New South Wales Supreme Court CITATION : Del Duca v McElwaine [2006] NSWSC 514 JUDGMENT DATE : 1 June 2006 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Harrison DECISION : (1) The decision of Magistrate Morahan dated 8 December 2005 is affirmed; (2) The appeal is dismissed; (3) The amended summons dated 23 May 2006 is dismissed; (4) The plaintiff is to pay the defendant's costs as agreed or assessed. CATCHWORDS : Appeal decision of Local Court Magistrate - denial of natural justice - vet fees LEGISLATION CITED : Local Courts Act 1987 (NSW) - ss 73 & 75 Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153 CASES CITED : Wakim v Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405 Wende v Finney [2005] NSWSC 927 Anthony Del Duca t/as Del Duca Thoroughbreds PARTIES : (Plaintiff) Paul Gerard McElwaine t/as Hamilton South Equine Hospital FILE NUMBER(S) : SC 10048/2006 Mr H J A Neal (Plaintiff) COUNSEL : Mr A J Bulley (Defendant) Henry Davis York (Plaintiff) SOLICITORS : McDonald Johnson Lawyers (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 61/2006 LOWER COURT JUDICIAL OFFICER : Morahan LCM LOWER COURT DATE OF DECISION : 8 December 2005 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON THURSDAY, 1 JUNE 2006 10048/2006 - ANTHONY DEL DUCA t/as DEL DUCA THOROUGHBREDS v PAUL GERARD McELWAINE t/as HAMILTON SOUTH EQUINE HOSPITAL JUDGMENT (Appeal decision of Local Court Magistrate - denial of natural justice – vet fees) 1 HER HONOUR: By amended summons filed 23 May 2006 the plaintiff seeks firstly, an order that the appeal be allowed; secondly, an order that the orders of Magistrate Morahan of the Local Court at Newcastle on 8 December 2005 be set aside; and thirdly, an order that the Local Court at Newcastle or another venue be directed to rehear the proceedings and determine it according to law and that the remitted proceedings not be heard by Magistrate Morahan. The plaintiff relies on his affidavits, sworn 23 February and 19 April 2006 respectively. The defendant relies on the affidavit of his solicitor, Craig Gerald Doyle, sworn 29 March 2006. 2 The plaintiff in these proceedings is Anthony Del Duca t/as Del Duca Thoroughbreds (Del Duca), the defendant in the Local Court. The defendant in these proceedings is Paul Gerard McElwaine t/as Hamilton South Equine Hospital (McElwaine), the plaintiff in the Local Court. For convenience, I shall refer to the parties by name in this judgment. 3 Mr Del Duca submitted that there was a denial of natural justice on the grounds that the decision was not fair and equitable. At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73(2) of the Local Courts Act 1982 (NSW) allows an appeal to this court on the grounds of lack of jurisdiction and/or denial of natural justice. Section 75 of the Act provides that the court may determine an appeal by either (a) varying the terms of the judgment or order or (b) setting the judgment or order aside or (c) by setting the judgment or order aside and remitting the matter to the Local Court for determination in accordance with the court's directions or (d) by dismissing the appeal. Grounds of appeal 4 Mr Del Duca appeals from the whole of the decision of Magistrate Morahan on the basis that the plaintiff to these proceedings was denied natural justice. The plaintiff's grounds of appeal are as follows:- firstly, at the pre-trial review held on 27 October 2005 the Registrar erred in that he did not attempt to identify the matters in dispute between the parties, erred in that he did not attempt to settle the proceedings, and ordered the plaintiff and defendant to file and serve its witness statements by 17 November 2005; secondly, despite such order the plaintiff was not served with the defendant's statements until 7 December 2005, being the day before the matter was heard and determined by the Local Court; thirdly, the defendant's statements raised evidence not raised by the defendant at any time prior to 7 December 2005; fourthly, the hearing commenced in circumstances where the plaintiff was self represented and the plaintiff had inadequate time to consider and be in a position to answer the case presented by the defendant, despite objections by the plaintiff; fifthly, the Magistrate erred in allowing the defendant to rely on the witness statements at the hearing on 8 December 2005; sixthly, the Magistrate erred in not adjourning the hearing to allow the plaintiff sufficient time to consider and prepare his defence and/or any evidence in reply to the statements served by the defendant; seventhly, in the circumstances where the defendant had run the case on the basis that he had been retained to provide services by Mr O'Donnell on behalf of or as agent for the plaintiff, the Magistrate denied the plaintiff procedural fairness by not deciding the case on that basis, but instead deciding the case in favour of the defendant on a different basis, namely, on the basis that the defendant was entitled to assume that he was dealing with the plaintiff personally; eighthly, the Magistrate denied the plaintiff procedural fairness by making the following factual findings without any evidence: (i) the plaintiff met with Mr O'Donnell and there was an agreement that any veterinary fees would be paid by the plaintiff if they were required; (ii) the defendant thought that the plaintiff was the principal that he was dealing with; and (iii) the defendant was well entitled to assume that he was dealing with the plaintiff in a personal capacity. 