Frugtniet v State Bank of New South Wales

Court of Appeal (NSW)|1999-12-10|Before: Mason P, Handley JA, Beazley JA, Hunter J, Per Handley JA, Per Beazley JA

New South Wales Court of Appeal CITATION : Frugtniet v State Bank of New South Wales [1999] NSWCA 458 FILE NUMBER(S) : CA 40847/95 HEARING DATE(S) : 19/08/99 JUDGMENT DATE : 10 December 1999

Brian Frugtniet PARTIES : Suzanne Frugtniet State Bank of New South Wales JUDGMENT OF : Mason P at 1; Handley JA at 2; Beazley JA at 33

COUNSEL : Appellant: In Person (second appellant) Respondent: D Ronzani SOLICITORS : Appellant: In Person (second appellant) Respondent: Abbott Tout CATCHWORDS : Procedural fairness; mortgage dispute; trial judge's refusal to grant an adjournment; refusal results in proceedings terminating; appellate review of discretionary judgments ACTS CITED : Fair Trading Act 1987 (NSW) Legal Aid Commission Act 1979 (NSW) Maxwell v Kuen [1928] 1 KB 645 Sali v SPC Ltd (1993) 67 ALJR 841 Thornberry v R (1995) 69 ALJR 777 CASES CITED: GSA Industries Pty Limited v NT Gas Limited (1990) 24 NSWLR 710 Scott v Handley [1999] FCA 404 House v The King (1936) 55 CLR 499 Squire v Rogers (1979) 27 ALR 330 DECISION : Appeal dismissed with costs

The appellants claim that they were denied procedural fairness in the refusal of the trial judge to adjourn part-heard proceedings in which they were defendants and cross-claimants.

There had been a prior history of adjournments and adjournment applications.

(i) It is only in extraordinary cases that the interests of justice will be served by a refusal of an adjournment in a case where to hear proceedings is likely to terminate proceedings. Given the history of the matter this was such an extraordinary case. Justice is not something that exists only for defendants or debtors but must be provided to all parties in legal proceedings. By 27 November 1995 the right of the respondent to have its case heard at long last was such as to justify the trial judge in taking the course he did.

(i) The principles governing appellate review of a trial judge's refusal to grant an adjournment are now well established. The refusal of an adjournment is discretionary and the principles governing review of discretionary judgments are applicable. The appellate court will be slow to interfere with the discretion of a trial judge to refuse an adjournment. It will generally only do so when the discretion had miscarried in the sense that it had been affected by wrongful application of principle or misunderstanding or erroneous assessment of factual material.

(ii) It is only in extraordinary cases that the interests of justice will be served by a refusal of an adjournment in a case where to hear the proceedings is likely to terminate the proceedings.

(iii) The appellate court will interfere where the refusal to grant an adjournment will result in a denial of natural justice to the party seeking the adjournment and the other party will not suffer any injustice.

(iv) A trial judge's conclusions that an adjournment application is merely a delay tactic is a relevant consideration in determining to refuse an adjournment. The manner in which the appellants conducted the proceedings could have given the appearance that they were seeking to delay the trial. However, in weighing up all the circumstances which were relevant to the adjournment, his Honour appears to have overlooked two matters which were most significant. Firstly, that the Bank had failed to indicate in the preceding week that it opposed the adjournment. Secondly, the Bank had failed on two occasions to provide relevant material to the appellants. The failure to have regard to those matters caused his Honour's discretion to miscarry.

1 MASON P: I agree with Handley JA. 2 HANDLEY JA: In this appeal I have had the benefit of reading the reasons for judgment of Beazley JA. I adopt her Honour's statement of the relevant facts in paras 1-50 of her reasons. Because I have the misfortune to differ from her conclusions, it will be necessary for me to refer to other matters on the record. 3 The case came on for hearing before Hunter J on 1 August 1995 following an application for an adjournment the day before which was refused by Simpson J, and an unsuccessful application for leave to appeal from her decision. Mrs Frugtniet made a further application to Hunter J for an adjournment relying on s 57 of the Legal Aid Commission Act because an appeal was pending from the refusal of legal aid for herself and her husband. His Honour refused that application and the hearing commenced. At the end of the day the hearing was adjourned to 21 and 22 August. 4 After lunch on 21 August Mrs Frugtniet made an application to Hunter J that he disqualify himself for apprehended bias based on the hearing before him on 30 December 1994 of a bail application by Mr Frugtniet. Hunter J refused the application and the hearing proceeded. 5 On the afternoon of 22 August, when the Judge announced that he would continue the hearing the following day, Mrs Frugtniet said that she was not available that day or the next because she had a 3 month trial starting in Melbourne on Monday (173), and had advised Simpson J of this (174). Hunter J said that he had intended to sit until the case finished, but had only fixed it for 2 days, and in view of the commitments of Mr and Mrs Frugtniet in Melbourne he would not force the matter to proceed but was concerned about the further hearing (175). 6 Mrs Frugtniet said that the pre-trial issues in Melbourne could go on for a long time but may not, but she estimated that she would be free by mid-November. The Judge then said: "His Honour: What is going through my mind is this, that to a large extent it seems to me that the defendants have presented the court with a situation that may put the matter outside of my control. But I would like to be satisfied about the commitments of the defendants and with that in mind would seek to have some communication from the legal representatives of the defendants as to … their commitments and the likely duration of them. Before making a final decision as to any adjourned date, the difficulty I have is that there is not much point in fixing a time for further consideration of that matter that might fall within a period when the defendants are unable to be, or either of them are unable to be present". 7 After further discussion the Judge adjourned for a short time to enable the Bank's solicitors to telephone the Melbourne solicitors acting for Mr & Mrs Frugtniet to confirm their commitments in the Melbourne proceedings. After the resumption Mr Ronzani, counsel for the Bank, said that his solicitors had obtained confirmation from the Melbourne solicitors that Mr and Mrs Frugtniet had substantial commitments in the following week, and that "what happens during that first week will determine what happens thereafter". His Honour then made the remarks quoted by Beazley JA in par 14 of her reasons and adjourned the matter to 27 November. 8 Unfortunately the arrangements for the adjournment and the further hearing were somewhat loose. His Honour did not impose an obligation on Mr & Mrs Frugtniet to keep the Bank's solicitors informed of developments in the Melbourne proceedings, nor did he require the Bank's solicitors to monitor the progress of these proceedings or list the matter for further mention during the interval. It is quite clear that Mr and Mrs Frugtniet secured their adjournment on 22 August on the basis of their representation that they would be heavily engaged in proceedings in Melbourne until mid November but would then be free to return to Sydney for the further hearing. 9 What occurred on 27 November is set out in the reasons of Beazley JA. There is no evidence of the precise commitments of Mr and Mrs Frugtniet as of that date in their other proceedings in Sydney and Melbourne, or when they arose. The Court does not know whether the clashes with the fixture before Hunter J were forced on the Frugtniets over their opposition after reference to this prior fixture, were acquiesced in without disclosure of that fixture, or were contrived. In para 3 of her affidavit of 21 November Mrs Frugtniet said: "… I have been in conferences and preparation for my trial in the County Court of Victoria and further assisting my husband in his appeal in the Court of Criminal Appeal in Sydney which timetable was set subsequent to the last hearing date and are changing due to circumstances beyond his control". 10 It appeared from para 10 of that affidavit that her husband's appeal to the Court of Criminal Appeal in Sydney would be heard on 14 December. The Court has no knowledge of the issues in that appeal or the role being played by Mrs Frugtniet. The criminal trial involving Mrs Frugtniet, which was said in August to be likely to last 3 months, had not yet commenced, and there is no evidence that a date for the start of that trial had been fixed, or if it had what that date was. It is not likely that a trial of that length would be fixed to commence late in the year only a few weeks before the vacation. 11 Mrs Frugtniet's first affidavit of 27 November stated that she was one of the defendants in proceedings in the County Court of Victoria and para 3 stated: "That the following is the court time-table in such matters - 27 November 1995, 04 December 1995 and 15 December 1995". 12 The nature of this timetable was never disclosed nor did Mrs Frugtniet explain why she was required to be in Melbourne on those days. She was able to appear before Hunter J on 27 November and was in Sydney all that day. She told the Judge that her solicitor was representing her in Melbourne that day but she was required on 4 and 15 December. 13 The Judge said in his reasons of 27 November: "I learn today with some concern from Mrs Frugtniet that, apart from some court appearances which are unspecified, those proceedings did not undergo a full hearing. The particulars of the foreshadowed timetable for the current set of litigation is of a nature that does not constrain me to the finding that her commitments are such that it would be unfair to her, or for that matter to her husband, for these proceedings to continue, and one would hope to continue to conclusion without further interruption".

