Rose v Tunstall

1. [1]

   On 11 April 2017 her Honour Magistrate Atkinson LCM in the Local Court (Downing Centre) dismissed a claim brought by the present Plaintiff where he claimed a judgment of $78,383.38 against the Defendants pursuant to ss 37 and 38 of the Associations Incorporation Act 1984 (NSW) (the AIC). The Plaintiff thereafter filed a summons in this Court on 9 May 2017 appealing from that judgment on 9 grounds of appeal said to be grounds demonstrating errors of law.

2. [2]

   On 15 May 2017 the Defendants by Notice of Motion filed that day sought an order dismissing the summons as incompetent pursuant to r 50.16A Uniform Civil Procedure Rules 2005 (NSW). In the alternative, the Defendants sought summary dismissal under r 13.4 UCPR. The basis of the relief sought in the Notice of Motion was that none of the grounds of appeal identified errors of law. Rather, they demonstrated, if anything, errors of fact only. It was said further that some of the grounds in any event were frivolous within the meaning of r 13.4.

3. [3]

   This judgment is concerned with the Defendants’ Notice of Motion and not with the question of whether any of the grounds are made out.

4. [4]

   At the hearing of the Motion the Defendants sought leave to file an amended summons, the effect of which was to reformulate the nine grounds of appeal. Frustratingly for the Court and the Defendants and in non-compliance with r 19.5 UCPR the Plaintiff in the Amended Summons made no indication by underlining, bolding, italics or striking through how the amended grounds differed from those in the summons first filed. Despite that failure, counsel for the Defendants indicated that he was prepared to deal the grounds as set out in the amended summons. Accordingly, I gave leave for it to be filed.

Background

1. [5]

   The Plaintiff was an Olympic and international boxing referee and judge and a member of Boxing NSW Inc which was an association incorporated under the AIC. On 20 July 2004 the Plaintiff was expelled by a decision of a special executive meeting of Boxing NSW Inc. The five Defendants were committee members who were present at the meeting and who each voted to expel the Plaintiff.

2. [6]

   On 16 February 2006 the Plaintiff sued Boxing NSW Inc and Arthur Tunstall who was then secretary of Boxing NSW Inc, in the Equity Division of this Court seeking a declaration that the expulsion was void and of no effect and an injunction restraining the implementation of the expulsion order.

3. [7]

   On 22 June 2006 the Defendants in the equity proceedings filed a Notice of Motion seeking an order that the summons be dismissed under r 13.4 UCPR as disclosing no reasonable cause of action and as being an abuse of power. On 27 June 2006 the Motion was dismissed with an order that those Defendants pay the Plaintiff’s costs.

4. [8]

   On 15 November 2006 those Defendants offered to consent to the declaration and injunction without making any admissions of liability and offered to pay the Plaintiff’s costs in the sum of $3000. The Plaintiff’s counter-offer in relation to costs was that the costs be agreed or assessed. That counter-offer was not accepted and the proceedings continued to a final hearing on 8 December 2006.

5. [9]

   On 31 January 2007 Brereton J ordered judgment in favour of the Plaintiff by making the declaration and granting the injunction sought, and ordering that Boxing NSW Inc pay the costs of the Plaintiff as agreed or assessed.

6. [10]

   On 24 June 2009 an Amended Certificate of Determination of Costs for $98,846.72 was filed in the District Court Sydney Registry and entered as a judgment. The amount of the costs included the costs order made on 27 June 2006.

7. [11]

   The Defendants in the present proceedings were said to be the committee members of Boxing NSW Inc at the time that judgment was entered.

8. [12]

   On 20 October 2009 a writ of execution was issued by the District Court and sent to the Sheriff’s Office for attempted execution against Boxing NSW Inc but it was returned unsatisfied on 19 November 2009.

9. [13]

   On 13 November 2009 a garnishee order was issued by the District Court and forwarded to Westpac Bank at Double Bay to attach all monies in the account of Boxing NSW Inc. The Bank replied on 20 November 2009 saying there were no accounts in that name with the branch.

10. [14]

    On 27 November 2009 Boxing NSW Inc paid the sum of $20,463.34 to the Plaintiff’s solicitors in respect of the costs order of 27 June 2006.

The Local Court proceedings

1. [15]

   The claim in the Second Further Amended Statement of Claim filed 7 December 2015 in the Local Court was that the Defendants were jointly and severally liable for the judgment debt incurred by Boxing NSW Inc by virtue of ss 37 and 38 of the AIC. The basis for this was set out as follows:

2. [16]

   On that basis, and taking into account the amount paid by Boxing NSW Inc, the Plaintiff claims $78,383.38.

Legislation

1. [17]

   Sections 37 and 38 of the AIC provide:

2. [18]

   Section 39 of the Local Court Act 2007 (NSW) gives a party a right to appeal to this Court but only on a question of law. Section 40 requires the leave of this Court to be given on a ground that involves a question of mixed law and fact.

