El Safty v Kaye Chapman Investments Pty Ltd [2017] QCA 224

SUPREME COURT OF QUEENSLAND CITATION: El Safty v Kaye Chapman Investments Pty Ltd [2017] QCA 224 PARTIES: AHMED EL SAFTY (applicant) v KAYE CHAPMAN INVESTMENTS PTY LTD ACN 145 505 951 (respondent) FILE NO/S: Appeal No 4264 of 2017 DC No 248 of 2015 DIVISION: Court of Appeal PROCEEDING: Application for Leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Southport – Unreported, 3 April 2017 (Muir DCJ) DELIVERED ON: 6 October 2017 DELIVERED AT: Brisbane HEARING DATE: 12 September 2017 JUDGES: Gotterson and McMurdo JJA and Mullins J ORDERS: 1. Application for leave to adduce further evidence refused. 2. Application for leave to appeal refused. 3. The applicant to pay the respondent’s costs of the applications to be assessed on the standard basis. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – ADMISSION OF FURTHER EVIDENCE – IN GENERAL – where applicant applied for leave to appeal against summary judgment in favour of the respondent – where summary judgment application had been adjourned to allow the applicant to adduce further evidence on issues in dispute, including the ownership of certain furniture – where the applicant failed to adduce further evidence at the adjourned summary judgment application on the ownership of the furniture – where counsel for the applicant conceded that summary judgment could be given in favour of the respondent for the undisputed part of the respondent’s claim – whether the applicant should be granted leave to adduce further evidence on the issues alleged to be in dispute – whether the application for leave to appeal against summary judgment should be granted -- 1 of 7 -- 2 Uniform Civil Procedure Rules 1999 (Qld), r 766 R v Katsidis; ex parte A-G (Qld) [2005] QCA 229, cited COUNSEL: C C Upton for the applicant G R Coveney for the respondent SOLICITORS: PPCS Lawyers for the applicant Case Legal Pty Ltd for the respondent [1] GOTTERSON JA: I agree with the orders proposed by Mullins J and with the reasons given by her Honour. [2] McMURDO JA: I agree with Mullins J. [3] MULLINS J: Mr El Safty applies for leave to appeal against summary judgment given against him in the District Court on 3 April 2017 for part of the respondent’s claim, namely the sum of $105,544, together with an order for costs of the summary judgment application in favour of the respondent. [4] Unless Mr El Safty is successful in his application for leave to adduce further evidence on the hearing of the application for leave to appeal, there is no basis to challenge the learned primary judge’s decision to give summary judgment against Mr El Safty, as the then counsel for Mr El Safty conceded that such judgment could be entered against his client. The District Court proceeding [5] The respondent’s claim against Mr El Safty was for the sum of $248,572.70 for debt together with indemnity costs pursuant to an agreement between the parties. The statement of claim pleaded a number of agreements between the respondent, Mr El Safty and El Safty Enterprises Pty Ltd (the company) (including an agreement for the sale of furniture from the respondent to the company), disputes that arose with respect to the agreements, and that, as a result, the respondent, the company and Mr El Safty entered into the settlement agreement on 21 November 2011 (the settlement agreement) pursuant to which Mr El Safty agreed to be liable with the company to the respondent for the obligations specified in the settlement agreement. The statement of claim pleaded that Mr El Safty and the company were liable to the respondent for the agreed sum set out in the settlement agreement of $533,572.70 and the respondent had received from the company and/or Mr El Safty the amount of $285,000, leaving the balance owing by them of $248,572.70. [6] The statement of claim also pleaded that the company was placed into receivership on or about 27 July 2012. Although Mr El Safty did not admit that allegation, it appears to have been common ground that receivers and managers were appointed to the company around that time. [7] Mr El Safty’s original defence pleaded that the settlement agreement was superseded by a further settlement agreement entered into by the respondent and Mr El Safty in an exchange of emails between 20 May and 16 July 2015 (the 2015 agreement) which acknowledged a debt owed by Mr El Safty to the respondent of $202,000 and set out a payment schedule for repayment of that amount and interest over the period of approximately 12 months until 30 June 2016. -- 2 of 7 -- 3 [8] The respondent’s application for summary judgment was first heard by the primary judge on 6 February 2017. The application was supported by the affidavit of Ms Kaye Chapman, the sole director of the respondent, which exhibited the settlement agreement, deposed to the receipt between 2011 and 2015 of occasional payments totalling the sum of $285,000 made by the company and/or Mr El Safty, and confirmed that as at September 2015 the balance owing under the settlement agreement was $248,572.70. Ms Chapman denied that the 2015 agreement was ever reached between Mr El Safty and the respondent, but confirmed that payments were received from Mr El Safty of $19,600 on 25 September 2015, $2,600 on 30 September 2015 and $2,600 on 30 October 2015. Ms Chapman asserted that even on Mr El Safty’s own case, he owed the respondent the sum of $177,200 which was the balance after deducting payments of $24,800 from the acknowledged indebtedness of $202,000. [9] Mr El Safty swore an affidavit on 1 February 2017 to oppose the summary judgment application. Mr El Safty asserted that additional payments which he estimated at $50,000 in cash above the total amount of $285,000 were paid by him to Ms Chapman on behalf of the respondent and asserted in paragraphs 57 to 60: “57. Additionally, it was agreed between me and Kaye Chapman on behalf of the Plaintiff that about $200,000.00 worth of furniture purchased from the funds the subject of the advance would be sold and the proceeds would be credited by the Plaintiff to any loan sums owing. 58. I am aware that here again as a result of discussions had by me with Kaye Chapman that the said Kaye Chapman received large amounts of cash from the sale of these items of furniture and kept the details secret in an effort by the Plaintiff to avoid paying commission she would have been liable to pay to the Debt Collectors. 59. I seek a full accounting from the Plaintiff of the cash that Kaye Chapman has received from both me and the sale of the furniture on behalf of the Plaintiff as this sum needs to be deducted from the amount claimed to be owed by me and the Company to the Plaintiff. 60. It was agreed that the costs of the storage and delivery of the furniture to purchasers which was born by me and deducted from the amount claimed to be due. This has not been taken into account by the Plaintiff in the matters set out in the Statement of Claim.” [10] Although Mr El Safty adverted to an agreement between himself and the respondent about furniture and an allegation that the respondent should credit the proceeds from the sale of the furniture from the amount claimed to be owed by him and the company to the respondent, the 2015 agreement did not refer to such agreement about the furniture and no documentary evidence relating to such agreement was exhibited to Mr El Safty’s affidavit. At the hearing on 6 February 2017, Mr El Safty obtained an adjournment to allow him to adduce the evidence to support the allegations about the additional payment to the respondent of $50,000 in cash and the crediting of the proceeds from the sale of the furniture. -- 3 of 7 -- 4 [11] An amended defence was filed on behalf of Mr El Safty on 6 March 2017. If Mr El Safty were not successful in proving the 2015 agreement, one alternative claim set up in the amended defence is based on the value of the furniture that was the subject of clause 10.0 of the settlement agreement. That provided for the respondent to provide an invoice addressed to the company for the furniture detailed in the furniture agreement for an amount of $338,024.63 which the parties agreed was the fair market retail value of the furniture and the respondent agreed to accept the sum of $100,000 described as the “reduced retail amount” from the company and Mr El Safty, if the reduced retail amount were paid to the respondent on or before 30 November 2011. Although not referred to in the amended defence, clause 10.7 of the settlement agreement provided: “The Parties agree that titles in and ownership of the furniture referred to in Clause 10.1 shall remain vested in the [respondent] until the [company] and Elsafty have paid to the lender the Reduced Retail Amount.” [12] Mr El Safty alleged in the amended defence that any claim by the respondent against him must be reduced either by $338,024.63 or the value of the reduced retail amount of $100,000. In the latter case, Mr El Safty detailed payments made to the respondent of $434,006.35 which together with the reduced retail amount it was alleged cleared the agreed debt of $533,572.70 referred to in the statement of claim. [13] Ms Chapman swore a further affidavit on 30 March 2017 addressing the allegations in the amended defence and confirming that neither Mr El Safty nor the company had paid the sum of $100,000 for the furniture by the date specified in the settlement agreement of 30 November 2011. [14] Mr El Safty swore a further affidavit on 3 April 2017. Mr El Safty alleged the company purchased the furniture which was detailed in the invoice annexed to Ms Chapman’s affidavit, but did not set out what steps took place between the parties to amount to a purchase of that furniture. Mr El Safty then deposed to the furniture being stored in shipping containers rented by him for which he paid the rental and storage costs and asserted, without disclosing any factual basis for the conclusion, “Title in the Furniture passed to me at the time I took possession of the Furniture”. [15] In the affidavit of 3 April 2017, Mr El Safty corrected the amount which he said had been paid to the respondent from $434,006.35 to $419,536.10. Mr El Safty’s affidavit also exhibited bank statements on which he identified payments which he asserted had been made to the respondent. In response to Ms Chapman’s assertion that neither Mr El Safty nor the company had paid the sum of $100,000 for the furniture by 30 