14 Mr Frugtniet's affidavit of 24 November sworn in Sydney stated that his appeal to the Court of Criminal Appeal had been allocated hearing dates on 24 November, 1 December and 14 December. Mrs Frugtniet was in Melbourne until the afternoon of 24 November. He also stated that he no longer had confidence in Mrs Frugtniet as his representative in court and intended to represent himself but he did not appear before Hunter J on the 27th , and his absence was not explained. The Judge said in his reasons that day that this claim by Mr Frugtniet lacked substance, and that finding was well open. 15 The course of the hearing before Hunter J on 27 November is set out in paras 25-37 of the reasons of Beazley JA. I need only add a few short comments. Mrs Frugtniet quite reasonably misunderstood the associate's letter of Wednesday 22 November to the Bank, copied to her, which called for a response from the bank by 9.30 am the next day if it opposed the adjournment. However the position was clarified on Friday afternoon in time for Mrs Frugtniet to be able to return to Sydney that day. Her confusion justified an adjournment for a day or so but nothing more. 16 While his Honour's remarks quoted in para 30 do not reflect the orders actually made on 22 August, the adjournment to 27 November was granted for the reasons he referred to. In those circumstances his Honour was entitled to receive a full explanation from Mrs Frugtniet of the reasons why she and her husband found themselves with conflicting commitments on the adjourned date. No such explanation was ever offered. 17 Mrs Frugtniet's affidavit of 27 November annexed a medical certificate she obtained on the previous Saturday which stated that she was suffering from tonsillitis and was unfit for work until 1 December. The Judge said in his reasons that day that he had no doubt that she was suffering from tonsillitis but added that, having seen her in court, he was: "quite satisfied from … the appearance of the second defendant in court today that, though it may occasion her some discomfort and call for some further effort on her part, she is able to conduct this litigation on her behalf and, if her husband does not persist in his present attitude, on behalf of her husband". 18 The Judge had been able to observe Mrs Frugtniet over the 3 previous hearing days and was entitled to make his own assessment of her capacity to represent herself in the proceedings. He was certainly not bound to defer to a medical certificate such as that produced by Mrs Frugtniet. This Court may be permitted to know that such certificates can be obtained from some doctors without difficulty and on insubstantial grounds. The Judge saw and heard Mrs Frugtniet that day and this Court cannot disturb this finding. See Abalos v Australian Postal Commission (1990) 171 CLR 167. 19 The proceedings had been marked by repeated applications by Mr and Mrs Frugtniet for adjournments. The first such application on 4 October 1994 was refused by Newman J on 12 October, but the case could not be heard because a judge was not available. The case was later fixed for hearing on 1 February 1995 but on 23 January Mrs Frugtniet applied for an adjournment relying on an affidavit in which she stated that she was a defendant in a criminal trial to be held in the County Court in Melbourne, the trial having been fixed since June 1994 to commence on 30 January 1995 with an anticipated duration of 3 months. On 27 January Hulme J vacated the hearing date and gave additional directions. On 29 May 1995 Mrs Frugtniet made an application to remove the matter from the next available callover on 21 June because of the criminal proceedings pending in Melbourne. This application was refused by Dunford J on 29 May 1995. 20 On 21 June 1995 the matter was placed in a call-up with a view to fixing a hearing date. There was no appearance on behalf of the defendants, but in a written submission sent by facsimile Mrs Frugtniet again referred to the Victorian proceedings and stated that the presence of both defendants in the County Court was absolutely necessary during specified periods in June and that a trial date had been fixed for a period of 67 court days from 28 August. The case was fixed for hearing commencing on 31 July with an estimated duration of 2½ days. On 27 July an application was made by Mrs Frugtniet on behalf of both defendants for an adjournment which was refused by Simpson J. On 31 July the application for an adjournment was renewed before Simpson J and again refused. An application for leave to appeal to this Court on 1 August failed, and then a further application for an adjournment was made that day to Hunter J and refused. 21 Hunter J was therefore entitled to closely scrutinise the grounds for this application for yet another adjournment and to conclude that the problems with the Bank's documents and Mrs Frugtniet's tonsillitis and the other proceedings were really only pretexts which had been seized upon by the defendants as a plausible basis for a further lengthy adjournment. 22 On 27 November Hunter J, having refused an adjournment to the following year, adjourned the case until the next day to allow him to finish a part heard case. At 4.41 that afternoon Mrs Frugtniet sent a facsimile letter to the Bank's solicitors requiring various witnesses to attend for cross-examination and seeking production of specific documents the following day. A copy was also sent to the Judge's associate at 5.07. The solicitors replied by fax recording that Mrs Frugtniet had left court that morning about 11 am without seeking to inspect any of the Bank's documents or asking for copies. Mrs Frugtniet sent a further letter to the Judge's associate at 5.08, and a copy of a further sworn affidavit annexing another medical certificate at 5.10. In this affidavit she indicated that she did not intend to appear in court the following day. She had demonstrated a considerable capacity for work since leaving Court at 11 am that morning. 