Van Eden v Van Eden Shoes Australia P/L

HEARING DATE(S) : 24 November 2004, 1 February 2005 & 17 March 2005

DECISION : (1) The appeal is dismissed; (2) The orders of Magistrate Morahan dated 30 August 2002 are affirmed; (3) The summons filed 26 September 2002 is dismissed; (4) The plaintiff is to pay the defendants' costs as agreed or assessed.

CATCHWORDS : Appeal from decision of Local Court Magistrate - procedural fairness

Corporations Act 2001 (Cth) - ss 180, 181 & 182 Limitation Act 1969 (NSW) - s 14 LEGISLATION CITED : Local Courts (Civil Claims) Act 1970 (NSW) - s 69 Local Court (Civil Claims) Rules 1988 (NSW) - Pt 6 r 3(1)

Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC1263 Devries v Australian National Railways Commission (1993) 177 CLR 472 CASES CITED : Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [200] NSWSC 1153 RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082 State Rail Authority of New South Wales v Earthline Construcitons Pty Ltd (in Liq) (1999) 160 ALR 588 Wakim v Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405

Franciscus Maria Van Eden (Plaintiff) PARTIES : Van Eden Shoes Australia Pty Limited (Defendant)

Mr F M Van Eden (Plaintiff in person)

SOLICITORS : Mr G Wrobez, Holding Redlich (Defendant)

LOWER COURT FILE NUMBER(S) : 595/2001; 627/2001; 10/2002

LOWER COURT JUDICIAL OFFICER : Magistrate M Morahan

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

12683/2002 - FRANCISCUS MARIA VAN EDEN v VAN EDEN SHOES AUSTRALIA PTY LIMITED & ANOR

JUDGMENT (Appeal from decision of Local Court Magistrate - procedural fairness) 1 MASTER: By summons filed 26 September 2002, the plaintiff seeks: firstly, an order setting aside the decisions of Local Court Magistrate M Morahan dated 30 August 2002 in proceedings 595/2001 between Franciscus Maria Van Eden as plaintiff and Van Eden Shoes Australia Pty Limited as defendant; in proceedings 627/2001 between Franciscus Maria Vana Eden as plaintiff and Van Eden Shoes Australia Pty Limited as defendant together with a cross claim in the same proceedings; and in proceedings 10/2002 Franciscus Maria Van Eden as plaintiff and Van Eden Shoes Australia Pty Limited as defendant; and finally, in the alternative, a declaration that all steps taken in the name of Van Eden Shoes Australia Pty Limited are void and of no effect. 2 The plaintiff is Franciscus Maria Van Eden. The first defendant is Van Eden Shoes Australia Pty Limited. On 24 November 2004, the plaintiff requested an adjournment. The adjournment was granted and the appeal and summons as against the second defendant Geoffrey Joseph Van Eden was dismissed with costs. At the hearing the plaintiff appeared unrepresented. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 69(2) of the Local Courts (Civil Claims) Act 1970 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156 and two more recent cases, namely Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082. It cannot be said that the Magistrate acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 Recently, in Swain v Waverley Municipal Council [2005] HCA 4, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 5 Section 69(4) of the Act provides that the court may determine an appeal by either (a) setting the judgment or order aside or (b) by varying the terms of the judgment or order or (c) by setting the judgment or order aside and remitting the matter for determination in accordance with the court's directions or (d) by dismissing the appeal.

