Dougmax Pty Ltd v Hodges [2003] QDC 14

DISTRICT COURT OF QUEENSLAND CITATION: Dougmax Pty Ltd v Hodges [2003] QDC 014 PARTIES: DOUGMAX PTY LTD Appellant And KAREN ANN MARY HODGES Respondent FILE NO: Appeal No 4024/01 DIVISION: PROCEEDING: Appeal No 4024/01 ORIGINATING COURT: Magistrates Court DELIVERED ON: 12 March 2003 DELIVERED AT: Brisbane HEARING DATE: JUDGE: Boyce DCJ ORDER: Appeal dismissed with costs CATCHWORDS: Monies lent – Whether intention to create legal relations – non-disclosure of documentary evidence – Rule 225 of Uniform Civil Procedure Rules – refusal of leave to tender documents not discovered COUNSEL: Mr A Skoien for the Appellant Mr T Farrelly for the Respondent SOLICITORS: Lees Marshall Warnick for Appellant John G McDonald & Partners for Respondent REASONS FOR JUDGMENT [1] This is an appeal by a decision in a Magistrates Court in a civil action. The Plaintiff/Appellant Dougmax Pty Ltd (whom I shall refer to as “Dougmax”) sought to recover the payment of $24,727.52 as monies lent by Dougmax to the -- 1 of 18 -- 2 Defendant/Respondent (whom I shall refer to as “Miss Hodges”) in the years 1994 and 1995. [2] After a trial the Learned Magistrate ordered that the claim by Dougmax be dismissed and Dougmax pay Miss Hodges’ costs of the action. [3] Dougmax appeals the judgment and asserts: 1. Evidence was wrongly excluded at the trial. 2. The judgment is against the evidence and the weight of the evidence. 3. Judgment should be given for Dougmax or alternatively the matter should be remitted to the Magistrates Court for a further hearing. Factual Background [4] In relation to this matter the following facts are not in dispute: (a) Dougmax is the trustee of The Hodges Family Trust; (b) Mr Gerard Hodges is the brother of Miss Hodges; (c) Mr Clinton Smith is the brother-in-law of both Mr Hodges and Miss Hodges; (d) The Hodges Family Trust was established by the father of Mr Hodges and Miss Hodges; (e) Mrs Maureen Hodges is the mother of Mr Hodges and Miss Hodges; -- 2 of 18 -- 3 (f) Mr Hodges and Mrs Maureen Hodges have both been directors of Dougmax, either jointly or separately; (g) Dougmax paid sums totalling $22,727.52 to Miss Hodges; and (h) Miss Hodges has not paid any money to Dougmax in respect of amounts which are the subject of the Action. [5] The amended Statement of Claim sets out that the monies owing were made up of monies paid on six separate occasions. Three of those occasions were by way of a cheque payable to Miss Hodges, two occasions were by way of a cheque payable to a solicitor, Mr Clinton Smith, the last was to a solicitor, Mr O’Neill. [6] Initially Miss Hodges appeared for herself. The defence was apparently drafted by Miss Hodges herself. It seems to suggest that any money provided to Miss Hodges by Dougmax was by way of a gift or at the very least that Miss Hodges had never been asked to repay the money. [7] The trial extended over two days, the first day being 20 June 2001 and the second day on 25 July 2001. [8] On the first day Dougmax was represented by Counsel but Miss Hodges appeared in person. The usual difficulties occurred with a litigant appearing in person. Any judicial officer faces serious problems in this situation. [9] At the outset the Learned Magistrate advised Miss Hodges as to the appropriate way to conduct proceedings. He advised Miss Hodges that she could not rely upon a -- 3 of 18 -- 4 statutory declaration of Miss Hodges mother without calling the mother to give evidence. [10] On the first day of the hearing the Court heard evidence for Dougmax from Mr Gerard Hodges, a director of Dougmax and brother of Miss Hodges. The Court also heard oral evidence from Mr Clinton Smith, a solicitor, and brother-in-law of both Mr Gerard Hodges and Miss Hodges. [11] The Court also admitted various documents into evidence. [12] Exhibit 2 were books of cheques drawn on the account of Dougmax. [13] Exhibit 3 were various bank statements for the bank account of Dougmax. [14] Exhibit 4 were financial statements for the Hodges’ Family Trust for the relevant financial years. [15] Dougmax closed its case after evidence from Mr Smith and Mr Gerard Hodges. The trial of the action was then adjourned to enable Miss Hodges to arrange her witnesses. [16] When the trial resumed on 