23 In para 60 Beazley JA reviews the evidence relating to the provision of documents by the Bank that had been requested by Mrs Frugtniet or the Judge. The facts she refers to need to be evaluated in the light of the Judge's statement in his reasons of 27 November that he had caused his associate to write the letter of 29 September: "… to convey a request to the parties that there be present in court today documents relevant to that issue in the hope that whether or not the issues are strictly issues raised by the pleadings, at least if there was an attempt by the defendants to pursue that issue or issues, then at least there would be no further delay through the absence of relevant material". 24 The counsel for the Bank said in court on 27 November that the documents requested by the associate's letter of 29 September, other than the property valuations, were in court and copies were available for the defendants and the Judge (T 5). The property valuations were expected shortly (T 6). The Judge asked Mrs Frugtniet whether it was true that since the last hearing she had not asked the Bank or its solicitors for the documents she complained about not receiving and she replied: "I didn't realise that I had to when I called for it to be produced in court. I expected it to be produced … I have been busy doing other things with the trial". 25 Mrs Frugtniet left court after the Judge adjourned the case to the following day without asking the Bank's solicitors for the copies of the documents they had available to give her. In all these circumstances I have concluded that the Bank's default, if such it was, was of a minor nature and that the problems with the documents did not provide any grounds for an adjournment to the new year. The case was adjourned to the following day, and Mrs Frugtniet did not seek a slightly longer adjournment to enable her to master the documents which by then were available. 26 Beazley JA sets out in paras 51-6 of her reasons the relevant cases and the principles they establish. She acknowledges in para 62 that this was not a case where the discretion could only have been exercised in one way (as was the case in Maxwell v Kuen [1926] 1 KB 645). She also acknowledges that the Judge's finding that Mr and Mrs Frugtniet's motivation in seeking an adjournment was to achieve "by whatever means they can devise that they might perceive to be acceptable to the court, the indefinite deferral of the hearing of these proceedings". 27 Her Honour holds that the Judge's exercise of discretion miscarried because his Honour appears to have overlooked the Bank's failure to communicate its objection to an adjournment by 9.30 am on Thursday 23 November, and the Bank's failure to provide copies of documents to Mr and Mrs Frugtniet. 28 I must respectfully differ from her Honour on these questions. The confusion over the Bank's attitude lasted for no longer than a day and a half and did not call for a lengthy adjournment. The Judge's reasons of 27 November show that there was no failure on the Bank's part to comply with the request in the associate's letter of 29 September. This was intended as a request that the documents be available in court and the text makes this reasonably clear ("draw the following matters to … attention for the resumption of the hearing of this matter on 27 November 1995"). 29 The strict position with respect to the documents called for by Mrs Frugtniet in court on 21 and 22 August was the same. These were calls for production in court, and, when the adjournment was granted, Mrs Frugtniet did not seek an order for production of these documents during the adjournment. 30 Between 22 August and 27 November she made no request for inspection of these documents or for copies, not even during the week before 27 November, although during the latter part of this week she may have thought that her application for an adjournment was unopposed. She did not collect the copies of the documents which had been prepared for her by the Bank's solicitors before leaving the court at 11 am on 27 November. In my judgment the difficulties over these documents may have justified a short adjournment, but this was never sought, but they did not justify an adjournment until the new year. 31 In Sali v S P C Ltd (1993) 67 ALJR 841 at 845, Brennan, Deane and McHugh JJ said: "… It is only in extraordinary circumstances that the interests of justice will be served by a refusal of an adjournment in a case … where the practical effect of the refusal is to terminate the proceedings". 32 In my judgment this was an extraordinary case. The criminal trial pending in Victoria against Mrs Frugtniet, expected to last 3 months and about to start, was the basis of a successful application for an adjournment to Hulme J on 27 January, the unsuccessful applications to Dunford J on 29 May and to the list Judge on 21 June, the successful application to Hunter J on 22 August, and then the unsuccessful application to him on 27 November. The appellants having cried wolf so often cannot complain that Hunter J refused to accept the reasons they advanced on 27 November for a further adjournment based on this pending criminal trial. Justice is not something that exists only for defendants or debtors. Justice is something which must be provided to all parties in legal proceedings and by 27 November the right of the Bank to have its case heard at long last fully justified Hunter J in taking the course that he did. 33 In my opinion the appeal should be dismissed with costs. 34 BEAZLEY JA: This appeal turns on the question whether the appellants were denied procedural fairness in the refusal of the trial judge to adjourn part heard proceedings in which they were defendants and cross-claimants. The determination of that question involves a careful examination of the events preceding the refusal of the adjournment and the manner in which the trial judge dealt with the application for adjournment itself.

