New South Wales Supreme Court CITATION : Saul v Pool Data Systems [2008] NSWSC 249 HEARING DATE(S) : 19 March 2008 JUDGMENT DATE : 28 March 2008 JURISDICTION : Common Law JUDGMENT OF : Harrison AsJ (1) Leave to appeal is granted. (2) The appeal is upheld. DECISION : (3) The order made by his Honour McCosker LCM dated 4 July 2007 striking out Mr Saul's defence is set aside. (4) The matter is remitted to the Local Court at Forster to be determined according to law. (5) Costs are reserved pending receipt of the defendant's written submissions within 14 days. CATCHWORDS : LEAVE TO APPEAL - Local Court Magistrate - Strike out defence LEGISLATION CITED : Civil Procedure Act 2005 Local Courts Act 1982 CATEGORY : Principal judgment CASES CITED : Erhard v Bhatia [2002] NSWCA 388 House v The King (1936) 55 CLR 499 PARTIES : Edward Earle Saul (Plaintiff) Pool Data Systems Pty Ltd (Defendant) FILE NUMBER(S) : SC 13905/2007 COUNSEL : P Batley (Plaintiff) SOLICITORS : Priest McCarron (Plaintiff) Mark M Morris (Submitting Appeal - Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 257/2006 LOWER COURT JUDICIAL OFFICER : McCosker LCM LOWER COURT DATE OF DECISION : 4 July 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON FRIDAY, 28 MARCH 2008 13905/2007 - EDWARD EARLE SAUL v POOL DATA SYSTEMS PTY LTD JUDGMENT (Leave to appeal decision of Local Court Magistrate – strike out defence) 1 HER HONOUR: By amended summons filed 19 March 2008, the plaintiff seeks leave to appeal against an order made by his Honour McCosker LCM on 4 July 2007 in the Local Court at Forster in matter number 257/2006. The plaintiff relied upon the affidavits of Mathew Lindeman sworn 7 December 2007 and Sally Bryant affirmed 7 December 2007. The defendant filed a submitting appearance save as to costs. 2 The plaintiff in these proceedings is Edward Earle Saul (Mr Saul) who was the defendant in the Local Court proceedings. The defendant in these proceedings is Pool Data Systems Pty Ltd (Pool Data) who was the plaintiff in the Local Court proceedings. For convenience, in this judgment I shall refer to the parties by name. Leave to appeal 3 Mr Saul appeals only part of the judgment and orders made by McCosker LCM on 4 July 2007 in the Local Court at Forster in matter number 257/2006. The part of the decision that Mr Saul appeals is the order that Mr Saul's defence be struck out. McCosker LCM determined that Mr Saul failed to comply with a Court direction that at 11.00 am on 29 June 2007 in the Court registry at Forster, Mr Saul and Pool Data exchange statements of the evidence upon which they sought to rely in the proceedings in circumstances where: (a) At 11.00 am on 29 June 2007 Mr Saul sent to Pool Data by email a copy in portable document format (pdf) of the statement upon which he intended to rely in the proceedings. 4 Mr Saul says that the Magistrate made an error of legal principle in failing to apply and give consideration to the principles in Part 6 Division 1 of the Civil Procedure Act 2005. 5 Section 74 of the Local Courts Act 1982 provides that an appeal against an interlocutory order does not lie to this Court except by leave. "74 Appeals requiring leave (1) A party to proceedings under this Part who is dissatisfied with the judgment or order of a Court sitting in its General Division may appeal to the Supreme Court against the judgment or order on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court. (2) A party to proceedings under this Part who is dissatisfied with any of the following judgments or orders of a Court sitting in its General Division may appeal to the Supreme Court against the judgment or order, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs." 6 Section 75 of the Local Court Act provides that the Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. 7 On 10 July 2007, the Magistrate made an order that Mr Saul's defence be struck out. History of Local Court proceedings 8 By statement of claim dated 11 September 2006, Pool Data claimed the amount of $29,794.11 for money due by Mr Saul for work performed by Pool Data, plus interest. 9 Pool Data had prepared an expert's report to support a claim that Mr Saul had lodged in the Consumer, Trader and Tenancy Tribunal (CTTT). Mr Saul lost in the CTTT. By defence in the Local Court proceedings, Mr Saul has pleaded that the services provided were not in accordance with the retainer and he provided legal services for which he was not entitled to recover any fees. 10 On 24 January 2007, the matter was listed for pre-trial review in the Local Court at Forster and the following directions were made: The parties were to exchange statements of evidence by 9 March 2007; the matter was listed for a status conference on 14 March 2007 and was listed for hearing on 22 March 2007. 11 In February 2007, Stephen Bromhead, solicitor ceased to act for Pool Data. Pool Data then engaged the services of Mark Morris, solicitor. Mr Morris sought Mr Saul's consent to vacate the hearing date and the adjournment of the hearing. Mr Saul consented to this. 12 On 14 March 2007, the following directions were made; (a) Hearing vacated; (b) subpoenas returned on 18 April 2007; (c) parties exchange statements of evidence by 27 April 2007; (d) matter listed for mention on 1 May 2007; and (e) matter listed for hearing on 10 May 2007. 13 On 24 April 2007, Mr Saul attended a conference with Paul Batley, of counsel, and Steve Young, a solicitor employed by Mr Saul's solicitor, D I McKern. During the course of that conference, Mr Young informed Mr Saul that D I McKern could no longer act for him because there was a conflict of interest. 14 On 1 May 2007, Mr Batley attended the Local Court at Forster when the hearing date for 10 May 2007 was vacated and the matter was adjourned for directions on 10 May 2007. In about early May 2007, Jane Adams solicitor, agreed to represent Mr Saul. 15 On 10 May 2007, Mr Laurie Hagan, solicitor, appeared as agent for Ms Adams. The matter was adjourned until 23 May 2007. On 23 May 2007, Mr Hagan again appeared as agent for Ms Adams and the following directions were made: (a) parties exchange witness statements in the Local Court registry at Forster at 11.00 am on 29 June 2007; (b) matter listed for mention on 4 July 2007; and (c) matter listed for hearing on 12 July 2007. 