Don’t smoke in bed

In April 2011 Ms Greene rented a house at Eastwood for 12 months at $400 per week.

In May 2011, the house was rendered uninhabitable as a result of a fire.

The fire was caused either by a cigarette lighter dropped on the bed or a candle knocked over by accident when Ms Greene and her wheelchair-bound boyfriend, Mr Brown, were sharing a cigarette.

The landlord sued for damages: Liang v Greene by her tutor the NSW Trustee and Guardian [2013] NSWDC 74.

The matter came before Judge Elkaim for hearing on 27 May 2013.

Most of the plaintiff’s evidence was inadmissible and counsel for the defendant (Ms Greene had in the meantime become the subject of an order by the Mental Health Review Tribunal, so that the NSW Trustee and Guardian was conducting her defence) successfully objected to it.

Triumph!

Modified triumph.  Judge Elkaim proposed to grant the landlord an adjournment, subject to the question of costs, to fix up her evidence.  “Subject to the question of costs” basically means subject to the plaintiff paying the defendant’s costs thrown away by the adjournment.

Counsel for the defendant sought instructions.  She withdrew the objections.

Judge Elkaim said “This approach seemed unusual to me as the inadmissible material all came back into consideration as evidence submitted by consent.”  Well, that all depended on the adjournment, really.  If it had been refused things might have been different.  I suppose it was worth a try.

Under the lease, the tenant was liable for her negligence and also for that of Mr Brown as a person on the property with her permission.  The defendant sought to say that negligence had not been proved.

The judge was of the view that section 5B of the Civil Liability Act led to a finding of negligence.  That’s the section about taking reasonable precautions when there is a risk of harm (you can look at it).  He said:

21There is a clear risk of damage to property if a candle or cigarette lighter is allowed to fall onto a mattress. This is not an insignificant risk. It is well known that smoking in or near a bed is a source of house fires. Further, in my view, a reasonable person would take precautions to avoid the use of open flames in circumstances where contact with the open flame might lead to a fire.

22In relation to Section 5B(2), I am satisfied that there is a high probability that harm would occur if care was not taken. A flame introduced to a mattress or other bed clothing gives rise to a high likelihood of harm. Any fire has a likely seriousness of harm. The burden of taking precautions to avoid the risk of harm in these circumstances is light. One simply does not smoke or have candles near a bed. I do not think that Section 5B(2)(d) is relevant.

That last comment is a reference to a clause which takes into account as a countervailing consideration “the social utility of the activity that creates the risk of harm.”

This conclusion held whether the fire was caused by the lighter or the candle.  (Because as tenant Ms Greene was responsible for her de facto’s conduct, it similarly didn’t matter which of the two had been careless.)  Actually, it’s not clear to me why the question of negligence arose at all, except as a means of imputing causation to the acts of either Ms Greene or Mr Brown.  I didn’t think that a tenant’s liability for damage caused by the tenant or the tenant’s invitees to rented premises depended on those actions being careless.  Obviously there is more to this case than meets the eye, but it hardly seems like a case of “ordinary wear and tear.”

At the time of the fire, the premises were uninsured because the landlord had forgotten to renew her insurance policy.  The premises had still not been remediated or relet because the landlord did not have the money to do so.  The landlord sought damages for the cost of repairs, as well as for loss of rent to date and for a short period to allow the repairs to occur.

The judge awarded $226,000 for the repairs, but nothing for the loss of the rent.

This was for two reasons.

First, the landlord had already made a claim in the CTTT for loss of rent for the remainder of the term of the lease.  That claim had already been settled.  The judge therefore took the approach that the landlord could only now claim for loss of rent after the lease would have come to an end.  This applied to the period from May 2011 (when the fire occurred) to May 2012 (when the lease was due to expire).  That still

Secondly, there had been a failure to mitigate.  The judge referred to the lease, which applied the rules of mitigation to loss and referred to loss which”could have been avoided by reasonable effort by the landlord” as loss which the landlord could not recover.

In my opinion the full clause only uses those words as a kind of plain English example to explain the rule, and the example should be interpreted in that light:

The rules of law relating to mitigation of loss or damage on breach of a contract apply to a breach of this agreement. (For example, if the tenant breaches this agreement the landlord will not be able to claim damages for loss which could have been avoided by reasonable effort by the landlord.)

The judge observed:

“Generally a failure to mitigate a loss only arises after the loss has materialised. I do not see why the same approach should not be taken in anticipation of a loss.”

“I do not see why not” is a pretty loose form of legal reasoning.  If people start being able to get away with contractual damages because the other party could have insured against the loss in question, a lot of the legal landscape is going to look rather different.  And if the landlord had insured against loss of rent consequent on fire damage, then it doesn’t really mean that the landlord would have lost nothing.  The landlord might not be out of pocket, assuming the insurer paid up, but the insurer would be entitled to sue in the landlord’s name to recoup what it had paid out.

Probably the judge’s reasoning in this particular case was probably not quite on all fours with that example.  If the landlord had been insured and the insurer had paid up, the repairs would have been finished sooner and there would have been no loss of rent from the end of the lease – or so he held.

Nevertheless, (and this is more for lawyers than any other lucky readers) the claim for the extra period of vacancy because the landlord didn’t have the money to do the place up seems more like a Hadley v Baxendale limb 1 or 2 case about causation than a question of mitigation.  Even if so, mitigation would apply to questions such as what steps Ms Liang took to seek a loan to undertake the repairs.  The strange thing to me about Ms Liang’s case is that it seems to assume that the judgment will lead to recovery of money which will enable her to undertake the repairs.

So, don’t smoke in bed (or even have candles near your bed) and don’t forget to renew your fire insurance.  It’s all pretty simple really.

You have been warned.

 

An hour every three years

On 2 April 2004, I was a barrister and holder of a local practising certificate.

I am required to undertake continuing legal education.

Clause 176 of the Legal Profession Regulation 2005 imposes a requirement that in each three year period ending 31 March 2007, 2010 and 2013 (und so weiter), the continuing education I undertake must:

“include a component relating to the management of the practice of law that deals predominantly with the following issues:
(a) the principles of equal employment opportunity,
(b) the law relating to discrimination and harassment,
(c) occupational health and safety law,
(d) employment law,
(e) the management of legal practice consistent with paragraphs (a)-(d).”

A “component” means at least one hour’s worth.

Well the last three years are up. It’s kind of a Rumpelstiltskin moment.

I can’t remember whether I undertook “regulation 176″ CLE/CPD (“Continuing Professional Development”) in 2010-11 or 2011-12. I can’t be bothered checking.

Just to be on the safe side, I have watched on my computer a streamed video of a talk given a couple of weeks ago which was designed to meet the criteria. I am able to satisfy the requirement by watching a video in this way so long as I have already otherwise completed 4 hours of “face to face” continuing legal education.

It’s difficult to see what purpose such compliance can really serve.

Children’s Court throws another book at Mr Donaghy

Mr Donaghy is a sole practitioner in Lismore.

