Tarabanko v Galachov

Relevant Legislation

1. As previously noted, this appeal is brought pursuant to s 39 of the Local Court Act. Section 39(1) provides as follows: "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 question of law."
2. Section 40 permits an appeal to this Court on a mixed question of law and fact providing that leave is obtained.

Appellant's Contention

1. The contention of the appellant is that a Magistrate sitting in the Local Court will commit an error of law of a kind which enlivens the discretion of this Court to intervene if, in making a discretionary or a evaluative decision, such as the one here challenged, the Magistrate fails to have regard to a relevant fact or circumstance, or takes into account an irrelevant fact or circumstance. It is also contended that a failure to accord a party to proceedings procedural fairness would also enliven the Court's s 39(1) jurisdiction.

Local Court Proceedings

1. Before turning to whether the learned Magistrate's decision in the Local Court was affected by an error of law sufficient to enliven section 39(1) of the Local Court Act, it is necessary to consider in some detail the denouement of events in the Local Court.
2. Proceedings were commenced by the respondent by a Statement of Claim filed on 24 October 2015 which sought a judgment for a little under $22,000. That Statement of Claim was amended on 7 February 2016 (wrongly described as 14 February 2016 in the Local Court judgment). The claim was concisely stated and related, amongst other things, to a dispute between the respondent and appellant with respect to the repayments relating to, and maintenance and registration of, a motor vehicle; to the purchase of tools by the appellant at the expense of the respondent, which were not returned; and to a loan of $15,500 made to the applicant by the respondent, which remained unpaid.
3. On 19 February 2016 both parties were before the Local Court at Parramatta where a Registrar made orders for the further preparation of the matter. These orders were made in accordance with a document entitled "Standard Directions", apparently issued pursuant to Practise Note Civ 1. The document was signed by both parties, each of them acknowledging that they had received a copy of the directions on 19 February 2016.
4. The Standard Directions provided that, first, parties were not to file their evidence prior to the hearing date unless the Court otherwise ordered; secondly, that statements were to be served on or before 18 March 2016; and thirdly, that proceedings were to be listed for review on 15 April 2016 with a hearing date of 12 May 2016. In addition, there were a number of other standard directions. One called for discussion and agreement about facts and issues in dispute and provided that the respondent must file a statement of agreed facts and issues at least seven days prior to the hearing.
5. The form of Standard Directions included the following statement: "If the parties fail to comply with the Court's directions it can be expected that the statement of claim will be dismissed or the defence struck out and orders will be made that the non-complying party pays the costs of the other party."
6. The Standard Directions also included this paragraph: "Where a party does not serve evidence in accordance with these or any other directions made by the court then the party may not rely on that evidence at the hearing unless the non-complying party satisfies the court that it is in the interests of justice to do so."
7. It does not seem to be in dispute that by the time of these directions, the respondent had provided to the appellant all of the material upon which he wished to rely. The appellant did not serve any material on the respondent before 18 March 2016 which was the date fixed for service of statements.
8. When the matter was before the Court on 15 April 2016, the appellant did not appear, but the respondent did. There is no transcript of what occurred on that day available in the material before this Court, but it appears from remarks made by the Magistrate on 12 May 2016 that the time for compliance with the directions with respect to service of evidence was extended from 18 March 2016 to 22 April 2016.
9. It also appears that the respondent was not directed to notify the appellant of that order but it seems that a letter was sent by the Local Court informing the appellant of that order on 18 April 2016. The appellant claimed, when before Stafford LCM, that he did not ever receive that letter.
10. The matter was listed for final hearing on 12 May 2016 in the Local Court at Parramatta. Both the respondent and the appellant appeared in person. What occurred is recorded in seven pages of transcript. It will be necessary to refer to parts of that transcript in the course of this judgment. In summary, the appellant sought to rely upon evidence which he had with him and which he said demonstrated that he had a full and complete defence to the respondent's claim, but which he had not served on the respondent in accordance with the Standard Directions made in February 2015.
11. Stafford LCM refused to allow the appellant to rely upon that evidence and proceeded to determine the respondent's claim solely upon the respondent's affidavit. She found in favour of the respondent with respect to the entirety of his claim and entered judgment for the respondent against the appellant in the sum of $21,895.40. She also ordered that the appellant pay the respondent's costs as agreed or assessed.
12. It is apparent from the transcript that this result occurred without the respondent being asked to, or saying, one word and that the result also occurred without the learned Magistrate looking at the evidence which the appellant wished to rely upon, and without the respondent tendering any evidence. Such a result, on its face, is curious. Unsurprisingly, it has given rise to an appeal.
