Rory McDonnell v Mehanna Holdings Pty Ltd as Trustee for the Mehanna Discretionary Trust - [2019] NSWSC 1768 - NSWSC 2019 case summary — Zoe

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Rory McDonnell v Mehanna Holdings Pty Ltd as Trustee for the Mehanna Discretionary Trust

[2019] NSWSC 1768

Supreme Court of NSW|2019-07-26|Before: Adams J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2019-07-26

Before

Adams J

Catchwords

HCA 57 Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited [2006] NSWSC 343
[2014] NSWCA 177 Tomko v Palasty (No 2)
(2007) 71 NSWLR 61

Source

Original judgment source is linked above.

Catchwords

HCA 57 Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited [2006] NSWSC 343[2014] NSWCA 177 Tomko v Palasty (No 2)(2007) 71 NSWLR 61

Judgment (18 paragraphs)

[1]

Introductory remarks

By summons dated 13 June 2019, Rory McDonnell seeks leave to appeal under ss 39 and 40 of the Local Court Act 2007 (NSW) against a decision of Magistrate Greenwood on 20 December 2018 striking out his defence and cross-claim and entering summary judgment against him. Mr McDonnell contends that the learned Magistrate erred by, inter alia, incorrectly applying r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") and denying him procedural fairness.
Mr McDonnell initially also sought judicial review of the Magistrate's decision under s 69 of the Supreme Court Act 1970 (NSW). He contended that the magistrate failed to afford him procedural fairness, failed to have regard to a relevant fact (the merits of the defence) and that her Honour's decision was unreasonable. I will deal with Mr McDonnell's failure to properly commence that aspect of the proceedings invoking this Court's supervisory jurisdiction below at [65]-[67].
The evidence before me on this appeal consisted of all the material that was before Magistrate Greenwood in the Local Court. This included the plaintiff's chronology, pleadings consisting of the statement of claim filed on 15 August 2017, the defence filed on 6 October 2017, the amended defence filed on 12 January 2018, the first cross-claim filed on 22 May 2018, the defence to the first cross-claim filed on 19 October 2018.

[2]

Factual background

Mr McDonnell is a mortgage broker. On or about March 2017, he (as the director of York Street Capital) was engaged by Mehanna Holdings Pty Ltd as Trustee for the Mehanna Discretionary Trust ("Mehanna") in relation to financing for properties intended to be bought by Mehanna.
By statement of claim filed in mid-August 2017, Mehanna brought proceedings in the Local Court alleging a breach of contract and negligence on the basis that Mr McDonnell (the second defendant) and York Street Capital (the first defendant) had mispresented the amount of finance that could be obtained for Mehanna.
In the statement of claim, Mehanna pleaded that these breaches occurred in relation to the purchase of a property in Newtown. Mehanna required a loan of up to $3,000,000 to complete the purchase, pay the stamp duty and meet other purchase costs. The statement of claim stated that between on or about 8 February 2017 and on or about 10 February 2017, Mr McDonnell made an oral representation that he or York Street Capital could arrange a loan to enable Mehanna to complete the purchase, for a commission of $16,500. On 2 March 2017, Mehanna Holdings entered into a contract to purchase the property. Mehanna then paid the commission to York Street Capital by cheque on 14 March 2017 in the sum of $16,500.
Although Mr McDonnell was the second defendant in the Local Court and his company, York Street Capital, was the first defendant for ease of reference I propose to refer to the defendants below collectively as Mr McDonnell.
Under the contract for the sale of land, Mehanna was obliged, if the sale was not completed in time, to pay interest on the balance of the purchase price, any other amount payable and half the deposit to the vendors.
Subsequently, York Street Capital did not arrange a loan. On 18 April 2017, the solicitors for the vendor of the Newtown property served a Notice to Complete on the solicitors for Mehanna. This required completion of the sale by 4 May 2017. On or about 26 April 2017, Arch Finance provided Mehanna with an offer of finance from Perpetual Trustee Company Limited for a maximum amount of $1,658,800.
On 28 April 2017, Mehanna and York Street Capital entered into an agreement where Mehanna accepted the finance from Perpetual Trustee and York Street Capital refunded Mehanna's commission. This agreement was partially oral and partially in writing.
Mehanna was unable to complete the purchase of the Property by 4 May 2017. Mehanna and the vendors then entered into an agreement to extend the time for completion to 5 June 2017. By 4 May 2017, Mehanna had paid interest of $10,919.34 to the vendors. York Street Capital did not repay its commission.
In relation to the contract claim, Mehanna claims that York Street Capital and/or Mr McDonnell breached the oral agreement to provide adequate finance. The loss and damage claimed is: 1. The commission to Mr McDonnell; 2. The legal fees of the vendors; 3. The interest of $10,919.34 paid to the vendors; 4. Additional legal fees paid to the solicitors for Mehanna.
Alternatively, Mehanna claimed that York Street Capital breached the 28 April 2017 agreement and that its $16,500 commission was a debt due.
In relation to the claim in negligence, Mehanna claimed that York Street Capital and/or Mr McDonnell failed to exercise reasonable care and skill in arranging a loan of up to $3,000,000 to enable Mehanna to purchase the Newtown property. Alternatively, Mehanna claimed that York Street Capital and/or Mr McDonnell engaged in misleading and deceptive conduct, contrary to s 18 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, in representing that it could obtain such a loan.
After the statement of claim was served on 5 September 2017, Mr McDonnell engaged his first solicitor, Anthony Margiotta, on or about 25 September 2017, following which a defence was filed on 6 October 2017 on behalf of both defendants which indicated that Mr Margiotta was Mr McDonnell's solicitor.
Mr McDonnell's solicitor failed to appear at court on 22 November 2017.
An amended defence was filed by Mr McDonnell's solicitor on 12 January 2018 which pleaded the following at [21], [21A], [22] and [26]: "21. In answer to the allegations contained in paragraph 24 of the Statement of Claim the first and second defendant deny that the plaintiff and the first defendant entered into any such agreement as alleged, and says in further answer thereto that, in the event it is determined that any such agreement as alleged by the plaintiff existed: (a) on or about 13 March 2017 the plaintiff and theist defendant enter into each of : (i) an agreement pursuant to which the first defendant agreed to act as the plaintiff's broker in connection with the attempt to obtain a proposed facility of $1,850,000.00 (First Mandate Agreement), the written par of which was either recorded or contained in the Finance Mandate and Service Agreement dated 13 March 2017; and (ii) an agreement pursuant to which the first defendant agreed to act as the plaintiff's broker in connection with the attempt to obtain a proposed facility of $1,250,000.00 (Second Mandate Agreement), the written part of which was recorded or contained in the Finance Mandate and Service Agreement dated 13 March 2017; (b) the entry by the plaintiff ad the first defendant into each of the First Mandate Agreement and the Second Mandate Agreement impliedly rescinded such obligation as the first defendant may have had under any agreement such as that alleged by the plaintiff in paragraph 24 of the Statement of Claim (the existence of which is denied). 21A. The first and second defendants deny the allegations contained in paragraph 25 of the Statement of Claim, and in further answer to the allegations contained therein: (a) says that on or about 13 March 2017 the plaintiff paid to the first defendant an amount of $16,500.00 as a partial payment against the amounts owing to the first defendant under the First Mandate Agreement and the Second Mandate Agreement, together with likely anticipated disbursements to be paid by the first defendant on the plaintiff's behalf; and (b) repeats the contents of paragraph 21 above. 22. The first and second defendants deny the allegations contained in paragraph 26 of the Statement of Claim, and say in further answer thereto that the plaintiff paid to the first defendant an amount of $16,500.00 pursuant to each of the First Mandate Agreement and the Second Mandate Agreement. …. 26. The first and second defendants deny the contents in paragraph 30 of the Statement of Claim, and say in further answer thereto that the plaintiff: (a) was not induced by; (b) did not rely on; and (c) was not mislead by; any such representation as is alleged by the plaintiff."
On 16 January 2018, Mr McDonnell's solicitor failed to appear at court for further directions.
On 16 May 2018, Mr McDonnell filed a notice of change of solicitor. His new solicitor was Mr Michael Foley. It was common ground that Mr Foley was a competent solicitor and no fault for any delay is to be directed at him.
On 22 May 2018, Mr McDonnell filed a cross-claim claiming misleading and deceptive conduct by Mehanna in relation to their financial circumstances. Mr McDonnell's cross-claim asserted that he was engaged by Mehanna on 13 March 2017 to assist in completing a purchase of the property in Newtown they had already bought and representations (four in total) Mr Mehanna made to Mr McDonnell in a telephone conversation on 21 June 2016 in relation to his and Mehanna Group's financial position that Mr McDonnell relied upon as continuous representations.
According to the cross-claim, the first representation was that Mehanna's gross income was in the order of over $750,000 annually. The second representation was that that the combined liabilities of the Mehanna Group were in the order of $5,000,000. The third representation was that the Mehanna Group structure was relatively simple and straightforward. The fourth representation was that that the Mehanna Group was "awash with money" and would not have any difficulty in satisfying lenders that it could repay loans in the amount being sought by Mr McDonnell.
On 17 September 2018, Mr McDonnell's new solicitor, Mr Foley, suffered an aneurysm and was in the ICU until December 2018.
On 26 September 2018, 10 October 2018 and 24 October 2018, there was no appearance on behalf of Mr McDonnell at further directions hearings. There was some correspondence between Mr McDonnell and Mr Mehanna's solicitor during that time.
On 24 October 2018, Mr McDonnell notified Mehanna that he had found a new solicitor to replace Mr Foley.
On 7 November 2018, Mr McDonnell failed to appear in person or by way of his new solicitor at court for further directions. A costs order in the amount of $500 was made against him that day for both failing to appear and failing to comply with a notice to produce for the fourth time. The Court timetable further required Mr McDonnell to file evidence on his cross-claim by 16 November 2018. The evidence was not filed by that date.
On 11 December 2018, Mehanna filed a notice of motion seeking that Mr McDonnell's defence and the cross-claim be struck out under UCPR r 12.7(2) on the basis of his failure to conduct proceedings with due dispatch as well as the costs of the motion and the costs of the proceedings.