25 July 2001, Miss Hodges was represented by Counsel. Prior to the resumption of the trial there had been correspondence between solicitors for Dougmax and solicitors for Miss Hodges. It was urged by the solicitors for Miss Hodges that the witnesses for Dougmax should be re-called so that further matters might be put to them in cross examination. -- 4 of 18 -- 5 [17] The solicitors for Dougmax responded by a letter which advised that the application would be opposed. [18] When the trial resumed Counsel for Miss Hodges made an unsuccessful application for the re-opening of the case for Dougmax. This was opposed by Dougmax and the magistrate ruled in favour of Dougmax. [19] It is easy to be wise with the benefit of hindsight but the objection by Dougmax to the witnesses being re-called had very unfortunate consequences for Dougmax. Miss Hodges, who represented herself on the first day of the trial, did not put to Mr Hodges various matters that ought to have been put to Mr Hodges in compliance with the Rule in Browne v Dunne. [20] One of the complaints by Dougmax is that ultimately Miss Hodges gave evidence on important matters which had not been put to Mr Hodges in cross examination on the first day of the trial. [21] Nevertheless at the end of the evidence for Miss Hodges no application was made by Counsel for Dougmax for leave to re-call Mr Hodges. [22] On the hearing of the appeal, Counsel for Dougmax quite rightly did not rely on any breach of the Rule in Browne v Dunn. [23] That was the proper course to follow given the strenuous opposition by Dougmax at the trial to the witnesses for Dougmax being re-called for further cross examination on day two of the trial. -- 5 of 18 -- 6 [24] When the hearing re-commenced on day two, Counsel for Miss Hodges applied for the exclusion of some of the evidence that had been received on the first day of the trial. [25] Counsel for Miss Hodges: (1) Asked for exclusion of part of Exhibit 2 being a cheque butt and for the exclusion of Exhibits 3 and 4. (2) Submitted that those documents should have been excluded on the basis that they had not been disclosed and in those circumstances leave of the court should have been sought under Rule 225 of the Uniform Civil Procedure Rules 1999. (3) Asked for the exclusion of all of the evidence given by Mr Clinton Smith and Exhibit 7 (a letter from the bookkeeper for Mr Smith and photocopy of a Trust account ledger). (4) Submitted that this evidence ought to have been excluded on the basis that it was subject to legal professional privilege which had not been waived by Miss Hodges. [26] The Learned Magistrate: (1) Noted that Miss Hodges was not legally represented on the first day of the trial. (2) Found that the documents had not been discovered. -- 6 of 18 -- 7 (3) Held that leave of the court should have been obtained before those documents were allowed into evidence. (4) Noted that leave had not been obtained. (5) Concluded on the issue of non-disclosure of documents that the specified documents should not have gone into evidence. [27] Accordingly the Learned Magistrate directed that the documents should be excluded from evidence. [28] As to the evidence of Mr Smith and the issue of legal professional privilege the Learned Magistrate ruled that the evidence given was the subject of legal professional privilege and should not have been led. The Learned Magistrate noted Miss Hodges was not legally represented on day one of the trial. Accordingly the Learned Magistrate excluded from the record the evidence given by Mr Smith and Exhibit 7. [29] Miss Hodges then gave evidence and did not call any other witnesses. [30] The Learned Magistrate concluded that the outcome of the case depended on the credibility of witnesses. In the result there was on the one hand evidence from Mr Hodges for Dougmax and on the other evidence by Miss Hodges herself. [31] The Learned Magistrate expressed a strong preference for the evidence given by Miss Hodges and accordingly dismissed the claim by Dougmax. -- 7 of 18 -- 8 Documentary Evidence excluded because of non-disclosure [32] Prior to the Uniform Civil Procedure Rules in Queensland, the position at common law was that documents that ought to have been discovered prior to trial and were not discovered, were