Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Romeo v Papalia & Ors [2012] NSWCA 221
• Hearing dates: 20 June 2012
• Decision date: 26 July 2012
• Before: Basten JA at 1; Campbell JA at 2; Sackville AJA at 3.

Decision

The appeal is dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PRACTICE AND PROCEDURE - motion to adduce further evidence on appeal - whether primary judgment given after a "trial or hearing on the merits" within s 75A(8) of the Supreme Court Act 1970 - whether an interlocutory judgment is necessarily given without a trial or hearing on the merits - whether special grounds shown to receive further evidence - whether discretion to receive further evidence under s 75A(7) of the Supreme Court Act 1970 should be exercised in favour of the appellant.; AGENCY - solicitor and client - moneys borrowed by husband and wife - both sued by lenders - wife gives instructions to solicitor on her own behalf and on behalf of her husband - whether primary Judge correctly found that the solicitor was authorised to execute terms of settlement on behalf of the husband.
• Legislation Cited: Evidence Act 1995 (Cth); Civil Procedure Act 2005 (NSW); Supreme Court Act 1970 (NSW); Uniform Civil Procedure Rules 2005 (NSW)
• Cases Cited: Ainsworth v Wilding [1896] 1 Ch 673; Akins v National Australia Bank (1994) 34 NSWLR 155; Australian Securities and Investments Commission v Hellicar [2012] HCA 17; 286 ALR 501; AVS Australian Venue Security Services Pty Ltd v Criminale [2006] NSWCA 368; Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319; Bailey v Marinoff [1971] HCA 49, 125 CLR 529; Carr v Finance Corporation of Australia Ltd (No 1) [1986] HCA 20; 147 CLR 246; Clark v State of New South Wales [2012] NSWCA 139; Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; 75 NSWLR 462; DA Christie Pty Ltd v Baker [1996] 2 VR 582; De Bussche v Alt (1878) 8 Ch D 286; DJL v Central Authority [2000] HCA 17; 201 CLR 226; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89; Gamser v The Nominal Defendant [1977] HCA 7; 136 CLR 145; Hawkins Hill Gold Mining Co v Briscoe (1887) 8 NSWR (Eq) 123; Hoskins v Van Den-Braak (1998) 43 NSWLR 290; Jones v Dunkel [1959] HCA 8; 101 CLR 298; Kinch v Walcott [1929] AC 482; King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; [2006] ANZ Conv R 48; Langdale v Danby [1982] 1 WLR 1123; Martin v Abbott Australasia Pty Ltd [1981] 2 NSWLR 430; McCann v Parsons [1954] HCA 70; 93 CLR 418; Morley v Statewide Tobacco Services Ltd (No 1) [1993] 1 VR 423; Nominal Defendant v Manning [2000] NSWCA 80; 50 NSWLR 139; Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116; Permanent Trustee Co (Canberra) Ltd v Stacks & Holdings (Canberra) Pty Ltd (1976) 15 ACTR 45; Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64; Singh v Ginelle Pty Ltd [2010] NSWCA 310; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691; Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640; Tarn v Scanlan [1928] AC 34; Teoh v Hunters Hill Council (No 5) [2012] NSWCA 75; Wickstead v Browne [1992] NSWCA 272; 30 NSWLR 1; Wood v Balfour [2011] NSWCA 382; 15 BPR 29,773
• Texts Cited: P Watts and F M B Reynolds, Bowstead and Reynolds on Agency (19th ed, 2010)
• Category: Principal judgment
• Parties: Giuseppe Romeo (Appellant); Frank Papalia (First Respondent); Julie Rance (Second Respondent); Ana Maria Romeo (Third Respondent)
• Representation: Counsel: R E Dubler SC (Appellant); M A Ashhurst SC/ S B Docker (First and Second Respondents); Solicitors: Proctor Phair Lawyers (Appellant); Shaw Reynolds Bowen & Gerathy Lawyers (First and Second Respondents)
• File Number(s): 2010/211436

Decision under appeal

• Citation: [2011] NSWSC 696
• Date of Decision: 2011-07-06 00:00:00
• Before: Sackar J
• File Number(s): 2010/211436

Judgment

1 BASTEN JA: I agree with Sackville AJA.

2 CAMPBELL JA: I agree with the orders prepared by Sackville AJA, and with his reasons for so ordering.

3 SACKVILLE AJA: This appeal arises out of an unsuccessful application by the appellant to set aside a consent judgment entered against him and his wife (Mrs Romeo) in the sum of $3,156,491, plus interest and costs. The consent judgment, on its face, resolved a claim brought by the respondents in the Supreme Court against the appellant and Mrs Romeo (together "the Defendants") for moneys due under a deed of loan and associated mortgages. The first respondent (Mr Papalia) is Mrs Romeo's brother.

4 The judgment against the Defendants was entered on 1 October 2010, in consequence of orders made by a Registrar of the Supreme Court on 15 September 2010. The Registrar's orders were based on short minutes of consent orders signed by a solicitor on behalf of both Defendants and by the respondents' representative.

5 The Defendants filed a motion on 26 October 2010 in the Supreme Court proceedings seeking an order setting aside the judgment. However, on the first day of the hearing, the Court was informed that Mrs Romeo did not wish to pursue her application.

6 The appellant relied on two principal contentions before the primary Judge (Sackar J), as follows:

• the solicitor who signed the consent orders (Mr Carbone) had neither actual nor ostensible authority to do so on behalf of the appellant; and
• alternatively, if the applicant were not permitted to defend the matter, he would suffer injustice as he had a defence to the respondents' claims, namely that he knew nothing about loans made by the respondents and had not signed any of the relevant documents.

7 On 6 July 2011, Sackar J dismissed the motion: Papalia v Romeo [2011] NSWSC 696. His Honour found that the appellant had authorised Mr Carbone to sign the short minutes on behalf of the appellant and that, in any event, the appellant had no arguable defence to the substantial claim made by the respondent. Accordingly, his Honour dismissed the appellant's motion.

Motion to Adduce Further Evidence

The Motion

8 The parties are in dispute as to whether the judgment of the primary Judge was final or interlocutory or, more specifically, whether it was given after a "trial or hearing on the merits" for the purposes of s 75A(8) of the Supreme Court Act 1970 ("SC Act"). This issue is significant because the appellant has sought leave in this Court, over the objections of the respondents, to adduce further evidence.

9 I describe later the nature of the further evidence the appellant seeks to adduce (at [56]-[62] below). It is enough to note here that it includes evidence from Mrs Romeo as to her dealings with the appellant and Mr Carbone in relation to the loan and the litigation. Mrs Romeo was not called by the appellant in the proceedings heard by the primary Judge. If this Court decides that the further evidence should be received, it will be necessary for another hearing to take place so that the respondents have an opportunity to test the evidence and to adduce evidence in reply. Whether that should be done in this Court or elsewhere need not at present be decided.

Supreme Court Act

10 Section 75A(7) of the SC Act provides that the Court, on appeal, may receive further evidence. However, s 75A(8) provides as follows:

"Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds."

Section 75A(9) states that s 75A(8) does not apply to matters occurring after the trial.

11 In general, the following three conditions must be satisfied to establish "special grounds" for the admission of further evidence under s 75A(8) of the SC Act:

"(1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;

(2) The evidence must be such that there must be a high degree of probability that there would be a different verdict;

(3) The evidence must be credible."

Akins v National Australia Bank (1994) 34 NSWLR 155, at 160, per Clarke JA (with whom Sheller JA agreed); Wood v Balfour [2011] NSWCA 382; 15 BPR 29,773, at [119]-[121], per Macfarlan JA (with whom Giles and Meagher JJA agreed). However, these principles do not prevent the Court exercising flexibility in reconciling the demands of justice with the public interest in bringing suits to finality: McCann v Parsons [1954] HCA 70; 93 CLR 418, at 430-431, per Dixon CJ, Fullagar, Kitto and Taylor JJ, Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116, at 123-124 [11]-[14], per Heydon JA (with whom Mason P and Young CJ in Eq agreed); Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64, at [6]-[31], per Spigelman CJ; at [134]-[136], per Campbell JA (Handley AJA agreeing with both). For example, the Court can decide to admit further evidence under s 75A(8) even though the evidence is not fresh in the sense required by the first of the three conditions stated in Akins: Nowlan v Marson Transport, at [17]-[19]; Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319, at [102], [107]-[108], per Basten JA (with whom Handley JA agreed).

12 The appellant's position is that s 75A(8) does not apply to his application to adduce further evidence since the judgment of the primary Judge dismissing the application to set aside the consent orders was not given "after a trial or hearing on the merits". Accordingly, so the appellant contends, he does not have to show "special grounds" for the further evidence to be received on the appeal. To address this issue and to deal with other arguments raised by the parties it is necessary to refer to the procedural history of the matter.

