At the outset of a formal hearing the referee shall advise the licensee of those matters contained in the department's records upon which the department's intended action is based. He shall judicially notice the files and records of the department which may be examined by the licensee or his attorney. The referee shall examine all witnesses including the licensee but nothing herein shall be construed as prohibiting the licensee from offering additional relevant testimony nor shall this be construed as prohibiting the examination of witnesses by the licensee or his attorney.