Herbert Wende & Ors v Giles Finney [2005] NSWSC 927

New South Wales Supreme Court

Herbert Wende & Ors v Giles Finney [2005] NSWSC 927 CITATION : This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 11/08/2005

JUDGMENT DATE : 16 September 2005

JUDGMENT OF : Howie J at 1

DECISION : The appeal is allowed and the verdict and orders of the Magistrate set aside. The matter is remitted to the Local Court to be determined comformably with this decision. The respondent is to pay the appellants' costs of the proceedings before the Assistant Registrar and this appeal.

CATCHWORDS : Appeal - Proceedings in Small Claims Division of Local Court - documents on subpoena filed at hearing - documents alleged dishonesty and misconduct by appellants - refusal to allow witnesses to be called in answer to documents - denial of procedural fairness.

Supreme Court Rules - Pt 60 r 10 LEGISLATION CITED : Local Court (Civil Claims) Act - s 69(2A) (repealed)

Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409 Wakim v Mathiew Pty Ltd [2002] NSWSC 405 CASES CITED : Slade v Gea [2001] NSWSC 38 Kojima v Australian Chinese Newspapers [2000] NSWSC 1153

PARTIES : Hertbert Wende, Margaret Wende and Mark Lloyd v Giles Finney trading as CBD Law

FILE NUMBER(S) : SC 11795/2004

M. Lloyd and H. Wende - Applicants appeared in person COUNSEL : R. de Meyrick - Respondent

- SOLICITORS : CBD Law - Respondent

LOWER COURT JURISDICTION : Supreme Court

LOWER COURT JUDICIAL OFFICER : Assistant Registrar Howe

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HOWIE J

FRIDAY 16 SEPTEMBER 2005

11795/2004 HERBERT WENDE & ORS v GILES FINNEY

JUDGMENT 1 HIS HONOUR: The is an appeal from the judgment of Assistant Registrar Howe refusing to set aside a decision of a Magistrate sitting in the Small Claims Division of the Local Court at Gosford. The Assistant Registrar determined the matter under the delegated authority of a Master. The jurisdiction of this Court to review the decisions of a Master is provided in Pt 60 r 10, of the Supreme Court Rules. An appeal from a Master to a single Judge of the Court is not a retrial but an appeal subject to the usual principles governing a review of facts or an exercise of discretion as are applied by the Court of Appeal: Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409. 2 The appellants appeared unrepresented and Mr Wende, assisted by Mr Lloyd, presented the case on their behalf. Mr de Meyrick appeared for the respondent. 3 In accordance with s 69(2A) of the Local Court (Civil Claims) Act (the Act) (now repealed) an appeal lies against a decision in the Small Claims Division only on the ground that there was a lack of jurisdiction or a denial of natural justice. Initially the appellants asserted that both errors occurred in the hearing of their claim against the respondent on 10 May 2004 as a result of which there was a verdict for the respondent. The appellants, who were represented before the Assistant Registrar, abandoned the ground in relation to lack of jurisdiction. 4 The proceedings that give rise to this appeal commenced on 24 November 2004 with the issuing of a Statement of Liquidated Claim by which the appellants sought the sum of $3,200 and interest from the respondent on account of payments incurred by the appellants as a result of the respondent's alleged negligent handling of proceedings brought by the appellants in the District Court. In brief the appellants assert that they had incurred payments amounting to the sum claimed as a result of three orders made in the District Court as a consequence of the failure of the respondent to prepare their case in a timely fashion and to comply with directions made for the hearing of the proceedings in that Court. 5 The proceedings in the District Court arose when in May 2000 the appellants commenced an action seeking damages as a result of two trees on a neighbouring property falling on a shade house used by the appellants in carrying out a wholesale nursery business on their property. In August 2001 the appellants engaged the services of the respondent to represent them. Difficulties arose between the appellants and the respondent in the preparation of the appellants' case, particularly in respect of the obtaining of reports by an expert on plant production and a forensic accountant in respect of a claim for loss of earnings as a result of the damage to the shade house. The appellants also claimed that the barrister engaged by the respondent was unprepared because the respondent did not properly brief him. 6 On 5 June 2003 Gibson DCJ ordered the appellants to pay costs thrown away totalling $2,700 as a result of adjournments of hearing dates in February, April and June 2003 because of the unreadiness of the appellants' case. The appellants also paid $500 to the defendants' solicitors as a compromise of a motion to have the proceedings struck out in September 2003. It was these payments that gave rise to the appellants' claim in the Local Court. 7 Ultimately in October 2003 the appellants and the respondent parted ways. The case was taken over by a firm of solicitors, Lyons & Lyons, who engaged a barrister, Mr Gruzman. In a letter dated 6 November 2003 to Jim Lyons, Mr Gruzman indicated his initial thoughts that the case was not ready to proceed in its current state and that it required the immediate attention of the newly engaged solicitors. 8 The proceedings came before Judge Robison on 10 and 11 November 2003. The appellants again sought an adjournment and the defendants sought to have the proceedings dismissed. His Honour refused to dismiss the proceedings but ordered the appellants to pay the defendants' costs. The Judge was critical in guarded terms of the handling of the appellants' case by the respondent but noted that he had not heard from the respondent. He stated:

"……. it would seem that on any reasonable reading of this material, that the plaintiffs would have been inclined to have this matter determined sooner, rather than later, but beyond that, I make no further comment" 9 It was in this background that the appellants commenced the proceedings in the Local Court on 24 November 2003. That matter eventually came before a Magistrate on 22 April 2004 for hearing but the proceedings were adjourned to 20 May 2004 on the application of the appellants because of the late filing of an affidavit by the respondent. The Magistrate made an order that "any statements" from either of the parties were to be filed by 13 May 2004. 10 On 4 May 2004 the respondent issued a subpoena for production on Lyons & Lyons for all documents relating to the proceedings in the District Court. Apparently the respondent had handed over the entirety of the file to this firm when he ceased to act for the appellants without keeping copies of any documents. On 14 May 2004 the respondent issued a notice to produce on the appellants in similar terms to the subpoena. 11 At a return of the subpoena on 17 May 2004, the appellants opposed the respondent having access to the documents. Without ruling on the objection, the Registrar stood the matter over to the hearing of the claim. 12 The claim came before Magistrate Cocks for hearing on 20 May 2004. Mr Wende appeared for the appellants and Mr O'Callaghan for the respondent. There was a preliminary issue raised as to access to the subpoenaed documents but it was not resolved by the Magistrate and the hearing was stood in the list to allow Mr O'Callaghan to search through the documents produced to determine what he wanted to tender. Later Mr O'Callaghan indicated to the Magistrate that he would only be seeking access to the advices provided by Mr Gruzman to Lyons & Lyons. The appellants objected to access being granted to the documents on the grounds of relevance and privilege. The matter was left unresolved and again stood in the list. 13 When the matter came before the Magistrate again, he granted access to the documents overruling the claim of privilege. He once more adjourned the hearing so that Mr O'Callaghan could access the documents in the presence of Mr Wende so that he could know what documents Mr O'Callaghan had seen. 14 Later, when the matter recommenced, Mr O'Callaghan sought to rely upon a small bundle of documents, one of which was a letter marked "confidential". He had refrained from showing that document to Mr Wende believing it to be a matter for the court to decide whether Mr Wende should know its contents. The Magistrate held that, if Mr O'Callaghan sought to rely on the letter, then Mr Wende had to be allowed to view it. However, he did not give Mr Wende an opportunity to look at the document until after he had retired to consider his judgment. 15 The Magistrate heard submissions and then adjourned to peruse the file before delivering judgment. It appears that apart from the documents that had been filed in advance of the hearing, the Magistrate also received a number of documents chosen by Mr O'Callaghan from those inspected by him. These documents included an unsigned and undated letter marked "confidential" from Mr Gruzman to Jim Lyons and a letter from Mr Gruzman to Lyons & Lyons dated 11 November 2003. I will refer to these two documents as "the Gruzman documents". It is the reception by the Magistrate of these documents that gives rise to the proceedings in this Court. 16 When the Magistrate returned to the Bench the following took place:

His Honour: Yes, I've read all the material in relation to the matter. I've had access to a number of documents on subpoena. No last minute matters before I give decision?

