Was there a Breach of Procedural Fairness?
90It was agreed between the parties at the relevant time, the monetary limit of the jurisdiction of the Local Court was $60,000.
91Section 30 of the Local Court Act conferred jurisdiction on the Court sitting in its general jurisdiction:
"To hear and determine:
(a) proceedings on any money claim, so long as the amount claimed, whether on a balance of account or after an admitted set off or otherwise, does not exceed the jurisdictional limit of the Court when sitting in that division". (Emphasis added)
92The proceedings on the Cross-claim amounted to a money claim because the proceedings constituted a claim for damages (whether liquidated or unliquidated): see s 29A Local Court Act.
93Although the provisions of s 30 of the Local Court Act could, if narrowly construed, be read as applying only to a plaintiff and not to a cross-claimant, the position is put beyond doubt by the provisions of the Civil Procedure Act 2005, which applies to the Local Court when the Local Court is hearing civil claims of the kind here in dispute.
94It is apparent from the provisions of s 3 of the Civil Procedure Act that in interpreting the provisions of the Local Court Act, a plaintiff and a cross-claimant are in identical positions. Accordingly, and the parties accepted that this was the correct approach, s 30(1)(a) of the Local Court Act, has the effect that unless there is an admitted set-off, or an abandonment of a claim above the jurisdictional limit, the Local Court has no jurisdiction to hear and determine a cross-claim where the jurisdictional limit is exceeded. This approach is correct because the words "...or otherwise" are apt to include the abandonment of a monetary sum which means that the claim is in excess of jurisdiction. Neither party submitted that there is a specific Form provided by the UCPR by which a party can announce its abandonment. The UCPR do not apparently provide for any specific mechanism for that abandonment. Accordingly, it seems that it would be open for a party to inform a Court at any time before the final hearing of a matter commences
95I note, parenthetically, although this does not seem to have been addressed by either of the parties, since there was no formal objection to the jurisdiction of the Local Court being exceeded by an amount of 20 per cent more than the jurisdictional limit, by any of the parties prior to one month before the commencement of the hearing of the proceedings, then a discretionary 20 per cent extension to the jurisdictional limit existed: see s 31(1) Local Court Act.
96However, as it seems from the detail of the sum of money actually claimed in the Cross-claim and the sum of money actually claimed by Roseville College, even if these amounts were set off, and such a set off was admitted, this discretionary extension of the monetary limit would still have been exceeded by the cross-claim. In those circumstances, it is best if this issue is put to one side.
97However, if Mr and Mrs Mears had reduced the sum claimed on the cross claim to the appropriate monetary limit by abandoning the excess over $60,000, then the Local Court had jurisdiction to hear and determine their Cross-claim.
98In Ex parte Aala, the High Court of Australia was called upon to consider whether an incorrect statement made by a Tribunal member to an applicant about materials which were before the Tribunal, constituted a denial of procedural fairness. All of the justices concluded that there had been a denial of procedural fairness. A number of different reasons were expressed for their conclusion.
99Gleeson CJ described the denial of procedural fairness in this way:
"3. ...The statement in question covered a matter which had a bearing upon the credibility of the prosecutor. It misled the prosecutor, as a consequence of which he was deprived of the opportunity to answer, by evidence and argument, adverse inferences which were based in part upon a misunderstanding of his previous conduct."
100Gaudron and Gummow JJ concluded at [80] that there had been a denial of procedural fairness, concluding that it was sufficient that "the denial of natural justice deprived [the prosecutor] of the possibility of a successful outcome".
101Callinan J said at [206]:
"206. This is not a case in which a Tribunal has merely misapprehended a fact and therefore has only made an error of fact within jurisdiction. At the inception of the hearing the second Tribunal mistakenly, but nonetheless prejudicially to the prosecutor, caused him to believe that a state of affairs relating to the manner in which he might choose to conduct his case existed when in fact that state of affairs did not exist.
...
208. Whilst the Tribunal might not have any obligation enforceable at law to give an application an express warning of the possibility or likelihood of adverse against him or her, it is an altogether different matter for a Tribunal to misrepresent, however innocently, an important state of affairs bearing upon the way in which a person in a prosecutor's position might proceed to present his or her case."
102Callinan J, as did all other Judges of the High Court, concluded that there had been a denial of procedural fairness.
