been served in accordance with the practice note ("Ground 1(iv)").
I will first deal with Ground 1(iii) then Grounds 1(i), 1(ii) and (iv).

Ground 1(iii) - Advice in relation to an adjournment

In Mr Klapsis' submission, he was denied procedural fairness when the Magistrate advised him that he would almost certainly have to pay the costs of Mr Formosa thrown away as a result of any adjournment application.
Mr Klapsis submitted that the manner in which the Magistrate raised the prospect of applying for an adjournment effectively meant the he did not feel as though he had any real option but to proceed with the hearing. Mr Klapsis stated that the way in which the Magistrate communicated to him failed to indicate that the exercise of discretion to grant an adjournment may more readily be granted to an unrepresented litigant who has misunderstood procedural requirements and who is, as a consequence, not in a position to present his evidence.
Counsel for Mr Formosa submitted that it is clear that Mr Klapsis was given ample time and opportunity to prepare and serve his evidence and that Mr Klapsis has offered no explanation as to why he personally did not prepare and serve an affidavit of his own evidence of the circumstances of the bailment in light of the fact that he had been directed on three occasions to serve evidence. Counsel for Mr Formosa referred to the circumstance that Mr Klapsis was also given the opportunity to apply to vacate the hearing dates as a consequence of the directions made by the Local Court on 8 September 2015 and he did not make such an application.
Counsel for Mr Formosa further submitted that, while Mr Klapsis now says that he wished to obtain expert handwriting evidence in reply, the approach to the expert was not made until a week prior to the hearing, and there is no explanation for the delay, bearing in mind that this was a matter identified by Mr Klapsis when the matter was before the Court on 11 March 2015.
Finally, counsel for Mr Formosa submitted that the Magistrate made it abundantly clear to Mr Klapsis that it was open to him to make an adjournment application to enable the affidavit of Mr Klem to be relied upon and evidence in reply to be prepared and served. The Magistrate explained to Mr Klapsis that the likely consequences of that application succeeding would be that he would be required to pay the costs thrown away. There is no doubt the Magistrate's explanation of those consequences was forthright, but, in the circumstances, hardly unusual.