5 In Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153 and Wakim v Mathiew Pty Ltd t/as Dove Migration Services [2002] NSWSC 405, O'Keefe J (at [23]-[24] and at [20]-[21] respectively) made essentially identical observations on natural justice. In Kojima he stated: "The requirements of natural justice (or procedural fairness as it is now commonly referred to) apply to the Small Claims Division of the Local Court. This is clear from the nature of the function to be performed by that tribunal and the statutory recognition that is afforded to natural justice by s 69(2A) of the Act. The content of the requirements of natural justice is not fixed. The content is fluctuating. The overarching requirement is that of fairness (National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 312 per Gibbs CJ with whom Brennan J agreed). For a court that normally involves a duty to: (i) act judicially; (ii) deal with the matter for decision without bias; (iii) give each party the opportunity of adequately presenting its case; (iv) observe the procedural and other rules provided for in the relevant statute; (v) come to its decision with that sense of responsibility that is the necessary accompaniment of the duty to do justice." The Local Court (Small Claims Division) proceedings 6 In The Local Court Mr McElwaine, the vet, sued Mr Del Duca for the sum of $5,049.35, being outstanding fees for veterinary treatment on horses by the plaintiff for the defendant, during the period of four months from 27 July to 22 November 2004. By defence, Mr Del Duca denied that he or his agent ever instructed that any work was to be done. Alternatively Mr Del Duca pleaded that is any instructions were given for Mr McElwaine to undertake the work it was by the company AVRS NSW Pty Limited t/as as Del Duca Thoroughbreds. 7 On 27 October 2005, at a pretrial review, the court ordered the parties to file and exchange statements by 17 November 2005. Neither party served their statements until the day prior to the hearing, namely 7 December 2005. Mr McElwaine's solicitor served the documents upon Mr Del Duca by fax at his address for service, namely his office at about 2.30pm. The address for service was Mr Del Duca's office but he was not in his office that day. Mr Del Duca went straight to the Local Court from his home on the Central Coast and did not collect those documents. 8 On 8 December 2005 Magistrate Morahan entered judgment in favour of Mr McElwaine in the sum of $5,049.35 plus costs and interest. Overview of the Small Claims Division of the Local Court 9 The legislative policy in relation to small claims is that there should be a quick, cheap and informal resolution of these claims. To achieve this, proceedings are conducted with a minimum of formality. According to O'Keefe J in Wakim at [16], the quick, cheap and informal resolution of claims: "…has many advantages. It tends to shorten proceedings. It assists in reducing costs. It does this in a number of ways, one of which is to make it easier for litigants in person to understand the procedures, perhaps to appear for themselves and not be disadvantaged by excessive legality, formality or procedural rules. Another is to give finality to decisions made in respect of small claims. This has been done by so framing the legislation as to ensure to the greatest extent possible that claims before the Small Claims Division of the Local Court should begin and end in that court. The limitation on the right of appeal permitted by the statute betokens this. Such a policy is readily understandable in the light of the fact that the ceiling for claims in the Small Claims Division is $10,000. Taking up the time of superior courts with such small matters is thus properly avoided in the vast majority of cases." 10 In determining whether the plaintiff was denied procedural fairness it is necessary to consider the nature of the jurisdiction exercised in the Small Claims Division. This is because the content of procedural fairness varies depending upon the nature of the tribunal and the jurisdiction it exercises. Section 70 of the Act provides: "Procedure generally in Small Claims Division (1) The jurisdiction conferred by or under this Act on a Court sitting in its Small Claims Division is to be exercised by a Magistrate or an Assessor. (2) Proceedings in a Court's Small Claims Division are to be conducted with as little formality and technicality as the proper consideration of the matter permits. (3) The rules of evidence do not apply to proceedings being heard or other proceedings in a Court's Small Claims Division. (4) Witnesses may not be cross-examined except in circumstances in which, and to the extent to which, the cross-examination of witnesses is authorised by a practice note. (5) An Assessor or Magistrate exercising the jurisdiction of a Court sitting in its Small Claims Division may inform himself or herself on any matter relating to proceedings being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit. (6) Proceedings in a Court's Small Claims Division (other than any judgment given or order made in respect of the proceedings) are not required to be recorded." 