Norfeld Pty Ltd v Amanda Lee Jones trading as Watermark Patent and Trademark Attorneys

Court of Appeal (NSW)|2014-11-28|Before: Ward JA, Hamill J

Judgment 1THE COURT: By summons filed 28 August 2014, Norfeld Pty Ltd (Norfeld) seeks leave to appeal under ss 101(1) and 101(2)(r) of the Supreme Court Act 1970 (NSW) from a decision by Hamill J ([2014] NSWSC 992). His Honour had granted Norfeld leave to appeal from the decision of a magistrate in Local Court proceedings in which Norfeld was ordered to pay Amanda Lee Jones t/as Watermark Patent and Trademark Attorneys (Watermark) a sum of around $75,000 for outstanding legal fees. Hamill J dismissed the appeal. 2In essence Norfeld contends that it was denied procedural fairness in the Local Court hearing because the Magistrate refused to allow Norfeld to cross-examine Watermark's witnesses on issues concerning quantum to the extent that quantum was relevant to Norfeld's defence or alternatively by dissuading Norfeld from cross-examining Watermark's witnesses on those issues. Norfeld also complains that the magistrate refused to allow it the opportunity to tender further evidence on issues concerning quantum during an adjournment of the hearing between 11 October 2012 and February 2013. 3Norfeld contends that Hamill J erred in concluding that Norfeld was not denied procedural fairness in the Local Court proceedings because of those matters and in refusing an application by Norfeld to file a further amended summons in the Supreme Court proceedings.

Background 4The matter has had an unfortunate and unsatisfactory procedural history both in the Local Court and in the Supreme Court. Norfeld's Counsel does not dispute this but says that Norfeld does not accept that the blame for this lies solely at its feet. 5It is not necessary to recite all of the procedural and pleading history. Suffice it to note that Norfeld did not have legal representation at the Local Court hearing. It was there represented by its director, Mr Preston. It did have legal representation by the time of the hearing before Hamill J. 6The issues on which Norfeld maintains it was not permitted to cross-examine included whether work referred to and charged for in invoices issued by Watermark was done; whether the work was done pursuant to instructions from Norfeld; the rate at which Watermark was entitled to charge for work done; and whether Watermark charged at the agreed rate. 7Norfeld had raised various grounds of appeal in its summons seeking leave to appeal in the Supreme Court. That summons was amended twice. In February 2014, when Norfeld successfully applied for an adjournment of the appeal, Campbell J granted the adjournment on conditions including (as amended) that the grounds stated in the Further Amended Summons filed in Court on 24 October 2013 were to stand without further amendment as refined in Norfeld's 2013 December submissions. Before Hamill J there was a dispute as to the scope of the grounds of appeal having regard to what was meant by the reference to the refinement of the appeal grounds in the December submissions. 8During the course of argument before Hamill J, on 30 April 2014, an application was made on behalf of Norfeld for leave to amend its further amended summons to include a further appeal ground (to the effect that the magistrate had erred in denying Norfeld's application to tender further evidence on the issue of quantum) and add to the relief sought that the matter be remitted to the Local Court for complete or partial re-trial. 9Hamill J proceeded on the basis that he considered first whether there had been a denial of procedural fairness as alleged by Norfeld. Having determined that there was no denial of procedural fairness, the application further to amend the summons became otiose. Nonetheless his Honour indicated that it should be refused having regard to the orders made by Campbell J and in order to indicate the Court's disapproval of the conduct of the proceedings to date.

