Court of Appeal (Vic)|2014-08-29|Before: Osborn JA

Downes & Anor v Maxwell Richard Rhys & Co Pty Ltd (in liq) [2014] VSCA 193 (29 August 2014)

1st Revision, 2 September 2014, Page 29, [108]

Maxwell Richard Rhys & Co Pty Ltd (in liq) v Downes & Downes [2014] VCC 22 (Judge MacNamara)

PROCEDURAL FAIRNESS - Self-represented defendants - Where prima facie proof of claim - Where invitation by judge to defendants to rely on submissions - Where no explanation of possible reasoning by reference to Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 - Where affidavit used for purposes other than that for which it was admitted - Obligations of trial judge - Re Refugee Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 applied.

1 The brothers John and Bernard Downes appeal against the judgment of his Honour Judge MacNamara of 5 February 2014 ordering them to pay the respondent ('Rhys') $1,192,946.27 plus costs and granting Rhys possession of farm land comprised in two titles at Litchfield, Victoria.

2 The claim founding judgment was based upon a deed which it is not disputed the Downes executed and by which they agreed to pay a specified sum and grant mortgages over land to secure repayment of that sum in consideration of Rhys forbearing to immediately sue for prior moneys advanced.

3 Rhys was placed in liquidation in 2011. At all material times during the relevant dealings prior to that date Colin Maxwell Curran was the director of Rhys.

4 The Downes' defence was that the moneys previously advanced to them had not comprised loans but were initially invested pursuant to a share farming agreement under which they grew crops on land in the Mallee owned by them utilising farms provided by investors pursuant to arrangements with Rhys.

5 In order to encourage the investment of third parties in the share farming venture the Downes had, from time to time, signed what were referred to as 'guarantees' that investors would be repaid moneys due to them upon the receipt of the proceeds of crops.

Between about August 2003 and April 2004 Mr Curran represented to the Defendants that his investor clients required personal guarantees to be signed by the Defendants in order to give his investor clients comfort that the Crop Proceeds would be paid by the Defendants into the J & B Downes NAB Account, and that once the Defendants had paid the Crop Proceeds into the J & B Downes NAB Account, they need not concern themselves about the personal guarantees as they would not be enforced by the Plaintiff and were no longer relevant.[1]

7 In about late 2004, Mr Curran proposed a further joint venture on land at Tintinara in South Australia in which he held an interest. The Downes' case was that they commenced share farming crops pursuant to this arrangement in 2005 and also commenced a share goat farming business on the Tintinara land in the same year.

8 There is an underlying controversy between the parties as to the basis on which the goat farming business was undertaken and, in particular, whether moneys for use in it were loaned to the Downes or were invested in further share farming operations.

9 In about October 2007, the Downes received a letter of demand from Gadens Lawyers ('Gadens') demanding the sum of $678,032 on behalf of Rhys as moneys due pursuant to an alleged loan agreement.

10 Following correspondence and discussion between the parties, a meeting occurred at the Melbourne offices of Gadens at which the deed forming the basis of the subsequent proceedings was given to the Downes. The Downes alleged that they were induced to sign the deed by similar assurances to those which had led them to sign the guarantees. Their defence states:

During the course of the Gadens meeting, Mr Curran, on behalf of the Plaintiff, in trade or commerce conveyed the following representations to the Defendants in meaning and effect, that:

(a) his client investors wanted some reassurance from the Defendants that 2007 Crop Proceeds from the Tintinara land would be paid;

(b) that the purpose for the Deed was to take the place of the personal guarantees namely, to show his investor clients that the Defendants had promised to pay the 2007 Crop Proceeds; and

(c) that he (the Plaintiff) wouldn't rely on and enforce the Deed against the Defendants.[2]

11 In turn, the Downes' defence asserted that Rhys was precluded from relying on the deed and the mortgages effected pursuant to it because it was procured by misleading and deceptive conduct. They denied that they owed the money referred to in the deed and said that they had paid the proceeds of the 2007 crop and any proceeds from the sale of goats to Rhys. As a consequence they denied that they are indebted to Rhys.

12 Rhys instituted proceedings in 2010 against the Downes in reliance upon the deed. Judgment was initially entered by default against the defendants in February 2011 but that judgment was set aside by Judge Ginnane[3] on 21 September 2012 after the defendants had satisfied him by affidavit that they had an arguable defence. His Honour articulated the basis of an arguable defence and that defence was subsequently pleaded and filed on 10 October 2012.

13 After some delay and a series of adjournments (at the request of the Downes) the matter came on for trial before Judge MacNamara. The Downes were unrepresented, although they had been represented during earlier stages of the proceeding. The matter was relatively complex and posed a series of difficulties in the course of the two day trial. Ultimately, however, his Honour concluded that Rhys had proved its claim and found against the Downes.

14 In so concluding, the trial judge reasoned as follows:

On the face of it, the story that someone would execute a deed relating to pre-existing loans that did not exist and undertake obligations which the other party to the deed promised would never be enforced, simply lacks credibility.
In the present case, however, the defence had some plausibility because Mr Curran agreed in evidence that the initial arrangements which Rhys entered into with the Downes involved share cropping arrangements entailing the Downes executing documents styled as personal guarantees which appeared to evidence loan advances in circumstances where the nature of the transaction involved no loans at all. Mr Curran said that these personal guarantee documents were executed merely to ensure that the Downes used the money subscribed for the purpose of crop planting and not for their own purposes.
Mr Curran said that the loans which ultimately led to the preparation of the deed did not relate to the initial share cropping arrangements but to the raising of goats upon the Tintinara property. The proposition that there were materially different arrangements relating to the goat business from the cropping arrangement was understandable and plausible.
There were four circumstantial matters that supported Mr Curran's characterisation of the goat farming arrangement:

(a) records of a company controlled by Mr Curran to act as an intermediary between Rhys and the Downes characterised the amounts paid to the Downes in the latter phase of their relationship with Rhys as loans;

(b) there was no record of any written protest or any oral protest being made to Gadens when demand for the payment of amounts apparently owing under the deed was made;

(c) an affidavit of Mr Robert Hinton of Gadens exhibited transcripts of voicemails from the Downes to Gadens which indicated a desire to negotiate but did not demonstrate indignant complaint or other response of the type that might be expected if the deed represented an illusory set of obligations and had been the subject of representations of non-enforcement;

(d) the material produced by Rhys showed substantial repayment by the Downes consistent with repayments of principal and interest.