I have written before about magisterial complaints made about him by David Heilpern in David Heilpern throws the book, misses, and throws it again.

That involved an attempt by Magistrate Heilpern to punish Mr Donaghy for his conduct of a matter before the Children’s Court by imposing a personal cost order against him.

Magistrate Susan Duncombe, also sitting in the Children’s Court on the North Coast, has also had a go.

This time the book is Hamlet.

Re “Jim, Hanna and Alana” [2012] NSWChC 15 involved an abusive and angry man, his battered de facto partner and their (also battered) children. The children had been taken into care and the proceedings involved whether whether (and on what terms) they should be returned to the care of the mother, who had in the meantime repartnered. Mr Donaghy acted for the man, pseudonymised as “Mr Dark.” Mr Dark did not seek return of the children to himself but opposed their return to their mother.

Her Honour allowed herself the following concluding paragraphs:

60 Before turning to the orders that I must make, I have some final comments about the way in which this matter proceeded. Due to the father’s position in respect of the restoration of the children to the mother, there was extensive cross-examination by Mr Donaghy, the representative of the father, of each witness. I note that in submissions Mr Donaghy said four times that this is not about one partner acting out of spite towards a former partner. He said repeatedly that it was about the father’s genuine concerns for the welfare of his children if they were to be returned to the mother. He said that “(t)he focus is on the Director-General’s assessment – not about one parent tearing down another parent. This is about the father’s genuine concerns – his concerns about his daughter rolling around the bed with an unknown male. This is not about tearing down one side”. Later in the submissions he said “This about the Director-General’s assessment. It is not an exercise in tearing one person down against the other – the father is putting this case – the mother has no runs on the board – in relation to the drug use she is still using cannabis in February this year, 8 months after the children were taken”.

61 As Mr Donaghy made these repeated submissions the words of Shakespeare in Hamlet, Act 111, Scene II came to my mind: “The (lady) doth protest too much, methinks”. The fact that this was put in submissions four times, when no-one in submissions had made such an allegation, is indicative in my view of the true motivations of the father. I formed the view that the continuation of these proceedings, and the continued failure to file evidence despite directions to do so on no less than six occasions, was an attempt to continue the power he had over his former partner, the mother of the children. It is fortunate that despite the long history of being overborne by her former partner that the mother has been able, with counselling and other assistance, to begin to distance herself from this power and control. She has come a very long way from the person who was too afraid to seek medical treatment (despite horrendous injuries), too afraid to speak out about criminal activity and her alleged responsibility for it, too afraid to obtain support and counselling and too afraid to leave her partner despite the most horrible abuse. She is to be congratulated and encouraged to continue on the path of recovery in her own interests and of course in the interests of the children.

62 Rather extraordinarily, Mr Donaghy also submitted that “Seriously – if Dr Mellor’s material supported what was in the letter and was put before me in an affidavit – we would not have had a hearing”. That is an incredible submission when the evidence is properly analysed. Dr Mellor’s letter dated 6 January 2011 is included as annexure D of the affidavit of the caseworker filed in October 2011. As I understand it, there is other information provided to Mr Donaghy and his client in the stage 2 documents. The letter from Dr Mellor outlines, briefly, his treatment of the mother on two occasions when she presented with a broken nose to his surgery and on the second occasion, in November 2010, did not follow up treatment (including no follow up for an x-ray and no domestic violence counselling). It is an incredible submission to make in the light of that letter, to somehow suggest that what is in that letter does not speak for itself. If Mr Donaghy’s advice to his client would have been to not contest these proceedings if he had been satisfied that his client had indeed inflicted such injuries on his partner, why was it necessary for Mr Donaghy to wait for the Department to subpoena such records? If that information was so critical then in my view, Mr Donaghy’s obligations to assist this Court in determining the matter expeditiously and without unnecessary adjournments and in a non-adversarial manner, was clear. Had the father ever put on any evidence to suggest that these medical records were in some way erroneous, I am certain that DFaCS would have followed Mr Donaghy’s suggestion that he file an affidavit and/or be called for cross-examination. As it was, the letter remained unchallenged since it was filed in October 2011. Time after time the father was provided with opportunities to put his case to the Court (and to the other parties). Had he once put evidence before the court in which he denied the allegations of domestic violence, perhaps the records of the doctor would have been subpoenaed. As it is, Dr Mellor’s letter stands as unchallenged and credible evidence in support of the mother’s allegations of serious domestic violence perpetrated by her partner upon her prior to the removal of the children.

63 In my view the conduct of these proceedings, since August 2011 when Mr Donaghy has been representing the father, has been delayed unnecessarily by the delays in obtaining instructions, the delays in putting on evidence and the way in which the witnesses were cross-examined in court.

She really took a set against Mr Donaghy and his client, didn’t she?

The perennial concern is the extent to which this involves the advocate being tarred with the same brush as the advocate’s client.

Of course you had to be there, and even then there might be room for more than one interpretation of events.

For example, “Mr Dark” (who chose that name?) was incarcerated in September 2011 which could well have been an impediment to taking instructions and preparing evidence.

Mr Donaghy also had a few other matters on his plate 1, 2 which by their nature don’t necessarily endear him to me.

The opening paragraph of Magistrate Duncombe’s reasons for judgment reveals that her Honour rejected the tender of any evidence at all from Mr Dark.

It is clear that the matter could have been further delayed if evidence of the father, Mr Dark which he sought to file on the first day of the hearing, had been admitted. My reasons for the refusal to admit that evidence are on record. I will not repeat them here.

Given what she is prepared to say about Mr Dark in paragraph 61 without the benefit of any evidence from him, I think those reasons would have borne repetition.

The sway of the mighty

On Thursday, Lloyd Rayney was acquitted of the charge of murder of his wife, Corryn.

Because it was a trial by judge alone (rather than with a jury), the judge gave reasons for his decision.

The case was circumstantial.  The main circumstances were the break-down of the Rayneys’ marriage and a place-card in Mr Rayney’s name from a dinner,  found not far from where his wife’s body was found buried in a shallow grave in Kings Park.

The stuff about the breakdown of the marriage makes dispiriting reading, and the deceased does not emerge prettily from it.  (There are also charges, yet to be determined, against Lloyd Rayney in relation to covert recordings he is alleged to have made of his wife’s telephone calls.)  The irony is that the more unpleasant the prosecution could show deceased to have been, the more motive Mr Rayney could be said to have murdered her.  It’s the reverse of what happens with self-defence or provocation defences where the act of killing is admitted and the defendant is the one who seeks to paint as black a picture of the deceased’s conduct as possible.

There was no shortage of evidence, particularly in emails from the deceased and accounts of conversations with friends and relatives.  There were statements she was going to take her husband to the cleaners, that she was going to “do him slowly.” There were threats and stated intentions to expose his gambling and his marital infidelity and to embarrass him at court (she was a registrar of the Supreme Court) by such things as getting a court attendant to deny him admission to the court unless he handed over financial information she wanted from him and to cruel his prospects of appointment to silk or any other professional advancement.