Pleadings in the Local Court 10The claim by Watermark was commenced by statement of claim in the Local Court in October 2011. That pleading was subsequently amended. On 10 April 2012, Norfeld filed its defence. 11The claim by Watermark was for amounts claimed to be owing pursuant to an agreement to provide services. Norfeld's defence contained a denial that it had requested the provision of services by Watermark and a denial that there was an agreement between it and Watermark. (The magistrate appears to have understood from the pleaded defence that the principal issue in the proceedings was the identity of the entity with whom any request for, or agreement had been entered into as to, the provision of services by Watermark.) 12Counsel for Norfeld concedes that the defence did not expressly deny that Watermark had agreed to provide services to Norfeld nor did it expressly deny that Watermark had provided services to Norfeld in the relevant period. He contends, however, that there was no deemed admission under r 14.2(6) as to those matters and that any admission as to the provision of services does not assist Watermark. 13In its defence, Norfeld denied the allegation that, as at 5 September 2011, the balance of amounts outstanding from it to Watermark for services provided was as stated at paragraph [8] of the further amended statement of claim. Watermark's pleading particularised the services provided by reference to invoices previously delivered to Norfeld. Norfeld submits that particulars do not constitute separate allegations of fact and therefore its failure to traverse the particulars did not constitute an admission as to the services provided by Watermark. 14Accordingly, Norfeld contends that, based on the pleadings, quantum was an issue in the proceedings.

Alleged denial of procedural fairness 15During the course of the Local Court hearing, it became clear that Mr Preston wished to cross-examine Watermark's witnesses on the invoices and to contend that some of the services the subject of Watermark's claim were not provided pursuant to instructions by Mr Preston or Norfeld. 16The Magistrate considered that this was a new defence that Norfeld had not raised in its pleadings. Norfeld contends that the magistrate erred in placing an onus on Norfeld expressly to plead or dispute issues concerning quantum in its defence and in refusing to allow Norfeld to cross-examine on issues concerning quantum at the hearing. 17Counsel for Norfeld accepts that it had an opportunity, prior to the hearing in October 2012, to serve evidence which articulated issues concerning quantum, but points to delay on Watermark's part in serving its evidence. (Evidence was apparently due to have been exchanged by 13 September 2012, but not served by Watermark until 1 October 2012.) The hearing commenced on 10 October 2012. It was listed for two days and was then adjourned for a further two days at a time four months later. The magistrate refused an application made at the October hearing for further evidence to be adduced by Norfeld on the issue of quantum. 18Norfeld's Counsel in the present proceedings accepts that the precise content of the requirements of natural justice is guided by relevant case management provisions in the Civil Procedure Act 2005 (NSW) ss 56-60 but submits that where a judicial officer acts in a manner that is disproportionate to the case management issue, this may involve a denial of procedural fairness. He contends that a proper response would have been to allow Norfeld to cross-examine on issues concerning quantum for a limited time or limited to a particular witness.

Decision of Hamill J 19It is apparent from his Honour's reasons that Hamill J carefully reviewed the background to the matter and the transcript of the proceedings in the Local Court. His Honour concluded that Norfeld was not denied procedural fairness or natural justice. 20His Honour said (at [102]) that had there been any legitimate contest as to quantum, in the sense that Norfeld alleged that any of the invoices were based on services that were not rendered or that the services were not rendered on instructions, Mr Preston had had ample opportunity to articulate that contest and to do so much earlier and with greater particularity than he did. His Honour took into account the fact that Norfeld was not represented by a lawyer and had particular regard to this when considering any deficiencies in the pleadings. His Honour nonetheless considered that the magistrate had adequately fulfilled his obligation to ensure that Norfeld received a fair hearing. 21For reasons explained (at [9]) above, his Honour considered that the controversy as to whether the application to amend the grounds of appeal by way of the proposed second further amended summons was of no practical moment. Hence, his Honour's decision to refuse the application to amend did not prevent him from considering Norfeld's case on its merits.

Grounds of Appeal 22The grounds of appeal sought to be raised, if leave is granted, are in essence that his Honour erred in finding that Norfeld was not denied procedural fairness in the Local Court; erred in dismissing the complaint made as to the refusal of the Magistrate to allow Norfeld to serve further evidence on issues concerning quantum; and erred in refusing Norfeld leave to file its second further amended summons. (Norfeld accepts that if there is no error in the procedural fairness finding, the last ground cannot be upheld.)