The Proceedings 35 The appellants were the registered proprietors of their home at Hunters Hill. The property was subject to a first mortgage to the respondent. The existence of that mortgage was not in dispute. According to the respondent (the Bank), the property was also subject of a second mortgage in its favour. The Bank alleged there had been default on the mortgages. The appellants disputed the validity of the second mortgage, alleging it was fraudulent. It followed, according to them, that there was no default. 36 The Bank served statutory notices upon the appellant and on 10 September 1992 caused a summons to be issued out of the Supreme Court claiming judgment for possession and an order for leave to issue a Writ of Possession. 37 Although the Supreme Court Rules do not call for a defence to be filed to a summons, the appellants filed a defence, verified by Mrs Frugniet on 6 November 1992, in which they denied default and disputed the validity of the second mortgage. Allegations of unconscionable conduct and overcharging were also made. 38 On 1 August 1995, the matter came on for hearing before Hunter J. Mrs Suzanne Frugtniet, the second appellant, appeared for both appellants. Mr Ronzani of counsel appeared for the respondent Bank. He moved on the summons and read the affidavit of debt of Phillip James Soulos, sworn 4 September 1992. Evidence of substituted service of the summons was given and the memorandum of the first registered mortgage was tendered. 39 Mrs Frugtniet then commenced cross-examination of the Bank's witnesses. The matter proceeded on 1 August and 21 August 1995. On 21 August 1995 it became apparent from the cross-examination that the appellants were alleging that the Bank had engaged in misleading or deceptive conduct in relation to a banker's opinion it had given in respect of a company Inforvision Australia Pty Ltd (Inforvision). The trial judge gave the appellants leave to amend their defence and to file a cross-claim to include such an allegation. 40 The amended pleadings were filed on 22 August 1995. In the amended defence, the appellants acknowledged that they signed blank proforma Instruments of Mortgage at the request of the Bank, to be used by the Bank in case there were typing or other mechanical errors in the Mortgage document. The appellants alleged that the Bank wrongly used one of those pro forma documents to register the second mortgage. 41 In the cross claim, the appellants alleged that the Bank had made misrepresentations and engaged in misleading and deceptive conduct in breach of the Fair Trading Act 1987 (NSW). In brief, it was alleged that the Bank had represented that Inforvision was a sound financial corporation. Relying on this representation, the appellants alleged they entered a finance broking agreement with Inforvision, which included a term that the appellants' company, Travel Trend International Pty Ltd (Travel Trend), would advance $125,000 for and on behalf of Inforvision. Inforvision failed to repay Travel Trend, as a result of which Travel Trend suffered loss. 42 The appellants also alleged that in further reliance on the representations, the appellants requested the Bank to advance $165,000 to Travel Trend by way of an overdraft facility. The Bank alleges that the overdraft was secured by the second mortgage, which is the mortgage the appellants dispute. 43 The trial judge did not make any specific order that the matter continue on pleadings. The Bank has never pleaded a defence to the cross-claim. 44 During the course of the hearing on 22 August 1995, Mrs Frugniet called for various documents or sought information, or was informed by the Bank that it would provide certain information. The documents called for included: (i) the copy mortgage; (ii) the Bank manual (iii) a loan application by a company Zapalto Pty Limited; (iv) a statement of the interest rate charged on the various accounts after 6 July 1989; (v) the appellant's application for a home loan; (vi) documents relating to Inforvision. In addition, Mrs Frugniet sought, and was promised, information as to the state of the Inforvision accounts. 45 Later on the afternoon of 22 August 1995, Mrs Frugtniet indicated to the Court she could not be present on the following two days, as the appellants had a conference in Melbourne at 12 noon the next day and were to be involved in a three month trial starting the following Monday. It was inferred by those present in court (presumably from knowledge they already had) that the matter was a criminal trial. Mrs Frugtniet told the trial judge that she estimated she would return to Sydney in mid-November. 46 Hunter J adjourned the matter for a short period (probably about 40 minutes) to enable the amended defence and cross-claim to be filed, and also to enable the Bank's legal representatives to communicate with the appellants' Melbourne legal representatives as to the Frugtniets' Melbourne commitments. 47 When his Honour returned to the bench, the following exchange occurred: "HIS HONOUR: Have you been able to resolve the other matters in terms of satisfying yourself as to the correctness of the information that has been given to the court? RONZANI: Yes. Some of the information is not strictly correct. … HIS HONOUR: But then there are substantial commitments in Melbourne? RONZANI: Yes, substantial as to the first week. As to what happens during that first week will determine what happens thereafter. … I would submit the matter should at least be listed for mention at some stage after the first week and approximate tenth week so that both parties have a date to aim for but we will contact the solicitors in Melbourne at the conclusion of the arguments during the first week and satisfy ourselves that if in fact the rest of the time mentioned by Mrs Frugtniet is going to be taken up because of decisions during the first week, we can inform the court officially of that at the mention. HIS HONOUR: I think I prefer a slightly different course but perhaps with the same effect. The week commencing 27 November? RONZANI: This is for hearing. We will take it. It won't matter whether it is convenient or not. HIS HONOUR: What I will do is adjourn this matter for further hearing on 27 November and with the view to continuing the hearing until its completion. That adjournment of the matter is on the basis of information provided to me by the defendants which in substance is that as from tomorrow and probably for the next three months the attendance of each of the defendants will be required in relation to court proceedings in Melbourne. If it transpires for whatever reason that the defendants are not so committed, then either party is at liberty to apply to the court on 48 hours notice for the purpose of re-fixing the hearing date." 48 His Honour thus formally adjourned the matter to 27 November 1995. 49 On 29 September 1995 the judge's associate wrote to the Bank's counsel in the following terms: "His Honour has requested me to correspond with the parties in order to draw the following matters to their attention for the resumption of the hearing of this matter on 27 November 1995. Having regard to the requests already made by the defendants, for the production of documents by the bank, His Honour believes it may facilitate the completion of the hearing if the plaintiff makes the following available: (i) Memorandum No. J799 to mortgage over property registered at the Queensland Office of the Registrar of Titles as Vol 6228 Folio 162 (Lot 362 on Registered Plan No. 180122), (ii) State Bank account statements for the Travel Trend and Frugtniets accounts between 6 July 1989 and the date of closure, (iii) Details of any security taken in respect of the advance to the Frugtniets of 7 July 1989, and (iv) Copies of any property valuations held by the bank relevant to the advance of finance to the Frugtniets and Travel Trend."

