Supreme Court New South Wales Medium Neutral Citation: Xu v Georges [2013] NSWSC 880 Hearing dates: 4 December 2012 Decision date: 04 July 2013 Before: Latham J Decision: 1. Leave to appeal is refused. 2. Up to and including 18th October 2011 costs as agreed or [on the ordinary basis] are to be paid by the plaintiff to the defendants 3. Indemnity costs thereafter are to be paid by the plaintiff to the defendants Catchwords: APPEAL - appeal from Local Court to Supreme Court - no appeal from Local Court to Supreme Court on questions of fact - leave to appeal refused - indemnity costs granted Legislation Cited: Local Court Act 2007 Cases Cited: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 Gangemi Holdings Pty Ltd v Salter [1999] NSWSC 1004 Haines v Leves & Anor.(1987) 8 NSWLR 442 Mahoney v Industrial Registrar of New South Wales & Anor. (1986) 8 NSWLR 1 Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 R v District Court: Ex Parte White (1966) 116 CLR 644 State Rail Authority v Smith [2000] NSWSC 334 Category: Principal judgment Parties: Cui Mian XU - Plaintiff Farah Georges - Defendants Representation: Counsel P Folino-Gallo - Plaintiff FFF Salama - Defendants Solicitors Mark Rahme and Associates - Plaintiff Paramonte Legal - Defendants File Number(s): 2011/00299457-1 Judgment 1The plaintiff in these proceedings appeals against a decision of Magistrate Pearce in the Local Court on 19 August 2011. The plaintiff commenced proceedings in the General Division of the Local Court against the defendants claiming the sum of $30,000.00, which she had paid to the defendants under a contract for the preparation and lodgement of a development application by the defendants relating to the plaintiff's brothel. 2The history of the relationship between the parties, the scope of the agreement between them, and the reasons for the failure of that contractual arrangement occupied a considerable number of hearing days. At the conclusion of the hearing, the magistrate gave an ex tempore judgment which, not surprisingly, did not refer in detail to all of the evidence. The magistrate made a number of findings of fact which were essentially based on an acceptance of the defendants' evidence in preference to that of the plaintiff. 3The jurisdiction of this Court to entertain an appeal from the Local Court is based on ss 39 and 40 of the Local Court Act 2007. In short, an appeal lies as of right on questions of law, and only by way of leave on questions of mixed law and fact. The plaintiff does not contend that this appeal is based on anything other than questions of mixed law and fact. However, when one has regard to the plaintiff's grounds of appeal, it is apparent that the appeal is an attempt to revisit findings of fact unfavourable to the plaintiff that were made by the magistrate and which were open to him on the evidence. For the reasons which follow I am of the view that the plaintiff ought be refused leave. The Contractual Arrangement Between the Parties 4The plaintiff has been running brothels for over fifteen years. The current brothel, located at Rydalmere, was a massage parlour before the plaintiff successfully applied for Development Approval to operate it as a brothel. For the purposes of that Development Application the plaintiff engaged architects SS Seawin Design and Construction Pty Ltd and also engaged the defendants as a consultant. The defendants had undertaken work for other Asian brothel owners in the Parramatta area and had been recommended to the plaintiff. 5Two Development Applications were made, the first in 2006 which was refused by council and the second in 2007 which was also refused by council but later approved on appeal to the Land and Environment Court. 6In May 2009, the plaintiff instructed SS Seawin Design and Construction to prepare a Development Application to Parramatta City Council to increase the number of working rooms from two rooms to three rooms. 7Meanwhile, in or around late June 2009, the plaintiff and the defendants discussed the possibility of the defendants assisting the plaintiff in preparing a Development Application to Parramatta City Council to increase the number of working rooms from two rooms to four rooms on the existing floor plan. 8Following those discussions, on 7 July 2009 the plaintiff and the defendants met at City Extra Café in Parramatta where the defendants wrote by hand a list of the scope of works to be carried out by his company FRG Developments Pty Ltd for the plaintiff. The said works were divided into three stages. The plaintiff was to pay to the defendants the sum of $10,000 at the completion of each stage. The total contract amount was thus for $30,000. 9The defendants completed the works accordingly and received three separate instalments of $10,000 from the plaintiff in person, each time at City Extra Café in Parramatta. The final instalment was received on 12 August 2009 and the Development Application was ready to be lodged soon thereafter. 