How bitter or not the marriage breakdown was should probably be put in perspective: at least one of the relevant family law practitioners expressed the view that the level of acrimony was nothing out of the ordinary.

One little aspect caught my eye.

A well-known picture of the couple in possibly happier times, reproduced above, shows them in a plane chartered by Hancock Prospecting Pty Limited, a company controlled by Gina Rinehart, who is recognisable in the background.  Apparently HPPL had become a client of Mr Rayney at some stage after he went into private practice.

Previously Mr Rayney had been counsel assisting the inquest into the death of Lang Hangcock.

Both of these connexions were referred to by Acting Justice Martin in his judgment.

At [63] (emphasis added and likewise again below):

In April 2007 the accused and the deceased travelled to Bali in a plane chartered by a client. They shared a villa and appeared to be happy.

At [71], dealing with the evidence one of Mr Rayney’s colleagues:

Ms Black spoke of the accused’s ‘calm and controlled’ demeanour and personality in a particularly stressful matter involving an inquest into the death of a prominent Western Australian person.

Why such extraordinary circumspection?

On the instructions of the Public Trustee

You often see this on real estate advertisements.

It is the equivalent of saying “liquidator’s sale” or “deceased estate.”

In real-estate speak it is an invitation to snap up a bargain.  The property (which may or may not be a bit run down) must be sold.

It’s not just a matter of deceased estates.  Commonly, a sale on the instructions of the public trustee will occur when an elderly person’s affairs are committed to its management and the house has to be sold in order to meet the expenses of that person’s new accommodation.

It turns out (though this will hardly come as a surprise to anyone who has dealt with the Public Trustee) that those instructions do not amount to much.  If you are a family member, you might want to do something about that.  But it can be difficult getting the Trustee to pay any attention to you.  Quite possibly the Trustee is under-resourced.  More troublingly, because the Public Trustee is often appointed out of situatons of family conflict or to manage the affairs of less-competent members of society, there seems to be an institutional tendency to discount and disregard such troublesome interventions.  Neutrality may be the goal but minimalism verging on inaction often seems to be the outcome.

The problem is that the Public Trustee’s discretion is so broad that its decisions and actions (or, more commonly, inactions) are practically unreviewable.  I have yet to see a case where the trustee has been properly taken to task.  It is all too hard.  If anyone complains, the trustee can hide behind the skirts of antecedent familial disputes and it would be a brave judicial officer or tribunal which would step in.

AMC and ALQ v NSW Trustee and Guardian [2012] NSWADT 217 is a recent case in point.

The NSW Guardianship Tribunal appointed the public trustee financial manager of AMC’s affairs.  Prior to the appointment, AMC’s house of 60 years had been on the market, though it isn’t clear from the report who was really driving that decision.  After the appointment, the Trustee called off that sale (why?) then called the sale on again.  In between, a new villa was bought for AMC in a different part of town (presumably in an old people’s development) and the sale of AMC’s house was needed to pay out the mortgage taken for that purchase.  The property went on the market on 21 August 2012 with an auction due on 15 September 2012.  Prior to the inspection period, AMC’s daughter and that daughter’s teenage son had still been living in the house.  No effort at all seems to have been taken to make the house presentable.  AMQ, AMC’s son, went along to the inspection and saw that it was in a state of disarray in some rooms, for example unmade beds, unwashed items in the kitchen sink and the like.  He also thought that a better effort could be made to market the property with a view to emphasising its redevelopment potential.

On 7 September 2012, AMQ’s solicitor wrote to the Trustee about this.  Presumably ALQ had made some previous attempt to raise this with the Trustee.  The Trustee did not respond.

AMQ appealed to the ADT against the Trustee’s decision to sell the property as presently proposed and specifically sought an interim stay of that decision – that is, a delay on the auction in order (ALQ said) to enable a better marketing campaign.

As well as complaining about the marketing and presentation, AMQ also complained that the Trustee would not reveal to him its proposed reserve price.  Judge K P Connor accepted that this was confidential and need not be disclosed.  The Trustee had had problems with this in the past.

He was more critical of the conduct of the sale.

At the hearing, Richard Mosvessian of Century 21 Real Estate Randwick, gave evidence by the phone about the marketing campaign.  He:

“confirmed that the son’s assertions regarding the state of some the rooms on the recent open days was accurate. He disputed the son’s contention that it mattered how a property of this kind was presented. He said that the interested market looked past these things, and focussed on the essentials of the property and such matters as the possible cost of renovation. He rejected the practicality of marketing the property as one with subdivisional and redevelopment potential. He referred to the number of parties that had inspected the property, the number of
contracts that had been issued, and the number of building inspections that had been obtained by interested parties.”

The mind boggles about Mr Mosvessian’s views about how a property is presented.  Is that the advice that Mr Mosvessian gives to all his vendors?

Mr Caldwell, the Trustee’s property manager, stated that no special instructions were given to agents engaged to handle clients’ properties as to how they were presented for sale, and the office [of the Public Trustee] did no monitoring in that regard.

Judge Connor was clearly taken aback:

21 The evidence of the poor state of the presentation of the property at open days has been available now for some time. I have noticed in the paperwork that Mr Mendelssohn (solicitor for the applicants) commenced to take action formally on 7 September 2012 (see letter of complaint to the NSW Trustee). It may be that he engaged in representations of a more informal character predating that date.

22 I think it is a matter of concern that the evidence of these issues was raised by the son and Mr Mendelssohn with the NSW Trustee and met, it would seem, with no action. My firm opinion is that the office should proceed on a principle of respect for the protected person’s likely views on the matter, in relation to the way in which their homes are presented to market. I do not understand my view to be that of the office. As I have understood it from Mr Caldwell (Manager, NSW Trustee), the office is relatively inactive in that matter and leaves things entirely to the discretion of the agent.

23 It is clear from the evidence today that Mr Movsessian has made his own call on this issue. He appears not to be of a view that this matter is of importance in terms of the market, and that closes the issue in his mind.

24 I think this is something that would matter to the protected person and their family; and it did seem to matter to the mother and her son in this case. It is a matter of regret that we have had this sort of insouciance in relation to this issue.

25 I accept having said that, that there are houses often that the NSW Trustee is called on to manage and put to market that are in shocking states of disrepair. I am not talking about houses of that kind. I am talking about houses that are within the ordinary framework of home management.

Respect and regret for its lack is one thing (or maybe they are two); overturning a decision of the Trustee is another.   The lettuce leaf got limper.

26Nevertheless it seems to me that the factors of prejudice that exist today are such that it would be inappropriate of me to make a restraining order at this late stage. I accept what Mr Movsessian says that there had been a significant level of buyer interest, evidenced by various contracts going out.