Procedural History

Events Leading to Entry of Judgment

13 The respondents commenced proceedings against the Defendants on 30 June 2010. The statement of claim pleaded the history of dealings between the parties and alleged that the Defendants had failed to make payments due under a deed of loan and a mortgage. It is not now in dispute that the statement of claim was served personally on the appellant on 14 July 2010.

14 The proceedings were listed for directions on 28 July 2010 and 15 September 2010. On each occasion Mr Carbone announced an appearance for the Defendants. Ms Farmer, a solicitor, appeared for the respondents at the second of the two directions hearings.

15 At the second hearing, a conversation took place between Mr Carbone and Ms Farmer, as follows:

"Mr Carbone: My clients do not have any defence to the debt claim made by your clients and will consent to judgment.

Ms Farmer: If it is the case that your clients will consent to judgment for $3.1 million I would prefer the short minutes of order to record that the first and second defendants consent to judgment if that is their position."

16 Ms Farmer made some amendments to draft short minutes that had been prepared. The short minutes as amended included the following:

"The Court notes:

(1) Plaintiffs will be filing a notice of discontinuance in respect to its claims for judicial sale and possession.

(2) ... Defendants consent to judgment on the Plaintiffs' claim for $3,156.491 plus interest and costs."

17 Ms Farmer and Mr Carbone then had a further conversation:

"Ms Farmer: Do you want to telephone your clients and get their instructions on these short minutes?

Mr Carbone: Yes I will do that."

18 Mr Carbone left the room. When he returned he said that he would sign the short minutes of order. Mr Carbone and Ms Farmer each signed the short minutes. Representatives of other parties to the litigation also signed the short minutes, but that is not relevant to the present appeal.

19 The matter was called on the Registrar's list and the Registrar was handed the short minutes of order. She made orders accordingly.

20 The judgment was entered on 1 October 2010.

The Motion to Set Aside the Judgment

21 On 26 October 2010, the defendants filed the motion ultimately dismissed by the primary Judge. The orders sought by the defendants were as follows:

"1. That the decision of Registrar Walton of 1 October 2010 be reviewed pursuant to Rule 49, Division 4 of the Uniform Civil Procedure Rules 2005.

2. That judgment entered against the [Defendants] be set aside."

Course of the Hearing

22 The hearing on the motion commenced on 16 February 2011. Counsel for the appellant (Mr Allen) announced at the outset that Mrs Romeo was not proceeding with her application to set aside the judgment.

23 Mr Allen read affidavits by the appellant and by Mr Phair, who was the appellant's solicitor on the motion. The respondents' counsel (Mr Docker) read affidavits by Mr Papalia, the first plaintiff in the Supreme Court proceedings, and by the respondents' solicitor.

24 Mr Allen stated that he wished to call oral evidence from the appellant to supplement the latter's affidavit. In response, the primary Judge observed that he had assumed that the appellant would be cross-examined in any event. Mr Docker indicated that Mr Carbone had not provided an affidavit, but that the respondents nonetheless intended to call him to give oral evidence.

25 The appellant gave short oral evidence in chief and was cross-examined at some length by Mr Docker. In the course of that cross-examination, the appellant's credit was subjected to sustained challenge.

26 Just prior to the luncheon adjournment, the primary Judge asked whether Mrs Romeo had been in court during the appellant's evidence and was told that she had.

27 Mr Docker's cross-examination of the appellant resumed after the adjournment. At the conclusion of the cross-examination, Mr Allen asked for a short adjournment to seek instructions. His request was granted.

28 Upon the resumption, Mr Allen applied on behalf of the appellant for an adjournment. He gave these reasons:

"On 6 September 2010 my instructing solicitor took precautions because he perceived there may or may not be a conflict of interest. There have been events today both in and out of Court - I can say one of them is the cross-examination of Mr Romeo, particularly the documents put to him in which there appears to be his signature witnessed by Mr Murray [a property consultant] and there has been inference that was done at the same time that Mrs Romeo executed the documents. There are also things which happened out of Court which I can't go into.

It seems to me to protect not only Mr Romeo, but myself and Mr Phair, that a course of action has to be taken. That will be done either tomorrow or Friday. That course of action is to send somebody off to see another legal practitioner and obtain, hopefully, full and independent advice."

The primary Judge granted the adjournment.

29 A directions hearing was held before the primary Judge on 25 February 2011 at which Mrs Romeo was represented by a solicitor. Mr Allen advised his Honour that Mrs Romeo had given fully informed consent to him (Mr Allen) continuing to act for the appellant. Mr Allen also stated that he had not yet made a decision whether to call Mrs Romeo, although he was inclined to think that he would. The primary Judge directed that the appellant serve on the respondents' solicitors within ten days a précis of the evidence proposed to be called from Mrs Romeo. It appears that no such précis of evidence was served within the time specified or at any time prior to the resumption of the hearing on 20 June 2011.

30 When the hearing resumed on 20 June 2011, Mr Docker completed his cross-examination of the appellant and Mr Allen briefly re-examined him. After discussion, the appellant was recalled by Mr Allen to give further evidence in chief, mostly directed to his state of health. Mr Docker cross-examined the appellant on this further evidence.

31 The respondents then called Mr Carbone. As Mr Docker had foreshadowed, Mr Carbone gave his evidence in chief orally. He was cross-examined by Mr Allen.

The Submissions

32 At the conclusion of Mr Carbone's evidence, counsel made their final oral submissions, although both also relied on brief written submissions.

33 Mr Allen said that the appellant's case was that Mr Carbone never had the appellant's authority to agree to the terms of settlement and thus the "contract" never came into existence. In his written submissions Mr Allen identified the two critical questions as whether:

• Mr Carbone was the appellant's agent; and
• if so, the express authority given to Mr Carbone carried with it the implied authority to contract on behalf of the appellant.

34 Nothing in the written submissions suggested that the primary Judge should decide the questions of agency or authority according to whether the appellant had made out a prima facie or arguable case. The submissions proceeded on the basis that his Honour had to determine on the evidence whether the appellant had established that a contract had never came into existence because Mr Carbone lacked authority to bind the appellant.

35 Mr Allen's written submissions to the primary Judge identified three "pathways" by which the primary Judge could set aside the judgment if the appellant established his factual claims. He submitted that the orders could be made pursuant to:

• Uniform Civil Procedure Rules ("UCPR"), r 36.15 (which permits the court to set aside a judgment or order if the judgment was given or the order was made, "irregularly, illegally or against good faith");
• UCPR, r 36.16(2)(b) (which permits the court to set aside a judgment given or made in the absence of a party); and
• the inherent jurisdiction of the court.

36 The appellant's written submissions to the primary Judge made no reference to UCPR r 49.19 (which permits the court to review any order or decision or other act of a registrar and "to make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit"). This had been the only rule referred to in the appellant's motion seeking an order setting aside the judgment.

37 In the course of oral argument, his Honour asked Mr Allen to explain the appellant's defence "on the merits" (by which his Honour clearly meant the merits of the respondents' claim against the appellant). The following exchange occurred:

"ALLEN: Firstly that he didn't borrow the money to the extent that the mortgage documentation shows otherwise. He didn't sign it except for one particular instance ....

HIS HONOUR: And if I'm against you on that?

ALLEN: That's it.

HIS HONOUR: Game, set and match isn't it?

ALLEN : Yes."

38 The primary Judge also raised with Mr Allen concerns about the nature of the appellant's evidence and the fact that Mrs Romeo had not been called as a witness:

"HIS HONOUR: ... I have watched Mr Romeo on two separate occasions and there is some very unsatisfactory things about his evidence. Very unsatisfactory.

ALLEN: The only answer is that for your Honour to totally...

HIS HONOUR: And you haven't called Mrs Romeo and you could easily have called her to give us or me, most particularly, a great deal of contextual information about all sorts of things.

ALLEN: I made the decision not to call.

HIS HONOUR: I understand you did and I'm not criticising you but I would have thought you made the decision with your client's best interests at heart.

ALLEN: And also there is the aspect which had some doubt attaching to it in relation to certain privileges that may not be claimed.

HIS HONOUR: I'm not sure about that. Mr Carson [the solicitor for Mrs Romeo] turned up on the last occasion [the directions hearing] when there was a possible conflict and he's not here today so I'm assuming that such conflict as might have been thought to exist was resolved.

ALLEN: I didn't call her. I can live with that.

HIS HONOUR: You don't have to live with it. It has significant consequences in a case like this.