O'Callaghan: Did Your Honour have access to those materials which we wished to tender there?

His Honour: Yes, that's been tendered.

O'Callaghan: And you've read that?

His Honour: Read that.

Wende: That in part is not signed, may I say.

His Honour: Sorry, it's not what?

Wende: If that is seen to be evidence, part of those documents are not signed, if we're talking about those documents that were taken out of the subpoena.

His Honour: Oh, I accept them as being from the solicitor's file, whether or not they're signed. There's a copy of the signature there from Mr Gruzman.

Wende: Yeah.

His Honour: One of them is not signed. I accept that they're produced on subpoena from the solicitor's file notes or records.

Wende: Well, in my view they're not relevant but in any case if they're accepted…

His Honour: They looked pretty relevant to me, Mr Wende.

Wende: Then I would wish to call witnesses.

His Honour: I don't propose to allow evidence to be called on oath. I've got documents coming out of my ears in relation to this. It's not a matter for evidence to be given. It's a matter of perusal of the file, taking the evidence by way of statement form. This is the Local Court, Small Claims Division. It's meant to be done by way of written statement, it's not meant to be a full blown hearing. Heaven knows one would have thought you'd be scared of further court hearings given the number of times that this has been before the court or matters relating to this or pertinent to this, had been before the court. I propose to make a decision based on the written material. 17 The Magistrate then proceeded to give his judgment. It takes about two pages of transcript. Of the one hundred lines of transcript comprising the Magistrate's reasons, 50 lines involve the Magistrate either quoting directly from or summarising the two documents emanating from Mr Gruzman and obtained by Mr O'Callaghan from the file produced on subpoena. Those documents were highly critical of the appellants and in effect assert that they were attempting to raise a false claim in relation to economic loss resulting from the effects on the conduct of their business by the damage to the shade house. 18 The Magistrate read into his judgments passages of the documents that were personally critical of Mr Wende and his attitude to the proceedings including the following:

"I am very concerned that Mr Wende either does not understand plain English or is trying to manoeuvre himself into a position of strength against his former solicitor and all his present solicitors". 19 The Magistrate then went on to comment on the changing nature of the claim made by the appellants and the unsuccessful attempts to settle the claim as revealed in the letter by Mr Gruzman. He then stated:

"The evidence throughout the file is that the nature of the settlement figure was in no way shape or form supported by the professional advice that was being given and unusually, very senior counsel, he makes a comment that he has never done this in all his years of practice: 'I am not prepared to appear for the plaintiffs who appear to be propounding a case that is false in a material particular, that is, propounding tax returns which are false to base an economic loss claim. It is incredible that these persons have been able to survive with an income of a couple of thousand dollars'". 20 A little later in his judgment the Magistrate again quoted from the letter of Mr Gruzman as follows:

"Mr Gruzman goes on: 'I have a duty to the Court as well as my instructing solicitors and my clients but I regard my duty to the Court to put forward and honest account as paramount. In the circumstances I am not prepared to act for or advise on this or any other matter. According I return herewith the brief.'

He goes on a little bit further on at about point 6: 'I regret I have to take this course but I am not going to be a party to a claim which is an attempt to deceive the Court'." 21 The Magistrate then referred to the fact that Judge Robison would not have been aware of this material and could not take it into account when granting the adjournment application, but added:

"This Court, which involves an action in professional negligence, however, can look at the whole story in relation to what the feelings are of those parties who have dealings with the plaintiff both early in the course and subsequently. Mr Gruzman goes on at point 8: 'In twenty four years of practice at the bar I have never had occasion to return a brief in these circumstances. Whilst the plaintiffs would not accept or properly consider my advice to settle these proceedings on proper terms, that plays no part in my decision. I advise very shortly that after I had met the plaintiffs within my view taking into account the evidence, the action was at best worth $100,000. Having now had the opportunity to assess the strength of the evidence, and taking into account the Court's attitude today to the massive increase in the claim from $11,000 to $611,000, I am less optimistic of the chances of the plaintiff ever succeeding the Offer of Compromise which expired in April 2003.'

