Slim v Kabra

[2005] NSWSC 1190

CITATION:	Slim v Kabra [2005] NSWSC 1190 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	11 April, 4, 11 and 12 July 2005 (written submissions to 22 July 2005)
JUDGMENT DATE :	25 November 2005
JURISDICTION:	Equity
JUDGMENT OF:	Associate Justice McLaughlin at 1
DECISION:	1. Upon the application of the Defendants, I order that the report of Peter David Rodgers dated 16 April 2004 be adopted. 2. I order that the Plaintiffs pay the costs of the Defendants of the notice of motion filed by the Defendants on 7 May 2004. 3. I order that the notice of motion filed by the Plaintiffs on 14 December 2004 be dismissed. 4. I order that the Plaintiffs pay the costs of the Defendants of the aforesaid notice of motion filed by the Plaintiffs on 14 December 2004. 5. I make orders as in paragraphs 1 and 2 in the notice of motion filed by Peter David Rodgers on 24 December 2004. 6. I order that the Plaintiffs pay the costs of Peter David Rodgers of the aforesaid notice of motion filed by him on 24 December 2004. 7. I reserve to the parties liberty to apply in respect to the implementation of orders 1 and 5 hereof. 8. I order that the claim of the Plaintiffs in respect to item 16 in the schedule of the Plaintiffs dated 22 March 2004 and any other claims of the Plaintiffs for legal costs be determined by the Court, and that, for such purpose, all necessary directions be given and orders be made. 9. I reserve to the parties liberty to apply in respect to the implementation of order 8 hereof. 10. I stand over to a date to be fixed by arrangement with my Associate the claims referred to in order 8 hereof

CATCHWORDS:	Practice. - Reference by Court. - Adoption of referee's report. - Procedure followed by referee. - Requirement of natural justice. - Whether parties can re-agitate findings of referee.
LEGISLATION CITED:	Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005
CASES CITED:	Beveridge v Dontan Pty Limited (1991) 23 NSWLR 13 Birkai Pty Limited v Permanent Custodians Limited (1994) 35 NSWLR 178 Buckley v Bennell Design & Constructions Pty Limited (1978) 140 CLR 1 Buttrose v Versi (Rolfe J, 10 December 1990, unreported) Cape v Maidment (1991) 98 ACTR 1 Chloride Batteries Australia Limited v Glendale Chemical Products Pty Limited (1988) 17 NSWLR 60 Homebush Abattoir Corporation v Bermria Pty Limited (1991) 22 NSWLR 605 Integer Computing Pty Limited v Facom Australia Limited (Marks J, Supreme Court of Victoria, 10 April 1987, unreported) SJP Formwork (Aust) Pty Limited v Leda Constructions Pty Limited (Giles J, 19 May 1992, unreported) Strbak v Newton (Samuels JA, Court of Appeal, 18 July 1989, unreported) Super Pty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549 White Constructions (NT) Pty Limited v Commonwealth of Australia (1990) 7 BCL 193 Xuereb v Viola (1988) 18 NSWLR 453
PARTIES:	Ali Slim (First Plaintiff) Monique Slim (Second Plaintiff) Sunil Ramniwas Kabra (First Defendant) Neeta Sunil Kabra (Second Defendant) Suresh Kumar Guduguntla (Third Defendant) Pyiyadar Shindi Guduguntla (Fourth Defendant) Peter David Rodgers (Court Appointed Referee)
FILE NUMBER(S):	SC 2852 of 2003
COUNSEL:	Mr P. Chippindall (Plaintiffs) Mr R. Steele (Defendants) Mr M. Doble, Solicitor (Referee)
SOLICITORS:	Proctor Phair (Plaintiffs) Michie, Shehadie & Co (Defendants) Raj Lawyers (Referee)

LOWER COURT JURISDICTION:

- 21 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Friday, 25 NOVEMBER 2005

2852/03 ALI SLIM and ANOR –v- SUNIL RAMNIWAS KABRA and ORS

JUDGMENT

1 HIS HONOUR: These proceedings relate to a partnership formerly conducted between the Plaintiffs and the Defendants under the name and style Birmingham Industrial Park. The proceedings were instituted by summons filed by the Plaintiffs 19 May 2003. By that summons the Plaintiffs sought a declaration that the partnership be dissolved as from 14 April 2003 and an order that the partnership business be wound up by and under the directions of the Court; an order for an account; an order for an enquiry as to the assets of the partnership and as to the respective interests of the Plaintiffs and the Defendants in those assets. Prayer 4 in the summons is as follows:

