Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Jeffreys v Sheer [2025] NSWCA 6 Hearing dates: 3 February 2025 Date of orders: 5 February 2025 Decision date: 05 February 2025 Before: McHugh JA Decision: The appellant's notice of motion eFiled on 17 January 2025 is dismissed Catchwords: CIVIL PROCEDURE – Court of Appeal – application for pro bono referral – where application made shortly before listed hearing date – whether the respondent will suffer prejudice if hearing date is vacated – where applicant has recently directed substantial sums through his accounts – application refused Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 7.36 Cases Cited: Allchin v Hunter Water Corporation (No 2) [2024] NSWCA 315 Renshaw v New South Wales Lotteries Corporation Pty Ltd [2021] NSWCA 41 Sheer v Jeffreys [2024] NSWSC 1161 Category: Procedural rulings Parties: Bruce Michael Jeffreys (Applicant) Itshak Sheer (Respondent) Representation: Counsel: In person (Applicant) M Hazan (Respondent) Solicitors: In person (Applicant) UX Law (Respondent) File Number(s): 2024/381607 Publication restriction: Nil. [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.] JUDGMENT 1. The respondent commenced proceedings in the Supreme Court for specific performance by the appellant of a contract to purchase shares in a company called Dresden Optics Pty Ltd (Dresden), of which the appellant is the sole director, for a price of $2.5 million. Those proceedings were heard by Kunc J in October and December 2023. His Honour published reasons on 13 September 2024 to the effect that the respondent was entitled to an order for specific performance (Sheer v Jeffreys [2024] NSWSC 1161 ("Sheer")), with orders made on 2 October 2024. 2. The appeal is listed for hearing on 26 February 2025. 3. By notice of motion marked as eFiled on 17 January 2025, the appellant seeks an order for referral for assistance under the Pro Bono Scheme (the Scheme) under Div 9, Pt 7 of the Uniform Civil Procedure Rules 2005 (NSW). (The appellant said from the Bar table that he had lodged his notice of motion with the registry on 19 December 2024, but nothing turns on that.) Rule 7.36 relevantly provides: 7.36 Referral to a barrister or solicitor (1) If satisfied that it is in the interests of the administration of justice, the court may, by order, refer a litigant to the registrar for referral to a barrister or solicitor on the Pro Bono Panel for legal assistance. (2) For the purposes of subrule (1), the court may take into account— (a) the means of the litigant, and (b) the capacity of the litigant to obtain legal assistance outside the scheme, and (c) the nature and complexity of the proceedings, and (d) any other matter that the court considers appropriate. … (4) If a litigant is referred for assistance under this rule, the registrar must attempt to arrange for legal assistance to be provided to the litigant by a barrister or solicitor on the Pro Bono Panel. (4A) If the registrar is unable to arrange legal assistance for a litigant who is referred under this rule within 28 days after the litigant's referral, the registrar may make an order terminating the litigant's referral. … 1. The applicable principles were recently discussed by Mitchelmore JA in Allchin v Hunter Water Corporation (No 2) [2024] NSWCA 315, where her Honour said as follows at [12]-[13]. "[12] The principles guiding the discretion to make a referral under r 7.36 of the UCPR have been considered in a number of decisions of this Court, including, in recent times, in Iqbal v Hotel Operations Solutions Pty Ltd [2022] NSWCA 88; Amgad v Cairns [2022] NSWCA 101 and Young v Director of Public Prosecutions (NSW) [2022] NSWCA 133. Each of those decisions referred with approval to what Brereton JA said regarding r 7.36 of the UCPR in Renshaw v New South Wales Lotteries Corporation Pty Ltd [2021] NSWCA 41 ("Renshaw"), which included the following passage (omitting the footnotes): '[10] The essential test for making a referral for pro bono assistance under the rule is that it be in the "interests of the administration of justice" to do so. Mere satisfaction that a litigant cannot otherwise obtain legal assistance is an insufficient reason. As subrule (2) contemplates, it is relevant to consider the person's means, needs and capacity, the nature of the proceedings, and the likely availability and utility of legal assistance. [11] Moreover, pro bono assistance is a valuable and scarce resource, dependent on the goodwill of members of the legal profession, which should not be lightly dissipated. The Court has a responsibility to husband this resource carefully. The obligations undertaken by a lawyer who accepts a referral import a concomitant obligation on the Court to exercise discretion in the making of referrals. As I said in Dafaalla v Concord Repatriation General Hospital [[2007] NSWSC 602]: "The success of the scheme is dependent upon the support of the profession, and the obligations which are undertaken by a lawyer on the pro-bono panel import a concomitant obligation on the Court to exercise discretion in the grant of referral certificates. While, by r 66A.1(4), a referral does not indicate that the Court has formed an opinion on the merits of a litigant's case, the Court should ordinarily be reluctant to grant certificates in respect of matters that appear to be without merit. That is not to say that a referral should never be made in a case apparently lacking merit: for example, it may well be appropriate to grant a certificate, for the limited purpose of obtaining advice, in a case without legal merit, where there is some prospect that the advice will assist the litigant to understand the defects in the case, so that unnecessary litigation may be avoided." [12] While referral for legal assistance does not reflect any opinion on the merits of a litigant's case, normally the Court will want