15 His Honour went on to ultimately conclude as follows:

I feel more able to rely on these matters by reason of the following further considerations. The manner in which the defendants conducted their case at trial meant that they put in no evidence in response to the plaintiff's case at all. Insofar as their case was based on assurances and representations allegedly made to one or other or both of the defendants, there was every reason to expect that one or both of the defendants would have given evidence. It is reasonable to infer, therefore, that had they given evidence, their evidence would not have been helpful to the defendants' case.[4]
Where the absent witness is the defendant, himself, or the defendants, themselves, the ability to draw inferences based on other evidence is stronger.[5]
In those circumstances, I accept the evidence relied on by the plaintiff that there were actual loans which were made preceding the execution of the Deed and that the Deed was intended to create genuine legal obligations without any assurance of non-enforcement.[6]

16 It can be seen that the failure of the Downes to give evidence was critical to his Honour's decision and his Honour inferred that, had they given evidence, their evidence would not have been helpful to their case.

17 His Honour went on to deal with other matters raised by the Downes in the course of the hearing (but not pleaded) including a defence of substantial repayment.

The plaintiff seeks possession of the mortgaged property in reliance of s 78 of the Transfer of Land Act. This section applies to registered mortgages generally, whether first ranking or not. It entitles a mortgagee to enter into possession of the mortgaged property 'upon default in repayment of the principal sum of interest'. The plaintiff's material attests to the service of a demand for payment of the secured monies under s 76 of the Transfer of Land Act.
The Downes' defence actually pleads the making of this demand, so it is common ground. In light of the findings which I have made already and the terms of the Deed, there was a certification by the plaintiff's liquidator of a default by the Downes. The whole amount payable under the Deed accelerated and the Downes made default in the payment of it, despite service of the demand. The requirement for Rhys to be entitled to possession of the mortgaged property under s 78 of the Transfer of Land Act have therefore been made out. The plaintiff is entitled to an order for possession of the mortgaged property.[7]

19 The appeal raises a series of interrelated complaints of want of procedural fairness. The first issue relates to the adoption by the trial judge of Jones v Dunkel[8] reasoning in circumstances where the Downes did not give evidence and the alleged failure of the judge to alert the Downes to the consequences of not giving evidence.

The learned Judge erred in failing to properly inform the Appellants of the potential consequences of their failure to give evidence, including the possibility that the Court would apply the principle described in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 against the Appellants.
The learned Judge erred and thereby denied the Appellants procedural fairness in that:

(a) he failed to direct the First Appellant into the witness box after he had indicated a desire to give evidence;

(b) he failed to determine whether the Second Appellant wished to give evidence;

(c) he failed to explain to the Appellants at the relevant time that it was then their opportunity to give evidence and that they were not confined to a 'presentation';

(d) he failed to inform the Appellants of the process for tendering documents; and

(e) he failed to warn the Appellants of the consequences of them not giving evidence in circumstances where their defence relied upon a plea of misleading and deceptive conduct based upon misrepresentations alleged to have been made to them by representatives of the Respondents.

The learned Judge erred in applying the principle in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 in order to support his conclusion (at reasons [44]) that he should accept the evidence relied upon by the Respondent.[9]

20 The second issue involves a series of complaints relating to the receipt by the trial judge into evidence of the affidavit sworn by Mr Hinton who was, at the time of the hearing, overseas.

The learned Judge erred in finding that the Appellants consented to the affidavit sworn by Mr Robert Hinton on 4 June 2012 being admitted without Mr Hinton being available for cross-examination.
The learned Judge erred in relying upon the affidavit sworn by Mr Hinton on 4 June 2012 in circumstances where the Appellants did not consent to Mr Hinton's affidavit being admitted without him being available for cross-examination.
The learned Judge erred in failing to inform the Appellants of the consequences of admitting Mr Hinton's affidavit into evidence without Mr Hinton giving evidence.[10]

21 For the reasons which I set out below, I accept that there is substance in the both complaints.

22 The right of an unrepresented party to be heard requires that he or she be able to understand the bases on which he or she might contest the evidence led in support of a claim against them, and the manner in which he or she might answer such claim by adducing evidence in response.

23 The judge must provide reasonable advice and assistance to the unrepresented party insofar as is necessary for a fair trial whilst recognising and respecting the rights of the opposing party:

In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent. ...At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement. ...An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent.[11]

24 In Minogue,[12] the Full Court of the Federal Court recognised that the trial judge must strike a balance.[13]

A trial Judge often faces something of a dilemma. While he or she may be bound to provide some advice and assistance to an unrepresented litigant, the authorities make it clear that the Judge should not intervene to such an extent that he or she cannot maintain a position of neutrality in the litigation.[14] However, the boundaries of legitimate intervention are flexible and will be influenced by the need for intervention to ensure a fair and just trial.[15]

25 Nevertheless in Neil v Nott & Anor[16] the High Court[17] recognised that a frequent consequence of self-representation is that the Court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy.

26 To similar effect Kirby P (with whom Sheller JA agreed) observed in Edwards v Allmen Engineering Pty Ltd & Anor:

Concealed in the lay rhetoric and inefficient presentation may be a just a case.[18]

27 The requirements of procedural fairness are inherently flexible and must respond to the circumstances of the particular case.[19] It follows that the need to explain evidentiary rules and principles to a party in a particular case will depend upon the nature of that case and the course of the hearing.

28 In the present case, as I have said, the trial judge ultimately applied the rule in Jones v Dunkel[20] against the Downes. Whether it was fair to do so lies at the heart of this appeal.

29 The underlying principle was articulated by McHugh J in Re Refugee Tribunal; Ex parte Aala (in agreement with the majority as to the principle and its application to the facts but dissenting on the ultimate outcome of the case on discretionary grounds):[21]

One of the fundamental rules of the fair hearing doctrine is that a decision-maker should not make an adverse finding relevant to a person's rights, interests or legitimate expectations unless the decision-maker has warned that person of the risk of that finding being made or unless the risk necessarily inheres in the issues to be decided. It is a corollary of the warning rule that a person who might be affected by the finding should also be given the opportunity to adduce evidence or make submissions rebutting the potential adverse finding.[22]

30 The further grounds of appeal go to the manner in which affidavit evidence was admitted and raise the issue of whether it was fair to receive such evidence without further explanation to the Downes of the consequences of receipt of the affidavit without cross-examination of the deponent.

31 It is necessary to review the course of the trial hearing to understand the Downes' case on appeal.

32 At the outset of the trial, separate counsel appeared for Mr Hinton to explain why Mr Hinton was not in attendance to answer a subpoena. Counsel for Rhys indicated that the only relevant part of Mr Hinton's affidavit was 'to put into evidence file notes made in his office of contact with the defendants, if that becomes necessary'.

33 In those circumstances, Mr John Downes (who in effect appeared both for himself and his brother Bernard) indicated that he was happy for the affidavit to be received without cross-examining Mr Hinton.

34 The limited purpose of Mr Hinton's evidence was again affirmed by counsel for Rhys in the course of opening the case.

35 Ultimately in the course of final addresses, the judge referred at one point to the parties having 'adopted the convention' that the affidavit was admitted for a limited purpose only.

