New South Wales Supreme Court CITATION : Peters v Magistrate Pat O'Shane & 2 Ors [2006] NSWSC 1329 HEARING DATE(S) : 06/12/2006 JUDGMENT DATE : 8 December 2006 JUDGMENT OF : Associate Justice Malpass DECISION : The judgment of the Local Court is set aside. In lieu thereof, judgment entered for the defendants against the plaintiff for damages to be assessed. The matter is remitted to the Local Court for assessment according to law. The question of the costs of the appeal is reserved. CATCHWORDS : Alleged breach of agreement between parties for the provision of editing work - commencement of proceedings for damages (Ordinary Statement of Claim claimed an amount for unliquidated damages) - motion for discovery - dispute as to compliance with discovery order - application to Magistrate to strike out defence and enter judgment - defence struck out and judgment entered for the sum claimed in the Ordinary Statement of Claim - appeal - discretionary power of Court - cross examination on affidavit verifying discovery - Rules require the entry of judgment with damages to be assessed - evidentiary deficiency to support amount of the judgment entered - judgment set aside - matter remitted to Local Court for assessment according to law. LEGISLATION CITED : Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Michael PETERS PARTIES : Magistrate Pat O'SHANE Simon MURPHY Benjamin WIESS FILE NUMBER(S) : SC 13440/06 COUNSEL : Mr P.R Nagle (Pl) Mr H. Altan (Defs) SOLICITORS : LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 735/05 LOWER COURT JUDICIAL OFFICER : O'Shane LCM LOWER COURT DATE OF DECISION : 22 June 2006 LOWER COURT MEDIUM NEUTRAL CITATION : Benjamin Eli Wiess and Simon James Murphy v Michael K Peters - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE MALPASS 8 December 2006 13440/06 Michael PETERS v Magistrate Pat O'SHANE & 2 Ors JUDGMENT 1 HIS HONOUR: The defendants were students at the University of New South Wales. The plaintiff was a lecturer at the University. 2 It is alleged by the defendants that an agreement was reached with the plaintiff, on or about 23 February 2003, to provide editing work in relation to a text book (Laws of Business) which he had written and intended to have published. It is further alleged that the plaintiff would pay royalty payments on book sales amounting to fifteen percent of the wholesale price of the book. 3 The defendants say that the work was performed during the period of January to March 2003. The book was published on 25 March 2004. 4 Subsequently, two payments were made by the plaintiff (in a total sum of $1824). 5 The defendants filed an Ordinary Statement of Claim in the Local Court. It claimed, inter alia, damages in the sum of $19 467.62 (this is contrary to the provisions of Rule 14.13 of the Uniform Civil Procedure Rules 2005 (NSW) (the Rules). 6 The plaintiff filed a Defence, which was subsequently amended. The Amended Defence raised a number of issues. I shall mention certain of them. It did not admit the alleged agreement (although the plaintiff did admit that the agreed rate was fifteen percent of book sales of the wholesale price). It denied proper performance or completion of the alleged work. It contended that payment had been made of more than fifteen percent of book sales. 7 The parties prepared for a hearing. Written statements and affidavits were filed and served. An unresolved dispute concerning the plaintiff's documents persisted. 8 Prior to the commencement of proceedings, the defendant had requested the plaintiff to provide information (similar to that which was to be later sought by way of discovery). The request was unproductive. 9 After the commencement of proceedings, the defendants served a Notice to Produce on him (it was in terms similar to what was sought in the latter discovery). The plaintiff filed a Notice of Motion to have the Notice to Produce set aside as an abuse of process (it being said to be a substitute for discovery). The notice to produce was not pursued and the defendants then looked to the obtaining of the material by way of discovery. 10 The defendants brought a Motion for discovery. A contested hearing of the application took place. An order was made on 6 April 2006. A copy of the order is an annexure to an affidavit sworn by the second defendant (apart from documents relating to the sale of the book, it sought tax returns for the years 2004 and 2005). 11 The order required compliance by 23 May 2006. On 7 May 2006, the proceedings were listed for final review (the hearing of the proceedings had been set down for two days on 21 and 22 June 2006). At that time, the plaintiff had not complied with the order. The Magistrate gave a direction that the plaintiff comply with the order by 9 June 2006. He arranged for the matter to be re-listed on 13 June 2006. 