The law

The decision to grant or refuse an adjournment is a discretionary one. The guiding principles in relation to an appeal against such an exercise of discretion are set out in House v The King (1936) 55 CLR 499; [1936] HCA 40 at 504-505 where the High Court said: "... The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. ..."
Counsel for Mr Formosa referred to Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 ("Lam") and Italiano v Carbone [2005] NSWCA 177 ("Italiano").
In Lam, Gleeson CJ stated at 14: "Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice."
In Italiano, Basten JA stated at [85] to [88]: "[85] A claim based on procedural unfairness, in these circumstances, must demonstrate that the confusion in the mind of the Claimant was such that he cannot be said to have foregone a reasonable opportunity to make an application for an adjournment, or that the circumstances were otherwise such that the Tribunal itself had an obligation to consider offering an adjournment. [86] In the present case, there was a hearing at which the Claimant had the opportunity to seek an adjournment so that he could better prepare a defence to a case of which he had inadequate notice. His failure to make an application in that regard, absent some satisfactory explanation, itself grounded on procedural unfairness, is fatal to this aspect of his claim. He did not give evidence before the Master that his failure to seek an adjournment was because at no stage prior to the completion of the hearing, did he understand that any claim was made against him personally. Had he given such evidence, it could well have been subjected to serious challenge. In any event, it was a matter of fact for him to establish before the Master and that he did not seek to do. [87] Absent such evidence, he cannot succeed in this Court because to do so he must ask this Court, in effect, to consider and determine in his favour an application for an adjournment which he did not make before the Tribunal. Such a request would involve a rehearing of an aspect of the Tribunal proceeding. No such factual inquiry can be undertaken by way of judicial review or on an appeal on a question of law. It is for an analogous reason that, where a breach of procedural fairness is established, the Court will not inquire into the consequences in the particular circumstance, unless "it is confident that the breach could not have affected the outcome": Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at [104] (McHugh J). [88] An opportunity foregone, but reasonably available, does not demonstrate breach of procedural fairness..."
I note that Basten JA's statement of principle at [85] has been referred to and applied by this Court subsequently: see Brennan v Consumer, Trader & Tenancy Tribunal & Anor [2010] NSWSC 1240 per Hoeben J at [47]-[48].
Mr Klapsis referred to Kelly v Westpac Banking Corporation [2014] NSWCA 348 ("Kelly") and Titan v Babic (1994) 49 FCR 546; (1994) 126 ALR 455 ("Titan").
In Kelly, the Court of Appeal (per McColl and Gleeson JJA and Sackville AJA) determined that Mr Kelly, a litigant in person, had not been afforded adequate opportunity to assess and respond to the late service of evidence by Westpac. The Court of Appeal at [33] stated: "The court is reluctant to grant leave to appeal in matters of practice and procedure such as the granting of an adjournment or the vacation of a trial date. … It will generally only intervene in such a case where it considers there is "a clear case of material error in the decision at first instance": Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65."
But what occurred in Kelly is not what occurred here. In Kelly, the defendant, who was a litigant in person, sought and was refused an adjournment on the basis of late service of affidavits by the plaintiff, Westpac. In this appeal it is the litigant in person, Mr Klapsis who is seeking to rely on further evidence. He is not the one on the receiving end of further evidence.
In Titan the Full Court of the Federal Court reviewed the question of whether the Master of the ACT Supreme Court should have allowed an unrepresented party an adjournment. The Full Court concluded at 464: "The question remains whether the Master should have allowed Mr Titan an adjournment to call witnesses. Where it is apparent that a party who does not have legal representation has misunderstood procedural requirements so that he or she is not in a position to complete the presentation of evidence, an adjournment might be considered in the interests of justice provided that no irreparable substantive or procedural injustice is done to the other party involved. In any such case the granting of an adjournment will be a matter of discretion. In this case there was no application for an adjournment nor does there seem to have been any intelligible explanation to the master of Mr Titan's failure to arrange his witnesses. It may be that in some cases a tribunal should, to avoid possible injustice, inquire of an unrepresented person the reason for the failure properly to prepare his or her case. Again, that is a matter of discretion limited by the necessity that the tribunal be, and appear to be, impartial as between the parties. This was not a case in which the master was obliged to undertake such an inquiry. On the face of the record there was no procedural error on his part and the Full Court [of the Supreme Court of the Australian Capital Territory] was correct in the way that it dealt with this issue."
Titan also does not assist Mr Klapsis. In the Local Court, as in Titan, the Magistrate was not obliged to afford procedural fairness to Mr Klapsis, who had no legal representation, as there was no relevant application for an adjournment or explanation in relation to Mr Klapsis' failure to prepare affidavits or call witnesses.
In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 French CJ made the following remarks in relation to the granting of an adjournment: "[5] In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system ...
In Aon, Gummow, Hayne, Crennan, Kiefel and Bell JJ in their joint judgment, stated at [116] that, "[t]here may be some point of distinction in our views as to what J L Holdings Pty Ltd v State of Queensland (1996) 71 FCR 545 holds", however their Honours made similar conclusions to that of French CJ. Their judgment also emphasises that a court, in granting applications which might cause undue delay, must consider case management and the role of the courts in serving the public: "[111] ...The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. [112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. [113] In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings."

