Soloman v Savage

Court of Appeal (NSW)|2018-10-18|Before: Macfarlan JA, Leeming JA, MacFarlan JA

The application that Mr Edmond El Khoury cease to act

Something more must be said about the appellant's solicitor, Mr Edmond El Khoury. He had certified his client's defence and amended defence, and witnessed his client's affidavit of 26 November 2017 and sent it and the notice of motion to the District Court. Although his name did not appear on his client's notice of appeal, he had signed statements pursuant to UCPR rr 51.28(3)(a) and 51.29(5)(b) both dated 5 October 2018 as "Solicitor for the Appellant" confirming that there were no documents and no transcript other than those included in the Red Book that were necessary for the hearing and determination of the proceedings. (That is why there were no appeal books other than the Red and Orange books.) He had also witnessed an affidavit affirmed on 11 July 2018 by Mr Soloman in this Court in support of an extension of time for the purpose of obtaining the transcript from the Local Court, in which affidavit he was described as Mr Soloman's legal representative. Further, Mr El Khoury was described on the cover of the Red Book (filed 10 August 2018) and the Orange Book (filed 8 October 2018) as "Solicitor for the Appellant".
By notice dated 13 October 2018, Mr El Khoury purported to cease to act for Mr Soloman. His notice referred to a notice of intending to cease to act which was dated 11 October 2018. The rules prevent the solicitor of a party from ceasing to act shortly before a hearing without leave (UCPR r 7.29). When this was pointed out, Mr Mando applied orally for leave to permit Mr El Khoury to cease to act. Mr Mando said that his application that Mr El Khoury not be on the record as his solicitor was made on behalf of the appellant. He said that Mr El Khoury had assisted as a friend of Mr Soloman, and that he (Mr Mando) had advised Mr El Khoury well before 11 October 2018 that he should not act as there was a clear conflict between Mr El Khoury's interests and those of Mr Soloman. Mr Davie, who appeared for the respondent, had nothing to say in relation to the application, and the parties were advised that this Court would deal with the matter in its judgment.