ALLEN: Yes. The answer to that is this, that Mr Romeo has given evidence that he didn't sign those documents. For your Honour to say that he doesn't have a case on the merits your Honour really has to find that that evidence was not bona fide and if your Honour is going to make the conclusion as a matter of fact that the defence that he has put forward is not bona fide I lose and my client loses." (Emphasis added.)

39 In a later exchange, the primary Judge observed that it was highly unlikely that the Defendants, who had worked side by side for many years, would not have discussed the litigation and the statement of claim that had been served on the appellant. This led to a further exchange, as follows:

"HIS HONOUR: But then not to have discussion about it, not one discussion. Unless [you] were to call Mrs Romeo why wouldn't I proceed on the basis that husband and wife would discuss everything with each other. Why wouldn't I? There's no suggestion that this was some sort of regime where husband and wife conducted sovereign states, one in one part of the house and one in another and they never met over coffee or a meal or on the weekends.

ALLEN: It's always difficult to guess what goes on behind closed-

HIS HONOUR: But you could have called that evidence. If there was anything untoward or ... anything unusual about the way in which they conducted their family affairs and business affairs, you could have called. That's why Jones v Dunkell [sic] in a case like this might bite pretty hard.

ALLEN: Bites hard? But there's still insufficient evidence even if your Honour is tenuated [sic] by doubt about the veracity of Mr Romeo's evidence to conclude that he does have an [arguable] case."

40 Mr Docker submitted to the primary Judge that it was not open to the appellant to rely on UCPR, rr 36.15 or 36.16. He said that UCPR 36.15 could not assist the appellant because there was no "irregularity", given that Mr Carbone had at least ostensible authority to bind the appellant. Nor was r 36.16 available because the appellant's motion had been filed more than 14 days after the judgment was entered and thus was filed out of time: r 36.16(3A), (3B), (3C).

41 The primary Judge asked Mr Allen whether Mr Docker was correct in suggesting that the "real basis" for the application was the inherent jurisdiction. Mr Allen replied that Mr Docker was correct.

Primary Judgment

42 The primary Judge noted (at [22], [27]) that the appellant's written submissions relied on UCPR, rr 36.15 and 36.16 to set aside the judgment, but that Mr Allen had effectively conceded that the appellant could "really only invoke the inherent jurisdiction".

43 His Honour recorded (at [25]) that the respondents had submitted, on the authority of Bailey v Marinoff [1971] HCA 49, 125 CLR 529, and Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; 75 NSWLR 462, that the consent judgment was final and could not be set aside in the absence of an allegation of fraud. The respondents had also submitted that although the Supreme Court, as a superior court of record, has inherent jurisdiction to set aside a consent order, it would do so only if the judgment was obtained by fraud or by an agreement which was void or voidable (at [26]). His Honour appears to have proceeded on the basis of the second of these submissions, as the judgment makes no further reference to the submission that the consent judgment was final and therefore could not be set aside.

44 The primary Judge identified (at [30]) the first set of issues as follows:

"The [appellant] submits the first question ... is whether Mr Carbone was [the appellant's] agent. If so, it is submitted that the second question is whether the express authority given to Mr Carbone carried with it the implied authority to contract on behalf of [the appellant]. It is said there was no holding out by [the appellant] to the [respondent] that Mr Carbone was his agent. [The appellant] denied ever giving Mr Carbone any instructions in relation to the matter at all."

45 The primary Judge found (at [47]) that the appellant was well aware over the years that Mr Carbone had been retained by the appellant's wife (Mrs Romeo) to act on behalf of both of them in all kinds of matters, litigious and otherwise. His Honour also found (at [47]) that the appellant (contrary to his denials) had been served with the statement of claim in the proceedings and knew that Mr Carbone would be retained to act in the matter.

46 The primary Judge expressed his conclusions as follows:

"48. The Romeos have been married for approximately 49 years and they have worked side by side all that time in their business ventures. I consider it inconceivable that this litigation was not discussed between them before and after the service of the statement of claim. They must also have discussed what they could and should do in the circumstances. When Mrs Romeo spoke to Mr Carbone, she spoke on behalf of both of them and their respective family interests and [the appellant] knew and assumed that that would happen. In my opinion he was content for his wife to organise various matters litigious and non litigious and in particular to deal as she did on all other occasions with this piece of litigation as well. I do not accept his protestations to the contrary and especially in circumstances where Mrs Romeo has not been called.

49. In a letter dated 5 May 2010 to the [respondents'] solicitors a plea for time is in effect made. It is an important letter because it is tantamount to an admission that there are monies owing and that there is no defence to the debt. [The appellant] in his affidavit ... denies having seen the letter before these proceedings and denies it is his signature on that letter. He was asked questions about the letter before me. He reiterated that it was not his signature but it was that of his wife's [sic]. He did not he said authorise her to affix his signature. He did however confirm much of the substance of the letter as true .... I cannot accept his evidence that he did not sign that letter. His wife was present in court when he gave his evidence on this letter and indeed on various documents and yet she was not called. It if were true that some other person, she being the obvious candidate, had signed her husband's signature it would have been an easy thing for her to have been called to clarify the matter and to tell the court if it was not him then who it was. It is likely that her evidence would not have assisted Mr Romeo in that regard. I consider it highly probable it is his signature in all the circumstances. That he probably signed the letter at his wife's invitation and forgot for example is not to the point. It is, given the contents of the letter, entirely probable that he was content to go along with his wife in consenting to judgment at the relevant time.

50. In my opinion either [the appellant] expressly agreed to his wife telling Mr Carbone to agree to the entry of judgment against he and his wife or alternatively left it entirely in her hands to make the decision as to what should be done in the circumstances. Mrs Romeo felt a great sense of shame and sadness as a result of letting her brother down by not being able to repay the loans ...

51. In my opinion Mr Carbone had full authority, actual or ostensible to enter the agreement he did and there is no basis to set aside the judgment for lack of authority." (Emphasis added.)

47 The primary Judge said (at [52]) that the appellant had "alternatively contended" that an injustice would occur if he were not allowed to defend the substantive proceedings. The appellant's defence was that he knew nothing about the loans and had not signed any of the relevant documents.

48 His Honour did not explain why this issue arose, given that he had rejected the appellant's contention that the consent judgment should be set aside on the ground that the underlying agreement did not bind him. It may be that his Honour was considering an alternative possibility, namely that if the solicitor did not have authority to consent to judgment against the appellant, the judgment might have been given in his absence. In that case, it might have been relevant to decide whether the appellant had an arguable defence to the respondents' claim under the deed of loan and the mortgages.

49 His Honour stated (at [70]) that he was unable to accept the appellant's evidence that he had not signed the loan documentation. The appellant's evidence on critical issues was "entirely untruthful and glaringly improbable". Moreover, neither Mrs Romeo nor Mr Murray (a mortgage broker who witnessed a number of the appellant's signatures on mortgage documentation) had been called in the appellant's case.

50 The primary Judge concluded as follows:

"84. In summary, [the appellant] wishes to have the judgment set aside on the basis that he has an arguable defence to the alleged indebtedness on the basis that some mysterious person apparently not his wife, not Mr Murray and no one he could otherwise identify has it seems forged his signature on numerous mortgage documents and for example the deed of loan. I have to say that on the state of the evidence before me I do not think that [the appellant] has an arguable case that the various documents do not bear his signatures. The only injustice worked in my view if the judgment were set aside would be to the [respondents]. For those reasons I reject and dismiss the motion to set aside the judgment as I am firmly of the view that no injustice would be caused to [the appellant] in not doing so."

The Appeal

51 It appears that the appellant filed a summons for leave to appeal from the decision of the primary Judge to dismiss the appellant's motion to set aside the consent judgment. That summons was dismissed by consent on 21 September 2011. However, the consent orders made on that day included the following terms:

"4. The [appellant] is granted an extension of time to file and serve a notice of appeal by 5 October 2011;

5. The Court notes the respondent[s] will not challenge the competency of such notice of appeal on the ground that leave to appeal is required under s 101(2)(e) of the Supreme Court Act 1970;

6. These orders are without prejudice to the parties' contention as to whether the orders of Sackar J of July 2011 were after a trial or hearing within the meaning of s 75A(8) of the Supreme Court Act 1970."

Thus the appellant preserved his entitlement to contend that he should be permitted to adduce further evidence on the appeal pursuant to s 75A(7) of the SC Act, rather than s 75A(8).

Appellant's Case

Jurisdictional Bases

52 On the appeal, the appellant put his case somewhat differently from the way it was presented to the primary Judge. Mr Dubler SC, who appeared for the appellant, submitted that, if the appellant could establish that the solicitor, Mr Carbone, had agreed to settle the claim against the appellant without instructions, both the purported agreement and the consent judgment were nullities, at least as against the appellant. On this basis, by analogy with the reasoning in Hoskins v Van Den-Braak (1998) 43 NSWLR 290, the appellant was entitled ex debito justitiae to have the consent judgment set aside.

