Spencer v Elichung Pty Ltd

LEGISLATION CITED : Local Courts Act 1982 (NSW) - ss 73 & 75

Holloway v Chairperson of the Residential Tribunal (2201) 51 NSWLR 716; (2001) 40 BPR 18,905; [2001] NSWCA 209 Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153 CASES CITED : Oliveri Legal Pty Ltd v Lohnring International Pty Limited [2004] NSWSC 987 Wakim Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405 Wende v Finney [2005] NSWSC 927

Peter James Spencer (Plaintiff) PARTIES : Elichung Pty Ltd as Trustee for Monachan Family Trust t/as Cooma Rural Supplies (Defendant)

Mr P J Spencer (Plaintiff in person) SOLICITORS : No Appearance (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15812/05 - PETER JAMES SPENCER v ELICHUNG PTY LTD AS TRUSTEE FOR MONACHAN FAMILY TRUST t/as COOMA RURAL SUPPLIES

JUDGMENT (Appeal decision of Local Court Magistrate - Small Claims Division - money due) 1 HER HONOUR: By summons filed 2 December 2005 the plaintiff seeks firstly, an extension of time in which to lodge an appeal from a judgment entered on 21 October 2005 by Magistrate P Russell at Cooma Local Court, secondly that that judgment be set aside and thirdly, that the matter be remitted to the Local Court for a hearing de novo. The plaintiff relies on his affidavit dated 31 March 2006. At the hearing before this Court, the plaintiff appeared unrepresented. The defendant was called outside the Court three times and did not appear. Unfortunately, as the defendant did not appear, this Court did not have the benefit of a contradictor - see Holloway v Chairperson of the Residential Tribunal (2001) 51 NSWLR 716; (2001) 40 BPR 18,905 and [2001] NSWCA 209. As the plaintiff was unrepresented this Court did not have the benefit of all the relevant documents contained in the Local Court file. 2 The plaintiff in these proceedings is Peter James Spencer (Mr Spencer) the defendant in the Local Court. The defendant in these proceedings is Elichung Pty Ltd as trustee for Monachan Family Trust t/as Cooma Rural Supplies (Cooma Rural) the plaintiff in the Local Court. For convenience in this judgment I shall refer to the parties by name. The Magistrate entered judgment in favour of Cooma Rural in the amount of $6,422.63. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73(2) of the Local Courts Act 1982 (NSW) allows an appeal to this court on the grounds of lack of jurisdiction or denial of natural justice.

4 Section 75 of the Act provides that the Court may determine an appeal by either (a) varying the terms of the judgment or order or (b) setting the judgment or order aside or (c) setting the judgment or order aside and remitting the matter for determination in accordance with the Court's directions or (d) dismissing the appeal.

Grounds of Appeal 5 The plaintiff claims a denial of natural justice on the grounds that, firstly, the parties were not given an opportunity to cross examine witnesses regarding conflicting statements and secondly, judgment was entered based on a finding of fact without the parties having an opportunity to lead evidence on the authenticity or correctness of the document on which the finding was made.

Extension of time to appeal 6 On 21 October 2005 the Magistrate delivered judgment. The plaintiff in these proceedings had 28 days from that date in which to lodge his appeal. The appeal should have been filed by 19 November 2005. On 22 November 2005 a requestion was raised. The summons was returned to the plaintiff requesting that the summons be re-drawn naming the party appealing as the plaintiff and the other affected party/ies as defendant/s. On 2 December 2005 the summons was filed. The plaintiff's explanation is that the appeal would have been lodged but the requisition was raised. 7 I am satisfied that the plaintiff has provided a satisfactory explanation for the delay. I grant an extension of time for the filing of this appeal.