Resolution of the appeal

There can be no dispute that the District Court was obliged to accord procedural fairness to Mr Soloman, which extended to his having an opportunity to be heard before the issues in the litigation were decided.
But there can also be no dispute that an opportunity had been given to him. Indeed, the hearing was delayed, ultimately it seems until around 12.30pm, in order that he or his representative might exercise that right to be heard.
Procedural fairness does not require a party affected by a court order to actually be heard before it is made. If that were so, no order could ever be made in the absence of the other party. Procedural fairness requires that a party has an opportunity to be heard. In the case of a final hearing in the District Court of New South Wales, that right included a right to be heard, orally, and with legal representation if Mr Soloman so chose.
The onus lies on Mr Soloman to establish that he was denied the opportunity to be heard to which he was entitled. But the evidence does not establish that Mr Soloman was unable to appear, including by his legal representatives, on 27 November 2017. Neither the text messages nor the affidavit goes so far, as was accepted during submissions: "SACKVILLE AJA: There's no evidence that the solicitor was intimidated, is there? ... MANDO: There's no evidence from the solicitor directly, no. SACKVILLE AJA: Is there any evidence that the barrister who was briefed was intimidated? MANDO: No. SACKVILLE AJA: Why would a barrister be intimidated doing his or her duty by messages such as this? What's the duty of the barrister in this situation? MANDO: They have to serve their client without fear or favour, I would accept that, and I would accept that the barrister should not have been intimidated, but they are serious threats which are part of the circumstances, your Honour. SACKVILLE AJA: There's no evidence that the threats were communicated to the barrister. The evidence suggests that a barrister was briefed and yet didn't turn up, there's no explanation, there's no evidence from a barrister, nothing. MANDO: Your Honour, I accept all that ..."
A highly remarkable aspect of this appeal is that despite the extraordinary content of the text messages said to have been received by Mr Soloman and forwarded to Mr El Khoury, nothing further was adduced by way of evidence about what happened after they were received than was included in Mr Soloman's affidavit of 26 November 2017. This evidentiary gap placed Mr Mando in a very difficult position. He submitted, for example, "the written communication to the Court basically states that the legal team for the appellant could not be there on that day in that location" (transcript, 18 October 2018, pp 17.38-.45). That is not what the affidavit says, nor is it implicit in the affidavit.
Even if the threats in the messages annexed to Mr Soloman's affidavit were taken at their highest, there was opportunity for a lawyer to appear and advance his application on the Monday. Mr Soloman's own affidavit of 26 November 2017 stated that he had prepared for the hearing to be held the following day with his solicitor "who engaged counsel to attend Bega from Sydney which costs me over $15,000.00". Counsel's obligation was to attend court when the matter was listed for hearing. There is no evidence that counsel was ever told that any threat had been made. There is no evidence that counsel, if he or she were told of the text messages, believed that counsel, as opposed to Mr Soloman, might be in any danger. There is no evidence explaining when counsel decided, or was instructed, not to attend Court. For that matter, there is no evidence as to who the counsel was, when he or she was briefed, what flights and accommodation arrangements had been made and when they were cancelled, or what his or her instructions were on the morning of 27 November 2017.
I return to Mr El Khoury. Once again, there was no evidence that he regarded the text messages as involving any threat to him as opposed to his client. There is no evidence from him as to his instructions to the counsel who had been retained. There is no evidence of why there was no communication, either from him or his barrister, to the lawyers acting for the plaintiff, or to the Court.
Mr Mando emphasised that the threats were received on the Friday afternoon, and said that there was no time to brief a local agent or new lawyers. Once again, there is no evidence of that. But let it be assumed, favourably to Mr Soloman, that for reasons entirely beyond his control, and involving serious criminality disclosed by the text messages, it was practically impossible for him or his legal team to take any step prior to lunch time on Monday 27 November. Even so, Mr Soloman had the right to make an application pursuant to UCPR r 36.16(2)(b), which permits a court to set aside or vary a judgment after it has been entered if "it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order". There was no need for the trial to take place in Bega; the rules expressly confer power to change the venue of proceedings: UCPR r 8.2.
Next, there was no evidence as to why steps were not taken that afternoon, or the following day, or the following week, to apply to set aside the judgment which had been obtained in Mr Soloman's absence. The vulnerability of a judgment obtained ex parte to being set aside under UCPR r 36.16 is one reason why courts and plaintiffs are reluctant to proceed ex parte, even when it is clear that the defendant has knowledge of the hearing date.
Indeed, this Court was told without objection that Mr Soloman had exercised a right to apply to set aside the judgment obtained against him by application filed in the District Court on 28 March 2018 (the same date as the notice of appeal was filed), and that the application was listed for hearing in November.
This Court must determine Mr Soloman's appeal on the basis of the evidence properly before it. All of the gaps in the evidence referred to above were and are squarely within Mr Soloman's ability to establish.
The appellant's submission proceeds on the basis that, after he had filed an application to adjourn or vacate the hearing the previous day, supported by an affidavit containing the matters to which Mr Soloman had deposed, procedural fairness required that application to be granted.
That submission is premised upon the proposition that the primary judge considered Mr Soloman's affidavit. That is not established by anything that appears in the transcript, as Mr Mando ultimately accepted. The transcript makes no mention of the affidavit at all, save in one passage. That passage was as follows: "HIS HONOUR: You see there was a notice of motion filed to vacate the hearing, is that right? THOMPSON: Yes, I saw - I received that at 4.30pm yesterday afternoon. I would note even if the material in that supporting affidavit were accepted, there's no reason disclosed why a solicitor, agent or counsel would not be here on behalf of the respondent. HIS HONOUR: Somebody should be here. Yes. I'm read to hear the matter today ..."
On the one hand, the fact that the judge was aware of the notice of motion suggests that he may also have been aware of the affidavit in support which was provided simultaneously with it. On the other hand, the affidavit is highly remarkable. If taken at face value, it discloses a serious contempt of court (threats to a litigant and witness) and criminality (including certain of the public justice offences in Division 3 of Part 7 of the Crimes Act 1900 (NSW)). Alternatively, if not authentic, it may also disclose a serious contempt and criminality. The fact that the judge made no remark at all concerning the affidavit, and took no step of referring the matter to the Director of Public Prosecutions or the Attorney General tends to support that his Honour did not have regard to the affidavit. If there were a large number of matters in his list, that would not be altogether surprising.