[4]

Reasons for striking out defence and cross-claim

Her Honour indicated that the first matter for her consideration was s 58 of the Civil Procedure Act 2005 (NSW) ("CPA"), having regard to s 56 and s 57. When considering s 57, her Honour noted the gap between the filing of Mehanna's statement of claim in mid-August 2017 and the proceedings in late 2018. When considering the need for the efficient disposal of the court's business, her Honour had regard to a chronology handed up by the plaintiff and stated: "….Other than that it seems to me there has been no criticism of any kind levelled against the plaintiff in this matter and I cannot see that there can be any criticism levelled at the plaintiff but I think what can be said for sure is that there has not been efficient disposal of the Court's business in this matter.. I refer there to the number of times the matter has been before the Court, the fact that there have been two prior hearing dates, this being the third, and it would appear those hearing dates were vacated maybe a month out when it is basically impossible to put any other matters into those vacancies."
Her Honour was satisfied that there had not been a timely disposal of the matter in a way that was affordable for the parties. Her Honour then turned to the factors contained within s 58 of the CPA. In terms of the complexity of the proceedings, her Honour did not consider that Mehanna's action posed a particularly complex or difficult set of issues; it simply concerned whether Mr McDonnell had done what he had undertaken to do under the contract and whether accurate information was provided to Mehanna.
Her Honour then turned to consider s 58(2)(b)(ii) of the CPA, namely the degree of expedition with which the respective parties had approached the proceedings. Taking into account the six occasions where the defendant failed to appear in the proceedings, her Honour stated "I have to say I cannot recall a case where there has been such a flagrant disregard of the Court's timetables and of attention to this matter and of respect towards the proceedings and the plaintiff and the Court." While acknowledging the catastrophic medical incident that had befallen the plaintiff's solicitor in September, her Honour noted that this had occurred more than a year after proceedings were instituted. Furthermore, although Mr McDonnell appeared to have a new solicitor, this solicitor was not on the record. Her Honour noted that a timetable was set on 16 January 2018 and a cross-claim was filed in May, but that Mr McDonnell had not filed any evidence. It was further noted that a costs order remained unpaid and that there had been four prior return dates for the notice to produce. Furthermore, Mr McDonnell had conceded that the defence that he had filed was merely a holding defence. (I pause here to note that this is incorrect, it was Mehanna that had only filed a holding defence to the cross-claim).
Her Honour acknowledged Mr McDonnell's explanation that the lack of expedition on his behalf was his solicitor's aneurysm and thus beyond his control. However, she noted that he had had 12 months during which to organise proceedings before this and, after the accident, should have immediately engaged a new solicitor. She found that the plaintiff had facilitated the just, cheap and quick resolution of proceedings but that the defendant had not. In terms of s 58(2)(v), she again noted the multiple instances of non-appearance by Mr McDonnell. Finally, she noted that great injustice would be done to the plaintiff if she did not make the order. She thus struck out Mr McDonnell's defence and the cross-claim.

[5]