not for that reason inadmissible at the trial. The Court had various powers to protect a party prejudiced by the failure of the opposing party to make proper discovery prior to trial: see Southern Cross Exploration v Fire & All Risks Insurance (1985) 2 NSWLR 340 at 345 and 357. [33] Under Rule 211 of the Uniform Civil Procedure Rules each party to a proceeding has a duty to disclose each document under its possession or control and directly relevant to the proceeding. [34] Pursuant to Rule 214, disclosure should be by delivery of a list of documents. [35] Rule 225 provides that a party cannot tender discoverable documents that were not discovered without leave of the court. [36] The grant of leave pursuant to Rule 225 is discretionary. The Learned Magistrate applied his mind to the exercise of the discretion and gave reasons for his refusal to grant leave. [37] The duty to disclose is fundamental to the conduct of modern litigation. In Commissioner of Australian Federal Police v Propend Finance (1997) 188 CLR 501 @ 581 Kirby J noted: “Increasingly in recent years, including to some extent, in criminal proceedings the Australian legal system has moved away from trial by ambush.” -- 8 of 18 -- 9 [38] The Courts have emphasised in recent years that the efficient conduct of litigation today requires that all parties should “lay their cards on the table”. [39] The Learned Magistrate recognised the “cards up” philosophy found in the Uniform Civil Procedure Rules. [40] In House v R (1936) 55 CLR 499 at 504 a majority of the High Court Judges observed: “The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.” [41] These difficulties are compounded when the discretion is exercised in the course of a decision pertaining to practice and procedure (see Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177). [42] I consider that this is not an appropriate case to interfere with the exercise of the discretion of the Learned Magistrate. [43] In any event I conclude that the documentary evidence excluded was of little relevance to the outcome of the case. Even if one were to include as part of the evidence, the documentary evidence excluded by the learned Magistrate, I could not say that the result would warrant interference with his findings based essentially, as they were, on the credibility of witnesses. -- 9 of 18 -- 10 [44] In so far as the documents excluded were the financial records of Dougmax they were of little evidentiary value and highly unlikely to affect the final decision. [45] The cheque that was excluded was relevant only to the proof of the quantum of the claim. [46] Accordingly I consider that the documentary evidence excluded was of little relevance to the judgment of the Learned Magistrate. The exclusion of the evidence of the Solicitor [47] Mr Smith is a solicitor. He acted for Miss Hodges in relation to matrimonial affairs. [48] The discussion between Miss Hodges and her brother-in-law, Mr Smith, concerned payment for the professional services of Mr Smith. [49] The evidence of Mr Smith is that while Miss Hodges was at the office of her solicitor for the purpose of a consultation she had a discussion with him regarding payment for his fees. [50] Mr Smith gave evidence that “she (Miss Hodges) discussed paying a loan from her brother (Mr Hodges)”. [51] Mr Smith gave other evidence regarding the payment of his fees. [52] The evidence given by Mr Smith was given on the first day of the trial when Miss Hodges was not legally represented. -- 10 of 18 -- 11 [53] When Miss Hodges was legally represented on the second day of the trial, the Learned Magistrate heard argument and excluded the evidence of Mr Smith because it was covered by legal professional privilege. [54] For Dougmax it is submitted: (1) The communications were not of the type covered by legal professional privilege. (2) That Miss Hodges had waived any privilege by suggesting in a letter (Exhibit 6) to Dougmax that Mr Smith could provide a breakdown of part of the debt. (3) There is nothing in the evidence led from Mr Smith which reveals instructions or advice covered by legal professional privilege. It could not reasonably be said that Miss Hodges discussed the method of payment of Mr Smith’s fees for the purpose of obtaining legal advice