36 After resolution of the question of the admissibility of Mr Hinton's evidence, the judge made an initial statement to the Downes concerning the future course of the trial:

I think, therefore, it falls to you Mr Lapirow. Perhaps, before you open, I might say a few words for the benefit of the defendants. I do not know how much experience, gentlemen, you might have had in the court process. I might just say a couple of introductory words. In representing as your task in representing yourselves, the case will be determined on the evidence, and the evidence will come from people who go into the witness [box], from documents that are marked as exhibits or from any affidavits that are put in to evidence.

Both parties will have the opportunity to address me from the table. Make speeches if you like. The purpose of those addresses or speeches will not be to constitute evidence, but merely to draw my attention to the evidence that I have heard or that I will hear and, of course, the speeches also are for the purpose of making arguments to the operation of the law. Mr Lapirow will in a moment explain what his client's case is about. He will tell me the evidence that he says is going to prove it and I will invite you gentlemen, if you wish, to make a short response, so that I can fully appreciate the matters of which the parties agree and disagree.

Is that all relatively clear, gentlemen?

MR J DOWNES: Yes, Your Honour. Thank you.

37 It can be seen that his Honour was careful to draw a distinction between addresses and evidence.

38 Counsel for Rhys then opened the case for the plaintiff and in so doing sought to split such case, allowing Rhys in the first instance simply to prove the deed and produce a certificate evidencing the moneys due under it. The judge ultimately declined to allow Rhys to follow this course but indicated he would be receptive to any application to re-open the plaintiff's case if it were necessary to do so following the presentation of the Downes' case.

39 Before ruling on the application however, the trial judge invited Mr J Downes to tell him in general terms what the defendants' case was.

40 Mr Downes did so in some detail, describing the initial share farming agreement. At one point Mr Downes said:

MR J DOWNES: John and Bernard, which is us two here, Your Honour. It was our job to plant the crop, prepare the land for the crop, look after the crop through to the end and sell it - sale of the crop and then send money back to the J & B Downes Sydney account, which is Mr Curran's account.

HIS HONOUR: What percentage of the amount raised from the crop would go to J & B Downes?

MR J DOWNES: Well, in the initial stage, we had our share farming at around - a lease amount of around $40 an acre for the use of our land and our management.

41 He further described the signing of guarantee slips 'for the satisfaction of the investors'.

42 He then described the execution of the deed as being a 'repackaging' of all those 'little slips' (ie guarantee slips) for the satisfaction of Mr Curran and his investors.

43 He said that the role of the Downes was that of 'share farm managers', although there was a collateral arrangement for the purchase by them of a share of the property at Tintinara in exchange for carrying out improvement works.

44 The goat farming proposal was put together by Ernst & Young, accountants. The proposal was that the Downes would build up a number of female goats and Mr Curran would sell them to his new investors and they would own both a share of the goats and a share of the actual land.

45 The money paid to the Downes to run the goat farming was not a loan but a contribution to farm expenses which gave them security.

The whole idea of us moving away from our traditional family farm, if you like, was to get more security into our business, so if we were involved with a bigger company like Mr Curran's company with buying extra properties, we were told we'd be the managers, and we obviously had done a good job because we've been invited to meet Mr Robards and put in stuff to Ernst & Young. So, we were obviously doing - and it was a fairly hard time in that period of dry conditions and pathetic grain prices, which can be cross-checked, over the last 10 years basically.

46 Mr Curran's investment scheme collapsed because of the failure of another business with which he was associated.

I guess that's the farming side, Your Honour. So, when, all of a sudden, unfortunately for Mr Curran, not his fault, but Westpoint collapsed and that took down his company, well, that was the end of the operation in South Australia as we knew it and, even though he did try to get other people there after that, I think the word was around that there was issues and nobody wanted to put the seed capital in. Mr Robards wasn't there then and then Ernst & Young had all the paperwork ready but the investors went missing. So, all of a sudden, [if] we're (sic) left our properties that we're supposed to be managing, that plan we have for that was taken from us, so we have to bring animals back to our properties and then we have to sell them, under pressure basically, to get funds back to Mr Curran's people, and it brought it to a halt just overnight because one part of the business collapses, that one goes as well. Well, not overnight, sorry, but in time it took down that property as well ...

47 The deed was signed to facilitate further business ventures.

It was basically signed because it was - once again Mr Curran had advised us that it was to give peace of mind to the investors and we were going forward onto these new bigger projects so there would be - we would have more people coming on board and they wanted to be basically the little slips we signed, it was to take the place of those.

48 Mr Curran still had the land in South Australia and was still trying to sell goats and land to investors.

49 The essence of the share cropping arrangement was that the initial payments by investors would be wholly tax deductible. They were not loans. The loan documentation was fictitious.

50 The understanding was that the deed would not be enforced.

MR J DOWNES: We were working with Mr Curran and he had been quite successful before, Your Honour. We had no reason to - this wasn't going to - this system wasn't going to work. We had a product - we actually knew the world wants our meat. We couldn't produce - our biggest problem was not having supply.

HIS HONOUR: So things that had taken a very inconvenient turn with the collapse of West Point and it would be fair to say that you would do whatever it took to get things back on track?

MR J DOWNES: And the signing of the deed, as I say, we were harvesting. I came down. It was the 18th, to come down to pick up that deed and sign it and I had it back on the 21st which was the Monday because Christmas was right on, and it had to be all fixed up for the - to give piece of mind to Mr Curran and his investors. So there was no time for even thought of having somebody legally check it because we knew how we had been working through. It wouldn't be enforced, and right from the start it wasn't a loan, it was a share farm agreement we were involved in on both properties and hopefully going on to third and fourth properties.

51 Mr Downes then addressed the defendants' dealings with mortgagees other than Rhys and indicated that he and his brother and their wives remained in possession of two farm holdings.

52 At the conclusion of this address, his Honour again referred to the distinction between matters said in address and in evidence.

Is there anything else that I need to know so that I can understand what the defendants say to this claim against them? Given that you will have the opportunity if you wish to go into the witness box, your brother too, and you can call other people as your witnesses to go through these matters in detail. The purpose of this process is just so that I can understand what the dispute is. As I mentioned earlier, what is just said from the table isn't evidence itself, it is just a preview.

53 After some further debate between counsel for Rhys and the Bench, and the judge's ruling on the question of splitting the plaintiff's case, counsel for Rhys proceeded to call evidence.

54 The liquidator was called first to produce the deed, a certificate stating moneys due under the deed, and title documents relevant to the claim under the mortgages.

In or about March 2004, the parties entered into an oral agreement whereby the Lender agreed to loan monies and grant financial accommodation to the Debtors on terms and conditions agreed between the parties ('Loan Agreement').
The purpose of the Loan Agreement was to assist the Debtors in their farming operations.

As security for the Loan Agreement, the Debtors granted the Lender security by way of a mortgage over the Debtors' Properties ('Original Lender Security').