Now that clearly must go to the hub of the matter in relation to this matter because quite a number of the adjournments seem to have been sought on the basis of the plaintiffs not being satisfied with the expert evidence that they have. Moving on to their own expert, I think it was Mr Salzman, or getting another expert at any rate, Mr Salzman, which caused some adjournments. Other adjournments of course have been referred to by the illness of Mr Lloyd, which exacerbated the situation. I've gone through all of the chronological notes which have been tendered in this case on behalf of Mr Finney and it seems that the matter did not have carriage and one of the primary, or the primary, problem was that the plaintiff was not able to come up with evidence, that supported their case for quite a whole settlement. I find no negligence on behalf of the defendant. I give verdict for the defendant. 22 The appellants claim that there was a denial of procedural fairness arising from the use made by the Magistrate of the two documents emanating from Mr Gruzman. They complain that the documents were received by the court in breach of the direction that material to be relied upon was to be filed prior to the hearing, that Mr Gruzman accused them of criminal conduct in relation to taxation fraud, and that they were deprived of the opportunity of testing or countering that material before the Magistrate acted upon it. They also argue that the Magistrate gave more weight than he should have to the untested beliefs and opinions of Mr Gruzman because he was "very senior counsel". 23 Although the appellants assert that there was no abandoning of the ground of appeal in relation to jurisdiction before Assistant Registrar Howe, I am satisfied that there was. It is clear from the arguments put before the Assistant Registrar by the representative of the appellants that they were all directed to the issue of procedural fairness. In any event there is no merit in the argument that the Magistrate lacked jurisdiction to deal with the claim simply because he received the Gruzman documents and acted upon them. The appellants relied upon Local Court Practice Note 3/2001 and in particular paragraph 5 to assert that, by the introduction of the Gruzman letters, the matter ought to have been transferred to the General Division of the Court. There is nothing in the Practice Note that in my view affects the jurisdiction of the Magistrate to hear the claim. The nature of the claim did not change by reason of the use of the Gruzman documents and remained within the jurisdiction of the Small Claims Division. The Magistrate might have been asked to transfer the matter into the General Division but no such application was made. True it may be that the appellants were not aware that they could make such an application. But it does not on the face of the material seem to me that, had such an application been made, the Magistrate must have granted the application in the exercise of his discretion. The simple fact that the Gruzman documents raised suggestions of impropriety, if not criminality, on the part of the appellants did not indicate that the claim was unsuitable for disposal in the Small Claims Division. 24 In determining the issue of whether the appellants were denied procedural fairness it is necessary to note the nature of the jurisdiction exercised in the Small Claims Division. This is because the content of procedural fairness varies depending upon the nature of the tribunal and the jurisdiction it exercises. Section 23B of the Act provided:

23B Procedure generally in Small Claims Division (1) Proceedings in the Small Claims Division of a court are to be conducted with as little formality and technicality as the proper consideration of the matter permits. (2) The rules of evidence do not apply to an action being heard or other proceedings in the Small Claims Division of a court. (3) An Assessor or Magistrate exercising the jurisdiction conferred on a court sitting in its Small Claims Division may inform himself or herself on any matter relating to an action being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit. (4) Proceedings in the Small Claims Division of a court (other than any judgment given or order made in respect of the proceedings) are not required to be recorded. 25 Further the Practice Note, to which I have already referred, indicates that there is no right for a party to call witnesses. There are, however, procedures in place to determine before the hearing whether there is a need for a witness to attend to be examined orally and a direction can be given permitting such a course. The fact that witnesses can be called in the Small Claims Division is a relevant factor in determining whether there was a lack of procedural fairness in the Magistrate's response to the production of the Gruzman documents at a late stage in the proceedings. 26 In Wakim v Mathiew Pty Ltd [2002] NSWSC 405, O'Keefe J stated:

[16] A clear legislative policy emerges from the Act in relation to small claims, namely, that there should be a quick, cheap and informal resolution of such claims. To achieve this, the proceedings should be conducted with the minimum of formality. That has many advantages. It tends to shorten proceedings. It assists in reducing costs. It does this in a number of ways, one of which is to make it easier for litigants in person to understand the procedures, perhaps to appear for themselves and not be disadvantaged by excessive legality, formality or procedural rules. Another is to give finality to decisions made in respect of small claims. This has been done by so framing the legislation as to ensure to the greatest extent possible that claims before the Small Claims Division of the Local Court should begin and end in that court. The limitation on the right of appeal permitted by the statute betokens this. Such a policy is readily understandable in the light of the fact that the ceiling for claims in the Small Claims Division is $10,000. Taking up the time of superior courts with such small matters is thus properly avoided in the vast majority of cases. 27 Of course informality and the abandonment of the normal rules of evidence and procedure should not be allowed to give rise to unfairness even where the justice being administered is in relation to relatively trivial claims. Rather in such matters the court might need to be particularly astute to ensure that the lack of formality and the speedy resolution of claims does not become an end in itself at the expense of the appearance of fairness to the parties within the court's jurisdiction. After all the formal rules of procedure that normally attend a hearing are generally aimed at producing fairness to the parties, sometimes at the expense of efficiency in the exercise of the court's jurisdiction. So where those rules are displaced by the need to provide cheap, efficient and expedient justice to the parties, the advantages can sometimes be obtained at too high a price so far as a particular litigant is concerned. 28 No doubt one of the reasons why the proceedings in the Small Claims Division are conducted with the informality required is that the parties before the court are, in advance of the hearing, aware of the material upon which the determination is to be made. There are procedures laid down and referred to in the Practice Note that require the parties to identify to each other the material they intend to rely upon. The material upon which each side relies, including statements of witnesses and the actual documents at the heart of the dispute, are in a form where they can be reviewed by the court assisted by such submissions that the parties wish to make upon those documents without the need to formally tender and prove the relevant material. As the Magistrate in the present matter observed, the intention of the scheme of the relevant legislation is that the dispute can generally be resolved on the documents. 29 In the present case there was no suggestion that any witnesses were to be called and a direction was made as to the filing of statements by a certain date in advance of the hearing. When the question of the tender of the Gruzman documents at the hearing arose, the appellants objected on the basis that it was in breach of the direction. The Magistrate stated:

"There's been [a] Registrar's or Court orders in relation to filing of statements. Now this is an enquiry to get to the bottom of it. What he's doing is seeking to support the statement evidence by direct evidence of business records." 30 However, the statements of both the appellants and the respondent that had been filed in accordance with the directions made by the court had annexed a large number of documents in the nature of business records or otherwise in support of assertions made in the statements. Clearly the respondent was attempting to obtain fresh material from the file subpoenaed to rebut material placed before the court by the appellants or in support of assertions made by the respondent. 31 The appellants, who were unrepresented, could be forgiven for believing that the material upon which the claim would be determined was that which had been filed by the parties in accordance with the direction of the Court. One of the problems in the present case was that the issue of access to the subpoenaed documents was not determined before the hearing day and only shortly before the actual hearing of the claim commenced. So, perhaps unusually, the normal manner of dealing with a disputed claim in this jurisdiction was not followed because unserved documents were being placed before the court and in a case where one of the parties was without legal representation. True it may be that technically speaking the order made related to the filing of statements, but this was a jurisdiction not concerned with such a formalistic approach to procedure. The simple fact is that new material was being tendered to the court whether it was technically in breach of the order earlier made or not. 32 Although the transcript and other material is somewhat confusing as to what documents the appellants had with them as a consequence of the notice to produce, it seems reasonably clear that the Gruzman documents came from the subpoenaed file and it is reasonable to conclude that the appellants had no notice of them until proffered in evidence. Certainly the document marked "confidential" did not come to the notice of the appellants until after the Magistrate had adjourned to read the file and the material tendered at the hearing. It is obvious that the new material was given considerable importance by the Magistrate in determining the claim having regard to the significance attributed to it in the reasons for judgment. 33 Mr de Meyrick submitted that the Gruzman documents became relevant because the appellants had, as part of the material in support of the claim relied upon an earlier advice from Mr Gruzman to Mr Lyons of 6 November 2002 prepared shortly after he was instructed to appear for the appellants. The advice stated his opinion that the proceedings were not ready for trial. Part of the criticism contained in that advice was that the statement of claim "was hopeless" and that proceedings based upon it were likely to fail. There was little else in the advice that touched upon the question before the Magistrate. But in any event, the issue here is not whether the Gruzman documents were relevant but whether their revelation at the hearing resulted in procedural unfairness to the appellants. 34 It seems perfectly clear that once the Magistrate decided to receive the Gruzman documents and act upon them that the appellants wished to call witnesses in an attempt to rebut them. That application was summarily dismissed simply on the basis that the proceedings were to be determined on the documents and not by "a full blown hearing". But it is clear that, although there was no right of a party to call witnesses, the court could permit a witness to be called and examined. The relevant Practice Note recognises that a magistrate or registrar at a "pre-trial review" can make such an order having regard to "the particular circumstances of the case, including the amount involved and whether there is a real issue as to credibility or a significant conflict on the evidence". 35 The appellants were unrepresented before the Magistrate. They were confronted with the tender of documents that in effect suggested that they were attempting to mount a dishonest case in the District Court in respect of their claim for economic loss based upon the available records of their income and liabilities in connection with their business. The "confidential" letter raised issues as to the credibility of Mr Wende indicating that he would make a "thoroughly discreditable witness" and that he was "manoeuvring himself into a position of strength against his former solicitor". This latter allegation went to the very issue that was being raised by the claim. The more formal document, an advice dated 11 November 2003, contained the clear allegation that such was the disreputable, if not dishonest, misconduct of the appellants that counsel had to take a course that was unprecedented in his long practice at the bar. 36 It is clear that the Magistrate put great store on the fact that these were allegations being made by "quite senior counsel" who felt it necessary to take an exceptional course in returning the brief because of his duty to the court. But these facts were irrelevant to the issue before the Magistrate except as they reflected upon the credibility of the appellants and Mr Wende in particular. Much of what the Magistrate read into his judgment from the Gruzman documents was highly prejudicial to the appellants and at least had the appearance of simply discrediting them in their conduct of the proceedings in the District Court. 37 One of the authorities relied upon by the appellants both before the Assistant Registrar and on the hearing of the appeal was Slade v Gea [2001] NSWSC 38. This is a decision of Carruthers AJ in respect of proceedings before a Magistrate in the ordinary jurisdiction of the Local Court. His Honour found that there was a denial of procedural fairness in that case because the Magistrate had relied upon a finding of serious misconduct by the defendants in relation to their cross-claim without that allegation being put to the defendants when they gave evidence and where an adjournment was refused to allow a witness to be called who might support the credibility of the defendants. 38 Of course the nature of the proceedings there being reviewed were different to the proceedings in the present case and what might be a denial of procedural fairness in the circumstances of those proceedings and the issues arising for determination before that magistrate might not be a denial of procedural fairness in the present case. It is not particularly helpful to compare facts and findings between proceedings in different jurisdictions. However, the Assistant Registrar distinguished that case on the basis that the Magistrate in the present proceedings did not base his ultimate finding on credibility. 39 There was a credibility issue to be resolved by the Magistrate because there were competing claims made by the appellants and the respondent as to the reasons for the failure to comply with the District Court directions and the necessity for adjournments in those proceedings. In particular the appellants alleged that a number of the assertions made by the respondent in his statement were false as to instructions given by them and the circumstances in which certain reports were prepared. 40 Ultimately the Magistrate, relying largely upon the assertions of fact in the Gruzman documents, accepted the respondent's version of events to the effect that the adjournments were a result of the appellants not being satisfied with the expert reports and that "the primary, or one of the primary, problem(s) was that ……... the solicitor of the plaintiff was not able to come up with evidence that supported their case for quite a whole settlement". True it is that the judgment of the Magistrate is not expressed in terms of credit findings but in effect, based largely upon the Gruzman documents, the Magistrate found in favour of the respondent's account. As I have already noted, much of the judgment of the Magistrate was made up of quotes from the Gruzman documents that had no purpose other than to reflect upon the credit of the appellants. 41 Mr de Meyrick relied upon the decision of O'Keefe J in Kojima v Australian Chinese Newspapers [2000] NSWSC 1153. That was a decision rejecting an allegation of a lack of procedural fairness in proceedings in the Small Claims Division. It was held that the Assessor in that case had not erred by refusing an application for the calling of a witness after the close of evidence at the hearing of the claim, in respect of $980, because the parties had agreed in advance that the matter would be determined on the statements without witnesses being present. 42 Although in the present case there was an agreement that the proceedings should be conducted on the statements filed, the introduction of the Gruzman documents changed the agreed procedure to a very significant degree. Whether or not the earlier ruling strictly applied to these documents, the simple fact is that the appellants were faced with new material of a highly damaging nature, not only to their case but also to their credit, being placed before the court during the hearing. They clearly indicated they wished to call evidence in response but were summarily denied that application simply on the basis that the matter was to proceed on the documents. 43 It is now put that the appellants did not make it clear what witnesses they required nor did they actually seek an adjournment. But the Magistrate never gave them any opportunity to do so. Because the proceedings lacked formal rules of procedure and because the appellants were unrepresented, this Court should not take a strict approach to the application made by the appellants in a case where the Magistrate never attempted to determine what evidence it was that the appellants wished to call or the nature of the case they wished to present in answer to these documents. Although there was some objection raised by Mr Wende to the authenticity of the documents, it should not be taken that this was the only issue to be raised about the contents of the documents. 44 It is unfortunate that this matter has been subject to further appeals and delays in resolution particularly having regard to the amount of the claim. But notwithstanding the nature of the jurisdiction, I am persuaded that there was a denial of procedural fairness by the production of these documents and the Magistrate's use of them in light of the refusal to properly consider the application of the appellants to respond to the documents and the allegations they contained. As I have indicated, one of the documents raised an assertion that went to the very heart of the claim being an allegation that Mr Wende was trying to put himself in a position of strength against his former solicitor, the respondent, and this passage was quoted and seemingly adopted by the Magistrate. The Magistrate clearly gave the documents considerable weight having regard to the author of the documents and the assertion that the writer was compelled to act in an unprecedented way such was the seriousness of the misconduct of the appellants. 45 I am not prepared in the circumstances of this case and having regard to the weight that the Magistrate gave to the documents to find that the result would have been the same had there been no denial of procedural fairness. 46 The appeal is allowed and the verdict and orders of the Magistrate set aside. The matter is remitted to the Local Court to be determined comformably with this decision. The respondent is to pay the appellants' costs of the proceedings before the Assistant Registrar and this appeal.