103I am satisfied that in the factual circumstances which occurred here, there has been a denial of procedural fairness. I accept that a presiding judicial officer is not under any obligation, and should not, ordinarily give legal advice to a litigant appearing in person. During the course of a hearing, whether of a civil matter, or a criminal matter, the principal obligation of a presiding judicial officer is to ensure that the hearing is conducted fairly, and in accordance with the law: see MacPherson v The Queen [1981] HCA 46; (1981) 147 CLR 512 at 523 per Gibbs CJ and Wilson J. As Mason J said in MacPherson at 534, albeit in the context of a criminal trial:
A trial in which a judge allows an accused to remain in ignorance of a fundamental procedure which, if invoked, may prove to be advantageous to him, can hardly be labelled "fair".
104The obligation of the presiding judicial officer is, where necessary and appropriate, to ensure that the litigant in person sufficiently understands the procedure of the Court and their obligations as a litigant in the presentation of their case to enable them to properly and fairly present their case. Particularly in cases of dismissal of claims without a hearing, courts need to take special care to ensure that "... there is no viable cause of action which, with appropriate amendment of the pleading and a little assistance from the court, could be put into proper form": Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 536 per Kirby P.
105In this case, the conclusion is irresistible that Mr and Mrs Mears, on 2 October 2008, were by reason of a combination of the way in which submissions were put by counsel for the College, and what was said by the Heilpern LCM, left with the clear impression that they were at liberty to bring their claims against the College, which they had articulated in their Cross-claim, in another court of competent jurisdiction without any restriction, provided that the claims were properly pleaded.
106Mr Mears raised the question that whether such approach could succeed in these proceedings because the factual issues were closely linked or intertwined. The position was confirmed in the final exchange between Heilpern LCM and Mr Mears, where Mr Mears said:
"Mr Mears: But the way you have separated these matters - so does that leave me free to proceed in any jurisdiction that you believe is available to me?
His Honour: It certainly does."
107In association with that statement, the Local Court did not make any order, nor did it give any indication to Mr and Mrs Mears that, if they were to bring their cross-claim as fresh proceedings in a court of competent jurisdiction, then they should do so prior to 14 October 2008, which was the date upon which the hearing of the claim by Roseville College had been fixed. Nor, at that time, was there any suggestion of a likelihood, let alone a risk or a possibility of an issue estoppel, or some form of res judicata arising which would have the effect of preventing a full ventilation of the issues on the cross-claim in another Court at some time after the hearing in the Local Court.
108On the contrary, counsel for the College argued that the matters could properly be split, in the sense that the principal matters with respect to Roseville College's claim could be heard and determined without impacting upon the hearing of the proceedings in another appropriate court.
109Even after the Magistrate in delivering his judgment on whether or not it was appropriate to strike out the Defence and enter summary judgment, which he declined to do, there was no specific mention of any risk of issue estoppel or res judicata.
110Given the close relationship between the factual issues raised by the defence and the cross-claim, a failure to draw those matters to attention in the submissions by counsel for the College, when combined with statements of the kind to which I have referred by Heilpern LCM, the belief which Mr Mears expressed as to what he was free to do was entirely reasonable and justifiable.
111That belief was not then reflected in what occurred on 14 October 2008.
112On that occasion, Favretto LCM correctly, if I may say with respect, drew attention to the risk of issue estoppel or res judicata arising. Having regard to the contents of the Defence and cross-claim, it was entirely appropriate for Favretto LCM so to do.
113However, the difficulty which then confronted Mr and Mrs Mears was that they had attended at the hearing with one understanding, namely, that they were free to bring their cross-claim in another court of appropriate jurisdiction without limitation and they were being confronted by a conflicting statement by Favretto LCM who was entirely unaware of what had been said in the exchanges on the previous occasion in Court.
114That was because as Favretto LCM pointed out on 14 October 2008, they were not able to take proceedings in another jurisdiction without limitation, because of any of the risks of estoppel to which I have earlier referred.
115Confronted by that risk, and having regard to what had been said to them on the previous occasion, it is unsurprising that they sought an adjournment. Although Mr Mears attempted to convey, reasonably accurately, the substance of what had transpired in the exchanges with Heilpern LCM on the previous occasion, it appears that Favretto LCM, who did not have a transcript of the previous court hearing, did not take into account any of those matters in determining whether or not Mr and Mrs Mears were entitled to an adjournment and a consideration of the proper course to follow, including, in a timely fashion, filing their cross-claim in another court which, so they were informed by Heilpern LCM, would result in the automatic transfer of the whole of the proceedings to that Court.
