PAPAELLINAS v MOSSOP SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, CLARKE and MEAGHER JJA 31 May 1994, 29 July 1994 [1994] NSWCA 248 Facts Appeal from stated case. The appellant and the respondents were all members of an unincorporated association known as "Writers in the Park" which has, since 10 September 1985, organised readings, forums, book launches, and other writing based events in the Lounge Bar of the Harold Park Hotel at Glebe. Tuesday night readings were recorded. The Harold Park Hotel supplied the sound recording equipment and Writers in the Park purchased the blank tapes. The recordings were done by members of Writers in the Park. The appellant, through his agent negotiated a sale of the tapes to the Mitchell Library for the sum of $15,000 and dishonestly kept the money. As this finding could not be challenged by the appellant, the appellant was left with technical points of appeal only. Held (per Clarke JA; Priestley and Meagher JJA concurred) The application to state and sign a case and a stated case should be in the prescribed form of Form 41B (Pt32 R11 Supreme Court Rules). Was the statement of claim a nullity as a result of the procedural irregularities? No. ORDERS Appeal dismissed with costs. Priestley JA I agree with Clarke JA. As appears from his detailed consideration of the appeal, the nature of the proceedings by which the magistrate's decision was brought under the Supreme Court's consideration and the circumstances of the case precluded any challenge to the magistrate's finding on what was the substantial matter litigated before him, which was whether the appellant had dishonestly retained the proceeds of sale of the tapes. The appellant was left only with the more technical points dealt with by Clarke JA, and for the reasons given by him, I do not think the appellant succeeds on those points. In my opinion the appeal should be dismissed with costs. Clarke JA On 2 March 1993 Mr RK Godfrey SM gave judgment in favour of the respondents in the sum of $ 15,000. The appellant was dissatisfied with that decision and on 30 June 1993 filed a stated case in this Court. That case was heard by Wood J who concluded that it had not been shown that the learned Magistrate's determination was erroneous in point of law and the appellant has now appealed to this Court from that decision. At the outset of the appeal Mr Molomby, counsel for the appellant, applied for leave to tender the transcript of evidence taken during the hearing before the Magistrate. Counsel for the respondents objected to the tender and, the transcript not being incorporated in the stated case and not being before Wood J, the court rejected the application. Accordingly the argument proceeded upon the basis that the court was confined in its consideration of the points raised to the material appearing in the stated case and the documents, including the written reasons of the learned Magistrate, which were incorporated in it. The facts which can be discerned from those documents may be shortly stated. 2 UNREPORTED JUDGMENTS The appellant and the respondents were all members of an unincorporated association known as "Writers in the Park" which has, since 10 September 1985, organised readings, forums, book launches, and other writing based events in the Lounge Bar of the Harold Park Hotel at Glebe. It is, as its application to the Community Cultural Development Unit in 1990/91 for assistance pointed out, "an organisation of volunteers, the overwhelming proportion of whose budget is committed to fees and payments to arts workers". It apparently has a Constitution and set of Rules but these are not before the Court. Whether it has a list of members and whether they extend beyond the persons who are parties to the present proceedings is a matter that is not entirely clear. The learned Magistrate's relevant finding was that: "Writers in the Park is an unincorporated association with charitable purposes namely the promotion of literature. Since 1985 the Tuesday night readings have been recorded on tape. The Harold Park Hotel supplied the sound recording equipment, Writers in the Park purchased the blank tapes. The recordings were done by members of Writers in the Park." At various times the storing or archiving of the tapes, which had become scattered all over Sydney, were discussed between a number of the members. A decision was then made to collect all the tapes and this was done. It was intended by those persons that the tapes be donated to the Mitchell Library. According to the reasons for judgment the appellant informed the fourth respondent, Simon Morgan, that the Mitchell Library would archive the tapes but in response to questions, which the fourth respondent directed to the appellant on several occasions, the latter replied that the only money which would be paid would be in the vicinity of $100 to cover administration and transportation. Notwithstanding that answer (which his Worship accepted was given on a number of occasions) the appellant, through his agent, Rosemary Creswell, negotiated a sale of the tapes to the Library for the sum of $15,000 and kept the money. The learned Magistrate concluded that the appellant dishonestly sold the tapes which, in his view, belonged to Writers in the Park, to the Library. By this finding I take him to mean that the appellant fraudulently induced the fourth respondent to sign a document which facilitated the sale and retained the moneys for his own use when he knew that the tapes were not his to sell. The reasons also contain the following passage: "The sale was discovered and when challenged by Mark Morgan he at first denied receiving any money. Mark Morgan then contacted Rosemary Creswell for verification. He again challenged the defendant and again the defendant at first denied receiving any money but later admitted the same." The factual finding that the appellant had dishonestly retained the proceeds of sale of the tapes was not challenged. The court was informed that the reason for the absence of a challenge was that there was not one open to the appellant, a statement which would seem to be correct. Once the appellant admitted that he had received the money the proceedings were commenced against him. The statement of claim was quite short, reading: "The Plaintiff claims $15,000 in respect of the following cause of action: 1. The Plaintiff is the unincorporated Association known as Writers in the Park whose address for service is 115 Wigram Road, Glebe in the State of New South Wales and whose members are particularised in Schedule 1| attached hereto. 