Consideration

In the lead up to the hearing in the Local Court, Mr Klapsis had failed to file a defence on time, default judgment had been set aside, he had not complied with prior Court timetables on three occasions, a prior hearing date had been vacated on Mr Formosa's application (due to the handwriting expert's report not having been served), a guillotine type order had been made in relation to Mr Klapsis serving affidavits after the due date for service and he had been given the opportunity to apply for an adjournment prior to the hearing. The only attempt Mr Klapsis had made to comply with the Court timetable was to serve the statement of Mr Klem on Mr Formosa's solicitors the day before the hearing. By the time of the last review Mr Klapsis had not applied for an adjournment. The Magistrate took into account ss 56, 57, 58 and 61 of the Civil Procedure Act 2005 (NSW) when explaining to Mr Klapsis the consequences of making an application for an adjournment. The Magistrate informed Mr Klapsis that he could make an application for an adjournment but foreshadowed that it would be unlikely to succeed and that if it did so he would have to pay the costs thrown away by the adjournment of some thousands of dollars.
The Magistrate also informed Mr Klapsis that if he chose to apply for an adjournment the Magistrate would hear from Mr Formosa's solicitor and then exercise his discretion. By his responses Mr Klapsis understood what he had been told. In particular he was aware that there would be costs awarded against him as he asked the Magistrate "so what would the costs be incurred be if I wanted to [apply for an adjournment?]" (T18.23, 7/10/2015).
When Court resumed after a short adjournment, the Magistrate asked Mr Klapsis if he had any application for an adjournment, to which he replied, "No." Hence, Mr Klapsis was advised that he could apply for an adjournment, he understood the consequences and he elected not to do so.
Mr Klapsis was given the opportunity to cross examine Mr Formosa's witnesses and make his submissions. He was given a reasonable opportunity to be heard albeit without evidence from his side. Procedural fairness has to be afforded to both parties, not just one. In these circumstances, it is my view that the Magistrate afforded Mr Klapsis procedural fairness.

Grounds 1(i), 1(ii) and 1(iv) - Refusal to allow the plaintiff to rely on evidence

