Ezi Lift Cranes Pty Limited v Thompson

The statutory provisions

1. Sections 35, 39 and 41 of the Local Court Act 2007 (NSW) provide as follows. "35 Procedure generally in Small Claims Division (1) The jurisdiction of the Court sitting in its Small Claims Division may be exercised by a Magistrate or an Assessor. (1A) However, the jurisdiction of the Court in proceedings involving company title home unit disputes under section 34A may only be exercised by a Magistrate. (2) Proceedings in the Small Claims Division are to be conducted with as little formality and technicality as the proper consideration of the matter permits. (3) The rules of evidence do not apply to proceedings being heard or other proceedings in the Small Claims Division. (4) Witnesses may not be cross-examined except in circumstances in which, and to the extent to which, the cross-examination of witnesses is authorised by the rules or a practice note. (5) A Magistrate or an Assessor exercising the jurisdiction of the Court sitting in its Small Claims Division may inform himself or herself on any matter relating to proceedings being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit. (6) Proceedings in the Small Claims Division (other than any judgment given or order made in respect of the proceedings) are not required to be recorded. 39 Appeals as of right (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. (2) A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness. 41 Determination of appeals (1) The Supreme Court may determine an appeal made under section 39 (1) or 40: (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. (2) The District Court may determine an appeal made under section 39 (2): (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the District Court's directions, or (d) by dismissing the appeal."
2. Part 2.10 of the Local Court Rules 2009 provides as follows: "2.10 Applications (1) Unless the Court orders otherwise, applications are to be made orally before the Court. (2) Despite subrule (1) - (a) any application for the transfer of proceedings to the Court's General Division, or (b) any application for an order under Part 8 of the Uniform Civil Procedure Rules 2005 that the venue at which the proceedings are to be heard be changed, or (c) any application for the inspection of property, or (d) any application in relation to proceedings made after the Court has given judgment in the proceedings (such as an application for a writ of execution), or (e) any application to set aside a judgment or order of the Court, is to be made by motion in accordance with Part 18 of the Uniform Civil Procedure Rules 2005."
3. There is a detailed Practice Note which applies to civil proceedings in the Local Court.
4. Paragraph 33 of that Practice Note (Local Court Practice Note Civil 1) provides as follows: "33. Small Claims Division - Single Expert 33.1 If the court gives leave to adduce expert evidence, then the following directions are taken to have been made unless the court otherwise orders: (a) Within 14 days of leave being given to adduce expert evidence, the parties must agree on the single expert witness to be retained and obtain that expert's concurrence (b) If the parties cannot agree on a single expert witness and obtain that expert's concurrence within 14 days, then the parties must immediately notify the court, which will then appoint a single expert. (c) Within 14 days after the single expert witness has been selected or appointed, the parties must: - Agree on how the expert is to be briefed, ensuring that the expert will be briefed with sufficient material to enable him or her to prepare a report. - Brief the expert in the agreed manner. 33.2 If the parties cannot agree on how the single expert witness is to be briefed, they must immediately notify the court, which will then give directions about how the single expert is to be briefed. 33.3 The single expert witness must provide his or her report to the parties within 21 days on which the single expert witness was briefed. 33.4 The single expert witness may be requested to provide a supplementary report that takes into account any new or omitted factual material. 33.5 Any party may, subject to all just exceptions and s.177 of the Evidence Act 1995: - Tender the single expert witness report/s - Cross-examine the single expert witness. 33.6 A single expert witness's fee for preparation of the report and any supplementary report and for attending court (if required to do so) is to be paid by the parties equally, subject to other agreement or direction and subject to any later order concerning the costs of the proceedings. 33.7 A single expert witness may apply to the court for directions."
5. It is clear on the transcript in the Local Court which is before me that there was an application by the plaintiff to cross‑examine the expert Mr Wood. That must be seen in the context of Mr Wood having provided two reports with the second report being a report as to which the plaintiff had input. It seems clear that paragraph 33.5 of the Local Court Practice Note indicates that any party may, "subject to all just exceptions and s 177 of the Evidence Act 1995 (NSW)" cross‑examine the single expert witness.
6. The learned Assessor rejected the application to cross‑examine the expert primarily on the basis that it appeared that the expert had properly complied with his duties and that there was not a proper basis to do so. In particular, the Assessor said: "I have no other expert evidence before me that assesses the damages. He is the single expert, I'd have to have a very good reason for disregarding what he says": T24.44 (28 October 2019).
7. The issue before the Court is whether there was a denial of procedural fairness to the plaintiff by not allowing the cross-examination sought.