2. The Plaintiff claims from the defendant monies in the sum of $15,000 had and received by the Defendant in July of 1990 from the State Library of New South Wales, Macquarie Street, Sydney for the Plaintiffs. URJ PAPAELLINAS v MOSSOP (Clarke JA) 3 3. The Plaintiff claims: (a) The sum of $15,000; (b) Costs; (c) Interest... " In the schedule the names of all the respondents and one other, David Gaunt, appeared. Mr Gaunt's name was later removed as he indicated that he did not wish to be a party to the action. The appellant filed grounds of defence which stated that: "The defendant intends to defend this action upon the following grounds: 1. The defendant denies paral, para2 and para3 of the statement of claim and says further that he is not indebted to the plaintiff in the amount of $15,000 or for any amount.' Having recited the contents of the two pleadings the stated case proceeds: "Originally the plaintiff was described as Writers in the Park. Subsequently the pleadings were amended so that the plaintiffs became six of the seven people in the schedule attached to the statement of claim..." It was this amendment of the pleading which led to the first ground in the stated case which was as follows: "The case should have been dismissed on the defendant's motion because the plaintiff was an unincorporated association called Writers in the Park and it is well settled in the law that an unincorporated association cannot sue or be sued." Following this statement of the contention some further facts were stated as follows: "The statement of claim was filed on 12th December, 1991. During the ensuing eight months the pleadings were not amended. Shortly prior to the hearing on the matter, which was set for 19th August, 1992, counsel for Mr Papaellinas filed a motion to dismiss the case on the grounds that it was brought in the name "Writers in the Park" an unincorporated association, and that such an association could not legally bring an action. On the day of hearing the Magistrate denied that motion, and instead allowed the statement of claim to be amended by replacing 'Writers in the Park" with the seven named persons. Counsel for the defendant pointed out that the action, having been begun in the name of a non existent legal person, was a nullity and, therefore, incapable of amendment and to allow such an amendment was contrary to the authorities on the matter." The inclusion of these words following the contention seem to me to be quite irregular. Pt32 R11 of the Supreme Court Rules provides that both an application to state and sign a case and a stated case should be in the prescribed form. The form of stated case is Form 41B and it is perfectly clear that it requires a clear statement of the determination which has been challenged, the facts which the learned Magistrate has found relevant to that determination, the grounds of the determination and the appellant's contention. It concludes by raising the question whether the specified determination was erroneous in point of law. Although no point was raised by the respondents before Wood J, or this Court, as to the regularity of the stated case the present case was drafted with little apparent reference to the rule to which I have drawn attention and is not, in my opinion, in a satisfactory form. While the court is disposed to deal with the appeal notwithstanding the irregularity in the case I mention that fact because of the high incidence of unsatisfactorily stated cases before this Court. It is, to my mind, important that lawyers charged with the responsibility of drafting a stated case should pay careful regard to the rules and not set out surplus material in the 4 UNREPORTED JUDGMENTS portion set aside for the determination and contention. All the facts should appear in the relevant portion of the case whether by express statement or incorporation. In the event Wood J rejected this contention of the appellants and it has been submitted that his Honour erred in law in so doing. In his judgment Wood J correctly posed the question as one as to whether the description of the plaintiff as "Writers in the Park" in the statement of claim was a procedural irregularity capable of amendment by substitution of the individual plaintiffs or a fundamental and incurable flaw incapable of any such amendment. In rejecting the submission his Honour relied upon the decision of the majority in M and M Civil Engineering Pty Ltd v Sunshine Coast Turf Club (1987) 2 QdR 401 and held that the statement of claim was not a nullity. While I agree, in general, with his Honour's reasons I would myself dismiss the application upon the ground that, properly construed, the statement of claim clearly identified the plaintiffs as the named persons in the schedule and that its amendment was, in a sense, a procedure taken only for more abundant caution. Wood J made an alternative finding in support of his conclusion which was of like effect and that was that the use of the association name as the plaintiff was capable of being considered a short form description of the persons named in the schedule. The appellants' submissions proceeded upon the basis that the unincorporated association had no legal capacity to bring the proceedings and that a fundamental defect in the capacity of a party which has instituted proceedings renders them a nullity. Reference was made in these submissions to Lazard Bros v Midland Bank [1933] AC 289, United Service Insurance Co Ltd v Lang (In Liq) (1935) 35 SR 487, Maritime Services Board of New South Wales v Australian Chamber of Shipping [1977] | NSWLR 648 and Carlton Cricket and Football Social Club v Joseph (1970) VR 487. It is, of course, clear that an unincorporated association has no legal capacity to commence an action in a court and it may be that proceedings instituted by the association itself would