November 2011, Mr El Safty asserted merely that he did not agree with the relevant paragraph in Ms Chapman’s affidavit. [16] At the resumed hearing of the summary judgment application on 3 April 2017, the respondent’s counsel indicated the respondent’s willingness for the purpose of the summary judgment application to rely on the debt acknowledged by Mr El Safty in the 2015 agreement of $202,000 and deduct from that the amounts which the respondent conceded had been paid subsequently by Mr El Safty or about which there was an arguable case. Mr El Safty’s counsel did not, and could not on the basis of the evidence adduced by Mr El Safty, dispute the proposition put to him by the primary judge that there was no evidence that Mr El Safty owned the furniture. This undermined Mr El Safty’s claim to offset some value for the furniture against the -- 4 of 7 -- 5 respondent’s claim. The matter was stood down for Mr El Safty’s counsel to obtain instructions and on his return to the court counsel for Mr El Safty accepted the amount calculated by the primary judge as being outstanding after allowing deductions for payments and disputed payments from the starting debt amount of $202,000 and acknowledged that judgment could be given “for that undisputed amount”. [17] In giving reasons for ordering judgment on part of the respondent’s claim, the primary judge noted that, on Mr El Safty’s own case, he was indebted to the respondent in the sum of $202,000 and, deducting from that sum the amounts in respect of which Mr El Safty had produced evidence of making payments to the respondent between 9 June and 22 December 2015, left the balance of $105,544. The primary judge noted expressly that judgment was given for the amount conceded by Mr El Safty. The summary judgment disposed of only part of the respondent’s claim and it was common ground that the balance of the plaintiff’s claim would have to proceed to trial. The further evidence [18] The further evidence was received by the court for the purpose of determining the question of leave pursuant to r 766(1)(c) of the Uniform Civil Procedure Rules 1999 (Qld). It relevantly comprises two affidavits of Mr El Safty and an affidavit of a law clerk from Mr El Safty’s former solicitors. The law clerk was present during the hearing on 3 April 2017, but was not present for all the conversation that took place between Mr El Safty and his then counsel, when the matter had been stood down by the primary judge to enable counsel to obtain instructions from Mr El Safty. The law clerk heard counsel’s advice to Mr El Safty that “the judge was heading down the path of giving summary judgment”. One affidavit of Mr El Safty records that he was “not happy” when his counsel told the court that judgment could be entered and that his solicitor would not allow him to talk directly to the judge. Mr El Safty deposed that, if he had been allowed to speak to the judge, he would have informed the court that he would pay the respondent, if the furniture was returned to him. [19] The other affidavit of Mr El Safty sets out his recollection of the conversation that he had with counsel on 3 April 2007 prior to the concession being made to the judge about the entry of judgment and exhibits the application Mr El Safty filed in the District Court on 4 September 2017 to seek leave to withdraw the deemed admissions made in the amended defence and counterclaim filed on 6 March 2017 and for leave to file the further amended defence and amended counterclaim (the proposed defence and counterclaim) exhibited to that affidavit. [20] Mr El Safty has recited the effect of the conversation he had with counsel as follows: “(i) Counsel said to me that the judge had made up her mind that the Plaintiff was the owner of the furniture and she would make an adverse order if I do not admit that the Plaintiff is the owner of the furniture; (ii) in response, I informed Counsel that I was the owner of the furniture, and that I had stated this in my affidavits filed in the Application; (iii) I informed Counsel that I am entitled to an account for the value of the furniture and I am entitled to set-off that value against the money I owed the Plaintiff pursuant to our 2015 agreement; -- 5 of 7 -- 6 (iv) I told Counsel if the Plaintiff returned the furniture to me, which is rightfully mine, I owed the Plaintiff money. If she doesn’t, I do not owe the Plaintiff any money; (v) that was the end of our conversation and Counsel returned to Court.” [21] Mr El Safty also stated in this affidavit that he never instructed counsel to consent to any judgment being entered against him. Mr El Safty did not seek to adduce evidence from counsel who appeared on his behalf at the hearing on 3 April 2017. [22] It is relevant to the consideration whether leave should be given to adduce further evidence to note that, as the balance of the respondent’s claim is still proceeding in the District Court, the opportunity remains for Mr El Safty to pursue his claim that he owned the furniture and has a right of set-off in respect of the value of the furniture. Mr Coveney of counsel on behalf of the respondent conceded at the hearing of the applications in this court that the respondent did not