Legal principles

1. [19]

   In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Mason CJ said (at 355-356):

2. [20]

   In R L & D Investments P/L v Bisby [2002] NSWSC 1082 Kirby J said at [13]:

3. [21]

   In Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 the Full Court of the Federal Court had to determine whether an appeal involved a question of law in the context of the construction of a statute. The Court said this (at 287):

Grounds of appeal

1. [22]

   I shall now deal with the grounds of appeal individually or in groups as counsel dealt with them:

Grounds 1 and 2:

1. [23]

   These grounds particularly concern paragraphs 18 – 23 of the learned Magistrate’s judgment. Those paragraphs are as follows:

2. [24]

   The Defendants submitted that her Honour’s statement at para [20] that she agreed with the Defendants’ submission was a finding of fact. The Defendants submitted that the Plaintiff does not assert that there was no evidence to support the finding or that the Magistrate misdirected herself in law. Counsel drew attention to the authorities dealing with the exception to the rule about facts fully found falling within a statutory provision where the statute uses words according to their ordinary meaning. These authorities included Pozzolanic and Commissioner of Taxation v Crown Insurance Services Ltd (2012) 207 FCR 247; [2012] FCAFC 153 at [29]ff.

3. [25]

   The Defendants further submitted that ground 1 puts the Plaintiff’s case in a very different way from what the Plaintiff argued before the Magistrate. The assertion in that ground of the way the Magistrate should have found, namely, that a contingent debt was incurred, is doomed to fail. It should, therefore, be struck out as “frivolous”.

4. [26]

   The Plaintiff submitted that the question whether the facts fully found satisfied the test in Hawkins v Bank of China (1992) 26 NSWLR 562 was a question of law and that grounds 1 and 2 were implicitly saying that her Honour in paragraphs 20 and 22 wrongly applied the test laid down in Hawkins and that that involved an error of law.

5. [27]

   It is clear that the issue for the Magistrate at this point was whether the Association incurred a debt. The Magistrate set out the Defendants’ submissions about what “incurs a debt” means. That determination was clearly a question of law: Pozzolanic at 287(3). As the Defendants’ submission recorded by the Magistrate at [19] of her judgment makes clear, the phrase “incurs a debt” had been given a particular meaning in decided cases.

6. [28]

   The issue was not a factual enquiry about what the Association had done. The facts were undisputed at this point. The Association had defended the Plaintiff’s claim and had been unsuccessful with the result that costs orders were made on 27 June 2006 and 31 January 2007. The issue was whether, being subjected to those costs orders by the Court, the Association could be said to have incurred a debt so that the matter fell within the provisions of s 38(1) of the AIC. As the authorities mentioned by the Defendants to the Magistrate demonstrated, there was learning and authority about what the phrase “incurs a debt” means in particular circumstances. That is not a question of fact but a question of law.

7. [29]

   It is difficult to understand why the Magistrate’s agreement with the Defendants’ submissions that the Association did not incur a debt could be said to be finding of fact. The Defendants rely to some extent on what the Magistrate said in paragraphs 21 and 22 where she said what inferences were and were not reasonable.

8. [30]

   The Plaintiff would not be entitled to base its appeal on the inference that the Magistrate said in paragraph 21 could be drawn but that does not seem to me to be the basis of the complaint in grounds 1 and 2. However, as paragraph 23 makes clear the drawing of that inference is not an essential aspect of the Magistrate’s conclusion which was a conclusion of law based on the undoubted fact recorded in paragraph 23.

9. [31]

   The Defendants submitted that the matter was within the category of cases which look at whether “facts fully found” fall within a statutory provision. However, as the Full Court of the Federal Court made clear in Pozzolanic (at 287(5)) the question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law, and the principle is only qualified when a statute uses words according to their ordinary meaning. In the present case the issue was whether suffering a costs order was the “incurring of a debt”. Accordingly, it is question-begging in those circumstances to assert that the words “incurs a debt” in s 38 are used according to their ordinary meaning to deny the Plaintiff the right to argue that point.

10. [32]

    In my opinion, grounds 1 and 2 raise a question of law.

11. [33]

    As to the submission that ground 1 is doomed to fail, although the matter is finely balanced, I do not consider that the Plaintiff should be deprived of its right to argue the legal point arising from Hawkins. Even accepting that the Plaintiff did not put the matter in the way ground 1 suggests, it is clear from the Magistrate’s judgment at paragraph 19 that the issue was a live one because of submissions made by the Defendants. Although the argument seems to me to be a weak one, I cannot find that it fits any of the descriptions in General Steel Industries Inc v Commissioner for Railways (NSW) (1965) 112 CLR 125 at 129 to deny the Plaintiff the right to go to a final hearing.