to see some signs of merit in a case before making a referral; absent merit, referral will rarely be "in the interests of the administration of justice". In some cases, the possibility that examination of the case by a competent practitioner will reveal merit may suffice. In still others, apparently devoid of merit, the Court may grant a referral for the purposes of advice, if there is a prospect that such advice may assist the litigant to appreciate the defects in the case, with the result that unnecessary and futile litigation may be avoided. However, it would be a misuse of this valuable resource to grant a referral to a litigant whose case is devoid of apparent merit simply to make the Court's task in dealing with the litigant easier.' [13] There is no question that it would be to the advantage of the Court if the appellant were represented by Counsel. However, as Basten JA said in Lane v Northern NSW Local Health District (No 2) [2014] NSWCA 32 at [8]: 'It is true that in every case this Court benefits from the availability of professional legal assistance, however it is not always available and there are limits to the cases in which this Court can impose upon members of the Bar to provide assistance without return by way of fee.'" 1. Preparations for the hearing of the appeal are well advanced, in that both parties have filed their written submissions. I note, however, that the appellant's written submissions appear to go outside the notice of appeal, and there may well be a dispute if the appellant now seeks to amend the notice of appeal. Appellant's submissions on the notice of motion 1. The appellant, who describes himself as the founder of two Australian businesses, was represented at the trial by senior and junior counsel. He deposes in his affidavit made 19 December 2024 that he incurred direct costs of approximately $500,000 through the trial proceedings; that he has "exhausted" his financial resources in defending the proceedings; and that he cannot afford continued legal representation for the appeal. 2. The application is somewhat unusual in that the appellant states that he continues to discharge his duties as the sole director of Dresden which, he deposes, employs approximately 60 staff working across Australia and in Canada. The appellant states that he is finding it impossible to manage both the considerable caseload of his appeal and to continue to effectively operate a business of that size and complexity, and says that the demands of running the business make it extremely challenging to dedicate the necessary time to properly prepare his appeal. In other words, the appellant is in effect asking for a lawyer to act for him without fee in order that he can continue to run a substantial business. And, as noted above, the appellant has already filed his written submissions. 3. The appellant also submitted that there could be no prejudice to the respondent if he is now given pro bono legal assistance (and, I understood, if that led to vacation of the 26 February hearing date), in circumstances where the appellant was bound by the undertakings to which I refer below. 4. The appellant submits that the appeal involves what he describes as complex questions of contract law "including issues of contract formation, intention to create legal relations, and the operation of various legal principles established through significant caselaw precedents." I pause to note that those are garden-variety matters of contract law that involve the application of well-established principles. The appellant further says that the case involves "intricate questions regarding professional conduct obligations and the administration of justice", which appears to be a reference to an argument developed in his written submissions based on a concern that the respondent's solicitor was involved in giving advice at the time of the events in question. 5. The appellant also made submissions as to the negative consequences which may flow if he fails in his appeal, including a concern that his businesses would cease to exist and that his mother would lose the home in which she lives, being a unit in Marrickville owned by the appellant. I do not consider these to be matters of particular significance in the exercise of the discretion. The outcome of litigation is almost always important to those involved in it and to others affected by it. That is an assumed premise in the rationale for the existence of the Court's discretion under r 7.36; it does not much help in distinguishing one case from another in the exercise of the discretion. Respondent's submissions on the notice of motion 1. The appellant did not lead specific or up-to-date evidence of his financial position. However, three affidavits of the appellant in the proceedings below, made on 4 and 20 June 2024 and 11 October 2024, are annexed to the affidavit of Eric Shmilovits made on 21 November 2024, on which the respondent relies. 2. The respondent, while taking a neutral attitude to the question of referral for legal assistance in the abstract, is concerned that it might lead to the vacation of the 26 February 2025 hearing date. The respondent opposes any vacation of the hearing date based on the following matters. 3. While judgment was reserved following the trial below, the respondent became concerned about the risk of dissipation of assets. In particular, he became concerned that the appellant had advanced $200,000 to a company called Psoas Holdings Pty Ltd (Psoas) (a company of which the appellant is a director), which sum that company had invested in the Rixon Income Fund on or about 1 December 2023. The respondent brought an application for freezing orders. That was resolved in June 2024 by undertakings which the appellant gave to the Court, inter alia, not to sell, dispose of or deal with certain assets without providing notice to the respondent's solicitor. 