Grounds of appeal 6 The plaintiff appeals from all of the decisions of the Magistrate made on 30 August 2002. There were three claims brought by the plaintiff in the Local Court, namely: 595/2001, 627/2001 and 10/2002. In proceedings 627/2001 there was a cross claim brought by the defendant. 7 The written grounds of appeal state that the Magistrate erred in allowing the defendant, through the solicitors on the record, to defend the claims of the plaintiff and prosecute the cross claim when it was clear that the said solicitors had no authority from the defendant to represent it at the hearing of the matters. Secondly, that the Magistrate denied the plaintiff the right to procedural fairness in permitting the defendant, through the solicitors on record, to act when they had no authority from the defendant so to do. Thirdly, that the Magistrate erred in finding that the defendant, as cross claimant, was entitled to recover two sums of money from the plaintiff when the appointment of the solicitors to represent the defendant was done without the authority of the board of directors, or the assent of the majority of its members. Fourthly, that the Magistrate erred when determining that a loan said to be owed to a partnership comprising, among others, the plaintiff, was outside the limitation period pursuant to s 14 of the Limitation Act 1969 (NSW) and was therefore irrecoverable. Finally, that the Magistrate erred when finding that the provisions of ss 180, 181 and 182 of the Corporations Act 2001 (Cth) rendered void and therefore irrecoverable, a claim by the plaintiff for payment of the sum of $30,000.00 said to be due to him by the defendant. The plaintiff in oral submissions clarified that during the hearing he abandoned the written grounds of appeal which had been prepared by a solicitor and then focussed his appeal upon the Magistrate's conduct of the proceedings. 8 Orally, in court, the thrust of the plaintiff's complaint was that "he had been framed and that the Magistrate was party to it" and that the Magistrate was "fighting me". The plaintiff asserted that the transcript did not properly record what took place and urged this court to listen to the tapes which spanned two days. The court was prepared to listen to the tapes where they differed from the transcript, otherwise the transcript was to be taken to an accurate recording of the proceedings. The court listened to the submissions by the defendant which were recorded on tapes [Ex G]. It is my view that nothing untoward occurred during the making of those submissions. 9 Nevertheless, I have endeavoured to cover both the written grounds of appeal and the oral grounds of appeal.

Local Court proceedings 10 The Magistrate in his reasons dated 30 August 2002, gave a background that led to these legal actions being taken. The judgment reads: "The plaintiff and his brother, Mr Geoffrey Van Eden are brothers who, together with their wives, formerly traded as Van Eden Shoes Australia Pty Ltd. The company first commenced trading in 1962 when Mr Geoffrey Van Eden and his brother Peter formed the company. Approximately eight years ago, Mr Frank Van Eden was invited to join the company and shortly after, the other brother, Peter left. Each has a 50% shareholding in the defendant company. In November 1991, a fire destroyed the defendant's factory and the company virtually ceased trading from then on although it does own property, has money in the bank and on occasions, has received money from rents for its property. Up until the fire in 1991, Mr Geoffrey Van Eden was responsible for designing and manufacturing shoes while Mr Frank Van Eden handled sales and the company accounts. The two brothers had a falling out when the son of Mr Geoffrey Van Eden, Scott, who was a financial planner, discovered that Mr Frank Van Eden was repaying interest on a debt made to the company by his wife at the rate of 40%. It was implied in Scott Van Eden's evidence that there were further incidents of a similar nature but he did not go into in detail.

Action 295/01 11 In this action, the plaintiff claims the return of a loan of $18,424.60 made by the full partnership to the defendant. The plaintiff claims that because details of this loan were set out in the 1996 balance sheet of the company the loan was made in 1996. This is the not case. The Magistrate made a finding that the loan was made in 1993. It was statute barred. In oral submissions in this court, the plaintiff took issue with the Magistrate informing him of the effect of s 14 of the Limitation Act 1969. 12 Aside from finding that the claim was statute barred, the claim was only brought by two of the four parties and offended Part 6 r 3(1) of the Local Court (Civil Claims) Rules 1988 (NSW). 13 The Magistrate's reasoning in relation to action 295/01 was that the plaintiff had not made out his case. The Magistrate also considered that the plaintiff had not accurately presented the facts and found in favour of the defendant. There was no error of law. 14 The plaintiff was partially successful in defending the claims in the cross claim. In relation to the Magistrate's findings in relation to the second and third counts pleaded in the cross claim, they were open to him. There are no errors of law.