An order that Peter David Rodgers be appointed as a Court expert under Part 39 of the Supreme Court Rules to inquire into and reports [ sic ] the following:
(a) All contributions to the partnership from the commencement of the partnership to date.
(b) The quantum of such moneys, if any, owing by the partnership to the Plaintiffs and all Defendants severally.
(c) All moneys owed by the Plaintiffs and the Defendants severally to the partnership.
(d) The quantum of any money received by the Defendants on behalf of the partnership.
(e) The quantum of all benefits that the Defendants severally or collectively received on behalf of the partnership.
(f) The quantum of any moneys received by the Plaintiffs or any of the Defendants on behalf of the partnership.
(g) The quantum of moneys to be brought to account by the Plaintiffs and by the Defendants respectively.

2 On 26 September 2003 orders were made by consent, which were substantially along the lines of the relief sought in the summons. However, paragraph 3 of those consent orders (which were embodied in short minutes of order dated 26 September 2003 and signed by the solicitors for the respective parties) differed somewhat from the precise wording of prayer 3 in the summons, in that the consent order commenced,

An order that Peter David Rodgers be appointed as a Court expert under Part 39 of the Supreme Court Rules or in the alternative as a Court appointed referee under Part 72 of the Supreme Court Rules to inquire into and report the following:

3 Paragraph 4 of the consent orders made provision for each party to deliver to the referee a schedule “nominating all contributions, benefits derived by the Plaintiffs and the Defendants and moneys owned [sic] by or to the Plaintiffs and the Defendants relating to the partnership which they respectively require the Court expert or Court referee to investigate pursuant to Order 3”. Paragraph 4 then made provision for the content of such schedules, and continued, “The inquiry by the Court expert or the Court referee will be limited to the items listed in the schedules”.

4 Thereafter Mr Rodgers (who is a chartered accountant and a partner of the firm Rodgers Reidy and who is also a registered auditor, registered tax agent and a registered liquidator, as well as being an official liquidator, a registered trustee and a registered trustee in bankruptcy) proceeded to embark upon the functions committed to him by the orders of 26 September 2003. (It should be observed, however, that apparently there was some delay in Mr Rodgers being informed of his appointment. In a letter dated 11 November 2003 Mr Rodgers stated that he “was not advised by either [firm of solicitors] of my appointment until recent date”.) Although in his affidavit of 7 June 2004 the First Plaintiff said that his solicitors advised Mr Rodgers of his appointment as a Court expert on 20 September 2003, nevertheless he therein also stated that his solicitors forwarded to Mr Rodgers a copy of all the affidavits and exhibits only on 22 October 2003.

5 Mr Rodgers submitted to the solicitors for the respective parties what he described as an interim report dated 15 March 2004, what he described as a further interim report dated 26 March 2004,what he described as a further interim report dated 1 April 2004 and what he described as a final report dated 16 April 2004. (It should be noted that Mr Rodgers in his various reports referred to the “joint venture” of the partners, where the summons and the consent orders referred to the “partnership” between the partners.)

6 There are presently before the Court the following notices of motion:

Notice of motion filed by the Defendants on 7 May 2004, by which the Defendants seek substantively an order that the Court adopt the report of Mr Rodgers dated 16 April 2004.
Notice of motion filed by the Plaintiffs on 14 December 2004, by which the Plaintiffs seek substantively a declaration that the report of Mr Rodgers dated 16 April 2004 does not constitute a report of a referee within the meaning of Part 72 of the Supreme Court Rules; a declaration that in the conduct of the reference Mr Rodgers denied the Plaintiffs natural justice; an order that the alleged report be not adopted.
Notice of motion filed by Peter David Rodgers, described as “Court appointed Referee/Applicant”, on 24 December 2004, by which Mr Rodgers claims substantively an order pursuant to Part 39 Rule 5 or, alternatively, Part 72 Rule 6, of the Supreme Court Rules that the Plaintiffs and the Defendants (each of which parties is a Respondent to the notice of motion) account to Mr Rodgers in a specified sum “from the proceeds of the joint venture between the parties in respect of his remuneration for acting as Court appointed expert, alternatively referee”, together with interest upon the specified sum, calculated in the manner set forth in the notice of motion.

7 After the hearing of those notices of motion commenced before me on 11 April 2005 the legal representatives of the parties queried my power (at that time as a Master) to hear the foregoing notices of motion. In consequence, on 11 April 2005 Justice Palmer, as Duty Judge in the Equity Division, by consent of the Plaintiffs, the Defendants and Mr Rodgers, ordered that the foregoing notices of motion be referred to me for hearing.