A mirror letter was sent to Mrs Frugtniet. 50 On 14 November 1995, the Bank's solicitors wrote to Mrs Frugniet enclosing "bundle of account statements for accounts 38-0222-01 pages 3 and 4 only; and 90-0136-00". This Court was informed these were Frugtniet and Travel Trend accounts. No further documents were made available at that time. 51 Nothing further happened in the matter until 20 November 1995, when Mrs Frugtniet telephoned the judge's associate. The associate made the following note of this communication: "20.11.95 3:10pm Ms Fructniet (sic) called -Would like to adjourn Monday's hearing as she's in the middle of an appeal and has the trial in Melbourne. Also the other side haven't produced the documents that they were supposed to. I told her she needs to make an Application for Adjournment. Told her to send it up by fax ASAP (she said she was in Melbourne…" 52 On 21 November 1995, Mrs Frugtniet forwarded two documents by facsimile to the Judge's associate - an Application for an Adjournment and an affidavit in support. In the Application for Adjournment Mrs Frugtniet sought vacation of the hearing date of 27 November 1995 and the setting of a date in the new year. In the affidavit in support five reasons were advanced for the adjournment: (i), the Bank had not produced the documents referred to in the letter of 29 September 1995; (ii) it was oppressive to have three sets of court proceedings running concurrently (these proceedings, in which the appellants were not legally represented, her trial in Melbourne and Mr Frugtniet's appeal in the New South Wales Court of Criminal Appeal, in which Mrs Frugtniet was to represent him); (iii) the Bank had still not produced a number of documents which were the subject of calls during the hearing on 1, 21 and 22 August 1995; (iv) the Bank had acted in a seriously irregular manner in providing "private and confidential documents" to the Australian Federal Police; and (v) Mr Frugtniet was also involved in the preparation of his appeal in the Court of Criminal Appeal "which dates have come in between this matter". 53 By a faxed letter dated 22 November 1995, the judge's associate wrote to the Bank stating: "His Honour has requested me to forward to you the enclosed facsimile received from Mrs Frugtniet together with a copy of my reply, with the further request that if the foreshadowed application is opposed, for [the Bank] to provide an affidavit in response if possible by 9.30 am 23 November 1995." 54 The Bank did not respond to the letter, either by correspondence or by filing an affidavit. 55 On the same day, the judge's associate also wrote to Mrs Frugtniet by fax, acknowledging receipt of her facsimile dated 21 November 1995, advising that if the adjournment application was pressed, and if opposed by the Bank, it would be necessary for Mrs Frugtniet to be represented. The associate also raised the possibility of hearing the adjournment application prior to 27 November, if necessary by means of a video conference link, if the appellants were still in Melbourne. 56 On 24 November 1995 (a Friday), the judge's associate forwarded another letter by facsimile transmission to Mrs Frugtniet, advising that as the application for adjournment had not been brought on, the judge wished it be stressed that "it will be essential for you to be represented on Monday for any application or on the resumed hearing of the matter". A copy of this letter was sent by facsimile transmission to the Bank's solicitors. The facsimile transmissions were forwarded at 4.45pm and 5pm respectively. 57 On Saturday 25 November 1995, Mrs Frugtniet attended at the Drummoyne Medical Centre and was examined by Dr Cordaro, who diagnosed tonsillitis and certified her unfit for work until 1 December 1995. 58 On Monday 27 November 1995 the matter was called on before Hunter J. Mrs Frugtniet appeared and informed the Court that she persisted in her application for an adjournment, preferably until the New Year. She handed up a copy of an unsworn affidavit of herself. This affidavit was later sworn. In addition, she relied upon an affidavit of Mr Frugtniet, sworn 24 November 1995 and tendered the medical certificate given by Dr Cordaro on 25 November. 59 In her unsworn affidavit Mrs Frugtniet raised the following matters in support of the adjournment application: (i) that the Melbourne criminal proceedings were listed (apparently for various pre-trial applications) on 27 November 1995, 4 December 1995 and 15 December 1995; (ii) that on 22 November 1995 the judge's associate wrote her a letter which she misunderstood. She believed she had to await an affidavit from the Bank by 9.30am on Thursday 23 November 1995 if the Bank was to oppose the application. It was not until 5pm on Friday 24 November 1995 when the judge's associate wrote to her advising that since the matter had not been brought on she would have to be present on Monday (the appellant not being financially able to obtain legal representation); (iii) that as a result of the letter of 24 November she made arrangements and returned to Sydney on the evening of Friday 24 November 1995; (iv) that she commenced to feel unwell on the Friday evening and went to the Medical Centre on Saturday and was prescribed antibiotics and given a medical certificate covering one week; (v) that having regard to the matters raised in her affidavit of 21 November, together with her tonsillitis and the pressures of the Victorian proceedings until 15 December, she sought an adjournment until the new year;. (vi) she also sought an order for "production of all documents sought to be produced on the last three hearing dates and detailed in the letter from the Associate to his Honour Judge Hunter dated 29 September 1995 and most importantly the Inforvision Australia Pty Ltd file in particular from December 1989 until September 1992"; (vii) she sought other information as to the name of a witness and again raised the matter of the Bank having produced documents to the Australian Federal Police, specifying that over 1,000 documents had been produced and that "some of the documents referred to … do not appear on the [Bank's] verified list of documents filed in these proceedings". 60 Mrs Frugtniet also relied upon an affidavit sworn by Mr Frugtniet. In that affidavit Mr Frugtniet relied on the following matters in support of the application for adjournment: (i) the court timetable for the criminal proceedings in Melbourne; (ii) that dates had been allocated in his Court of Criminal Appeal proceedings on 24 November 1995, 1 December 1995 and 14 December 1995; (iii) that he was totally preoccupied with the aforementioned proceedings; (iv) that the Bank had not complied with requests for production of documents "including orders made by Hunter J". Presumably this was a reference to the letter sent by his Honour's associate of 29 September 1995; (v) that the Bank had not produced the file "in its entirety", but had produced over 1,000 documents to "third parties involved in the Victorian proceedings"; (vi) that it would be unfair to him if the matter was heard before all the documents required or requested to be produced were produced and before the Court of Criminal Appeal proceedings were concluded. 