53 Mr Dubler relied on three alternative jurisdictional bases for setting aside the consent orders:

• the inherent jurisdiction of the Court;
• the power to review an order made of a registrar, conferred by UCPR, r 49.19 (see at [36] above); and
• the power to set aside a judgment or order which was entered or made irregularly, conferred by UCPR, r 36.15(1) (see [35] above).

Mr Dubler did not rely on r 36.16(2)(b) (see at [35] above).

54 Of the three alternatives advanced by Mr Dubler, the appellant had ultimately relied only on the first (the inherent jurisdiction) before the primary Judge. However, Mr Ashhurst SC, who appeared with Mr Docker for the respondents, did not object to the appellant relying on rr 49.19 and 36.15(1) on the appeal, although he submitted that the appellant's reliance on those provisions was misplaced.

Authority

55 Mr Dubler submitted that the primary Judge had erred in finding that Mr Carbone had actual or ostensible authority to enter into an agreement on behalf of the appellant consenting to judgment being entered against the appellant. I shall deal later with Mr Dubler's submissions on that aspect of the case (at [126]-[128] below).

Further Evidence

56 I think it fair to say that Mr Dubler recognised the difficulties confronting the appellant's challenge to the primary Judge's factual findings on the question of authority, bearing in mind that his Honour found the appellant to be an unsatisfactory witness. No doubt with that in mind, the notice of appeal sought an order that this Court receive evidence from Mrs Romeo. A subsequent notice of motion expanded that application to include evidence from Mr Phair, the appellant's solicitor.

57 The evidence sought to be adduced from Mrs Romeo, set out in an affidavit sworn by her, is to the following effect:

• she did not tell the appellant about the loan from the respondents because she was embarrassed and he had been sick;
• the appellant did not receive any of the moneys lent, which were paid as she directed;
• she had not shown to the appellant letters of demand received from the respondents;
• the appellant gave her the statement of claim, but said nothing about it;
• she instructed Mr Carbone to act in relation to the statement of claim and the proceedings instituted by the respondents without discussing the pleadings, the litigation or the proposed orders with the appellant;
• she told Mr Carbone she had no defence, but decided not to tell him that the appellant may have had a defence because she did not want her husband to know of the litigation; and
• she declined to give evidence about the signing of the loan and mortgage documents for fear of self-incrimination, but would be prepared to do so if she received a certificate under s 128 of the Evidence Act 1995 (which would ensure that evidence given by Mrs Romeo under objection on grounds of self-incrimination could not be used against her subsequently).

58 The evidence sought to be adduced from Mr Phair is to the following effect:

• he ceased to act for Mrs Romeo on 16 February 2011, when the proceedings before the primary Judge were adjourned;
• prior to the resumption of the hearing on 20 June 2011, he spoke to Mrs Romeo who indicated that she would give evidence on behalf of her husband;
• at about 9.15 am on 20 June 2011, Mrs Romeo told him she was worried about the police if she gave evidence and that she had decided to go home;
• he spoke to counsel who advised that Mrs Romeo could not be stopped and that, in any event, her evidence was not necessary at that stage of proceedings, but only at trial;
• he accepted counsel's advice;
• had he been aware that Mrs Romeo's absence would lead to a Jones v Dunkel inference adverse to the appellant, he would have served a subpoena on Mrs Romeo and instructed counsel, if necessary, to apply for a certificate under s 128 of the Evidence Act 1995.

Mr Phair's proposed evidence does not address why nothing seems to have been done to comply with the primary Judge's direction on 25 February 2010 that a précis of Mrs Romeo's proposed evidence be served within 10 days.

59 Mr Phair swore a second affidavit to which he annexed a précis of evidence Mrs Romeo would give to this Court if permitted to do so. The précis was to the effect that only Mrs Romeo had signed the deed of loan, mortgage documents and the letter of 5 May 2010 (see at [118] below).

60 Mr Dubler did not expressly concede that the appellant was unable to establish the "special grounds" required under s 75A(8) of the SC Act for receiving further evidence on appeal "from a judgment after a trial or hearing on the merits". However, his primary submission was that the application fell to be considered under s 75A(7) of the SC Act, because the judgment of the primary Judge was not given after a trial or hearing on the merits. Thus the appellant did not need to demonstrate special grounds to be permitted to adduce further evidence on the appeal. Mr Dubler's submissions assumed that s 75A of the SC Act applies to the current appeal (see at [51] above). Mr Ashhurst, on behalf of the respondents, did not challenge that assumption.

61 Mr Dubler did not dispute that the factual findings made by the primary Judge, insofar as they related to Mr Carbone's authority to settle the proceedings, were based on evidence given and tested as it would be at a trial. Nonetheless, Mr Dubler contended that the appeal to this Court was from an interlocutory decision, since it was open to the appellant to make another application to set aside the judgment on the basis of further evidence. It followed, so he submitted, that the appeal was not "from a judgment after a trial or a hearing on the merits" for the purposes of s 75A(8) of the SC Act.

62 Mr Dubler accepted that the evidence sought to be adduced on the appeal was available at the trial and could have been given at that time had different forensic decisions been made (for example, to issue a subpoena to Mrs Romeo and, if necessary, to invoke s 128 of the Evidence Act to protect her against possible self-incrimination). He submitted, however, that Mrs Romeo's evidence was so important that it would be unjust to the appellant to deny him the opportunity of relying on it.

Application to Adduce Further Evidence

Hearing on the Merits

63 Mr Dubler relied on Wickstead v Browne [1992] NSWCA 272; 30 NSWLR 1, and Nominal Defendant v Manning [2000] NSWCA 80; 50 NSWLR 139, for the proposition that an appeal from an interlocutory judgment is not an appeal from a trial or hearing on the merits.

64 In Wickstead v Browne, the plaintiffs applied for leave to appeal from an order summarily dismissing the proceedings on the ground that they had failed to show a triable issue. Handley and Cripps JJA held that the Court should accede to the plaintiffs' tender of further evidence on the appeal. Their Honours said (at 11) that the appeal did not follow a trial on the merits, but was an appeal from an interlocutory order. Accordingly, the application to adduce further evidence fell within s 75A(7) of the SC Act and there was no need for the applicant to show special grounds for the evidence to be admitted.

65 The reasoning in Wickstead v Browne was economical. Their Honours did not say that their decision rested on the proposition that an interlocutory judgment, regardless of the nature of the hearing that preceded it, can never be a judgment "after a trial or hearing on the merits" for the purposes of s 75A(8) of the SC Act. Nor did their Honours address the question of whether a judgment, although interlocutory for the purposes of determining whether leave to appeal is necessary, nonetheless should be regarded as a judgment after a trial or a hearing on the merits, for the purposes of s 75A(8) of the SC Act.

66 Wickstead v Browne was considered in Nominal Defendant v Manning. In that case, a plaintiff unsuccessfully sought leave to commence an action for damages for personal injuries against the Nominal Defendant out of time. He failed in his application because he did not adduce evidence giving a sufficient explanation for his long delay in seeking leave. The plaintiff then filed a second application for leave to commence the proceedings out of time and sought to adduce further evidence explaining the delay. The trial Judge held that the second application was not an abuse of process and that it could be considered on its merits. The Judge admitted the additional evidence notwithstanding that it could have been adduced on the first application had the plaintiff shown due diligence. The Nominal Defendant sought leave to appeal from the trial judge's decision to grant the plaintiff an extension of time to institute the proceedings.

67 The Nominal Defendant advanced what Heydon JA described (at 147 [44]) as a "very wide" proposition, namely that:

"the very important public interest in the courts ensuring that the parties conduct litigation efficiently and expeditiously meant that in interlocutory proceedings of all kinds, including proceedings to obtain extensions of time, only one application should be permitted unless there has been a change of circumstances, or unless the second application rests on evidence which could not, with reasonable diligence, have been obtained for use in the first application. The bar contended for was said not to operate as a bar to jurisdiction, but to be a principle relevant to the proper exercise of judicial discretion."

68 A majority of the Court of Appeal held that the order dismissing the plaintiff's first application for an extension of time was interlocutory and neither barred a second application nor had the consequence that a second application was an abuse of process: at 154-156 [67], [71], [72] per Heydon JA; at 163 [106], 167 [122], [123], per Foster AJA. The majority recognised that this holding was potentially at odds with the decision of the Victorian Court of Appeal in DA Christie Pty Ltd v Baker [1996] 2 VR 582. There the majority (Brooking and Hayne JJA) held that a second application under s 23A of the Limitation of Actions Act 1958 (Vic), seeking an order extending time for the commencement of an action for damages for personal injuries, was an abuse of process, at least where it relied on additional material that was not fresh and where no fraud was alleged.