8 I have had the benefit of receiving written submissions from the respective legal representatives of the Plaintiffs, the Defendants and Mr Rodgers. Those documents will be retained in the Court file. (I should, in this regard, record that after the conclusion of the hearing on 12 July 2005, when I reserved my decision herein, Counsel for the Defendants on 22 July 2005 forwarded to my Chambers a document headed “Defendant’s Submissions in Reply” (which had been foreshadowed at the conclusion of the hearing). Subsequently, on 3 August 2005, Counsel for the Plaintiffs wrote to my Associate in respect to the Defendant’s Submissions in Reply and, for the reasons set forth in that letter, requested that I disregard those submissions.)

9 It will be appreciated that the Plaintiffs seek that the Court should not adopt the report of Mr Rodgers, upon the grounds that it is not a report of a referee within the meaning of Part 72 of the Supreme Court Rules and that in the conduct of the reference the Plaintiffs have been denied natural justice; that the Defendants seek that the Court should adopt the report of Mr Rodgers; and that Mr Rodgers is seeking that he be paid remuneration for carrying out the functions committed to him by the Court, and that such remuneration be paid out of a bank account in which the proceeds of the realisation of the assets of the former partnership are currently held, and of which bank account the respective solicitors for the Plaintiffs and for the Defendants are the signatories.

10 If the Court accedes to the application of the Defendants and adopts the report of Mr Rodgers, there would appear to be no basis upon which any party could properly oppose the payment to Mr Rodgers of the remuneration which he seeks. There was no dispute between the parties as to the rates of Mr Rodgers’s fees. However, there was a dispute concerning the source of the payment of those fees, whether out of the joint venture account (which is the account which the solicitors for the respective parties are the signatories, and which is referred to in the notice of motion filed by Mr Rodgers), or by one or other of the Plaintiffs or the Defendants. It is implicit in the application of Mr Rodgers that the Court should adopt his report. To that extent he supports the application of the Defendants and opposes the application of the Plaintiffs. The written submissions on behalf of Mr Rodgers are expressly to that effect.

11 At the outset it should be observed that one of the problems which has given rise to the dispute between the Plaintiffs on the one hand and the Defendants and Mr Rodgers on the other hand concerning the question of whether the report of Mr Rodgers should be adopted has arisen from the terms of the orders made by consent on 26 September 2003 that Mr Rodgers “be appointed as a Court expert under Part 39 of the Supreme Court Rules or in the alternative as a Court appointed referee under Part 72 of the Supreme Court Rules.” Ultimately all parties, as well as Mr Rodgers, were in agreement that Mr Rodgers was acting only as a referee and not as an expert.

12 Part 72 of the Supreme Court Rules makes provision for reference by the Court to a referee. That Part contains provision for remuneration of the referee (Rule 6), and for the conduct of proceedings under the reference (Rule 8). Rule 13(1) provides,

Where a report is made, the Court may, of its own motion, after notice to the parties, or on application by any party, on a matter of fact of law or both -
(a) adopt, vary or reject the report in whole or in part;
(b) require an explanation by way of report from the referee;
(c) on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report;
(d) decide any matter on the evidence taken before the referee, with or without any additional evidence,
and shall give such judgment or make such order as the Court thinks fit.

13 The foregoing provisions of Part 72 of the Supreme Court Rules are now replaced by Part 20 Division 3 of the Uniform Civil Procedure Rules 2005. Rule 20.20 follows the wording of Part 72 Rule 8, whilst Rule 20.24 follows the wording of Part 72 Rule 13.

14 At the outset of his reference Mr Rodgers suggested that each party accept without challenge every item presented by the opposing party up to a limit of $1,000. Subsequently, the parties agreed to accept all items to a limit of $500. That is, as I understand it, there was no challenge by either party to any item presented by the opposing party to an upper limit of $500.

