Ucar v Nylex Industrial Products Pty Ltd [2007] VSCA 181

Court of Appeal (Vic)|2007-09-27|Before: WARREN CJ, CHERNOV and REDLICH JJA

ACCIDENT COMPENSATION - Whether denial of natural justice - Observation by trial judge of appellant's movements in court while behind counsel - Non-disclosure of observations to counsel - Trial judge's reliance on in court observations - Observations material to disposition -Admissibility of affidavit as to course that would have been taken if afforded opportunity to address - Consequence of denial of natural justice - When relief may be refused - Principle in Stead v Commonwealth Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 considered and applied - Decision set-aside and new trial ordered.

2 I would make some additional observations. For the substantial part of the trial judge's reasons, there could be no controversy. There was a thorough analysis of the relevant medical reports and the assessment of them. Towards the end of the judgment, his Honour embarked upon a description of his observations of the appellant in Court. Thus, it was argued by Mr Forrest for the respondent, by the time his Honour made his remarks as to the conduct of the appellant in Court, the "dye was cast" because the judge had determined adversely to the appellant on the basis of the medical reports and some video film. For the reason that the judge had already determined the matter, the remarks as to the appellant's conduct did not relate to the reasoning of the decision it was argued. Hence, it was submitted we should not speculate beyond that reasoning.

3 However, close scrutiny of the judgment does not lead to a dichotomy between the reasoning up to the controversial paragraph in the judgment and the paragraph itself, thereby treating the paragraph as gratuitous or irrelevant to the reasoning. I find such analysis artificial. Furthermore, as explained by Redlich JA with respect to the principle in Stead's case,[1] the respondent's argument does not meet the entitlement articulated in that authority of a fair trial. Here the trial judge observed the appellant in Court whilst not giving evidence and, importantly, in all likelihood beyond the sight of his counsel. The judge reached a view that cannot be disentangled from the reasoning concerning the medical evidence and the video. Both Chernov and Redlich JJA have carefully considered the authorities. I need say no more, save to observe that there is a consistent approach across intermediate appellate courts that leads me to conclude that the decision below was problematic. This Court should follow that approach in the interests of comity across the common**

4 Finally, the appellant sought leave to rely upon an affidavit to explain the matters observed by the trial judge. In the circumstances of this appeal I would not regard the affidavit as necessary to establish the appellant's submission. For that reason I would not consider it.

5 The appellant, Mehmet Ucar, appeals against the decision of a judge of the County Court made on 26 May 2006 whereby his Honour refused him leave, pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 ("the Act"), to bring common law proceedings for damages against the respondent, Nylex Industrial Products Pty Ltd, in relation to a lower back injury that he sustained on 31 August 2000 whilst in the respondent's employ. The appellant claimed that the injury was a serious injury as defined in paras (a) and (c) of the definition of "serious injury" in s 134AB(37) of the Act with respect to both pain and suffering and loss of earning capacity. Although his Honour accepted that the injury in question was suffered in compensable circumstances, he concluded that he was not satisfied that, as a consequence of it, the appellant suffered a "serious injury" within the meaning of either of the above paragraphs of the definition.

6 In summary, the appellant contended before us that the decision is vitiated because his Honour failed to accord him procedural fairness, erred in his analysis of the medical evidence, applied the wrong test in determining aggravation and failed to deal with his claim that he suffered a serious injury in terms of loss of earning capacity. Before analysing the arguments relating to these contentions, it is necessary to set out briefly the relevant evidence that was before his Honour.

**7 So far as is relevant, the material before the court below consisted of the appellant's affidavit sworn 13 July 2004, numerous reports of medical practitioners who had examined the appellant during the relevant period and five video tapes showing him in various stages of movement. The only person to be cross-examined on the filed material was the appellant. His affidavit essentially disclosed that he was born in Turkey on 12 January 1967. Thus, he was 33 years old at the time of the incident and 39 years at the date of the hearing. After leaving school in Turkey, he studied to be an electrical technician and then undertook, for a short time, a course in accounting. For about three years he worked as a telecommunications technician. In 1989 he came to Australia and, almost immediately, obtained employment with the respondent. Initially he worked as a process worker but within a few years was promoted to leading hand. In that capacity he performed a number of tasks that included supervising other workers, setting up machines, supplying materials to machines and removing finished products from them. Part of the work was heavy, requiring him to lift and manoeuvre boxes of finished products and the like. On 31 August 2000, while lifting a three metre long table, the appellant experienced back pain and, although he kept working, the pain persisted and, on 5 September 2000, he consulted his general practitioner, Dr Le, in relation to it.

8 The appellant was unable to return to his pre-injury employment because of the injury, although he did go back to work and performed light duties on three occasions for short periods, in late 2000 and early 2001. He claimed that he was unable to work since then and, in July 2004, his employment with the respondent was terminated. As he said, he had been in the respondent's employ for 11 years and had a responsible and well paid job to which he has been unable to return due to his injury. The appellant further deposed that, prior to the injury to his lower back, his hobbies included buying and fixing motor cars and computers but, because of his back pain, he could no longer do that work. As his Honour noted, the appellant claimed that his level of pain fluctuated and when it was very bad he had to go to bed for a few days. The pain was made worse by bending or twisting or lifting and it could be easily aggravated. The appellant said that he was never free of pain and that he could stand or sit for 20 to 30 minutes, but beyond that, his pain increased. As a result of the pain, he said, he is continually depressed, becomes tired quickly and lacks motivation. In the result, his social and married life have been detrimentally affected. At the time of the accident the appellant was married but by the time of the hearing he and his wife had separated, although they continued to live at the same address.

9 His Honour noted that, while it was not in issue that the appellant suffered an organic injury to his lower back in compensable circumstances on 31 August 2000, the extent and duration of any resultant incapacity was in dispute. More particularly, said his Honour, "it is controversial whether, as a result of the injury to his lower back on 31 August 2000, the [appellant] has suffered ... a serious injury as defined in paragraph (a) of the definition of serious injury in s 134AB(37) of the Act, i.e. has the injury to [his] lower back resulted in a permanent serious impairment or loss of a body function?"**

**10 The early medical evidence showed that the appellant suffered from a disc protrusion which seemed to be attributable to the injury. Thus, the CT-scan of 20 October 2000 of the appellant's spine showed that he suffered an injury to a disc in his lower back, relevantly "a central and right paracentral disc protrusion at L3-4". The appellant was referred to Mr Pullar, a neurosurgeon who, for the first few years, was his treating surgeon. Mr Pullar referred him for an MRI scan and, according to his report of 3 January 2003 the MRI scan, dated 27 November 2000, showed degenerative changes in the L3-4 disc with a right paracentral disc herniation. His diagnosis was of mechanical back pain - "presumably related to the L3-4 disc injury". Mr Pullar considered that the appellant was not an appropriate candidate for surgery and referred him to Dr Clayton Thomas, a consultant in rehabilitation. He first examined the appellant on 16 January 2001 and diagnosed him as having a discogenic back pain - "I felt that the L3-4 disc level was likely to be implicated" - and prescribed Efexor. Similarly, Dr McKenzie, an orthopaedic specialist, who examined the appellant in February 2003 said in her subsequent report that the appellant was suffering from L5-S1 disc degeneration with "what appears to be an annular tear" and a right-sided L3-4 disc protrusion.

11 But it seems that other, and in particular, later, medical evidence did not support Dr Thomas as to whether the two scans were "similar". The later reports accepted that there was a resorption of the disc protrusion and that the appellant's complaints lacked a sound neurological basis. Thus, for example, Mr Brownbill, a neurosurgeon, who examined the appellant on 13 March 2001 and 1 May 2002, said in his report of 2 May 2002 that he found "no objective neurological abnormality" and that "marked non-organic reaction ... dominated the clinical picture". And Mr Jones, an orthopaedic surgeon, who examined the appellant in June 2003, reported that the appellant had "sustained an L3-4 disc prolapse, leading to back pain and, initially, some pain in the right thigh. The injury was sustained in August 2000, now three years ago and one would have expected a considerable level of improvement over what is now present. I suspect this man is developing a pain disorder with substantial magnification of disability. The diagnosis is considerably overstated back pain resulting from an injury to the L3-4 disc of the spine".

12 The judge also referred to the opinions of Dr Kenna, a consultant in musculoskeletal pain management, who had seen the appellant on seven occasions since January 2001. He was of the view that, over the period, psychological factors became the main driving force behind the appellant's claimed disability and, as his Honour noted, following his examination of the appellant on 27 April 2006, Dr Kenna wrote that although he "considered that initially [the appellant] may have sustained discogenic injury to his lower back ... now there is no clear evidence of any underlying work related focal pathology. X-rays confirmed degenerative changes, but no neuro-compressive indications or features. I therefore consider his complaint is one of chronic unspecified pain pertaining to the lumbar spine (which Mr de la Harpe considers as being of a degenerative nature)". Dr Kenna also said that, notwithstanding the appellant's complaints of pain, "there was no clear physical disability per se" and opined that the appellant initially incurred a disc prolapse, but further X-rays indicated "that the discal prolapse and neuro-compressive element have resolved". He agreed with Mr de la Harpe, an orthopaedic surgeon who became the appellant's treating surgeon, that "symptomatology is due to the degenerative change per se not due to any ongoing specific work related pathology" and concluded that he was "unable to confirm the ongoing presence of any disability pertaining to the lumbar spine which would preclude him from re-entering the workforce, at least on modified duties".

13 On 31 August 2001, the appellant consulted a new general practitioner, Dr O'Toole. He referred him to Mr de la Harpe who arranged for a further MRI scan of the appellant's lumbar spine that was carried out on 12 May 2004. In his report of 10 May 2006 Mr de la Harpe, who became the appellant's treating surgeon, said that he considered that the MRI scan of November 2000 was too old for him to formulate a treatment plan. Thus, he organised for the MRI scan of 12 May 2004 which, he reported, showed some degenerative change in L3-4 and L5-S1 but "no focal disc protrusion was seen". In his report of 24 February 2006, Mr de la Harpe said that he suspected that the appellant "has spiralled into a chronic pain syndrome secondary to his degenerative discs".