61 Mr Frugtniet also raised matters going directly to his defence of the matter. He then stated in para 16: "… but I have no more confidence in the Second Defendant representing me in this matter and will therefore represent myself and file a Notice of Appearance." 62 He said he would need to call about ten witnesses and estimated a hearing time of a further 8 days. He too sought that the matter be adjourned to the New Year. 63 The trial judge asked whether the Victorian proceedings, being the reason advanced for the adjournment on the first occasion, had proceeded. He was informed it had not. His Honour said: "I was under the impression that the court was going to be informed if the matter was not to proceed, because the only basis upon which I acceded to your application to adjourn the matter was in recognition of the possible unfairness of requiring this case to proceed while you and your husband had the case in Victoria." 64 His Honour seems to infer in this statement that Mrs Frugtniet had an obligation to inform him if the Melbourne proceedings did not continue for the whole of the three months. As is apparent from what his Honour said on 22 August 1995 (see para 46 of these reasons), his recollection in this regard was not entirely correct. 65 Counsel for the Bank opposed the application. He defended the Bank's position in relation to the non-production of documents by saying that the Inforvision file was available but that the bank statements had never been requested. 66 This last statement was correct, but it overlooked what had happened on 22 August 1995. On that day the following exchange had taken place between Mr Ronzani and Mrs Frugtniet: "RONZANI: The [Inforvision] file is produced. It contains privileged material because it has been the subject of a recovery action. We believe it to be all that related to Inforvision certainly so far as it is relevant concerning the recovery action. S FRUGTNIET: Would it be possible to get the Inforvision account balance as at 1 March 1989? RONZANI: If there are no bank statements in that thick file the answer is not immediately but it can be got overnight in the same way. My instructing solicitor is looking for July. S FRUGTNIET: 1 March 1989. RONZANI: 1 March 1989." (emphasis added) 67 It was clear that Mrs Frugtniet had an expectation that she would be provided with Inforvision's account balance as at 1 March 1989. That information would have come from the bank statements. Mrs Frugtniet was neither provided with the account balance nor the bank statements from which she could derive this information herself. Accordingly, Mr Ronzani's statement was apt to mislead his Honour by suggesting this was a last minute request by Mrs Frugtniet. In truth, it was a legitimate complaint about failure to provide information as was expressly promised. 68 His Honour stated that such matters should have been put in an affidavit, as he had indicated should be done in the letter sent by his associate dated 22 November 1995. It is convenient at this point to note that Mrs Frugtniet quite understandably "misunderstood" the associate's letter to the Bank. That letter stated that if the Bank opposed the adjournment application it was to file an affidavit. The Bank did not file any affidavit, and Mrs Frugtniet made the reasonable assumption that the adjournment was not opposed. It was not until 24 November that Mrs Frugtniet was put on notice she should appear on 27 November. 69 His Honour asked whether the documents referred to in his associate's letter of 29 September were in court and was informed they were, "except for the property valuations" which the Bank was "waiting now for it to arrive". The following exchange then occurred between his Honour and Mrs Frugtniet: "HIS HONOUR: Mrs Frugtniet, do you accept that, since the last hearing, you have [not] made application to the plaintiff or its solicitors for the documents that you complain of as not having been received? S FRUGTNIET: I didn't realise that I had to when I called for it to be produced in court. I expected it to be produced. HIS HONOUR: The simple answer is, you have not? S FRUGTNIET: No, I have been busy doing other things with the trial. HIS HONOUR: Do you accept that you have not requested the bank statements of Inforvision as distinct from the file for Inforvision? S FRUGTNIET: When I said "the file" I meant everything. That would include bank statements. HIS HONOUR: I propose to refuse the applications for adjournment. I say applications because the affidavit of Brian Frugtniet of 24 November 1995, though upon grounds that overlap with those relied upon by Mrs Frugtniet as grounds for an adjournment, includes further material and purports to be an independent application for an adjournment on bases I will address now." 70 His Honour delivered judgment in which he gave the following reasons for refusing the adjournment. In relation to Mr Frugtniet's application, his Honour stated that Mr Frugtniet had complained that the plaintiff had failed to comply with requests for the production of documents, but without identifying the requests or documents. His Honour further stated that Mr Frugtniet requested an adjournment on the basis that neither he nor Mrs Frugtniet were legally trained or qualified. Furthermore, his Honour noted that Mr Frugtniet then expressed a wish to represent himself, as opposed to his wife appearing for him, which she had previously done, whilst he was present in court. His Honour stated that he had no hesitation in refusing the application for the proceedings to be adjourned. He commented that the basis upon which Mr Frugtniet professed to have no confidence in his wife representing him had no reasonable foundation. In fact, his Honour considered that Mr Frugtniet's failure to appear on that day in court indicated that he had confidence in his wife to present the case on his behalf, as she had also done in the Court of Criminal Appeal. His Honour considered Mr Frugtniet had not advanced any reasonable basis for the proceedings to be adjourned. 71 As to Mrs Frugtniet's application, , his Honour accepted that she was suffering from tonsillitis. However, having observed her in court, his Honour stated: "… though it may occasion her some discomfort and call for some further effort on her part, she is able to conduct this litigation on her behalf and, if her husband does not persist in his present attitude, on behalf of her husband."