15 In accordance with the procedure prescribed by paragraph 4 of the orders of 26 September 2003, Mr Rodgers received from the Plaintiffs and the Defendants their respective schedules, and subsequently the response of each party to the schedule of the opposing party. Each of the first, second and third reports of Mr Rodgers (being respectively the interim report dated 15 March 2004, the further interim report dated 26 March 2004 and the further interim report dated 1 April 2004) invited further submissions from the parties. The Defendants made further submissions by a letter dated 23 March 2004 from the solicitors for the Defendants to Mr Rodgers. The Defendants made further submissions by letters dated 29 March and 30 March 2004 from the solicitors for the Defendants to Mr Rodgers. The Plaintiffs made further submissions by letter dated 31 March 2004. The solicitors for the Defendants sent a further letter to Mr Rodgers dated 7 April 2004. Copies of each of the foregoing items of correspondence between the respective solicitors and Mr Rodgers were sent to the solicitors for the other parties. The Plaintiffs and their solicitors had a number of face to face meetings with Mr Rodgers. The Defendants, who at the time were not aware of such meetings, confined their communications with Mr Rodgers to written submissions.

16 Ultimately the number of the items in dispute between the parties, which it was necessary for Mr Rodgers to address, and to resolve, in the course of his reference, was significantly reduced, in consequence of the foregoing procedure which had been adopted for the conduct of the reference. The report of Mr Rodgers expresses his decision concerning those disputed items.

17 The only matter in respect of which Mr Rodgers did not make a determination was the right of the Plaintiffs to be indemnified out of the assets of the partnership in respect of legal fees paid by the Plaintiffs to their solicitors, Proctor Phair. Those legal fees were the subject of accounts enclosed in the letter of 31 March 2004 from Proctor Phair to Mr Rodgers, being “for legal costs dated 27 June 2003 which related to the sale of 1 Birmingham Avenue Villawood and the dealings with the joint venture”. Mr Rodgers in his affidavit of 17 June 2004 said (at paragraph 7) that he did not consider that he was appropriately qualified to determine:

(a) whether those legal costs were properly incurred on behalf of the joint venture between the parties such that a right to be indemnified from the assets of the joint venture accrues to the plaintiffs; or
(b) whether those legal costs were incurred reasonably; and/or
(c) whether the quantum of those legal costs is fair and reasonable.

18 In his final report, of 16 April 2004, Mr Rodgers said, in this regard,

I do not propose to rule on those professional fees, as to whether those costs fall to the joint venture in full, or alternatively are liabilities that must be cleared by Mr Slim. I can only refer that issue back to the two legal firms for resolution. I note the strenuous protestations on the issue by Mr Shehadie as expressed in his letter of 7 April 2004, and judicial determination on legal costs may be the only recourse if discussions do not succeed. Certainly I am not qualified to determine a legal issue when both sides press their case so vigorously.

The letter of Mr Shehadie of 7 April 2004 referred to by Mr Rodgers, which is part of annexure A to Mr Shehadie’s affidavit of 11 April 2005, makes detailed comments concerning the accounts for legal costs which were included in Mr Phair’s letter of 31 March 2004.

19 The original claim in this regard was made in the schedule of the Plaintiffs submitted to Mr Rodgers under cover of the letter of 22 March 2004 from the First Plaintiff. Item 16 in that schedule is in the name Proctor Phair Lawyers, in an amount of $45,341. Under the heading “Plaintiffs Comments” appears the following

We seek this amount for lawyer fees to seek a solution with the partnership problems. Refusal of disclosing tenant bond deposits, refusal to allow us to access books, Receiver Deed Agreement, Disclose of council orders, NTT Computer supplies agreements, Agents correspondences to sell the property.

20 Despite the foregoing description appearing in the schedule of the Plaintiffs, it would appear that these legal costs relate, first, to costs of Proctor Phair upon acting on the sale of 1 Birmingham Avenue Villawood, which costs, in an agreed amount of $5,000 were paid to those solicitors from the sale proceeds upon settlement of the sale of that property; and to costs of the Plaintiffs in respect to their dispute with the Defendants concerning the partnership.

21 I am in agreement with the view expressed by Mr Rodgers that the question of whether or not the costs of the Plaintiffs in respect to their partnership dispute with the Defendants is an item which comes within the ambit of the reference to Mr Rodgers is a legal question which it is inappropriate for Mr Rodgers himself to determine. Similarly, the question of whether professional costs charged to the Plaintiffs, but previously (by agreement of the parties) paid to the solicitors out of the proceeds of sale of the subject property, come within the ambit of the reference to Mr Rodgers is a legal question, which it is inappropriate for Mr Rodgers himself to determine.

22 I consider that the appropriate course is for the Plaintiffs’ claim in regard to these costs, which either have been paid to Proctor Phair, or which the Plaintiffs assert they are liable to pay to Proctor Phair, should be determined by the Court rather than by Mr Rodgers.