14 The appellant was also examined for the respondent by Associate Professor John Balla, a consultant neurologist. In his report of 5 June 2003 Dr Balla relevantly said that the history of the radiological findings was consistent with there being a disc protrusion in the appellant's mid-lumbar region. Later in his report he concluded that "whilst some of [the appellant's] symptoms are directly related to the accident as described, there is an associated psychological component and some non-organic findings as indicated". And in his report of 9 December 2004, Dr Balla said: "In a subjective manner, based on previous experience with similar cases, it is my opinion that spinal impairment may account for 25% of any permanent impairment and that psychosomatic factors for 75%". In his final report of 11 April 2006, he said that, on examination, although there were limitations in relation to the appellant's back movement and straight leg raising, there were "no other neurological abnormalities". He went on to say in respect of the second MRI scan that it showed degenerative change of the lumbo-sacral spine "but no significant disc protrusion. ... It is my opinion the diagnosis is aggravation of previously existing degenerative disease in the lumbo-sacral spine with particular impact from L3/4 and L4/5. I believe that this is significantly aggravated by associated depression and psychiatric problems."

15 His Honour also noted that the treating general practitioner, Dr O'Toole, had reported on 13 June 2006 that there had been little change in the appellant's complaints and that he had developed a depressive illness secondary to his chronic pain and that his prognosis was poor.**

**16 After comprehensively analysing the medical evidence, and in particular that which was "contemporaneous" with the date of the hearing, his Honour concluded that the prevailing medical opinion was that there was a significant psychological component in the appellant's ongoing complaint of pain and incapacity and that several doctors, including the two treating orthopaedic surgeons, considered that the injury involved an aggravation of previous degenerative changes in the appellant's spine. The learned judge recognised that s 134AB(38)(h) compelled the exclusion of the psychological consequences of the injury from the consideration of whether the injury falls within para (a) of the definition of "serious injury". But the onus was on the appellant, said his Honour, to "disentangle the evidence" such as to establish, for the purposes in para (a) of the definition, the extent to which the consequences to the appellant of the injury were in fact organic or physical, as distinct from psychological or psychiatric. His Honour said that, while he was satisfied that as a consequence of the injury the appellant suffered some form of physical impairment, on the whole of the evidence he was not able to determine "the extent of the physiological or organic consequences of the bodily impairment caused by the injury".

17 His Honour then went on to say that the appellant's difficulties were compounded by the manner in which he presented himself to the court and on the videotapes that were shown at the hearing. The judge referred to five videotapes of the appellant in various stages of movement that were tendered in evidence. Three of them were made in 2002 and the other two in 2006. His Honour said that he did not find them particularly helpful in evaluating the likely extent of the appellant's then incapacity, but noted one incident that was recorded on 13 March 2002. It showed the appellant bending over and into a wheelie bin which, his Honour said to counsel in the course of argument, displayed an "astonishing range of movement at a time when the [appellant] had sworn he was greatly incapacitated by his back injury". In relation to another video film of the appellant his Honour told counsel that he thought it showed that he walked quickly and without restriction in contrast to "the way [he] acted in this Court throughout the hearing". As I explain later, in his reasons his Honour referred adversely to the appellant's demeanour in court and considered that he attempted to deceive the court as to the extent of his incapacity.

18 The learned judge concluded that he was not able to determine, on the evidence, the extent of the physiological or organic consequences of any bodily impairment that was caused by the injury and concluded that the appellant "has not proved permanent impairment or loss of body function resulting from injury to his lower back which has had the pain and suffering and loss of earning capacity consequence when judged by comparison with other cases in the range of possible impairments and losses of a body function that could fairly be described as being more than significant or marked, and as being at least very considerable". His Honour reached a like conclusion in respect of the appellant's claim that his injury fell within para (c) of the definition of "serious injury". It is not necessary, however, to examine the judge's reasons as to this conclusion because the appeal is directed only to his Honour's decision in respect of the appellant's claim that his injury fell within para (a) of the definition of "serious injury".**

Failure to accord procedural fairness - grounds 15-20

19 The appellant's principal submission under cover of grounds 15 to 20 was that the impugned decision is vitiated and, thus, must be set aside because the judge below failed to accord him procedural fairness during the hearing of his application. More particularly, it was said that his Honour impermissibly took into account in reaching his impugned conclusion, to the appellant's prejudice, his movements in court when he was located behind his counsel, without providing him with the opportunity of dealing with the matter. It was said that, although during the hearing of the case the learned judge made it known to the parties that he considered that the video film of the appellant's movements of bending or reaching into the wheelie bin seemed to be inconsistent with his claimed limitations as to his physical movements arising from the injury, by way of contrast, he did not tell the appellant that he might take into account, adversely to him, his observations of his movements in the courtroom when he was out of sight of his counsel. What the judge relevantly said in his reasons about his observations of the applicant's movements was this:

"46. I had the advantage, which is of particular significance in relation to pain and suffering, of observing the plaintiff in Court for a protracted period of time. In my view, the plaintiff did himself a great disservice by the manner in which he presented himself. During the two days he was either giving evidence or present in Court, he displayed a degree of incapacity that was indicative of great pain when he was required to move. On the first day of the hearing, he was frequently grimacing and when required to do so, moved slowly and tentatively. However, on the second day of the hearing, he remained seated behind his counsel while final addresses were being made for a period of an hour and 20 minutes, with little or no change in his posture. This was in contrast to his evidence that he could only sit for a period of 20 to 30 minutes without experiencing great discomfort. When he did get up and go outside the Court, it seemed to be at the request of his solicitor. As he left the court, the plaintiff appeared to stagger and was required to reach out towards the walls to steady himself. I cannot reconcile this degree of incapacity with both his freedom of movement when walking on 10 May 2006 or with his re-entry into the Courtroom when he moved quite quickly to avoid being hit by the Court door which closed upon him. Finally, when the Court adjourned, the plaintiff responded to the request of the Tipstaff to stand, by standing quickly without any apparent restriction of movement, which was in marked contrast to his movements during the previous day and a half."

20 His Honour then proceeded to outline the basis of his conclusion to dismiss the application:

"47. The result is that in respect of the plaintiff's application to bring proceedings claiming damages for pain and suffering on the basis of paragraph (a) of the definition of 'serious injury', I am unable to determine to what extent this plaintiff's alleged incapacity is:

(a) due to a loss of function due to an organic injury to his lumbar spine;

(b) due to a psychological or psychiatric reaction to an organic injury to his lumbar spine;

(c) due to an attempt to consciously deceive the Court in respect of the extent of any pain and discomfort which he is experiencing;

(d) due to any pre-existing degenerative condition present in his spine prior to the incident on 31 August 2000.

I am satisfied by the evidence as a whole that the plaintiff has suffered a marked psychological overreaction to the original physical injury he suffered to his lumbar spine and, in addition, he has attempted to effect a deceit upon the Court by exaggerating and embellishing the physiological or organic consequences of any bodily impairment caused by that injury.
It therefore follows that I am not able to determine the extent of the physiological or organic consequences of any bodily impairment caused by the injury suffered by the plaintiff on 31 August 2000. I find that the plaintiff has not proved permanent impairment or loss of a body function resulting from injury to his low back on 31 August 2000, which has had the pain and suffering and loss of earning capacity consequence when judged by comparison with other cases in the range of possible impairments or losses of a body function that could fairly be described as being more than significant or marked, and as being at least very considerable. The plaintiff's application pursuant to paragraph (a) of the definition of 'serious injury' is refused."

**21 It was said for the appellant that these passages make it apparent that his Honour's impugned decision was based, at least in part, on his conclusion that the appellant was not a credible witness in relation to the state of his injury and that this, in turn, was founded on his Honour's observations of his behaviour in court. Counsel argued that by not disclosing that he might take such observations into account adversely to the appellant, his Honour denied him procedural fairness. As a result, it was said, his Honour's decision is vitiated.

22 It is uncontroversial that an ingredient of the court's duty to accord procedural fairness involves the giving of "a fair opportunity to those who are parties in the controversy to correct or contradict any relevant statement prejudicial to their view".[3] And as McHugh J said in Re Refugee Tribunal; Ex parte AALA:[4]**

"One of the fundamental rules of the fair hearing doctrine is that a decision-maker should not make an adverse finding relevant to a person's rights, interests or legitimate expectations unless the decision-maker has warned that person of the risk of that finding being made or unless the risk necessarily inheres in the issues to be decided. It is a corollary of the warning rule that a person who might be affected by the finding should also be given the opportunity to adduce evidence or make submissions rebutting the potential adverse findings."

**23 But whether the above requirement of natural justice has been breached is not always easy to determine in the context of a curial proceeding in respect of a judge's observation of the conduct of a party given that, generally, the court is not bound to draw attention to every single observation that is made of the party. Thus, for example, Kirby P said in Government Insurance Office of New South Wales v Bailey[5] that the above requirement does not "mean that a decision-maker is obliged to call attention to every single observation that is made". And it is not improper for the judge to rely on his or her observations of the manner in which the party enters and

leaves the witness box where such conduct takes place in sight of counsel.[6] Kirby P in Bailey also cited with approval the following statement of Jacobs J in Jobst v Inglis:[7]**

"... A judge cannot be required or expected to interrupt a trial every time a party gestures or grimaces from the body of the Court, which happens not infrequently; no doubt if the conduct is persisted in, it may be prudent to draw it to the attention of counsel, or even 'warn' the party concerned; but what is 'fair play and commonsense' in dealing with such a situation will vary from case to case ..."

24 His Honour went on to emphasise:[8]

"By conventional theory, the observations made by a trial judge of the appearance and demeanour of a witness giving evidence are not only available to be used in the determination of a dispute but amount to important ingredients of the decision-making process. They normally provide the primary decision-maker a distinct advance which controls, and even limits, the exercise by the appellate court of its statutory functions in an appeal by way of re-hearing: see Owners of Steamship Hontestroom v Owners of Steamship Sagaporack [1927] AC 37 at 47; Jones v Hyde [1989] HCA 20; (1989) 63 ALJR 349 at 351; [1989] HCA 20; 85 ALR 23 at 27; Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 at 178ff.