In or about July 2005 the Lender registered a caveat (Caveat AD765803T) over the Debtors' Properties pursuant to the Original Lender Security ('Caveat').
During the course of March 2004 and July 2007, the Lender, either directly or through its agents J&B Downes Pty Ltd or China Dog Pty Ltd, made a number of advances and granted financial accommodation to the Debtors ('Monetary Advances').
Albeit that the Debtors have repaid some of the Monetary Advances, the Debtors are jointly and severally in default of their obligations to the Lender and are jointly and severally indebted to the Lender for the Indebted Sum being moneys owed by the Debtors to the Lender in respect of Monetary Advances.
Despite a number of requests for repayment made by or on behalf of the Lender to the Debtors, the Indebted Sum remains unpaid.
The Lender and the Debtors have agreed that the Debtors will repay the Indebted Sum to the Lender in accordance with the terms and conditions set out herein.

56 It further contained the following acknowledgment:

2.1 The Debtors acknowledge as follows:

(a) they are indebted to the Lender for the Indebted Sum being moneys owed by them to the Lender in respect of Monetary Advances;

(b) they are in default of their obligations as debtors of the Lender;

(c) receipt of copies of the New Lender Security documents together with any general terms and conditions relating to those documents;

(d) they understand that Gadens Lawyers are acting on behalf of the Lender and are not acting on behalf of the Debtors in any respect.

57 It required the debtors to repay the amount specified in the schedule to the deed in accordance with the repayment scheme set out in the same schedule. It further provided for interest to be paid on the unpaid balance of the indebted sum.

58 There was some cross-examination directed to the liquidator as to why a mediated settlement had not proceeded. The liquidator said that settlement had been rejected by some external creditors of the company.

59 Counsel for Rhys next tendered the affidavit of Mr Hinton and then proceeded to call evidence from Mr Curran.

60 Mr Curran adopted affidavits previously sworn in the proceeding. It may be noted that these affidavits stated, amongst other things:

There was no money owing or claimed in relation to any of Mr Curran's entities or companies including the plaintiff in relation to the initial share cropping venture.[23]
The Downes proposed the goat farming venture and sought and obtained loans to allow them to conduct it.[24]
A total of $758,000 was lent by Rhys to the Downes.[25]
The agreement was that the Downes would pay the first $50 from each goat sold to Rhys by way of repayments.[26]
The Downes presented a number cheques which were dishonoured.[27]
Mr Curran was unable to keep track of how many goats the Downes had, and when and where they sold them.[28]
Mr Curran attempted to negotiate with the Downes for repayment of the moneys from about March 2007 to September 2007 prior to instructing Gadens to obtain repayment.[29]
Gadens sent a letter dated 1 October 2007 and, after negotiations, the deed was signed on 18 December 2007.[30]
No representations were made by Mr Curran that the deed and mortgages entered into pursuant to the deed would not be relied upon.[31]
A series of payments were made by the Downes after the deed was entered into but the payments were never on time and did not meet the terms of the agreement.[32]

61 Mr J Downes cross-examined Mr Curran. At the commencement of questioning, the trial judge made it clear that Mr Downes should confront Mr Curran directly with the defence case, saying in part: 'this is really the core of the case, the most important part of it.'

62 Mr Curran first agreed that, before investing in the Downes' farms at Donald, he inspected the farming operation. He further agreed that the parties then started off with 'the first 40,000' and that investments made in the share farming operation were eligible for tax deductions by the investors.

63 Some of the investors chose to rollover their funds from year to year.

64 If an investor put in $50,000, that investor would become a 'grower' and the money would be broken down and applied to fuel, grain, and management costs charged by the Downes.

65 The personal guarantee forms were signed so that Mr Curran knew that the Downes would actually plant and grow the crops with the funds.

66 On the other hand, the deed was not (as was put to him) to cover about 30 of the personal guarantee forms and furthermore related to a different operation:

The deed was structured or prepared by Gadens, along with the mortgage, and the mortgage and the deed were related to the goat farming operation, not the wheat farming operation that John is talking about where the personal guarantees were signed.

67 In turn, Mr Curran's initial recollection was that the only grain grown at Tintinara was to feed goats and not for sale. Mr Downes then put to Mr Curran two tax invoices for the contract planting of a barley crop on 165 hectares and a third invoice recording the delivery of 131 tonnes of barley to the Keith silo.[33]

Well, this is, '165 hectares of seeding', and this is the first time I've ever seen this and I don't know what that's for, what property that's for. The next one is 'barley sowing on property'. It's all around - the date is 2005, 2005 and this one is 2006. So, no I don't - I can't - I mean, my recollection is the answer that I gave, that that's what we were doing with that property down there back - we originally did some - what I can recall, we did both wheat farming and under-sowing on your property and then we went and we did it Tintinara.

69 Mr Downes then put to Mr Curran further detail of share cropping undertaken at Tintinara. Ultimately, Mr Curran said:

The goat farming was subsequent to this and- this date, I can't remember - recall the exact dates, but the reason that the deed was put in place and the mortgage was put in place was that this business started to fail and I agreed with John and Bernard that we would get out of that business if they gave us a mortgage and they just paid us interest on the money. Whether the money was - whether the money was - and all the bank statements I notice are in that affidavit, from the National Australia Bank. And they agreed and I had no - nothing to do with the communication with John from that point on. It was all done through Gadens.

HIS HONOUR: All right. Well, the question that I asked you was a slightly different one. It was not asking how the deed was brought into existence, but what were the initial transactions relative to the goat farming operation? You have said that they were different from those relative to the grain growing operation. So what were they? Who was writing out cheques to whom and for what purpose?---The first investment was from myself, from the - from my super fund, which is about $60,000, to start it all, and then other investors invested along the way, but there was only two or three that - that they would repay their money under the share farming agreement for the wheat, the grain growing operation, and then we had a continuation with the goats that was funded by mainly two or three investors.

Goats - I can't remember the structure but the goats - and as John mentioned earlier, we had Ernst & Young write an advice on this so we had it structured properly, so there were tax deductions and income. Goats breed - the gestation period is about five months, so - and they have twins. I can't remember exactly what it was, but it was that people that invested in that is what is recorded under the deed and the mortgage document when that - - -

HIS HONOUR: And you say that was a loan?---Definitely.

Am I right in saying that if we got the document from Ernst & Young, it would explain that these subscriptions were loans?---It actually [would]. John Howard repealed that law, if you recall, the day we ran the ad. So, we had 70 inquiries and John mentioned the thing fell over, but we couldn't get a penny because he - he withdrew the tax deductibility. I think we had people like Timbercorp and GrainCorp - - -

So, if you like, the public subscribers, they didn't come on board at all?---No, no.

