EAGLAND and ANOR v FAVRETTO and ANOR [1996] NSWCA 163

EAGLAND and ANOR v FAVRETTO and ANOR

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, CLARKE AND SHELLER, JJA 20 February 1996, 11 March 1996 [1996] NSWCA 163

Procedural fairness — natural justice in interlocutory proceedings — adverse conclusions drawn by trial judge — parties to be given opportunity to explain — trial judge to have regard only to evidence before them

This appeal arose from the trial of a separate question, heard by Bainton J, as part of the proceedings surrounding the affairs of Barlile Corporation Ltd. The question was whether the respondents had been full time executives of Barlile or a related corporation. His Honour reached the conclusion that the appellants had not discharged the onus of showing the respondents had held such positions.

The appellants appealed on the basis that his Honour referred to and used in the determination of the issue before him, material which had been filed in court in accordance with orders of the court but which had not been tendered as evidence in the hearing of the separate issue and with which none of the parties had dealt or had an opportunity to deal. Further, they submitted that historical material which had been admitted into evidence to explain the development of the litigation had been used by his Honour to draw adverse conclusions against the appellants and against a witness, without apprising them that the material was to be used in that way.

The appellants submitted that this constituted a denial of natural justice, was an irregularity and denial of procedural fairness, and gave rise, at the lowest, to

apprehended bias against the appellants on the part of his Honour, and warranted the overturning of the judgment and the remittance of the matter for re-hearing. The Court of Appeal upheld the appeal.

Held: The trial judge breached the fundamental principle that where a judge draws adverse conclusions against a party or witness, the matters upon which the adverse conclusions are based are to be found in the evidence of the case. It is also essential that the witness or party be given an opportunity to deal with and explain any circumstance from which, in the absence of a satisfactory explanation, those adverse conclusions were drawn: Unsted v Unsted (1947) 47 SR (NSW) 495; Hodge v Williams (1947) 47 SR (NSW) 489; Brinkley v Brinkley (1965) P 75.