Justice is not truly blind. A decision-maker (whether judge or magistrate), sitting in a courtroom is not blinkered. The decision-maker observes the drama which is played out in the well of the courtroom. As Jacobs J remarked in Jobst parties and witnesses frequently sit in court and grimace, frown, laugh and otherwise display facial and body language which it is virtually impossible for the decision-maker to fail to see. Burt CJ said, on his retirement, that he had whiled away the boring parts of cases by counting the panels at the back of his courtroom. Judges without panels are usually confined, when attention strays from parties, witnesses or their representatives, to observing those seated before them. It is impossible, in the geographical layout of a courtroom to do much else. The appearance of a witness as he or she approaches the witness-box may properly be taken into account where agility and ease of movement are in contest. To require otherwise would be to require a division of the mind quite unrealistic in the case of a jury and equally artificial for judicial officers. In this modern age, the suggestion that a form of transmogrification of the witness occurs by administration of the oath (or taking the affirmation) so that body language and facial features or other elements of the demeanour can be taken into account thereafter but not a moment before, would involve a rigidity and artificiality which the law should reject. So long as the conventional theory reigns that observations of a party or other witness are an important and legitimate element in curial decision-making, it is appropriate to permit at least the observations to be taken into account which occur inside the courtroom. However this conclusion leaves the question of notification to the parties and their representatives where the observations have occurred, as here, outside the actual period of the trial and when the person being observed is at the back of the court behind the representatives of the parties who thus have no opportunity to observe the features in question and by interrogation, evidence or advocacy, to persuade the decision-maker to a different view about them than has been formed.

So far as the duty to alert the parties or their representatives of such matters is concerned, it involves, as Davidson J acknowledged in Hodge v Williams (at 492; 203), the drawing of 'a very fine line between what is proper and improper'. Or between what is essential and unnecessary. Inevitably, the point at which that line will be drawn depends upon the circumstances of the case. Matters relevant will include the opportunity which the parties have had to respond to the considerations in question; the significance of those considerations for the decision under challenge; and the apparent importance which the decision-maker attaches to the undisclosed material in reaching the decision. Courts have offered various formulae to describe the way in which the 'fine line' is to be drawn in a hard case."

25 Kirby P also referred,[9] with apparent approval, to the South Australian cases cited by Young J in his article 'Observation by Trial Judges Outside Court'.[10] These decisions show, as Kirby P has pointed out, that ordinarily "fairness and commonsense" are the touchstone in the determination of whether the judge's observations should have been disclosed to the party in question. Thus, in Minagall v Ayres,[11] Hogarth J said:

"... It is, of course, proper and usual for the court to take note of the demeanour of a witness when in the witness box giving evidence. This is one of the most common and valuable means available to the court for arriving at the truth of a matter. It is entirely different, however, for a court to take into account the 'actions, mannerisms and idiosyncrasies' of a party while he is sitting in the body of the court, that is to say, while he is out of range of vision of both his own and opposing counsel, when the conduct in question may be calculated to lead the court to a decision in his favour. Such conduct is analogous to a statement made by a party in his own favour out of court, evidence of which, in general, would not be admissible. No reference was made during the hearing of the conduct observed by the Special Magistrate, and of course counsel for the prosecution had no opportunity to investigate its genuineness."

An appeal to the Full Court of the Supreme Court of South Australia was dismissed. In their joint judgment, Napier CJ and Travers J sought to emphasise that the question whether there has been a vitiating failure to accord natural justice must depend on fairness and commonsense in the context of the particular case. Their Honours said:[12]

"But, while we agree with Hogarth J, we desire to guard ourselves against being understood as laying down any absolute rule upon the subject. It seems to us that it is a matter of what we should regard as 'fair play and common sense'. The condition upon which a judge is at liberty to take notice of what he has seen for himself is that the parties should know or be informed of what he has noticed, and have an opportunity of answering or dealing with it."

Similarly, in Stojanovski[13] Priestley JA, citing the judgments in Minagall v Ayers, accepted that "in general when a judge acted on observations of a witness out of the sight of counsel it would be wrong to draw any conclusions as a result of those observations without having given counsel an opportunity to take whatever course counsel wished in dealing with such observations" but noted the Full Court's reservation that, ultimately, there was no absolute rule and that it was a matter of fair play and commonsense.

26 That the general rule is flexible and is based on fairness and commonsense was also emphasised by Clarke JA in Government Insurance Office of NSW v Bailey[14] and by King CJ in Angaston & District Hospital v Thamm.[15] The learned Chief Justice in the latter case referred with approval to the above-mentioned passage in the judgment of Napier CJ and Travers J in Minagall v Ayres and continued:

"The rule, as appears from the passage cited, is not to be regarded as absolute in the sense that it must be applied rigidly to every observation which a judge might make of a party during the course of a trial outside the witness-box. Something will depend, no doubt, on the circumstances of the particular case and upon the significance of the particular observations. It is clear, however, that where the judge makes observations of the actions or demeanour of a party, which actions and demeanour are not observable by counsel, and makes use of those observations in a way which has a significant influence upon his decision of the case, he is required in justice, before making such use of those observations, to make those observations and the possibility of his using them in the course of his judgment known to counsel at a stage of the hearing at which counsel still has an opportunity of dealing with them in a proper and effective way."

**27 It is apparent, therefore, as I have said, that, where the judge makes an observation concerning the party's demeanour in court that is not observable by counsel in circumstances where the court might rely on it to the party's prejudice, the judge is required to disclose the fact of the observation as well as the possibility that reliance may be placed on it in the resolution of any issue that may affect that party's property, rights and legitimate expectations. This accords, I think, with the general rule that a party should be given the opportunity to respond to matters prejudicial to its interests that are known only to the court and which might be taken into account in the determination of issues that may affect the party's property, rights or legitimate expectations. And, as will be explained later, subject to qualifications, failure to disclose such matters will generally result in the decision being set aside.[16]

28 It seems to me that if his Honour's observations of the appellant in this case were limited to those made on the first day of the hearing, as I have described earlier, his failure to disclose such observations would not have amounted to a denial of procedural fairness. In his reference to those observations during discussions with counsel his Honour was encompassing the appellant's demeanour in the witness box and in the courtroom in circumstances where the demeanour was observable by the appellant's experienced counsel. In those circumstances, it could not be fairly said, I think, that the appellant was denied the opportunity to deal with that conduct. A like conclusion, in respect of similar circumstances, was reached in Stojanovski.[17]

29 But as para 48 of his Honour's reasons reproduced earlier makes apparent, in reaching the impugned conclusion his Honour took into account "the evidence as a whole" and that must, or at least might, have included his observations of the appellant's demeanour on the second day of the trial. It was during this period that his Honour observed four matters that he treated adversely to the appellant's credit without first disclosing to counsel his observations and his preliminary views as to this. The first was that the period during which the appellant remained seated appeared to his Honour to have been inconsistent with his claimed inability to sit for prolonged periods without experiencing pain or material discomfort. The second matter was the appellant leaving the courtroom immediately after the instructor spoke with him, the inference being that his Honour thought that the instructor told the applicant to leave the court because he had remained seated for an unduly long period. The third matter was the manner in which the appellant departed the courtroom, namely, by seeming to stagger and hold out his arms to steady himself by reaching out towards the walls, in contrast to his apparent freedom of movement, as shown on the video film of 10 May 2006, and his re-entry into the courtroom when, as his Honour said, he moved "quite quickly to avoid being hit by the Court door which closed upon him". And the fourth matter was the appellant's response to the direction of the tipstave, by standing "quickly without any apparent restriction of movement, which was in marked contrast to his movements during the previous day and a half".

30 Before dealing further with matters that arise from his Honour's observations, it is convenient to dispose of the appellant's application to us for leave to file an affidavit relating to the second of his Honour's abovementioned observations. We were told that the affidavit seeks to explain that the instructor's discussion with the appellant that was noted by his Honour was unrelated to any concern about his prolonged sitting without movement. In my view, the affidavit should not be received. The vice that was said to arise from this aspect of his Honour's observations lay in his failure to afford the appellant the opportunity of dealing with what seems to have been speculation as to the content of the discussion between the instructor and the appellant. In the circumstances, it seems to me, what was actually said during this discussion is irrelevant to this issue.

31 It was said for the respondent that the appellant's counsel was given a fair opportunity to deal with his Honour's concern that there appeared to be an inconsistency between the appellant's claimed consequences of the injury and his movements in court and as shown in the video film. More specifically, it was argued, his Honour's tentative view as to the appellant's credibility in that regard was made known to the parties before addresses by the judge pointing out the following. First, it was said, his Honour made it apparent that the appellant's movements, as shown on the video, were "quite surprising", in other words, arguably inconsistent with the effects of the injury for which he contended in court. Then his Honour told counsel that, from his observations of the appellant "in the witness box for several hours", he formed a preliminary view that there was a degree of exaggeration by him of his physical symptoms. His Honour said that he had "unparalleled opportunity to see him for a length of time in the surroundings of a court. Now, as to what extent that's conscious exaggeration or unconscious, I would like to think more about that". Notwithstanding these observations by the judge, it was said, there was no application to recall the appellant and counsel proceeded to make final submissions without doing so. Given those circumstances, it was said, the appellant's counsel was given a fair opportunity to deal with the appellant's demeanour in court.

32 Although what his Honour had told counsel in this respect was, as far as it went, fair and proper, it was limited to the applicant's movements on and prior to the first day of the hearing. In my view, these discussions with the judge would not have made counsel aware that his Honour might also take into account, adversely to the appellant, his demeanour in the courtroom on the second day of the hearing when he was behind his counsel. Given this prospect, the rule of procedural fairness, or, as Jacobs J said in Jobst, "fair play and commonsense", demanded that his Honour inform the appellant's counsel of those matters. His Honour's failure to do that meant, I think, that the appellant was not accorded the procedural fairness to which he was entitled.**

33 I now turn to the question whether this failure vitiates his Honour's decision. In this regard, I am in general agreement with the analysis of Redlich JA of the principle in Stead v State Government Insurance Commission[18] ("Stead") and the approach that is required. Since mere breach of natural justice does not necessarily invalidate the decision,[19] the answer to this question depends on whether it can be said that the breach had no bearing on the decision,[20] or that an order for a retrial would be futile in that, upon a retrial, the same order will inevitably result.[21] Thus, in Stead it was said:[22]

"Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference. ... It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial."