13. It is necessary to record an exchange which occurred in the Local Court during the course of the hearing. As has been previously noted, both the respondent and the appellant appeared in person. The respondent seems to have a reasonable facility with English. On the other hand, the appellant indicated to the Local Court that he had a limited capacity to converse in English - the appellant characterised his English level as "intermediate" - and as a result, he relied upon a friend who was permitted by the Court to interpret what was going on. However, the learned Magistrate declined to allow that person to "appear as a lawyer or say anything about the case". The first exchange which took place was initiated by the Magistrate. She asked the appellant, "you have filed no material with the Court?". When the appellant indicated that he had material to provide to the Court the Magistrate said, "No, it's too late. The Court made directions for you to file your statements and you didn't do that." The appellant responded "I don't know".
14. Then, there was a discussion about the Standard Directions document to which I have earlier referred. A reference was made to what occurred on the review date of 15 April 2016. After this discussion, her Honour said to the appellant, "Do you say you have filed any statements or affidavits?" And further "You're saying you filed your statements and affidavits, I'm asking you, on what date?" The appellant answered that he had not filed any statements or affidavits. The Magistrate then said: "Then you should have got some legal advice, because it means that you now have no evidence for the hearing today. On the other hand, the respondent has filed his evidence with the Court in accordance with the directions, so that's the only evidence I can decide the case on; in other words, what he said happened. Do you understand that? That's how I've got to decide the case".
15. The gentleman who was interpreting on behalf of the appellant asked the Magistrate, "Can we ask for additional time to provide any evidence because he got it before?" That was a reference to an earlier statement made in which the appellant had said he prepared all of his documents by 18 February. The Magistrate responded: "You haven't put any reasons to me so your application for leave to file evidence is refused. That is because the Court made directions on 19 February and you are in default of those directions. A further chance was given to you by the Magistrate at review on 18 March, noting that you were in default... The matter is in for hearing today. You haven't complied. No reason has been advanced for your non-compliance. So the application for an extension of time to file or for leave to file in Court is refused. That means the only evidence is the affidavit of Mr Galachov. I have another hearing in front of me that will go for about an hour. Do you wish to ask Mr Galachov any questions in relation to his affidavit? What's the answer, do you wish to cross-examine him?"
16. This passage encompasses the decision about not allowing the appellant to rely on evidence, and the succinct reasoning in support of that decision.
17. The appellant through his friend indicated that he didn't wish to ask anything. He was then asked what legal arguments he wished to make about the case, and he indicated that he wished to rely on evidence as a counterweight to the respondent's case. Her Honour then said: "I'm not allowing him to adduce his evidence because he didn't comply with the Court directions. Do you want to make any submissions or legal arguments before I decide the case?"
18. The appellant attempted to make submissions by putting in an "explanation letter of the case". The Magistrate refused to allow him to put in "an explanation letter", saying "he can't adduce any evidence". There was further discussion. Then when it appeared that the Magistrate was declining to allow any further material to be put before her, the appellant understood from that that he wasn't entitled to say anything more and declined to say anything.
19. Her Honour then went on to deliver her substantive decision on the respondent's claim. That decision in part included a description of the civil proceedings and the history of the proceedings in the Local Court. During the recounting of that history, contrary to what she had earlier said in the course of discussion, the Magistrate accurately recorded what occurred on 19 February. She said, referring to 19 February: "On that date the Deputy Registrar made orders that statements or evidence be exchanged by 18 March 2016. Today's hearing date was fixed and also a review date was fixed for 15 April."
20. Having recounted what occurred on the review date the Magistrate said: "Today in Court the appellant has appeared unrepresented, but as I have said assisted by a friend who has agreed to interpret. He sought to file in Court his evidence. Due to his default with two sets of directions and the fact that this matter has been set down for hearing for three months now, and the fact that no reason was put before me as to why he failed to comply with those directions, I decline to extend the time to allow him to file and serve his material, and decline to allow leave to file his material in Court. That means that the only evidence before the Court is the affidavit of Victor Galachov. The appellant does not wish to cross-examine the respondent on the evidence and has made no submissions with respect to the statement of claim or the amended statement of claim."
21. Her Honour went on to finalise the matter finding in favour of the respondent.