The next aspect of ground 1 concerns firstly, the Magistrate's refusal to allow the plaintiff to rely on evidence that had previously been filed or served in the proceedings by Mr Formosa; secondly, the Magistrate's refusal to allow the plaintiff to rely on evidence that had not been served in accordance with the practice note, namely the affidavit of Mr Klem, an employee of the company, dated 2 October 2015; and thirdly, the Magistrate's failure to allow the plaintiff to present evidence viva voce.
At the hearing in the Local Court, Mr Klapsis sought to rely on the affidavit of Mr Formosa's solicitor, Mr Ellicott which had previously been filed and served in opposition to Mr Klapsis' application to set aside default judgment. (Aff, 25/7/2016 [5]). In oral submissions, Mr Klapsis explained that he wanted to rely on an email from Mr Formosa to Mr Ellicott dated 25 March 2014 that was annexed to Mr Ellicott's affidavit. (CB 409).
Counsel for Mr Formosa, in the hearing of this appeal, submitted that Mr Klapsis' submissions do not identify precisely what material in Mr Ellicott's affidavit would have assisted Mr Klapsis' defence of the claim. There was no notice given of the intention to rely upon the affidavit and Mr Ellicott was not asked to be present at court.
Aside from the document from Mr Klem, after a fair reading of the transcript of the hearing in the Local Court, it is my view that it was not clear what else Mr Klapsis was seeking to rely upon. In this appeal Mr Klapsis submitted that he was denied procedural fairness by not being able to rely upon evidence which had already been submitted in the proceedings by Mr Formosa's law firm on behalf of Mr Formosa.
It took quite a while for Mr Klapsis at the hearing of this appeal to identify the document he was talking about. That he wished to rely upon this document was never made clear to the Magistrate at the outset of the hearing in the Local Court. It is an email dated 25 March 2014 annexed to Mr Ellicott's affidavit, which was sent by Mr Formosa to Mr Ellicott. It relevantly reads: "Subject: Nowra Power Boats Hi George Please see attached contract for the boat Ebbtide that I left on consignment with Nowra Power Boats. He appointed an administrator Friday last week. I have been trying to get money since early in the year with excuses every time. I gave him the benefit of thinking he would pay. I know he has 3 paid boats due in 3 weeks from overseas valued at around $150,000. I am gathering he used my money to help fund these boats out of the USA. He also owes the ATO around 200K, we are the next in line at 75K. …" (CB 409).
Mr Klapsis says that this is evidence that Mr Formosa left the boat on consignment with the company. Had he articulated this argument, the result may have been different. If the Magistrate had allowed this email into evidence, Mr Formosa may have had an opportunity to provide an explanation. However, this did not take place. Instead, the Magistrate gave Mr Klapsis the opportunity to apply for an adjournment. Mr Klapsis was made aware of the consequences of not complying with Court directions and the practice note. It is my view that Mr Klapsis was afforded procedural fairness.
In oral submissions, Mr Klapsis made much of the discrepancies in the evidence as to the whereabouts of Mr Formosa on 5 December 2013, the date when the consignment agreement was allegedly signed. Mr Klapsis submitted that the Magistrate did not deal properly with these inconsistencies. (T14.41-22).
In Mr Formosa's statement to police dated 16 July 2015 he said at [94] to [104]: "94 In the evening on 4 December 2013, I went to Vincentia as there had been a large storm, and I needed to repair some damage to my house. 95 The next day, 5 December 2013, I recall trying to telephone George, but he wasn't answering his phone. 96 That morning, Jamie Borg, a tradesman/contractor I employ drove down to assist me with the repairs. 97 Mark Williams, another tradesman also assisted me. 98 The roof needed fixing. 99 I needed some special stainless steel screws to fix the roof, and some for the railing. 100 There was a bit of brickwork that needed repairing, and some pavers that needed resetting. 101 I did not have the right screws for the roofing. 102 At 11:58 on 5 December 2013, I rang George on his mobile. We had a conversation in words to the effect of: I said: "Hi George. I am shooting through Nowra shortly. Are you there?" George said: "No." I said: "Do you have the money yet?" George said: "No, it hasn't gone through. The buyer is paying for it when it hits the dock in Western Australia." I said: "OK. Just make sure he can't take the boat before he pays for it." George said: "No no, he can't take it, because it's on consignment. The boat won't be released to him until it is paid for." I said: "Okay then." George said: "We should see the money in a couple of weeks." I said: "Okay then." 103 Jamie and I drove to Bunnings in Nowra around 1 o'clock on 5 December 2013. 104 We did not stop at Nowra Powerboats because George said he wasn't there, and that he didn't have my money yet." (CB 205-206).