10By this stage, the plaintiff had already lodged the Development Application prepared by SS Seawin Design and Construction for the three-bedroom brothel. The defendants indicated to the plaintiff that he could substitute that application with the application prepared by him, however was instructed against doing so by the plaintiff. 11Despite having collected the documents prepared for the Development Application for the four-bedroom brothel, the plaintiff failed to lodge the application. She claimed that this was due to a conversation with her then lawyer Ben Barrack in which he had told her that there would be no chance of approval for that Development Application, either by the council or by the Land and Environment Court. 12One of the proposed new working rooms in the Development Application plans prepared by the defendants measured 2.1 m x 2.3 m and included a plan for a bed that measured only 1 x 1.5 m. The plaintiff gave evidence that Ben Barrack had based his opinion that the Development Application would be refused on the small size of the working room and the bed. In his evidence the defendants maintained that these measurements had been on the instructions of the plaintiff, who had wanted to use the room for special services in the brothel. The plaintiff denied this in her evidence. 13On 12 November 2009 the plaintiff told the defendants that she was not happy with the Development Application, though she did not elaborate any further. Despite meeting the defendants several times throughout the preparation process, this was the first time the plaintiff had expressed dissatisfaction about the defendants' work. At no stage did the plaintiff suggest that his work was defective or negligent in any way. On 17 November 2009 the defendants invited the plaintiff to discuss her concerns with him but the plaintiff did not attempt to do so. 14On 18 November 2009 the defendants received a letter from the plaintiff's lawyer Mark Rahme alleging negligence and misleading and deceptive conduct and demanding a refund of the contract sum of $30,000 plus damages. Ben Barrack had refused to act in the matter as he claimed to personally know the defendants. 15The plaintiff brought proceedings in the Local Court at the Downing Centre in Sydney and the matter was heard before Pierce LCM. His Honour found the plaintiff substantially unsuccessful, but found that the defendants had been negligent in one respect, by requiring the traffic report. The plaintiff was awarded damages of $2,200.00 which represented the cost of that report. 16Costs were awarded in favour of the defendants, but this was not recorded in the Notice of Orders Made, which was sent by the Registrar to the parties. The plaintiff subsequently refused to pay the defendants' costs and instead demanded that the defendants pay the plaintiff's costs. 17Following considerable correspondence and after several unsuccessful attempts to secure payment, the defendants filed an Application for Costs in the Supreme Court. On 18 October 2011 the Costs Assessor indicated to the plaintiff's lawyers his preliminary view that the magistrate's orders clearly ordered costs in favour of the defendants against the plaintiff. On 21 October 2011 the plaintiff filed a Notion of Motion to stay the enforcement of Pierce LCM's costs orders until determination of the current appeal. 18The plaintiff now seeks :- ato have Pierce LCM's judgment set aside; bin the alternative, a declaration that Pierce LCM made errors of law as set out in the appeal grounds and further seeks an order in the nature of certiorari quashing his Honour's judgment and an order of mandamus directing that the proceedings be remitted to the Local Court to be dealt with by a different magistrate; and calternatively again, a judgment for $30,000.00 plus interest and costs in favour of the plaintiff. The Plaintiff's Submissions on the Appeal 19The plaintiff pressed 27 grounds of appeal, two of which (grounds 20 and 21) were abandoned. The remaining grounds of appeal are somewhat repetitious, but they may be grouped into the following categories: aNo evidence capable of supporting the findings of fact (Grounds 1, 4 - 6, 9 - 10, 12, 22 - 23) bFailure to make a finding of fact on a fundamental issue (Ground 2) cFailure to provide "lawful or meaningful" reasons for a finding of fact (Ground 3) dFailure to take into account relevant evidence or failure to afford proper consideration to relevant evidence (Grounds 7 - 8) eInconsistency in reasoning (Grounds 11, 25 - 26) fError in fact-finding (Grounds 12 - 19, 24) gManifest irrationality, illogicality or unreasonableness (Ground 27) 20The plaintiff claimed that there was no evidence capable of supporting the magistrate's finding that the Development Application was reasonably capable of Development Approval upon its lodgement (Grounds 1 and 23). Counsel for the plaintiff contended that this was because evidence provided by the defendants' expert Mr Byrnes was not capable of supporting this finding. 