have been a nullity but that is not this case. The terms of paral of the statement of claim, which I have already set out, makes it plain that the association was an unincorporated one and nominates the members of that association. There would have been no purpose in listing the names of members of an association which was able to sue in its own name. The only purpose of the inclusion of the names of members would be to indicate the persons who were, in essence, bringing the action. For that reason, it seems to me that what was said in the statement of claim should be understood as conveying the message that the action was brought by the members on behalf of the unincorporated association. If that is correct then the statement of claim was not a nullity. Nor, on the evidence before the court, was there a procedural irregularity but if the learned Magistrate decided, for more abundant caution, to grant an amendment he was entitled to do so. The second ground of appeal is that "His Honour erred in law in finding that 'the facts stated do suggest that the individuals who were substituted as plaintiffs were members centrally concerned in the organisation of the association and in the making of the tapes". This ground relates to Contention F in the stated case which asserts that the finding in favour of the six individuals who had been substituted as plaintiffs was erroneous because no findings were made about the role or status of any of the named plaintiffs in relation to the association. Wood J's conclusion was based upon the material in the stated case which indicates that all but one of the respondents were involved in the organisation at various times. The appellant challenges the correctness of this conclusion when URJ PAPAELLINAS v MOSSOP (Clarke JA) 5 one of the respondents was not mentioned in the stated case and others were mentioned in what the appellant described as an "historical context". In my opinion the present submission, if it was made to Wood J, should not have been entertained by him and it should not be entertained by this Court. The court is confined to the matters articulated in the stated case, as I have endeavoured to point out, and the facts referred to therein which relate to the questions raised. None of those facts suggest that the matter now sought to be raised by the appellant was an issue before the learned Magistrate. If this is correct then the authorities establish that this Court should not entertain the point at this stage. (See Abalos v Australian Postal Commission (1990) 171 CLR 167.) Insofar as there are no facts expressed in the stated case itself which could support the present submission it is necessary to refer to the reasons for judgment which were incorporated in the case in order to determine whether the point was taken in the trial. Those reasons refer to the pleadings and there then follows the following passage: "The Certificate of Readiness filed by the plaintiff reads under the heading 'Summary of Issues in Dispute'. "(1) Was the sum of fifteen thousand dollars paid by the State Library of New South Wales to the defendant, paid to the defendant for himself or as agent for [or] on behalf of the plaintiff. (2) The answer to the first issue would in part be resolved by determination as to who owned the material which was purportedly sold by the defendant to the State Library of New South Wales. (3) There will be an issue between the parties as to whether the ownership of the material so supplied had been assigned either in part or on whole by the plaintiff to the defendant." The present point does not fall within any of those issues but Mr Molomby correctly points out that the certificate was filed by the plaintiffs and there was no express statement in the reasons to the effect that the defendant accepted them. Neither, however, is there a statement to the effect that the defendant disputed that they were the issues or that he sought to raise any other issues. What is clear is that that statement is immediately followed by the learned Magistrate's consideration of those, and only those, issues. There could be no clearer indication that what the parties joined issue on were the three points set out in the certificate of readiness. Furthermore, it is clear to me that if this issue had been raised by the appellant at the hearing there would have been an opportunity to the respondents to lead evidence establishing the facts now said not to have been proved. In these circumstances the only inference which is open to the court is that the point was not raised as an issue at the hearing before the learned Magistrate and was not open to the appellant either before Wood J or this Court. Ground 3 was not pressed and the fourth ground contended that his Honour erred in law in going beyond the material before him in the stated case and, in particular, in concluding that the only view open on the evidence was that the recordings of the readings were made for the purposes of the association, and any copyright acquired by the makers or organisers of the tape recordings could only have been held by them on trust for its purposes and for the benefit of its members. His Honour did make the statement to which reference is made in the ground of appeal but, in order fully to understand it, it is necessary to set out a portion of the judgment which immediately precedes that statement. His Honour said: 6 UNREPORTED JUDGMENTS "The finding that the tapes were the property of the voluntary association was wrong in law, so far as it suggested that the association, as an entity itself, owned the tapes since it was incapable of holding any proprietary interest.... To that extent the reasoning of the learned Magistrate was erroneous. However, it does not follow that the result of the proceedings was also wrong. " There then follows the statement in question. Iam not persuaded that what the learned Magistrate said should be understood as conveying the notion that it was the unincorporated association rather than the members of the association who were the proprietors of the tapes. If the passage in the learned Magistrate's reasons should be understood in that way then I would agree with Wood J but in