Mr Klapsis referred to Mr Formosa's "statement of a witness" to the NSW Police annexed to the affidavit of Mr Formosa in which he stated at [16]: "16 I had a further conversation with George about selling my boat and George said, 'You gave me permission to sell the boat.' I have then asked George to show me the signed consignment form and the document for proof of sale. George was able to provide me with a Motor Vehicle and Vessel Consignment Agreement and two invoices for boat repairs dated 23rd January, 2012 and the 20th November, 2013. When I looked at this agreement, the only details that were written in my handwriting were the 'Consignor Bank Details', however the signature on this document was not my signature and the date that it was signed was the 5th December, 2013. I had never seen this form before and I know that I never signed this form on the 5th December, 2013 because I was in Sydney on that date moving my company's factory from Hoxton Park to Ingleburn. The repairs conducted on the 20th November, 2013 were not approved by me and I knew nothing about this repair until he handed me the invoice. George could not provide me any document in relation to the sale of the boat because he started the document was at his home address. …" (CB 298).
This evidence annexed to Mr Formosa's affidavit puts him in Sydney on 5 December 2013 where he was moving his company factory from Hoxton Park to Ingleburn.
The Magistrate was alive to this issue. After Mr Klapsis drew his Honour's attention to this evidence, the Magistrate stated, "Yes, I know. I have highlighted that. I am going to ask Mr Welch to reply to that." (T145.23-24, 8/10/2015).
Mr Welch provided the following explanation: "These are the phone calls sequence 105 on 6 December I believe that reading through the entries here between Ingleburn, Lurnea, Prestons, Hoxton Park, Denham Court, Ingleburn, Denham Court, Hoxton Park, when the plaintiff was making the statement to the police he obviously didn't have the benefit of the contemporaneous records that we produced as part of this affidavit in determining exactly where he was on the day of 5 December. The date of 6 December may well be the date that he was moving for the purposes and believed that that was the date that he was referring to in the police report. … It is an inconsistency. There is no inconsistency that he was moving offices at that time; that evidence is consistent throughout the affidavit where he talks about moving premises and the conversations. The only inconsistency is to the date and in my submission, your Honour, it would be an inconsistency of one day only after some five months. (T155.46-50; T156.1-16, 8/10/2015).
Mr Klapsis' next submission about denial of procedural fairness concerns the Magistrate's failure to allow Mr Klapsis the ability to present evidence viva voce (Ground 1(iv)). This ground of appeal overlaps with others.
Not only had Mr Klapsis not served documents in accordance with the practice note, he also failed to comply with a specific order made on 23 September 2015 that his evidence in chief would not be relied on at the hearing unless it had been served in accordance with that order subject to leave. Mr Klapsis could have sought an adjournment and put on an affidavit or statement prior to the hearing. He had been directed to do this on a number of occasions and failed to do so. He offered no real explanation for his non compliance. While he was not permitted to give oral evidence, he was given some leeway by the Magistrate.
If the Magistrate had allowed Mr Klapsis to present his evidence viva voce it probably would not have afforded Mr Formosa procedural fairness. In my view for the Magistrate to not allow Mr Klapsis to give oral evidence in circumstances where Mr Formosa was not in a position to investigate the truth of his evidence does not deny Mr Klapsis procedural fairness.