Appellant's Submissions on the Appeal

1. In this Court, the appellant submits that legal error is shown in the proceedings on 12 May 2016. He submits that the Standard Directions, contrary to what the Magistrate said orally in Court, did not require the filing of any evidence, but merely required the service of it. Secondly, he submits that the directions were, in their form and by their wording, confusing and inadequate to convey to litigants the substance of what it was intended should occur. Thirdly, he submits that there was no default in failing to file evidence; rather, the true default was in failing to serve it in time. Fourthly, he submits that an adequate explanation was proffered to the Court, in circumstances where the Court needs to be particularly cognisant of litigants in person appearing for themselves in relatively small matters, who do not have a readily facility with the English language. Next, it is submitted that the proposed evidence upon which the appellant wished to rely was not considered by the Magistrate in terms of its relevance to the proceedings or in terms of its possible substantive effect on the proceedings, in circumstances where, so it seems, the Magistrate had informed herself of the evidence in support of the respondent's case.
2. It is further submitted that there was no evidence of, or claim made from, the Bar Table by the respondent in the Local Court that he was in any way prejudiced by the late service of the further material. It is submitted that there was no consideration given by the Magistrate to the question of whether the proceedings would be interrupted or adjourned if the evidence was permitted to be adduced in circumstances where no prejudice was asserted, nor any enquiry made about prejudice.
3. Finally, it is submitted that the Magistrate gave no consideration at all to the dictates of justice as required by s 58 of the Civil Procedure Act 2005.
4. The appellant submits that each of these errors, either of itself or in combination, constituted errors of law of a substantive kind sufficient to vitiate the judgment of the Local Court, and to lead to the appeal being upheld.

Respondent's Submissions on the Appeal

1. The respondent submitted that in the particular circumstances of this case, there could be no doubt at all that the appellant, as defendant in the Local Court, was clearly informed as to his obligations to provide evidence to defend the proceedings. He points to the fact that the Standard Directions were signed by the appellant, who had an interpreter present on that day, and that the appellant had simply failed, or else chosen not to, comply with those directions. The respondent submits that there is no room for misunderstanding about the obligations imposed on the appellant by those Standard Directions and that, as I have said, there was simply no compliance with them.
2. The respondent submits that although the appellant informed the Court that he did not understand the directions, the Court would not accept such an explanation. Further, the respondent submits that as a matter of substance his case was well-proved by the evidence which he filed in the proceedings, and that none of the evidence which the appellant intended to rely upon could have affected the outcome in any way. Accordingly, the respondent submits that no error of law has been demonstrated and that the judgment which was given was both procedurally fair and in substance correct.

