El-Hadi v Australian Timbers Pty Limited (No. 2)

By an amended summons filed in court on 13 November 2020, the plaintiff in these proceedings seeks to appeal against a decision of her Honour Magistrate Kennedy in the Local Court in which her Honour found for the defendant (who was the plaintiff in the court below) in proceedings brought against the plaintiff. The amended summons seeks a number of orders, but for the purposes of the application which is before me today, the relevant order is that pleaded in paragraph 2 and which is in the following terms:

I note that on a previous occasion when this application came before me and was adjourned, I took the step of allocating a hearing date for the substantive proceedings of 12 February 2021.

The relevant background can be shortly summarised.

In the court below, the defendant brought proceedings against the plaintiff seeking damages arising out of the alleged execution, by the plaintiff, of a Guarantee, under which he purportedly guaranteed contractual obligations of Alzco Carpentry and Construction Pty Ltd (Alzco) to the defendant. Alzco is a company of which the plaintiff's son, Ali El-Hadi, is the sole director.

In his defence, the plaintiff denied that he signed the Guarantee. Quite apart from the evidence of his denial, the plaintiff relied on a series of examples of his signature on other documents, and argued that those signatures were consistent within themselves, but obviously and completely inconsistent with that which appeared on the Guarantee. The plaintiff argued before the Magistrate that this evidence fortified a conclusion that he had not signed the Guarantee. One of the signatures relied upon by the plaintiff in this respect was that which was appeared on his driver’s licence.

The plaintiff's son swore an affidavit and gave oral evidence before the Magistrate. He said that he had forged the plaintiff's signature on the Guarantee. He was apparently given a certificate pursuant to s 128 of the Evidence Act 1995 (NSW) in relation to his admissions of forgery, although it must be said that he did not have the benefit of that certificate at the time of swearing his affidavit which was filed and read in the proceedings.

The defendant called evidence from a number of witnesses in the court below. They included a Mr Van Akker who gave evidence that he saw the plaintiff sign the Guarantee.

It is not necessary for present purposes to canvass the evidence which was given by the plaintiff before the Magistrate. However, in light of the issues raised on the present application, it is relevant to note one passage of the plaintiff’s cross-examination, in which he was asked the following in reference to the Guarantee: [1]

In the course of her judgment, the learned Magistrate said the following: [2]

The amended summons sets out a number of proposed grounds of appeal. For the purposes of this application, particular focus has been paid to grounds 1 and 2 which are in the following terms:

In written submissions, counsel for the plaintiff submitted that the Magistrate had concluded, [3] notwithstanding her apparent acceptance of the fact that the vastly different signature appearing on the Guarantee was that of this plaintiff, that the plaintiff's driver's licence was an insufficient basis on which to find that he had not signed the Guarantee. It is that passage of her Honour's reasons which forms the focus of ground one.

It was submitted that the error in that reasoning was two-fold. Firstly, it was submitted that the reasoning operated to reverse the onus of proof by requiring the plaintiff (as the defendant) to disprove that the signature on the guarantee was his, as opposed to requiring the defendant (as the plaintiff) to prove that it was. Secondly, it was submitted that there was no evidence before the Magistrate which allowed a finding that the plaintiff had an alternate signature or, if he did, that he had ever used it.

Counsel for the defendant submitted that however ground one was construed, it effectively asserted that there was no evidence to support the Magistrate's principal finding that the plaintiff had signed the Guarantee. It was submitted that on any construction of the proposed ground, the fundamental proposition which was being advanced by the plaintiff was that there was no evidence to support the Magistrate's finding that the plaintiff signed the Guarantee. Counsel submitted that the untenable nature of that proposition lay in the evidence of Mr Van Akker who said that he saw the plaintiff sign the Guarantee, which the Magistrate obviously accepted. Counsel submitted that it was a matter for the Magistrate to assess that evidence, and having done so to accept it or reject it. It was submitted that once that position was reached, any ground which asserted that there was “no evidence” to support her Honour's primary finding that the plaintiff had signed the Guarantee could not be sustained.