In relation to the documents that were not provided by the Bank, his Honour stated that Mrs Frugtniet had accepted she made no request for these documents since the previous hearing and that the bank statements had never been specifically requested. He further noted that material relevant to the issues was present in court, except for some material which would not cause a delay in the hearing. His Honour refused the application of the second defendant which he considered as relevant to the position of the first, concluding that the grounds were without sufficient substance. His Honour held that an order to adjourn would be unfair to the Bank, which was entitled to a resolution of the proceedings. 72 Mrs Frugtniet left the court stating: "I resent that assertion from your Honour that I am well enough to conduct these proceedings. How dare anybody tell me that. They are lying. I am sick. I am under medication."

73 Sometime later on 27 November 1995, Mrs Frugtniet sent a handwritten affidavit to the court by facsimile transmission. She referred to his Honour's remark that she was well enough to conduct the case, and annexed a further medical certificate from Sydney Hospital stating that she had "acute tonsillitis" and was "unfit for work from 27 November 1995 to 1 December 1995". She complained that she was tired and in no position "to inspect the documents produced by [the Bank] or purported to be produced by the Bank" (emphasis added). 74 Also on 27 November 1995, Mrs Frugtniet wrote to the Bank advising the persons she wished to cross-examine, giving a list of proposed witnesses for the appellants and also seeking copies of documents referred to in the course of the hearing on 21 and 22 August 1995 and in the letter of 29 September 1995. She stated that if the matter did proceed on 28 November and the documents were not provided she would "seek relief from the Courts as natural justice and procedural fairness have to be(sic) prevail". 75 On 28 November neither of the appellants appeared in court. On inquiry from Hunter J the Bank stated it wished to proceed. His Honour directed the hearing to proceed and the Bank tendered further evidence in its case. His Honour adjourned the matter to 29 November to enable the Bank to prepare an outline of submissions with transcript references. 76 Mr Frugtniet wrote to the court on 29 November protesting that he and Mrs Frugtniet considered they had been denied procedural fairness in the proceedings. He raised a number of matters to support this application, including Mrs Frugtniet's illness, the refusal of the Registry on 25 November to permit Mrs Frugtniet to issue various subpoenas, the failure of the Bank to produce documents and the fact that Hunter J had apparently refused an adjournment to permit him to represent himself. 77 Mrs Frugtniet did not appear on 29 November. His Honour delivered a judgment in which he stated, so far as is material here: "I repeat, the absence of the defendants from this court this week, except for the appearance by Mrs Frugtniet on Monday, is completely unacceptable and without any semblance of a satisfactory explanation. I have no doubt that the Court of Appeal will be the next court to be subjected to the manoeuvrings of these defendants, who have successfully avoided the completion of these proceedings for something like three years now. I have adverted to those matters in my reasons for judgment in the course of the last day or two, and would add only that a matter that was not adverted to was the difficulty that was experienced in serving these defendants with originating process, a matter that was adverted to by Mr Ronzani in submissions to me yesterday. The willingness of the courts to extend a sympathetic and charitable attitude to litigants in person, in my opinion, must have some limits, and in this case those limits I think expired some time ago. It is a case of this kind that raises questions in my mind as to the desirability of permitting litigants to appear in person: given their capacity to disrupt the court time, absorb in inefficient ways significant court time; their capacity, if so minded, to use the system in cynical ways; From my enquiries the incidence of litigants appearing in person is a continuing and growing problem in court administration. Having regard to the interests of other litigants to have their respective cases dealt with in a timely way, I have come round to the perhaps unconventional and politically incorrect view that litigants in person should not be permitted in this court. As a corollary to that view, it must be recognised that it could only be treated as a realistic approach to this problem if coincident with it was a legal aid system which operated to ensure no injustice was occasioned to litigants who would otherwise be forced to appear in person. While these remarks are impromptu and superficial and have not played any part in the reasoning which has led to the way in which this litigation is coming to an end in this court, I would only add that it would come as no surprise to me if a cost-efficiency analysis was carried out in terms of the cost of providing legal aid in such cases and the inevitable attendant expedition of court hearing, as contrasted with the sorry state of costs and time wasted in the present system, it would show a cost benefit in favour of some procedure such as I have now thought appropriate to mention." 78 His Honour referred to Mr Frugtniet's facsimile in some detail and then noted: "… the first defendant has taken it upon himself to absent himself from these proceedings, notwithstanding his knowledge, from his presence in court, of the adjourned date of these proceedings. … his attitude … [is] cavalier in the extreme. … [It casts doubt on] the bona fides of these manoeuvrings by the defendants to avoid a resumption of the hearing of this matter on a fully contested basis." 79 The submissions and some further affidavit evidence of the Bank were handed to His Honour, who then adjourned the matter for judgment to 10am on 30 November 1995. 80 Later on 29 November, the matter was again listed before his Honour. Mr Lever-Naylor of counsel appeared for Mrs Frugtniet. Mr Ronzani appeared for the Bank. There was no appearance for Mr Frugtniet. 81 Mr Lever-Naylor applied for an adjournment on the basis that: "… in all the circumstances and in the interests of justice, [it would be] unfair not to have heard [Mrs Frugtniet's] submissions, whatever they were, in this matter if she was not present at the last part of the hearing, which I understand is the position." 82 His Honour responded by noting: "I think in deference to your presence I should say this: First, I think it is regrettable in the extreme that the litigation is coming to a conclusion in the way it is and, for my part, I have, I think, extended significant indulgences during the course of the hearing to your client and the first defendant, not the least of which was a substantial adjournment of some months which, as it turned out, appears to have been unnecessary. More importantly, in the course of the last 24 hours I have found it necessary in dealing with this matter to express my views for proceeding to the conclusion of these proceedings in the way I have decided should be done. I have expressed views which, I think on any view of it, are particularly critical of both defendants to the point where I think it would be quite inappropriate for me to continue to hear the proceedings if that hypothetical possibility was considered. I think that the best course, in the sense the fairest course that I can follow is to proceed to judgment, as I propose to do tomorrow morning, by granting judgment in possession to the plaintiff and by ordering the issuing of a writ of execution but ordering a stay of the execution for a time which would permit your client to test either the course that I have followed in the last 48 hours by appeal or to test the decision by way of judgment that I propose [to] give in the matter by way of appeal. It seems to me, without any question, that it is a far more preferable course than any other and, in particular, I think it is completely unacceptable that the proceedings, having reached the stage they have reached, that the Court should accede to any application which would result in a reopening of the matter by way of further order of some kind or another, which would only have the effect of me disqualifying myself from further hearing the matter and for the matter to then be relisted for hearing de novo before another judge. I conclude my comments with my opening remark, that I think, without any question, the way in which these proceedings have come to a conclusion is highly regrettable, but I add through no other fault than the conduct of your client and the first defendant." 83 The following day his Honour delivered judgment, made an order for possession and dismissed the cross-claim.