Norfeld's submissions 23The primary Judge agreed with Watermark (at [62]) that Norfeld had not specifically pleaded that quantum was in issue nor that Watermark had acted without instructions and failed to provide services that were the subject of particular invoices. However, his Honour accepted Norfeld's submission that it had put liability in issue and had not made any admissions as to quantum in its pleading. 24In his Honour's view (at [63]), the transcript of the proceedings confirmed that both the Magistrate and counsel for Watermark were under the impression that the issue was whether Norfeld, as opposed to Mr Preston personally or the entity Preston Australia Pty Ltd of which he was also the director and sole shareholder, was liable for the debt. The Magistrate expressed his understanding in an early exchange with counsel for Watermark. At this stage, Mr Preston said nothing to indicate that he also put in issue the amount of the debt by reference to whether Watermark had acted on instructions or failed actually to perform the services referred to in the invoices. 25After referring at length to the passages in the transcript relied on by Norfeld to support its argument, the primary Judge made five observations: (1)He rejected (at [69]) the claim made by Mr Preston before the Magistrate that he had only two and a half days to prepare and that Watermark had had a year to prepare its case. (2)He concluded that the Magistrate had given Mr Preston a good deal of latitude because Norfeld was not legally represented and had explained at considerable length the nature of the proceedings and the procedures that would be followed (at [72]). (3)He said that the transcript showed that Mr Preston had not been in "any sense cowed or overwhelmed", but had put his submissions "forcefully and repeatedly" (at [73]). (4)He said that Norfeld's assertion that the services were not provided (or not provided on instructions) and that the invoices were exaggerated "was always put globally and in general terms" (at [74]). Moreover, at no stage had Norfeld identified which particular invoices were disputed or the basis on which they were disputed (at [75]). (5)He said that there was a little confusion as to whether Mr Preston had been stopped from cross-examining on particular issues relating to the invoices, or had been stopped altogether (at [76]) and that one of the problems for the Magistrate had been that Mr Preston made no attempt to identify which invoices were disputed and which were not (at [77]). 26At [97], his Honour indicated that in order to determine whether Norfeld was denied a fair hearing in the relevant sense it was necessary to review the whole of the transcript. Norfeld accepts that this was the correct approach. From [98] to [101], his Honour made various observations based on that review: that the Magistrate had explained the procedures in a clear and intelligible way ([98]); that the Magistrate had attempted to keep the case moving and within the parameters that truly arose, providing Mr Preston with significant latitude in so doing ([99]); that Mr Preston had availed himself of the opportunity to cross-examine the witnesses at some length and with varying degrees of success but that on the central issue (i.e., the identity of the entity with whom Watermark had reached an agreement or arrangement for the provision of the services) the witnesses remained unshaken ([100]); and that Watermark had presented a powerful case and the extent to which Norfeld had a legitimate defence to that claim was highly questionable ([101]). 27Counsel for Norfeld accepts the correctness of the observations made by his Honour at [98]-[100], though maintaining that they did not answer the complaint that was made as to the denial of procedural fairness and maintaining that the defence as properly construed did put quantum in issue. As to the observation at [101], Norfeld acknowledges that it is appropriate to take into account the strength or weakness of a party's case when exercising discretion as to matters of practice and procedure but maintains that it was not appropriate for the Magistrate to shut Norfeld out from cross-examination on the issue of quantum. 28His Honour concluded (at [102]) that Norfeld was not denied procedural fairness or natural justice. His Honour considered that had there been any legitimate contest as to quantum, in the sense that Norfeld alleged that invoices were based on services that were not rendered or not rendered on instructions, Mr Preston had had ample opportunity to put his contentions much earlier and with greater particularity than he did. 29Norfeld accepts that it did have an opportunity before the hearing to serve evidence articulating issues concerning quantum but submits that the "ampleness" of that opportunity was affected by Watermark's delay in serving evidence and argues that even if Norfeld had articulated that contest in the evidence served five days before the hearing commenced it is unlikely to have reduced the length of the hearing. In that regard, it should be noted that Mr Preston spent about two days cross-examining Watermark's witnesses.