21The plaintiff further alleged that there was no evidence capable of supporting the magistrate's findings :- regarding the "third working room" (Grounds 4 - 6); that the tasks in the written agreement were required for the Development Application (Grounds 9 - 10); that the plaintiff was the applicant to the Development Application (Ground 12); that the defendants had a reasonable basis for believing that the tasks in the written agreement were required for the Development Application (Ground 22); and that the defendants completed the tasks in the agreement (Ground 23). 22The plaintiff asserted that his Honour fell into fundamental and jurisdictional error by failing to determine the terms of agreement (Ground 2). 23The next ground claimed that the magistrate erred in failing to record lawful or meaningful reasons for his decision, particularly in relation to his global finding that he preferred the evidence of the defendants to that of the plaintiff (Ground 3). 24The plaintiff also contended that the magistrate failed to take into account relevant considerations or afford proper consideration to matters that were before him as evidence, again regarding the "third working room" (Grounds 7 - 8). 25The plaintiff also argued that there were various inconsistencies in the magistrate's judgment and reasoning, including inconsistencies between: The finding that the fire and ventilation report was required and the finding that the traffic report was not required (Ground 11); The finding that certain mistakes in the drawings were inconsequential as they were outside the ambit of the defendants' brief and the finding that the agreement was for the preparation of a Development Application capable of being approved (Ground 25); and The finding that the fact that the specifications document was not required for the Development Application was inconsequential to the proceedings and the finding that the defendants owed a duty of care to the plaintiff (Ground 26). 26Further, the plaintiff asserted a number of errors in the magistrate's findings, including his Honour's findings that :- the identity of an applicant or an applicant's criminal antecedents are relevant considerations in a Development Application (Grounds 12 &14); the applicant was the plaintiff not the plaintiff's husband (Ground 13); knowledge of the plaintiff's criminal antecedents was sufficient to found a reasonable belief in the requirement of a crime statistics report (Ground 13); Farah Georges was not a party to the contract and FRG Developments Pty Ltd was the only contracting party (Grounds 15 - 17); FRG Developments Pty Ltd was entitled to subcontract parts of the work (Ground 19); and the plans prepared by the defendants were not defective (Ground 24). 27Finally, the plaintiff claimed that the decision was manifestly irrational, illogical or unreasonable (Ground 27). 28The plaintiff's written submissions were repetitious and lengthy, comprising 76 pages. The Court was assisted by a document titled 'An Outline of the Various Errors of Law' that was filed with the written submissions. Disposition 29Grounds 1 to 27 do not raise errors of law or errors of mixed fact and law by the magistrate. The grounds either seek to disturb findings of fact, or allege errors of law which are unfounded. 30There is no appeal to this Court from the Local Court on questions of fact. A wrong finding of fact, even a perverse finding of fact that is against the weight of the evidence, does not elevate such an error into an error of law. In Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, Jordan CJ summarised the relevant principles thus (at 138) : - (3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or, (c) if it has misdirected itself in law. 31See also Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; Mahoney v Industrial Registrar of New South Wales & Anor. (1986) 8 NSWLR 1; R v District Court: Ex Parte White (1966) 116 CLR 644; Haines v Leves & Anor.(1987) 8 NSWLR 442; Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419; Gangemi Holdings Pty Ltd v Salter [1999] NSWSC 1004; Carr v Neill [1999] NSWSC 1263; State Rail Authority v Smith [2000] NSWSC 334. No evidence capable of supporting the findings of fact (Grounds 1, 4 - 6, 9 - 10, 12, 22 - 23) 32Grounds 1 and 23 are unfounded. Quite apart from the fact that the question of whether the Development Application was reasonably capable of Development Approval would have best been answered by the lodgement of the Development Application itself, the magistrate was entitled to rely on the evidence of the defendants and the defendants' expert, town planner Mr Byrnes, in reaching his conclusion. The defendants had successfully completed design work for brothels in the past which had been approved and town planners are routinely involved in Development Applications. The magistrate also heard evidence that from her experience in running brothels, the plaintiff knew that Development Applications for brothels are often rejected by local councils, but later approved on appeal to the Land and Environment Court. The plaintiff's claim that Mr Byrnes' evidence was not capable of supporting the magistrate's findings is unfounded. 