116As well, by a simple oral announcement to the Court, Mr and Mrs Mears could have abandoned the excess of the sums claimed in their crossclaim, including their unliquidated claim, and proceeded with their cross-claim, subject to the unresolved issues about the adequacy of their pleading, and the readiness of the College for a hearing on all issues raised by their claim and the cross-claim of Mr and Mrs Mears. But Mr and Mrs Mears did not get that opportunity, adequately, on either 2 October, or else on 14 October.
117Rather, the decision of Favretto LCM on the issue of whether or not an adjournment ought be granted concentrated on the provisions of s 56 of the Civil Procedure Act and the dilatory nature of the approach of Mr and Mrs Mears to the hearing.
118In his reasons he said that Mr and Mrs Mears had ample opportunity to file a proper cross-claim.
119It is hard to conclude that a period of, at the maximum, 12 days between when their cross-claim was "dismissed" because it exceeded the jurisdiction of the Local Court, and the hearing, in circumstances where Mr and Mrs Mears were unrepresented and were engaged in preparing for a hearing, and were not given any warning that there was time limit within which they were to file their cross-claim in another court, or else abandon the excess of their claim, do not support the conclusion of Favretto LCM that they had an ample opportunity to file the cross-claim.
120In addition his conclusion that their late acceptance of the proposition that there may be a risk of issue estoppel or res judicata was a matter falling at their feet, was a finding which was not justified in all of the circumstances. Mr and Mrs Mears' understanding of that issue was necessarily informed by what they had been told 12 days earlier by Heilpern LCM. No question was raised on that occasion, as I have said, of the existence of any estoppel.
121As well, it is hard to see how, other than with respect to their legal costs, that, at that stage of the proceedings, the College was prejudiced by a further adjournment to enable a cross-claim to be filed in another Court, or else, a step taken in the Local Court which abandoned any excess over and above the jurisdictional limit. Having regard to the powers of the Local Court with respect to making orders as to costs, including that a gross sum of costs can be determined by the Court without a process of assessment, and ordered to be paid within a fixed period, s 98 Civil Procedure Act , it is hard to see how any prejudice on the part of the College could not be appropriately addressed if an adjournment was granted to enable the position with respect to the cross-claim to be regularised.
122It is true, as Favretto LCM pointed out to Mr and Mrs Mears, that the overriding purpose of the Civil Procedure Act with respect to the resolution of the real issues in proceedings, is to achieve the just, quick and cheap resolution of those issues. However, quickness and minimisation of cost do not automatically prevail over the interests of justice. Each factor is to be considered by the Court in determining the exercise of any discretionary power when relevant in the particular circumstances of each case.
123Here, the interests of justice plainly demanded, in light of what Mr and Mrs Mears had been told by Heilpern LCM, that they be given an opportunity, albeit for a limited period, to consider whether to commence their proceedings in another court, or alternatively, to proceed on their cross-claim by limiting the sum claimed to the jurisdiction of the Local Court. Whether this required the "re-instatement" of their Cross-claim is not presently material. That was a matter of procedure which ought not have affected any question of substance.
124It was only in one of those ways, upon the assumption which had previously been articulated, that the principal proceedings would be transferred to another court of competent jurisdiction where the crossclaim was mounted, that the risk of an issue estoppel or res judicata could have been avoided.
125As well, it was clearly in the public interest and the interest of efficiency of the administration of justice, that one court be properly seized of all of the issues, and that there should be only one hearing on all of the issues, with one judgment being delivered.
126The course insisted upon by Counsel for the College, necessarily meant that there would be two hearings by two separate courts on issues that were largely intertwined, which would undoubtedly have resulted in considerable cost and expense to all parties. It also placed an unnecessary burden on the resources of the court system. That is particularly so when there was unlikely to be any advantage to be gained by having the claim of the College heard and determined because, even if the College succeeded in obtaining judgment, it was open to Mr and Mrs Mears to seek a stay on the enforcement of that judgment pending the hearing and determination of their claim. Such a stay was a realistic prospect, having regard to the similarity of issues on both claims.
127Thus, I conclude that in addition to the denial of procedural fairness on 2 October 2008 which has arisen because they were mislead, I am sure unwittingly, by what they were told by the presiding magistrate, who himself was presented with submissions from counsel for the College which urged the course which he followed. At the leats, those submissions were incomplete and thereby misleading, as was, what the magistrate told Mr and Mrs Mears.