The main prejudice was, as far as I can make out, that AMC had already bought a new place and had a mortgage to pay off plus, presumably, some expenses of advertising.  The other potential prejudice from any sub-par presentation of the house was let through to the keeper with regret.  It’s water under the bridge.

Judge Connor expressly accepted the concerns expressed by the son and his mother, but the decision stood with the mildest of rebukes to the Trustee:

31I think it would have been more respectful had the property been presented in a better way. I think though it is now too late and too close to the auction date to interfere so radically with the decision that has been taken. Some reassurance can at least be obtained from the fact that there is the level of activity and interest in the property that has been indicated.

32For those various reasons I am not prepared to intervene.

33I do not for a moment think it is an entirely happy state of affairs that we have experienced today.

34We hear cases here frequently where there is criticism of the unavailability of estate officers to people with grievances. I realise that your officers, Mr Caldwell, are under enormous pressure and often are faced with difficulty in dealing with representations. We also hear complaints about phones not being answered. The Tribunal had that experience today when it was unable to reach you at the appointed time on the number you had given; it constantly went to message.

35So I just hope you can take some of those concerns back into the office administration and do what you can to improve levels of communication.

I’m sure that was a lot of comfort to ALQ and (to the extent that she was able to understand what was going on) AMC.

Or not.

Family Provision 2

I’ve posted about Family Provision before.  I still think of it as that though now it is simply “provision” under the Succession Act. I’m using acro-pseudonyms in this post to protect the young, more from search-generated publicity than anything else.

The funeral service for MM, who died on 4 November 2009, was held at St Peter’s Watson’s Bay on 11 November 2009.

The memorial notice described him as:

Late of Watsons Bay.
Loving son of
P, loving father of X, cherished brother and brother-in-law of Y and
Y2, Z and Z2, fond uncle of [etc].

Aged 57 years

That’s an early death these days.  MM died in his sleep at his home. of cancer of the throat  There was a big turn-out, and an article in the Wentworth Courier.  MM had been a teacher at Paddington Public School for two decades and by all accounts (not just in the article) had been an inspiring one.  Dozens of former students packed his funeral, the paper reported.

Obviously, dying of cancer of the throat is not the nicest of endings, but there were other respects in which MM’s final years had been less than ideal.

In 2006 he and his wife had separated. In 2007 they were divorced.  She got primary custody of their son, X.  MM saw X occasionally but eventually this stopped after an incident in 2008 in which X, then aged 15, stabbed him in the arm.  X, for his part, alleged that MM had assaulted him.  Criminal charges were brought and interim AVOs taken out.  Those charges and the AVO were ultimately dismissed on 23 April 2009 when X simply did not turn up to court on the appointed day.

During this time, Family Court property proceedings were still afoot.  MM’s health must have already been poor as his brother Z was appointed litigation guardian to conduct his case.  A settlement was reached in March 2009. It does not appear to have involved MM undertaking obligations towards either his former wife or his son.  He had been a primary school teacher; she had for some years been the CEO of Sydney Airport Corporation and before that an executive for the Macquarie Bank airports venture.

On 4 September 2009 MM made a fresh will leaving his estate to his two brothers, Z and Y (who was his twin).  He also wrote a letter on that day explaining why he did not leave anything to X.  He referred to the stabbing incident and its aftermath.  He further wrote:

3. Since that time I have made occasional attempts to restore relations by text messages on his birthday and regarding his grandmother’s serious medical condition. He has rejected my approaches clearly expressing the wish to have nothing more to do wish me.

4. X is an only child and his mother is CEO of Macquarie Airports and extremely wealthy. X has been entirely maintained by his mother since his relationship with me has broken down. I anticipate that his mother will meet all X’s needs in life until he is independent and that he will ultimately inherit a very significant interest from her estate.

5. I do not believe that anything I might have left to X would make any different to his life.

MM’s estate consisted chiefly of his house in Watson’s Bay, and superranuation which could either be paid to the estate as a lump sum or (at X’s election) paid to X at about $250 per week until X turned 25, which would be in 2018 or until he stopped undertaking approved studies if that was later.

MM’s former wife, KM, commenced proceedings in the Supreme Court as X’s tutor for provision (“Family Provision”) for X out of his father’s estate.  After X turned 18, an order was made enabling KM to continue as X’s tutor even though he was now of age.

The matter finally came to trial before Associate Justice Macready.  By that stage the house had been sold and the likelihood was that after legal costs on both sides there would be an estate of about $2.1 million.

At the time of the trial, X lived with his mother.  He owed her $14,000 which she had lent him to buy a car.  Apart from the car, he had golf clubs worth $2,000 and was part-way through a course at Bonny Doon golf course in pursuit of his ambition to become a professional golfer.

X (or perhaps more accurately, his mother, KM) sought an order that he be be provided with the whole of MM’s estate.  The following needs were put forward as being needs for which X should be provided:

(a) the purchase of a home unit in the Darling Point area in the range of prices between $775,000 to $1,975,000;

(b) costs of purchase and fit-out of $100,000;

(c) a bigger car of $21,000-22,000;

(d) golf expenditure and clothing expenditure of $13,500 per annum;

(e) running costs of the car of $10,000-11,000 per annum;

(f) food and groceries of $15,000-16,000 per annum;

(g) golfing fees to bring him up to professional status of $50,000;

(h) counselling costs.

This sort of list is often referred to in the trade as a “wish list” – not that this is particularly a term of art.  It certainly seems extravagant and you have to wonder at the idea of someone of that age undertaking a diploma to become a professional golfer, but the estate was large, X was the only eligible person (not even Y, MM’s twin, was an eligible person) so that the only competing consideration was the respect that the court should pay to to the testator’s wishes.

The reference to counselling costs is in part because quite apart from his parents’ divorce, X’s upbringing had not been an easy one.  He spent his first five years in an orphanage and arrived in Australia with no education and no English.  He had had behavioural and learning difficulties at school and a psychiatrist mentioned “impulsive behaviour and history of aggressive behaviour when provoked.” Unless his sporting ambitions came good, it was unlikely that X would be able to earn an income commensurate with the lifestyle to which he was accustomed.  Apart from sport, X’s employment prospects would at best be in the hospitality industry or some other manual work

The defendants, MM’s brothers, conceded that X was an eligible person under the relevant legislation (now the Succession Act) and that as adequate provision had clearly not been made for him (given that he had some provision should be made for him. They proposed that X receive one third of the estate.  Essentially their line was that X had rejected his father (when MM had texted him about his MM’s mother’s declining health, he had replied “Never text me again. I am trying to get on with my life.” – admittedly he can only have been 15 or 16 at the time) and that X’s mother was more than able to provide for X’s welfare and was likely to leave him a sizeable inheritance.

Associate Justice Macready did not accept either of these arguments.

As to the estrangement, he found that it was for a relatively short period.  “It was a difficult time” but about a week before MM’s death, X had visited him (with a friend – Macready AsJ makes no comment about that though you do have to wonder) for about half an hour and made some kind of rapprochement.  The breach between X and MM was not such that his Honour would reduce or decline provision on that account.