23 Essentially the complaint of the Plaintiffs concerning the conduct of the reference by Mr Rodgers, and the basis upon which the Plaintiffs submit that his report should not be adopted are, first, that where there have been disputed factual assertions by the respective parties, Mr Rodgers should have determined those factual issues after receiving oral evidence, tested in an appropriate fashion. Further, that the Plaintiffs were denied natural justice in consequence of the fact that the First Plaintiff (who was absent from Australia on account of family problems) was not given an opportunity to respond properly to the final submissions made on behalf of the Defendants.

24 It should be appreciated that throughout the entirety of the conduct of the reference by Mr Rodgers the Plaintiffs and the Defendants were represented by their respective legal advisers, and that written submissions were presented by those legal advisers to Mr Rodgers, with copies of those written submissions being served upon the opposing party.

25 Part 72 rule 8 of the Supreme Court Rules makes express provision for the conduct of proceedings under the reference. Subrule (1) of that rule provides that the Court may give directions with respect to the conduct of proceedings under the reference. Subrule (2) provides,

Subject to any direction under subrule (1) -
(a) the referee may conduct the proceedings under the reference in such manner as the referee thinks fit;
(b) the referee, in conducting proceedings under the reference, is not bound by rules of evidence but may inform himself or herself in relation to any matter in such manner as the referee thinks fit.

26 There is no suggestion that during the course of the reference any of the parties, through their respective legal representatives, expressed to Mr Rodgers any dissatisfaction with the manner in which, or the procedure by which, Mr Rodgers was conducting the reference. As to the disputed questions of fact, which essentially arose towards the conclusion of the conduct of the reference, the solicitor for the Plaintiffs expressly rejected the suggestion of any personal meeting between the parties, and expressly endorsed the procedure which Mr Rodgers had adopted of exchange of written statements between the respective legal representatives, saying, “what is anticipated by the parties that you can make the determination on the written submissions of the parties”. Interestingly, it would appear that the Plaintiffs and their solicitor had a number of face to face meetings with Mr Rodgers; whilst the Defendants (who, through their legal advisers, were not aware of such meetings) confined their contact with Mr Rodgers to written submissions.

27 In the light of the exchange of correspondence between the respective legal representatives of the parties and Mr Rodgers, concerning the procedure to be adopted by Mr Rodgers, being a procedure agreed to by the parties, it is difficult to see how the Plaintiffs can now justifiably complain that Mr Rodgers did not hear oral evidence and allow cross-examination of witnesses. The letter of 25 November 2003 from the solicitors for the Plaintiffs to Mr Rodgers (annexure H to the affidavit of Mr Rodgers sworn 1 February 2005) expressly invites Mr Rodgers to deal with the matter upon the written submissions of the parties, and states that, “If there are any matters in our respective submissions that need clarification by the parties we will meet with you or provide written response to your written queries”, and continues by rejecting a face to face meeting between the parties.

28 The present complaint on behalf of the Plaintiffs that Mr Rodgers did not hear oral evidence and allow cross-examination of evidence is totally inconsistent with the procedure proposed by the Plaintiffs’ own legal representatives, and accepted by the legal representatives of the Defendants and by Mr Rodgers. The reference was conducted expressly in accordance with the procedure proposed, agreed to and accepted by the parties. Indeed, even if one (or even both) of the parties had not so agreed, it would have been open to Mr Rodgers to have conducted the reference in accordance with such procedure, consequent upon the powers given to him under the foregoing subrule (2) of Part 72 rule 8.

29 The further ground upon which the Plaintiffs submit that there has been a denial of natural justice is that the First Plaintiff was not personally available to make submissions or representations responding to the submissions on behalf of the Defendants. At all times the Plaintiffs were represented by competent and experienced legal representatives. There does not appear to be any suggestion that those legal representatives were, by reason of the necessary absence overseas, for a relatively short period, of the First Plaintiff, precluded from obtaining adequate instructions from the Plaintiffs concerning any responses which might be made to the submissions of the Defendants. I do not consider that on this account there has been any denial of natural justice to the Plaintiffs or, indeed, that for any other reason there has been any denial of natural justice to the Plaintiffs.