11 Practice Note 2 of 2005 (see annexure ADD:12, aff Del Duca 23/02/06) at [10.1], [10.2], [10.3] and [10.4] states: "10.1 There is no right to call witnesses to give evidence, to give evidence on oath/affirmation or to cross-examine a party or witnesses on oath/affirmation or otherwise in the Small Claims Division 10.2 Where a direction had not been given at the Pre-trial review by the Magistrate, Assessor or Registrar for the attendance of any witness at the trial of the proceedings, the proceedings will be heard and determined by each party tendering the written statements of witnesses together with any other relevant documentation or material in support of the party's case. There will be no right to examine or cross-examine any witness. Parties will, however, be entitled to make comments, present arguments and make final submissions on the evidence. 10.3 Where a direction has been given at the Pre-trial review by the Magistrate, Assessor or Registrar, that a witness attend for cross-examination, the proceedings will be heard and determined on the oral evidence and the written statements and other documents and materials which have been tendered. Submissions on the evidence will also be allowed. 10.4 The procedure at the trial of the proceedings in the Small Claims Division will be determined by the Magistrate or Assessor as he or she thinks fit." 12 In Wende v Finney [2005] NSWSC 927 Howie J at [27] and [28] made some pertinent observations about the proceedings in the Small Claims Division which I respectfully reproduce here. They are: "Of course informality and the abandonment of the normal rules of evidence and procedure should not be allowed to give rise to unfairness even where the justice being administered is in relation to relatively trivial claims. Rather in such matters the court might need to be particularly astute to ensure that the lack of formality and the speedy resolution of claims does not become an end in itself at the expense of the appearance of fairness to the parties within the court's jurisdiction. After all the formal rules of procedure that normally attend a hearing are generally aimed at producing fairness to the parties, sometimes at the expense of efficiency in the exercise of the court's jurisdiction. So where those rules are displaced by the need to provide cheap, efficient and expedient justice to the parties, the advantages can sometimes be obtained at too high a price so far as a particular litigant is concerned. No doubt one of the reasons why the proceedings in the Small Claims Division are conducted with the informality required is that the parties before the court are, in advance of the hearing, aware of the material upon which the determination is to be made. There are procedures laid down and referred to in the Practice Note that require the parties to identify to each other the material they intend to rely upon. The material upon which each side relies, including statements of witnesses and the actual documents at the heart of the dispute, are in a form where they can be reviewed by the court assisted by such submissions that the parties wish to make upon those documents without the need to formally tender and prove the relevant material. …the intention of the scheme of the relevant legislation is that the dispute can generally be resolved on the documents." 13 In Wende a party tendered documents that were produced on subpoena during the hearing. Those documents alleged dishonesty and misconduct. Wende requested the opportunity to call witnesses to rebut that evidence. This request was refused. As it turned out, much of what the Magistrate read into his judgment from these documents was highly prejudicial to Wende. It was held that the failure to give Wende an opportunity to rebut that evidence constituted a denial of procedural fairness. 14 The plaintiff submitted that in the circumstances he was entitled to a reasonable time to properly consider the defendant's witness statements, and to respond to them, including the opportunity to consider cross examination. Further, the plaintiff submitted that the Magistrate did not give Mr Del Duca the opportunity to apply for an adjournment – see Wende [43]. The hearing before the Magistrate 15 Mr Del Duca had been served with the documents from Mr McElwaine the day before the hearing. He did not avail himself of the opportunity to read them overnight. Nor did he collect them from his office early so he could read them prior to the hearing taking place. 16 Mr Del Duca appeared at that hearing unrepresented before the Magistrate. At Court, Mr McElwaine's solicitor handed Mr Del Duca further copies of the documents that had been served the previous day. At the outset of the hearing, Mr Del Duca told the Magistrate that he had not seen the statements from Mr McElwaine until that morning and that he was greatly disadvantaged (t 2.18). The Magistrate anticipated that Mr Del Duca was about to seek an adjournment and gave reasons why the matter was to proceed on that day. 17 The Magistrate stated: "I can't see any disadvantage, I mean as far as I'm concerned, you both got the statements yesterday or you've got them at the last minute. The case is decided on the statements and the oral submissions that you make. …" 18 Mr Del Duca objected to an additional statement upon which Mr McElwaine sought to rely. When Mr Del Duca objected, Mr McElwaine's solicitor did not press for tender of that statement. Mr Del Duca stated that he had just had a very quick look and he would like to put on a sort of defence. A defence had already been filed. The Magistrate pointed out that he was not entitled to prepare or file statements in reply. The Magistrate outlined the procedure that was to be followed during the hearing. It was as follows: "…each of you has the opportunity to address based on the statements. Each of you then has the opportunity to address in reply and then each of you has the right to make submissions as to why I should decide the case in your favour and then I give a decision. The whole thing takes about 20 to 30 minutes and there are no statements in reply. The whole purpose of this Small Claims Division is the speedy expedition of cases." 