As to the wealth of KM and the prospect of a sizeable inheritance, anything that she might leave on her death was likely to be a good while off yet, and she was not obliged to provide for X while she was alive now that he was an adult.   MM had a responsibility to provide for his son out of his estate and the comments in para 4 of his note were “an attempt…to abdicate from the
responsibilities.”

His Honour ordered that X receive a legacy of $1.1 million.  This was based on $850,000 for a flat in the eastern suburbs (but not necessarily Darling Point or the like), $50,000 for costs and fit-out, $12,000 for a new car (he commented that X could trade in the present one), $63,500 for the remainder of his golfing course and a buffer (actually, by my calculations, about $124,500) to give him some years to establish himself as a golfer or alternately follow some other path. He assumed that X would then take the pension under his father’s superannuation.

There is remarkably little argument as to support this – for example, his Honour did not deduct any amount to take into account the superannuation.  It looks very much as though he has simply decided to give X about half and let him take the super.

After costs, the likely effect of this is that each of the brothers will receive about $500,000 from MM’s estate.  That’s $200,000 less each than they had proposed, though they each also stand to receive about $360,000 from their mother’s estate (an amount which is presumably increased because MM did not survive his mother to take a share).

On reflection, the outcome is not particularly surprising.  Misconduct in the young is less likely these days to count as what was once called “disentitling conduct” and even when it sometimes counted for more (in the days of the bifurcate jurisdiction in the Supreme Court of the two M[a]c Associate Justices –Laughlin and - -ready) Associate Justice Macready was always the AsJ less inclined to take that approach.  For some years there has been a developing theme of attempting to rescue children from the fallout of divorces when the time comes for either testamentary or family [now under the Succession Act] provision.

It was probably impossible for MM to exclude X from sharing in his estate, even if, at the time and as part of the Family Law property settlement (when MM’s death was probably on the fairly near horizon) some express and substantial settlement had been made by KM for X’s benefit.  Still, you can understand why the brothers might have dug their heels in, and not simply because they wanted the money for themselves.   Why shouldn’t KM have put her hand in her pocket now and settled some money on X, rather than run a court case to take it from them out of the estate of MM after all that had happened?  If you’ve had to park a car at the airport recently, you’d probably think she could easily have afforded it.

Working for Railcorp

One of the most dispiriting sets of decisions which are now published on the internet is the decisions of the NSW Transport Appeals Board. The latest is Khalil v RailCorp [2012] NSWTAB 25.

Mr Khalil joined Railcorp as a customer service attendant in 2004. In 2005 he became a train guard and in 2008 he became a train driver. That’s a career in Railcorp.

Mr Khalil had been working as a DJ since 1996. At some stage he obtained an ABN (which got him more favourable terms for purchase of equipment and a mobile phone) under the name of ‘A Mobile DJ 4U.’ He placed some advertisements in this name. He said he used to DJ about once a month.

From 2005, Mr Khalil’s depot manager was Shelley Wall. She got to hear of his DJ work, and she said that at least by about August 2010 she was aware of it, because she mentioned to Mr Khalil that if he wanted to do any outside work or voluntary activity he needed to obtain approval for this from Railcorp. Mr Khalil, she said, “argued the point” about this because he was of the view that it was just a hobby.

In fact, Ms Wall had other concerns about Mr Khalil. She was not happy about his absentee record.

Ms Wall had a meeting with Mr Khalil on 14 October 2010 to discuss his excessive absences which were to be reviewed again in January 2011. At this stage she also returned to the topic of the outside employment and told him he needed to submit an application for approval of that. On 12 November 2010, she sent him a memo about that because he had not yet submitted an application for approval of his DJ-ing activity.

After that, Mr Khalil submitted a form for approval of his DJ activities. He said in that:

“I play music on CDs at parties using a dj sound system and I also MC during the Function”.

Under ‘Fatigue Assessment’ he wrote:

“I only DJ on my rostered days off to ensure I have adequate rest for my next shift”

There was to be a meeting about that in November but it did not occur as Ms Wall’s mother died and she took three and a half weeks off at this time.

The application was supposed to have been dealt with by another manager in Ms Wall’s absence but it came back to her on her return to work as the other manager had not filled in the relevant section as to whether or not he supported the application.

Ms Wall was of the view that she would not support the application. Mr Khalil would need to improve his absentee record before she would support it. If she didn’t support it, it was unlikely to be approved.

On 5 January 2011 Mr Khalil was involved in a safety-related incident when the train he was driving overshot the platform by one carriage.

On 19 January 2011 Ms Wall issued a memo to Mr Khalil advising him of a scheduled meeting on 31 January 2011 to discuss that incident and his attendance record. At the meeting, she told him that she would not be supporting his application to do external DJ work but would revisit the position again in six months if his absentee record improved. After the meeting, she signed off on the form, not supporting the application.

Early in February, the relevant manager did not approve the application, though it is unclear whether Mr Khalil ever received any formal notification of this (he said he did not). By then Mr Khalil had transferred to work as an Intercity driver and his new manager told him in March that he was not permitted to DJ. Mr Khalil said he accepted that and that he did not work as a DJ after that.

But somewhere, for some reason, someone was checking up on Mr Khalil. On 20 May 2011, Kim Manderson, HR Business Partner Sector 2, referred the issue of Mr Khalil carrying out secondary employment when an application for approval of secondary employment had been declined to RailCorp’s Investigations Unit (RUI) for investigation. The investigator found advertisements on the internet and various pictures of him DJ-ing in 2010. An investigator rang up the phone number on one of the advertisements, which was Mr Khalil’s parents’ house (he had since moved out of home, married and had children). Mr Khalil returned the call and left a message, saying “It’s the DJ.” Shelley Wall confirmed that the voice was Mr Khalil’s.

On 18 August 2011 the investigator wrote to Mr Khalil notifying him of three infractions of the code of conduct, namely:

(1) That in 2009 he failed to disclose his work as a DJ in his secondary employment disclosure form, and that he did such work without prior written approval.
(2) That despite being told after submitting his 2010 application that he was not permitted to work as a DJ, he continued to work as a DJ without prior written approval.
(3) That he dishonestly failed to disclose in his June 2011 disclosure form that he was still working as a DJ and has done so without prior written approval.

The third count was based on the (specious, I would have thought) argument that a requirement to disclose involvement even in “inactive companies” extended to a requirement to disclose an ABN registration, even if no business was being conducted.

Mr Khalil submitted a response. He was offered an interview which he did not participate in. The investigator concluded that the allegations were not substantiated. They were forwarded to the Disciplinary Review Panel which on 12 December 2011 recommended that Mr Khalil be dismissed. Mr Khalil’s solicitors then made some submissions and the investigator conducted further investigations and confirmed his earlier recommendation. In January 2012 the DRP confirmed its recommendation and in February 2012, Mr Khalil was dismissed with 4 weeks pay in lieu of notice.