69 Mason P, who dissented in Nominal Defendant v Manning, preferred the majority view in Christie. While his Honour considered (at [4]) that the first order made by the trial judge did not bar a second application, he accepted (at [10]) the long line of authority which:

"attests to the practice of courts hearing interlocutory applications on matters of substance declining to allow a second contested run at the target where the only change of circumstances is an applicant coming forward with new evidence."

70 Heydon JA, by contrast, preferred the approach taken by Charles JA, who had dissented in Christie. Charles JA had pointed out that it would be anomalous if new evidence could be received on an appeal from an interlocutory decision with leave, but not on a second interlocutory application made to the trial judge. Heydon JA agreed (at 155 [70]) that the relatively liberal approach adopted by Charles JA to the reception of evidence on a second interlocutory application avoided anomalies that would otherwise arise.

71 Heydon JA noted (at 147 [45]) that there are considerable differences between various categories of orders and the circumstances in which they are made. He observed that it was unlikely that a set of rigid criteria, such as those propounded by the Nominal Defendant in argument, could justly settle all issues. However, his Honour was careful not to state principles broader than necessary for the resolution of the case before him (at 147 [45]). He said (at 149 [55]) that one interpretation of the expression "trial" in s 75A(8) is a final hearing on the merits. A corresponding interpretation of the expression "hearing on the merits" in s 75A(8) would be a hearing leading to the decision of a separate question under what is now UCPR 28.2. But he expressly refrained (at 149 [55]) from deciding whether this was the correct construction of s 75A(8).

72 Heydon JA considered whether Wickstead v Browne could stand with other decisions, notably those of Hunt J in Martin v Abbott Australasia Pty Ltd [1981] 2 NSWLR 430, and of the House of Lords in Langdale v Danby [1982] 1 WLR 1123. He expressed the view (at 151 [60], 154 [65]) that, although the reasoning in Martin was inconsistent with the decision in Wickstead v Browne, the latter decision should stand. Heydon JA concluded (at 155 [70]-[71]) as follows:

"the principles propounded by Charles JA [in Christie] should be applied in order to avoid an anomalous difference arising between the relative liberality with which evidence is admitted on interlocutory appeals and the extremely restrictive approach to permitting second interlocutory hearings based on additional (but not fresh) evidence urged by the Nominal Defendant ...

For present purposes it is not necessary to go further than to reject the test proposed by the Nominal Defendant, and to decline to apply the view of the majority in D A Christie Pty Ltd v Baker that the applicant making a second interlocutory application is guilty of an abuse of process unless the other party is guilty of fraud or the application rests on evidence which could not reasonably have been relied on before."

73 The issue for decision in Nominal Defendant v Manning was not the correct construction of s 75A(8) of the SC Act, but whether a second interlocutory application made by the plaintiff to the trial judge to extend time for the commencement of proceedings was an abuse of process. I do not read Heydon JA's judgment as stating that an interlocutory decision can never be a judgment "after a trial or hearing on the merits". As I have noted, his Honour refrained (at 149 [55]) from expressing a concluded opinion as to the construction of s 75A(8). In addition, Heydon JA observed (at 154 [66]) that even if Langdale v Danby placed the decision in Wickstead v Browne in question, the reasoning of the House of Lords:

"still contemplates that no interlocutory hearing is a hearing on the merits unless it concludes in a final disposition of the proceedings. It says nothing about proceedings otherwise than for summary judgment, like the first interlocutory decision in this case, preventing the plaintiff from even instituting proceedings. ... Langdale v Danby ... leaves open a substantial area in which there exist interlocutory appeals which are otherwise than 'from a judgment after a trial or hearing on the merits'".

This passage implies that there may be judgments which, although interlocutory, are nonetheless given "after a trial or hearing on the merits".

74 In Nominal Defendant v Manning, Foster AJA agreed (at 167 [122]) with Charles JA in Christie that an unsuccessful applicant for an interlocutory order was not prevented from repeating the application on the ground of abuse of process, simply because the applicant sought to rely on additional facts which did not amount to "fresh evidence". Foster AJA did not express an opinion as to the construction of s 75A(8).

75 It follows from what I have said that neither Heydon JA nor Foster AJA stated in Nominal Defendant v Manning, whether as part of the ratio decidendi or otherwise, that an application to adduce further evidence in an appeal (or application for leave to appeal) from an interlocutory judgment must always be dealt with under s 75A(7), rather than s 75A(8) of the SC Act.

76 This understanding of Nominal Defendant v Manning is supported by Clark v State of New South Wales [2012] NSWCA 139. In that case, Johnson J dismissed proceedings claiming damages for false imprisonment pursuant to UCPR, r 13.4, on the ground that the proceedings constituted an abuse of the process of the Court. His Honour took this course by reason of the plaintiff's destruction of important evidence. The plaintiff applied for leave to appeal from Johnson J's decision and sought to adduce further evidence in support of his application.

77 Hoeben JA (with whom Macfarlan JA and Tobias AJA agreed) held that the applicant had to show "special grounds" if the evidence was to be received. His Honour (said at [59]):

"As the review of the cases in Nominal Defendant v Manning ... makes clear these proceedings, although interlocutory, would probably be regarded as involving orders of a substantive nature so as to attract the operation of s 75A(8) SCA. In those circumstances, the combination of the statutory requirement for 'special grounds' together with the common law meant that additional evidence as to matters which occurred before the hearing before Johnson J, should only be received by the Court if the evidence were credible, highly probative and not previously obtainable by reasonable diligence." (Emphasis added.)

See also King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; [2006] ANZ Conv R 48, at [18], per Campbell J.

78 In my opinion, the expression "a judgment after a trial or hearing on the merits" is not necessarily co-extensive with the concept of a final judgment. Section 75A(8) of the Supreme Court Act does not use the expressions "final judgment" or "interlocutory judgment". It instead speaks of an appeal from a judgment after a trial or hearing on the merits. The use of this language demonstrates an intention that the limitation on adducing further evidence is to apply whenever the appeal (or an application for leave to appeal) is from a judgment given after a hearing at which the legal and factual merits of the particular claim have been determined by the court. The question s 75A(8) poses is not whether or not the appeal is from an interlocutory judgment, but whether it is from a judgment given after a trial or hearing on the merits.

The Nature of the Hearing in the Present Case

79 The judgment against the appellant in favour of the respondents was entered by consent. In general, a judgment that has been entered cannot subsequently be challenged. As was said by Barwick CJ in Bailey v Marinoff, at 130:

"Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed."

See also Gamser v The Nominal Defendant [1977] HCA 7; 136 CLR 145, at 154, per Aickin J (with whom Barwick CJ, Gibbs and Stephen JJ agreed); DJL v The Central Authority [2000] HCA 17; 201 CLR 226, at 245 [38], per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.

80 However, a judgment that has been entered is not unassailable. It may be challenged on the ground that it was obtained by fraud or mistake or by an agreement which is void or voidable: Permanent Trustee Co (Canberra) Ltd v Stacks & Holdings (Canberra) Pty Ltd (1976) 15 ACTR 45, at 48, per Brennan J. In DJL v Central Authority, the plurality said (at 245 [37]) that where a judgment is sought to be impeached for fraud, the "preferable course" is to institute separate proceedings. Other authorities seem to go further, suggesting that unless a statute or the rules permit an application to be made in the same proceedings which resulted in the judgment, the application to set aside a judgment on these grounds must be made in separate proceedings. Thus in Permanent Trustee v Stack & Holdings, Brennan J stated (at 48) the principle as follows:

"When the litigant has a right to set aside the judgment on the ground of fraud, however, the fraud must be alleged in a fresh action brought to try the issue ... Similarly, where the judgment is entered by consent, and a party alleges that the agreement pursuant to which the judgment was entered is void or voidable ..." (Emphasis added.)

See also Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691, at 696-697, per Handley JA (with whom Mahoney and Clarke JJA agreed) (a case of alleged fraud); Ainsworth v Wilding [1896] 1 Ch 673 (alleged mistake); Kinch v Walcott [1929] AC 482, at 494 (alleged fraud); Teoh v Hunters Hill Council (No 5) [2012] NSWCA 75, at [11]-[16], per curiam (alleged fraud).

81 It is not necessary to consider whether the application to set aside the judgment in the present case should have been brought in separate proceedings as no objection has been taken to the form of the proceedings. The significant point for present purposes is that the appellant sought an order setting aside the judgment because the agreement consenting to judgment had been entered into by Mr Carbone without the appellant's authority. On appeal, Mr Dubler characterised the appellant's claim as an entitlement to have the judgment set aside ex debito justitiae because both the purported agreement and the consent judgment were nullities: cf AVS Australian Venue Security Services Pty Ltd v Criminale [2006] NSWCA 368, at [28], per Basten JA.