order to determine whether the passage in question was erroneous it is necessary to refer to the two contentions in the stated case which were under consideration by his Honour at the time he made the contentious statement. The first was Contention B which was: "The finding that cassette tapes in dispute were the property of the unincorporated association known as 'Writers in the Park' is incorrect in law because an unincorporated association, having no legal personality, cannot own property." (This is a contention I would reject for the reason that I do not read the learned Magistrate's reasons as seeking to draw the distinction which is implicit in the contention.) The second contention was that "The finding that the cassette tapes in dispute were the property of the unincorporated association called 'Writers in the Park' is erroneous." Immediately following this contention the stated case proceeds: "There was no evidence that the tapes were the property of 'Writers in the Park'. The evidence about the tapes, as recorded in the determination, was that they were recorded on equipment belonging to the Harold Park Hotel, of which the plaintiff Simon Morgan was licensee, that the blank tapes were sometimes bought from the proceeds of the 'Writers in the Park' activity, and that the recordings were made by the plaintiffs Simon Morgan and Mark Morgan, by the defendant, George Papaellinas and by other organisers at their direction. In the evidence of the plaintiffs Simon Morgan and Mark Morgan relating to the circumstances in which Simon Morgan signed Exhibits 3, 4 and 5, there was behaviour by them consistent only with the assertion of a right of proprietorship to the tapes in Simon Morgan shared only with Mr Papaellinas." Before dealing with the submissions let me point out that under the stated case procedure a court is required to determine whether, upon the facts found by the learned Magistrate, he or she has erred in law. The only occasion for going beyond the facts found by the Magistrate would occur when a submission is made that the there is no evidence to support a particular conclusion. In that event the procedure to be followed is that the transcript of evidence and all exhibits should be put before the court to determine whether there is, or is not, such evidence. It is obvious that the passage I have quoted contains assertions by the appellant and not findings by the Magistrate and for this reason it is a clear example of irregularity in the statement of the case. The present submission and the contention could, however, be understood in two ways. First, that there was no evidence before the Magistrate that the tapes were the property of the members of Writers in the Park. If that was to be pressed it would have been necessary for all the evidentiary material to be incorporated in the stated case and put before URJ PAPAELLINAS v MOSSOP (Meagher JA) 7 the court. This was not done and as the transcript was not tendered before Wood J, it was not available to be received by the court in the appeal. In the absence of the evidence tendered at the trial there is no way that this Court could uphold the 'no evidence' submission. The contention could also be understood as asserting that on the facts found the only conclusion open, as a matter of law, was that the tapes were the property of the appellant and the fourth respondent It would seem to follow from this contention that the issue at the trial was whether the tapes were owned by the members of the association or by the two named persons There was, for instance, no suggestion that the tapes belonged to the individual speakers or to anyone else The question simply was whether they were owned by the members or the two persons. The case that they were owned by the two persons depended upon Exhibits 3,4 and 5 which were documents signed either by both the appellant and fourth respondent or by the fourth respondent alone Insofar as the document signed only by the fourth respondent (which was the earliest one signed) was, on the Magistrate's findings, induced by a fraudulent representation by the appellant, the status of all these documents is a matter of some uncertainty Even if one puts to one side that uncertainty I am unable to discern upon what basis it could be said that self serving documents signed by two persons could vest copyright in the tapes in them at the expense of all the other members, or at least the active members, of the association. These documents considered alone, or in association with other evidentiary material in the stated case, or incorporated within it, could not support the proposition advanced by the appellants and in these circumstances it is not surprising that the learned Magistrate made the factual finding that the tapes were the property of the association. In a sense the statement by Wood J went beyond what was necessary in order to sustain the learned Magistrate's finding of fact. Nonetheless it seems to me his Honour's statement is correct involving, as it does, a rejection of the concept that the documents signed by the appellant and fourth respondent could operate to vest ownership of the tapes in them at the expense of the membership generally. I should not conclude my observations upon this question without pointing out that underlying the appellant's submissions was the contention that as the appellant and fourth respondent were registered as the joint owners of the business name they were entitled to the property of the association (ie its members) or alternatively that they were entitled to deal with it as their own with the consequence that the documents provided a sound recognition of their title. I will assume, although it does not appear from the stated case, that they were in fact the registered proprietors of the business name but that assumption does not, in my opinion, establish their right to the property in question. In my opinion the appeal should be dismissed with costs. Meagher JA I agree with Clarke JA. Appeal dismissed with costs Counsel for the Appellant: TMOLOMBY AND E TRUSCOTT Instructed by: HEIDTMAN AND CO Counsel for the Respondent: C BIRCH 8 UNREPORTED JUDGMENTS Instructed by: CRADDOCK MURRAY AND NEWMANN