We can forget about the public subscribers. You say that - sorry, I withdraw that. The plaintiff says that it is seeking to recover amounts that your former company lent. Can you tell me about the circumstances in which those loans were made?---They were made under the mortgage document that we had Gadens draw up and in the deed, and they were originally to buy goats, to buy the farm and give it to John to run, John and Bernard, and run both places, and it was John's - - -

MR J DOWNES: The actual farm, Mr Curran, you were buying that separate to our operation. You were buying that under the lease/purchases, a totally separate - - -?---Yes.

71 It can be seen that this evidence was less than entirely convincing in its detail.

72 After reference to correspondence from 2005, Mr Downes further asked as follows:

MR J DOWNES: You wanted to sell the goats we had at Tintinara to Mr Robards and also to the other investors and, if you didn't have any other investors coming in, Mr Robards was going to put up seed funds to grow the business as well. Is that correct?---I can't recall that exactly.

73 Further cross-examination followed relating in part to the position of external creditors of Rhys.

74 Mr Curran was then asked why there were no periodic statements of loan account balances if the moneys advanced to the Downes constituted loans. He answered:

The loans were - going back from memory the loans were made initially they were share farming agreements then they became loans, we always had a mortgage from the first day that any money was paid to John, or the Downes' and that mortgage was re-done by Gadens in about 2007. Along with that loan deed. The reason for that was the dividends and payments that the Downes had an obligation to pay, stopped and became late and then became ill.

75 Lastly, Mr Curran was questioned about licensing regulations governing the lending of money.

76 In re-examination, Mr Curran was referred to a document entitled 'J & B Downes P/L Bank Register' recording transactions undertaken by the company which Mr Curran established to act as an intermediary between Rhys and the Downes, and comprising a summary of the relevant bank records.[34] This document was tendered in evidence. Mr Curran described the document as recording 'investor funds going into the cropping and goat operation depending on the date'. The document also recorded payments by the Downes including interest payments. Some transactions were specifically recorded as loans to the Downes.

77 Counsel for Rhys then called for the Downes to provide their income tax returns and relevant bank statements for the financial year ending 30 June 2003 and foreshadowed taking up the history of payments in cross-examination of Mr Downes if necessary.

78 Counsel then tendered through Mr Curran a loan balance reconciliation for the period 1 July 2003 to 31 August 2007 which had been prepared by Gadens. He then closed the case for Rhys.

Thank you. Subject to the possibility of the plaintiff being able to reopen if something unexpected arises out of the case that you, the defendants, put on, you now have the floor. Mr Downes, what evidence are you intending to rely on? Are you going to give evidence; is your brother going to give evidence; is anybody else going to give evidence?

[MR J DOWNES] : No, there's only ourselves, Your Honour. There's nobody else.

HIS HONOUR: All right. As I think I explained to you earlier, the evidence that we receive in a case like this comes from documents and from what is said from the witness box. Whilst I can hear what you say from the table, that is not really evidence. It is only evidence if you go into the witness box and take the oath or affirmation. Of course, when you do that, you will be subject to cross-examination by Mr Lapirow. You gave me an opening this morning. Is there anything further that you think I need to know before you launch into the evidence that you are going to rely on, so I can see where it's all heading? My feeling is that you have told me what your case is already and nothing more need be said, but if you think more needs to be said, now is your opportunity.

80 Counsel for the Downes submitted that the last statement had the potential to confuse the Downes. In itself I doubt this is so but it formed part of the context leading up to the critical point in the case at which the Downes elected not to call evidence.

81 Mr J Downes responded that he needed some time to look at the financial documents that had been tendered on behalf of Rhys.

82 Counsel for Rhys responded by complaining that the discovery given by the Downes had been inadequate. His Honour observed:

Aren't there Jones v Dunkel comments to be made about those matters, unless there is some explanation as to why the proper documents weren't forthcoming?

83 After some further debate the case was put over to the following day.

84 On that day, Mr J Downes addressed the financial reconciliation document which had been tendered on behalf of Rhys and submitted, in effect, that the moneys received by the Downes had been substantially repaid.

85 A further discussion about evidence then ensued:

HIS HONOUR: Thank you for that observation. In terms of evidence that you might be going to call, are you going to call any witnesses? And you will remember what I said yesterday, that since we are in court, the evidence is what emerges from the witness box and from the documents that are put and marked as exhibits, so will you be calling any witnesses? Will you be giving evidence yourself?

MR J DOWNES: I could give that evidence myself, Your Honour.

HIS HONOUR: All right. Do you want to do that now or is there some step that you want to take before giving that evidence yourself?

MR J DOWNES: When I give my evidence, that'll be my overall - my full reply.

HIS HONOUR: You can give your evidence which will be an explanation of the facts that are involved in this case as you know them.

MR J DOWNES: Yes.

HIS HONOUR: But in addition to that you can address me, drawing my attention to what's been said by the other side, what hasn't been said, the things that they might have proven that haven't [been] prove[n], drawing attention to what you've said, drawing attention to anything for instance that your brother or any other witness that you might call has to say. So in terms of giving your evidence that will be the whole of the factual presentation.

MR J DOWNES: Yes.

HIS HONOUR: But you will be able to make a speech, if you will. You are making one now and you will be able to make one at the end summing up your case.

MR J DOWNES: Yes.

HIS HONOUR: So you have the opportunity both to give evidence from the witness box and to make the speech, but it is only the evidence that comes from the witness box that constitutes evidence of fact as distinct from just a summing-up, if you will.

MR J DOWNES: Okay.

HIS HONOUR: A preview of what is going to come from the witness box or a summary of what has come and what should be accepted.

86 Mr Downes then made further submissions about the tax deductibility of payments made by investors in the share farming schemes conducted by Rhys. He further addressed the circumstances in which the deed was signed and submitted that he did not have ample time to seek independent legal or financial advice. This discussion again contemplated that the Downes might give evidence:

HIS HONOUR: All right. Are you proposing to give evidence? If you are, I will ask at this point, what is your evidence going to be on the point? You have made the comment that you didn't have much time to think about this. Are you saying therefore that you did not understand what you were signing, or you understood what you were signing and you signed it but then maybe if you had, had the opportunity to consider matters at greater leisure you would not have reached the same conclusion, or what will your evidence be on this point?

MR J DOWNES: I didn't have ample time in that period to get - seek independent advice, legal or financial advice on the documents that were presented to us, Your Honour.

HIS HONOUR: Yes, all right, and that is what you say about it?

MR J DOWNES: Yes.

87 Mr Downes further submitted that if the moneys advanced were loan moneys the Downes would have received regular loan statements.

88 He then addressed issues of money lending licensing before concluding as follows and eliciting the following response from the trial judge:

MR J. DOWNES: Your Honour, with the funds I mentioned that came into our business from Mr Curran and the funds were returned, you can see that we were doing a lot of things right in the program and that's why we've - Mr Curran introducing us to the bigger players, Mr Robards and then having an approval from Ernest (sic) & Young to go forward, that was pretty exciting for us with our - the future we believed for us and our families in dealing with the bigger companies.