16 On 26 June 2007, Mr Saul was informed by George Domaradzki of the Legal Aid Commission that Ms Adams had notified him that she was not prepared to continue to act for him. On 28 June 2007, Mr Saul attended the office of Mr Batley and completed a statement for the purpose of the proceedings and completed a notice of motion and affidavit. The notice of motion sought that the hearing date be vacated and that Mr Saul be given leave to file a cross claim within 14 days. 17 On 4 July 2007, the matter was before the Magistrate to ensure that there had been compliance with the prior court orders. Mr Morris, the solicitor who appeared for Pool Data, stated: "There has been exchange of statements your Honour but it was done informally and I have here the originals of my client's statement and that of his expert witness, Anthony Grieve and I seek to hand those up to your Honour." (t 1) 18 Later at (t 4) Mr Morris again stated: "…Well your Honour the submissions of the plaintiff are that the parties have already exchanged statements in the matter, which your Honour had previously ordered. So therefore if the motion were granted, there would have to be, there would be a re-opening of the pleadings, and therefore further statements may have to be filed to answer the issues raised by the further pleadings." 19 The Magistrate in his extempore reasons for decision relevantly stated (at t 7): "…The court can strike out the defence filed by the defendant in these proceedings. No such application is made. The notice of motion now, in my view, seems to suggest that if I do adjourn the matter, I have to vacate the hearing date. One of the effects of that would be is that the defendant in the proceedings has access to the plaintiff's material, at a time which would allow the defendant to then draft his material. It is possible and there is no doubt a submission that would be put, that his material would be drafted in light of the access to the plaintiff's material. In my view, that would be totally in appropriate and could well be seen as a disadvantageous position from the plaintiff's perspective. So in respect of the motion firstly to vacate the hearing date, that is refused. In respect of the motion which I take to be that leave be granted that the defendant be allowed to file a cross-claim, in relation to that the motion is also refused. In respect of the matter before the Court, the defence filed in these proceedings by the defendant is struck out." 20 On 4 July 2007, the Magistrate refused to vacate the hearing and did not grant leave to file a cross claim. As previously stated, this part of the Magistrate's decision is not the subject of this appeal. 21 It is appropriate at this point that I remind myself of the principles according to which this court is to decide the Magistrate's discretionary decision. They are stated definitively in a short passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v The King (1936) 55 CLR 499 at 504-505. It is, I think, useful to re-state them as follows: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 22 Counsel for Mr Saul referred to Part 6 Division 1 provisions "Part 6 Case management and interlocutory matters Division 1 Guiding principles 56 Overriding purpose (cf SCR Part 1, rule 3) (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (4) A solicitor or barrister must not, by his or her conduct, cause his or her client to be put in breach of the duty identified in subsection (3). (5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs." 23 Counsel for Mr Saul also referred to Erhard v Bhatia [2002] NSWCA 388. 24 Mr Saul had sworn an affidavit which had been served on the solicitors for Pool Data by email. I accept that the document was not exchanged at the Local Court registry at Forster at 11.00 am on 29 June 2007, but that both parties agreed that there had been an exchange of witness statement and this fact was mentioned in submissions to the Magistrate on two occasions. Pool Data did not request the Magistrate to strike the defence out. The Magistrate stated that one of the effects [of granting an adjournment] would be that Mr Saul had access to Pool Data's material, at a time which would allow Mr Saul to then draft his material. According to the Magistrate, it was possible and there was no doubt a submission that would be put, that his material would be drafted in light of the access to Pool Data's material and that could well be seen as a disadvantageous position from Pool Data's perspective. 25 It is my view that the Magistrate arrived at this decision on the basis that firstly, Mr Saul had not exchanged his witness statements; and secondly, that he would obtain an unfair advantage by seeing Pool Data's statements before he prepared his own. This was not the case. Both parties had already exchanged witness statements. In my view there was an error affecting the exercise of the Magistrate's discretion which has led to a substantial wrong occurring. Hence, it is my view that the Magistrate's order striking out the defence should be set aside. The matter should proceed to hearing to be determined on its merits. Leave to appeal is granted. The appeal is upheld. The order made by his Honour McCosker LCM dated 4 July 2007 striking out Mr Saul's defence is set aside. The matter is remitted to the Local Court at Forster to be determined according to law. 26 Costs are discretionary. Costs usually follow the event. The plaintiff has made written submissions in relation to costs. The defendant's submitting appearance was filed on the basis it is "save as to costs". As the solicitors representing both parties are located on the North Coast rather than arguing costs in Sydney I propose to consider the costs issue by way of written submissions. As previously stated, the plaintiff has already furnished written submissions, which my associate will forward, to the defendant's solicitor today. The defendant has 14 days to furnish its written submissions, if it wishes to do so. Costs are reserved pending receipt of the defendant's written submissions within 14 days. The Court orders: (1) Leave to appeal is granted. (2) The appeal is upheld. (3) The order made by his Honour McCosker LCM dated 4 July 2007 striking out Mr Saul's defence is set aside. (4) The matter is remitted to the Local Court at Forster to be determined according to law. (5) Costs are reserved pending receipt of the defendant's written submissions within 14 days. ********** 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.