82 Whatever the correct characterisation of the appellant's case, he accepted before the primary Judge that he had to establish that Mr Carbone lacked actual or ostensible authority to enter into the agreement resolving the proceedings or to consent to judgment against the appellant. Unless he established that the agreement underlying the consent orders was void (at least so far as the appellant himself was concerned), he could not succeed in setting aside the orders. The primary Judge, in addressing this contention, had to make findings as to whether the appellant, by words or conduct, had conferred actual or ostensible authority on the solicitor to compromise the proceedings in the manner he did.

83 The critical issue before the primary Judge was not whether the respondents' claim against the appellant for moneys said to be due and owing was well-founded, notwithstanding that the primary Judge comprehensively rejected the appellant's claim to have an arguable defence. The critical issue that required determination was whether the agreement entered into by Mr Carbone on the appellant's behalf was valid and thus could support the consent orders. This issue turned on Mr Carbone's authority to enter the agreement so as to bind the appellant.

84 The appellant gave evidence at the hearing and was cross-examined at length. Other witnesses were called and were also cross-examined. The primary Judge was invited to assess the appellant's credit and to make the factual findings necessary to determine the appellant's claim that Mr Carbone lacked authority to sign the short minutes of order on the appellant's behalf. His Honour made findings adverse to the appellant. It was not suggested at the hearing (or on the appeal) that findings should be made otherwise than in accordance with the principles governing a final hearing. In particular, it was not suggested that the appellant merely had to establish that he had a prima facie or arguable case on the issue of the solicitor's authority. In short, the primary Judge rejected, on the merits, the appellant's claim that he was entitled as of right to an order setting aside the consent judgment.

85 The cases holding that an application to set aside a judgment should be made in separate proceedings appear to proceed on the basis that the claimant is asserting an independent cause of action, rather than any claim or defence in the principal proceedings. The legal effect of the judgment dismissing the application would seem to have been to dispose of the appellant's cause of action. On this basis, it is arguable that the order dismissing the appellant's motion finally determined the rights of the parties and thus was a final judgment: Carr v Finance Corporation of Australia Ltd (No 1) [1986] HCA 20; 147 CLR 246, at 248, per Gibbs CJ; at 253-254, per Mason J. However, there may be an issue (as the appellant argued) as to whether Hoskins v Van Den-Braak stands in the way of such a conclusion: see at 299, per Mason P (with whom Priestley and Beazley JJA agreed).

86 Whether or not the judgment of the primary Judge was final, in my opinion it was given after a hearing on the merits within the meaning of s 75A(8) of the SC Act. All issues of fact and law material to the question of the solicitor's authority and the validity of the agreement entered into by him on behalf of the appellant were ventilated before the primary Judge. His Honour made the findings of fact necessary to determine the appellant's claim, after hearing and considering all evidence the parties wished to adduce and after they had an opportunity to test the evidence and make submissions on the law.

87 I do not think it matters whether the appellant relied on the inherent jurisdiction of the Court or invoked (as he did on appeal) the Court's power to review an order of a Registrar (r 49.19) or its power to set aside a judgment entered irregularly (r 36.15(1)). Whatever the source of power relied on, the case propounded by the appellant before the primary Judge was that he was entitled to an order setting aside the consent judgment because it was founded on an agreement entered into by a solicitor without authority: cf Singh v Ginelle Pty Ltd [2010] NSWCA 310, at [39], per Campbell JA (with whom Beazley JA and Handley AJA agreed). The appellant's case was heard and determined by a judgment given after a hearing on the merits.

88 The parties filed lengthy supplementary submissions addressing whether Hoskins v Van Den-Braak is authority for the proposition that an application to set aside an irregular judgment is an interlocutory judgment. Hoskins involved an application to set aside a Local Court judgment on the ground that the defendant had never been served with the statement of liquidated claim. The Court of Appeal held that the defendant was entitled ex debito justitiae to have the judgment set aside and that the Local Court, in the exercise of its "inherent powers", should have acceded to the defendant's application.

89 There is a question as to whether Hoskins, insofar as it relies on the inherent powers of a statutory court, can stand with the decision of the High Court in DJL v Central Authority [2000] HCA 17; 201 CLR 226, [25]ff, per curiam; AVS v Criminale, at [30], per Basten JA. Putting that question to one side, I doubt that Hoskins stands for the proposition of the breadth advanced by the appellant. In any event, for the reasons I have given, I do not think that the status of a judgment as interlocutory or final is determinative of whether a judgment has been given "after a trial or hearing on the merits" for the purposes of s 75A(8) of the Supreme Court Act.

90 It follows from what I have said that the effect of s 75A(8) of the SC Act is that the appellant is not entitled to adduce further evidence on the appeal unless he can show "special grounds".

Has the Appellant Shown Special Grounds?

91 In supplementary submissions, Mr Dubler summarised the matters on which the appellant relies in support of his application to adduce further evidence, as follows:

"(a) The size of the judgment involved;

(b) The absence of there having been a hearing on the merits of the appellant's verified defence (at least with all available evidence being led);

(c) The fact that the solicitor never had any contact with the appellant and never knew of or considered the appellant's potential defence when he consented to judgment against the appellant;

(d) The appellant says that he was at all times ignorant of the nature of the claim (and its size), that a solicitor, purportedly acting for him, was consenting to a judgment for over $3 million being entered against him, that he was purportedly a joint debtor on loan documents and he further says he never received the funds;

(e) ... Counsel made a glaring and palpable error in thinking Mrs Romeo was not yet a necessary witness and in failing to explain her absence, which gives rise to the real apprehension that there never was a proper or sufficient hearing of the first application ..."

92 Mr Dubler did not dispute that the proffered evidence does not satisfy any of the three conditions laid down in Akins v NAB (see at [11] above). The evidence sought to be adduced from Mrs Romeo was available prior to the hearing before the primary Judge. His Honour made directions on 25 February 2010 (see at [29] above) precisely for the purpose of ensuring that any evidence from Mrs Romeo was put on in a timely fashion. Those directions were apparently not complied with and Mr Phair's affidavit gives no explanation for the non-compliance. Nor does he explain why Mrs Romeo's willingness to give evidence seems to have been addressed only very shortly before the resumed hearing. Whatever might be said about counsel's telephone advice to Mr Phair, the appellant had ample opportunity to call Mrs Romeo at the adjourned hearing, with whatever steps might be determined to be appropriate to safeguard her against self-incrimination.

93 Mrs Romeo's credit has not yet been tested. However, her proffered evidence amounts to no more than unsupported assertions that she never discussed the matter with the appellant and that he did not sign the documents. Mr Romeo gave evidence before the primary Judge that he did sign certain documents. The primary Judge formed an unfavourable view of Mr Romeo's credit and rejected his claims not to have signed documents apparently bearing his signature. The rejection of Mr Romeo's evidence does not, of itself, establish the contrary proposition. Nonetheless, while recognising that Mrs Romeo's credit has not been tested, it cannot be said that there is a high degree of probability that her evidence, if admitted, would produce a different result on the question of authority.

94 Furthermore, there is a significant gap in the evidence the appellant wishes to adduce from Mrs Romeo. Neither her affidavit nor that of Mr Phair addresses the crucial issue determined by the primary Judge, namely whether she and the appellant had discussions as to her authority to engage Mr Carbone to act on behalf of both of them, either generally or in relation to the claim made by the respondents. The gap in the evidence was pointed out during argument in this Court, but no application was made to put on further evidence addressing the issue.

95 The appellant has not demonstrated special grounds justifying admission of the evidence on which he now seeks to rely. The criteria laid down in Akins v NAB are not satisfied; the proffered evidence is deficient in that it does not address critical questions; and it has not been shown that the demands of justice require that the evidence be admitted.

What if s 75A(7) of the Supreme Court Act Applies?

96 If the correct position is that, contrary to my view, the reception of the proffered evidence is governed by s 75A(7) of the SC Act and not s 75A(8), I would exercise the discretion conferred by s 75A(7) adversely to the appellant. The broad statutory discretion is not qualified by any requirement that the appellant seeking to adduce further evidence establish special grounds for the application. But the sub-section does not confer a right to have further evidence received by the Court. The question is whether the dictates of justice favour the reception of the evidence. In addressing that question, the Court must take into account the "overriding purpose" stated in s 56(1) of the Civil Procedure Act 2005, namely to facilitate the just, quick and cheap resolution of the real issue in the dispute or proceedings; Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council, at [40], [136].