30 It will be appreciated that the provisions of Part 72 rule 8 give to the referee very considerable latitude as to the procedure which may be adopted in the conduct of the reference. In the instant case the parties, through their respective legal advisers, agreed with Mr Rodgers as to a procedure. Part of that procedure was expressly set forth in paragraphs 4, 5 and 6 in the orders of 26 September 2003. That procedure was that each party should prepare a schedule (in the nature of what is frequently referred to as a Scott schedule), and the opposing party should be given an opportunity to respond to each of the items in that schedule. Communication between the parties and Mr Rodgers was by way of correspondence passing between the respective legal advisers of the parties and Mr Rodgers. The procedure adopted made provision for each party to be served with a copy of correspondence passing between the other party and Mr Rodgers.

31 The relevant authorities relating to the adoption or non-adoption by the Court of a report of a referee have been conveniently assembled in Freckelton and Selby, Expert Evidence (1993), volume 2, Chapter 18A.

32 It is unnecessary for me to quote in detail from those authorities. For present purposes I should, however, refer to the decision of the Court of Appeal of New South Wales in Super Pty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549, especially the judgment of Gleeson CJ. Having outlined the provisions of Part 72 of the Supreme Court Rules, and reviewed the history of that Part, his Honour said, at 562,

I am unable to accept, either as an absolute rule, or as a prima facie rule subject to defined or definable exceptions, that a party who is dissatisfied with a referee’s report is entitled as of right to require the judge acting under Part 72 rule 13, to reconsider and determine afresh all issues, whether of fact or law, which that party desires to contest before the judge.

33 His Honour, having set forth his reasons for the foregoing conclusion, continued, at 563,

What is involved in an application under Part 72 rule 13 is not an appeal, whether by way of a hearing de novo or a more limited re-hearing. This is consistent with the right of the referee to conduct the reference as the referee thinks fit and unconstrained by the rules of evidence. Rather, the judge, in reviewing the report and deciding whether to adopt, vary or reject it, has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the rules and with the wider setting in which they take their place.
That wider setting is a system for the administration of justice according to law. In so far as the subject matter of dissatisfaction with a referee’s report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine the matter afresh. That was decided by this Court in Homebush Abattoir Corporation v Bermria Pty Limited (1991) 22 NSWLR 605: see also Cape v Maidment (1991) 98 ACTR 1 at 4. That conclusion is entirely consistent with the history of the rules and the reasoning of the High Court in Buckley v Bennell Design & Constructions Pty Limited (1978) 140 CLR 1 which, although the case related to different provisions, is also instructive as to the present provisions.
….
On the particular question, relevant to the present case, of the approach to be taken to disputed findings of fact, where there is shown to be evidence available to support such findings, or the issue involves a choice as between conflicting evidence, I agree with the views of Giles J as expressed in the extracts from his reasons for judgment quoted earlier [in SJP Formwork (Aust) Pty Limited v Leda Constructions Pty Limited (Giles J, 19 May 1992, unreported)]. I also agree with what was said by Cole J in Chloride Batteries Australia Limited v Glendale Chemical Products Pty Limited . In that case Cole J made extensive reference to, and relied upon, what was said by Marks J in Integer Computing Pty Limited v Facom Australia Limited (Marks J, Supreme Court of Victoria, 10 April 1987, unreported). Those two lastmentioned judgments are of particular relevance to reports involving technical (non-legal) expertise.

34 The Chief Justice had earlier in his judgment quoted with approval from the unreported decision of Giles J in SJP Formwork (Aust) Pty Limited v Leda Constructions Pty Limited (19 May 1992, unreported), including the following passage,

For my own part, in the circumstances of this case I do not think that the referee’s findings of fact should be generally re-agitated in the court. As a broad proposition, depending upon the circumstances of each case, the court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he did, particularly where the disputed questions are in a technical area where the referee enjoys an appropriate expertise. As an example of the application of that approach, in Buttrose v Versi (Rolfe J, 10 December 1990, unreported) Rolfe J adopted a passage from the judgment of Cole J in White Constructions (NT) Pty Limited v Commonwealth of Australia (1990) 7 BCL 193, in the following terms:
….
The purpose of referees reporting to the court on disputed questions of fact is rendered futile if the court is to reconsider disputed questions of fact in circumstances where it is conceded that there is factual material sufficient to enable the referees to reach the findings they did. In circumstances where the court, having closely scrutinised the referees report, has a comfortable feeling of satisfaction that the factual issues have been properly explored and considered, in my view the court should adopt the referee’s report on findings of fact.

35 Regarding the right to re-agitate the referee’s findings of fact, Mahoney JA, who agreed with the judgment of the Chief Justice in Super Pty Limited v SJP Formwork (Aust) Pty Limited, said, at 567, “The right to be heard does not involve the right to be heard twice.”