19 A short adjournment was taken so that the Magistrate could read the documents furnished by both sides. The hearing then took place in accordance with the procedure outlined above. There was a second adjournment taken. At one stage during the proceedings Mr Del Duca indicated he wanted to obtain a further copy of a document and sought some time to have a fax sent to him at the courthouse. The Magistrate acceded to this request (t 7). When this letter (which had an ACN number on it) was shown to Mr McElwaine's solicitor, the solicitor stated that Mr McElwaine and Mr O'Donnell were present in Court and while they knew that they would not be required to give evidence, if the Magistrate felt that anything turned on that letter, Mr O'Donnell could give evidence. 20 In relation to the issue of cross examination, the Magistrate stated that very comprehensive statements had been filed by both parties, two by the plaintiff and three by the defendant and the matter had proceeded for some time before Mr O'Donnell raised the issue of cross examination. The Magistrate continued that given the nature of the proceedings, it was his view that cross examination would not be appropriate. Was there a denial of procedural fairness or natural justice? 21 The Magistrate was aware that Mr Del Duca was in effect seeking an adjournment. Both parties had been served with documents the day before the hearing, albeit Mr Del Duca was unrepresented. The Magistrate in making a decision to proceed considered the interests of both parties. The Magistrate declined to grant an adjournment. It is my view that Mr Del Duca was given a reasonable opportunity to present his case. He put on statements, he addressed the main issue in dispute namely who was the correct defendant and raised other issues that were not mentioned in his defence. Mr Del Duca availed himself of this opportunity to make submissions and in so doing presented his case well. In these circumstances, it is my view that Mr Del Duca was afforded procedural fairness. 22 The plaintiff further submitted that the Magistrate decided the case on a basis different to the way it was run and that factual findings were made without evidence. The Magistrate outlined the issues in dispute. They were firstly, that Mr Del Duca said that he paid less in veterinary fees in previous years and he felt that the invoices were excessive and in one case he claimed that the wrong horse was named. He also raised the issue that one mare did not become pregnant, and as a result, he suffered considerable financial loss. The Magistrate addressed these issues. The Magistrate also referred to the issue which was raised in the defence, namely whether the correct defendant was AVRS NSW Pty Limited t/as Del Duca Thoroughbreds or Mr Del Duca t/as as Duca Thoroughbreds. 23 The Magistrate after summarising the evidence from both sides stated: "From the contents of the statements it is quite clear that the plaintiff thought that Mr Del Duca was the principal that he was dealing with and it was for this reason that the invoices were directed to him and the sums or the matters which led to these proceedings today being addressed to him." and "…it is my view that the plaintiff was well entitled to assume they were dealing with Mr Del Duca in a personal capacity." 24 There were disputed factual matters that were addressed by the Magistrate. There was evidence to support the finding that the plaintiff was dealing with Mr Del Duca in his personal capacity, such as the evidence from Mr O'Donnell, Mr McElwaine, and correspondence. There was a letter written by Mr Del Duca himself dated 2 December 2004 on letterhead styled "Del Duca Thoroughbreds" stating "I still have concerns in regard to the tax invoices" and enclosed a cheque in the sum of $3,000 being part payment. That letterhead did not contain an ACN number nor a reference to the company. 25 The plaintiff also submitted that he had been denied procedural fairness when the matter did not proceed to arbitration. If the complaint is that the best endeavours were not made by the Magistrate to bring the parties to discuss settlement, the Magistrate did request the parties to a settlement during the first adjournment (see s 71 of the Act). 26 It is my view that Mr Del Duca has not been denied natural justice or procedural fairness. The decision of Magistrate Morahan dated 8 December 2005 is affirmed. The appeal is dismissed. The amended summons dated 23 May 2006 is dismissed. 27 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. The Court orders: (1) The decision of Magistrate Morahan dated 8 December 2005 is affirmed. (2) The appeal is dismissed. (3) The amended summons dated 23 May 2006 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** 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.