33Grounds 4 - 6, 9 - 10, 12 and 22 - 23 seek to disturb findings of fact. The plaintiff's argument that there was no evidence for the matters listed above is misconceived. There is no error of law "simply because the judge prefers one version of the evidence to another or one set of inferences to another" : Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 151. The magistrate expressly indicated in his judgment that he found the plaintiff unworthy of belief with respect to some of her evidence and that he generally accepted the evidence of the defendants over the plaintiff, including the matters listed under the abovementioned grounds. This was a credit finding which this Court ought be slow to disturb. Failure to make a finding of fact on a fundamental issue (Ground 2) 34There is no merit in this ground of appeal since there was little dispute about the terms of the agreement. In any case, his Honour found that the essential aspects of the agreement between the defendants and the plaintiff were contained within the written agreement. 35Essentially, the defendants was to prepare the necessary documents for the lodgement of a Development Application to the Parramatta City Council for an increase in working rooms at the brothel operated by the plaintiff for a lump sum of $30,000.00 to be paid in three instalments. There was ample evidence to support this finding of fact. Failure to provide "lawful or meaningful" reasons (Ground 3) 36Ground 3 is without substance. His Honour provided examples in his judgment to explain why he preferred the evidence of the defendants over that of the plaintiff. His Honour's extempore reasons were over seven pages in length. They may have lacked the polish of a prepared judgment but they complied with the basic requirements of informing the parties of the basis of his decision. Failure to take into account relevant evidence or failure to afford proper consideration to the relevant evidence (Grounds 7 - 8) 37Grounds 7 and 8 must be rejected. The magistrate heard voluminous evidence from both the plaintiff and the defendants on the plans for the Development Application, including plans for the "third working room" and made his findings of fact accordingly. Inconsistency in reasoning (Grounds 11, 25 - 26) 38Ground 11 is unfounded. His Honour's finding that the defendants were negligent by commissioning a traffic report is not inconsistent with his finding that other reports, such as the fire and ventilation report, were reasonably required. A traffic report, which conceivably deals with traffic issues external to the brothel, is quite different in nature to a fire and ventilation report, which deals with the internal layout and fittings of the building itself. 39Ground 25 is misconceived. The magistrate made a finding of fact that the defendants' obligations did not extend to concerning himself with the boundaries of the land. His Honour made a separate finding that the agreement would reasonably be capable of being approved. There is no logical inconsistency between his Honour's two distinct findings of fact. The contention seems to merely be based on the fact that his Honour did not accept the evidence of the plaintiff's expert, who claimed that the mistakes in the drawings of the boundaries meant that the agreement would not be capable of approval. 40There is no inconsistency as alleged in Ground 26. While the magistrate found that the defendants did owe a duty of care to the plaintiff, his Honour also found that this duty was not breached by the defendants, except on the specific occasion regarding the traffic report. Moreover, his Honour stated that the preparation of specifications, while not strictly necessary for the plans, was a perfectly reasonable task for the defendants to undertake. Error in fact-finding (Grounds 12 - 19, 24) 41These grounds seek to disturb the magistrate's findings of fact and raise no questions of law or questions of mixed fact and law. 42There is no need to address each ground. However, with regards to Ground 17, it is clear that his Honour's reference to "Mr Georges" was a reference to the person acting on behalf of his company FRG Developments Pty Ltd, which the magistrate had determined to be the contracting party. Manifest irrationality, illogicality or unreasonableness (Ground 27) 43Ground 27 is not satisfied. There is no manifest irrationality, illogicality or unreasonableness in the magistrate's judgment or reasons. Orders 44Leave to appeal is refused. 45Up to and including 18th October 2011 costs as agreed or [on the ordinary basis] are to be paid by the plaintiff to the defendants. 46Indemnity costs thereafter are to be paid by the plaintiff to the defendants. 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: 08 July 2013