Bailment (Ground 2)

The second ground of appeal is that the Magistrate erred in finding that a bailment existed between the plaintiff personally and the defendant. This issue mainly involves a contested factual dispute.
On this topic Mr Klapsis also, I think, submitted that the Court's decision is afflicted by legal unreasonableness. In respect of legal unreasonableness, this ground was first identified by the High Court of Australia in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; (2013) 297 ALR 225; [2013] HCA 18. The ground of legal unreasonableness reflects the requirement of the law that a decision maker must understand his or her statutory powers and obligations (at [71]). A jurisdictional error will occur where, for example, no sensible authority acting with due appreciation of its responsibilities would have so decided (at [71]); the decision-maker has failed to give adequate weight to a relevant factor of great importance (at [72]); the decision-maker has given excessive weight to an irrelevant factor of no importance or reasoned illogically or irrationally (at [72]); the decision is a disproportionate response by reference to the scope of the power (at [73]-[74]); the decision lacks evident and intelligible justification (at [76]); or it is not apparent how a conclusion was reached but the decision itself bespeaks error (at [82] and [85]).
Mr Klapsis submitted that the Magistrate's decision lacks evident and intelligible justification because the evidence that was tendered in the proceedings by Mr Formosa indicates that firstly, the company was in the business of servicing, buying and selling boats; secondly, Mr Formosa met Mr Klapsis as he engaged the company to service his boat; thirdly, Mr Formosa engaged the company to sell the Larsson (a boat Mr Formosa had previously owned) on consignment; fourthly, Mr Formosa alleges that the boat was left at the company's premises to enable the sale of it; fifthly, Mr Formosa and his wife, Lisa Formosa, did not have a social relationship with Mr Klapsis; sixthly, Mr Formosa also had dealings with other employees of the company, namely Andrew and Anthony; seventhly, Mr Formosa's communication with Mr Klapsis was at the company premises or at email addresses for the company; eighthly, the advertisement for the sale of the boat refers to the boat being available to view at "our showroom", being the company premises; and ninthly, the funds from the sale of the boat were paid into the company account.
Mr Klapsis' submission is based on a no evidence ground. I agree that where a decision is based upon findings of fact, they must be founded upon logically probative evidence and not on mere suspicion.
It should be noted that in Mr Klapsis' defence he pleaded that Mr Formosa claims that a boat of his was left for storage at the premises of Mr Klapsis' company from December 2009 until December 2013, however the company did not provide boat storage. (D [5] and [6]). (My emphasis). This is in contradiction of the case that Mr Klapsis sought to advance at the hearing in the Local Court.
The Magistrate reviewed the evidence and authorities on bailment and concluded: "The characterisation of the bailment in this matter is not completely straightforward. Further, there are a number of classifications that a bailment can take on and these are set out historically and traditionally in a decision of Holt CJ in Coggs v Barnard (1703) 92 ER 197. Whilst there was no financial exchange between the parties, that is it was gratuitous, there were mutual benefits. There is the storage and the occasional polish which were advantages accruing to the plaintiff and the defendant could "sell off" the boat if occasion arose. Beyond this, there was no more formality to the arrangement and the plaintiff could collect, as I have said, the boat and use it at will. There is no doubt a bailment existed. The lack of formalities described in the plaintiff's evidence, even though there was mutual benefit and possibly that benefit may have eventually accrued to the company if a sale had been effected, and no such sale was ever effected, I would conclude that on the balance of probabilities the characterisation of this bailment was a gratuitous one, of mutual benefit for the two parties as persons and not between the plaintiff and the corporation. It was not a relationship that could be characterised as one associated with a business. I acknowledge that this is a conclusion that is based on a fine distinction on the facts in this case, but it was the elements on balance that favour this conclusion as opposed to the facts that point to a clear commercial or business type of relationship between the two. The fact that no money changed hands and as such no profit was involved, and I say parenthetically business in both s 2 and s 4 of the Fair Trading Act 1987 which is a New South Wales piece of legislation, include a business conducted not for profit, is not in my view determinative. Whilst a consideration, it is outweighed in my view by the personal relationship elements and the informality of the agreement and it is on that basis that I have reached the conclusion as to the nature of the bailment that I have just set out. I now turn to the second basis for the plaintiff's claim which is under the Australian Consumer Law. This is set out in sch 2 of the Competition and Consumer Act (Cth) 2010. Part 11 of this Act deals with the application of the Australian Consumer Law, that is sch 2. Section 131(1) of that Act says as follows, "Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations." The provisions of the Fair Trading Act (NSW) 1987 apply these provisions to the relationships not only between corporations but also between individuals and individuals and also individuals and corporations. However, the relation must exist between the parties to be protected by ss 18 and 21 of the Australian Consumer Law such that it has as a precondition that the person said to be in breach "must not do the offending conduct whilst engaged in trade or commerce." I have found that the relationship that Mr Formosa and Mr Klapsis had was a personal one, not related to the business that Mr Klapsis conducted through the corporation Nowra Powerboats Pty Limited. Therefore it follows in my view that the provisions of s 18 and 21 cannot apply. The claim based on these provisions should therefore fail. For the reasons that I have given, there should be a verdict based upon the breach of the bailment in favour of the plaintiff and a judgment should accordingly be entered in his favour for the sum of $75,000. There will also be an order in favour of the plaintiff in respect of costs and interests. I will hear from the parties in respect of the date from which interest should run. There will also be as I have said an order for costs, namely that the defendant pay the plaintiff's costs as agreed or assessed. If there is to be any different order in respect of costs then I will have to hear the parties separately in respect of that." (J 10-11).
Counsel for Mr Formosa submitted that the Magistrate expressly deals with the question of whether the bailment arose in the course of dealings between Mr Formosa and the company, rather than between Mr Formosa and Mr Klapsis, and decided that the evidence supported the latter construction. There is nothing to suggest that his Honour's interpretation of the evidence was in error.