HIS HONOUR: Yes.

MR J DOWNES: And, yes, it was just disappointing to all of us, Mr Curran included, that it didn't eventuate.

HIS HONOUR: Yes.

MR J DOWNES: Thanks for your time, Your Honour. That's covered what I had to say this morning.

HIS HONOUR: All right. Now, you don't have to give evidence if you don't want to. I might be wrong but my sense is that you want to rely on that presentation as the case for the defendants. Have I understood that right?

MR J DOWNES: That's correct, Your Honour, yes.

HIS HONOUR: I am grateful for that. Thank you very much, sir.

MR J DOWNES: Thank you, Your Honour.

HIS HONOUR: Mr Bernard Downes, your brother has spoken for you and made the presentation on your behalf?

MR B DOWNES: Okay, Your Honour.

89 It may be accepted that the trial judge's sense of the preference of the Downes not to give evidence was genuine and directly responsive to the statement 'that's covered what I had to say this morning'. Nevertheless, it can be seen that his Honour invited the Downes not to give evidence without raising with them the obvious forensic and evidentiary consequences of that choice. In particular, whilst the cross-examination of Mr Curran had established a basis for doubting and perhaps rejecting aspects of his evidence it remained true that:

the admissions contained in the deed itself as to pre-existing debt remained uncontradicted by direct evidence in the absence of any evidence from the Downes themselves;
Mr Curran's evidence that the loans arose out of the goat farming business and were part of arrangements distinct from those which related to the share cropping business remained uncontradicted in the absence of direct evidence from the Downes themselves;
Mr Curran's denial that the deed and mortgage were in effect documents executed to comfort investors rather than intended to have legal effect remained uncontradicted in the absence of direct evidence from the Downes;
there was no evidence substantiating the misrepresentations alleged in the defence and said to have induced the execution of the deed;
there was no evidence substantiating the circumstantial narrative given by Mr J Downes in opening the defence case;
inferences favourable to Rhys, for which there was a basis in the evidence, might be more confidently drawn when the persons presumably able to put the true complexion on the facts relied upon for the purposes of the defence were not called as witnesses by the Downes, and the evidence provided no sufficient explanation of this absence;[35] and
the trial judge had already indicated in the course of discussion with counsel for Rhys that Jones v Dunkel[36] reasoning might operate adversely to the Downes in this case.

90 It is necessary for completeness to summarise the final stages of the hearing. In final address, counsel for Rhys referred first to the terms of the personal guarantees as evidence of the fact of loans. The trial judge raised with counsel the concessions made by Mr Curran as to the nature of these guarantees. The following exchange then occurred:

MR LAPIROW: The problem that we face as the plaintiff is the failure of the defendant to subject themselves to cross-examination.

HIS HONOUR: I can assure you, I am alive to that.

MR LAPIROW: The failure of the defendant to discover their books of account. Had they discovered their books of account it is possible, and I cannot say it beyond that, to demonstrate that they were claiming the interest payments as deductions from their income. I cannot say that, that is the case, but what I can say is their books of account would not have assisted them.

HIS HONOUR: Because they were not produced.

MR LAPIROW: Were not discovered, were not produced.

HIS HONOUR: Yes, and Jones v Dunkel applies to documents as well as it applies to witnesses.

MR LAPIROW: And what you are asked to do in relation to the submissions from the Bar table and from the conclusion that Your Honour reaches in reading the passage of Mr Curran's affidavit is that these documents where the two Downes brothers say, 'Yes, this is a particular, an undertaking to repay an additional $X', there is an undertaking to repay and an undertaking to pay interest.

The primary proposition in answer to that is not to rely on Mr Curran's affidavit which says, 'We're not relying on those guarantees', but is to establish an agreement and put it to Mr Curran, the substance of which is that under no circumstances were the Downes required to repay the moneys that were advanced to them, and that was never put. It wasn't pleaded; it wasn't put.

In those circumstances, Your Honour cannot, in my submission, attach weight to that, bearing in mind that execution by the Downes of the deed. I am put at a disadvantage with respect to them not calling or not going into the witness box with respect to the deed. Your Honour is asked to assume, and indeed has assumed, that there were no statements of loan accounts given to the Downes.

They did not get into the witness box and allow me to put the solicitors' letters to them. They did not allow me to put to them the communications that took place between Gadens and themselves from September 2007 up until the time of the meeting and up until the time of the execution of the agreement. Some of that material is in the affidavit of Mr Hinton.

91 Reference was then made to the voicemail records exhibited to Mr Hinton's affidavit.

92 Counsel then addressed a reconciliation statement exhibited to Mr Hinton's affidavit as follows:

MR LAPIROW: And within that particular exhibit demonstrates over a period of time which is actually greater than the Exhibit J, it actually extends to another period of time beyond it, and that demonstrates the investments that not only came out of the bank account of J & B Downes, but it also demonstrates when funds were obtained and given to the defendants from other sources. For example, the investment from China Dog(?), the very first one, does not appear in the summary of the bank statement at Exhibit J.

HIS HONOUR: Yes.

MR LAPIROW: But what it does demonstrate is a history of dealing. There is no suggestion on the part of the defendants that the moneys that are said to have been paid were not paid, and when one looks at the further particulars of the defendants that were given in response to a request, the defendants are unable to say which of the payments that they received would be attributable to what they say is a share farming agreement and therefore on their say so an illusory obligation, or payable with respect to the goats.

93 It was next submitted that certain aspects of the facts pleaded in the defence or identified by way of further and better particulars of the defence had not been put to Mr Curran. Further, it was submitted that Downes had not produced any proper financial records. On the other hand, Mr Curran's evidence was that there was a separate loan arrangement entered into relating to the goat farming venture.

No basis had been established for doubting that the Downes understood the nature of the deed or that they signed it other than voluntarily. Further, Mr Curran's affidavit denying the allegations of misrepresentation made in the defence was not challenged in cross-examination.
Payments were also rendered after the deed which were only consistent with the assumption of the obligations under the deed. The reconciliation submissions relied on by the Downes do not take into account, properly or at all, the interest payable under the deed.
The financial records in evidence were inconsistent with the defence case.
There had been no proper challenge to Mr Curran's affidavit evidence.

95 In reply, Mr J Downes addressed the Gadens' reconciliation statement, referring back to his earlier submissions as to substantial repayment of the moneys received by the Downes.

96 The Downes now submit that, although the trial judge drew the distinction between submissions and evidence at a series of points during the trial, his Honour ultimately did not explain to the Downes:

(a) the need to rebut the documentary evidence upon which Rhys relied;

(b) the need to rebut not only the evidence of Mr Curran as to the underlying share farming transactions, but also as to the circumstances in which the deed was executed; and

(c) the possibility that if the Downes did not give evidence, the trial judge would adopt Jones v Dunkel[37] inferential reasoning as a basis for accepting the evidence of Mr Curran and the case for Rhys.