36 In the instant case I am satisfied that Mr Rodgers considered the disputed factual matters, and received submissions from the respective parties, through their legal representatives, concerning those disputed factual matters, and expressed his conclusions in regard to those matters. The circumstance that upon those disputed issues Mr Rodgers did not receive oral evidence and did not allow cross-examination upon such oral evidence (as would have been the case had such a dispute been decided by a Judge in a Court) does not in any way impugn the conclusions of Mr Rodgers concerning these disputed matters of fact. The entire purpose of the reference to a referee would be frustrated if the referee were somehow, despite the express provisions of Part 72 rule 8, constrained to conduct the reference as if he were a Judge presiding over a contested hearing.

37 I am not persuaded that the failure of Mr Rodgers to entertain oral evidence (a procedural course which he was not requested by the Plaintiffs to adopt, and, indeed, a procedural course which was totally inconsistent with that which the Plaintiffs themselves had invited Mr Rodgers to adopt and which, with the concurrence of the Defendants, he did adopt) in any way constitutes a ground upon which the Court should decline to adopt the report of Mr Rodgers.

38 It should be emphasised that at no stage during the course of the reference did the Plaintiffs ever request Mr Rodgers to receive oral evidence or to allow cross-examination. These matters have been advanced by the Plaintiffs for the first time only during the course of their application made by way of the notice of motion filed on their behalf on 14 December 2004, seeking, amongst other relief, a declaration that the report of Mr Rodgers does not constitute a report of a referee within the meaning of Part 72 of the Supreme Court Rules. The present complaint of the Plaintiffs in regard to the receiving of oral evidence and cross-examination thereon does not in my conclusion constitute a ground upon which the Plaintiffs are entitled to any of the relief sought in their notice of motion.

39 The other substantive ground upon which the Plaintiffs rely is the asserted denial of natural justice to the Plaintiffs. (That ground of denial of natural justice overlaps, to an extent, the foregoing ground regarding oral evidence and cross-examination, since the failure of Mr Rodgers to allow oral evidence and cross-examination is relied on by the Plaintiffs as constituting denial to them of natural justice.)

40 In Xuereb v Viola (1988) 18 NSWLR 453 Cole J (as he then was) had occasion to consider the way in which the principles of natural justice impact upon the conduct of a reference by a referee. At 466 his Honour referred to the provisions of Part 72 rule 8 (6), which requires that “[t]he parties shall at all times do all things which the referee requires to enable a just opinion to be reached…”, and continued,

But this statement of the Rules masks the difficulties inherent in the referee’s task for it does not give the referee any clear direction as to the procedure which he must follow to ensure that the opinion reached by him is a “just opinion” (Rule 8(6)). By “just opinion” is meant an opinion which is just between the parties. Implicitly that means in reaching his opinion concepts of natural justice must have been adhered to by the referee.

41 At 469 his Honour said,

Quite apart from Part 72 rule 11 (c), natural justice requires that a referee give reasons for his opinion. This is not just to permit the court better to exercise its functions under Part 72 rule 13. The deeper reason is that it enables the parties and the disinterested observer to know that the opinion of the referee is not arbitrary, or influenced by improper considerations but is the result of a process of logic and the application of a considered mind to factual circumstances. I adopt, with respect, the passage in the judgment of Samuels JA in Strbak v Newton (Court of Appeal, 18 July 1989, unreported), in speaking of the requirements for reasons in the judgment of a District Court Judge, as being an appropriate statement of principle applicable to the statement of reasons required by a referee;

“…

In the present case, the reasons are certainly succinct; but that is often to be regarded as a judicial virtue. Trial Judges must always endeavour to balance their duty to explain with their duty to be brief.”

42 Regarding the requirement of natural justice Rogers CJ CommD said in Beveridge v Dontan Pty Limited (1991) 23 NSWLR 13 at 24,

Ultimately, in a reference, the ultimate test will always be whether, bearing in mind the nature of the issues posed for the referee’s report, the expertise of the referee engaged by the reference, the submissions made by the parties and the absence or otherwise of a request for an oral hearing and for an opportunity to cross-examine, has each party been given a fair opportunity to put his, or her, or its case and point of view?

43 I do not see how the fact that the First Plaintiff, adequately represented by competent and experienced legal representatives, was absent from Australia, in consequence of family commitments, at a time when the submissions of the Defendants were served, constitutes in any way a denial of natural justice to the Plaintiffs.