Let it be assumed, favourable to Mr Soloman, that the primary judge was aware that a notice of motion had been filed supported by the affidavit disclosing the threats which had been made to him. Mr Soloman submits that in determining to dismiss the notice of motion for want of prosecution, it was necessary for the primary judge to have regard to the serious matters stated in the affidavit. Even if that be so, given the absence of any evidence addressing the absence of any agent or legal representative on behalf of Mr Soloman, it was open to the primary judge to dismiss the application for an adjournment for want of prosecution. The fact of the matter is that it had not been prosecuted, and there was, as was pointed out at the time, no evidence to explain why Mr Soloman was unable to retain anyone to appear on his behalf to do so. Further, the primary judge would have been entitled to have regard to the fact that by dismissing the application for an adjournment and proceeding in Mr Soloman's absence, Mr Soloman continued to have the right to apply to set aside the judgment.
Today, almost a year later, there continues to be an absence of evidence explaining why no one was able to appear either then or in the 14 days following entry of the judgment.
That suffices to deal with the gravamen of the appeal. For completeness, the following matters may be noted.
First, insofar as the appellant relies on a concept of legitimate expectation, that doctrine takes the matter no further. As Kiefel, Bell and Keane JJ said in Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326; [2015] HCA 40 at [28]-[29]: "The use of the concept of 'legitimate expectation' as the criterion of an entitlement to procedural fairness in administrative law has been described in this Court as 'apt to mislead', 'unsatisfactory' and 'superfluous and confusing'. In Lam, Hayne J observed that the concept 'poses more questions than it answers', such as '[w]hat is meant by 'legitimate'?' and '[i]s 'expectation' a reference to some subjective state of mind or to a legally required standard of behaviour?' and 'whose state of mind is relevant?' and '[h]ow is it established?'. Hayne J concluded that 'reference to expectations, legitimate or not, is unhelpful'. More recently, in Plaintiff S10/2011 v Minister for Immigration and Citizenship, Gummow, Hayne, Crennan and Bell JJ referred to the discussion of the concept by four members of the Court in Lam, and said that: 'the phrase 'legitimate expectation' when used in the field of public law either adds nothing or poses more questions than it answers and thus is an unfortunate expression which should be disregarded.'" (Footnotes omitted)
Secondly, Reznitsky v Director of Public Prosecutions does not assist Mr Soloman. This Court there set aside the dismissal of an appeal from the Local Court by the District Court because the appellant was not, in substance, permitted to be heard at all. The hearing is summarised at [23]-[28] and this Court concluded that not only had the District Court Judge been insulting and disrespectful of the appellant, but also that his Honour was not in substance conducting a hearing. Tobias AJA, with whom the other members of the Court agreed, said at [32]: "In my opinion there can be no doubt that the applicant was contumeliously denied procedural fairness: he was simply not heard and, therefore, there was no hearing within the meaning of s 22(3) of the Appeal and Review Act."
That was an extraordinary case, and far removed from the present. There is no suggestion that Mr Soloman, or anyone appearing on his behalf, would not have been heard had there been an appearance on 27 November 2017.
Thirdly, the conclusions reached above in no way turn on a view as to the authenticity or otherwise of the text messages attached to the affidavit filed on Sunday 26 November 2017. It will be plain that whether they be true or false, it is quite possible that there has been a very serious crime committed, as well as a serious contempt of court. In other circumstances, this Court would give serious attention to referring the matter to the Attorney General or the Director of Public Prosecutions. However, in light of the fact that an application to set aside the judgment is pending in the District Court, and the text messages and affidavit relate to proceedings in that Court, it is not necessary for any such step to be taken.
Finally I return to Mr El Khoury. Mr El Khoury, as Mr Soloman's solicitor, filed the notice of motion and supporting affidavit in the District Court and also witnessed Mr Soloman's affidavit. He was presumably aware of the contents of the affidavit which stated that he had been retained by Mr Soloman in connection with the hearing and that he had briefed counsel to appear on Mr Soloman's behalf at the hearing. So far as the evidence indicates, Mr El Khoury, despite being retained and having briefed counsel, not only did not appear in the District Court but did not inform the Court that he would not be appearing and did not proffer any explanation to the Court as to why neither he nor counsel would be appearing.
At the hearing in this Court Mr Mando stated that he had been given instructions directly by Mr Soloman. Mr Mando told the Court that as soon as he received instructions "a few weeks ago" he perceived a "very major conflict of interest between [Mr El Khoury] and [Mr Soloman]". Mr Mando added that he had asked Mr El Khoury to withdraw from the matter but that he (Mr El Khoury) had only filed the notice of ceasing to act very recently. Mr Mando also said that Mr El Khoury continued to act for Mr Soloman "as his friend rather than as his solicitor on the record".
The appeal books show that the notice of appeal, which was filed on 21 March 2018, was signed by Mr Soloman as an unrepresented appellant. However, the Red Book filed on 10 August 2018 records Mr El Khoury as the solicitor for the appellant, as does the Orange Book filed on 8 October 2018. (The Orange Book contains the written submissions on behalf of the appellant signed by Mr Mando as counsel.)
I am conscious that none of the matters referred to above have been brought to Mr El Khoury's attention and he has not been given any opportunity to explain his role or to address any issues of concern. Nonetheless, in the material before the Court there are matters which, subject to any explanation El Khoury offers, may be capable of suggesting that he has departed from the standards to be expected of a competent legal practitioner aware of his obligations to the court. Those matters include the following: 1. Whether, as Mr Soloman's affidavit claims, Mr El Khoury was retained to act on Mr Soloman's behalf in connection with the District Court hearing and to brief counsel. 2. If so, whether there is an explanation for Mr El Khoury's apparent failure to appear in the District Court or to proffer an explanation to the District Court for his non-appearance. 3. Whether Mr El Khoury was informed by Mr Mando that he (Mr El Khoury) was in a position of conflict with his client and, if so, when he was so informed. 4. If Mr El Khoury was made aware of the conflict of interest, whether he nonetheless continued to represent Mr El Khoury, either as a solicitor or as a "friend". If he did continue to represent Mr El Khoury, did he do so aware that he was in a position of conflict? 5. What is the explanation for Mr El Khoury's apparent failure to comply with the rules governing a solicitor seeking leave to cease to act for a litigant?
In the absence of a satisfactory explanation of these matters there may be a basis for the Court referring Mr El Khoury's conduct to the Law Society of New South Wales for consideration of what, if any, further steps should be taken. Before determining whether such a referral should be made Mr El Khoury should be invited to file and serve within 21 days any submission he wishes to make, together with any affidavit or other evidence on which he wishes to rely (that course follows that adopted in McGrath v Troy as administratrix of the estate of the Late Warren Terence Wade [2010] NSWSC 1470 at [124] and ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; [2014] NSWCA 402 at [159]).