Action 627/01 15 The Magistrate stated: "This claim involves what the plaintiff maintains is his share of insurance payouts following the fire. The building was insured for $100,000 but the insurance company would not honour this figure. As a result, actions were commenced against the insurance company and the broker for falsely misrepresenting to the defendant that it was insured for this amount. Both court actions were settled out of court and $36,000 was recovered from the insurance company and $27,000 from the broker." 16 The plaintiff referred to the transcript of 28 August 2002 at 24.45 where he cross examined his brother. The plaintiff asked "Well Geoff the agreement was when you said that I have .. (not transcribable). The agreement was that the Solicitor wasn't to known wasn't it? And Geoffrey answered "Yeah". 17 Even if there was an agreement in the terms outlined above, the monies should have been paid to the company and any payment made to the plaintiff would have been void. There is no error of law.

Action 10/2002 18 The plaintiff submitted that the Magistrate erred because he made a finding that Geoffrey Van Eden agreed to the sale of the property but on condition that all monies received were to go into a joint bank account and this was wrong. According to the plaintiff, in September Geoff phoned him and said words to the effect that "you can now sell the property". At t 37.35 (28/8/02) Geoffrey said "That we open a bank account in joint names because otherwise when we sell it and the money will be in the bank somebody might take it out." 19 Later the following question was asked and answered: "Q. When he refused about, when you couldn't agree about the banks accounts did you ask that the signs be removed? A. No, the reason why the, we never signed an agreement. Frank never signed the agreement to put it on the market and the estate agent only put the signs up before that was done." [t 41.28-33] 20 The Magistrate in his reasoning said: "Mr Geoffrey Van Eden says that he did not agree to the sale of the property but on the condition that all monies received were to go into a joint bank account. His evidence is that his brother would not agree to this. His brother wanted two separate bank accounts, one in each of their names. Mr Geoffrey Van Eden would not agree to this so he stopped the sale going ahead." [J 5.28-35]

and "…he has been unable to establish how his claim has been calculated other than guesswork, prices of surrounding properties and conversations with a real estate agent. No purchaser ever came forward to make an offer and the whole issue is vague in the extreme." [J 5.46-51] 21 The interest calculations are those performed by Mr Van Eden. This finding was open to the Magistrate. There is no error of law. 22 In written submissions, as well as throughout the hearing in this Court, the plaintiff spent much court time reagitating factual matters that were previously determined in the Local Court. This court explained to the plaintiff, on a number of occasions, that the appeal must demonstrate an error of law, and that the Court cannot review factual findings made by the learned Magistrate in the Local Court proceedings. The plaintiff was unwilling or unable to comprehend this distinction. 23 As previously stated, the plaintiff, on the second day of submissions, changed tack and submitted that he had not been given a "fair go" in the Local Court and proceeded to detail this alleged shortcomings. When the plaintiff was given the opportunity to make submissions in reply he raised most of the same issues he had raised earlier in submissions but stated that he needed more time to check transcript references to complete his submissions in reply. The court considered that the most expeditious way to give the plaintiff time to consider what he considered to be outstanding issues was by way of written submissions. I have read those submissions and considered the content of them. The defendant submitted that the plaintiff was given every opportunity to present his case to the Magistrate. In particular, attention was drawn to passages in the transcript of the Local Court proceedings that the defendant submits are proof of the "fair go" given to the plaintiff. 24 In Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153 and Wakim v Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405, O'Keefe J made the following observations: "The requirements of natural justice (or procedural fairness as it is now commonly referred to) apply to the Small Claims Division of the Local Courts. This is clear from the nature of the function to be performed by that tribunal and the statutory recognition that is afforded to natural justice by s 69(2A) of the Act. The content of the requirements of natural justice is not fixed. The content fluctuates. The overarching requirement is that of fairness ( National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 312 per Gibbs CJ with whom Brennan J agreed). For a court that normally involves a duty to: (i) act judicially; (ii) deal with the matter for decision without bias; (iii) give each party the opportunity of adequately presenting its case; (iv) observe the procedural and other rules provided for in the relevant statute; (v) come to its decision with that sense of responsibility that is the necessary accompaniment of the duty to do justice." 25 The Magistrate gave the plaintiff latitude with his presentation of his case from the outset, where his Honour stated:

"I think the best thing is to allow the statement to go in and I'll just make it a question of weight subject to later legal submissions and what Mr Van Eden might say to supplement the affidavit by way of oral evidence and of course subject to cross-examination and the final summing up that you're going to make in relation to the legal principles involved. I note your objection, if that assists you. [t 21. 43-52]

Well I note the objection, as I said earlier because Mr Van Eden's unrepresented and because he seems to have obvious problems understanding the legalities of his claim and the proper way to prepare and present a statement, for me to strike it out I think would be grossly unfair and I think in the interests of justice I should allow the tender of the statement. It will be qualified by way of, it's a question of weight and it will also be subject to cross-examination and closing submissions in relation to the legal principles involved. [t 23.44-53]

Q. Now Mr Van Eden, is there anything further you want to say in relation to your claim number 627 of 01? A. A lot [transcript error, corrected in court 17.3.05]" [t 23.44-57] Q. "Off you go, now is your chance?" [t 24.1] BENCH: "…Mr Van Eden do you wish to ask Scott Eden any questions about what he set out in his affidavit." PLAINTIFF: "Yes I do" [t 68.17-21] BENCH: "Just stand up Mr Van Eden now is your opportunity to ask your brother any questions?" [t 84.46-47] 26 The plaintiff complained that the Magistrate advised him of the statute of limitations in the first action. However, as can been seen from Kojima, his Honour was assisting the plaintiff in relation to the requirements of the statute. 27 The plaintiff submitted that the Magistrate took over cross-examination of his brother, Mr Geoffrey Joseph Van Eden, and would not let the plaintiff cross-examine him. He has supported this claim by referring to the Local Court Transcript of 28 August 2002 (LCT 2). The plaintiff has directed my attention to cross-examination of Mr Geoffrey Van Eden as recorded in LCT 2. In particular, the plaintiff submitted at pages 27-30; 32-35 and 41 as being evidence of the Magistrate taking over. 28 In regards to pages 27-30 and 32-35, Geoffrey Van Eden asked the plaintiff a question while he was being cross-examined. The Magistrate intervened and asked the plaintiff a number of questions regarding the financial matters of Van Eden Shoes Pty Limited as those topics were being examined. These questions arose in order to clarify an issue. At times (LCT 2 at 42) the Magistrate assisted the plaintiff by paraphrasing what the plaintiff was asking in question form so that Geoffrey Van Eden could answer it. 29 The plaintiff was given more than a reasonable opportunity to present his case. Statements that were not in admissible form were allowed in. The plaintiff was given specific opportunities to give evidence regarding causes of actions he pleaded; and in response to the cross claim, the chance to cross-examine both witnesses called on behalf of the defendant. 30 The plaintiff was also given the opportunity to make submissions. 31 LCT 2 records:

BENCH: "Now's your opportunity, your last opportunity to completely sum up your case as to why you should win these three actions." (t 44.5-7) BENCH: "Well now's your opportunity to sum up your case. What do you wish to say?" (t 44.37-38) BENCH: "No, you don't have to reply to that. I'm asking you to sum up your case. That was simply given to you to assist you." (t 49.33-35) BENCH: "I want to hear the summary of your case." (t 50./1) BENCH: "So can we get to the Yarramalong property now." (t 52.43) BENCH: "Is there anything else you want to say Mr Van Eden?" (t 54.29-30) 32 After carefully reading the transcript, listening to the sections of the tape recordings of the proceedings and taking into consideration the submissions and documentation before me, I have come to the view that the Magistrate afforded the plaintiff procedural fairness and gave him a "fair go". There is no error of law. 33 The appeal is dismissed. The orders of Magistrate Morahan dated 30 August 2002 are affirmed. The summons filed 26 September 2002 is dismissed. 34 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendants' costs as agreed or assessed.

(2) The orders of Magistrate Morahan dated 30 August 2002 are affirmed.

(3) The summons filed 26 September 2002 is dismissed.

(4) The plaintiff is to pay the defendants' costs as agreed or assessed. **********

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