Transcript of proceedings after defence struck out

After striking out Mr McDonnell's defence and cross-claim, the transcript reflects that the following occurred: "OLZOMER: Your Honour, in expeditiously dealing with these proceedings I would like to move the Court to dispense with the proceedings today by entering a judgment by the schedule of damages. HER HONOUR: Just one thing at a time, thank you, please. Turning to your motion you want o 1 and 2 to strikeout? [sic] OLZOMER: Yes. HER HONOUR: You want o 3, that the first and second defendants pay the costs of the motion and the costs of the proceedings? OLZOMER: Yes, your Honour. HER HONOUR: Is it appropriate to deal with that first? OLZOMER: It is, your Honour. HER HONOUR: Mr McDonnell, what do you want to say about the costs issue? SECOND DEFENDANT: Yes, I object to this, your Honour, because for example I've got a refund of commission, $16,500-- HER HONOUR: We're not dealing with that yet. We're dealing with the costs of the motion that I've just dealt with. What do you want to say? SECOND DEFENDANT: Well, the matter will be appealed, your Honour. HER HONOUR: You're welcome to do that, sir, but right now the costs of the motion? SECOND DEFENDANT: Okay, nothing to say, your Honour. HER HONOUR: l MAKE O 1, 2 AND 3 ON THE NOTICE OF MOTION AND I ORDER THAT COSTS OF THE PROCEEDINGS BE PAYABLE ON AN ORDINARY BASIS AS AGREED OR ASSESSED. OLZOMER: Before your Honour is the schedule of damages. HER HONOUR: What do you want to do? Do you want me to dispense with the need for a motion? OLZOMER: Yes, your Honour, I would like that dealt with. I feel it is appropriate the Court deal with it today. I note the statement of claim is for an unliquidated amount. However, these amounts are quantified in our evidence, which has been filed. HER HONOUR: I'm hearing from you, Mr McDonnell, that you disagree? SECOND DEFENDANT: Yes, your Honour. For example, the $16,500 was paid to cover valuations which were done, application fees to Arch Finance-- HER HONOUR: But this would all be material that would be in your evidence, sir. SECOND DEFENDANT: Yes, your Honour. HER HONOUR: We have passed that stage, sir. SECOND DEFENDANT: They can just put any amount they like, then? HER HONOUR: What did you want to say to what is-- OLZOMER: My submissions are that these amounts are quantified. All of the amounts, except for the final amount, is an amount which I submit is hard and fast. For example, the penalty interest was an amount paid by my client as a result of the settlement being delayed. The additional legal fees was an amount of $6,600, which was paid to the vendor's solicitors as a result of the additional legal fees they incurred. The $3,900 is an amount that was additionally paid to my firm as a result of the extra work that was incurred and then the $16,500 is an amount that was paid by the plaintiff to the defendant as a commission for being paid for their mortgage brokering services. SECOND DEFENDANT: It wasn't a commission. It was a valuation, application fees, and that was successful. HER HONOUR: You want judgment under what provision? OLZOMER: The Court's powers to enter summary judgment. I apologise, your Honour. I don't have the provision handy. HER HONOUR: Do you want to borrow my-- OLZOMER: I do, thank you, your Honour. HER HONOUR: You borrow that and we'll go back to the people that are ready, thank you."
The matter was then stood in the list whilst her Honour dealt with other matters. The transcript reflects that when the proceedings resumed, Mr McDonnell was not present in court. It is difficult to glean from the transcript when he entered court as the transcript does not record him saying anything before her Honour ordered summary judgment against him. Mehanna's solicitor, Mr Olzomer, appeared and the following exchange occurred: "OLZOMER: I'm not sure where the defendant is, your Honour. Thank you for your resources. I can provide those back to you. The plaintiff seeks that the Court enter judgment under UCPR 13.1, which is the provision for summary judgment. In my submission that rule allows the Court, on the application of the plaintiff, for any part of the plaintiffs claim. If there is evidence on the facts, which the claim or part of the claim is based, and there is evidence given by the plaintiff or some other responsible person in the belief of the person giving evidence that the defendant has no defence or rather, the Court may give just judgment for the plaintiff or make such other order on the claim or the part of the claim that the case requires. HER HONOUR: I'm dispensing with the requirement for a notice of motion. Do you seek 18.2, 2(b) and 2(c), because I have the power to under 2(c) and under 2(b) it's my view it would cause undue delay or other prejudice to the plaintiff if I was to require a motion to be filed. I will need your evidence, thank you. OLZOMER: Yes, your Honour; I rely on the affidavits filed in these proceedings on 27 February. Are they on the file? HER HONOUR: I don't think so. OLZOMER: I do have copies. HER HONOUR: Yes, they are. OLZOMER: My friend and I will have to share it. HER HONOUR: I've got Mr Mehanna. OLZOMER: There is Mr Mehanna, filed 27 February. There is a Joseph Antoon, filed 27 February. HER HONOUR: I have got both of those, thanks. I'll just let you know, you don't need to file your evidence with the Court." (Emphasis added.)
What appears to have happened here is that her Honour was taken to the plaintiff's affidavits filed with the statement of claim setting out how the amount claimed was arrived at. The transcript in the Local Court then reflects the following: "OLZOMER: Yes, I'll provide a copy to my friend. The first aspect of damages is penalty interest in the amount of $14,633.42. I refer the Court to para 21 of the affidavit of Joseph Anteon. Paragraph 21 , yes; the next item is $6,600 for 50 additional legal fees if payable to the vendor upon settlement. That is in the affidavit of Joseph Antoon. There was an extra amount of legal fees paid as a result of delay in settlement to UWE in the amount of $3,900. That is in para 30 of the affidavit of Joseph Antoon. Joseph says "Our professional fees increased to $5,850, an increase of $3,900, which was 5 solely attributable to the extra work created by the first defendant". There is a commission aspect of $16,500, which was paid by the plaintiff to the defendants and that is in 40 to 41 of the affidavit of Charles Mehanna. Your Honour, I am going to make a forensic decision not to press the Court for that $8,000 which is the last item. HER HONOUR: What is the order you are asking the Court to make today? OLZOMER: I'm seeking that the Court make an award for damages in favour of the plaintiff in the amount of $37,633.42. HER HONOUR: I have dispensed with the requirement for a notice of motion because in my view it would prejudice the plaintiff in having to attend Court on yet another occasion when today we have the second defendant and I cannot be confident, given the problems with the attendance of the defendants in this matter to date, that either or both would attend on the next occasion. In any event, of course, we know that their defence to the claim and their cross-claim have been struck out so they are on notice about this today. It has been brought up today but it is of course an inevitable consequence of the motion that was put on and heard today. HAVING BEEN TAKEN THROUGH THE EVIDENCE IN THIS MATTER, NOTING THAT THE LAST ITEM IS NOT PRESSED, TODAY I FIND FOR THE PLAINTIFF AND MAKE AN AWARD OF $37,633.42 UNDER R 13.1, BEING SATISFIED ON THE APPLICATION OF THE PLAINTIFF THAT THERE IS EVIDENCE OF THE FACTS FOR THE AMOUNT CLAIMED. I HAVE BEEN TAKEN THROUGH THE AFFIDAVIT MATERIAL AND OF COURSE THERE IS NO DEFENCE MATERIAL BEFORE THE COURT TODAY."

[6]