about the method of payment of Mr Smith’s fees. [55] For Miss Hodges it is submitted: (1) The communication here arose specifically in the context of Miss Hodges seeking legal advice, albeit in relation to her matrimonial proceedings. The communication would not have occurred but for the professional relationship. (2) The facsimile of 25 May 1999 does not amount to a waiver of privilege. The letter merely authorises the contacting of Mr Smith for the purpose of -- 11 of 18 -- 12 providing a break-down of monies paid. It does not authorise Mr Smith to discuss specific communications. [56] I note as to legal professional privilege: (a) Legal professional privilege promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor (see Grant v Downs (1976) 135 CLR 674 at 685 (overruled in part in Esso Australia Resources Limited v FCT (1999) 201 CLR 49). See also Daniels Corporation v ACCC (2002) 192 ALR 561 at 564. Not all communications with legal advisers will be privileged. As was said in Ex Parte Campbell (1870) 5 Ch 703 at 705: “What a solicitor is privileged from disclosing is that which is communicated to him sub sigillo confessionis – that is to say, some fact which the client communicates to the solicitor for the purpose of obtaining the solicitor’s professional advice and assistance.” It was then said that such communications should be privileged “because otherwise a man would be deterred from fully disclosing his case, so as to obtain proper professional aid”. (b) The limits on the communications which are covered by privilege have meant that legal advisers have been required to disclose, amongst other matters, the identity of their client, (see Bursill v -- 12 of 18 -- 13 Tanner (1885) 16 QBD 1), bills of costs (see Geraghty & Ors v Woodforth & Stewart (No. 2) (1957) QWN 42, trust account ledgers (see Packer v Deputy Commissioner of Taxation (1985) 1 Qd R 275). (c) The particular facts of the case might indicate that the particular document or oral communication contains material which is covered by legal professional privilege. Andrews SPJ in Packer v Deputy Commissioner of Taxation (supra, at 276-277) observed: “Disclosure of the nature of a transaction or matter in respect of which legal advise is sought or given is not privileged unless the disclosure reveals the communication itself, which may occur in the case of detailed bills of costs, for example.” The approach adopted in Packer v Deputy Commissioner of Taxation was cited with approval in Lake Cumbeline Pty Ltd & Ors v Effem Foods Pty Ltd (1994) 126 ALR 58 at 68 and Allen Allen & Hemsley v Deputy Commissioner of Taxation (New South Wales) & Ors (1988) 81 ALR 617 at 628, approved on appeal at (1989) 86 ALR 597 at 601. (d) Legal professional privilege is concerned with the ‘general preservation of confidentiality’ and is not limited to the particular legal proceedings for the purpose of which the relevant communication may have been made: Campbell v Baker (1983) 153 CLR 52, per Deane J at 114. (e) The confidence afforded by the privilege was referred to by Fletcher Moulton LJ in Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831 at 840 as “the very highest – so high that the solicitor is absolutely privileged and cannot be made to state what passed between him and -- 13 of 18 -- 14 his client. To that extent the solicitor is made, as it were, a part of his client for the purpose of those communications.” (f) The principle extends to communications between a client and his solicitor made for the purpose of giving or receiving advice: Grant v Downs (1976) 135 CLR 674 at 677; cf Esso Australia Resources Ltd v FCT (supra). Whether the principle attaches depends on whether the communication was brought into existence for the purpose of seeking or giving advice: per Andrews SPJ in Packer v Deputy Commissioner of Taxation [1985] 1 QdR 275 at 278. [57] In all the circumstances I consider that Mr Smith was giving evidence of a communication between a legal practitioner and his client which was the subject of legal professional privilege. Accordingly I consider that the Learned Magistrate was correct in holding that the evidence should be excluded as attracting legal professional privilege and privilege had not been waived by Miss Hodges. [58] It is