In AAI Limited t/as Suncorp Insurance v Patten & Anor [4] I had cause to consider the issues which arise on an application such as the present. I observed that in considering an application for a stay of proceedings, the Court is required to address two issues, namely: [5]

A consideration of the apparent strength of the plaintiff's case requires that the plaintiff invoke a recognised principle and have sufficient probability of success to justify the interlocutory order which is sought. In order to obtain interim relief, the plaintiff does not have to satisfy me of the likely outcome of the proceedings. It is not my function on an application of this nature to make a final determination of any issue. What I am required to do is to undertake an assessment of the probability of the plaintiff being successful in the proceedings. That assessment is necessarily an impressionistic one which takes into account the apparent sufficiency of the plaintiff's evidence, and which is guided by both the nature of the proceedings and the nature of the order sought. Ultimately, what the plaintiff must establish is the existence of a real question to be tried.

In determining where the balance of convenience lies, a number of factors may be relevant. They may include whether the relief sought would overturn or merely maintain the status quo. They may also include the effect on the respective positions of the parties of the grant on the one hand or the refusal on the other of the relief sought. That question may also take into account the existence and/or sufficiency of alternative ways in which the position might be addressed.

At face value, I would tend to accept the proposition advanced by counsel for the defendant concerning the evidence of Mr Van Akker. It was a matter for the Magistrate to accept or reject Mr Van Akker’s evidence that he saw the plaintiff sign the Guarantee. Her Honour accepted that evidence, as she was entitled to do. Given that, and absent anything else, it is difficult to conclude that the plaintiff would be successful in advancing a proposition that there was “no evidence” to support the Magistrate's conclusion.

However, the plaintiff's position in respect of ground one is slightly more nuanced than might first appear. It is based upon the proposition that the Magistrate found that the plaintiff had either signed the Guarantee in a deliberately different manner to his usual signature, or that he actually had a signature which was different to his usual signature. Bearing in mind the cross-examination of the plaintiff to which I referred earlier, there seems to be an arguable case that there was no evidence to support those particular findings made by the Magistrate. Such findings are, of course, inextricably linked to her Honour’s ultimate finding that it was the plaintiff who signed the Deed of Guarantee. Whilst that position is as I have said, a nuanced one, I am not able to come to the view that it does not give rise to a serious question to be tried.

It also seems to me that there is a related issue, namely whether the effect of the Magistrate's findings was to reverse the onus of proof in relation to what was the fundamental issue in the proceedings. In particular, her Honour’s reference to whether the evidence was or was not sufficient to “prove that [the plaintiff] could not have signed the documents in a different way on other occasions” may tend to suggest that her Honour concluded that there was an onus on the plaintiff to prove that he did not sign the Guarantee.

I accept, given the structure of the Magistrate's reasons, that there may be some issue as to what precise findings of fact her Honour made. However, I am satisfied on the basis of the ground as it has been articulated to me that there is a serious question to be tried.

In terms of the balance of convenience, I need only refer to the affidavit of the plaintiff sworn on 26 August 2020. In the course of that affidavit the plaintiff deposed to the fact that he does not have the means to pay the judgment debt without selling his family home in which he has lived for 17 years. [6] He is currently in receipt of a disability support pension on account of a series of psychological and physical health issues, as is his wife. His principal (and only real) asset is his family home.

It has not been suggested that the defendant would suffer any particular prejudice in the event that a stay were granted and whilst that is not determinative of the issue, it is nevertheless a relevant matter to be taken into account. Importantly, in circumstances where the hearing is listed to take place in February 2021, this is not a case in which there will be a substantial delay.

There would be a potentially adverse effect upon the plaintiff if a stay was not granted and I am satisfied that the balance of convenience lies squarely in his favour. Counsel for the defendant did not make any submission to the contrary.

In those circumstances I propose to grant the stay and, in doing so, make orders facilitating the hearing in February of next year. Whilst I have not heard the parties on the question of costs of this application, it seems to me that the appropriate order is that the costs be reserved and dealt with by the trial judge who will have had the benefit of hearing the entirety of the evidence and submissions.

Accordingly, for those reasons, I make these orders: