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