WEDNESDAY 26 OCTOBER 2005

JUDGMENT

1. HIS HONOUR: The appellants were successful on an appeal from an order of the Assistant Registrar refusing to set aside an order of a Magistrate sitting in the Small Claims Division of the Local Court; see Wende v FInney [2005] NSWSC 927. As a consquence the order was set aside, the matter returned to the Local Court and the respondent ordered to pay the appellant's costs.

2. When judgment was handed down on 16 September 2005, there was no appearance for the respondent. This was apparently due to some oversight in the office of the solicitors for the respondent arising from the fact that the person with carriage of the matter was absent. Shortly thereafter the respondent made contact with the Court requesting that the proceedings be reopened so that an application could be made by the respondent for an indemnity certificate under s 6 of the Suitors Fund Act 1951. The solicitor for the respondent was informed by the Court that a formal application should be made accompanied by submissions supporting the application and a copy sent to the appellants informing them that they had seven days from receipt to raise any objection to the application. It was indicated that the application would be considered in chambers on the written material.

3. The respondent complied with the Court's requirements under letter dated 26 September 2005. Unsurprisingly no submissions have been received from the appellants.

4. The Court has a discretion to grant or refuse a certificate. That discretion is to be exercised according to the principles set out in Builder's Licensing Board v Pride Constructions Pty Limited (1971) NSWLR 607 and Mir Developments Pty Limited v Atlantic Constructions Pty Limited (1985) 1 NSWLR 491. On the basis of the written submissions supplied by the respondent it is appropriate to exercise the discretion in the respondent's favour.

5. The Court further orders that the respondent is to be granted an inemnity certificate pursuant to the Suitor's Fund Act in respect of the cost of the appeal. **********

27/10/2005 - Additional paragraphs added. - Paragraph(s) Paragraphs 1 - 5 (26 October 2005)

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.