dispute the right of Mr El Safty to pursue his counterclaim and defend the balance of the respondent’s claim in reliance on the claims agitated by Mr El Safty in the proposed defence and counterclaim. [23] The problem for Mr El Safty is that the state of the evidence before the primary judge on 3 April 2017 did not support his assertion in his affidavit sworn on that date or the assertion he said he made to his counsel that he owned the furniture that had been sold by the respondent. Although Mr El Safty disputes the instructions he gave to counsel, the concession made by his counsel reflected the evidence that was before the primary judge. [24] Mr El Safty has foreshadowed in the proposed defence and counterclaim that there was another occasion on which he had a discussion with Ms Chapman in early to mid- May 2015 at the Glades Golf Club at which he said that Ms Chapman made statements to him to the effect that he could do whatever he liked with the furniture, the furniture was his, and that if he sold the furniture, he could keep the proceeds and that, as a result, he entered into a legally enforceable agreement with the respondent pursuant to which he then owed the furniture which he describes as the “final furniture agreement”. Mr El Safty also relies on the same conversation and circumstances to allege misleading and deceptive conduct or breach of trust on the part of the respondent. Mr El Safty has failed, however, to set out and affirm in his affidavit those facts relevant to the making of the alleged final furniture agreement or has not explained why it was not until the hearing of his application for leave to appeal against summary judgment that he raised for the first time that there was another agreement between the respondent and him about the furniture that affected the respondent’s entitlement to pursue the debt it claimed was owed by Mr El Safty that was different to that which he had outlined (without any detail and unsupported by evidence) in his affidavit of 1 February 2017. [25] Mr Upton of counsel who appears on Mr El Safty’s behalf in this court describes the further evidence as fresh evidence in the sense that it could not by reasonable diligence have been discovered prior to the hearing, because it did not arise prior to the hearing. See the distinction between “fresh” evidence and “new” evidence discussed in R v Katsidis; ex parte A-G (Qld) [2005] QCA 229 at [2]-[4]. Mr El Safty relies on the further evidence to depart from the concession made by his counsel to the primary judge. What Mr El Safty is in substance seeking to do is to put before -- 6 of 7 -- 7 the court evidence relevant to the ownership of the furniture which was available to him at the time of the summary judgment application. It is therefore characterised properly as new and not fresh evidence. [26] In the circumstances where the summary judgment application had been adjourned on 6 February 2017 to enable Mr El Safty to adduce evidence to support his allegation that the respondent had to credit him with the proceeds from the sale of the furniture which Mr El Safty failed to do for the purpose of the resumed hearing on 3 April 2017, it is inappropriate to grant leave now to Mr El Safty to adduce further evidence relating to the ownership of the furniture for the purpose of his application for leave to appeal against the summary judgment. This is particularly so in the absence of any explanation for his failure to adduce the evidence before the primary judge and the failure to verify the allegations in the proposed defence and counterclaim by affidavit. In addition, any prejudice to Mr El Safty by the entry of judgment against him for the sum of $105,544 plus costs can be mitigated in the District Court proceeding. The respondent does not oppose Mr El Safty being given leave in the District Court to file the proposed amended defence and counterclaim. It will then be a matter for Mr El Safty, as to what course he is advised to follow, pending the finalisation of the balance of the proceeding. [27] The application for leave to adduce further evidence must be refused. It follows that the application for leave to appeal against summary judgment should also be refused. Orders [28] Before the application to adduce further evidence was brought, the respondent submitted in its written submissions that, as the application for leave to appeal was brought in the face of a concession by Mr El Safty the judgment should be given for the sum awarded, the application was hopeless and costs should be ordered in the respondent’s favour on the indemnity basis. That scenario changed to a degree by the application to adduce further evidence. Despite a number of unsatisfactory aspects about how Mr El Safty has defended the respondent’s claim, the respondent’s success on these applications is in the normal course of litigation and the usual order for costs against an unsuccessful party on the standard basis should apply. [29] The following orders should be made: 1. Application for leave to adduce further evidence refused. 2. Application for leave to appeal refused. 3. The applicant to pay the respondent’s costs of the applications to be assessed on the standard basis. -- 7 of 7 --