27 In Ms Williams' submission the letter of 22 March 2001 (allied to the liquidation of N & G Electrics) admitted of the Magistrate concluding that the defence belatedly sought to be raised was not one brought bona fide. In this respect she pointed to the evidence that the debt owed to Terracon was not included in N & G Electrics' directors' report to the liquidator. Ms Williams contended that although in the statement of his reasons the Magistrate did not expressly refer to the question of bona fides, when one reads the transcript as a whole, it is clear that this was the issue with which he was concerned. In support of her submission Ms Williams referred me to a passage in the judgment of Kirby P in Acuthan v Coates (1986) 6 NSWLR 472 at 478:
"It is also to fall into the error of examining this unedited and unpunctuated record of ex tempore remarks at a busy magistrate's court as if the transcript were a document to be construed strictly."
28 Ms Williams submitted that it would be necessary for N & G Electrical Group to establish that there was no evidence upon which the Magistrate might have concluded that the defence brought by N & G Electrical Group was not bona fide before it could succeed on this appeal. She referred me to Carr v Neill [1999] NSWSC 1263 in which Sully J drew together the leading authorities dealing with appeals confined to error of law. His Honour referred to the principles enunciated by Jordan CJ in Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126. He went on to extract passages from the judgments in Poricanin v Australian Consolidated Industries Ltd (1979) 2 NSWLR 419; Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1; and Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 among others. His Honour concluded at [22]:
"[I]t is important to be clear from the outset of any such exercise that the present appellant cannot succeed simply by pointing to findings of fact made by the learned Magistrate, and by contending, however persuasively, that, in effect, the findings might well have been in favour of the appellant rather than in favour of the respondent. Nor will it be sufficient for the appellant to convince this Court that, had the matter been before this Court at first instance, findings of fact would have been made in terms more favourable to the appellant than the findings made by the learned Magistrate. In so far as the judgment of the learned Magistrate rests upon inferences of fact drawn by his Worship from the evidence before him, it will not be sufficient to sustain the present appeal that the appellant can demonstrate that the particular process of reasoning by which the learned Magistrate arrived at the particular inference is apparently illogical, provided only that there is some evidence reasonably capable of giving rise to the inference."
29 In Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 the Court was dealing with a claim for relief in the nature of certiorari to quash the order of a District Court judge dismissing a motion to set aside a default judgment. The judgment debtor gave oral evidence before the District Court Judge asserting that at the material time he had not been carrying on business under a certain business name. He denied that he was indebted to the plaintiff. It was his case that another company was carrying on the business under the particular business name and was the true debtor. Hope JA (in a judgment with which Glass JA agreed), said at 506 - 507:
"In the present case a problem arises because of the course taken by Williams DCJ in deciding whether a bona fide defence on the merits had been disclosed. In Simpson v Alexander (1926) 26 SR (NSW) 296 at 301; 43 WN 76 at 78, Street CJ, in whose judgment Gordan and Campbell JJ concurred, said:
'… In considering whether a defendant, who seeks to be let into defend, discloses a defence upon the merits, the court or a judge is not to try the issues of fact arising upon the alleged offence. That is for the jury at the trial. All that is required on an application of this kind is that the defendant should swear to facts which, if established at the trial, will afford a defence; and should establish his bona fides in setting up that defence. Although, however, issues of fact cannot ordinarily be gone into on an application of this kind, and although it is not usual to go beyond the evidence put forward by the defendant for the purpose of disclosing a defence on the merits, there is, so far as I know, no inflexible rule of law or of practice preventing affidavits in answer from being received.'
Whatever else this statement means, in my opinion it means that evidence can be received, by cross-examination or otherwise, as to the bona fides of the applicant in seeking to rely upon the defence, even though the evidence adduced relates to the issues which would be determined if the matter went to trial. However the question to which this evidence is directed is not simply whether the applicant has shown a defence on the merits; it goes rather to the composite question whether the applicant has shown a bona fide defence on the merits. If the judge hearing the application concludes that the applicant has deliberately lied about the alleged defence and is thus dishonest in raising it, the applicant would fail to establish that he had a bona fide defence on the merits. But if in such a case the judge merely concluded that he preferred the evidence of the respondent to that of the applicant, or anything as to credit short of disbelief by the applicant in the facts he relied on to found the defence, he would not on that account alone be entitled to find that the applicant had failed to establish that he had shown a bona fide defence on the merits. If he did so, he would be trying the issue to be determined at the trial, and this would be an error of law.
…
The learned judge found the claimant's version unacceptable, but this is different from finding that he was dishonest in raising the defence. … In the present case the learned judge, to some extent at least, tried the issues which would have to be determined at a trial. It is clear that he preferred the opponent's case, and did not accept the claimant's version of the facts. I am not satisfied that he expressed any conclusion on the claimant's bona fides in the sense I have described. There was thus an error of law on the face of the record, and certiorari should lie." (at 509).
30 I do not accept the submission that the Magistrate found that N & G Electrical Group were not raising a bona fide defence on the merits. He did not purport to so find. Rather he found that N & G Electrical Group did not have an arguable defence. In arriving at this conclusion I accept Mr Ash's submission that the Magistrate appears to have embarked upon an adjudication of the truth or otherwise of the case which N & G Electrical Group sought to advance and that to do so amounts to error of law; Reinehr Industrial Lease & Finance Pty Ltd v Jordan (unreported) NSWCA 4 June 1974.