The Small Claims Division of the Local Court 8 In Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153 and Wakim v Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405, O'Keefe J (at [23]-[24] and at [20]-[21] respectively) made essentially identical observations on natural justice. In Kojima he stated: "The requirements of natural justice (or procedural fairness as it is now commonly referred to) apply to the Small Claims Division of the Local Court. This is clear from the nature of the function to be performed by that tribunal and the statutory recognition that is afforded to natural justice by s 69(2A) of the Act. The content of the requirements of natural justice is not fixed. The content is fluctuating. The overarching requirement is that of fairness (National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 312 per Gibbs CJ with whom Brennan J agreed). For a court that normally involves a duty to: (i) act judicially; (ii) deal with the matter for decision without bias; (iii) give each party the opportunity of adequately presenting its case; (iv) observe the procedural and other rules provided for in the relevant statute; (v) come to its decision with that sense of responsibility that is the necessary accompaniment of the duty to do justice." 9 In determining whether the plaintiff was denied procedural fairness it is necessary to consider the nature of the jurisdiction exercised in the Small Claims Division. This is because the content of procedural fairness varies depending upon the nature of the tribunal and the jurisdiction it exercises. Section 70 of the Act provides: "Procedure generally in Small Claims Division

(1) The jurisdiction conferred by or under this Act on a Court sitting in its Small Claims Division is to be exercised by a Magistrate or an Assessor.

(2) Proceedings in a Court's Small Claims Division are to be conducted with as little formality and technicality as the proper consideration of the matter permits.

(3) The rules of evidence do not apply to proceedings being heard or other proceedings in a Court's Small Claims Division.

(4) Witnesses may not be cross-examined except in circumstances in which, and to the extent to which, the cross-examination of witnesses is authorised by a practice note.

(5) An Assessor or Magistrate exercising the jurisdiction of a Court sitting in its Small Claims Division may inform himself or herself on any matter relating to proceedings being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit.

(6) Proceedings in a Court's Small Claims Division (other than any judgment given or order made in respect of the proceedings) are not required to be recorded." 10 Turning to Practice Note 2 of 2005 [10.2] to [10.4] which reads: "10.2 Where a direction had not been given at the Pre-trial review by the Magistrate, Assessor or Registrar for the attendance of any witness at the trial of the proceedings, the proceedings will be heard and determined by each party tendering the written statements of witnesses together with any other relevant documentation or material in support of the party's case. There will be no right to examine or cross-examine any witness. Parties will, however, be entitled to make comments, present arguments and make final submissions on the evidence. 10.3 Where a direction has been given at the Pre-trial review by the Magistrate, Assessor or Registrar, that a witness attend for cross-examination, the proceedings will be heard and determined on the oral evidence and the written statements and other documents and materials which have been tendered. Submissions on the evidence will also be allowed. 10.4 The procedure at the trial of the proceedings in the Small Claims Division will be determined by the Magistrate or Assessor as he or she thinks fit" 11 In Wende v Finney [2005] NSWSC 927 Howie J at [27] and [28] made some pertinent observations about the proceedings in the Small Claims Division which I respectfully reproduce here. They are: "Of course informality and the abandonment of the normal rules of evidence and procedure should not be allowed to give rise to unfairness even where the justice being administered is in relation to relatively trivial claims. Rather in such matters the court might need to be particularly astute to ensure that the lack of formality and the speedy resolution of claims does not become an end in itself at the expense of the appearance of fairness to the parties within the court's jurisdiction. After all the formal rules of procedure that normally attend a hearing are generally aimed at producing fairness to the parties, sometimes at the expense of efficiency in the exercise of the court's jurisdiction. So where those rules are displaced by the need to provide cheap, efficient and expedient justice to the parties, the advantages can sometimes be obtained at too high a price so far as a particular litigant is concerned.