Leave 30At the time of filing the summons seeking leave to appeal in August 2014, the judgment sum, taking into account interest, is said to be around $90,000. Leave to appeal is required as this is below the threshold set in s 101(2)(r) of the Supreme Court Act. 31Watermark opposes the grant of leave to appeal. It submits that the critical foundation upon which Norfeld seeks leave to appeal (that his Honour found there was not a denial of procedural fairness having regard to the relevant case management provisions and a review of the transcript) is misconceived. It submits that Hamill J found that there was no denial of procedural fairness on a number of bases. It notes that his Honour had had regard to the pleading and procedural history of the matter; the course of the Local Court proceedings; the magistrate's interaction with Mr Preston at the hearing; the parts of the record relied upon by Norfeld; and the principles relating to procedural fairness and a party's right to cross-examine adverse witnesses. 32Watermark points out that a number of the complaints made in Norfeld's submissions as to aspects of the Local Court hearing (such as the listing of the matter for a two day hearing at a time when evidence had not been served; the unlikelihood that the hearing would not have finished in the allocated two days; and the power to limit the cross-examination on quantum) were not grounds raised in the further amended summons and were not raised before Hamill J. 33Watermark maintains that Norfeld was required to put any issue as to quantum fairly in issue in its pleaded defence and that there was no error on the part of Hamill J in considering submissions as to this aspect of the matter. 34Watermark contends that the Magistrate's decisions concerning evidentiary matters were discretionary decisions capable of being corrected only if an error in the sense considered in House v The King (1936) 55 CLR 499 had been identified. As to the limitation on cross-examination, it submits that Hamill J correctly concluded that Norfeld had been given a fair opportunity to put its case (that being the relevant question posed in Beveridge v Dontan Pty Ltd (1991) 23 NSWLR 13, albeit in the context of a reference out of court).

Conclusion 35The requirement for leave to appeal from a judgment where the quantum in dispute is less than $100,000 implicitly recognises the importance of keeping in mind the need for proportionality of the Court time and the costs incurred in resolving disputes. Where there is no question of principle and there is only a small amount in dispute, leave to appeal will usually be refused (Jaycar Pty Ltd v Lombardo [2011] NSWCA 284; Zelden v Sewell Henamast Pty Ltd [2011] NSWCA 56; Dunn v Ross Lamb Motors [1978] 1 NSWLR 26). It has also been said that leave should only be granted where there are there are substantial reasons to allow an appellate review (Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564). 36In the present case there is no question of general principle or public importance. The monetary amount in issue, though approaching the threshold, is still relatively small and likely to be dwarfed by the overall costs if leave is granted and the appeal succeeds in giving rise to a re-trial. This is a matter that has already occupied considerable court time (four days' hearing in the Local Court and a one day appeal in the Supreme Court after various interlocutory applications) and what is now sought, if leave were to be granted and the appeal successful, is a re-trial in the Local Court. 37Two further factors strongly militate against a grant of leave to appeal. The first is that Hamill J carefully considered and rejected Norfeld's contention that it had been denied procedural fairness in the Local Court proceedings. That conclusion is not attended by sufficient doubt to warrant a grant of leave to appeal, quite apart from considerations of proportionality. 38Secondly, the interests of justice do not support the grant of leave to appeal. Hamill J made the important point that Norfeld had not identified at any stage the basis on which it claimed that services had not been provided by Watermark or had been supplied by it without authority from Norfeld. It is difficult to see how Norfeld would suffer any injustice if leave to appeal is refused when, over the more than two years this litigation has been on foot, it never formulated, whether in pleadings or otherwise, the basis of the defence it says it wishes to mount. On the leave application, Mr Zipser, who appeared for Norfeld, acknowledged that this was so. Even now, it is not known what point would be served by cross-examination or by Norfeld being permitted to adduce further evidence on the issue of quantum. 39For those reasons, the application for leave to appeal was dismissed with costs.

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