submitted for Miss Hodges that even in the event that the appeal should succeed in relation to the exclusion of Mr Smith’s evidence: (1) (a) It amounted to at best the observation that Miss Hodges had “discussed obtaining a loan from her brother”. (b) Miss Hodges gave evidence that Smith’s professional costs were being paid by Mr Hodges. As a consequence the only possible value of the evidence to Dougmax’s case is the use of the word ‘loan’ by Miss Hodges. -- 14 of 18 -- 15 (c) This evidence is of little significance and should not displace the findings made as to credit. (2) The fact that Miss Hodges, a non-lawyer, indicated that her brother would ‘loan’ her the money for Smith’s fees does not amount to an admission of an enforceable contract. The evidence is of negligible weight. (3) Dougmax failed at trial since: (a) Strong findings as to credit were made in respect of both Miss Hodges and Mr Hodges; (b) There was no documentary evidence confirming the existence of a contract nor its terms. The Magistrate specifically found that the contents of Dougmax’s financial records was not compelling as to the existence of a contract; (c) In the circumstances Dougmax failed to establish the existence of a contract, and, more particularly, failed to establish the existence of an intention to create legal relations. [59] An appeal court is reluctant to interfere with a finding of fact made by a trial judge based on a finding of credit. In Devries v Australian National Railways Commission (1993) 177 CLR 472 Brennan, Gaudron and McHugh JJ observed at 479: “More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against- even strongly against – that finding of fact. If a trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge has failed to use or has palpably -- 15 of 18 -- 16 misused his advantage, or has acted on evidence which was inconsistent with facts incontrovertibly established by the evidence, or which was glaringly improbable.” [60] It is submitted for Miss Hodges that the excluded evidence is not sufficient to displace the findings made by the Learned Magistrate substantially influenced by his findings as to credit in that: (a) Neither the evidence of Smith nor the excluded documentary evidence is of substantial weight; (b) There is no deed of loan, memorandum, company minute, letter, or other document executed by the parties evidencing the existence of a contract of loan or the terms thereof; (c) The money provided to Miss Hodges came from what was the family trust, set up originally for her benefit (and her siblings); (d) No demand was made for repayment of this money until a family feud erupted concerning the future of the mother of Miss Hodges; (e) In the absence of any probative documentary evidence the issue became one of credit. [61] The submission for Dougmax is that the letter Exhibit 6 is of such weight that it results in the finding of credit by the learned magistrate being “glaringly improbable”. [62] It is submitted for Miss Hodges in regard to that letter (Exhibit 6): -- 16 of 18 -- 17 (a) Dougmax was a family company designed to administer the family trust. Mr Hodges is now the sole director. Miss Hodges regarded Dougmax and her brother to be one and the same; (b) The evidence supports the view that Dougmax is merely a corporate manifestation of Mr Hodges; (c) Miss Hodges provided a detailed explanation of the wording of the letter in her evidence. That explanation was that she conceded a debt of some $700 (unrelated to the present claim) to Mr Hodges but was ‘outraged and incensed’ as to the amount claimed in the letter of demand; (d) She was cross-examined at length on the subject. [63] I conclude that: (a) The evidence of Clinton Smith was properly excluded. (b) The documentary evidence was excluded pursuant to a proper exercise of the magistrate’s discretion. (c) The decision dismissing the claim by Dougmax was correct both on the evidence accepted at trial and, indeed, even if the excluded evidence is included. [64] I conclude that the decision of the Learned Magistrate was correct and ought not to be interfered with. I dismiss the appeal. I order the appellant to pay the -- 17 of 18 -- 18 respondent’s costs of and incidental to the appeal to be assessed on the standard basis. -- 18 of 18 --