Mr Khalil appealed. There were hearings in June. At them Railcorp argued that Mr Khalil:

failed to carry out his duties honestly and fairly;
failed to maintain high levels of acceptable behaviour;
failed to be aware of breaches of the Code and notify senior employees;
failed to use his authority in an appropriate and unbiased way for the intended work purposes;
failed to use RailCorp resources properly, efficiently and economically;
failed to be honest in meeting attendance requirements; and
did not act in the best interests of RailCorp.

These are all based on requirements set out in the Code of Conduct. At face value that seems to suggest that if you only achieve mediocre levels of acceptable behaviour you are breaking the code and can potentially be dismissed. In fact it all really had to come down to mr Khalil’s honesty or not in not disclosing and undertaking external work. It’s certainly hard to see where the allegations amount to any failure to use Railcorp resources properly, efficiently and economically, or use of authority.

The appeal was successful. The board accepted that the advertisements were old (which would certainly seem to be borne out by the fact that the number on one was Mr Khalil’s parents) and that Mr Khalil had not worked as a DJ since late 2010. It held that none of the disciplinary infractions were made good, or at most that the first one (in relation to 2009) was, but only technically and not in a way amounting to dishonesty, and that dismissal was entirely inappropriate. The board ordered that Mr Khalil be reinstated with continuity and that he be paid the amount of pay, less the amount of the 4 (four) weeks paid in lieu of notice, he would have received as a Train Driver to the date of the orders but for RailCorp’s decision to dismiss him.

There is a lot of grumbling from the government from time to time about the industrial situation in Railcorp and the government bus service, but if this is the way that Railcorp treats its employees, it is absolutely understandable that there might be a bit of work-to-rule in response.

To me there is something quite tyrannous about Ms Wall’s use of the carrot/stick in relation to permitting outside employment of a most occasional nature as a means of bringing about an improvement in Mr Khalil’s attendance record. As the board said (at [122]):

This case did not involve any kind of corrupt or questionable conduct. There was no question of conflict of interest. There was no real question of fatigue. It appeared that there was no good reason to deny the secondary employment (although this is not directly relevant to the case). There was certainly no good reason to dismiss Mr Khalil because he occasionally acted as DJ and thought that this was okay.

Ms Wall has moved on from that job, but at her Linkedin profile she says of her time there:

Drove and maintained staff absences to a level substantially below corporate averages by developing continuous monitoring and management processes leveraging human contact and genuine concern.

I love those words: “drove” and “leveraging.”

Cases like this put the NSW government’s enthusiasm to ensure that not only train guards and station attendants (who do come face to face with the travelling public) but also train drivers (who do not) should front up to work devoid of stubble into not very flattering context.

PS: after going to all this trouble I see there is a punchier report of this case in the Daily Telegraph. It’s not strictly accurate, since it treats the decision as one permitting Mr Khalil to keep his second job as a DJ, though that could be its practical effect if he chooses to apply for approval again. Then again, in my experience you can’t expect organisations like Railcorp to respond to such decisions with good grace. My advice to Mr Khalil: watch your back!

PPS: A good job by Brendan Edghill, organiser with the union, and a reminder of why it’s a good idea to belong to one, especially if you work for Railcorp.

David Heilpern throws the book, misses, and throws it again

This could become part of a series.

David Heilpern is a prominent   magistrate who currently presides on the north coast of NSW.  I have noted one  of his decisions before on this blog.  Early in his career on the bench he handed down a courageous decision concerning offensive language.  Prior to his appointment he had a rather odd walk-on role as a recipient of confidences from Atticus Busby concerning the alleged confessions made to Mr Busby (then a student at Southern Cross University where Mr Heilpern was a lecturer) by Irena Hatfield concerning the death of her husband in 1985 (for which she was subsequently tried and acquitted).

But I digress.

As part of his duties, Mr Heilpern presides in the Children’s Court of NSW.

On 5 July 2011, he presided over a matter concerning 5 children who had been placed in the care, notionally, of the Minister, but actually in the care of foster carers selected by an agency which has had its own colourful rise to prominence, Life Without Barriers.

On that occasion, a Mr Donaghy, solicitor, appeared for the mother.  The hearing on that day was not completed.  As Mr Heilpern subsequently put it, this was not the fault of the legal practitioners.  What he doesn’t quite spell out is that it actually was the fault of the DOCS (or whatever it is now called) officers who put on affidavit evidence which entirely failed to allude to various incidents of mistreatment of the children while they were in the foster care arranged by the agency.  This only came out when Mr Donaghy cross-examined them.

The matter was adjourned, part-heard, to 22 November 2011 in Grafton, where it was set down for two days’ hearing.  No other matters were set down for those days.

The matter at issue appears to have been whether care arrangements could be made which would enable the children to be placed in the care of relatives and presumably the conditions on which the mother would be able to see them.

At some stage, the department shifted its position to one “more favourable to the mother,” although they did involve separating the children.  The department served some care plans on Mr Donaghy on Monday 21 November, the eve of the hearing.  Two other care plans were not served then though the department indicated to Mr Donaghy what they were proposed to be.  It looked as though the matter might now be able to be settled.  A two-day hearing would no longer be necessary.  Of course, this belated concession by the department depended on the mother being able to respond to the new care plans and absorb their contents overnight.  At this stage it seems the mother did not accept that the children should be separated.  In other words, even if “favourable” to the mother, the department’s proposal was still unacceptable to her and was being offered as a kind of ultimatum.  It appears there were discussions on that day between a Mr Wheelahan, for the department, and Mr Donaghy, but the matter was not yet resolved.

On 22 November 2011, Mr Wheelahan appeared for the department (or possibly for the minister), a Ms Steiner appeared for the children.  The mother and Mr Donaghy were not there.

Mr Heilpern learnt (somehow) that Mr Donaghy was in fact in the Federal Magistrates Court that morning at Lismore.  He stood the matter down for an hour and a half and indicated that he wanted Mr Donaghy there.  When the matter resumed, Mr Donaghy was still not there.  He had engaged a Grafton solicitor as his agent who indicated that he was instructed to seek an adjournment until the next day and that discussions between the parties were continued.

This meant a wasted day for Mr Heilpern and his retinue of court attendants and sheriff’s officers.

The next day, Mr Donaghy appeared.  The matter was resolved by consent and orders made.  But Mr Heilpern was not happy with the course of action that Mr Donaghy had adopted.  It is for the court and the court only to vacate a hearing date, and Mr Donaghy should not have taken upon himself to effect this unilaterally, including (according to Mr Heilpern) by telling his client, the mother, not to come down from Brisbane for the hearing.

There was a testy exchange between them.  Mr Heilpern informed Mr Donaghy that he was considering making a costs order against him personally. He adjourned the matter to give Mr Donaghy an opportunity to obtain legal advice, and to prepare any affidavit material and submissions.