97 The issue in dispute before the primary Judge was whether the appellant was entitled to an order setting aside the current judgment on the ground that Mr Carbone lacked authority to settle the proceedings on the appellant's behalf. That issue was dealt with by the primary Judge after considering all evidence that the appellant and the respondents wished to adduce. That evidence was tested and his Honour came to conclusions on the basis of his factual findings, which included a comprehensive rejection of the appellant's evidence. The appellant's representatives were aware of evidence that Mrs Romeo could give and any reservations she had about giving evidence well before the hearing resumed following the adjournment.

98 This is not a case where the appellant wishes to remedy an evidentiary omission or an oversight that can be easily remedied with further evidence. In effect, he wishes to rerun a case that was fully ventilated and determined "on the merits" with the benefit of evidence that, for whatever reason, he or his representatives chose not to call at the hearing. He presumably seeks to have the adverse credit findings overturned so that, in effect, the whole case will have to be re-heard. The evidence on which he relies is quite inconsistent with the primary Judge's findings, but does not rise above the level of assertion. Furthermore, as I have explained, there are significant gaps in the proffered evidence, especially that of Mrs Romeo, that make it of limited value on the critical factual issues determined adversely to the appellant.

99 In my opinion, the reception of this evidence would inflict a considerable injustice on the respondents. The challenge to the consent judgment did not involve any allegation directed at them; they and their representative acted in good faith in agreeing to the orders and in entering the judgment. They have successfully resisted the appellant's application to set aside the judgment after a full hearing. The appellant's motion, if accepted, would require the same factual issues to be reventilated presumably before a different court. The respondents will be exposed to further delay and expense, without any clear demonstration that the exposure will be in the interests of justice. To accede to the appellant's motion would be at odds with the overriding purpose of the CP Act stated in s 56(1).

Conclusion

100 The interests of justice require the appellant's motion to be dismissed.

Appeal Against Findings Relating to Agency

The Alleged Errors

101 The primary Judge found that either the appellant expressly agreed to Mrs Romeo telling Mr Carbone to agree to the entry of judgment against both of them or he left it entirely in her hands to make the decision as to what should be done in the circumstances. This was effectively a finding that the appellant had actually authorised Mrs Romeo to retain Mr Carbone as the solicitor to act for both of them in the proceedings commenced by the respondents and that he had authorised Mrs Romeo to give Mr Carbone instructions as to the terms on which the proceedings were to be settled.

102 Mr Dubler did not dispute that the primary Judge was entitled to regard the appellant as an untruthful or unreliable witness and (as his Honour did) to reject his evidence on issues on which he was challenged. Nonetheless, Mr Dubler submitted that his Honour's findings on the issue of actual authority were erroneous. As I understood him, Mr Dubler identified four errors in his Honour's reasoning.

103 First, disbelief of the appellant's evidence did not prove the opposite of what he had asserted. The appellant had denied giving Mrs Romeo instructions to consent to the judgment. While his Honour might have had suspicions about the appellant's denials, there was no affirmative evidence to negate his denial. There was simply a "vacuum" in the evidence.

104 Secondly, the primary Judge had erroneously invoked Jones v Dunkel [1959] HCA 8; 101 CLR 298, in attaching significance to the absence of Mrs Romeo from the witness box. The failure by the appellant to call Mrs Romeo was a "critical pathway" in his Honour's reasoning. However, it was inappropriate for his Honour to rely on Mrs Romeo's failure to give evidence, because her interests were not only separate from that of her husband, but were actually in conflict. This was because the appellant gave evidence that he had not signed the deed of loan or mortgage documentation and the obvious inference was that his wife had signed the documents in his name.

105 Thirdly, the finding (at [48]) that the defendants must have discussed the litigation was speculation and not an inference based on evidence.

106 Fourthly, Mr Dubler relied on Mr Carbone's evidence that after reading the statement of claim he had neither contacted the appellant nor given consideration to his position separately to that of his wife. Mr Dubler also relied on Mr Carbone's argument for the proposition that Mrs Romeo, in a telephone conversation, had said that "I owe my brother money". This evidence was said to suggest that Mr Carbone should have sought instructions directly from the appellant and that, in any event, Mr Carbone did not have authority to settle the proceedings on the appellant's behalf.

Reasoning on Authority

Principles

107 There was no dispute as to the principles to be applied when determining whether Mr Carbone had authority to enter into the agreement constituted by the short minutes on behalf of the appellant. The relevant principles are stated in P Watts and F M B Reynolds, Bowstead and Reynolds on Agency (19th ed, 2010), at [5-008]:

"(1) Acts done on the principal's behalf by a sub-agent whose appointment was authorised or ratified by the principal bind the principal as if they had been performed by the agent himself.

(2) The relation of principal and agent may be established by an agent between his principal and a sub-agent if the agent is expressly or impliedly authorised to constitute such relation, or if his act is ratified, and it is the intention of the agent and of such sub-agent that such relation should be constituted."

108 In the leading case of De Bussche v Alt (1878) 8 Ch D 286, a shipowner consigned a ship to an agent for sale at a minimum price. The agent, with the consent of the shipowner, engaged a sub-agent in another country to sell the vessel. It was held that the relationship of principal and agent was established between the shipowner and the sub-agent and that the latter was obliged to account to the former for undisclosed profits made in the transaction. See Tarn v Scanlan [1928] AC 34, at 47-48, per Viscount Cave LC.

109 If the appellant authorised Mrs Romeo to engage Mr Carbone to act in the proceedings on the appellant's behalf and to settle the proceedings on terms she regarded as satisfactory, the appellant was bound by the conduct of Mr Carbone in signing the short minutes on behalf of both Defendants. The appellant could confer such authority on Mrs Romeo either expressly or implicitly, both being forms of actual authority: Morley v Statewide Tobacco Services Ltd (No 1) [1993] 1 VR 423, at 435, per Ormiston J (affirmed [1993] 1 VR 451).

First Argument

110 It is correct that the rejection of witness's evidence does not establish the opposite of what the witness has asserted: see, for example, Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640, at 695, per Gibbs J; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89, at 136 [100], 146 [124], per curiam; Australian Securities and Investments Commission v Hellicar [2012] HCA 17; 286 ALR 501, at [232], per Heydon J. However, as Gibbs J pointed out in Steinberg, the fact that a party is disbelieved on a particular topic does not necessarily mean that there is no evidence on that topic or that there are no circumstances from which the trier of fact can draw inferences adverse to that party. In the present case, there was a good deal of evidence affirmatively suggesting that the appellant had authorised Mrs Romeo to retain Mr Carbone on behalf of both Defendants and to give instructions to Mr Carbone as she saw fit to resolve the proceedings on behalf of both of them. Some of that evidence was given by the appellant himself.

111 The primary Judge accepted Mr Carbone's evidence. Mr Carbone said that he had acted for both defendants in at least 49 matters, including four litigation matters. Mr Carbone rejected a suggestion that he had never taken a step in litigation involving the appellant without receiving specific instructions from the appellant himself. His evidence was that instructions always came from Mrs Romeo, both in litigious and non-litigious matters, although on occasions the appellant attended conferences and had sworn an affidavit at least once. Mr Carbone's observation was that Mrs Romeo was heavily involved in all matters in which he was instructed and that instructions predominantly came from her. Mr Carbone's fees were rendered to and paid on account of both Defendants, unless one or other of their corporate entities paid.

112 Mr Carbone said (and the primary Judge found) that he received a faxed copy of the statement of claim which had been served on both Defendants. He spoke to Mrs Romeo, who said she was upset by the proceedings and hoped that she would resolve them. He attended court on 27 July 2010 and 15 September 2010 because he received instructions from Mrs Romeo to do so. Mrs Romeo told him at one point that "We don't have a defence" to the respondent's claim.

113 Mr Carbone was asked why he considered that he was acting for both defendants. He answered as follows:

"Because Mary Romeo always spoke for both. I dealt with 40 matters, 50 matters over the last six years. She was the spokesperson, the deal maker, the - everything went through her hands. Whenever I saw them in conference Joe [the appellant] was present, Mary did all the talking. Mary essentially was the person who always provided instructions and she always spoke on behalf of both of them. At no time did Joe ever ring me over the years. So far as I'm concerned, the instruction was I acted for both and that's why I filed a notice of appearance for both Mary and Joe."

114 The appellant accepted in his evidence (and the primary Judge found) that he and his wife worked side by side in their various business activities, which included multiple property purchases or developments. The appellants also accepted, somewhat reluctantly, that he had been served with papers on 14 July 2010 and that he knew the papers were for him, although he claimed he did not look at them because his ability to read English was not very good. He said that he put the documents "in the back office for my wife when she comes...".

115 The appellant's evidence included the following passages:

"Q. What is it your wife does?