97 In consequence, it is submitted the hearing was not a fair one.

98 Conversely, Rhys submits that the trial judge did adequately and fully explain the difference between submissions and evidence. It is submitted he could not have gone further without in effect entering the arena on behalf of Downes and the Court should not conclude the election by the Downes not to give evidence was other than a deliberate and informed forensic choice.

99 In my view, the submissions of the Downes as to Jones v Dunkel[38] reasoning should be accepted. Whilst it is true that his Honour went to substantial lengths to emphasise the difference between submissions and evidence as the matter progressed before him, the distinction was not reiterated at the critical point where the Downes elected not to give evidence and the judge did not identify or explain the consequences that might follow in terms of Jones v Dunkel[39] reasoning.

100 Such a direction could readily be given to similar effect as the jury direction contemplated by Menzies J in Jones v Dunkel itself:

In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hegedus as a witness cannot be used to make up any deficiency of evidence; (ii) that evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.[40]

101 Unfortunately, his Honour's statement 'now you don't have to give evidence if you don't want to' effectively invited the Downes not to give evidence but to rely on their submissions alone. This course could not fairly be suggested without raising for the Downes the significant evidentiary problems which I have identified above and the concomitant possibility that the failure to call evidence might result in the judge adopting Jones v Dunkel[41] inferential reasoning.

102 The course of the hearing which I have traversed in some detail raised the real possibility that the Downes believed that they had answered the case put against them by way of cross-examination and submission, and that in consequence, their own advocacy had in effect obfuscated the underlying evidentiary realities. In my view, the judge was bound to reiterate that the Downes had arrived at the point where they could seek to answer by evidence, the documentary evidence upon which Rhys relied and the evidence of Mr Curran, and could seek to make out the defence of misrepresentation which had been pleaded on their behalf, and verify the narrative put forward in opening the defence case.[42] Further, it was necessary in this context to specifically foreshadow the possibility of the operation of Jones v Dunkel[43] reasoning if they gave no evidence.

103 The case was relevantly similar to Aala[44] in that the circumstances made applicable what Lord Diplock identified in Mahon v Air New Zealand Ltd[45] as one of the rules of natural justice saying:

The second rule requires that any person represented at the inquiry who will be adversely affected by the decision to make the finding should not be left in the dark as to the risk of the finding being made and thus deprived of any opportunity to adduce additional material of probative value which, had it been placed before the decision-maker, might have deterred him from making the finding even though it cannot be predicted that it would inevitably have had that result. (Original emphasis.)[46]

104 It is also pertinent to cite the observation of Megarry J adopted by Gaudron and Gummow JJ in Aala:

[a]s everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change.[47]

105 The Downes were not warned of the risk that a finding made on the basis of Jones v Dunkel[48] reasoning might be made and were not given a proper opportunity to adduce evidence and make submissions rebutting such a potential adverse finding.

106 Putting these matters together, in my view, the Downes did not receive procedural fairness. Furthermore, it cannot be said that the trial judge's conclusion was inevitable.

107 In Stead v State Government Insurance Commission, it was said:

Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference ... It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial.[49]

108 This is not a case where the Court can be confident that the denial of procedural fairness can be said to have been necessarily irrelevant to the result.[50] As the trial judge himself recognised, the initial course of dealing between the parties involved the utilisation of what were admitted to be, in a sense, sham documents. Further, there was on the face of it, an obvious commercial reason why investors would make tax deductible share farming contributions to the Downes rather than make loans to them. Lastly, the evidence of Mr Curran was, as I have said, far from compelling on matters of detail. The case raised seriously contestable issues of fact.

109 It follows the decision of the trial judge must be set aside.

110 Insofar as the grounds of appeal directed to the affidavit of Mr Hinton are concerned, it is first submitted that the consent of the Downes to the admission of this evidence was not fully informed consent. The consequences of the Downes agreeing to the admission of the affidavit were not explained to them.

111 I do not accept this submission. The affidavit was admitted for a limited purpose which was explained to the Downes. Unless the voicemail records were challenged as to their accuracy (which was not the case), there was nothing improper in receiving them into evidence. Moreover, cross-examination of Mr Hinton could not have affected the probative value of these records in any event. They were not made by him. He simply produced them from his file records.

112 On the other hand, legitimate complaint is made that in final address counsel for Rhys referred to and relied on other evidence exhibited to the affidavit apart from the voicemails. In particular, counsel relied on a financial statement exhibited to the affidavit of Mr Hinton. Counsel further relied on a letter of demand dated 26 September 2007 exhibited to the affidavit.

113 The financial statement was relevant to the Downes' submissions about substantial repayment. Moreover, the judge specifically referred to the letter of demand in his reasons.

Mr Lapirow also drew attention to the lack of any written protest or of any record of an oral protest to the law firm, Gadens Lawyers, when demand was made for the payment of the amounts apparently owing under the Deed.[51]

114 The Downes had consented to the tender of the affidavit on a limited basis only. It should not have been relied on for other purposes without a further ruling as to its admissibility in the absence of its maker. The evidence was received after Rhys had been refused leave to split its case and the Downes had closed their case calling no evidence. They were not given the chance to object to the expanded use of the affidavit. It is unlikely that the evidence in issue materially affected his Honour's decision but it is sufficient to establish a relevant miscarriage of justice if it may have done so.[52] Accordingly, in my view, the trial miscarried on this basis also.

115 In all the circumstances, I would allow the appeal on ground 1 and ground 2, set aside the decision of the County Court, and direct that the matter be remitted for further hearing in accordance with law.

116 I have read in draft the reasons of Osborn JA and of Beach JA. The issues in the proceeding and what transpired at the trial have been fully set out by Osborn JA. I agree with the observations they both make as to the substantial lengths to which the trial judge went in explaining procedural matters, and in particular the distinction between submissions and evidence, to the self-represented defendants.

117 On the appeal the submissions of the appellants focused upon complaints as to an absence of procedural fairness which are the subject of ground 2 of the amended notice of appeal, and in particular upon the interchange between the trial judge and Mr J Downes during the course of Mr Downes' opening which culminated in the trial judge saying:

Now you don't have to give evidence if you don't want to. I might be wrong but my sense is that you want to rely on that presentation as the case for the defendants.

118 In the context of what had occurred before that interchange, and the repeated explanations the judge had given the defendants about the opportunity they would have to give evidence and the difference between submissions and evidence, I do not consider that there was any want of procedural fairness by virtue of what the judge said or failed to say then, or any of the matters set out in ground 2 of the Amended Notice of Appeal.