Extension of time to bring this appeal

Sections 39, 40 and 41 of the Local Court Act are as follows: 39 Appeals as of right (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. (2) A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness. 40 Appeals requiring leave (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. (2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs. 41 Determination of appeals (1) The Supreme Court may determine an appeal made under section 39 (1) or 40: (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. (2) The District Court may determine an appeal made under section 39 (2): (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the District Court's directions, or (d) by dismissing the appeal.
The time limit for instituting an appeal to this court is 28 days, as set out in UCPR r 50.3. The last day for instituting such an appeal, excluding days where the Supreme Court Registry was closed (see UCPR r 1.11(3)), was 1 February 2019. An extension of time can be granted under r 50.3(1)(c). UCPR r 50.3 is in these terms: (1) A summons commencing an appeal must be filed - (a) within 28 days after the material date, or (b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or (c) within such further time as the higher court may allow. (2) An application for an extension of time under subrule (1)(c) must be included in the summons commencing the appeal.
An application for an extension of time was included in the summons and Mr McDonnell relied upon an affidavit of 20 May 2019 to explain the delay in commencing this appeal. He was not required for cross-examination.
Mr McDonnell explained that after his defence was struck out, there were only two working days before Christmas and it was difficult for him to find a solicitor. He was advised by a friend, who was a legal consultant not currently practising, that he should appeal to the District Court. On 17 January the relevant documents were filed in the District Court appealing the Magistrate's decision.
In early February, Mr McDonnell was issued with a letter of demand and a wind-up application by Mehanna in respect of York Street Capital.
On 11 February 2019, Mr McDonnell was granted a stay of the wind-up application in the Local Court. On 20 February 2019 he engaged Danielle Phair, solicitor, to appear in the District Court, who immediately advised him that he was commencing his appeal in the wrong jurisdiction. Mr McDonnell's appeal in the District Court was dismissed with costs.
On 12 March 2019, Mr McDonnell was served with a bankruptcy notice based on the debt to Mehanna. Around this time, he also had to have a biopsy for a medical concern. The results for this arrived on 29 March 2019 and were clear.
On 2 April 2019, Mr McDonnell filed a notice of motion in the Federal Circuit Court seeking to have the bankruptcy notice set aside. At this time, he was also making arrangements to have a copy of the transcript of the Local Court proceedings sent to him.
On 16 April 2019, Mr McDonnell was granted an extension of time for compliance with the bankruptcy notice.
On 7 May 2019, Mr McDonnell appeared in the Federal Circuit Court in relation to the notice and his proceedings were adjourned until 21 May 2019 so that he could file an appeal in this court.
On 13 June 2019, Mr McDonnell filed a summons in this court, which was 148 days out of time. On 30 July 2019, he was granted leave to file an amended summons seeking leave to appeal and commencing an appeal.
Mehanna opposed time being extended to bring the appeal out of time. Reliance was placed on the fact that Mr McDonnell had first engaged lawyers in September 2017. It was submitted that he knew from that time the importance of having good lawyers. This submission was based on the fact that in his affidavit of 17 July 2019, he deposes to this at [15]. Reliance was also placed on the fact that in spite of that knowledge he refused to obtain lawyers and this forced Mehanna to incur the time, cost and effort of a misconceived appeal to the District Court.
It was further submitted that Mr McDonnell's explanation for the five-month delay was inadequate and that Mehanna would suffer further prejudice given the delay thus far.
I have had regard to the principle, noted by Garling J in McLennan v Sukh [2011] NSWSC 26 at [26] that: "Judgments and orders in the Local Court are final and conclusive - they are not merely the first step on a litigious path to further hearing."
Despite this, it seems to me that this is an appropriate matter in which an extension of time should be granted. In Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369; Basten JA, with whom Hodgeson and Ipp JJA agreed expressed the relevant principles at [55] and [56] in this way: "55 The approach to such an application requires acknowledgment of the proposition that "the respondent to the application has a vested right to retain the judgment" which is proposed to be the subject of appeal: see Jackamarra v Krakouer (1998) 195 CLR 516 at [4] (Brennan CJ and McHugh J). In such cases, consideration must be given to four factors of general relevance, namely: (1) the length of the delay; (2) the reason for the delay; (3) whether the applicant has a fairly arguable case, and (4) the extent of any prejudice suffered by the respondent to the application: see Palata Investments Ltd v Burt & Sinfield Ltd [1985] 1 WLR 942 at 946, referred to with approval, in such a context, in Jackamarra at [6]-[7]. 56 Speaking more generally, Kirby J noted that there might be other factors relevant to the grant of an extension of time in particular cases. As his Honour stated, after reference to the factors identified in Palata Investments, at [66] (7): "But they are by no means exhaustive. Several others have from time to time been thought relevant. These include whether the delay was intentional or contumelious; or merely the result of a bona fide mistake or blunder; and whether the delay is that of the litigant or of its lawyers, with which the litigant should not be saddled. It may also be relevant, where the default is that of a party's legal representatives, to take into account any considerations personal to the party which might have affected its ability to safeguard its own interests, for example, by applying pressure to its lawyers. Similarly, the extent to which any such prejudice may be remedied by an appropriate costs order is another consideration that has sometimes been treated as relevant."
I have had regard to all of these factors. The delay of five months is somewhat lengthy. The reasons for the delay were poor legal advice and the distraction of being put into bankruptcy by Mehanna over this judgment debt. Significantly, for the reasons I provide below, I am not only satisfied that Mr McDonnell has an arguable case I am also satisfied that he must succeed. It is to be accepted that prejudice will flow to Mehanna by further delay and I propose to deal with this prejudice with an appropriate costs order. The prejudice to Mr McDonnell should I not extend time is also significant given that a bankruptcy motive was served on him as a result of summary judgment being entered against him in this matter.
For these reasons, I would extend the time for bringing this appeal.

[7]

Mr McDonnell's second affidavit

Mr McDonnell relied upon a second affidavit of 17 July 2019 on this appeal.
In his second affidavit he explained the delay in the Local Court proceedings. Although I am satisfied that some of this evidence is relevant to what he was attempting to submit to her Honour in the Local Court, I am not otherwise satisfied that it is relevant to whether the Magistrate erred. I propose to only have regard to those aspects which were touched upon before her Honour.
Mr McDonnell explained that he met with a solicitor, Anthony Margiotta, in September 2017. In December, he met with a barrister. On 12 January 2018, he met with Mr Margiotta to discuss the amended defence. In March, it appears that the cost of defending the claim became prohibitive and Mr McDonnell had to engage a new solicitor. On 14 May 2018, Mr Margiotta indicated that he was ceasing to act. Mr Foley then began acting for Mr McDonnell. Leave to file a cross-claim was granted on 17 May 2018 and this cross-claim was filed and served on 22 May 2018. Mehanna then requested further and better particulars on 1 June 2018. A hearing date was vacated because Mr Mehanna would be overseas.
On 1 September 2018, Mr McDonnell corresponded with Mr Foley in relation to the notice to produce. Mr Foley was then ill from late September 2018 and unable to be contacted. Unrepresented, Mr McDonnell received a number of notices to produce. The following events are detailed in his affidavit as follows: "From mid-September to late October 2018 I made numerous attempts to upload the Notice to Produce documents without success. I emailed them to the Court Registry and Mr Olzomer. He responded on 24 October 2018 that he would accept electronic production but they must be filed with the Court…. I received a final Notice to Produce alone with a Notice of Motion to strike out my defence and cross claim returned 20 December 2018. I finally produced a list of ninety-five documents to the registry of the Local Court on 18 December 2018 and presumed that this Notice to Produce would deal with the Motion to strike out. I had a conversation with Mr Alex, the Justice of the Peace at the Civil registry as follows: RM: Please make sure that these documents are put with the file. It is very urgent. I have been trying to supply these for weeks. There is a motion to strike out my defence and cross claim in two days. I have an affidavit mostly prepared but not yet sworn. Can I swear it at the court on the day?' Alex:' It should be okay. The registrar will let you swear it as there is always a JP on hand." (Emphasis in original.)
After filing the notice to produce he took a copy of his draft affidavit which was not yet sworn to Uther Webster & Evans Solicitors and the front counter signed a receipt for it.