44 I am not persuaded that either of the substantive grounds upon which the Plaintiffs rely in support of their submission that the report of Mr Rodgers does not constitute a report of a referee within the meaning of Part 72 of the Supreme Court Rules, or that in the conduct of the reference Mr Rodgers denied natural justice to the Plaintiffs can be substantiated. In my conclusion neither of the grounds upon which the Plaintiffs rely has been substantiated. In the circumstances of the instant case, to adopt the wording of Cole J in White Constructions (NT) Pty Limited v Commonwealth of Australia, I have “a comfortable feeling of satisfaction that the factual issues have been properly explored and considered” by the referee, and in consequence I propose to adopt the report of Mr Rodgers.

45 It follows from the foregoing conclusion that I shall grant the application made by the Defendants in their notice of motion of 7 May 2004 that the Court adopt the report of Mr Rodgers dated 16 April 2004, and that I shall dismiss the notice of motion filed by the Plaintiffs on 14 December 2004.

46 In the light of the views which I have expressed herein, and my conclusion that the Court should adopt the report of Mr Rodgers, I can see no basis upon which the payment to Mr Rodgers of the remuneration which he seeks can properly be opposed by any party.

47 Mr Rodgers embarked upon the reference committed to him by the parties, which was enshrined in an order of the Court. He conducted that reference in accordance with the procedure agreed upon by the parties, and ultimately presented a report which the Court has concluded should be adopted. The Defendants have supported the adoption of the report. The Court has rejected the submissions of the Plaintiffs that the report does not constitute a report of a referee within the meaning of Part 72 of the Supreme Court Rules and that in the conduct of the reference Mr Rodgers denied the Plaintiffs natural justice. There is no reason why Mr Rodgers should not be paid his proper fees for conducting the reference.

48 I would with respect express my entire agreement with the sentiments of Brownie J in Birkai Pty Limited v Permanent Custodians Limited (1994) 35 NSWLR 178, who said, at 180, that “if the Court is to ask people to act as referees, then, generally speaking, the Court should see that they are paid proper fees for their work, and that people who ask the Court to appoint referees must expect the Court to see that the referees are paid those fees…” The attitude of the Plaintiffs in opposing the adoption of the report has resulted in Mr Rodgers being deprived of his fees for nineteen months since he completed his report. In those circumstances I am satisfied that he is entitled to an interest component upon his fees. (By Part 72 rule 6(1) the Court is given ample power to determine the amount of the fees to be paid to a referee, to direct how, when and by whom the whole or any part of such fees are to be payable, and to determine the consequences of failure to comply with a direction in that latter regard.)

49 I have already observed that there was no dispute between the parties as to the rates of Mr Rodgers’s fees, but that there was a dispute concerning the source of the payment of those fees. I propose, therefore, to make orders in the terms sought by Mr Rodgers in his notice of motion filed on 24 December 2004, and to reserve to the parties liberty to apply in respect to the implementation of such orders. That will enable the Plaintiffs or the Defendants, if either consider that the parties should not be jointly responsible for bearing the fees of Mr Rodgers, to claim that the entirety (or some other part) of those fees be paid by either the Plaintiffs or the Defendants.

50 I make the following orders:

1. Upon the application of the Defendants, I order that the report of Peter David Rodgers dated 16 April 2004 be adopted.
2. I order that the Plaintiffs pay the costs of the Defendants of the notice of motion filed by the Defendants on 7 May 2004.
3. I order that the notice of motion filed by the Plaintiffs on 14 December 2004 be dismissed.
4. I order that the Plaintiffs pay the costs of the Defendants of the aforesaid notice of motion filed by the Plaintiffs on 14 December 2004.
5. I make orders as in paragraphs 1 and 2 in the notice of motion filed by Peter David Rodgers on 24 December 2004.
6. I order that the Plaintiffs pay the costs of Peter David Rodgers of the aforesaid notice of motion filed by him on 24 December 2004.
7. I reserve to the parties liberty to apply in respect to the implementation of orders 1 and 5 hereof.
8. I order that the claim of the Plaintiffs in respect to item 16 in the schedule of the Plaintiffs dated 22 March 2004 and any other claims of the Plaintiffs for legal costs be determined by the Court, and that, for such purpose, all necessary directions be given and orders be made.
9. I reserve to the parties liberty to apply in respect to the implementation of order 8 hereof.
10. I stand over to a date to be fixed by arrangement with my Associate the claims referred to in order 8 hereof.

28/11/2005 - Correcting File Number in heading of Judgment - Paragraph(s) Heading