Ground 3 & 4

1. [34]

   The Plaintiff made a number of submissions concerning a writ being unsatisfied and whether s 37(3) requires the unsatisfied writ to be returned “to a court”.

2. [35]

   The findings made by the Magistrate in this regard were unnecessary, and whether those findings were right or wrong does not advance the matter. That is because it was asserted by the Plaintiff in the Statement of Claim and admitted by the Defendants in their Defence that the incorporation of Boxing NSW Inc was cancelled on 1 October 2010. The result was that, pursuant to s 37(1)(b), Division 3 of Part 4 of the Act (containing s 38) applied to the conduct alleged. It was not, therefore, necessary for the Magistrate to find either that the incorporation was cancelled (it was not an issue) nor that the deeming provision in s 37(3) did not operate (because s 38 applied by reason of s 37(1)(b) which does not require an inability to pay debts).

3. [36]

   For the Magistrate to have reached the point of considering s 38(2), it was a pre-requisite that one of the requirements in s 37(1) applied. The Magistrate found (c) did not apply and (a) was not put forward. Whilst it might have been desirable for the Magistrate to have noted the concession as to (b), it was not an error of law not to have done so.

4. [37]

   Grounds 3 and 4 should be struck out as frivolous because they take the matter nowhere.

Ground 5

1. [38]

   The Plaintiff’s written submissions under the heading “As to Appeal Ground 5” do not address this ground. They address ground 4. No other submissions oral or in writing concerning ground 5 were made by the Plaintiff. Nevertheless, I will consider whether the ground involves a question of law.

2. [39]

   To understand the finding in paragraph 43 of the Magistrate’s judgment it is necessary to set out the preceding paragraphs. The Magistrate said:

3. [40]

   It can be seen that the Magistrate’s determination at paragraph 43 was her findings of fact referred to in paragraph 41 and the inference her Honour drew in paragraph 42. Those are clearly factual findings. No question of law was involved.

Grounds 6 to 9

1. [41]

   The Defendants submitted that these grounds raised only issues of fact. The Defendants submitted that there was no assertion by the Plaintiff that there was no evidence to support these findings.

2. [42]

   The Plaintiff submitted that “reasonable grounds to expect” in s 38(1) included the Defendants’ knowledge of the financial records of Boxing NSW Inc and that was a question of law. The Plaintiff drew attention to what was said by the Court of Appeal in Dunn v Shapowloff (1978) 3 ACLR 775 when dealing with s 303(3) of the Companies Act 1961 (NSW) where the Court said,

3. [43]

   These grounds on their face raise errors of fact only. The criticisms of the Magistrate “inferring” and “finding” only have to be stated to make that clear. Similarly, the complaint in ground 6 is not so much that the Witness Statement was accepted into evidence as it is that the Magistrate accepted the evidence contained in it. Self-evidently, that is a question of fact. In any event, the ground should be regarded as “frivolous” since it was the Plaintiff who tendered the Statement.

4. [44]

   The Plaintiff’s written submissions only highlight that the matters complained of in these grounds were issues of fact. The submissions say, for example:

5. [45]

   The Plaintiff’s oral submissions complaining of financial evidence “not…taken into account” and asserting what a proper examination of the evidence would have shown only highlight the factual nature of these complaints.

6. [46]

   Although ground 9 is expressed as an error in “holding” (an expression properly reserved for a determination of law), the remainder of the ground makes clear that the nub of this ground is that the Magistrate should have “take[n] into account the fact” that financial records showed certain things. That is a question of fact.

7. [47]

   The reference to Dunn v Shapowloff is misconceived. Section 303(3) of the Companies Act provided:

8. [48]

   The Plaintiff’s counsel said that if there were mixed questions of fact and law the Plaintiff would need to amend to seek leave under s 40 of the Local Court Act. No such application was made. There would need to be a proper basis to do so because the scheme of the Local Court Act is designed to limit factual matters to final determination in the Local Court with the Supreme Court ordinarily confined to correcting errors of law.

9. [49]

   I do not understand the Plaintiff’s submission that because the “reasonable grounds” included the Defendants’ knowledge, that inclusion meant that the question was one of law. Determining what knowledge the Defendants had was a question of fact determined on all of the evidence.

10. [50]

    These grounds raise only questions of fact.

Conclusion

1. [51]

   In my opinion the following orders should be made:

   1. (1)

      Order pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW) that grounds 3 to 9 in the Summons be dismissed.

   2. (2)

      The Plaintiff is to file a Further Amended Summons consistent with order (1) within 14 days.

2. [52]

   Neither party has been entirely successful on the Motion. However, the Defendants have largely succeeded. My prima facie view is that the Plaintiff should pay 50% of the Defendants’ costs of the Motion. If either party wishes to propose a different order I will hear the parties on costs.