Mr Donaghy did not prepare any affidavit or written submissions.  He appeared on the next occasion, 27 February 2012, where, according to Mr Heilpern, he

made some extraordinary submissions … in a most unseemly and rude manner. He stated that he did not make written submissions because “this is simply running up costs that I can’t recover…I’m not getting paid for this and I object to you dragging this matter out in this manner”. He stated that care was a specialist jurisdiction where specialist magistrates learn that DOCS “put forward material that is not correct, that is not complete and that is not in the best interests of the children”. He stated that I should not make a costs order against him because:

“…it would be very unfortunate for the Children’s Court to appear to consider that assaults upon 12 year old Indigenous children, locking children in their bedroom for 12 hours overnight, is somehow acceptable behaviour. And, it would also be unfortunate if the message was to be sent to the Department of Community Services, well you can file documents with the Court that are misleading and if anyone questions you, the persons who question you will be hit with a costs penalty”.

Mr Donaghy did make some more substantial submissions, including some later written communications, where he drew Mr Heilpern’s attention to decisions which held first that the power of the Children’s Court to order costs was limited to exceptional circumstances, and that in any event the Children’s Court had no power at all to award costs against a non-party, including a legal representative.

Mr Donaghy was right about this.  It follows that it was Mr Heilpern who was out of order in threatening a costs order, and he did not make one.

Regardless of the question of any costs order, he seems to have taken the view that Mr Donaghy has committed professional misconduct.

He published a judgment.  The final paragraph is as follows:

I will have the registry forward a copy of this judgment to the President of the Children’s Court. There are three reasons for this. Firstly, it may be appropriate for him to consider representations to amend the legislation to permit an order for costs against a legal practitioner. It is hard to imagine a policy reason why costs against legal practitioners cannot be ordered in care proceedings, but can be in civil proceedings. Secondly, it may be appropriate for him to forward a copy of this judgment to the Legal Aid Commission of New South Wales so that they are at least aware of the waste in this case. Thirdly, it may be appropriate for him to consider a complaint to the Legal Services Commissioner regarding the conduct of the practitioner.

The judgment includes a lengthy extract (selected, of course, by Mr Heilpern) of the exchanges between Mr Heilpern and Mr Donaghy on 23 November, as well as Mr Heilpern’s selection of a few of Mr Donaghy’s other more heatedly indignant and probably less well-judged submissions.  As the Court of Appeal has had occasion to comment on other occasions, such exchanges are rarely edifying.

In my opinion, in his concern for the court’s dignity and control of its own processes, Mr Heilpern has chosen to overlook the fairly obvious point that, had Mr Donaghy and his client turned up on the 22nd of November, just as much court time and resources (as well as Mr Donaghy’s own costs, presumably also met from the legal aid budget) would have been wasted, because at that point his client (the mother) had not agreed to the department’s proposals.  The party which should have sought an adjournment at the earliest opportunity was the department, on the afternoon of 21 November, when discussions between Mr Wheelahan and Mr Donaghy were taking place.  My own experience of litigation against government departments leads me to the view that at least as much ink could have been spilt excoriating the department in question for this as thundering from the bench against Mr Donaghy.

A thousand miles from care – 4

This is the latest in a series of posts I have written concerning the long-running dispute between the McLaughlins and those controlling the (previously) company-title home-unit building Dungowan Manly.

The background to the dispute is set out in my first post on this topic, and the bulk of the litigation in my second.  A subsidiary dispute, in which the McLaughlins were largely unsuccessful, was the subject of my third post.

To cut a long story short, the dispute involved plans to redevelop a home unit block in Manly (Dungowan Manly) which were opposed by the McLaughlins but which were pushed through by the majority, led by one Mr Garratt QC, a Melbourne barrister, who at all times rather forcefully maintained that the redevelopment did not require the McLaughlins’ consent.  This proved to be wrong – subject, that is, to any further appeal – which in the circumstances cannot be ruled out.

I have only alluded to it indirectly in my first post, but there is also something rather odd about how Mr Garratt became the owner of multiple units in the building (or rather, the shares representing the right to occupy those units) without the true beneficial ownership of those shares being disclosed.

Whilst the McLaughlins’ opposition might seem to have been obstinate and pig-headed, the approach adopted by the company towards them was likewise so, conditioned by Mr Garratt’s view which was adopted by the majority.  And the McLaughlins’ obstinacy should be viewed in the light of their offer to sell their shares which, because of Mr Garratt’s view, was not taken up, even though the company had obtained finance which would have enabled it to do so.

In the main dispute, Justice Ward awarded the McLaughlins relatively modest damages of $200,000 for breach of the statutory contract under section 140 of the Corporations Act and about $14,000 for oppression, and ordered that the company pay the McLaughlins’ costs.  The damages were relatively modest because her honour discounted them by “about two thirds” because she said the buy-back of their shares at $950,000 which was mooted at the beginning of the distpute might not have occurred and that the McLaughlins had seemed not to have mitigated their damages by agreeing to sell their shares to the company at a price determined by an independent valuer.  As far as I can work out, this meant that they should have given in to the majority, because the value an independent valuer would have ascribed to the shares would presumably have been the value of the shares following the course of conduct (in breach of their contract with the company) that the company had adopted.  This seems a bit rich.

The company appealed both orders and the McLaughlins cross-appealed the amount of damages for breach of the statutory contract.

The appeal was originally set down for early 2011 but ultimately was not heard until April-May 2012.  This was partly owing to the unsuccessful stratagem adopted by the McLaughlins to attempt to  prevent the company proceeding with the appeal which was the subject of the intervening round of proceedings before Pembroke J in 2011.

Yesterday the Court of Appeal handed down judgment which was unanimously in the McLaughlins’ favour: the appeal was dismissed and the cross-appeal upheld by increasing the damages under the statutory contract from $200,000 to $513,129.45 as at March 2010, plus interest.

It’s not clear to me right now how the McLaughlins will extract this money, given that the building has in the meantime been converted to strata title, but I think there was something in the fine print of that conversion which protected the McLaughlins in relation to that.

Chinese Robin Hood

It’s an old story.

A agrees to sell something to B. B gets possession of it.

B then sells it to C.

A wants it back, usually because B never paid for it – often because a cheque bounced.   (If C has meanwhile sold the car, A might ask C to pay him for it because he has wrongfully dealt with A’s property.)

C says “but I paid for it.”

B is nowhere to be found. Such a character is typically referred to in the case law as a “rogue” – a term of art which strangely I have not found specifically referred to in dictionaries, though it is quite distinct.

A leading case which we all learn in law school is Lewis v Averay. Comically, or nostalgically if you are the right age, the rogue is a man in tights, or passed himself off as one: he managed to get the owner of a car (Lewis) to sell it to him with payment by cheque by convincing him (by means of a forged Pinewood Studios pass) that he was none other than Richard Greene, who had played Robin Hood in the 1950s English TV series. This person then sold the car to Averay. The cheque was forged and worthless and, surprise surprise, “Richard Greene” was nowhere to be found.