No doubt one of the reasons why the proceedings in the Small Claims Division are conducted with the informality required is that the parties before the court are, in advance of the hearing, aware of the material upon which the determination is to be made. There are procedures laid down and referred to in the Practice Note that require the parties to identify to each other the material they intend to rely upon. The material upon which each side relies, including statements of witnesses and the actual documents at the heart of the dispute, are in a form where they can be reviewed by the court assisted by such submissions that the parties wish to make upon those documents without the need to formally tender and prove the relevant material. …the intention of the scheme of the relevant legislation is that the dispute can generally be resolved on the documents." 12 In Wende a party tendered documents that were produced on subpoena during the hearing. Those documents alleged dishonesty and misconduct. Wende requested the opportunity to call witnesses to rebut that evidence. This request was refused. As it turned out, much of what the Magistrate read into his judgment from these documents was highly prejudicial to Wende. It was held that the failure to give Wende an opportunity to rebut that evidence constituted a denial of procedural fairness.

Local Court Proceedings 13 Cooma Rural Supplies sued Mr Spencer, who, pursuant to an agreement, supplied goods to him from time to time for payment. It was alleged that pursuant to this agreement Mr Spencer owed $6,422.63. 14 By defence, Mr Spencer admitted there was an agreement but denied owing the amount claimed and raised, inter alia, that the plaintiff had refused to provide any delivery document signed by him in relation to the supply of the goods in question (Ex A). That remained Mr Craig Sellars's position throughout the Local Court proceedings. At the heart of Mr Spencer's defence were conversations he alleged he had with Mr Sellars. Mr Sellars was the manager of Cooma Rural. According to Mr Spencer there were two conversations between him and Mr Sellars in July 2003 and 12 August 2005.

Pre-trial review 13 August 2005 15 Mr Spencer by his statutory declaration dated 3 June 2005, tendered to the Registrar at the pre-trial review, foreshadowed that he wanted Mr Sellars to give evidence when this case went to trial. This was because in July 2003 Mr Spencer says that Craig called him and said that he had a problem because upon checking companies records there was a delivery of lupins valued at about $8,500 which they had not charged out. This delivery of lupins had occurred over 2½ years ago (ie 2000). Craig was sending the invoice to Mr Spencer. Mr Spencer says that he has never received this invoice. 16 Mr Spencer says that he attended pre-trial directions at Cooma Court on 13 August 2005. At that review Cooma Rural's solicitor advised that they would be obtaining statements of Joanne Brown (who has worked in Cooma Rural's accounts) and of Mr Sellars. Mr Sellars would be forwarding a statement to the Court in which Mr Spencer's claims would be denied by Mr Sellars. 17 On 13 August 2005 the Registrar advised Mr Spencer that he could not call Mr Sellars as a witness and that he could only make a statement. The matter was listed for hearing on 21 October 2005. 18 In the evening after that Court appearance (although Mr Spencer has typed 12 August 2005 it must have been on 13 August 2005), Mr Spencer telephoned Mr Sellars at home and asked him if he remembered the phone call about 2½ years ago regarding the missing invoice. Mr Sellars said he did remember the conversation but he did not think that it was for a delivery of lupins but he thought that it was for feed bins. According to Mr Spencer, Mr Sellars said he would check with Cooma Rural. Mr Sellars phoned back and said that he would not make a statement saying that he had not made that phone call but he still felt that it was an invoice regarding feed bins not lupins. According to Mr Spencer, Craig then said "look it is much the same only as to whether it is lupins or feed bins." Mr Sellars then said "what you are saying and what they are saying whatever the $6,000 is the balance, which is really the running balance - just pay it". Mr Spencer says that following this conversation he searched his record of accounts and located invoice number 20158 dated 30 May 2002, which was for bins, and it had been paid. 19 Anna Nilsson (Mr Spencer's wife) in her statement confirms that she was aware of the telephone call from Craig to her husband concerning the invoice two years before these proceedings commenced. Ms Nilsson says she also overheard the second telephone conversation (although she puts it as occurring on 12 June 2005) in which Craig confirmed that he did remember that telephone call 2½ years ago with her husband. According to Ms Nilsson, Craig said during that call that he would never sign an affidavit denying that earlier conversation.