4. In conjunction with those matters, the appellant made three affidavits as to his financial position, on 4 and 20 June and 11 October 2024. The affidavit of 4 June disclosed that the appellant had sold his shares in a company called Newtown Group Holdings Pty Ltd for $6,825,840 (I was informed this occurred in November 2023). Much of that $6.8 million was directed to discharging liabilities that might be described as non-discretionary, including tax. Of the balance (i.e., in the period between November 2023 and 4 June 2024): 1. the appellant advanced a total of approximately $1.4 million as working capital to Dresden and Psoas. However, the shares in those companies have nil value, and neither company is in a position to repay its loan; 2. $200,000 was invested in Rixon Capital via Psoas; 3. the appellant made approximately $101,000 in mortgage repayments, $61,000 in car hire purchase repayments, $75,000 in credit card repayments; and 4. he spent over $258,000 on other expenses including a holiday and making payments to his children for living expenses. 1. In disposition of the primary proceedings below by way of order for specific performance, on 2 October 2024, Kunc J made orders to the effect that by 8 November 2024 the appellant pay the respondent $2,980,856.79 (i.e., the purchase price of $2.5 million plus interest). His Honour ordered that if that order was not complied with, there would be judgment for the respondent in the sum of $2,980,856.79 to take effect on and from 9 November 2024. As the respondent submits, the practical effect of the orders made by Kunc J on 2 October 2024 was to delay the respondent's ability to issue a bankruptcy notice until some time in November. 2. The appellant applied to stay the 2 October orders pending appeal. On 1 November 2024, upon the appellant's undertaking to the Court (among other things) to join in an application for expedition of the appeal and to prosecute it diligently, Kunc J granted an injunction pending the appeal, the effect of which was to restrain the respondent from commencing any proceedings to enforce any judgment that arose by reason of the appellant's non-payment of the $2,980,856.79 by 8 November 2024. The 1 November orders provided that they were not intended to prevent the respondent from having issued and serving a bankruptcy notice based on the judgment. 3. The appellant failed to make the payment by 8 November 2024 or at all. On 14 November 2024, a bankruptcy notice was served on the appellant. It appears to be common ground that the appellant did not comply with that notice and thereby committed an act of bankruptcy. 4. Against that background, the respondent submits that if the hearing date were to be vacated, he would suffer prejudice in the following respects. 5. First, the respondent submits that the appellant's overall financial position deteriorated between the time of his 20 June and 11 October 2024 affidavits, and is likely to have continued to do so. The undertakings given in June did not extend to credit cards or living expenses, and the credit card liability of about $32,000 as at 20 June had become about $100,000 by 11 October. Between August and October, the appellant made $313,000 in repayments pursuant to a payment plan with the Australian Taxation Office. In the period between 20 June and 11 October, the appellant expended $39,418.50 on legal fees. On the assumption that no value should be attributed to the appellant's loans to Dresden and Psoas at either date, on Mr Shmilovits' calculations the appellant's assets declined from approximately $5 million as at 20 June to approximately $4.8 million as at 11 October. On Mr Shmilovits' calculations the corresponding figures for the appellant's liabilities were an increase from $4.856 million as at 20 June to $5.046 million as at 11 October. To that figure must be added the 9 November 2024 judgment debt in the order of $3 million. 6. I accept that, since the appellant says he has no income, it is likely that his current assets are somewhat less than $4.8 million, while his liabilities are in the order of $8 million, and that the position is likely deteriorating at least because of living expenses. 7. Secondly, it was submitted that the respondent's practical ability to gain the benefit of any recovery of the $200,000 that the appellant advanced to Rixon Capital may be prejudiced. In particular, the respondent is concerned that the injunction made on 1 November 2024 will prevent him from presenting a creditor's petition within six months of the appellant's act of bankruptcy (i.e., the failure to comply with the bankruptcy notice). However, this issue was not explored before me in any detail, I did not receive (and I would not expect to receive on an application such as this) considered submissions from a self-represented appellant on issues potentially arising in a future bankruptcy, and I am not in a position to form any concluded view about the matter, other than to acknowledge that the passage of time is likely to be detrimental to the respondent's interests in this respect. Consideration 1. The principal considerations in the circumstances of the present case are broadly (1) whether the appeal discloses what Brereton JA described in Renshaw as "signs of merit"; (2) the risk of prejudice to the respondent; and (3) the appellant's circumstances and how he has come to be in them (i.e., substantially the subjects listed in r 7.36(2)(a)-(c)). 2. As to the first category of considerations, it is not the Court's function on an application of this kind to reach a concluded view about the strength or weakness of the appeal. The Court may, however, take into account whether the appeal shows — or particularly whether it lacks — signs of apparent merit. I have reviewed the notice of appeal, the primary judge's judgment and the parties' submissions filed on the appeal. One notable feature of the judgment is that the primary judge made adverse credit findings of some significance in deciding the case against the appellant. Those findings were in part based on the appellant's manner of giving evidence in the witness box (see, e.g. Sheer at [55]-[56]), where the primary judge might be expected to have had an advantage over the Court of Appeal. 