The case is taught as one about “mistake” and whether or not that vitiates a contract. That is because the assumption is that if there was a contract, then property in the car passed to the rogue, and when Averay bought the car from the rogue, assuming he didn’t that B was a rogue, it then became his. (That is a simplified version of the assumption, so far as it is embodied in the statutory codification of the law in this regard in the various avatars of the Sale of Goods Acts – eg, in NSW, section 28(2).)  If it could be said that Lewis only meant to sell the car to Richard Greene, then maybe there was no contract at all, the car never became the rogue’s, and it never became Averay’s. That was Lewis’s case. He won at first instance, but lost on appeal.

Averay, a bassoonist,  subsequently emigrated to Canada, where on last report he lived on a houseboat near Vancouver.

There are a lot of cars in the world and very many rogues.  A recent example of such a case can be seen in the judgment of Gibson DCJ in Detective Senior Constable Wilkes v Abou-Yaghi [2012] NSWDC 6.

Mr Abou-Yaghi (A-Y) sold his BMW X5 for $95,000 to a person who said he was a solicitor, a Mr Jeffrey Zhang.  There was in fact no such solicitor, so I shall call him Z. Prior to picking up the car, Z said he would pay A-Y with a bank cheque.  A-Y told Z he would keep the registration papers until this bank cheque was cleared.  A-Y and Z  signed a document as follows:

“I Hatem Abou-Yaghi state that I have sold my car, a BMW X5 2009 model, registration number: BLR96B on Wednesday the 6 th of July 2011.

The selling price was $95,000, the payment for the car was by bank cheque.

The registration papers for the BMWX5 will be sent when the bank cheque is cleared from Jeffrey Zhang NSW licence number: 16893252.

This is an agreement between myself, Hatem Abou-Yaghi, and the new owner, Jeffrey Zhang, that the above arrangement is suitable and legally binding.

Signed: Hatem Abou-yaghi [signature] (previous owner)

Signed: [signature] (new owner)[ie, Z]

A-Y provided the log book of the vehicle and two keys together with a BMW key ring. Z signed the registration transfer details, as did A-Y, but A-Y explained that he would keep these documents until the bank cheque cleared. Before Z left A-Y’s house, he took a photograph of the RTA registration paper on his mobile, stating that he may need this if he was stopped by police.

All of this happened a bit after 6 pm – Z rang A-Y at 5.58 pm to say he was coming round to pick up the car and the BMW was on the M2 expressway heading east from Seven Hills by about 6.52 pm.

At 5.52 pm, somebody had already placed an advertisement on the Chinese overseas-students’ web page, Tigtag, advertising the BMW for sale.

Jiaqi Guo, a Chinese overseas student, saw the ad at about 6.30 pm when he was surfing TigTag’s “Australia” ( 澳 洲 ào zhōu) and “cars” ( 汽 车 qì chē) section.  It said:

” 出 售 宝 马 X5

出 售 银 色 宝 马 X5, 价 格 55000。有 意 请 联 系 QQ:2420560656 “

["Selling BMW X5

Selling Silver BMW X5, price 55000. If interested, please contact QQ: 2420560656"]

Jiaqi responded:

” 我 感 兴 趣 请 加 我 103442955″

[I'm interested. Please add me 103442955]

103442955 was his “QQ” number.  QQ is a popular free instant messaging computer program amongst mainland Chinese.

After that they communicated by QQ, and Jiaqi arranged to meet the person selling the car at the carpark of Kingsford McDonalds (next to UNSW), which he did at about 7.30. The person he met there said he was acting on behalf of the seller and that the car was not there yet. Jiaqi had been told that the sale was a hurried sale because the seller had just graduated and was returning to China. A price of $45,000 was agreed on, and Jiaqi was given the details of the car.

Jiaqi then walked home (he lived nearby) and over the next hour or so did the various checks you can do about a vehicle’s history and whether there are any encumbrances. These were satisfactory.

Jiaqi happened to have $45,000 in cash because he had recently withdrawn $40,000 to buy a car at an auction but had been unsuccessful and he apparently had the other $5,000 available. He returned to McD’s where he was now shown the car. He “fell in love with it.” He did not take it for a test drive or even get into the car before he handed over the $45,000. The registration papers were inside.  [Had he looked at the registration papers he would have seen that the purported transferor of the car was A-Y, who would seem unlikely to be a person returning to China after completing his studies.]

Aha! The registration papers! Yes, the registration papers! Presumably with the aid of the picture taken on the mobile phone, forged registration papers had already been produced.

The next morning, Jiaqi went to the RTA (the then name of the relevant NSW authority) to register the transfer. The forgery passed muster. That day, A-Y also lodged the notice of sale and banked the cheque.

A few days later, A-Y was told that the cheque was a forgery: it had been altered from an original figure of $40. He reported the whole thing to the police, which is how come the police finally seized the vehicle and were the applicants in these proceedings, which were in effect a kind of interpleader. Should the car, seized but no longer needed for evidence, be returned to Jiaqi Guo (from whom the police had seized it and to whom they would in the absence of any order, be obliged to return it), or to A-Y or even (I think a theoretical rather than a seriously advanced possibility) kept by the police on behalf of the crown?

Young Mr Guo lost his money. Judge Gibson found against him on two bases that she said were independent. He was not a purchaser in good faith – there were just too many fishy things about the purchase which he had been prepared to overlook. And further, relying on two 1958 NSW cases, the contract between A-Y and Z was “void.”

I’m not so sure about the second ground as an independent ground. It wasn’t so much that the contract was void as that the condition in the contract for the passing of title had not been fulfilled. Of the 1958 cases, one specifically did not deal with section 28 of the Sale of Goods Act (appellate courts were tougher about that sort of thing then) and both predated the reconsideration of what might constitute “possession” which occurred in the Privy Council case of Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd (1965) 112 CLR 192 in relation to the possession by a buyer who has already sold goods. Judge Gibson indirectly quoted this case via a subsequent High Court case. That case dealt with section 28(1), but a similar meaning of possession is usually thought to apply under section 28(2) to the person who agrees to buy goods and gets possession of them without becoming the owner and then sells them.

But that’s not really what prompted this post. This is an area of the law which is notoriously unsatisfactory. I haven’t the energy to deal with it and nor would I expect Gibson DCJ to be the one to cut or even unravel any Gordian knot.

What I really liked was the facts, the speed with which events unfolded, the abundance of evidence in a digital age (Z’s passage from Seven Hills to Kensington is traceable because he took various toll ways. As you might expect, Z didn’t bother to pay any of the tolls.) and most of all, the appearance of evidence, in Chinese characters, in a judgment of an Australian court. I expect this was itself enabled by the digital source of that evidence and its subsequent provision to the court in digital form.

Of course the biggest fishy thing about the purchase was that Mr Guo paid $45,000 for a car that was presumably worth something approaching $95,000. It was simply too good to be true. That counts for a lot, even if some of the other unusual factors pointed out to the court by the police could be put down to cultural differences.