A little later in their reasons, their Honours said:[23]

"All that the appellant needed to show was that a denial of natural justice deprived him of the possibility of a successful outcome."

**34 It is apparent enough from his Honour's reasons, which I have reproduced, that his views of the appellant's demeanour in court formed a material basis for his conclusion that the appellant was not a credible witness as to the extent of his physical injury - he was a person who sought to deceive the court, said his Honour - and that this finding was, in turn, a material factor in the judge's conclusions that he could not separate out the psychiatric from the physiological consequences of the impairment[24] and that, in the circumstances, the appellant had failed to establish that he had sustained an organic injury by reason of the accident which met the requirements of s 134AB(38)(c) or (d) of the Act.

35 Given that this case was, in large part, one that focused on the credibility of the appellant, I think that it cannot be said that the denial to him of the opportunity to address his Honour's adverse considerations did not deprive him of the possibility of success. Similarly, it seems to me that on a retrial it cannot be said that the same result would inevitably follow if the appellant's credit were, for example, upheld. I am assuming for this purpose, and against the appellant, that the medical evidence, taken by itself, would leave equivocal the position whether the consequences of the injury to the appellant were physiologically or psychologically induced. But if the appellant was believed about the physical consequences to him of the injury, that may form a sufficient basis for a finding in his favour. Obviously, one cannot be certain of this, but I consider that these possibilities compel the conclusion that his Honour's decision must be set aside.

36 In the circumstances, it is not necessary to consider the appellant's other grounds of appeal that were argued before us.**

37 On the assumption that his Honour's decision is set aside, the question arises whether this Court should decide the matter for itself, or whether a retrial should be ordered. Section 134AD of the Act states that, on the hearing of an appeal from a decision made on an application under s 134AB(16)(b), which applies here, this Court is to decide for itself whether the injury is a serious injury within the meaning of the act. But as Mason CJ, Brennan and Dawson JJ said in Fleming v Hutchinson,[25] in determining whether an injury is "serious":

"... the Court must apply the test of 'seriousness' by evaluating the plaintiff's condition and such an evaluation does not depend on any legal principle. It depends on the opinion of a judge familiar with a range of conditions within which the instant condition occurs."

As it was acknowledged in Barwon Spinners, such an advantage is often critical in these applications and it is trite to say that this Court does not enjoy that benefit.[26] Moreover, in the present case it would not be possible for this Court to decide the matter for itself on papers given that so much depends on the evaluation of the appellant's evidence, and his credibility in particular. Put shortly, this is not a case where it can be said that this Court is in as good a position to determine the matter as a trial judge.[27] In the circumstances, I consider that the matter should be remitted for retrial. Such a conclusion does not, I think, disregard the above statutory directions. Rather, it acknowledges the limitations of this Court to decide a matter that is critical to the outcome of the case.

38 For the reasons I have given, I would order that the decision below be set aside and that the matter be remitted to the court below for retrial. Subject to hearing the parties, I would also order that the respondent pay the appellant's costs

of the appeal and that the costs of the trial and retrial be at the discretion of the judge hearing the retrial.

**39 The trial judge in his reasons for judgment referred to certain observations he had made of the appellant and his solicitor during the hearing. The judge had not previously mentioned those observations to counsel or indicated his intention to rely upon them. The appellant was given no opportunity to call evidence or make submissions concerning those observations.

40 The primary argument by the appellant was that this constituted a denial of procedural fairness which required the judgment to be set aside. The respondent contended that if there was a denial of natural justice, the appellant should be refused relief as the trial judge's assessment of the appellant's credibility did not affect his decision. It is necessary to determine whether the appellant had been afforded procedural fairness and whether there was no possibility of a different outcome had the appellant been afforded an opportunity to deal with the judge's observations. The admissibility of affidavit evidence filed on behalf of the appellant, was also in question which dealt with what he would have said or done at trial had he been afforded procedural fairness.

41 In his reasons for judgment his Honour, after discussing the nature of the application, summarised the appellant's evidence-in-chief as contained in his affidavit and his viva voce evidence. As the trial judge noted, several doctors, including the treating orthopaedic surgeons and doctors engaged to examine the appellant on the respondent's behalf, considered that the appellant suffered from an aggravation of a previous degenerative change in his spine. In the final report of one of the treating surgeons, the opinion was expressed as at February 2006 that the appellant had spiralled into a chronic pain syndrome secondary to his degenerative spinal condition. The trial judge also referred extensively to the reports of a medical practitioner who was a consultant in musculoskeletal pain management engaged by**

the respondent and who had examined the appellant on some five occasions between 2001 and 2006. The trend of these reports was that it was the doctor's opinion that there had been substantial resolution of the appellant's condition and that his current clinical presentation was a mixture of both physical and psychological factors, the physical being symptomatic of degenerative change which rendered the appellant fit for modified part-time duties. A second medical practitioner engaged by the respondent opined that the appellant suffered from an aggravation of pre-existing degenerative disease to the lumbosacral spine which was significantly aggravated by associated depression and psychiatric problems. His Honour then referred to Barwon Spinners[28] and the task of the plaintiff to disentangle the evidence of psychiatric or psychological injury from physiological or organic injury to determine whether the appellant had suffered a serious injury.[29] His Honour said that while the appellant may be suffering some degree of physical impairment as a result of the injury, he considered the appellant, on the evidence before him, to face "insurmountable problems" in separating the psychiatric and physiological injuries. His Honour then said that the plaintiff's difficulties were compounded by the manner in which he had presented himself to the court and the existence of some short video tapes of his activities. After referring to the content of the videos, his Honour went on to give the following reasons which give rise to the grounds of appeal under consideration:

"I had the advantage, which is of particular significance in relation to pain and suffering, of observing the plaintiff for a protracted period of time. In my view the plaintiff did himself great disservice by the manner in which he presented himself. During the two days he was either giving evidence or present in court, he displayed a degree of incapacity that was indicative of great pain when he was required to move. On the first day of the hearing, he was frequently grimacing and when required to do so, moved slowly and tentatively. However, on the second day of the hearing, he remained seated behind his counsel while final addresses were being made for a period of an hour and twenty minutes, with little or no change in his posture. This was in contrast to his evidence that he could only sit for a period of twenty to thirty minutes without experiencing great discomfort. When he did get up and go outside the court, it seemed to be at the request of his solicitor. As he left the court the plaintiff appeared to stagger and was required to reach out towards the walls to steady himself. I cannot reconcile this degree of incapacity with both his freedom of movement when walking on 10 May 2006 or with his re-entry into the courtroom when he moved quite quickly to avoid being hit by the court door which closed upon him. Finally, when the court adjourned, the plaintiff responded to the request of the tipstaff to stand, by standing quickly without any apparent restriction of movement, which was in marked contrast to his movements during the previous day and a half.

The result is that in respect of the plaintiff's application to bring proceedings claiming damages for pain and suffering on the basis of paragraph (a) of the definition of 'serious injury', I am unable to determine to what extent this plaintiff's alleged incapacity is (a) due to a loss of function due to an organic injury to his lumbar spine, (b) due to a psychological or psychiatric reaction to an organic injury to his lumbar spine, (c) due to an attempt to consciously deceive the court in respect of the extent of any pain and discomfort which he is experiencing; (d) due to any pre-existing degenerative condition in his spine prior to the incident on 31 August 2000.

I am satisfied by the evidence as a whole that the plaintiff has suffered a marked psychological overreaction to the original physical injury he suffered to his lumbar spine and in addition, he has attempted to effect a deceit upon the court by exaggerating and embellishing the psychological or organic consequences of any bodily impairment caused by that injury.

It therefore follows that I am not able to determine the extent of the physiological or organic consequences of any bodily impairment caused by the injury suffered by the plaintiff on 31 August 2000."

When must a judge bring to a party's attention their observations of a witness or party in court

**42 When an order is to be made which will deprive a person of some right or interest or legitimate expectation, the person is entitled to know the case sought to be made against them and to be given an opportunity of replying to it.[30] "Rights" and "interest" includes "preservation of reputation,"[31] hence a judicial determination involving serious adverse findings against a person will require that they be afforded an opportunity to address such an issue. The opportunity to be afforded the person must be sufficient to permit them to adduce evidence or make submissions rebutting the potential adverse finding[32] and to address matters which are not already obvious.[33]

43 The risk of an adverse finding will usually be present whenever there is a serious challenge to the credibility of a party or witness. Generally speaking, it will be unnecessary for the trial judge to advert to the possibility of such a finding because the risk will be apparent. Where the risk of an adverse finding being made does not necessarily inhere in the issues to be decided or where the facts or the inference which the judge contemplates drawing from the facts and which gives rise to such a risk is unknown to the party, the fundamental rule of fairness requires the decision-maker in some way to draw attention to the existence of that risk.