Discernment

1. It is necessary to consider these competing submissions and come to a resolution. I wish to say that in the remarks which follow, I should not be taken to be critical of the individual Magistrate involved in this decision. The work load in the civil jurisdiction of the Local Court is notoriously heavy. The Standard Directions have obviously been formulated in an attempt to give effect to the overriding purpose of civil litigation as described in s 56(2) of the Civil Procedure Act.
2. However, it is necessary to consider for a moment what it is that the Civil Procedure Act calls for. As I have said, s 56 provides the overriding purpose to which a Court must seek to give effect, namely, the facilitation of the just, quick and cheap resolution of the real issues in the proceedings. Each of those words is important. The Court must act in a way which is just, which is quick, and which is cheap. Clearly, as required by s 56, a party to civil proceedings is under a duty to assist the Court to further that overriding purpose.
3. Importantly, s 57 and s 58 of the Civil Procedure Act provide additional obligations on the Court when it acts to further the overriding purpose. Section 57 provides that in managing proceedings in a Court, a Court is to have regard to the following objects: 1. the just determination of the proceedings; 2. the efficient disposal of the business of the Court; 3. the efficient use of available judicial and administrative resources; and 4. the timely disposal of the proceedings and all other proceedings of the court at a cost affordable by the respective parties.
4. Section 58 provides that, in deciding to make orders or directions, and in the management of the proceedings and the terms on which orders or directions are to be made, the Court "must seek to act in accordance with dictates of justice."
5. The terms of s 58(2) are important. It provides: "For the purpose of determining what are the dictates of justice in a particular case the Court: a) must have regard to the provisions of s 56 and 57; and b) may have regard to the following matters to the extent to which it considers them relevant: (i) The degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) The degree of expedition with which respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, ... (vi) The degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) Such other matters that the Court considers relevant in the circumstances of the case."
6. Clearly, the Court is also obliged to have regard to the general principles established by decided cases with respect to case management. The High Court of Australia in Aon Risk Services v Australian National University [2009] HCA 27; [2009] 239 CLR 175 has addressed those underlying principles. Those principles require a Court considering any interlocutory application, including an application for an amendment of a document or an adjournment of proceedings, to pay careful regard to all relevant matters, including the legislation under which the application is made and by which the Court is bound, any explanation which is proffered by one party or the other for the relevant default or delay, and any prejudice which a party may experience as a consequence of the application being successful. Then, the Court must undertake an evaluative process whereby it reaches a conclusion which, in all of the circumstances, best accords with the interests of justice.
7. In my view, the learned Magistrate erred in the exercise of her discretion to refuse the appellant's application to rely on evidence merely because it had not been filed or served, and erred in the exercise of her discretion in failing to allow the appellant further time to serve that evidence, produce it to the Court, and rely upon it.
8. I have come to that conclusion because I am well-satisfied that, firstly, the appellant offered an entirely reasonable explanation for his failure to serve the evidence. That is, that he found the directions confusing. He did not appreciate with any clarity that he was obliged to provide the material to the other side before the review date, and certainly did not appreciate that he was obliged to file it before the hearing date.
9. Secondly, her Honour failed to satisfy herself as to whether the refusal to accept that evidence would produce injustice to any degree at all, including substantive injustice. Had she looked at the material which has been put before this Court, she would readily have come to the conclusion that the material permitted a substantive contest on the matters in issue between the parties, and that it demonstrated that there were contested issues to be determined in the proceedings before her.
10. Of particular importance was that the Magistrate failed to inquire, and the respondent failed to inform her, about the existence of any prejudice in the event that the evidence was to be relied upon. As far as I can see, the material which the appellant sought to rely upon went to facts surrounding the events the subject of the claim. There is no reason to think that the respondent in the Local Court could not have adequately dealt with the new material during his evidence in the course of proceedings. There is no reason to see why the proceedings could not have proceeded to a full and complete hearing on 12 May 2016, with both parties having the opportunity to put all of their evidence before the Court. Alternatively, if the respondent could not do so, then the Magistrate needed to, but did not, consider what adjournment was necessary, what the additional costs occasioned by that adjournment would be and what other prejudice existed.
11. This is particularly important in circumstances where the standard directions did not provide, pursuant to r 31.4 of the Uniform Civil Procedure Rules ("UCPR"), that statements were to stand as evidence-in-chief of the parties and witnesses in the proceedings. Moreover, no direction was given that proceedings would proceed either by way of written evidence or by written statement. In other words, in the absence of specific directions, the default method of proceeding for a hearing in the Local Court is by the calling of oral evidence: see UCPR 31.1(2). No consideration seems to have been given to this.
12. Most importantly, the learned Magistrate's decision fails to reveal that she gave any consideration at all to that which she was statutorily obliged to, namely, the requirements of the dictates of justice in the particular circumstances of the case.
13. In all of these circumstances there has been a manifest error of law. It has fundamentally affected the decision which the Magistrate reached. This Court is left with no alternative but to set that decision aside.
14. I make the following orders: 1. Order that this appeal from the decision of the Local Court dated 12 May 2016 be allowed. 2. Order that the judgment of the Local Court entered in favour of Mr Victor Galachov in the amount of $21,895.40 and the order for costs made in his favour, be set aside. 3. Order that the proceedings be remitted to the Local Court for further management and hearing.
15. I make the following orders about costs: 1. Order that the appellant pay the respondent's costs of these proceedings. 2. Order that the enforcement of the costs order be stayed until the conclusion of the proceedings in the Local Court, or until further order of this Court. 3. Order that, pursuant to s 6(1) of the Suitors Fund Act 1951, the appellant, Mr Victor Galachov, be entitled to an indemnity certificate in respect of these proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 April 2018