The letter of Mr Shehadie of 7 April 2004 referred to by Mr Rodgers, which is part of annexure A to Mr Shehadie's affidavit of 11 April 2005, makes detailed comments concerning the accounts for legal costs which were included in Mr Phair's letter of 31 March 2004.
19 The original claim in this regard was made in the schedule of the Plaintiffs submitted to Mr Rodgers under cover of the letter of 22 March 2004 from the First Plaintiff. Item 16 in that schedule is in the name Proctor Phair Lawyers, in an amount of $45,341. Under the heading "Plaintiffs Comments" appears the following
We seek this amount for lawyer fees to seek a solution with the partnership problems. Refusal of disclosing tenant bond deposits, refusal to allow us to access books, Receiver Deed Agreement, Disclose of council orders, NTT Computer supplies agreements, Agents correspondences to sell the property.
20 Despite the foregoing description appearing in the schedule of the Plaintiffs, it would appear that these legal costs relate, first, to costs of Proctor Phair upon acting on the sale of 1 Birmingham Avenue Villawood, which costs, in an agreed amount of $5,000 were paid to those solicitors from the sale proceeds upon settlement of the sale of that property; and to costs of the Plaintiffs in respect to their dispute with the Defendants concerning the partnership.
21 I am in agreement with the view expressed by Mr Rodgers that the question of whether or not the costs of the Plaintiffs in respect to their partnership dispute with the Defendants is an item which comes within the ambit of the reference to Mr Rodgers is a legal question which it is inappropriate for Mr Rodgers himself to determine. Similarly, the question of whether professional costs charged to the Plaintiffs, but previously (by agreement of the parties) paid to the solicitors out of the proceeds of sale of the subject property, come within the ambit of the reference to Mr Rodgers is a legal question, which it is inappropriate for Mr Rodgers himself to determine.
22 I consider that the appropriate course is for the Plaintiffs' claim in regard to these costs, which either have been paid to Proctor Phair, or which the Plaintiffs assert they are liable to pay to Proctor Phair, should be determined by the Court rather than by Mr Rodgers.
23 Essentially the complaint of the Plaintiffs concerning the conduct of the reference by Mr Rodgers, and the basis upon which the Plaintiffs submit that his report should not be adopted are, first, that where there have been disputed factual assertions by the respective parties, Mr Rodgers should have determined those factual issues after receiving oral evidence, tested in an appropriate fashion. Further, that the Plaintiffs were denied natural justice in consequence of the fact that the First Plaintiff (who was absent from Australia on account of family problems) was not given an opportunity to respond properly to the final submissions made on behalf of the Defendants.
24 It should be appreciated that throughout the entirety of the conduct of the reference by Mr Rodgers the Plaintiffs and the Defendants were represented by their respective legal advisers, and that written submissions were presented by those legal advisers to Mr Rodgers, with copies of those written submissions being served upon the opposing party.
25 Part 72 rule 8 of the Supreme Court Rules makes express provision for the conduct of proceedings under the reference. Subrule (1) of that rule provides that the Court may give directions with respect to the conduct of proceedings under the reference. Subrule (2) provides,
Subject to any direction under subrule (1) -
(a) the referee may conduct the proceedings under the reference in such manner as the referee thinks fit;
(b) the referee, in conducting proceedings under the reference, is not bound by rules of evidence but may inform himself or herself in relation to any matter in such manner as the referee thinks fit.
26 There is no suggestion that during the course of the reference any of the parties, through their respective legal representatives, expressed to Mr Rodgers any dissatisfaction with the manner in which, or the procedure by which, Mr Rodgers was conducting the reference. As to the disputed questions of fact, which essentially arose towards the conclusion of the conduct of the reference, the solicitor for the Plaintiffs expressly rejected the suggestion of any personal meeting between the parties, and expressly endorsed the procedure which Mr Rodgers had adopted of exchange of written statements between the respective legal representatives, saying, "what is anticipated by the parties that you can make the determination on the written submissions of the parties". Interestingly, it would appear that the Plaintiffs and their solicitor had a number of face to face meetings with Mr Rodgers; whilst the Defendants (who, through their legal advisers, were not aware of such meetings) confined their contact with Mr Rodgers to written submissions.
27 In the light of the exchange of correspondence between the respective legal representatives of the parties and Mr Rodgers, concerning the procedure to be adopted by Mr Rodgers, being a procedure agreed to by the parties, it is difficult to see how the Plaintiffs can now justifiably complain that Mr Rodgers did not hear oral evidence and allow cross-examination of witnesses. The letter of 25 November 2003 from the solicitors for the Plaintiffs to Mr Rodgers (annexure H to the affidavit of Mr Rodgers sworn 1 February 2005) expressly invites Mr Rodgers to deal with the matter upon the written submissions of the parties, and states that, "If there are any matters in our respective submissions that need clarification by the parties we will meet with you or provide written response to your written queries", and continues by rejecting a face to face meeting between the parties.
28 The present complaint on behalf of the Plaintiffs that Mr Rodgers did not hear oral evidence and allow cross-examination of evidence is totally inconsistent with the procedure proposed by the Plaintiffs' own legal representatives, and accepted by the legal representatives of the Defendants and by Mr Rodgers. The reference was conducted expressly in accordance with the procedure proposed, agreed to and accepted by the parties. Indeed, even if one (or even both) of the parties had not so agreed, it would have been open to Mr Rodgers to have conducted the reference in accordance with such procedure, consequent upon the powers given to him under the foregoing subrule (2) of Part 72 rule 8.
29 The further ground upon which the Plaintiffs submit that there has been a denial of natural justice is that the First Plaintiff was not personally available to make submissions or representations responding to the submissions on behalf of the Defendants. At all times the Plaintiffs were represented by competent and experienced legal representatives. There does not appear to be any suggestion that those legal representatives were, by reason of the necessary absence overseas, for a relatively short period, of the First Plaintiff, precluded from obtaining adequate instructions from the Plaintiffs concerning any responses which might be made to the submissions of the Defendants. I do not consider that on this account there has been any denial of natural justice to the Plaintiffs or, indeed, that for any other reason there has been any denial of natural justice to the Plaintiffs.
30 It will be appreciated that the provisions of Part 72 rule 8 give to the referee very considerable latitude as to the procedure which may be adopted in the conduct of the reference. In the instant case the parties, through their respective legal advisers, agreed with Mr Rodgers as to a procedure. Part of that procedure was expressly set forth in paragraphs 4, 5 and 6 in the orders of 26 September 2003. That procedure was that each party should prepare a schedule (in the nature of what is frequently referred to as a Scott schedule), and the opposing party should be given an opportunity to respond to each of the items in that schedule. Communication between the parties and Mr Rodgers was by way of correspondence passing between the respective legal advisers of the parties and Mr Rodgers. The procedure adopted made provision for each party to be served with a copy of correspondence passing between the other party and Mr Rodgers.
31 The relevant authorities relating to the adoption or non-adoption by the Court of a report of a referee have been conveniently assembled in Freckelton and Selby, Expert Evidence (1993), volume 2, Chapter 18A.
32 It is unnecessary for me to quote in detail from those authorities. For present purposes I should, however, refer to the decision of the Court of Appeal of New South Wales in Super Pty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549, especially the judgment of Gleeson CJ. Having outlined the provisions of Part 72 of the Supreme Court Rules, and reviewed the history of that Part, his Honour said, at 562,
I am unable to accept, either as an absolute rule, or as a prima facie rule subject to defined or definable exceptions, that a party who is dissatisfied with a referee's report is entitled as of right to require the judge acting under Part 72 rule 13, to reconsider and determine afresh all issues, whether of fact or law, which that party desires to contest before the judge.
33 His Honour, having set forth his reasons for the foregoing conclusion, continued, at 563,
What is involved in an application under Part 72 rule 13 is not an appeal, whether by way of a hearing de novo or a more limited re-hearing. This is consistent with the right of the referee to conduct the reference as the referee thinks fit and unconstrained by the rules of evidence. Rather, the judge, in reviewing the report and deciding whether to adopt, vary or reject it, has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the rules and with the wider setting in which they take their place.
That wider setting is a system for the administration of justice according to law. In so far as the subject matter of dissatisfaction with a referee's report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine the matter afresh. That was decided by this Court in Homebush Abattoir Corporation v Bermria Pty Limited (1991) 22 NSWLR 605: see also Cape v Maidment (1991) 98 ACTR 1 at 4. That conclusion is entirely consistent with the history of the rules and the reasoning of the High Court in Buckley v Bennell Design & Constructions Pty Limited (1978) 140 CLR 1 which, although the case related to different provisions, is also instructive as to the present provisions.
….
On the particular question, relevant to the present case, of the approach to be taken to disputed findings of fact, where there is shown to be evidence available to support such findings, or the issue involves a choice as between conflicting evidence, I agree with the views of Giles J as expressed in the extracts from his reasons for judgment quoted earlier [in SJP Formwork (Aust) Pty Limited v Leda Constructions Pty Limited (Giles J, 19 May 1992, unreported)]. I also agree with what was said by Cole J in Chloride Batteries Australia Limited v Glendale Chemical Products Pty Limited . In that case Cole J made extensive reference to, and relied upon, what was said by Marks J in Integer Computing Pty Limited v Facom Australia Limited (Marks J, Supreme Court of Victoria, 10 April 1987, unreported). Those two lastmentioned judgments are of particular relevance to reports involving technical (non-legal) expertise.
34 The Chief Justice had earlier in his judgment quoted with approval from the unreported decision of Giles J in SJP Formwork (Aust) Pty Limited v Leda Constructions Pty Limited (19 May 1992, unreported), including the following passage,
For my own part, in the circumstances of this case I do not think that the referee's findings of fact should be generally re-agitated in the court. As a broad proposition, depending upon the circumstances of each case, the court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he did, particularly where the disputed questions are in a technical area where the referee enjoys an appropriate expertise. As an example of the application of that approach, in Buttrose v Versi (Rolfe J, 10 December 1990, unreported) Rolfe J adopted a passage from the judgment of Cole J in White Constructions (NT) Pty Limited v Commonwealth of Australia (1990) 7 BCL 193, in the following terms:
….
The purpose of referees reporting to the court on disputed questions of fact is rendered futile if the court is to reconsider disputed questions of fact in circumstances where it is conceded that there is factual material sufficient to enable the referees to reach the findings they did. In circumstances where the court, having closely scrutinised the referees report, has a comfortable feeling of satisfaction that the factual issues have been properly explored and considered, in my view the court should adopt the referee's report on findings of fact.
35 Regarding the right to re-agitate the referee's findings of fact, Mahoney JA, who agreed with the judgment of the Chief Justice in Super Pty Limited v SJP Formwork (Aust) Pty Limited, said, at 567, "The right to be heard does not involve the right to be heard twice."
36 In the instant case I am satisfied that Mr Rodgers considered the disputed factual matters, and received submissions from the respective parties, through their legal representatives, concerning those disputed factual matters, and expressed his conclusions in regard to those matters. The circumstance that upon those disputed issues Mr Rodgers did not receive oral evidence and did not allow cross-examination upon such oral evidence (as would have been the case had such a dispute been decided by a Judge in a Court) does not in any way impugn the conclusions of Mr Rodgers concerning these disputed matters of fact. The entire purpose of the reference to a referee would be frustrated if the referee were somehow, despite the express provisions of Part 72 rule 8, constrained to conduct the reference as if he were a Judge presiding over a contested hearing.
37 I am not persuaded that the failure of Mr Rodgers to entertain oral evidence (a procedural course which he was not requested by the Plaintiffs to adopt, and, indeed, a procedural course which was totally inconsistent with that which the Plaintiffs themselves had invited Mr Rodgers to adopt and which, with the concurrence of the Defendants, he did adopt) in any way constitutes a ground upon which the Court should decline to adopt the report of Mr Rodgers.
38 It should be emphasised that at no stage during the course of the reference did the Plaintiffs ever request Mr Rodgers to receive oral evidence or to allow cross-examination. These matters have been advanced by the Plaintiffs for the first time only during the course of their application made by way of the notice of motion filed on their behalf on 14 December 2004, seeking, amongst other relief, a declaration that the report of Mr Rodgers does not constitute a report of a referee within the meaning of Part 72 of the Supreme Court Rules. The present complaint of the Plaintiffs in regard to the receiving of oral evidence and cross-examination thereon does not in my conclusion constitute a ground upon which the Plaintiffs are entitled to any of the relief sought in their notice of motion.
39 The other substantive ground upon which the Plaintiffs rely is the asserted denial of natural justice to the Plaintiffs. (That ground of denial of natural justice overlaps, to an extent, the foregoing ground regarding oral evidence and cross-examination, since the failure of Mr Rodgers to allow oral evidence and cross-examination is relied on by the Plaintiffs as constituting denial to them of natural justice.)
40 In Xuereb v Viola (1988) 18 NSWLR 453 Cole J (as he then was) had occasion to consider the way in which the principles of natural justice impact upon the conduct of a reference by a referee. At 466 his Honour referred to the provisions of Part 72 rule 8 (6), which requires that "[t]he parties shall at all times do all things which the referee requires to enable a just opinion to be reached…", and continued,
But this statement of the Rules masks the difficulties inherent in the referee's task for it does not give the referee any clear direction as to the procedure which he must follow to ensure that the opinion reached by him is a "just opinion" (Rule 8(6)). By "just opinion" is meant an opinion which is just between the parties. Implicitly that means in reaching his opinion concepts of natural justice must have been adhered to by the referee.