44 The circumstances in which such conduct amounts to a denial of procedural fairness has been considered by other intermediate courts of appeal. In Minagall v Ayres[34] a magistrate, in dismissing charges that the defendant had driven a motor car whilst under the influence of liquor, relied on the observations he made of the defendant in court during the hearing to conclude that the prosecution witnesses may have been honestly mistaken as to his conduct. On appeal Hogarth J said:**

"It is, of course, proper and usual for the court to take note of the demeanour of a witness when in the witness box giving evidence. This is one of the most common and valuable means available to the court for arriving at the truth of a matter. It is entirely different however, for a court to take into account the 'actions, mannerisms and idiosyncrasies' of a party while he is sitting in the body of the court, that is to say, while he is out of range of vision of both his own and opposing counsel, when the conduct in question may be calculated to lead the court to a decision in his favour. Such conduct is analogous to a statement made by a party in his own favour out of court, evidence of which, in general, would not be admissible. No reference was made during the hearing of the conduct observed by the special magistrate, and of course counsel for the prosecution had no opportunity to investigate its genuineness."[35]

45 In their joint judgment in Minagall, Napier CJ and Travis J said:

"While we agree with Hogarth J, we desire to guard ourselves against being understood as laying down any absolute rule upon the subject. It seems to us that it is a matter of what we should regard as 'fair play and commonsense'. The condition upon which a judge is at liberty to take notice of what he has seen for himself is that the party should know or be informed of what he has noticed and have an opportunity of answering or dealing with it ..."[36]

46 Jobst v Inglis[37] was a case similar to the present where the totality of the evidence included film of the plaintiff, observations of which the judge made of the plaintiff in the witness box and "her contrast demeanour and behaviour in the body of the court". The trial judge concluded that the plaintiff had exaggerated her injuries. Jacobs J, who dissented, referred to Minagall in these terms:

"The trial judge on his own initiative, obeyed that precept. He brought his observations to the attention of counsel for the plaintiff, expressly acknowledging the risk of drawing an unfair conclusion, and invited comment or explanation, an invitation which was accepted by counsel; and after discussion counsel said: 'It is perfectly true [sic] for your Honour to take all those things into account.' Having regard to the explanation offered by counsel it is in my opinion quite unrealistic to suggest that the plaintiff should have been recalled to explain her conduct. A judge cannot be required or expected to interrupt a trial every time a party gestures or grimaces from the body of the court, which happens not infrequently; no doubt if the conduct is persistent in, it may be prudent to draw it to the attention of the counsel, or even 'warn' the party concerned; but what is 'fair play and commonsense' in dealing with such a situation will vary from case to case. As I have already said, I can see no judicial impropriety in the present case."[38]

47 Each of the majority judgments of Matheson J and Johnston J drew attention to the time at which the trial judge had drawn his observations to counsel's attention.

"... in my opinion current concepts of natural justice required that he should have been told earlier, and at a time when he could have sought instructions, possibly over an adjournment and possibly applied to recall the appellant.[39]

"I respectfully agree with what was said by Napier CJ and Travis J in Minagall v Ayres that it is a matter of fair play and commonsense, that if any real significance is to be attached to what is observed, the party should be informed of what has been noticed."

**48 Johnston J concluded that as his Honour had used his observations in respect of what he plainly regarded as a very important finding, namely that the plaintiff had exaggerated her symptoms, the trial judge was bound to draw the attention of counsel to his observations at a time when it was open to the party to bring forward evidence explaining her conduct and considered his indication to counsel was too late.

49 The rule is not to be inflexibly applied to every observation which a judge makes of a party or a witness during the course of a trial outside the witness box. As King CJ stated in Angaston and District Hospital v Thamm, "[S]omething will depend, no doubt, on the circumstances of the particular case and upon the significance of the particular observations."[40] Courts are perhaps more flexible than they were at the time of the majority judgment in Jobst in permitting the calling of evidence at a very late stage in the trial and even in permitting a party to reopen its case.

50 The principle and the authorities which support it were considered by Kirby P and Clarke JA in Government Insurance Office of New South Wales v Bailey.[41] In that case Clarke JA, with whom Hope AJA agreed, found that as the trial judge was assessing damages for personal injuries in a case in which there was no conflict of evidence and no relevant issue of credit or fact, it was difficult to see that the observations of the plaintiff in court had any influence at all on the trial judge's assessment of damage.[42] They considered the applicable rule to be that stated in Minagall and Jobst as further clarified by King CJ in Angaston in the passage to which I have referred. Kirby P, who was in dissent, differed from the majority in his conclusion as to the trial judge's obligation, but his very helpful exposition of the law did not differ markedly from the view expressed by the majority. In Marelic v Comcare[43] Beazley J applied the principle expressed in Minagall and Bailey holding that the failure of the tribunal to advert to the observations it made of a party in court and the use to which it proposed to put those observations, until it referred to them in its reasons for judgment, had denied the appellant procedural fairness. [44]

51 These principles were applied by the New South Wales Court of Appeal in Stojanovski v Gheiti,[45] a case in which the trial judge had made observations of the plaintiff in the body of the Court but had not informed counsel for the plaintiff of those observations. The court did not regard the rule, as stated by King CJ in Angaston and adopted by Clarke JA in Bailey as having been infringed. In Kassem v Crossley[46] Mason P, with whom Heydon and Clarke JJA agreed, applying the principles stated in Minagall, Jobst and Angaston found that the trial judge had failed to alert the representatives of the plaintiff to the fact that she intended to rely upon her observations of the plaintiff in court and thereby failed to afford the plaintiff a reasonable opportunity to address the point.

52 A decision-maker sitting in the courtroom is not blind to the events which occur in the courtroom but when his or her observations are of matters which the party's representatives have no opportunity to observe, or where it may reasonably be assumed that the party's representatives will not appreciate the inferences which

52 the decision-maker intends to draw from observations that are made,[47] the party should be informed of the observations or the inferences which the decision-maker contemplates drawing so as to afford the party an opportunity to deal with such matters, whether by calling evidence or by making submissions.[48]

53 The trial judge's observation that the appellant had conducted himself in a manner inconsistent with his testimony by remaining seated behind his counsel for an hour and twenty minutes, together with the observation that the appellant did not get up and go outside until he was spoken to by his solicitor, were matters which his Honour was obliged to raise with counsel for the appellant. It is plain from the language and context of His Honour's remarks that his Honour drew the inference that the appellant only stood up and went outside and feigned discomfort in leaving because his solicitor had spoken to him. His Honour's failure to draw these observations to the attention of counsel deprived the appellant of the opportunity to either give evidence or make submissions in explanation of the events. These observations together with the others referred to in his Honour's reasons bore upon the trial judge's assessment of the appellant's credibility and whether he was suffering from the injury alleged. Natural justice required that the appellant be given a reasonable opportunity to address those matters which provided the foundation for the conclusions reached as to these matters. Moreover, the observations contributed to the grave conclusion which his Honour reached that there had been an attempt by the appellant to effect a deceit upon the court by his exaggeration and embellishment of his physical injuries.

54 Although counsel for the respondent in their outline of submission was inclined to suggest that the appellant's counsel had to some extent been alerted to the learned judge's perception of the appellant's presentation but had not availed himself of the opportunity to address the judge on the issue, that argument was rightly abandoned during the course of oral submissions. Counsel for the respondent conceded in oral submissions that principle compelled the conclusion that the appellant's counsel at trial had not been given sufficient notice of the observations which his Honour had made and upon which his Honour was proposing to rely.**

Where procedural unfairness has occurred, in what circumstance may relief against the decision be refused?

**55 The respondent's argument on appeal was, in substance, that such a departure from a fair trial as had occurred did not vitiate the judgment as the trial judge had reached an unimpeachable conclusion which would not have altered had the appellant been afforded procedural fairness. This response obscured the significance of non compliance with the requirements of procedural unfairness.

56 The English Court of Appeal in the oft cited decision of Jones v National Coal Board[49] expressed the importance of procedural fairness in these terms:**

"There is one thing to which everyone in this country is entitled, and that is a fair trial at which he can put his case properly before the judge ... no cause is lost until the judge has found it so; and he cannot find it without a fair trial, nor can we affirm it."

**57 Procedural fairness must be upheld for its own sake, as well as for its consequences because "the experience of the common law [is] that, out of fair and lawful procedures, fair and lawful outcomes will more commonly emerge".[50] The concern is with the fairness of the procedure adopted rather than the fairness of the outcome; with the decision-making process not the decision.[51] The true legal issue "is not only, whether the person adversely affected by a decision has had his or her legitimate expectations disappointed. That may be a consequence of the departure from the legal standard; but it is not the invalidating cause." [52]

58 The consequences of a denial to afford procedural fairness of the kind with which we are here concerned, was considered by Mason P in Seltsam Pty Limited v Ghaleb[53] who made the following observations which I gratefully adopt:**

"As to procedural fairness, this judicial obligation is relevantly concerned with affording a reasonable opportunity to present or meet a case (Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 611[40]). That opportunity is vital both to the reality and the appearance of justice. Just outcomes are grounded upon the court or tribunal addressing the issues presented, particularly where litigation proceeds according to the adversary principle.

Where an adjudicator hears evidence or receives argument from one side behind the back of another there will be want of procedural fairness without inquiring into the probative impact of that evidence or representation. The same goes for a refusal to entertain a relevant argument that one party wishes to put, is stopped from putting, and later turns out to have been rejected.

The reasons are twofold, tracking the twofold function of the doctrine as identified above. First, the appearance of fairness has been shattered in a material respect. As Lord Denning put it on behalf of the Judicial Committee of the Privy Council in Kanda v Government of Malaya [1962] UKPC 2; [1962] AC 322 at 337-8:

The court will not inquire whether the evidence or representations did work to his prejudice. Sufficient that they might do so. The court will not go into the likelihood of prejudice. The risk of it is enough. No one who has lost a case will believe he has been fairly treated if the other side has had access to the judge without his knowing.

Secondly, there is virtually no means of discovering the impact of the secret material upon the mind of the adjudicator without transgressing the very assumptions underlying the doctrines of procedural fairness and of judicial (or limited appellate) review. I agree with Professor D J Galligan who wrote ('Procedural Fairness' in Peter Birks ed, The Frontiers of Liability vol 1, 1994):

'How can the court know with any certainty that evidence and argument from a party would have made no difference? It simply cannot know in the sense of knowledge as justified belief. Facts, truth, insight, all emerge from argument and discourse, and the clearest case can easily give way to doubt.

Megarry V-C put the point well: "... the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change." [John v Rees [1970] Ch 354 at 402].

The difficulty is compounded when we take into account the special position of the courts in exercising judicial review; their task is to decide matters of legality and procedure, not to assess the merits. The court faces a dilemma: to judge that a procedure would have made no difference to the original decision, the court has to put itself in the place of the decision-maker; but the more it does that, the closer it comes to an assessment of the merits. This difficulty points to an approach which, in most cases, is the most sensible: since they cannot know with any certainty the effects of the procedural defect, the courts would be wise to order that the procedural requirements be upheld. This need not be inflexible, and there may be exceptions; but exceptions should need to pass a clear and compelling test, and rarely be allowed.'

These principles apply with equal force to appellate review limited to questions of law in relation to a trial that proceeded on a concession as to an important issue of fact which was ignored or departed from for the first time in the reasons for judgment. The law should not countenance a purely speculative argument that it would have made no difference had the departure been signalled earlier."[54]

59 A decision which contravenes the rules of natural justice, while not void ab initio, may be rendered void from the time of its making, if the decision is so treated by a court.[55] The granting of such relief is subject to the important qualification, stated in Stead v State Government Insurance Commission[56] that

"an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility."