8. The following matters appear to me to be relevant: 1. The matter was in the Local Court Small Claims Division where there is a lesser degree of formality and an attempt to deal with matters in a speedy and efficient manner. I refer to s 35(2) of the Local Court Act 2007. The rules of evidence do not apply to proceedings being heard in the Small Claims Division; 2. The maximum amount in issue in the proceedings below was about $10,000; 3. Mr Wood had been appointed as a single expert, then his appointment was revoked, then he was appointed a single expert again on 6 May 2019. That is made clear in my view by the transcript at T2.11 and following for 12 August 2019; 4. An initial expert report by Mr Wood as to damages was prepared; 5. The Court determined liability on 12 August 2019; 6. The Court then adjourned the matter to enable Mr Wood to prepare a supplementary report with questions from the plaintiff included; 7. That supplementary report was prepared dated 14 October 2019; 8. In substance, Mr Wood came to the same views as to damages as in his first report; 9. The matter came on for a damages hearing on 28 October 2019; 10. Mr Simons, on behalf of the plaintiff, sought to cross‑examine Mr Wood as to his report and particularly as to conversations he had both with the defendant and Mr Simons; 11. A single expert is appointed by the Court under the Local Court Practice Note Civil 1, paragraph 33.5. Any party may, as I have indicated, subject to "all just exceptions" and s 177 of the Evidence Act 1995, cross‑examine the single expert witness; 12. Section 177 of the Evidence Act appears to be inapplicable; 13. The prima facie entitlement to cross‑examine is understandable. If a party does not itself brief an expert and file and serve a report then that party must be entitled to test the expert on his report including his instructions, his factual assumptions and his conclusions; 14. Here, it is somewhat unclear whether the plaintiff wanted to cross‑examine as to the conversations between the defendant and the expert as well as to test the conclusions of the expert. I point in particular to that part of the transcript for 28 October 2019 from T19.15-T20.29. At T20.21, Mr Simon states soon after his application to cross‑examine the expert that he felt that the expert had not answered directly some of the questions which had been asked of him. At T23.41, although Mr Simons seems to point to the conversations, he does refer to some objective factors which concerned him relating to the report.
9. Overall, I find that although the primary purpose was to test the expert as to the conversations, it seemed to be that there was a desire to test the expert also on some matters in the reports. The learned Assessor appears to have rejected the application to cross‑examine primarily because there were detailed expert reports before her and an adjournment was required. I refer in particular to T24.44 on 28 October 2019 which I have earlier quoted.
10. The plaintiff also raises the issue that there was a denial of natural justice through failing to permit an affidavit to be filed by Mr Simons. However, I reject that ground of appeal. At T22.44, Mr Simons merely indicated that he was prepared to swear an affidavit if directed by the Court. There was no application by him to file an affidavit as part of any application. I cannot see that there was any denial of procedural fairness on that matter.
11. Mr Simons submits that the application to cross-examine was to test the expert both as to the conversations and also as to the expert's reasoning. He submits that he was not permitted to cross‑examine as is contemplated by the Practice Note with a single expert. He points to s 35(4) of the Local Court Act which provides that: "Witnesses may not be cross‑examined except in circumstances in which, and to the extent to which, the cross‑examination of witnesses is authorised by the rules or a practice note." He submits that the Practice Note in question authorised the cross‑examination. He submits that there was a denial of procedural fairness.
12. Mr Simons relies in particular on comments by Harrison AsJ in Spencer v Elichung Pty Ltd [2006] NSWSC 523 where her Honour at [11] accepted the comments of Howie J in Wende v Finney [2005] NSWSC 927. Howie J stated at [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."
13. Mr Zreika, who appears on behalf of the defendant, submits in summary that: 1. The approach of the Assessor has to be seen in the light of the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW) and the issue of proportionality of costs; 2. There had already been two separate days of hearing; 3. The application to cross‑examine has to be seen in the context of a fairly minor claim and in circumstances where the plaintiff had had input into the supplementary report; 4. The plaintiff was not obliged to participate in a supplementary report and could have made an application to file its own expert report. It participated in the questions to be asked with the result of Mr Wood's second report. If cross‑examination was sought, the application should have been made earlier than the hearing on 28 October 2019. In response to this point, Mr Simons points to Part 2.10 of the Local Court Rules which provide that applications are to be made orally. Presumably the application would need to have been made either at the hearing on 28 October 2019 or by way of some separate notice of motion. It is difficult therefore to see how there would have been any particular saving as to costs although that is possible; 5. The focus of Mr Simons at the hearing was on the conversations with the defendant, not the substance of the reports. It was submitted that the approach of the learned Assessor in rejecting the application in the light of the fact an adjournment was needed was a proper one in those circumstances: see T23-24 on 28 October 2019.