Orders

It has not been shown that there was any denial of procedural fairness. Accordingly, there is no occasion to consider any further the application to extend time. There is no reason for costs not to follow the event. I propose that the appeal be dismissed, with costs, and that Mr El Khoury have leave to file and serve any submissions and/or evidence within 21 days of today.
SACKVILLE AJA: Subject to what appears below, I agree with the orders proposed by Leeming JA and with his Honour's reasons.
As Leeming JA has explained, it is not necessary to determine whether Mr Soloman's affidavit in support of the motion of 26 November 2017 was before the primary Judge. If it were necessary to decide that question, I would infer that the affidavit was before his Honour and that he took its contents into account in rejecting the application to adjourn the proceedings.
The passage in the transcript of the District Court hearing extracted by Leeming JA (at [43] above) reveals that his Honour drew to the attention of Mr Thompson (Mr Savage's solicitor) that a notice of motion had been filed on behalf of Mr Soloman seeking to vacate the hearing. Both the notice of motion and the affidavit were filed electronically at 11.09 am on Sunday 26 November 2017. It is unlikely that the primary Judge had before him the notice of motion but did not also have the affidavit affirmed by Mr Soloman.
The transcript records that Mr Thompson informed his Honour that he (Mr Thompson) had received both the notice of motion and the supporting affidavit the previous afternoon. Mr Thompson then noted that even if the material in the supporting affidavit were accepted, no reason had been disclosed why a solicitor or counsel could not be present. That observation was, in effect, a submission and was plainly correct.
The primary Judge's response was "Somebody should be here. Yes". I infer from that response that his Honour was aware of the contents of the affidavit and accepted Mr Thompson's submission that no reason had been given for the non-attendance of the solicitor and counsel who (according to Mr Soloman) had been retained to appear at the hearing. If the primary Judge did not have the affidavit before him he could not have known that counsel had been briefed (as he clearly did since he adjourned the case until later in the day to see if a representative arrived on the flight due in at Bega at 11.30 am). Unless he had read the affidavit the primary Judge also could not have accepted Mr Thompson's submissions that the material did not explain why neither a solicitor nor counsel was present.
I do not regard the fact that the primary Judge did not refer the threats identified in the affidavit to the authorities as indicating that he had not read the affidavit. There are many reasons why his Honour may not have referred the matter to the authorities. For example, in the absence of Mr Soloman or his representatives and without any corroborative evidence, his Honour may have had doubts about the authenticity of the alleged threats. Another possible reason is that his Honour may have thought that the matter was very likely to return to the District Court by way of an application to set aside the judgment and that further evidence clarifying the position might then be adduced.
There was a suggestion in argument in this Court that the primary Judge failed to give any consideration to the application to vacate the hearing. In my view the transcript demonstrates that his Honour considered the application, but accepted Mr Thompson's submission that Mr Soloman's affidavit failed to explain why neither the solicitor who had been retained nor counsel who had been briefed had not appeared. It did not require anything other than a quick reading of the short affidavit to reach this conclusion.
The primary Judge indicated that he was not prepared to adjourn the proceedings beyond the day but that he was prepared to adjourn the matter until later in the day to give counsel who had apparently been briefed an opportunity to arrive on the morning flight. In fact, his Honour adjourned the matter on two separate occasions during the day in order to allow for the possibility that counsel would arrive on the flight.
I do not read the primary Judge's dismissal of the notice of motion for "want of prosecution" as demonstrating that his Honour gave no consideration to the substance of the application. In dismissing the motion the primary Judge noted that there had been no appearance by Mr Soloman's legal representative and no message explaining his (or her) absence. The observation implied that his Honour had formed the view that the affidavit did not explain the absence of Mr Soloman's representative and that no other explanation had been provided for the failure of the representative to appear.