119 However, notwithstanding the judge's commendable efforts to ensure that the defendants were able to understand the process and make informed decisions, ground 1 concerning the judge's failure to warn them of the potential application of Jones v Dunkel[53] must be upheld for the reasons given by Osborn JA. The defendants could not have known of, or anticipated, the application of those principles. Clearly, that possibility was relevant to their decision as to whether to give evidence. The judge then did apply those principles to the detriment of the defendants in his judgment.[54]

120 The complaints as to the use of the Hinton affidavit also have substance, but it is unnecessary to address those complaints, to the extent that they can properly be said to fall within the grounds of appeal, as ground 1 must be upheld and a new trial ordered.

121 In this matter I have had the advantage of reading in draft the reasons for judgment of Osborn JA. I agree with his Honour that the appeal should be allowed, substantially for the reasons given by him.

122 The work of a trial judge is challenging. It is more challenging when one side of the litigation is unrepresented (or in more modern terms, 'self-represented').

123 As has been said before, self-represented litigants, who do not possess legal skill or objectivity, usually stand in a position of real disadvantage in legal proceedings. In such circumstances, a trial judge, who has a duty to ensure a fair trial, is required, within appropriate bounds, to provide a self-represented litigant with due assistance.

124 In the present case it can be seen that the judge was at pains to provide the appellants with all necessary assistance during the course of the trial. The assistance provided by the judge was properly within bounds, notwithstanding objections taken from time to time by counsel for the respondent (which included one less than entirely helpful submission that 'all parties come before the court equal').

125 At different points during the trial, the judge told the appellants that what was said from the bar table was not evidence, and that if they wished to meet the respondent's case then it was necessary to give evidence from the witness box and/or tender documents relevant to their defences. All of this could only have been helpful to the appellants, and was in conformity with the judge's duty to ensure a fair trial.

126 However, after the conclusion of the respondent's case, the first appellant addressed the judge from the bar table in what was described as a 'presentation'. The presentation appears to have commenced as an opening of the appellants' case. During the presentation the judge again emphasized that evidence comes only from the witness box and/or tendered documents. Also during the presentation, the first appellant stated that he was going to give evidence. At the conclusion of the presentation there was the following exchange:

MR J DOWNES: Thanks for your time, your Honour. That's covered what I had to say this morning.

HIS HONOUR: All right. Now, you don't have to give evidence if you don't want to. I might be wrong but my sense is that you want to rely on that presentation as the case for the defendants. Have I understood that right?

MR J DOWNES: That's correct, your Honour, yes.

HIS HONOUR: I am grateful for that. Thank you very much, sir.

MR J DOWNES: Thank you, your Honour.

HIS HONOUR: Mr Bernard Downes, your brother has spoken for you and made the presentation on your behalf?

MR B DOWNES: Ok, your Honour.

HIS HONOUR: Thank you very much. I think it is back to you, Mr Lapirow.[55]

Counsel for the respondent then commenced his final address.

127 While one empathises very much with the judge's approach, and with great respect to the judge, whose conduct of the trial had been impeccable to that stage, I think it was at this point that the appellants were denied procedural fairness. In my view, the judge's statement that the appellants wished to rely on the 'presentation' as the case for the defendants would have misled unqualified people in the position of the appellants to believe that the presentation could be relied upon as an answer to the respondent's evidence-based case. That of course was not so, as the judge's reasons for judgment subsequently disclosed.

128 I am conscious that the above exchange between the judge and the appellants cannot be looked at in isolation. It must be examined in the context of the whole trial, and the exemplary assistance otherwise provided by the judge to the appellants. That said, in a case where at least one of the appellants had indicated an intention to give evidence, I think the exchange referred to had the effect of misleading the appellants into the belief that their presentation could constitute an answer to the respondent's case. The appellants were thereby inadvertently denied procedural fairness, in a case where the judge had otherwise been conspicuously fair in his conduct of the trial.

129 In resisting this appeal, the respondent submitted that the Court was being asked 'to take on trust' the appellants' lack of a sophisticated knowledge of legal procedure. That submission must be rejected. Any fair reading of the transcript of the trial discloses that the appellants do not possess any significant level of legal skill or ability. The appellants' inability to look after their own interests in a trial can be demonstrated by one example of what occurred at trial. Counsel for the respondent sought to tender the Hinton affidavit solely to put in evidence file notes exhibited to that affidavit. The appellants consented to the Hinton affidavit being admitted for that limited purpose. That was the basis upon which the Hinton affidavit was then admitted into evidence by the judge. Notwithstanding that basis, counsel for the respondent did not confine the use of that affidavit to the file notes exhibited to it. On two occasions, counsel sought to rely on different exhibits to the Hinton affidavit for additional purposes. No objection to this course was taken by the appellants. That failure by the appellants more than amply demonstrates the position of disadvantage they stood in as unrepresented (self-represented) litigants.

130 For these reasons, this appeal must be allowed and the proceeding remitted for retrial.

[1] County Court Proceeding No CI-10-05607, defence filed 10 October 2012 by first and second defendants, [8].

[2] County Court Proceeding No CI-10-05607, defence filed 10 October 2012 by first and second defendants, [18].

[5] See, for instance, Black v Tung [1953] VicLawRp 84; [1953] VLR 629.

[6] Maxwell Richard Rhys & Co Pty Ltd (in liquidation) v Downes & Downes [2014] VCC 22 ('Reasons'), [42]-[44] (citations in original).

[9] Amended Notice of Appeal dated 24 June 2014.

[11] Rajski v Scitec Corporation Pty Ltd (Unreported, New South Wales Court of Appeal, Samuels JA, 16 June 1986), 27, quoted with approval by the Full Court of the Federal Court in Minogue v HREOC [1999] FCA 85; (1999) 84 FCR 438 ('Minogue'), 446 [28].

[13] Minogue [1999] FCA 85; (1999) 84 FCR 438, 446, [29] (citations in original).

[14] Burwood Municipal Council v Harvey (1995) 86 LGERA 389 (NSWCA), 397 (Kirby P).

[15] Panagopoulos v Southern Healthcare Network (Unreported, Supreme Court of Victoria, Smith J, 15 September 1997) 6.

[17] Brennan, Deane, Toohey, Gaudron and McHugh JJ.

[18] [1995] NSWCA 158, 2 cited with approval in Hodder Rook & Associates Pty Ltd v Genworth Financial Mortgage Insurance Pty Ltd [2011] NSWCA 279 [39].

[19] Kioa v West [1985] HCA 81; (1985) 159 CLR 550, 584 (Mason J), 594 (Wilson J), 612-5 (Brennan J), 633 (Deane J).

[21] [2000] HCA 57; (2000) 204 CLR 82 ('Aala'), 121 [101] (citation in original).

Downes & Anor v Maxwell Richard Rhys & Co Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (220 paragraphs)

Downes & Anor v Maxwell Richard Rhys & Co Pty Ltd (in liq) [2014] VSCA 193 (29 August 2014)

Parties

Cases Cited (8)