[8]

GROUNDS OF APPEAL

The amended summons that Mr McDonnel moved on at the hearing on 26 July 2019 set out four grounds of appeal under ss 39 and 40 of the Local Court Act and five grounds of judicial review.
At the commencement of the hearing in this matter, I raised with Ms Merkel, who appeared for Mr McDonnell, that insofar as judicial review of the Magistrate's decision was sought, there had been no compliance with UCPR r 59.3(4), which provides, inter alia, that the person responsible for the decision to be reviewed must be joined as a defendant. Mr McDonnell had not joined the decision-maker, in this case, the Local Court of NSW, as a party to the proceedings. Although it is customary for the Local Court to file a submitting appearance in proceedings for judicial review, the fact remains that the matter had been listed for hearing without notice being given to the Local Court that it was a purported party to the proceedings.
When I raised this with Ms Merkel, she accepted it and submitted that she wished to proceed with the claim for judicial review. So as to avoid the need for an adjournment in order for this to occur I raised with her why alternate proceedings for judicial review were brought in circumstances where a statutory appeal was available. It was submitted that a claim of a denial of procedural fairness is a matter for judicial review. I pointed out that there is authority for the proposition that a denial of procedural fairness is an error of law: see for example Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 at [39]. Further, s 39(2) of the Local Court Act expressly states that the only statutory appeal to this court from a decision in the small claims division is for a want of jurisdiction or a denial of procedural fairness.
Ms Merkel was content for the grounds of review to be treated as grounds of appeal. Although Mr Bennett, counsel for Mehanna, opposed any addition of the Local Court as a party at this late stage, there was no opposition to the relevant grounds of review being considered as statutory grounds of appeal under the Local Court Act.
I indicated to the parties at the time that I was satisfied that the grounds of judicial review relying upon a denial of procedural fairness are capable of amounting to questions of law as was the ground of review alleging misconstruction of a statutory provision, I indicated that I would grant leave for Mr McDonnell to filed an amended summons reflecting this.
On 30 July 2019, a further amended summons was filed by Mr McDonnell without objection from Mehanna. The grounds of appeal in this document were expressed in terms which were consistent with how they were argued before me at the hearing. Thus the nine grounds of appeal were as follows: Ground 1: The learned magistrate erred in fact and law in finding that the plaintiff's delay in filing evidence was of such weight that his defence and cross claim should be struck out and he should be denied the opportunity to put his case before the Court on the merits and on the quantum of the defendant's claim. Ground 2: The learned magistrate erred in fact and law in the exercise of her discretion by refusing to allow a short adjournment to enable the plaintiff to file evidence in the case in that she failed to give due weight to the reasons for his inability to access the online Court until his former solicitor ceased to be on the record. Ground 3: The learned magistrate erred in law when having struck out the defence and cross claim she dispensed with the requirement for a notice of motion to proceed to judgment in absence of the defendant (in court below) and entered judgment for the defendant in the plaintiff's presence when the plaintiff was ready and able to put his evidence before the Court if permitted to do so. Ground 4: The learned magistrate erred in failing to have regard to the requirement stated in Reg 13.1(1)(b) that there be evidence of belief that there is no defence and in failing to consider whether there was material before the Court relating to whether a defence was available including documents recording an Amended Defence and Cross-Claim when deciding to dispense with notice of motion and order summary dismissal. Ground 5: The learned magistrate failed to accord procedural fairness to the plaintiff during the hearing by failing to permit him to tender evidence in his case. Ground 6: The learned magistrate failed to accord procedural fairness to the plaintiff in the exercise of her discretion by rejecting his application for a short adjournment to permit him to file evidence hi his case. Ground 7: The learned magistrate failed to accord procedural fairness to the plaintiff who was self-represented by failing to allow him to give evidence to the Court either orally or by permitting him to depose to and tender a large and detailed affidavit concerning the merits and quantum of the case. Ground 8: The learned magistrate failed to have regard to a relevant fact or circumstance being the merits of the defence articulated on the pleadings. Ground 9: The judgment of the learned magistrate was unreasonable in law.

[9]

The plaintiff's submissions

In written submissions, the plaintiff submitted that, in relation to the first ground of appeal, the transcript discloses a failure to give due consideration to the other relevant matters including the merits of the case. Similarly, in relation to the second and third grounds, the plaintiff submitted that there was a reasonable explanation for the delay (namely the "series of misfortunes which dogged him from about September 2018") and this also justified an adjournment.
In relation to the fourth ground of appeal, the plaintiff submitted that it was never put before Magistrate Greenwood by Mehanna in the Local Court that Mr McDonnell had no defence, as is required by r 13.1(1)(b).
It was submitted that her Honour's "prime preoccupation" was the delay and that the subsequent refusal of leave to allow Mr McDonnell to file evidence was a denial of procedural fairness.
It was further submitted that that her Honour did not advert to the merits of the claims articulated in the defence and cross-claim, as required by UCPR r 13.1. Nor did her Honour take into account that Mehanna had the burden of proof in terms of showing that Mr McDonnell had no arguable case. It was submitted that her Honour failed to take into account "the evident purpose" of r 13(1) when she determined to dispense with the formal requirement for its exercise.
Reliance was placed on the fact that Mr McDonnell was not on notice on 20 December 2018 that there might be an application for summary judgment.
In oral submissions, it was submitted that the summary judgment worked a "very very substantial prejudice" to Mr McDonnell. It was thus a "significant error" for her Honour not to examine the merits of the case on the pleadings because there was a clear question of law raised by the contract question and the corresponding claim by Mr McDonnell under s 18 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law.
It was conceded that the nub of the complaint was a denial of procedural fairness as well as reliance upon a misconstruction of UCPR r 13.1. That is, her Honour failed to deal with the merits of the case before summarily dismissing it and the fact of striking out the defence was not enough for her Honour to discharge her judicial duty to consider the merits before entering summary judgment.

[11]