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Judgment

MACFARLAN JA: I agree with the orders proposed by Leeming JA and, subject to Sackville AJA's observations (with which I agree), with his Honour's reasons.
LEEMING JA: Mr Phillip Aziz Soloman appeals from a judgment of the District Court given on 27 November 2017 in the amount of $173,400, comprising a claim of $60,000 and interest of $113,400. The appeal lies as of right, for two reasons. The first is that for the purposes of the $100,000 threshold in s 101(2)(r) of the Supreme Court Act 1970 (NSW), interest contributes to the amount: see Maund v Crown in right of the State of New South Wales [2013] NSWCA 226 at [7]. Secondly, although there was no appearance by the respondent, the matter proceeded on a final basis. It had been listed for final hearing, and it is clear from the transcript that although Mr Savage moved ex parte, the judgment was neither a default judgment nor a summary judgment.
The judgment was obtained in Mr Soloman's absence, and in this Court he submits that what occurred was not procedurally fair. The circumstances are, to say the least, highly unusual, and it will be necessary to set out in some detail the events leading up to the entry of judgment.

The appeal

The notice of appeal contains 2 grounds: "1. His Honour erred in ordering judgment for the plaintiff in default of an appearance in circumstances where the defendant had a full defence to the plaintiff's claim. 2. His Honour ought to have ordered that the proceedings be adjourned and fix a further date for hearing."
The appellant's basic proposition advanced in his written submissions in chief was that there was a denial of procedural fairness by proceeding in the appellant's absence, rather than adjourning the hearing, because "his Honour was aware of a documentary application filed by the appellant to vacate the hearing date", which "contained such explanation (including reference to threats to the appellant's personal safety in the event he attended Bega)". The written submissions were directed to the right to natural justice, the presumption that bodies exercising public power will do so in accordance with natural justice and the requirements of notice and a fair opportunity to be heard. It was said that "there was 'no overriding necessity' in the circumstances which precluded giving Mr Soloman a fair opportunity to appear at a hearing of the substantive issues in the proceedings, and be heard fairly, having regard to the fact that he had filed a defence and had communicated with the Court up until the day of the scheduled hearing". The submissions also extended to legitimate expectation, to the effect that: "the appellant had a reasonable basis to expect that the hearing would be adjourned having regard to his explanation and the documentary application he filed with the Court which contained such explanation, and that his interests, in having the hearing adjourned and ultimately having a fair hearing of the substantive issues in which he would be fairly heard, would not be disregarded."
Submissions were also made based on Reznitsky v Director of Public Prosecutions (NSW) [2014] NSWCA 79, to the effect that "in order to qualify as a 'hearing', where a hearing of an issue on the merits is required by statute, there must be an opportunity for an applicant to reasonably and fairly advance his case".
The respondent filed a short written submission in response, which accepted that there was an obligation to accord natural justice to the defendant, extending to an opportunity of presenting his case, but then contended that there was no evidence that the defendant did not have any such opportunity, that no application for an adjournment was made, and that there was "no explanation as to why at the very least a representative of the appellant did not attend court to seek an adjournment".
The appellant's written submissions in reply, and his oral submissions, placed heavy emphasis on the seriousness of the threats in the text messages, and the fact that they extended not merely to Mr Soloman, but also, so it was said, because of the plural references to "u cunts" and "u wog pigs", to his lawyers. He submitted that the judge erred in failing to vacate the hearing and that as a result there was a denial of procedural fairness.

At a glance

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Judgment (4 paragraphs)

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Legislation Cited (2)

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