3. On what appear to have been two important issues, intention to enter contractual relations and the appellant's misrepresentation case, there was a live dispute at trial about what the respondent had said in meetings with the appellant. In particular, the appellant asserted that the respondent had represented that he required the documents which were ultimately found to constitute the contract only in order to "placate" his wife. The primary judge rejected that evidence and made findings adverse to the appellant in relation to those conversations; see, e.g., Sheer at [81]. While no ground of appeal is expressly directed to credit, the appellant's written submissions traverse the credit findings at some length. In the result, although I have some reasons for doubt, I am unable to say that the appeal has no apparent merit. I will treat this factor as neutral. 4. As to the second category of considerations, prejudice to the respondent, I accept that if the hearing date were vacated the respondent would be likely to suffer prejudice based on the evidence discussed above, in particular, the deterioration in the appellant's financial position. I also accept that (depending on the basis on which any application to vacate the hearing date was made), such an application might be in tension with the basis upon which Kunc J granted the injunction restraining enforcement of the judgment, namely, the appellant's undertaking to prosecute his appeal diligently. 5. It is not certain that if a referral for legal assistance were now made, that would lead to an application for adjournment of the hearing; nor that it would be granted. But given the proximity of the hearing, and the fact that the appellant has filed lengthy written submissions already, I have proceeded on the footing that this is a case in which the legal assistance the appellant seeks is in refining and then presenting his arguments to the Court at the hearing; that is, a brief to appear. Given the stakes, and the appellant's evident commitment to his case, there seems little to be gained at this stage by referral for the purposes of advice only. 6. I have considered whether the referral could or should be made on the basis of an undertaking not to seek an adjournment, no matter how appropriate the lawyer might otherwise consider that course. But there may be difficulties for a lawyer, consistently with their professional obligations to the appellant, in accepting a referral to appear at the hearing of the appeal on that basis. It would not be an attractive brief. It seems to me that the shortness of the period before the hearing date, coupled with the desirability of retaining that date, mean that there is a real prospect either that the referral will not be taken up (because the lawyer has insufficient time to prepare), or that it will result in an application for adjournment. These are reasons at least tending against a referral. 7. In any event, I consider the third category of considerations, the appellant's circumstances and how he has come to be in them, decisive. 8. The appellant did not lead up-to-date evidence to establish his current means or capacity to obtain assistance. In light of the evidence of his position as at 11 October 2024, I accept that, as to the appellant's means, he would likely now have difficulty in raising funds to conduct the appeal in the style in which the trial was run. But as to his capacity to obtain legal assistance outside the pro bono scheme, given the nature of his spending last year and the absence of any current or specific evidence, I am not satisfied that he has no capacity at all to obtain paid representation, for example, by retaining a keen junior barrister to conduct the appeal. The appellant deposed, without elaborating, that he does not meet the requirements for legal aid assistance. But, as the respondent submitted, if that is so, the reasons might well also bear on the appropriateness of referring the appellant for pro bono legal assistance through the Scheme. In the absence of further evidence, I am unable to draw any conclusion either way. 9. What is clear is that the appellant has directed very substantial sums through his accounts in the recent past. He chose to direct $1.4 million into his businesses in the hope that they will survive and have value in the future. He spent large sums on his family and on a holiday. If he has exhausted his financial resources, that is the result of the choices he made. 10. It would no doubt be of benefit to the Court in this matter, as in almost all matters, for the appellant to have professional legal assistance. But the appellant is intelligent and articulate. He seems better equipped to conduct his appeal without professional legal assistance than many self-represented litigants who come before the Court. As to the nature and complexity of the proceedings, this is a commercial case where the issues involved appear to be relatively straightforward. 11. As Brereton JA emphasised in Renshaw, the pro bono scheme is a precious and limited resource. It depends on the goodwill of the profession which should not be abused. 12. I am not satisfied that it is in the interests of justice to make a referral in the circumstances of this case. I will refuse the appellant's application to be referred to the registrar for referral for legal assistance. Orders 1. The appellant's notice of motion eFiled on 17 January 2025 is dismissed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 February 2025