Principles Governing Appellate Review of a Trial Judge's Refusal to Grant an Adjournment 84 The principles governing appellate review of a trial judge's refusal to grant an adjournment are well established and have also been subject of recent decisions in the High Court (Sali v SPC Ltd & Anor (1993) 67 ALJR 841; Thornberry v R (1995) 69 ALJR 777), this Court (GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710) and in the Federal Court (Scott & Anor v Handley, Senior Member, AAT & Anor [1999] FCA 404). These principles may be relevantly summarised as follows. 85 Firstly, the refusal of an adjournment is discretionary and the principles governing the review of discretionary judgments applies to appellate review of a refusal to grant an adjournment: see House v The King (1936) 55 CLR 499; Thornberry v R at 777. An appellate court will be slow to interfere with the discretion of a trial judge to refuse an adjournment: Sali v SPC Ltd at 628. It will generally only do so when: "the exercise … of discretion has miscarried in the sense that that it had been affected by wrongful application of principle or misunderstanding or erroneous assessment of the factual material … This general rule is subject to any power of the particular appellate court to receive new evidence on the hearing of an appeal… and the benefit of hindsight in a case where it can be seen that serious injustice has resulted or will, in fact, result from the exercise of the discretion"

Squire v Rogers (1979) 27 ALR 330 per Deane J at 337. 86 Secondly, it is only in extraordinary cases that the interests of justice will be served by the refusal of an adjournment in a case where to hear the proceedings is likely to terminate the proceedings: Sali v SPC Ltd & Anor; Scott v Handley, at para 29. 87 An appellate court will interfere where the refusal of the adjournment will result in a denial of natural justice to the party seeking the adjournment and the other party will not suffer any injustice: Maxwell v Kuen [1928] 1 KB 645 at 657, 658; Sali v SPC Ltd at 628. 88 Thirdly, the discretion of the trial judge has to be exercised having regard to all the circumstances of the case: Scott v Handley at para 33; Squire v Rogers per Deane J at 337. 89 Fourthly, a trial judge's conclusion that an adjournment application is merely a delaying tactic is a relevant consideration in determining to refuse an adjournment: Sali v SPC Ltd & Anor. 90 How then should these principles be applied to this case? Two things should be noted at the outset. First, the manner in which the Frugtniets had conducted the proceedings could have given the appearance that they were seeking to delay the trial. The proceedings had been commenced by the Bank by summons filed on 10 September 1992. The appellants' Notice of Appearance and Defence were filed promptly. However, the hearing date was not set until 9 December 1994, when Simpson J set the matter down for hearing on 1 February 1995. In late January 1995, the appellants sought an adjournment of the hearing. Hulme J granted an adjournment and directed that the matter be listed on 15 May 1995, for the appointment of a hearing date. His Honour also made an order for the filing of affidavits, noting that a previous order to that effect had been made but no affidavits had been filed by the appellants, notwithstanding that they had indicated to him that they proposed to call some ten witnesses. 91 The matter was set down for hearing on 1 August 1995. The respondents had not filed any affidavit evidence. On that day the appellants made a further application for adjournment before Simpson J who refused the application. The appellants immediately appealed to the Court of Appeal, which it appears, refused the appeal. The appellants then made a further application for adjournment before Hunter J. His Honour refused the adjournment. The matter proceeded on that day and was adjourned part heard until 21 August 1995. 92 On 21 August 1995, the appellants made an application that Hunter J disqualify himself for apprehended bias. Hunter J rejected that application and the adjourned hearing of the matter proceeded. During the course of the next 2 days, Mrs Frugniet called for various documents to be produced by the Bank and also cross-examined in a way which indicated to his Honour that for such cross examination to be relevant, the appellants needed to amend their pleadings. These two matters lead to the second matter which needs to be noted. 93 During the course of the hearing and in particular on 22 August, counsel for the Bank indicated that the Bank would either provide further information or provide documents to the appellants. His Honour also gave leave to the appellants to amend their pleadings, which they did. Notwithstanding that the information and documents sought by the appellants during the course of the hearing on the 22 August were, apparently, relevant to the amended claim, the Bank did not provide that material. Nor did it, prior to 27 November 1995, provide to the appellants the documents referred to in the trial judge's letter of 29 September 1995. 94 On the adjournment application, on 27 November, it appears his Honour had the impression that Mrs Frugniet's request for this material had been made at the last minute. That is a criticism which could rightly have been levelled at the appellants during the course of the hearing in August. However, there were calls and requests to which the Bank acceded at that time and his Honour also permitted the appellants to amend their pleadings with the consequence that that material remained relevant to the further hearing of the matter. If any criticism was to have been made in November, it should have been directed at the Bank for its failure to provide the documents and information as promised. 95 A number of other matters have to be factored in to the overall circumstances which existed when the appellants sought the adjournment on 27 November 1995. They are referred to in detail above. The significant matters were that Mrs Frugniet had understood that if the adjournment was to be opposed, the Bank would file an affidavit and that she was ill. These and the other matters referred to in the preceding paragraphs were factors which favoured the grant of an adjournment. The lateness of the application and the previous history of the matter told against the granting of an adjournment. This was not a matter therefore where it could be said that the court's discretion could only have been exercised in one way. The question arises therefore whether, on the application of the principles to which I have referred, this Court should interfere with the trial judge's exercise of discretion to refuse the adjournment. 96 In my opinion, it should. The trial judge's reasons for judgment on both 28 and 29 November reveal that his Honour considered that the appellants' motivation in seeking an adjournment was to achieve "by whatever means they can devise that they might perceive to be acceptable to the court, the indefinite deferral of the hearing of these proceedings". His Honour may have been correct in that view. However, in weighing up all the circumstances which were relevant to the adjournment, his Honour appears to have overlooked the two matters which were most significant - namely that the Bank had failed to indicate in the preceding week that it opposed the adjournment, as his Honour had requested them to do, and the fact that the Bank had failed, since August in the one case, and September in the other, to provide relevant material to the appellants. The failure to have regard to those matters, in my opinion, caused his Honour's discretion to miscarry. 97 The appellants accept that it is now too late to reverse the orders made on the Summons. The properties subject of the mortgage have been sold. However, they seek an order that the dismissal of the cross-claim be set aside. As, in my opinion, the trial judge wrongly refused the adjournment, that order should be made. 98 Accordingly, I would propose the following orders:

(ii) Set aside the order of Hunter J dismissing the cross-claim and the order for costs made in respect of the cross claim;

(iii) Remit the cross claim to the Common Law Division for hearing;

(iv) Order the respondent to pay the costs of the appeal. *******************************

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