60 The joint judgment recognises that where the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference. The court stated that where there had been a denial of natural justice relevant to a finding of fact, an appellate court should proceed with caution:

"It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial."[57]

61 The joint judgment further stated that if the Full Court was to be understood as saying no more than that a new trial would probably make no difference to the result, it had failed to apply the correct criterion and that all that the appellant needed to show:

"was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result."[58]

62 Subsequently in Kioa,[59] Kirby J explained the principle in Stead thus:

"Once the applicable breach is proved, the victim of the breach is ordinarily entitled to relief. It is only where an affirmative conclusion is reached, that compliance with the requirements of procedural fairness 'could have made no difference' (Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 at 145) to the result, that relief will be withheld. This court has emphasised that such an outcome will be a rarity. It will be 'no easy task' to convince a court to adopt it (Stead at 145). This especially be so where as here, 'the issue concerns the acceptance or rejection of the testimony of a witness at the trial' (Stead at 146)."

**63 Gleeson CJ's approach in Kioa was similar to that of Kirby J and the judgments of McHugh and Callinan JJ and Gaudron and Gummow JJ, with whom Hayne J agreed, do not appear to be materially different.[60] These observations in Kioa apply to the consequences of both breach of the common law rules of natural justice as well as to non compliance with mandated statutory procedures.

64 In Re Refugee Review Tribunal; Ex parte Aala[61] the High Court was concerned with the exercise of a statutory power which was conditioned by common law principles of procedural fairness. The High Court accepted the principle that had earlier been stated in Stead that relief for procedural unfairness should only be refused if the Court could say that a properly conducted hearing could not have yielded a different result. Gaudron and Gummow JJ said:**

"It is one thing to refuse relief on the ground of utility because, as Lord Wilberforce put it, '[t]he court does not act in vain'. For example, the application for an administrative determination may be one which, irrespective of any question of procedural fairness or individual merits, the decision-maker was bound by the governing statute to refuse. Or the prosecutor's complaint may be the refusal by the decision-maker of an opportunity to make submissions on a point of law which must clearly have been answered unfavourably to the prosecutor. Again, the decision under review may have no legal effect and no continuing legal consequences may flow from it. In such a situation, the reasoning in Ainsworth v Criminal Justice Commission, where the remedy refused was certiorari, indicates that prohibition will not lie.

However, the conditioning of a statutory power so as to require the provision of procedural fairness has, as its basis, a rationale which differs from that which generally underpins the doctrine of excess of power or jurisdiction. The concern is with observance of fair decision-making procedures rather than with the character of the decision which emerges from the observance of those procedures. Unless the limitation ordinarily implied on the statutory power is to be rewritten as denying jurisdictional error for 'trivial' breaches of the requirements of procedural fairness, the bearing of the breach upon the ultimate decision should not itself determine whether prohibition under s 75(v) should go. The issue always is whether or not there has been a breach of the obligation to accord procedural fairness and, if so, there will have been jurisdictional error for the purposes of s 75(v).

Cases said to turn upon 'trivial' breaches are often better understood on other grounds. In particular, it is trite that, where the obligation to afford procedural fairness exists, its precise or practical content is controlled by any relevant statutory provisions and, within the relevant legislative framework, this will vary according to the circumstances of the particular case. The point is developed in particular in the judgments of Deane J in Kioa v West and Haoucher v Minister for Immigration and Ethnic Affairs."[62]

65 In Gerlach v Clifton Bricks Pty Ltd[63] Kirby J and Callinan J explained the principle in these terms:

"But in Stead this Court showed itself resistant (as it had earlier been in Balenzuela) to the notion that because such an error might have been immaterial to the actual result, the outcome of the trial was unaffected and therefore that a new trial would be a futility. The Court in Stead concluded that for a party to secure an order for a new trial, that party, otherwise entitled by an error of law (natural justice), need only show the possibility of a different outcome."

66 The circumstances in which relief will be refused for the consequences of procedural error, in the context of judicial review, was considered in NAFF v MIMIA,[64] Kirby J stating:

"The merits arguments do not cure procedural error

It is not the function of judicial review to retry the merits or, as such, to re-assess the merits of the case and excuse an established departure from fair procedures because the merits seem strongly one way. If the departure from procedural fairness might have affected the outcome, the function of judicial review is to say so. Subject to the consideration of any residual discretion to deny relief, the courts will set aside the flawed decision. This is because, in the eye of the law, it is not a 'decision' as contemplated by law.

Every person, in respect of whom material decisions are made by a repository of public power conferred by the Parliament, is ordinarily entitled to have such power exercised in accordance with law. That includes, relevantly to this case, in accordance with the requirements of procedural fairness. The ultimate outcome of such insistence on fair procedures might eventually be the same. But where the issue is whether additional evidence and submissions might have affected the outcome of the decision-maker's consideration of the matter, it cannot normally be said with certainty that affording such an opportunity was futile.

That is why, in Re Refugee Review Tribunal; Ex parte Aala, in the context of judicial review, this Court affirmed the strong principle earlier stated in Stead v State Government Insurance Commission. In Stead, the test applied to deny relief for established procedural unfairness was whether the Court could say that a properly conducted hearing 'could not possibly have produced a different result'. A similar approach was adopted in Aala by all members of the Court."[65]

**67 Hayne J (applying the principle in Stead) concluded in CSR Ltd & Anor v Maddalena[66] that the breach of procedural fairness required the setting aside of the orders, it not having been submitted "that the making of those orders was otherwise inevitable."

68 Two further decisions of the High Court should be mentioned. In SAAP v Minister for Immigration and Multicultural & Indigenous Affairs[67] the Minister, relying upon Stead, argued that non compliance with a statutory regime of procedural fairness could not have made any difference to the outcome of the hearing.[68] McHugh and Hayne JJ, with whom Kirby J agreed, in rejecting this argument stated that where there has been a failure to observe fair decision making procedures, the bearing of the breach upon the ultimate decision should not itself determine whether relief should be granted.[69] The judgments of both McHugh and Hayne JJ refer to the passage I have quoted from the joint judgment of Gaudron and Gummow JJ in Aala, which makes plain that a breach of the statutory requirement is to be approached in substantially the same way as the breach of the common law principle of procedural fairness.

69 In Veal v Minister for Immigration[70] the High Court considered whether common law principles of procedural fairness required the Tribunal to inform the appellant of the contents of a letter which it had received and of which the appellant was unaware. The Tribunal had stated in its reasons that it had given no weight to the letter as it had not been able to test the claims made in it. The Court referred to the passage from the judgment of Brennan J in Kioa which I earlier set out and concluded that there was an obligation to reveal the substance of the letter to the appellant. The joint judgment states:**

"As has rightly been said, 'the necessity to disclose such material in order to accord procedural fairness is not based on answering a causal question as to whether the material did in fact play a part in influencing the decision.' It follows that asking whether, despite what was said in its reasons, the tribunal may have been subconsciously affected by the information distracts attention from the relevant inquiry. The relevant inquiry is: what procedures should have been followed? The relevant inquiry is neither what decision should the decision maker have made, nor what reasons did the decision maker give for the conclusion reached." (Emphasis added).

70 In Clark v Ryan[71] Habersberger AJA, with whom the Chief Justice and Ashley JA agreed, said that once a breach of procedural fairness is proved:

"A court should refuse relief only when it is confident that the breach could not have affected the outcome: Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; [2000] 204 CLR 82 at [103] per McHugh J; Muin [2002] HCA 30; (2002) 76 ALJR 966 at [140] per McHugh J and that such a situation will be a rarity: Aala at [130] per Kirby J."

His Honour then referred to the judgment of Gummow and Heydon JJ in Ruddock; Ex parte Applicant S154/2002 [72] in which it was said that -

"An appeal will succeed unless it is shown that a properly conducted trial could not possibly have produced a different result."

**71 The High Court has consistently stated that relief is not to be refused where the denial of natural justice deprived the applicant of the possibility of a successful outcome unless a new trial would inevitably have produced the same result.[73]

72 Putting to one side cases which turned upon the rigidity of statutory imperatives concerning procedural fairness and which may be distinguishable from those concerned with common law requirements of procedural fairness,[74] there has not always appeared to be consistency in the application of these principles at an intermediate appellate level. Some cases have upheld the impugned decision because there were alternative grounds on which the decision could not be impeached.[75] Where the applicant has failed at the hearing as a consequence of a point of law or discrete issue of fact unrelated to the procedural unfairness,[76] relief has sometimes been refused, because there was no possibility of a different outcome or because the same result was inevitable at a new hearing. In Giretti v Commissioner of Tax[77] there was an independent ground for the decision which the majority held was unaffected by procedural unfairness. Lindgren J, with whom Jenkinson J agreed, held that the applicant "was not deprived of the possibility of avoiding the making of a sequestration order." The majority acknowledged that Stead's case had been understood in subsequent Federal Court cases to have laid down a backward looking test, requiring the appellant to show that the denial of natural justice deprived him of the possibility of a successful outcome. Lindgren J considered that Stead permitted either a test that was "forward-looking" or "backward-looking" and that the application of the two tests would not necessarily yield the same result. His Honour considered the better view was that there was scope for the operation of both tests as alternative grounds "for denying relief either that there was or that there is no possibility of a different result." Merkel J, who dissented, recognised that there had been some ambivalence in the decisions since Stead as to the correct test to be applied. His Honour considered instances where courts have denied relief on the ground that the outcome would have been no different if a fair hearing had been conducted[78] as illustrations of where the rules of fairness had not been infringed or as arising from the court's discretion to refuse to grant relief where it was futile to do so.[79] His Honour did not consider the "backward-looking" test to be in accordance with the reasoning in Stead which required an appellate court "to find that a properly conducted trial could not possibly have produced a different result" in order to negate the possibility that the appellant was deprived of a successful outcome as a consequence of the denial of natural justice. Amongst the arguments advanced by Merkel J in favour of the "forward-looking" test was the notion, inherent in administrative or common law remedies of remitting a matter for rehearing where procedural fairness had been denied, that the rehearing may proceed quite differently and more advantageously to one of the parties than the original hearing.