Consideration

This appeal was expressed to be brought under ss 39 and 40 of the Local Court Act on the basis that the decision of the Magistrate was an interlocutory judgment and some of the grounds relied on error on a question of mixed law and fact. Although the decision of the Magistrate to strike out the defence and cross-claim under UCPR 12.7 was interlocutory in nature, the subsequent decision entering summary judgment was a final order: Macatangay v NSW (No 2) [2009] NSWCA 272 at [13] and thus falls within s 39 of the Local Court Act. Mehanna's counsel did not submit otherwise.
The relevant distinction between ss 39 and 40 is the question of leave. If an appeal is from a final order and involves a "question of law alone" no leave is required. On the other hand, if an appeal is brought against an interlocutory decision and/or is one based on a question of mixed law and fact then leave is required.
Whether an alleged error involves "a question of law alone" is not always straightforward. Justice Johnson summarised some of the statements of principle on this issue in Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited (2006) 67 NSWLR 402; [2006] NSWSC 343 at [58]-[60]: "58 There is no universally applicable test for distinguishing questions of law from questions of fact: Collector of Customs v Agfa-Gevaert Ltd (1995) 186 CLR 389 at 394; Sood v R [2006] NSWCCA 114 at paragraph 30. 59 The formulation "question of law" employs general words capable of application at different levels of generality: Attorney General for NSW v X (2000) 49 NSWLR 653 at 660 (paragraph 25). The expression "question of law" is wider than "error of law": Attorney General for NSW v X at 677 (paragraph 124). 60 A mixed question of fact and law does not fall within the description of "question of law alone": Williams v The Queen (1986) 161 CLR 278 at 287, 314; Attorney General for NSW v X at 663 (paragraph 44)."
I am satisfied that some examples of a ground of appeal asserting error a "question of law alone" include matters of statutory construction, the elements of an offence, denials of procedural fairness and the inadequacy of reasons provided by the Magistrate.
As for a question of mixed fact/law, in R v PL (2009) 199 A Crim R 199 at 205 [25]-[26], Spigelman CJ (McClellan CJ at CL and RA Hulme J agreeing) held that the process of applying a legal principle to the facts of a case involves a mixed question of fact and law. A number of grounds relied upon by Mr McDonnell in relation to the decision under r 12.7 fall into this description.
As for the relationship between the requirements for leave to appeal on both a question of mixed fact/law and an interlocutory judgment, Schmidt J observed the following in Ciszek v Enterprise Financial Solutions Pty Ltd [2010] NSWSC 1265 at [10]: "Notwithstanding the seeming breadth of s 39 ... the scheme of the Act is to require leave in a case where a party seeks to appeal an error of law arising in an interlocutory judgment or order. Section 39 must be read as being subject to the particular provisions made in s 40(2) in the case of interlocutory judgments. ... Each section must be given the work which it is seemingly intended to do. That will not be achieved if the view is taken that leave to appeal is not required, if an error of law arises in an interlocutory judgment or order."
In Sayed v Deng [2012] NSWSC 851, Beech-Jones observed the following at [28]-[29]: ".. with an interlocutory decision of the Local Court a disaffected party must seek leave to appeal under s 40(2)(a) irrespective of the form of error that is asserted. If their application for leave is granted their appeal will nevertheless be restricted to an error of law under s 39(1), unless they obtain a further grant of leave under s 40(1) to raise a question of mixed fact and law. In so far as the question of leave is concerned, in Coulter v R [1988] HCA 3; 164 CLR 350 at 359, Deane and Gaudron JJ noted that such a requirement: "... represents a constraint upon the overall cost of litigation by protecting parties, particularly respondents, from the costs of a full hearing of appeals, which should not properly be entertained by the relevant court either because they are hopeless or, in the case of a civil appeal to the second appellate court, because they do not possess special features which outweigh the prima facie validity of the ordinary perception that the availability of cumulative appellate processes can, of itself, constitute a source of injustice."
His Honour further observed in Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779 at [4]: "The considerations affecting a decision to grant leave to appeal under s 40(1) include whether any reason has been shown to doubt the correctness of the impugned part of the Local Court decision and the desirability of avoiding the parties incurring further costs and expense in litigating the matter if it is remitted to the Local Court."
With these principles in mind I turn to consider the three grounds of appeal concerning the first interlocutory decision to strike out the defence and cross-claim for want of prosecution. They can be summarised as follows:

[14]

Ground 6: Refusing the adjournment was a denial of procedural fairness.

Leave is required to argue these grounds on two bases: first, because this is an interlocutory decision, and, second, because the grounds rely on error based on a question of mixed fact and law. I am satisfied that leave to argue these grounds should be granted because of, inter alia, the close connection between these grounds and the remaining grounds of appeal which do not require the leave of the court as well as the fact that I am satisfied they have been made out.
These grounds contend that her Honour erred in the application of the relevant principles to the facts before her by placing too much weight on the question of delay and refusing a short adjournment. UCPR r 12.7(2) provides that: "If the defendant does not conduct the defence with due despatch, the court may strike out the defence, either in whole or in part, or make such other order as the court thinks fit."
As at the date of the motion on 20 December 2018, the matter was listed for a two-day special fixture on 29-30 January 2019. That is, the hearing was a month away.
It is to be accepted that the delay was considerable. This was the third time the matter had been listed for hearing, although one of the previous adjournments had been on application by Mehanna. It is understandable that when faced with the bald facts of the chronology, her Honour was entitled to be satisfied that the delay was excessive. On the other hand, Mr McDonnell had shown up that day with most of the relevant documents and her Honour had before her an explanation for some of the delay.
The relevant transcript recording the submissions made by Mehanna's solicitor and the attempts by Mr McDonnell to explain the delay runs to eleven pages. It is not practical to extract all of them. I have briefly summarised the argument above at [29]-[37] but it is necessary for me to extract some of the exchanges between Mr McDonnell and the bench in order to explain my reasons for upholding these grounds.
It was submitted on behalf of Mehanna's solicitor that there had been four sets of solicitors in the matter. That was not accurate. The record showed that he had a solicitor from early after commencement of the proceedings until that solicitor ceased to act in May 2018, then he had Mr Foley who was diligent until he had an aneurysm and then Mr McDonnell had engaged a final solicitor for the hearing (Ms Phair). When Mr McDonnell sought to clarify this, the following exchange took place: "SECOND DEFENDANT: Just to correct a couple of things that my friend said: firstly, there has been two solicitors, so not four. We are on the third. That is not on the record. HER HONOUR: That's not really the big issue here. SECOND DEFENDANT: No, okay, but my main solicitor, who filed the cross-claim, has been in ICU in hospital and he put together a very complicated cross-claim. He got out of hospital yesterday. He had a major aneurysm."
Although her Honour appeared to accept that Mr Foley's aneurysm explained some of the delay since September 2018, she was not satisfied that it explained all of it nor that it explained any of the delay before that time. It was common ground that there was a solicitor on the record prior to Mr Foley who had failed to attend court. Her Honour clearly sheeted the blame for this home to Mr McDonnell. Another example of Mr McDonnell trying to explain the delay before Mr Foley's aneurysm is as follows: "SECOND DEFENDANT: Okay, but the second point I would like to make is that there have been two vacated hearing dates and one was vacated by them, not by us, because the plaintiff was going to Lebanon. At that motion was agreed that the costs order would be dismissed, the previous cost order which my friend forgot to mention. So that was our agreement. Mr Foley went to Court and said, "We all agree to vacate September date if you agree to dismiss the previous costs order", and we ended up with a special fixture - HER HONOUR: It does not work like that. The Court is in control of proceedings. It's not what the parties agreed to do. What else did you want to say? SECOND DEFENDANT: well, there is a special fixture for January and we will be ready. The notice to produce was filed two days ago in in the registry downstairs. HER HONOUR: That is not the issue here today. You had a year before that to get organised. SECOND DEFENDANT: Yes, we had a hearing date in September which they requested to be vacated. HER HONOUR: But you hadn't done anything before the aneurysm. SECOND DEFENDANT: No, because the timetable changed for putting on evidence and we changed solicitors. Mr Foley did the cross-claim. Then there was a timetable for putting on evidence which was just a month ago. I haven't been able to retain - "
And later when he was trying to explain that his affidavit was almost ready: "HER HONOUR: Yes, but what is the point of that? Can I just tell you this, the law is even if your affidavit was complete and all that was needed was your signature, the higher courts say it's useless. It can't be relied on because the other side really doesn't know until they get it in final form what they're up against, in your case, it's not even finished. SECOND DEFENDANT: Correct, your Honour -it's very close to being finished. I won't have the solicitor to go through it and they haven't been able to because it's been this time of the year, it's been too busy, but I could endeavour to have this sworn by Monday."
Mr McDonnell's evidence had been due on 16 November (after a number of extensions). At the motion on 20 December 2018 he brought his almost-finalised unsworn affidavit to court as well as the documents for the notice to produce to court on a USB. The following exchange took place: "SECOND DEFENDANT: ………. I believe the motion is a little premature in the sense that the final return date was for today, for the notice to produce. Perhaps they just assumed that like the other times it wasn't going to be produced but it was produced two days ago to the registry. Granted, the evidence is not on, but I could assist the Court by, I said, Monday but if it assisted the Court I could even get this affidavit - there's a few more annexures to add but I could - maybe if we could have an adjournment and I could have this sworn after lunch today so then really everything is complied with. HER HONOUR: How are you going to add more to your affidavit and say that you will have i-- SECOND DEFENDANT: No, the affidavit is done but not all the annexures are attached but I have got them on a USB. HER HONOUR: I thought you said you wanted your solicitor to look at the affidavit. SECOND DEFENDANT: Well, it would be better to get on what I've got rather than have the matter struck out, your Honour. HER HONOUR: What else did you want to say?"
And later Mr McDonnell stated, "I could have this affidavit sworn today if it assisted the court". He also submitted that the matter was ready for hearing, a fact denied by Mehanna's solicitor on the basis that a request for further and better particulars was outstanding to which Mr McDonnell responded: "HER HONOUR: What about the particulars? SECOND DEFENDANT: I think that is all contained in the documents. That covers everything and if I could just go back to the beginning, my friend said that I was engaged to provide mortgage services. He requested a loan of $3 million to purchase a property. He purchased the property, we provided $1.65 million, so it's not like we failed completely. The second half was - I attempted to get him a better loan and his accounts were so complicated all the lenders said, 'We cannot approve it'. This is not a very clear cut case. Well, from my point it is clear cut case but he's settled on the purchase. We were ready to proceed. He said he was going to pay another million dollars to get them extra time. I said, 'Well, you're spending that money, not spending the extra legal costs, unnecessarily. We're ready to settle'".
Before proceedings to strike out the defence and cross-claim, her Honour was thus aware that the notice to produce, although it had been extended four times, had been answered on 18 December and emailed to the parties. Her Honour was also aware that Mr McDonnell was able to file his affidavit that day, which was all of his evidence. Her Honour was also aware that Mr Foley had been gravely ill and uncontactable. He was the solicitor on the record so the Local Court notice to produce "upload link" blocked Mr McDonnell's efforts because Mr Foley was the solicitor on the record. Mr McDonnell was unable to upload certain documents until he ceased to act and most of Mr McDonnell's documents were with Mr Foley.
Despite Mr McDonnell's request for a short adjournment until later that day, her Honour did not stand the matter down so the affidavit could be finalised. What her Honour did was to commence to give her reasons allowing the motion whilst Mr McDonnell was attempting to get a short adjournment to finalise and swear his affidavit. The transcript records this as follows: "HER HONOUR: How many documents are in those (referring to the Notice to produce documents provided to the Court by email/USB two days earlier)? SECOND DEFENDANT: There was 95 documents. There was probably close to a ream of paper, I would say. HER HONOUR: Okay, a ream is a- SECOND DEFENDANT: 500 pages, yes. HER HONOUR: This is a notice of motion under r 12.7. It is a strikeout motion to strike out the amended defence to the statement of claim and the cross-claim itself and the argument behind the application is that the two defendants in the main proceedings and the cross-claimant, that they have not prosecuted their claims with due despatch. Now, just before I start considering the matter, it wold appear that the value of the claim is approximately $43,000 or thereabouts."
Although it is to be accepted that her Honour afforded Mr McDonnell the opportunity to explain his position regarding delay, she did not ask any questions directed at the delay by the solicitor acting prior to Mr Foley. Nor did she at any time engage with Mr McDonnell on the merits of his defence, nor was any reference made to those merits in her reasons for striking out his defence and cross-claim. Nor did her Honour avert to the prejudice to Mr McDonnell if his case would not be heard. The only factor raised by her Honour was delay.
I am satisfied that these grounds are established.

[15]

Summary Judgment

The remaining six grounds pertain to the decision to enter summary judgment against Mr McDonnell and can be summarised as follows: Ground 3: Dispensing with the requirement for a notice of motion Ground 4: Failing to have regard to the requirement in r 13.1(b) Ground 5: Failing to permit Mr McDonnell to tender evidence in his case Ground 7: Failing to allow Mr McDonnell to give evidence to the court Ground 8: Failing to have regard to the merits of the defence Ground 9: The decision was unreasonable
I propose to deal with these grounds compendiously as I am satisfied that grounds 4 to 8 have been made out and there is no need to consider ground 9 as it relies on the other grounds.
The notice of motion before the Local Court that day was to have the defence and cross-claim struck out for want of prosecution. Mr McDonnell had shown up with his affidavit almost finalised and with the documents to be produced under the notice to produce. Rather than permitting Mr McDonnell the short adjournment to file his evidence after which time the matter could have been listed for hearing, her Honour waived the requirement for a notice of motion and proceeded to grant summary judgment against Mr McDonnell.
It is important to have regard to the requirements of UCPR r 13.1(1). It provides that, if on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: "(a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires." (Emphasis added.)
The principles governing an application for summary judgment are well established. In order to obtain summary judgment Mehanna had to establish in the Local Court that any defence Mr McDonnell intended to rely upon was "untenable and cannot possibly succeed": Spellson v George (1992) 26 NSWLR 666 at 678-679 per Young AJA, with whom Handley JA and Hope AJA agreed. The relevant principles were summarised by Emmett AJA (with whom Macfarlan and Simpson JJA agreed) in State of New South Wales v Williams (2014) 242 A Crim R 22; [2014] NSWCA 177 at [71], albeit in the context of an application to strike out a defence, as follows: "The requirement for establishing that there is no triable issue is a demanding one and the power to strike out a pleading on the basis that it discloses no reasonable defence, or is an abuse of process, should be exercised only in plain and obvious cases. The power should not be exercised in cases of doubt or difficulty or where the pleading raises a debatable question of law. Once it appears that there is a real issue, whether of fact or law, and that the rights of the parties depend upon it, a court should not dismiss a defence raising such an issue, either on the basis that no reasonable defence is disclosed or as an abuse of process (see Dey v Victorian Railways Commissioners [19 49] HCA 1; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) [19 64] HCA 69; 11 2 CLR 125 at 129-130; Commonwealth v Griffiths [2007] NSWCA 370; 70 NSWLR 268 at [1 1]- [ 12] and Spencer v Commonwealth [20 10] HCA 28; 241 CLR 118 at 139-140)."
In Shaw v State of New South Wales [2012] NSWCA 102 at [32]: "The question is therefore whether the claims in question are so obviously untenable or groundless that there is 'a high degree of certainty' that they will fail if allowed to go to trial; and whether this is one of the 'clearest of cases' in which the court may accordingly intervene to prevent the claims being litigated."
The process by which summary judgment was entered against Mr McDonnell must be viewed in the context that Mr McDonnell was unrepresented. He placed reliance in this court on the decision of Beazley JA (as her Honour then was) in Hamod v State of New South Wales and Anor [2011] NSWCA 375 regarding the duties of a judicial officer when dealing with unrepresented litigants.
As her Honour explained, the Court has an overwhelming duty to ensure that a trial is fair, Dietrich v R (1992) 177 CLR 292; [1992] HCA 57, which means that a self-represented litigant does not suffer a disadvantage. This means that a trial judge should ensure that unrepresented litigants are sufficiently informed about court practice and procedures. At [312], her Honour summarised the relevant principles: "312 Although the duty of a trial judge to assist an unrepresented litigant is cast in active terms, it does not extend to advising the accused as to how his or her rights should be exercised: R v Gidley (1984) 3 NSWLR 168. Rather, the judge has to put the unrepresented litigant in the position of being able to make an effective choice, a duty which applies notwithstanding the adversarial character of a criminal trial: McPherson per Mason J at 534. The duty is the same in a civil proceeding, with such modifications as are called for to take account of civil procedures. However, it is not the function of the court to give judicial advice to, or conduct the case on behalf of, the unrepresented litigant: Bhagwanani v Martin (1999) 204 LSJS 449; [1999] SASC 406 ; Clark v State of New South Wales (No 2) [ 2006] NSWSC 914. 313 The touchstone at all times remains that of fairness. In Rajski v Scitec Corporation Pty Ltd (Court of Appeal, 16 June 1986, unreported) Samuels JA, at 14, stated: 'But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent ... At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement ... An unrepresented party is as much subject to the rules as any other litigant.' 314 Thus, a trial judge is entitled to reprimand an unrepresented litigant if the judge believes that the litigant is trifling with the court: see Galea v Galea (1990) 19 NSWLR 263 at 283 per Meagher JA; Michael v Western Australia [2007] WASCA 100 at [64] per Steytler P (McLure JA and Miller AJA agreeing); Jae Kyung Lee v Bob Chae-Sang Cha at [84] per Basten JA."
Having regard to the principles concerning both summary judgment and unrepresented litigants, I am satisfied that four of the remaining five grounds of appeal are established arising from the manner in which her Honour ordered summary judgment in this matter. I am also satisfied that they are all errors of law.
The first error that her Honour dispensed with the requirement for notice that such an application would be made in circumstances where Mr McDonnell was unrepresented. A similar issue arose in Aldous v NSW [2014] NSWCA 280. In that matter the District Court had made orders for summary judgment without formal notice and without an affidavit deposing to belief that the defendant had no defence. Barrett JA (with whom Emmett JA and Tobias AJA agreed) allowed the appeal on the basis that there was a clear denial of procedural fairness and natural justice. His Honour observed the following at [11] and [12]: "11 It is, to my mind, plain that the appellant was denied a fair opportunity to understand and deal with the propositions that the judge ultimately accepted and that saw the litigation summarily terminated in the State's favour. The hearing was appointed to deal with the State's contention, advanced by its notice of motion, that the defence should be struck out. Had that proposition been determined adversely to the appellant, the proceedings would not have been brought to an end and he could have sought leave to replead by means of a revised defence. The appellant was not on notice that the outcome of the hearing of the notice of motion could be a judgment against him with no further opportunity for him to defend himself. 12 There was, in that way, a clear denial of procedural fairness and natural justice. The possibility that the proceedings might be brought to a conclusion by way of judgment for the State as plaintiff, without any hearing on the merits or any need for the State to prove any elements of its case, was not raised until the hearing of the notice of motion and then only indirectly and in passing by way of brief reference by the State's solicitor. There was no intimation to the appellant that the judge had it in mind to move outside the boundaries of the claim in the notice of motion. The appellant had no opportunity whatsoever to anticipate and deal with a proposition that spelled the end of his ability to defend himself."
Although the facts in that matter differed slightly, I am nonetheless satisfied that, consistent with these principles, her Honour erred in proceeding straight to summary judgment that day as this denied procedural fairness to Mr McDonnell. This is an error of law. No question of leave arises.
The second error arises from the fact that UCPR r 13.1(b) was overlooked. That provision mandates that before summary judgment can be entered there must be evidence, "given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed". No such evidence was before her Honour on this day. What her Honour had before her were the affidavits made on behalf of Mehanna setting out the basis of their claim but that is insufficient to comply with the requirements of UCPR r 13.1(b).
Although Mr Olzomer did advert to the requirements of the rule (see above at [39]), her Honour did not do so in her Reasons
I am satisfied that the failure to have regard to r 13.1(b) was an error of law in that her Honour misconstrued the relevant provision. No question of leave arises.
The third error is that her Honour appears to have commenced determining summary judgment when Mr McDonnell was outside of the court room. I have extracted the relevant transcript above at [39]. Although there is some reference by Mr Olzomer to "my learned friend" later down the page, which may well be a reference to Mr McDonnell, there is no acknowledgment by her Honour of when Mr McDonnell re-entered the courtroom nor any indication to him of what she was about to do.
I am satisfied that this failure to afford procedural fairness is an error of law. No question of leave arises.
The fourth error is that her Honour did not invite any submissions from Mr McDonnell once the matter resumed. There is no record on the transcript that the unrepresented Mr McDonnell was afforded the opportunity to say anything on the application. Nor did he in fact say anything after court resumed and before summary judgment was given. Prior to the matter being stood down in the list he had sought to challenge the question of quantum relied upon by Mehanna in the schedule of damages but was denied the opportunity to do so orally or by the tender of any documents.
A high onus is placed on a party seeking summary judgment. Even though the defence had been struck out her Honour still had to be satisfied that no defence existed at law. I am satisfied that the pleadings disclosed a serious question to be tried which was not addressed by the Magistrate in her brief reasons.
It is to be accepted that there is authority for the proposition that the traditional reluctance to enter summary judgment has diminished to some extent by the enactment of the CPA. As Beazley JA (with whom Basten and Hoeben JJA agreed) observed in State of New South Wales v Plaintiff A [2012] NSWCA 248 at [17]: "Although there is authority for the proposition that a court should be reluctant to exercise the power of summary dismissal without a hearing on the merits absent intentional and contumelious default on the part of the plaintiff, or inordinate or inexcusable delay, giving rise to a substantial risk that a fair trial would not be possible - see Birkett v James [1978] AC 297 at 318 - the stringency of that principle has been diminished by the enactment of ss 56-60 of the Civil Procedure Act. Further, a proceeding will involve an abuse of process in circumstances where the objective effect of the lapse of time since the cause of action arose is to render a fair trial impossible, despite the absence of any moral delinquency, oppressive conduct or misconduct on the part of the plaintiff: Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; 226 CLR 256 at [69]-[70]."
Despite this, and having regard to the relevant case management principles, I am nonetheless satisfied that her Honour erred in the manner in which she entered summary judgment in this matter.
It must be acknowledged that her Honour determined this matter ex tempore in a busy list and was operating under time pressures. This Court has repeatedly observed that, in appeals to this Court, full allowance must be made for the demands on a Magistrate in a busy Local Court. As Johnson J observed in Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Ltd (2006) 67 NSWLR 402; [2006] NSWSC 343 at [15] (albeit in the context of the hearing of criminal charges): "……., it is appropriate to bear in mind that his Honour's reasons constitute an unedited and unpunctuated record of ex tempore remarks in a busy Magistrate's Court: Acuthan v Coates (1986) 6 NSWLR 472 at 479A, 485C-D. Such a judgment should not be picked over and appropriate allowance should be given to the pressures under which magistrates are placed by the volume of cases coming before them: Neighbourhood Association DP295386 v Forgeron [2005] NSWCA 150 at [15]; Colosimo v Director of Public Prosecutions (2005) 64 NSWLR 645 at 655 [36]."
I would allow this appeal.

Rory McDonnell v Mehanna Holdings Pty Ltd as Trustee for the Mehanna Discretionary Trust

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