Consideration

1. As I indicated above, s 39 of the Local Court Act which is applicable to this appeal refers to a denial of procedural fairness. What is procedural fairness in this context? In my view, it relates to the fairness of the procedure by which the decision of the Assessor was made and not the fairness in the substantive decision under review: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at [25], a judgment of the Full High Court. Procedural fairness traditionally involves two requirements, the fair hearing rule and the rule against bias. There is no issue in the present case of an allegation of actual or apprehended bias.
2. The first issue is whether there is a duty to afford procedural fairness and secondly, if such a duty exists, the content of procedural fairness in the particular case. The content of the duty to afford procedural fairness in any particular case is a flexible one. In Kioa v West (1985) 159 CLR 550 at page 612 Brennan J stated: "The principles of natural justice have a flexible quality which, chameleon like, evokes a different response from the repository of a statutory power according to the circumstances in which the repository is to exercise the power." This statement was approved by McHugh J in Re Minister for Immigration and Multicultural Affairs; Ex Parte Miah (2001) 206 CLR 57 at [129].
3. In my view, it is clear, as the hearing involved the potential for orders against a party which were enforceable, that a duty to afford procedural fairness existed. It is contemplated in the Local Court Act. The question therefore turns to the content of the duty. There is no fixed content to the duty to afford procedural fairness. That has been stated in many appellate decisions: see Kioa v West at p 585 per Mason J. The fairness of the procedure and whether the rules of natural justice have been complied with depends on the nature of the matters in dispute and what would be a reasonable opportunity for the parties to present their case in the circumstances. It is partly to be determined by the standards of a reasonable observer who is fair minded and informed of the circumstances and it is designed to avoid practical injustice: Re Minister for Immigration and Multicultural Affairs; Ex Parte Lam (2003) 214 CLR 1 at [37] per Gleeson CJ. In my view, where a substantial hearing is involved in a curial or quasi‑curial context, the contents of the rules of natural justice must include a reasonable opportunity to a party to present their case and reply to the case against them: see Kioa v West, above, at page 582 per Mason J.
4. In my view, the current appeal is a finely balanced one. There is some substance in the submission of Mr Zreika that effectively the application to cross‑examine was made in the context of a small claim where the plaintiff had an opportunity to be involved in the questions posed for the second report and that the focus of the complaint was on the conversations. However, reading the transcript as a whole, even if the conversations were the primary focus, they relate to the factual assumptions on which the expert proceeded and I am of the view that a number of the transcript references point to the question that there had not been a proper answer to the questions or a proper taking into account of the facts.
5. I am particularly persuaded by the following: 1. The Practice Note; 2. Section 35(4) of the Local Court Act; 3. The fact that any application to cross‑examine if made beforehand would have had to have been made orally or by way of notice of motion which would have involved a vacation of the hearing date and a further hearing anyway.
6. Having regard to these matters and looking at the transcript as a whole, in my view the plaintiff should have been afforded the opportunity to cross‑examine the expert. In coming to that view, I take into account the size of the matter and the costs that have already been involved. However, I do refer to the comments of Howie J at [27] in the Wende case which emphasise the importance of the rules of natural justice being complied with including in the Small Claims Division. For all of those reasons in my view there was a denial of procedural fairness in the present case and, accordingly, the appeal should be allowed.
7. The orders which I make are: 1. Appeal allowed; 2. The decision of the Assessor in the Local Court on 28 October 2019 is set aside; 3. The matter is remitted to the Local Court for redetermination according to law in accordance with the Court's reasons. [His Honour heard submissions as to costs.]
8. The plaintiff appellant has sought an order for costs in its favour. It relies on the usual rule that costs follow the event and that it has been successful in a finding that there was a breach of the rules of procedural fairness. It is submitted that substantial work had to be undertaken for the appeal and that the Summons succinctly referred to the grounds of appeal and nothing was heard from the defendant.
9. In my view, the appropriate matters which are relevant include: 1. That there was no specific reference to paragraph 33 of the Practice Note in the application made for cross‑examination; 2. The application could have been made right at the commencement of the proceedings and potentially the substantial amount of the costs of the day could have been avoided; 3. The plaintiff was not entirely clear as to precisely the basis for its cross‑examination even though teasing through all of the pages in the end it seems to have been on grounds not only involving the conversations; 4. There was no application made earlier for cross‑examination either on 12 August 2019 or at some other date.
10. In my view, looking at the matter fairly, the error was primarily that of the Assessor but also there was no reference made to the Practice Note or the succinct basis upon which the cross‑examination was to occur. In my opinion, there was an over emphasis by the Assessor on the fact that there were expert reports. Taking into account all of the matters and exercising the discretion which I have under s 98 of the Civil Procedure Act, in my view the parties should each pay their own costs of the appeal. I also order that the Exhibit be retained with the file.

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