12 On 8 June 2006, the plaintiff served a verified list of documents. The list, in effect, restricted discovery to documents which had already been served as part of the evidence in the proceedings. On 13 June 2006, the defendants informed the Court of their intention to challenge the sufficiency of the discovery and to file a Motion, inter alia, seeking to strike out the plaintiff's defence. The defendants informed the Court that they would be seeking to proceed with such a Motion on the first day of the hearing. 13 On 21 June 2006, following the commencement of the hearing, certainly, at least an oral application was made to have the defence struck out and for the entry of judgment (there was dispute as to whether a formal Motion was either filed in Court or placed before the Magistrate). The application was made before O'Shane LCM without objection. The parties were legally represented (by counsel). During the hearing of the application, the plaintiff was cross-examined and documentary material was tendered. The judgment was delivered by Her Honour on 22 June 2006. 14 In her judgment, the Magistrate observed as follows [T2.34-55]:- "Further to the observations of his written responses, as I have just briefly canvassed, the Court noted that when he was under cross-examination here yesterday he was evasive, obfuscatory and engaged in sustained stonewalling. It is clear to the Court from both his oral and his written evidence that he is and intends to remain stolidly resistant to making any disclosures of the type being sought by the plaintiffs in this matter and the Court is confirmed in its view of the defendant in this last respect by a perusal of the Court file in this matter. In the circumstances, then, the Court is not satisfied that the defendant has complied with the discovery order and the plaintiffs' motion is granted. In respect of that, unless Mr Adams can persuade me to a different view altogether, I intend to make an order that costs on the motion be paid forthwith on an indemnity basis. In accordance with the orders sought by the motion the defence is struck out and judgment is entered for the plaintiffs in the amount sought together with interest and costs in an amount to be agreed or as assessed." 15 On 18 July 2006, the plaintiff filed a summons in this Court. It seeks to bring an appeal against the decision of the Magistrate. The grounds of appeal relied on are set forth in the summons. They include alleged error in law, alleged bias and alleged denial of natural justice. The grounds of appeal are devoid of particularity on each of these matters. 16 An appeal from a decision of the Local Court lies where there has been error in point of law. The appellant bears the onus of satisfying the Court that there has been a material error in point of law which justifies the disturbing of the decision of the Magistrate. 17 Under the current civil procedure regime, Part 21 of the Rules (which concerns discovery) provides no express power to strike out a defence (see Part 23 Rule 4 of the previous regime). However, s61 of the Civil Procedure Act 2005 (NSW) (the Act) provides a remedy (where there has been a failure to comply with a direction). 18 Part 16 deals with "Default Judgment". Under Rule 16.2, a party is "in default" when the Court has ordered a defence to be struck out. Pursuant to Rule 16.3, a plaintiff may apply for judgment to be entered under that Part where the defendant is in default. Where the claim is for a debt or liquidated claim, or for a claim for unliquidated damages of the kind referred to in Rule 14.13 (2) (which has no application in this case), judgment may be entered for the plaintiff against the defendant for a sum not exceeding the sum claimed. Sub-rule 2 of Rule 16.3 specifies the contents of the "relevant affidavit in support". Under Rule 16.7, the Court may enter judgment on a claim for unliquidated damages (for damages to be assessed and for costs). 19 These provisions confer discretionary powers on the Court. The discretion is exercised having regard to the relevant circumstances of the particular case before the Court and so that the dictates of justice are best served. The onus rests with the party seeking relief. 20 In the present case, once the defence had been struck out, the defendants were in a position to apply for default judgment. 21 The hearing of the appeal took place on 6 December 2006. The parties were represented by counsel. Counsel have provided detailed written submissions, which were supplemented by oral argument. 22 Despite the lack of particularity disclosed by the grounds of appeal, the plaintiff has ventilated a number of areas of complaint. 