73 Since Giretti a large number of Federal Court decisions have applied the "backward-looking" test that it will be sufficient for the appellant to demonstrate that the denial of natural justice denied him or her "the possibility of a successful outcome."[80] In Lu v Minister for Immigration & Multicultural & Indigenous Affairs[81] and subsequently in VAAD v Minister for Immigration & Multicultural & Indigenous Affairs[82] it was said that "the applicant will succeed unless the denial of procedural fairness could have had no bearing on the decision. ... If it could not, the applicant will be refused relief".

74 The risk arising from a narrow application of the "backward-looking" test was pointed out by Bingham LJ in R v The Chief Constable of Thames Valley Police; Ex parte Cotton[83] and in his discussion in an extra-curial paper[84] and was again referred to by Merkel J in his dissenting judgment in VAF v MIMIA,[85] which echoed the observations from a number of passages from the High Court judgments to which I have referred.[86] His Honour said:**

"Information that has been stated to be part of the reason for the decision might appear to be only a minor part of the reasoning, but had it been put to the applicant, that information might have elicited a response which may have had an impact on the tribunal's decision. Thus, there is an inherent problem in assessing the importance of the information in question without having the response the applicant would have given to it had he or she been apprised of the information and of its significance."[87]

**75 In my view, the principle laid down in Stead contemplates two circumstances in which relief may be refused. It will be refused if upon analysis of the basis for the decision there is an incontrovertible fact or point of law which provides a discrete basis for the decision which cannot be affected by the procedural unfairness.[88] It will then be concluded that the applicant could not possibly have obtained a different outcome. Second, even where the subject of the procedural unfairness touched upon an issue in dispute that was material to the decision, relief may be refused if the respondent can demonstrate that it would be futile to hold a further trial because the result would inevitably be the same.

76 Two decisions of the NSW Court of Appeal illustrate the difficulty of the inquiry. In the first, Barwick v Council of the Law Society of New South Wales,[89] the court found that the Appeal Panel had not applied the correct test as laid down in Stead, the Panel proceeding on the erroneous footing that, before granting relief, it had to be satisfied that the errors made by the Tribunal were of sufficient significance to have affected the result. Nevertheless the Court held that there were incontrovertible facts that led to the conclusion that a properly conducted hearing before the Tribunal (or the Appeal Panel) could not possibly have produced a different result to the original finding.[90] In the second, Stanoevski v The Council of the Law Society of New South Wales,[91] Mason P, while satisfied that there was ample material which could still justify the impugned decision even if the material the subject of the procedural unfairness was factored out, found that the failure to observe the duty of procedural fairness vitiated the strike off order.

77 A fact is not to be regarded as incontrovertible where it is in dispute and its resolution depends upon an assessment of a party's credibility. As Nettle J (as he then was) observed in Collection House Limited v Taylor:**

"It will never be easy for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could not have borne on the outcome of an issue of fact. The difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness".[92]

78 Where the procedural unfairness relates to such an issue, it cannot be said that the party had no possibility of a different outcome, partly because it is not possible to discount subconscious effects upon the decision maker. Consequently an appellate court does not attempt to assess the extent to which the error of the decision maker affected his or her conclusion. The reason was explained in part by Brennan J in the well known passage from Kioa where, after observing that a litigant should be given an opportunity to respond to "adverse information which is credible, relevant and significant to the decision to be made" his Honour said:

"It is not sufficient for the repository of the power to endeavour to shut information of that kind out of his mind and to reach a decision without reference to it. Information of that kind creates a real risk of prejudice, albeit subconscious, and it is unfair to deny a person whose interests are likely to be affected by the decision an opportunity to deal with the information. He will be neither consoled nor assured to be told that the prejudicial information was left out of account."[93]

**79 The degree of causal connection between the alleged breach and the reasons for decision is not a relevant inquiry.[94] The first way in which relief may be refused calls for an assessment of whether the matter to which the procedural fairness relates could possibly have affected the decision. It will have done so where the procedural unfairness went to an issue that was in controversy that was material to the decision. If such a connection is identified, it is immaterial what, if any, actual effect the procedural unfairness had upon the decision maker. Cases that have analysed the material before the decision maker and asked whether the decision may have changed had the appellant been afforded a proper opportunity to respond are difficult to reconcile with the principle as stated in Stead and as applied in Kioa, Aala, SAAP and Veal.

80 Once the applicant establishes "the possibility" of a different outcome had there not been a denial of natural justice, relief will only then be refused if it would be futile to grant a new hearing as the same outcome would be inevitable. To establish this the respondent may rely upon arguments involving incontrovertible points of law or fact that were not raised at the initial hearing (or in some circumstances on new facts) which may support the conclusion that the outcome of a further hearing would inevitably be the same.**

When is evidence required as to what a party would have said or done if afforded procedural fairness?

**81 On the appeal counsel for the appellant was permitted to file an affidavit on the solicitor's behalf, subject to our determination as to its admissibility. The affidavit contained an explanation for the events observed by the trial judge which, it was deposed would have been placed before the trial judge had there been an opportunity to do so.

82 An examination of current authorities[95] led Ipp JA in Seltsam to conclude that "it will not ordinarily be necessary to lead evidence to prove that the denial of procedural fairness had the potential to affect the outcome" as in most cases the facts will speak for themselves as showing that a properly conducted trial might possibly have produced a different result.[96] Federal Court decisions also point to there generally being no obligation upon an applicant who complains of procedural unfairness to positively establish that, absent the unfair process, they would have taken a different course and that the process has resulted in practical injustice.[97] As Weinberg J stated in Applicant M1015/2003 v MIMIA:**

"Where an applicant does not given evidence of what he or she would have done had they been told that the tribunal intended to rely upon particular information adverse to their case, there is no general or inflexible rule that procedural unfairness cannot be demonstrated. That is not to say that evidence of this type is relevant, or even that the absence of such evidence may not be decisive in some cases. It is simply to say that there is no prerequisite that such evidence be given in all cases in which procedural fairness is alleged."

**83 Subsequently in Naff the High Court said that it will usually be open to a person to tender evidence of what would have been done if they had been afforded procedural fairness.[98] Both the joint judgment and the judgment of Kirby J in Naff recognised that it may only be necessary in some cases for such a party to adduce evidence as to what they would have done if the procedural defect had not occurred.[99]

84 The affidavit sought to provide an explanation for the observations made by the trial judge. Those observations were relevant to the controversial issues of the appellant's credit and the nature and extent of his injuries. The affidavit was admissible. But it is unnecessary to consider the substance of the explanation advanced in the affidavit. As the procedural fairness went to the material issue of the appellant's credibility this case did not call for the appellant to demonstrate what explanation might have been advanced against the drawing of an adverse inference by the trial judge, had a proper opportunity been afforded to the appellant.**

Where procedural fairness bears upon facts in issue or credibility of witnesses

**85 As there was procedural unfairness, the respondent needed to demonstrate that the view formed by the trial judge as to the applicant's credibility was incapable of having contributed to the trial judge's ultimate conclusions, or that a new trial would "inevitably result in the making of the same order as that made by the primary judge at the first trial."

86 Where procedural unfairness bears upon the acceptance or rejection of the testimony of a witness at the trial, an appellate court, not being able to evaluate the evidence of the witness in the way in which the trial judge can, will generally be disabled from reaching any sound conclusion that a properly conducted trial could not possibly have produced a different result.[100] An assessment of credibility by the tribunal of fact is not necessarily linear.[101] Moreover, because decision makers frequently express their reasons sequentially does not mean that they have decided factual issues in isolation from each other.[102] Ordinarily they will have considered all of the evidence before reaching conclusions upon factual issues affected by such evidence. Gleeson CJ in Aala explained why the application of the principle in Stead will rarely result in a refusal of relief where the denial of natural justice affected questions of credit:**

"It is possible that, even if the prosecutor had been given an opportunity to deal with the point, the Tribunal's ultimate conclusion would have been the same. But no one can be sure of that. Decisions as to credibility are often based upon matters of impression, and an unfavourable view taken upon an otherwise minor issue may be decisive."[103]

"...[D]ecision-making is a complex mental process. Disbelief of a litigant or witness on one point might carry over to affect the decision-maker's disbelief of the same person on other points. Contrary-wise establishing that an initial disbelief of a person's credibility on one matter was erroneous might convince a decision-maker of the need to revisit other conclusions and to look at the person's entire evidence in a new light."[104]

88 In Goldsmith v Sandilands,[105] Kirby J said:

"Specifically in the context of decisions affecting the reception of evidence relevant to the evaluation of the credibility of a witness, a rule of vigilance has been adopted by appellate courts. The foundation for this rule is an appreciation of the fact that decisions about credibility are often complex ones in which the decision-maker must take into account a variety of evidentiary indicators pointing respectively to acceptance or rejection of the contested testimony. Until the evidence at the trial is concluded and the last word spoken in argument, our legal system requires the decision-maker to keep an open mind about the significance of particular evidence as it may cast light on the truthfulness or falsehood of the assertions of a party or other witness. In the well-known words of Denning LJ, '[n]o cause is lost until the judge has found it so; and he cannot find it without a fair trial'.

However, even in such a matter the common law retains its sense of proportion. It is not every departure from procedural fairness concerning the reception or rejection of evidence relevant to the credibility of a party or witness that will entitle the aggrieved party to a new trial. In Stead v State Government Insurance Commission, this Court pointed to the cases where established error in this regard would not warrant an order for a retrial. However, it also emphasised that it 'is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference' where the issue is whether the testimony of a particular witness would be accepted.