The hearing on 21 October 2005 20 Mr Spencer appeared at that hearing unrepresented. Mr Herbert appeared for Cooma Rural. Section 70(6) of the Act provides that aside from the judgment, the proceedings are not recorded. Hence there is no transcript of the proceedings. 21 Mr Spencer relied upon his statements and that of his wife. Cooma Rural relied upon statements of Joanne Brown and Craig Sellars dated 22 September 2005. Mr Sellars's affidavit attached a document entitled "debtor transaction history" which showed an outstanding balance of $6,422.63. The transaction history records debits of $5,167.41 on 15 February 2002 and $7,517.30 on 30 May 2002. 22 On the morning of the hearing, Mr Spencer received the statement of Craig Sellars where at paragraph [20] he [Sellars] says: "I note that the Defendant claims to have had a conversation with myself in relation to the outstanding balance being pursuant to one particular invoice. I totally deny that allegation. To the contrary, no such conversation occurred to that effect. I have had numerous conversations between with the Defendant in relation to the outstanding balance. I telephoned the Defendant on a monthly basis to chase up payment of the running account." 23 At the hearing, it was apparent that the credibility of Mr Spencer and Mr Sellars was vital to the determination of the dispute. Mr Spencer was not permitted to cross examine Mr Sellars. 24 The Magistrate in her reasons for judgment stated: "The defendant denies that he owes that amount, and relies on what he says was a conversation with the then manager of the plaintiff's company in about 2003 in relation to, he says, an uncharged invoice. The plaintiff denies that conversation through the statement of the manager, Mr Sellers. The defendant relies on a set of statements referred to as "taxation invoice statements" provided by the plaintiff's company to him, from 16 September 2002. As I understand his position he [Mr Spencer] relies on those documents to cast doubt on the transaction listing document. Those taxation invoices do, on first consideration, appear to be at odds with the transaction listing document, but it appears on further examination that the tax invoices are not designed to be a complete record of the transactions between the plaintiff and the defendant. So much is clear from the fact that in all but one case there is no record of payments made." 25 The Magistrate held that: "The invoices significantly do not cover the entire period covered by the transaction listing. …I have reservations in relation to small claims matters because the manner in which these matters are heard, but I am satisfied on the balance of probabilities that the debt of $6,422.63 remains outstanding." 26 Mr Spencer submitted that the process for hearing small claims matters in the Local Courts has resulted in a denial of natural justice, as it did not allow him to question the statements of the other side. He says that because he could not cross examine in relation to conflicting statements he was disadvantaged. According to Mr Spencer cross examination would have shown several statements of the other side to be untrue and would have shown that the transaction listing was not a complete record and it was likely that the decision would have been in his favour. I do not agree with Mr Spencer insofar as he says he should have been entitled to cross examine both Joanne Brown and Craig Sellars. 27 However upon Mr Spencer's version of events, Mr Sellars did what he said he would not do. That is, Mr Sellars denied that the earlier lupin conversation had taken place. Mr Spencer only became aware of Mr Sellars's alleged change of position at the hearing. While it is accepted that generally the resolution of cases in the Small Claims Court can be done upon the reading of statements and the making of submissions, this is not one such case. The credibility of Mr Sellars was critical to the resolution of the issue in dispute. The Practice Note envisages that there will be cases where cross examination will be required. The credibility of Mr Spencer will also be in issue. 28 It is my view that the situation that arose here was similar to Wende; the advantage of the speedy trial was obtained at a price too high. By not permitting cross examination Mr Spencer was denied procedural fairness and natural justice. 29 The appeal upheld. The judgment of Magistrate Russell dated 21 October 2005 is set aside. The matter is remitted to the Local Court, Cooma to be dealt with according to law. 30 Costs are discretionary. Costs normally follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed. These costs should be modest.

(1) Leave is granted for an extension of time to lodge this appeal up to and including 2 December 2005.

(3) The judgment of Magistrate Russell dated 21 October 2005 is set aside.

(4) The matter is remitted to the Local Court, Small Claims Division, Cooma to be dealt with according to law.

(5) The defendant is to pay the plaintiff's costs as agreed or assessed. **********

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