23 A significant area concerns what was done by the Magistrate in dealing with the question of the striking out of the defence (which encompassed the matter of the sufficiency of the discovery that had been given by the plaintiff). There is no dispute that she had the power to do what was done. 24 In dealing with this question, certain developments need to be observed. What the Magistrate was doing is now governed by the new uniform civil procedure regime. Certain of what has been said in cases which were governed by its predecessors may no longer have application. In any event, more recent case law reveals a change in approach to the matter of cross-examination on affidavits verifying discovery. Further, the Magistrate was required to exercise the discretionary powers having regard to, inter alia, s56 of the Act. 25 Leaving aside the question of cross-examination, under the previous regime an affidavit verifying discovery had been regarded as conclusive of the question of sufficiency of discovery unless it could be shown, by recourse to the documents discovered, from the content of the affidavit verifying discovery, from the pleadings or from any other source that constituted an admission of the existence of a discoverable document, that the discovery had been insufficient. 26 Recent case law reveals a more permissive approach to the allowing of cross-examination. 27 In the proceedings before the Magistrate, the legal representatives for the plaintiff took no objection to their client being cross-examined. Although complaint has been made that cross-examination ventured outside the scope of discovery, any such transgression also was not the subject of any objection. Whatever be the position concerning cross-examination (I prefer the view that it may be allowed in an appropriate case), I do not consider that the plaintiff should now be allowed to complain about the cross-examination in this appeal. 28 In the course of the exercise of the discretion, the Magistrate made findings of fact. She had the advantage of observing the plaintiff during cross-examination and her findings were founded on her views as to his credibility and reliability. Those findings do not give rise to any error in point of law. I do not accept the submission that the findings lacked support in fact. 29 Save for a complaint in general form (that the Magistrate failed to take into account the obligation of justice), there is no specific complaint made concerning the exercise of the discretionary power to strike out the defence. In my view, no error in the exercise of that discretion has been shown. 30 Unfortunately, after striking out the defence the Magistrate proceeded to enter judgment in a liquidated amount (being the amount irregularly claimed in the Ordinary Statement of Claim). The defendants concede that she had before her what could be described as a claim for damages. It was for an unliquidated sum and required assessment. Under the uniform civil procedure regime, she was required to direct the entry of judgment for damages to be assessed. The Court could then undertake the assessment process. 31 It may be added that, not only was there an evidentiary deficiency to support the amount of the judgment that was entered in favour of the defendants, but there was a failure to take into account monies that had already been paid by the plaintiff to the defendants for editing work. 32 Although the defence filed by the plaintiff traversed matters of liability, during the hearing of this appeal it seemed to be common ground that what was really in issue between the parties was an assessment of the damages. The significant matter in dispute was the number of books that had been sold (it has been said that the plaintiff contended that only 430 had been sold, whilst it has been said that the defendants contend that the figure was in the order of 2600). There were said to be two other lesser issues (one was the quantum of the wholesale price and the other was the adequacy of performance of certain of the editing work). These are issues that can be dealt with on an assessment. 33 I should also mention two other maters that were raised in submissions by the plaintiff. Although raised, they were never clothed with particularity and/or developed. These were the matters of bias and denial of natural justice. 34 In the course of his submissions in the appeal, counsel for the plaintiff took the Court, at some length, through the transcript of the hearing before the Magistrate. Despite the Court being taken to many passages in the transcript, no particular one of them was identified as evidencing either bias or denial of natural justice. I have carefully read the transcript and I am left with the view that there is a dearth of material to found an allegation of a perception of bias against the plaintiff. There is nothing to suggest that he was denied natural justice. In my view, he was given a reasonable opportunity to present his case. 35 I set aside the judgment entered by the Local Court. In lieu thereof, I direct the entry of judgment for the defendants against the plaintiff for damages to be assessed. The matter is remitted to the Local Court for assessment according to law. 36 The question of costs may have its complexities. It has not been the subject of argument. Accordingly, I reserve the question of the costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.