In Stead, this Court set a very high standard where credibility was the issue. When evidence relevant to that point has been erroneously excluded the only basis for refusing a retrial is where the appellate court can affirmatively conclude that the error 'could have had no bearing on the outcome of the trial of an issue of fact'. The reason for this stringent rule is that the law accepts that credibility assessment can sometimes be crucial to the outcome of a case - as it was in this case. And the final conclusion on whether or not a witness is to be believed may depend upon evaluating all of the relevant testimony viewed in relation to all of the evidence in the case."[106]

89 In Kassem v Crossley[107] the Court was unable to conclude that the result would inevitably have been the same had there not been a denial of procedural fairness.[108] Although the trial judge said that she did not take observations of a party in court into account in assessing the appellant's medical condition, the Court noted that the appellant's credibility was important to several issues in the proceedings. The fact that the trial judge had stated that she could not ignore the discrepancy between the appellant's conduct in and outside the witness box -

"... means that the observation must be taken to have had an impact upon the overall assessment. In her Honour's words it gave her 'food for thought' as to the appellant's credit. Unlike a genus of ruminant like the cow, her Honour did not have separate stomachs for digesting the relevant material; and the judgment does not clearly place to one side what was obviously an adverse perception derived from her Honour's observation of the appellant's behaviour."[109]

90 Peakhurst Inn Pty Ltd v Fox[110] was another case in which, like the present, the respondent conceded that the trial judge had denied procedural fairness to the appellant but submitted that it was of no consequence as no substantial prejudice or miscarriage of justice had occurred. Tobias JA, with whom Sheller JA and Pearlman AJA agreed, said:

"It would be pure speculation to assert that his Honour would have come to the same factual conclusion even if he had ignored the ... credit issue. I would not be prepared to find that a properly conducted trial could not possibly have produced a different result ..."

**91 In Inghams Enterprises Pty Ltd v Timania Pty Ltd[111] the Full Court considered that the significance of the observations by the trial judge of a witness, giving what appeared to be signals from the body of the court to another witness in the witness box, led to the conclusion that it could not be said that the outcome of the proceedings could not have been affected had the witness been given an opportunity to explain the incident and/or had counsel been able to make appropriate submissions. The rejection of the witnesses' evidence was a significant step in reaching the ultimate decision in that case.[112]

92 As is generally the case with applications of this nature, both parties relied on the contents of the tendered medical reports, the appellant being the only witness who gave viva voce evidence. It was not in issue that the appellant had suffered an organic injury to his lower back in August 2000, the question being whether at the time of trial the appellant's low back injury had resulted in "a permanent serious impairment or loss of a body function".[113] The respondent in its outline of submission recognised that the principal reasons why the judge determined that the appellant had not made good the statutory test was the failure of the appellant to establish to what extent his alleged incapacity was due to a psychological or psychiatric reaction to an organic injury to the appellant's lumbar spine, and the judge's finding that there had been an attempt by the appellant consciously to deceive the court "by exaggerating and embellishing" the effects of any physical injury.

93 The respondent contended that there was no causal connection between the alleged breach and the outcome of the decision. We were in substance invited to assess the extent to which the error of the judge could have affected his conclusion. It was suggested that the trial judge had been able to reach a conclusion solely upon the medical evidence and without regard to the appellant's credibility, so that one could put aside the judge's in court 'observations' of the appellant. Thus it was said that based upon his Honour's assessment of the medical evidence and the videos taken of the appellant, the conclusions reached by the trial judge were unassailable, his Honour's assessment of the appellant's credibility making no possible difference to the outcome of the case. This argument must for the following reasons be rejected as inherently unsound.

94 The subject of the procedural unfairness directly related to the primary issue that was in controversy; what injuries was the appellant suffering from at the time of trial. As the appellant had testified as to that question, the procedural unfairness was material because it affected the judge's view of his credibility and the injuries from which he alleged he was suffering.

95 The medical reports tendered by the parties were obviously based in part upon the histories provided to the medical practitioners by the appellant. Brooking JA's statement in Mobilio v Balliotis[114] as to the relevance of the claimant's credibility continues to be of importance as the judgment in Barwon Spinners Pty Ltd v Podolak[115] indicates. His Honour said that:[116]**

"where, as is often the case when personal injuries are in question, the opinions of medical experts are to a considerable extent dependent upon the accuracy of the claimant as historian, the advantage which the primary judge has in assessing the claimant's credibility assumes an importance that is, so to speak, both direct and indirect, when the judge comes to evaluate the lay and expert evidence that has been given."

96 In considering the medical reports and making findings of fact, his Honour did not attempt to place to one side his adverse perception about the appellant's credibility or separate his process of reasoning in relation to the appellant's credibility from his ultimate conclusions. Even if it were permissible to go beyond a determination of whether the procedural unfairness bore upon issues which were in controversy, to examine the extent to which the trial judge's observations and conclusions about the appellant's credibility affected the outcome, it would be impossible for this court to be satisfied that his Honour severed his conclusions about the appellant's credibility from his analysis of the video films or the medical opinions.[117] The submissions of counsel at the trial show how the appellant's credibility was inextricably linked to all of the primary issues. Counsel for the respondent submitted in closing address, that the question of whether the appellant suffered from an organic or psychiatric component came down to whether he was "a witness of truth," the respondent repeatedly submitting that the appellant "should not be believed."[118]

**97 For the reasons I have set out, fairness required that the appellant should have been given an opportunity to deal with the material which could have been and was used in an adverse way.[119] It was open to the judge to act upon the appellant's evidence regardless of the weight of any medical opinion to the contrary. It cannot be asserted that findings of credit played no part in the resolution of the factual issue which involved the rejection of the appellant's testimony. The procedural unfairness bore upon issues which were in controversy and which were decided adversely to the appellant. That is all that needs to be shown to satisfy the test from Stead. As in most cases, it involves pure speculation to assert either that the trial judge would have come to the same factual conclusion had the credit issue been ignored[120] - as the respondent here argued - or that there was no possibility of a different outcome if the appellant had been afforded the opportunity the law required to deal with the issue in controversy. And it is in any event not appropriate to inquire as the extent to which the matter had or might have had some subconscious effect on the Tribunal in this case.

98 The inference which the trial judge drew from his observations of the appellant in court led to the conclusion that the appellant had attempted to deceive the court. That conclusion was stated to be one of the reasons why his Honour was unable to determine the extent of the appellant's physiological injury. One cannot exclude the possibility that the assessment of the appellant's credibility which in part rested upon the trial judge's observations, and which His Honour described as being of "particular significance", would have been different if the error had not been made, or had been corrected. It is impossible to say that the error could not have affected the outcome.[121]

99 The appellant is entitled to relief unless the respondent can show that the same result would be inevitable in the event of a new trial. Although it was not put in that way, I would treat the respondent's submission as also raising the second basis upon which relief may be refused. It is in any event necessary to consider a new trial because, by virtue of s 134 AD of the Act, this court must decide whether the injury was a serious one, or whether there should be a further trial. These questions can all be answered together.

100 Two things inescapably follow from the fact that the credibility of the appellant was very much in issue. The first is that it cannot be said that it is inevitable that the result would be the same on a retrial. Secondly, this court is not in a position to make a proper evaluation of the case as it does not have the benefits available to a trial judge in making a determination of whether the appellant suffers from a serious injury. The matter must be remitted for retrial.

101 Where a serious injury application case depends upon the assessment of the credibility of the applicant as to the continuing severity of their injuries, this court, as**

a general rule, has remitted such cases for retrial.[122] As was said in Dordev v Cowan[123] when an appeal is concerned primarily with findings of fact, particularly where credit was in issue, it would be plainly counter-intuitive if this Court were to reconsider such issues afresh merely on the reports that were tendered below and the transcript of the viva voce evidence. This approach mirrors the well recognised principle that an appellant who seeks to overturn a judgment of this kind undertakes a very difficult task, where the appellant's credit was in issue and the judge had the advantage of seeing and hearing the appellant.[124] Much of the benefit afforded to a trial judge in viewing the videos will derive from the context of having heard and seen the appellant give his evidence and be cross-examined. As to the pain and suffering consequences of the physical injury, the medical opinions could assume anything from great importance to no significance depending upon the conclusions reached as to the appellant's credibility generally and his reliability as a historian.[125]

**102 The appeal should be allowed, the appellant having established that the denial of procedural fairness deprived him of the possibility of a successful outcome and the respondent having failed to show that a further trial would inevitably produce the same outcome.[126]

[1] Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141.

[2] See Farah Constructions Pty Ltd v Say-Dee [2007] HCA 22, [135].

[3] Board of Education v Rice [1911] AC 179, 182 (Lord Loreburn LC).

[4] [2000] HCA 57; (2000) 204 CLR 82, 121. See also NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62; (2004) 221 CLR 1.

[6] See also, eg, Government Insurance Office of NSW v Bailey (1992) 27 NSWLR 304, 313 (Kirby P), 323 (Clarke JA, with whom Hope AJA agreed); Stojanovski v Gheiti ("Stojanovski"), Unreported, NSW Court of Appeal, 14 May 1996 (Priestley JA, with whom Sheller and Cole JJA agreed); R v Martin (No 4) [2000] SASC 436; (2000) 78 SASR 140, 146-147 (Perry J); Kassem v Crossley [2000] NSWCA 276; (2000) 32 MVR 179; Inghams Enterprises Pty Ltd v Timania Pty Ltd [2005] FCAFC 155; (2005) 221 ALR 823.

[8] Government Insurance Office of NSW v Bailey (1992) 27 NSWLR 304, 313-314.

[12] Ibid, 156; see also Stojanovski, (Unreported, NSW Court of Appeal, Priestley JA, 14 May 1996).

[13] Stojanovski, (Unreported, NSW Court of Appeal, 14 May 1996).

[14] (1992) 27 NSWLR 304, 323-324. See also Stojanovski, (Unreported, NSW Court of Appeal, 14 May 1996).

[16] See, eg, Government Insurance Office of NSW v Bailey (1992) 27 NSWLR 304, 315 (Kirby P).

[17] (Unreported, NSW Court of Appeal, Priestley JA,14 May 1996) 4, 5.

[20] Re Refugee Tribunal; Ex parte AALA [2000] HCA 57; (2000) 204 CLR 82, 122 (McHugh J), 130-131 (Kirby J).

[21] Stead [1986] HCA 54; (1986) 161 CLR 141, 145 (Mason, Wilson, Brennan, Deane and Dawson JJ); Re Refugee Tribunal; Ex parte AALA [2000] HCA 57; (2000) 204 CLR 82, 154 (Callinan J).

At a glance

Court

Decision date

Before

Source

Judgment (285 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (35)