128I have also concluded that Mr and Mrs Mears were denied procedural fairness by the failure of Favretto LCM to grant them an adjournment in circumstances in which they found themselves, which circumstances had been largely created by what had occurred in the exchanges with Heilpern LCM on the previous occasion. They should also have been permitted to rectify the position in which they found themselves by being allowed time within which to commence their proceedings in another Court, or else abandon the excess of their cross-claim.
129These denials of procedural fairness are matters of substance because, happening as they did at the start of the proceedings, they have prevented a hearing of the merits of all of the pleaded causes of action. I do not accept that the final judgment of Favretto LCM determined all issues fully. I accept the submissions of Mr Curtin SC that, at the least, the beneficial evidentiary provisions in the Trade Practices Act causes of action have not been considered or determined.
130I should note that a question arises as to whether the Local Court had jurisdiction to determine the pleaded causes of action, and also whether the provisions of the Fair Trading Act 1987 were applicable, and whether those provisions had the same beneficial effect for Mr and Mrs Mears. However, as no submissions were made on these matters, I am not in a position to make any relevant findings as to the questions which arise in this area.
131Having determined that a number of breaches of procedural fairness have occurred, the next matter which arises is whether those breaches ought be the subject of relief in this Court.
132In Stead, the High Court of Australia held that a plaintiff had been denied procedural fairness in proceedings upon a claim for damages for personal injury. The Court, Mason, Wilson, Brennan, Deane and Dawson JJ, in considering what relief ought follow from such a finding, said at 145:
"...an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial on such a case would be a futility.
For this reason, not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.
Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, ... it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference. ... However, when the Full Court is invited by a respondent to exercise [its] powers in order to arrive at a conclusion that a new trial sought to remedy to a denial of natural justice relevant to a finding of fact, could make no difference to the result already reached, it should proceed with caution. It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial."
133As Mr Curtin SC's submissions make clear the credibility of Mr Mears as a witness, and the believability of his evidence was a serious issue in the judgement of Favretto LCM. By way of example, in dealing with a significant issue at [48] of his judgment, Favretto LCM accepted the evidence of an employee of the College to that of Mr Mears.
134Kirby J discussed the judgment in Stead to which I have referred in Aala at [131]. He said:
"Once the applicable breach is proved, the victim of the breach is ordinarily entitled to relief. It is only where an affirmative conclusion is reached, that compliance with the requirements of procedural fairness 'could have made no difference' to the result that relief will be withheld. This Court has emphasised that such an outcome will be a rarity. It will be 'no easy task' to convince a court to adopt it ..." (footnotes omitted)
135I recognise and accept the features to which attention has been drawn in the submissions of Senior Counsel for the College about what has happened since the two hearing dates in October 2008. I recognise that significant costs have been incurred, and that many days have been occupied in the final hearing. I also recognise that the judgment of Favretto LCM, when ultimately deciding the matter, dealt with the merits of many, but not all of the matters that might ultimately fall to be determined on a Cross-claim.
136However, I am not persuaded that I could reach a conclusion that no other outcome was possible as Stead requires. It is clear that in his judgment, Favretto LCM referred to, and took into account, the failure of the defence to raise any question of misrepresentation, and the failure of Mr and Mrs Mears to have included a cross-claim dealing with many of the matters to which they referred. Equally, a cross-claim was needed to explicate the substance of their claims and to claim a remedy by way of damages. At the least, Mr and Mrs Mears did not have the opportunity of having a hearing on those matters and some of the causes of action which they wished to articulate.
137Accordingly, it seems to me that I must grant relief. The effect of that is that there must be a new trial.
138However, I would wish to receive submissions on what orders, with some precision, ought be made because it may be that the parties can by agreement, or else I can decide after further submissions, that an order can be crafted which has the effect of minimising to the greatest extent possible, the further expense to which the parties will be exposed, and the need for each point to be completely re-argued.
139I accept, as Mr Curtin SC submitted, that the best course is to provide the parties with the opportunity of considering what orders might properly be made by this Court in light of its reasons.
140Accordingly, in those circumstances, I will refrain from making any final orders about the disposition of the appeal.
141However, it will be appropriate for me to enter an order to the effect that the appeal will be allowed and that the parties are to confer and provide to the Court submissions as to what orders ought be made.