A. She's administrator. She work in the shop alongside of me and she does her duty.

...

Q. Administrates the staff.

A. Yes.

Q. It is true, is it not, that your wife deals with the paperwork, doesn't she?

A She does.

Q. She also deals with, doesn't she, the consultants which you have engaged from time to time?

A. She does.

...

Q. When you need to deal with the lawyer, she deals with the lawyer, is that right?

A. Yes.

...

Q. When your wife is dealing with the lawyer in the course of your business, you don't also deal with the lawyer, you leave it to her to do it?

A. None of my business.

Q. In relation to your joint business that's the case, isn't it?

A. Joint business?

Q. That is the business you and your wife carry out together?

A. Yes.

Q. That's the case that if she's dealing with the lawyer for the purposes of your joint business you don't deal with the lawyer, you leave it her, that's right, isn't it?

A. Not always, not always.

Q. Most of the time?

A. Most of the time.

...

Q. Just going back to the day on 14 July when you received the Court papers in this case. You understood when you got them that they were important documents, didn't you?

A. I only glance at the front page. I didn't read them. And I just said I put them out the back in the office.

Q. You put them in the office because it was your practice, wasn't it, whenever you got documents to get your wife to look at them, is that right?

A. The documents that come in the shop, it's public. It's open shop. I pick up the documents and take them to the back of the shop in the office.

Q. That was your normal practice, wasn't it?

A. Yes.

Q. Whenever you received documents you put them out in the back office?

A. Yes.

Q. For your wife to look at, is that right?

A. Yes.

Q. Is it the case that you would follow up with her what the documents were about?

A. Not always.

Q. It is the case, isn't it, that you would leave to her judgment to decide what needed to be done in relation to the document, is that right?

A. Yes.

...

Q. It is right that you left it for her to deal with as she saw fit; that's right, isn't it?

A. Yes.

...

Q. If you received court papers and they came to the attention of your wife in relation to a claim against you you would expect your wife to engage a lawyer; that's right isn't it?

A. Papers against me?

Q. Yes, against both of you.

A. Sure."

116 In view of the evidence of Mr Carbone and the appellant, it is not correct that there was a "vacuum" in the evidence as to whether the appellant authorised Mrs Romeo to retain Mr Carbone in the litigation, including for the purpose of giving instructions on settlement. Nor, contrary to Mr Dubler's submissions, is it correct that the evidence went only to the defendants' general practice when engaging a solicitor.

117 Mr Dubler correctly submitted that the mere fact that a solicitor has acted generally for a client in the past does not authorise that solicitor, for example, to institute proceedings on behalf of the client without instructions: Hawkins Hill Gold Mining Co v Briscoe (1887) 8 NSWR (Eq) 123, at 130, per Stephen J. But the evidence before the primary Judge carried matters considerably further. The appellant's own evidence establishes that he gave the statement of claim to his wife to deal with as she thought appropriate in the exercise of her judgment. He was content for her to instruct a lawyer in relation to the litigation, if that was required, and to deal with the lawyer on his behalf. The appellant himself did not wish to deal with Mr Carbone, but was content for his wife to determine what needed to be done in the litigation and indeed expected her to do so. There is nothing in the appellant's evidence to suggest that Mrs Romeo's authority to give instructions on his behalf ceased at some stage prior to settlement of the proceedings. The obvious inference is that it continued at least until the short minutes of order were signed and the consent judgment entered.

118 The primary Judge also relied on the letter of 5 May 2010 (see at [46] above) to support his findings. His Honour committed no error in finding, on the evidence before him, that the letter had been signed by the appellant and that the appellant was aware of its contents. The letter seemed to bear the appellant's signature and no basis has been suggested for attacking the primary Judge's assessment of the appellant's unreliability as a witness, particularly the rejection of the appellant's denials that he had signed particular documents, including the letter.

119 The appellant's first argument must therefore be rejected.

Second Argument

120 The appellant's Jones v Dunkel contention encounters two difficulties. The first is that, although his Honour regarded the failure to call Mrs Romeo as a "very significant matter" (at [43]), it was not the critical factor in his findings. The failure to call Mrs Romeo enabled his Honour to form the view more comfortably (at [43]) that, as Mr Carbone had testified, Mrs Romeo was the point of reference for the family to provide instructions. It also enabled his Honour more comfortably to conclude (at [48]) that the Defendants, who had been married for 49 years and had worked side by side in all their many business ventures, must have discussed the litigation. The primary Judge also invoked Mrs Romeo's absence from the witness box to support the finding that the appellant had signed the letter of 5 May 2010.

121 The so-called rule in Jones v Dunkel permits the Court to draw an inference that the uncalled evidence would not have assisted the party who failed to call it and entitle the trier of fact to more readily draw any inference fairly to be drawn from other evidence: Cross on Evidence (Aust ed), at [1215]. The failure to call the witness cannot be used to fill gaps in the evidence.

122 The primary Judge did not rely on the appellant's failure to call Mrs Romeo to fill any gaps in the evidence. The failure enabled him to be more comfortably satisfied about matters in which there was ample evidence in any event to support the findings he made. Even if the absence of Mrs Romeo from the witness box is disregarded, the evidence before the primary Judge well justified the findings he made. There is no reason to think that if the failure to call her were disregarded, he would have not made the same findings.

123 The second difficulty is that, on the material before the primary Judge, his Honour was entitled to rely on the failure to call Mrs Romeo as supporting the inference that her evidence would not have assisted the appellant. The exchanges between the primary Judge and counsel for the appellant demonstrate that his Honour specifically raised the significance of the failure to call Mrs Romeo in argument (see at [38], [39] above). Counsel acknowledged that he had made the decision not to call Mrs Romeo, but made no submission that it was inappropriate for his Honour to draw any inferences permitted by Jones v Dunkel. Moreover, the primary Judge noted that a solicitor had appeared for Mrs Romeo at the directions hearing held on 25 February 2010, but had not appeared on her behalf at the second day of the adjourned hearing. His Honour expressly recorded his assumption that any possible conflict between the Defendants had been resolved. Counsel said nothing to suggest that his Honour's assumption was incorrect.

124 In these circumstances, it is hard to see how the primary Judge could have concluded otherwise than that Mrs Romeo was in the appellant's camp and that no explanation had been given for his failure to call her. His Honour committed no error in concluding that the failure to call Mrs Romeo entitled him to draw inferences in accordance with the principles stated in Jones v Dunkel.

Third Argument

125 Mr Dubler's third argument also must be rejected. The inference drawn by the primary Judge is supported by the evidence of the defendants' close matrimonial and business relationship over many years; the appellant's evidence that he gave the statement of claim served on him to Mrs Romeo and, in effect, left her to give instructions to Mr Carbone; and Mr Carbone's evidence that Mrs Romeo had frequently given instructions in other matters, including litigation, on behalf of both defendants and that the appellant had been involved in such matters from time to time.

Fourth Argument

126 Nor do I think that there is substance in Mr Dubler's fourth argument. The evidence to which I have already referred was sufficient to support his Honour's finding that the appellant authorised Mrs Romeo to give instructions to Mr Carbone to act on behalf of both of them and to resolve the litigation. The appellant, on his Honour's findings, gave the statement of claim to Mrs Romeo; understood that a claim was being made against him and Mrs Romeo; expected Mrs Romeo to engage the solicitor to act on behalf of both of them in relation to the claim; and entrusted her to give to the solicitor whatever instructions were required to conduct and finalise the litigation on behalf of both of them.

127 The evidence of Mr Carbone upon which Mr Dubler relied, must be understood in context. He gave evidence that Mrs Romeo said on some occasions that she owed money to her brother and on others that "we" owed money and that "we" did not have a defence. He understood that Mrs Romeo was giving instructions to him on behalf of both the appellant and herself. Her conduct was consistent with the way in which he had received instructions with respect to transactions and the conduct of litigation in the past. Nothing was drawn to his attention to suggest that there was any conflict between the Defendants.

128 Mr Carbone's understanding does not of course establish actual authority for him to act on the appellant's behalf, either generally or in relation to this litigation. But Mr Carbone's understanding that he was instructed to act on behalf of both Defendants in the litigation reflected precisely what the appellant had in fact authorised, through the agency of Mrs Romeo. I should add that in my view there is nothing to put Mr Carbone on notice that he should make further inquiries before signing the short minutes of order on behalf of the Defendants. Even if there had been, that would not have affected the conclusion that he had authority to settle the proceedings on behalf of the appellant.

Conclusion

129 The challenges to the primary Judge's findings on agency do not succeed. His Honour did not err in making those findings,

Orders

130 The appeal must be dismissed, with costs.

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Decision last updated: 26 July 2012