Consideration

On this issue I agree with counsel for Mr Formosa's submission. There was a factual contest between the parties. The Magistrate analysed the competing versions of events and applied the relevant law. His Honour then concluded that the bailment arose in the course of personal dealings between Mr Formosa and Mr Klapsis. There was evidence to support Mr Formosa's version of events, namely the circumstances that no money changed hands and no profit was involved, which characterises the bailment as a gratuitous one, not one associated with a business. In these circumstances the Magistrate was entitled to come to the conclusion that he did. There is no error of law. This ground of appeals fails.

Handwriting expert (Ground 3)

The third ground of appeal is that the Magistrate erred in giving any weight to the evidence of Mr Anderson, the handwriting expert. Neither party provided submissions on this topic.
Mr Formosa relied on the consignment agreement dated 5 December 2013. Mr Klapsis says that this agreement was signed by Mr Formosa. Mr Formosa's evidence is that although the handwritten details of Mr Formosa's bank account set out in the consignment agreement was written by him, the signature, which purports to be Mr Formosa's, was not. (CB 202-203).
Mr Anderson gave evidence on the second day of the hearing in relation to the agreement purporting to be between Nowra Powerboats Pty Ltd as the consignee and Mr Formosa as the consignor. However, at the end of the document the signature against the words "The consignor" is that of Mr Klapsis and the signature against the words "The consignee" purports to be that of Mr Formosa.
On this topic the Magistrate stated: "Mr Anderson was directed to consider the signature between the word "Consignor" which in fact was Mr Klapsis' signature, and carefully at the signature beside the word "Consignee", purporting to be that of Mr Formosa. He rightly concluded that the signature purporting to be that of the consignor was not the signature of the plaintiff. Because of this, his report was of little assistance as he seemed to have looked at the wrong signature. However, he did say that he would have looked at both signatures that were beside the two words, that is beside "Consignor" and "Consignee" and did not remark on this and its similarity to the specimen signatures he had from the plaintiff. He says that if, on brief examination which he did in fact do when preparing his report, there had been a similarity of either of these signatures to that of the plaintiff he would have looked at it more carefully and remarked upon it. He did not. He was also asked to look at the signatures again whilst he was giving evidence before me in Court and his tentative or preliminary view was that, to his trained eye, the signature which purported to be that of the plaintiff, albeit filled in where the defendant should have signed, was not in fact the signature of the plaintiff. This gave some very limited support to the plaintiff's denial that the signature was his, however there being no evidence to the contrary, the evidence of the plaintiff is in any event sufficient in my view such that I would conclude on the balance of probabilities that in fact the plaintiff had not signed this document. In reaching this conclusion I rely primarily upon the evidence of the plaintiff with limited support from Mr Anderson given the way in which he examined the signatures for the preparation of his report and the inaccuracies of this potentially given he did not look with care sufficiently because he had been directed to the wrong signature. That in my opinion is sufficient to conclude that the document was not signed by the plaintiff and therefore no such relationship, that is one of consignor and consignee, existed between the plaintiff and the corporation as at the time of the sale to Mr and Mrs Austin. The defendant relies upon this document alone for the authority to sell the boat. …" (J 8-9).
The Magistrate referred to a second matter of concern in relation to the chronology of the purchase of the boat by the third party. The Magistrate set out certain factual conclusions on the balance of probabilities, in particular: "1. The finance for the approval of the loan for the purchase of the boat occurred on 22 November 2013. It would be reasonable to conclude that there was some discussion between the purchasers and the defendant prior to this particular date, the purchasers in that case being the people in Western Australia.' 2. The tax invoice for the sale was prepared by the defendant for his company and in his company's name on 25 November 2013. 3. On 25 November, the moneys in respect of this sale were paid into the account of Nowra Powerboats, as it then was. 4. Given the style of the tax invoice and the fact that the moneys were paid into the company account, the purported transaction was between Mr and Mrs Austin and the corporation, Nowra Powerboats." (J9).
From that chronology his Honour concluded: "From the above, subject to the delivery of the boat to Western Australia, the sale was completed. However, the consignment agreement purports to be signed on 5 December 2013, some ten days after the completion of the sale. There is no explanation for this discrepancy. …" (J9).
The Magistrate made a finding that the handwriting expert provided a tentative or preliminary view that his Honour said gave very limited support to Mr Formosa's denial that the signature on the consignment agreement that purported to be his was actually his. Although, the Magistrate put little weight on the handwriting expert's evidence, as there was no evidence to the contrary, he concluded on the balance of probabilities that the plaintiff had not signed the alleged consignment agreement. The factual matters in relation to the timing of the financing of the purchase of the boat, namely that approval for and payment of the loan as well as payment of the sale price into Nowra Powerboats Pty Ltd's account by the purchasers took place before the alleged signing of the consignment agreement on 5 December 2013, also did not support Mr Klapsis' version of events.
The Magistrate was entitled to make the findings he did in relation to the handwriting expert. There is no error of fact or law. This ground of appeal also fails.
The result is that the appeal fails. The decision of his Honour Magistrate Curran dated 2 November 2015 is affirmed. The amended summons filed 17 May 2015 is dismissed.
Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs on an ordinary basis as agreed or assessed.

The Court orders that: (1) The decision of his Honour Magistrate Curran dated 2 November 2015 is affirmed. (2) The amended summons filed 17 May 2015 is dismissed. (3) The plaintiff is to pay the defendant's costs on an ordinary basis as agreed or assessed.

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: 27 September 2016

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